2018-TIOL-NEWS-021 Part 2, Dated: Wednesday, January 24, 2018

2018-TIOL-NEWS-021 Part 2 | Wednesday January 24, 2018

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DIRECT TAX


	2018-TIOL-31-SC-IT + Story National Travel Services Vs CIT Whether the provisions of Sec 2(22)(e) get attacted as soon as a shareholder, not necessarily a member of the company or its register, is found to be the beneficial owner of the shares - YES: SC Whether, for the invocation of provisions of Sec 2(22)(e), the requirement of a registered shareholder who is also needed to be a beneficial owner of shares, is mutually contradictory - YES: SC - Case referred to Larger Bench: SUPREME COURT OF INDIA 2018-TIOL-29-SC-IT CIT Vs Indian Petrochemicals Corporation Ltd Having heard the parties, the Supreme Court condoned the delay and issued notice to the respective parties directing their appearences for further hearing on the issue of sales tax exemption, electricity payments, capital receipts, method of accounting, etc. - Notice issued: SUPREME COURT OF INDIA 2018-TIOL-30-SC-IT Kerala Sponge Iron Ltd Vs CIT Having heard the parties, the Supreme Court condoned the delay and granted leave to the Revenue Department to defend their case on the issue of 'maintanability of review application, in the garb of appellate remedy'. - Leave granted: SUPREME COURT OF INDIA 2018-TIOL-151-HC-MAD-IT John Baptist Lasrado Vs Income Tax Settlement Commission Whether when the assessee had paid interest u/s 201(1A) on the defaulted TDS before the concerned ITO in charge of TDS matters, charging interest u/s 234B on the shortfall in advance tax would amount to subject to double levy - YES: HC Whether an employee who is incharge of liason office of a MNC in India, is liable for payment of interest u/s 234(B) in respect of his salary earned abroad, which was not offered for taxation while filing of return - NO: HC - Assessee's petition allowed: MADRAS HIGH COURT 2018-TIOL-144-ITAT-JAIPUR DD Pharmaceutical Pvt Ltd Vs ACIT ( Whether when genuineness of expenditure incurred by a pharma company on acount of gifts made to business guests and conference expenses, is not doubted, then the same can not be disallowed merely because such expenses are prohibited being violative to medical ethics - YES: ITAT - Assessee's appeal allowed: JAIPUR ITAT 2018-TIOL-143-ITAT-KOL DCIT Vs J Thomas And Company Pvt Ltd Whether assessee's claim for bad debts can be disallowed, if the assessee had written off advances given in normal course of business only after taking necessary steps for recovery of the same and also preferring civil suits & criminal suits wherever neccesary - NO: ITAT Whether foreign travel expenses deserves to be allowed to an auctioneer, who has no role in either manufacturing or export of the particular commodity - NO: ITAT Whether it is relevant if a third party is benefitted by incurrence of a particular expenditure by an assessee, for purpose of allowing foreign travel expenses - NO: ITAT - Revenue's Appeal Dismissed: KOLKATA ITAT 2018-TIOL-142-ITAT-VIZAG Sri Sampathvinayagar Temple Trust Vs ITO Whether once application is filed for grant of registration u/s 12AA of the Act, it is the duty of assessee to furnish the information called for granting the registration and it cannot sleep over the issue without making any follow up - YES: ITAT Whether when assessee fails to establish that the Registration was granted in its case or it complied with the requirement for granting the Registration, disallowance of exemptions claimed is justified - YES: ITAT Whether in absence of any evidence about constitution of temple trust under any central or state provincial act, exemption u/s 10(23BBA) cannot be granted - YES: ITAT Whether evidence from the donor to establish that the donations are received for specific capital purpose are mandatory and mere resolution of the trust and placing Hundi is not sufficient to hold that the donations are received for the corpus - YES : ITAT - Assessee's appeal dismissed: VISAKHAPATNAM ITAT

INDIRECT TAX

SERVICE TAX SECTION

2018-TIOL-316-CESTAT-DEL

Parmesh Sharma Vs CCE

ST - Assessee was working as direct sales agent/ associates (DSI) of M/s. LIC Housing Finance Ltd. - Since, assessee did not register with the Department and did not pay Service Tax on the commission amount received from service receiver M/s. LIC Housing Finance Ltd., Department proceeded against assessee for confirmation of Service Tax demand - Submissions of assessee that appropriate Service Tax liability in respect of taxable service provided was discharged by service recipient has not been disputed - Further, this is also a case of revenue neutrality, inasmuch as service tax otherwise paid on the taxable services would be available as Cenvat Credit to the service recipient - Thus, extended period of limitation provided under proviso to Section 73 of FA, 1994 cannot be invoked for confirmation of Service Tax demand - However, on perusal of case records, Service Tax demands raised by Department are not entirely barred by limitation of time - Some of the demand is within the normal period prescribed under Section 73 ibid - Since, demands within the normal period has not been quantified by authorities below, matter remanded - In view of the fact that assessee had no intention to defraud the Government revenue, penalties cannot be imposed on assessee, same are set aside: CESTAT -Matter remanded: DELHI CESTAT

2018-TIOL-315-CESTAT-BANG

Palghat Automative Pvt Ltd Vs CCE, C & ST

ST - Issue that falls for consideration is (i) whether the availment of CENVAT credit on common input services which are used for trading as well as rendering taxable output services is correct as also liability of interest on the full credit availed on capital goods in the first year itself; (ii) eligibility to avail CENVAT credit on FRO crates which are not capital goods and (iii) availment of CENVAT credit on capital goods without proper documents.

As regards to CENVAT credit on FRO crates, findings of lower authorities is that FRO crates cannot be considered as capital goods, if they are not considered as capital goods, explanation given by assessee before lower authorities that such crates are used by them for movement of their various components which are used for rendering output service as authorised service station can be considered as inputs - Hence availment of CENVAT credit on such FRO crates cannot be disputed.

As regards the availment of CENVAT credit on capital items on defective documents as specified under Rule 9 of CCR, 2004, there is no finding on this point by first appellate authority as well as in the Order-in-Original as both the authorities have confirmed the demand holding that assessee has availed wrongly the credit of 100% in first year itself - This particular issue needs reconsideration by adjudicating authority, accordingly, the issue is remanded.

As regards the demand of CENVAT credit availed on common input services in both the appeals, which are utilised in trading activity and also for providing taxable output services, the judgment of High Court of Madras in case of F.L. Smidth Pvt. Ltd. 2014-TIOL-2186-HC-MAD-CX & Ruchika Global Services, it is held that pre and post 01/04/2011, trading activity has to be considered as an exempted services - Following the binding judgment of High Court, while rejecting the contentions raised by assessee on merits as well as on limitation, it is held that impugned orders are correct on the issue that trading activity is an exempted service, the matter is remitted back to the lower authorities only to requantify the reversal of CENVAT credit that needs to be done by assessee following the provisions of Rule 6(3A) of CCR, 2004 - The adjudicating authority will also quantify the quantum of interest and penalties that needs to be imposed on assessee based upon requantification of amount.

In the case in hand, assessee is not providing any output service in order to avail input service which has been taxed and charged by service stations to whom assessee has outsourced the services of rendering free warranty services - Hence the appeal on this point stands rejected: CESTAT - Appeals partly allowed: BANGALORE CESTAT

CENTRAL EXCISE SECTION

CIRCULAR

excircular1062

Celebration of Customs Day and Investiture Ceremony-2018

CASE LAWS

2018-TIOL-149-HC-RAJ-CX

JVS Food Pvt Ltd Vs UoI

CX - The petitioner made representation for supply of documents which sought to be relied by department but the same was not accepted inspite of decision in PGO Processors Private Ltd. and decision of Supreme Court in Kothari Filaments 2008-TIOL-237-SC-CUS - It is submitted that in the eventuatlity the order is passed, the appellate authority will not entertain the appeal without depositing the amount - Court deprecate the practice of officer in increasing litigation in High Court on arbitrary plea - This exparte order is passed in view of the fact that inspite of representation made for supplying documents, the same has not been supplied - The officer will now act in accordance with law and will not proceed arbitrarily, without giving proper opportunity to the petitioner: HC - Petition disposed of: RAJASTHAN HIGH COURT

2018-TIOL-314-CESTAT-CHD

Broadways Overseas Ltd Vs CCE

CX - Assessee is manufacturing goods and supplying to their parental unit for export vide ARE-1 No.19 and 20 dated 5.10.2005 and 6.10.2005 without payment of duty as goods are exported by parental unit - As the parental unit did not mention the goods cleared against ARE-1 No.19 and 20 in shipping bills, it was alleged that the goods covered under ARE-1 have been cleared clandestinely by assessee without payment of duty - Proceedings were initiated against assessee to demand duty alongwith interest and to impose penalty on assessee - Revenue's allegations are that the goods in question stand clandestinely removed to the domestic market in which case the benefit of non-duty paid clearance for export cannot be extended - For making such allegations, the Revenue has not produced any evidence as to show and establish that the goods were diverted and as to how compensation for the same was received by assessee - It is a matter of settled law that clandestine activities of any manufacturer, alleged by Revenue, are required to be substantiated by production of tangible and positive evidences - Same cannot be made on the basis of assumptions and presumptions - It has to be kept in mind that it is the Revenue which is alleging clandestine removal and as such, the onus to prove the same lies heavily upon them - Admittedly, Revenue has not been able to produce any evidences to that effect - As such, inadvertent mistake of non-mentioning of ARE-1 Nos. 19 & 20 in the shipping bills cannot lead to any adverse conclusion against assessee, especially, when such exports stand established by other parallel documents - In view of majority decision, impugned order is set-aside: CESTAT by Majority - Appeal allowed: CHANDIGARH CESTAT

2018-TIOL-313-CESTAT-CHD

Mehra Copy House Vs CCE & ST

CX - M/s. Rana Mahindra Papers Limited is manufacturer of paper and paper products, who were visited by Central Excise officers and during search, unaccounted stock of paper weighing about 28 MTs was found - The private records indicated systematic suppression of production of excisable goods and clandestine removal of the same - One of the buyers of clandestine materials of M/s.Rana Mahindra Papers Limited was Mehra Copy House, a proprietary concern - SCNs were issued to M/s. Rana Mahindra Papers Limited and Mehra Copy House and others demanding duty along with interest and proposing penalty - Role of M/s.Mehra Copy House becomes clear from the statement of Shri Prakash Chand Seth, proprietor of M/s.Mehra Copy House who stated that assessee received the writing and printing paper from M/s. Rana Mahendra Papers Limited and paid the billed amount through cash and an unbilled amount of Rs. 1,30,700/- (Rs. 60,700/- in bank + Rs. 70,000/- in cash) against the four consignments of writing & printing paper received by them from M/s. Rana Mahindra Papers Limited on the said four parallel invoices - At the time of follow up action, proprietor of assessee firm initially denied having received any writing and printing paper from M/s. Rana Mahendra Papers Limited - But subsequently, when they were confronted with deposits/pay slips of ICICI Bank, they admitted that they had received writing and printing paper on the parallel invoices from M/s. Rana Mahendra Papers Limited and also had made payments for the same - It clearly shows that assessee was fully aware that they had received goods on which the duty had not been paid and which were liable for confiscation - Impugned order upheld: CESTAT - Appeal dismissed: CHANDIGARH CESTAT

2018-TIOL-312-CESTAT-DEL

Piyush Jain Vs CCE

CX - Assessee engaged in manufacture of Flock Fabrics - A search was conducted at the business premises of assessee - On the basis of statement recorded and other materials seized, Department opined that assessee have made clandestine removal of goods - So, duty demand was raised and penalty imposed - Said earch was conducted on 06.05.1994 and since then the case has travelled widely for more than 23 years - In this scenario, Department submitted that no further evidence can be produced as no record is available - Shri Vikash Kumar Singh, whose statement was recorded, has died - Their advocate, Shri H.V. Raghavn Iyer, who was possessing the documents, has also died - In the statement of Shri Vikash Kumar Singh he stated that he has made the entries in the registers as per the direction of the Director, Shri Umesh Chand Jain - No cross-examination of Shri Umesh Chand Jain was conducted - Authenticity of private registers could not be considered to be reliable piece of evidence as there was no other corroborative evidence to support the entries made in so called private registers, especially when not even a single bill was located to prove the clandestine removal - No other incriminating material was found from the factory premises - No verification was made from transporters or railway authorities pertaining to unaccounted sale or transportation of unaccounted goods - Clandestine removal is very serious charge which required corroborated evidence and department has failed to collect such evidence - Nothing will come out even on remand when no additional material/evidence is available with the Department and that too after a lapse of considerable period - Hence, in interest of justice and to put the controversy at rest, by giving benefit of doubt, and, more particularly, when the allegations are not corroborated by supporting documents, impugned order set aside: CESTAT - Appeals allowed: DELHI CESTAT

CUSTOMS SECTION

NOTIFICATION / CIRCULAR

ctariffadd18_003

Anti-dumping duty imposed on Toluene Di-Isocyanate (TDI) imported from China PR, Japan and Korea

dgft17not046

Amendment in import policy condition of Urea under ITC (HS) code 3102 10 00 of Chapter 31 of ITC (HS), 2017 - Schedule - I (Import Policy).

cuscir04_2018

Amendments to the All Industry Rates of Duty Drawback effective from 25.01.2018

CASE LAWS

2018-TIOL-311-CESTAT-ALL

Harjinder Singh Vs CCE

Cus - Assessee was intercepted by officers of SSB whereas assessee was returning from Nepal to India and carrying pure gold with him and 239 gms. of gold nose pins - At the time of search, assessee fails to explain the real source of procurement of said goods - Moreover, at the time of search, he has stated that goods has been handed over to him by Shri Shera whom he does not know - In that circumstances, genuineness of assessee is doubted and the goods were rightly seized - Later on, assessee produced the invoice issued by one M/s D.S. Traders, Amritsar - All these are after-thought - In fact, if he had purchased the goods from M/s D.S. Traders, Amritsar, when he is carrying the gold in his pocket going to Nepal he should have the invoice also with him - Moreover, no prudent man will go to temple with such precious metal with him in pocket - In every big temple, on their notice board mention that Beware from the thief and keep belongings - In that circumstances, carrying the gold in temple is doubtful, therefore, it is a case of smuggling of gold by assessee from Nepal to India - In that circumstance, no infirmity found in impugned order, qua confiscation of goods in question - Value of gold is Rs. 6,26,258/- and redemption fine and penalties are imposed of Rs. 1 lakh each which are highly excessive, therefore, the redemption fine and penalty are reduced to Rs. 50,000/-: CESTAT - Appeal partly allowed: ALLAHABAD CESTAT

0-CESTAT-CHD

Hs International Vs CC

Cus - Assessee imported Alloy Wheels as also Car Truck tyres of various brands and filed bills of entries to be assessed on declared value - The said value declared by assessee was enhanced by assessing officers - Assessee paid the duty on enhanced value and cleared the goods - Subsequently, they filed appeals before Commissioner (A) against assessment of bills of entries but the same was rejected - Whether clearances of goods by paying customs duty on higher enhanced assessable value, precludes the assessee from challenging the same before the higher appellate forum - Inasmuch as goods imported by assessee were required in assessee's factory, same were cleared by them on payment of duty on enhanced value and this fact by itself cannot be adopted as a ground for resolving the disputed issue of valuation - The fact that assessed bills of entries were challenged by assessee before Commissioner (A), by way of filing appeals, is itself indicative of the fact that assessee was not satisfied with such enhancement and have exercised their right of appeal provided under the statute - It is almost a settled law that transaction value cannot be ignored based upon the doubts entertained by Revenue and mere suspicion on correctness of invoice is not sufficient to reject the evidence of value of imported goods - The onus to prove that there was under valuation, lies heavily upon the Revenue and is required to be discharged by production of tangible and positive evidence - There is no evidence to reflect upon the fact that the value agreed between importer and the exporter, does not reflect the correct value - Reference in this regard can be made to Tribunal decisions in case of Marvel Agencies 2016-TIOL-3311-CESTAT-DEL, S.K. Dhawan 2016-TIOL-1219-CESTAT-MUM and Kuber India 2016-TIOL-2505-CESTAT-DEL - Supreme Court in the case of Chaudhary Ship Breakers 2010-TIOL-86-SC-CUS has observed that price actually paid or payable has to be accepted as transaction value except in cases of exception carved out under the Rules - It is not the Revenue's case that those exceptions are available in the present case: CESTAT - Appeals allowed: CHANDIGARH CESTAT

MISC CASE

2018-TIOL-150-HC-ALL-VAT

Samsung (India) Electronics Pvt Ltd Vs CCT

Whether a mobile phone charger, sold as part of a package along with the mobile phone, can be taxed separately - NO: HC

Whether a mobile phone and its charger form a composite package, given the inseparable link between the two - YES: HC

Whether a mobile charger is taxable where it is packed seperately in a retail package, considering that the primary intent is to buy the cellphone, and that the charger is incidentally supplied without intention to specifically sell the charger - NO: HC

Whether Article 366(29A) of the Constitution generally empowers the taxation of all types of composite contracts, without paying heed to the specific types of composite contracts covered under its various sub-clauses - NO: HC

Whether the Department can split the value of the commodities in a composite package which bears one single MRP for the whole package, and then proceed to tax an item seperately - NO: HC

Whether any or every conclusion in a judgment can be interpreted as a principle of law, without considering the factual backdrop of the judgment or its issues involves - NO: HC - Assessee's Appeal Allowed: ALLAHABAD HIGH COURT

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