2018-TIOL-NEWS-038 Part 2, Dated: Wednesday, February 14, 2018

2018-TIOL-NEWS-038 Part 2 | Wednesday February 14, 2018

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DIRECT TAX


	2018-TIOL-60-SC-IT CIT Vs Doordarshan Commercial Services Whether there is any merit in the HC order directing clearance from the Committee on Disputes when the Apex Court had held that such a system had outlived its utility - NO: SC - Case Remanded: SUPREME COURT OF INDIA 2018-TIOL-275-HC-DEL-IT Sky Light Hospitality LLP Vs ACIT Whether AO's "reasons to believe" can be treated as honest, when the notice u/s 148 is issued based on the tax evasion report in which the source of income was not explained by assessee - YES: HC Whether the Writ Court should stop any adjudication, when the AO's "reasons to believe" establishes a sufficient nexus proving that assessee's income had escaped assessment - NO: HC Whether a human error committed by AO while issuing notice u/s 148 to a dead juristic person, will not nullify the proceedings which are otherwise valid - YES: HC Whether an attempt made by ITO to justify the issuance of reopening notice in the name of a non-existing entity, will obliterate such technical lapse - NO: HC - - Assessee's petition dismissed: DELHI HIGH COURT 2018-TIOL-260-HC-MUM-IT CIT Vs Avinash Nivrutti Bhosale Whether disallowance u/s 14A r/w Rule 8D(2)(ii) can be made, where such investment is made by the assessee using its own funds, and where the assessee's own funds exceed the investments made - NO: HC Whether the Revenue's appeal contesting applicability of Section 23(1)(a) to determine annual value of property, and contesting reduction of disallowance of helicopter expenses, merits being admitted - YES: HC - Case Deferred : BOMBAY HIGH COURT 2018-TIOL-259-HC-AHM-IT Well Bore Engineering Co Vs ACIT Whether assumption of jurisdiction on part of AO u/s 147 after period of four years, is valid, when there is no failure on part of assessee to disclose material facts necessary for assessment - NO: HC Whether reopening initiated on basis of change of opinion, deserves to be sustained - NO: HC - Assessee's petition allowed : GUJARAT HIGH COURT 2018-TIOL-249-ITAT-KOL Vodafone Essar East Ltd Vs JCIT Whether unabsorbed depreciation towards the previous A.Y, is eligible for set off while determining book profit u/s 115JB for the present A.Y - NO: ITAT Whether the Assessee is entitled to claim deduction of unabsorbed depreciation while determining book profit u/s 115JB, if the unabsorbed depreciation is lower than the amount of brought forward losses - YES: ITAT - Case Remanded: KOLKATA ITAT

INDIRECT TAX


	SERVICE TAX SECTION 2018-TIOL-58-SC-ST Commissioner of CGST and Central Excise Vs Metro Security Services ST - Adjudicating authority had imposed full penalty of 100% and had not given any option of availing reduced penalty on depositing amount with interest within thirty days - When the assessee approached the Commissioner (A), he granted such option of paying reduced penalty, if deposited within thirty days - Such option was granted by the Commr.(A), and later upheld by Tribunal – In Revenue appeal before High Court, the order of Tribunal was upheld and it was observed that if the assessee has not availed of the option made available by the Commissioner (Appeals), it will always be open for the department to recover full penalty instead of the reduced penalty as provided in the said order - Revenue in appeal before Supreme Court. Held: Delay condoned and leave granted: Supreme Court [para 2, 3] - Leave granted: SUPREME COURT OF INDIA 2018-TIOL-57-SC-ST CST Vs HDFC Bank Ltd ST - Respondent had received commission in convertible foreign exchange for transfer of money to persons in India and the same was sought to be taxed under BAS during the period 1.8.2005 to 30.9.2008 - CESTAT held that the issue is no more res integra and is covered in favour of appellant by the ratio of the decisions in Paul Merchants Ltd. - 2012-TIOL-1877-CESTAT-DEL and Wall Street Finance Ltd. - 2014-TIOL-1958-CESTAT-MUM - Supreme Court had condoned the delay in filing of appeal by Revenue and tagged the matter with Civil Appeal No. 5252-5254/2015 - As requested, last opportunity granted to appellant to file affidavit of valuation and deficit court fee failing which appeal would stand dismissed for non-prosecution without further reference: Supreme Court [para 1] - Compliance ordered: SUPREME COURT OF INDIA 2018-TIOL-544-CESTAT-MAD String Information Services Ltd Vs CST ST - Dispute relates to refund of Cenvat credit of duty paid on "Catering Services" as also "Insurance Services" taken for employees of service provider, in terms of Rule 5 of Cenvat Credit Rules - Period involved in present appeals are post-01.04.2011 when specific exclusions were introduced in definition of "Input Services" - "Outdoor Catering Services" was excluded if the same is used primarily for personal use or consumption of any employee - This evidently means that such services should be available to employees of company for their personal use, when they purchase eatables from their own pocket - There is nothing on record to show as to what kind of "Outdoor Catering Service" is being availed by assesse, thus, matter remand to adjudicating authority - As regards to "Insurance Services," Tribunal in case of M/s. Wabco TVS (India) Ltd. 2016-TIOL-1296-CESTAT-MAD has held that such services are excluded only when the same is extended to the employees on vacation and not otherwise - Inasmuch as, the matter is remanded, adjudicating authority would also reconsider the issue in respect of "Insurance Services", in the light of law laid down in said decision of Tribunal: CESTAT - Matter remanded : CHENNAI CESTAT CENTRAL EXCISE SECTION 2018-TIOL-59-SC-CX + Story RDB Textiles Ltd Vs CCE & ST CX - Brand Name - Notfn. 30/2004-CX as amended - Markings on jute bags are not for the purpose of indicating a connection in the course of trade between the jute bag and some person using such name or mark - The markings are by compulsion of law only in order that Governmental authorities involved in the PDS may identify and segregate the aforesaid jute bags - This being the case, it is obvious that there is no “brand name” involved in the facts of the present cases - what is in fact affixed to the jute bags is the name of the procurer agency in question such as the FCI, the State Government of Punjab and so on, the crop year, the name of the jute mill concerned, its BIS certification number and the statement that the food grains are manufactured in India - It is clear that all the aforesaid markings have, on the pain of penalty, to be done by the manufacturers of the jute bags, given the Jute Control Order and the requisition orders made thereunder - it is clear that the markings required on the jute bags are compulsory, being required by the Jute Commissioner, and are not for the purpose of enhancing the value of the jute bags by indicating a connection in the course of trade between the aforesaid products and the manufacturer of those products - Benefit of Notfn. 30/2004-CX as amended by 12/2011-CX available - Judgement of CESTAT set aside and appeals allowed: Supreme Court [para 18, 23] CX - Binding nature of Board Circular - it is well settled proposition that circulars that are issued by the Ministry of Finance are binding on the department of Central Excise, there being no judgment by the Supreme Court laying down the law contrary to such circulars: Supreme Court [para 19] - Appeals allowed: SUPEREME COURT OF INDIA 2018-TIOL-256-HC-MUM-CX Pr.CIT Vs Metro Shoes Pvt Ltd CX - The assessee was availing credit on input services and input goods received under Rule 3 of CCR, 2004 - Whether the assessee has taken credit in respect of service utilised for not manufacture of goods but goods which were traded - Assessee submits that in their own case an order was passed by Tribunal and that order was upheld by this Court in Central Excise Appeal No. 68 of 2009 - Therefore, Tribunal followed its earlier order in the case of this very assessee and rendered in identical facts and circumstances - Though the later order was not available for Tribunal's perusal, the earlier one was definitely on its file - Whether that order rendered in 2012 and in assessee's own case concludes the matter in favour of assessee and nothing more is required to be adjudicated or decided is not clarified in the order under appeal - If there was only one issue and that stands concluded then Tribunal ought not to have referred to two issues arising from the subject SCN - Whether both are concluded against Revenue by order of this Court as aforesaid and confirming the view of Tribunal rendered earlier, then, there was no need to refer to CENVAT Credit Rules - Then, on the basis of earlier view of Tribunal, the matter could have been disposed of - There was no concession that the earlier order covers the matter fully - Instead the Revenue argued extensively why benefit of the earlier order cannot be availed of by assessee - Tribunal was required to discuss in details the facts, set out the submissions and analyse the materials in accordance with settled legal principles - That is not done admittedly: HC - Matter remanded : BOMBAY HIGH COURT 2018-TIOL-547-CESTAT-ALL JP Glass Industries Vs CCE CX - Assessee engaged in manufacture of Glass Beads, which are totally exempted from payment of duty of Excise - In course of manufacture of such Glass Beads, Glass Tubes come into existence which were further being used captively for manufacture of Glass Beads - Proceedings were initiated against assessee by way of issuance of SCN raising demand of duty in respect of Glass Tubes by alleging that assessee had used compressor for blowing of Glass Tubes instead of their claim that the same have been produced by Mouth Blowing process, and by invoking the extended period of limitation - Statement of Shri Praveen Sharma, an employee of assessee, recorded on 08.08.2007 is to the effect that the manufacturing unit has started using the compressor from 01.04.2007 and prior to said date, Glass Tubes were being manufactured by Mouth Blowing process - However, adjudicating authority has dismissed the statement on the short ground that such facts were not brought to the notice of visiting officers on the day of visit itself - Admittedly, assessee has produced a bill dated 31.03.2007 issued by Rathi Industries, showing the sale purchase of compressor - The adjudicating authority has simpliciter dismissed the same on the ground that the same was purchased on the last date of financial year and as such, was manipulated - However, observations of adjudicating authority are in realm of assumptions and presumptions and not based upon any evidence so as to hold contrary to assessee's claim - Revenue has not bothered to investigate at the end of seller of compressor so as to find out the fact as to whether the compressor was actually sold on said date or not - No investigation was made by revenue, in which case the bill produced by assessee has to be accepted as the correct reflection of facts. As regards the manufacture of Glass Tubes with effect from 01.04.2007 with the help of compressor, assessee agrees that same would be dutiable inasmuch as same were being used captively for manufacture of exempted final products - However, assessee submits that they would be entitled to SSI Exemption in which case no duty liability would arise on them - For verification of said claim, which is dependent upon computation of clearances in a financial year, matter remanded to adjudicating authority - Penalty imposed on both the assessees set aside: CESTAT - Appeal partly allowed : ALLAHABAD CESTAT 2018-TIOL-546-CESTAT-AL Kesarewani Zarda Bhandar Vs CCE, C & ST CX - Assessee engaged in manufacture of Branded Chewing Tobacco - Shortages of coloured tobacco detected at the time of officers visit in assessee' factory - Apart from shortages, there is virtually no evidence on record to show the clandestine activities of assessee - Allahabad High Court in case of Minakshi Castings has held that such shortages cannot lead to inevitable conclusion of clandestine manufacture and removal of final product - Revenue's entire effort is to prove the charge of clandestine removal on the basis of assumption and presumption, especially, when shortage has been explained by assessee by addressing a letter to their jurisdictional officers indicating that such coloured tobacco was lying at the roof for purpose of drying - Revenue did not make any effort to verify the said facts and have simplicitor dismissed the assessee's claim as an after-thought - They have also not considered the manufacturing process of assessee, which requires drying of coloured tobacco for a period of three to five days - In absence of any identification of buyers, transporters and receipt of consideration, the findings of clandestine activities cannot be upheld: CESTAT - Appeals allowed : ALLAHABAD CESTAT 2018-TIOL-545-CESTAT-ALL Mahabir Trading Corporation Vs CCE & ST CX - M/s VSSL engaged in manufacture of CR Strips - Based on intelligence, search was conducted in factory premises, registered office of VSSL and the dealers associated with business of VSSL including the present assessees - Search and verification of stock in premises of assessees resulted in seizure of 96MT of CR Strips which was found in excess of stock recorded in RG- 23D Register - In addition, cash of Rs.2,30,000/- was also seized being sale proceeds of excisable goods as per Panchnama drawn - Order of confiscation of 96MT of CR Sheets is not sustainable as capacity of VSSL to manufacture CR Sheets is not established - Further assessee have led cogent evidence with regard to purchase of said sheets from other traders, which have been rejected on flimsy grounds without there being any cross verification from sellers of the sheets - As regards confiscation of cash, same is not sustainable as assessee had sufficient cash balance on the date of inspection in their cashbook maintained in ordinary course of business - Further, there is no finding by Revenue that said cash related to any clandestine activity or trading - Assessee is entitled to return of cash seized, with interest - Personal penalty on partner Mr. Ashok Kumar Lahoty is also not sustainable and same is set aside: CESTAT - Appeals allowed : ALLAHABAD CESTAT CUSTOMS SECTION 2018-TIOL-258-HC-MUM-CUS Ajay Tanna Vs UoI Cus - Penalty - The petitioner claims to be an ex-director of one M/s. Suprapti Plastics Limited and filed the petition against order of adjudicating authority levying various penalties on company and a personal penalty on them - Petitioner knows that appeal lies to appellate authority and in case that order is against him he can file a further appeal to Tribunal - He approaches the writ court this time in writ jurisdiction directly without resorting to these remedies only because he wants a relief of not being asked or called upon to secure the revenue - He would have to secure the revenue in terms of amended provisions and to the extent of 7.5% - Such a writ should not be entertained - These remedies are alternate and equally efficacious and a reasonable condition of securing the revenue to the extent of 7.5% is neither onerous nor excessive - A reasonable condition can be imposed on the petitioner or parties like him and to balance rights and equities: HC - Petition dismissed : BOMBAY HIGH COURT 2018-TIOL-257-HC-MUM-CUS Hashem Aligholipour Hammami Alias Salbas Selva Vs UoI Cus - Petitioner was intercepted at International Airport at Mumbai on his arrival from Singapore - On search, US$ 69,000 in denominations of 100 and 50 dollars currency notes was recovered - Order of confiscation of foreign currency was made on 30th March 2001 with option to redeem the same on payment of redemption fine of Rs.3,00,000/- and penalty of Rs.1,00,000/- on the petitioner passenger - Being aggrieved by that order, an appeal was preferred to the Tribunal who directed the petitioner to pay penalty of Rs.1,00,000/- before the matter can be listed for hearing - The penalty was paid - Thereafter a final order was passed by reducing the redemption fine to Rs.1,50,000/- and penalty of Rs.50,000/- - The petitioner, therefore, relying on the order passed by Tribunal, lodged the refund claim - The refund claim itself says that there were confiscation of foreign currency and an order of adjudication was passed post service of a SCN on petitioner - That ended with a direction to pay redemption fine and penalty - While dealing with application for refund, Deputy Commissioner observed that there was no necessity of obtaining any permission from Reserve Bank of India, in that the Deputy Commissioner relied on the order passed by the CESTAT in some other case - It is based on these findings that the refund came to be sanctioned - The petitioner may lay a claim for interest on receipt of such amount belatedly under general law, but within the four corners of the statute before court, namely the Customs Act, 1962, no provision found enabling the petitioner to recover the interest as claimed: HC - Petition dismissed : BOMBAY HIGH COURT 2018-TIOL-543-CESTAT-MAD CC Vs Areej Trading And Marketing Pvt Ltd Cus - the Respndent-assessee filed bills of entry for clearing safari wafer bars - On scrutiny, the unit price per carton was increased by the assessing group, and such increment was accepted by the assessee - The Revenue later suspected that the assessee heavily under-invoiced the value and Retail Sale Price - Thus the goods were seized, but were provisionally released upon cash deposit & execution of bank guarantee - Later an SCN was issued enhancing the value of a single wafer bar - However, such price was not accepted by the Commr., who accepted the price declared by the assessee - Held - Though a search was conducted at the assessee's premises, nothing incriminating was unearthed - The value was proposed to be enhanced on the basis of the price available in the local market and on cash bills for purchase of safari chocolates - It is not clear whether the cash bills pertain to safari chocolate or safari wafers - Thus, the Commr. has rightly held that there are no reasons to reject the price declared by the assessee: CESTAT (Para 2,5) - Appeal Dismissed : CHENNAI CESTAT

MISC CASE


	2018-TIOL-255-HC-MAD-VAT Atherya Retail Pvt Ltd Vs Assistant Commissioner (CT) Whether an assessment completed without properly examining all documents submitted by assessee, warrants re-examination to ensure application of the correct rate of tax - YES: HC - Case Remanded : MADRAS HIGH COURT

NEWS FLASH


	Exports of herbal, Ayush and surgical products register positive growth Corruption-related plaints against Delhi Govt offices go down by 81%: CVC