2018-TIOL-NEWS-055 Part 2, Dated: Thursday, March 08, 2018

2018-TIOL-NEWS-055 Part 2 | Thursday March 08, 2018

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	Legal Wrangle \| Corporate Law \| Episode 68

DIRECT TAX


	INSTRUCTION .No. DGIT(Vig.)/HQ/SI/Appeals/2017-18/9959 Irregularities in Appellate Orders - instructions CASE LAWS 2018-TIOL-356-ITAT-BANG + Story Raghuram P Nambyar Vs ACIT Whether mere sharing of cost between husband & wife while purchasing a property, will entitle both of them to claim exemption benefits u/s 54 upon transfer of such property, when the sale deed recognizes only one of them as legal owner - NO: ITAT Whether wife can claim co-ownership over a property jointly purchased along with her husband, merely because both of them have offered rent receipts earned from such property in their return - NO: ITAT Whether the assessee's wife can claim LTCG arising on sale of such property even when, she was a foreign citizen at the time of purchase of the same - NO: ITAT - Assessee's appeal dismissed: ITAT 2018-TIOL-355-ITAT-DEL + Story ITO Vs Precision Agencies Pvt Ltd Whether reopening of proceedings on account of unaccounted cash is valid if AO applies his mind, analyses the information received with bank statement of company, return and statement of the director and not merely reproduces the report of the investigation wing - YES: ITAT Whether Company can escape liability of taxation merely making statement of being ignorant of transactions taking place in bank account of company operated by director without making any concrete effort of proving that there is a fraud committed on it - YES: ITAT - Case Remanded: DELHI ITAT 2018-TIOL-351-ITAT-KOL RB Polymers Ltd Vs CIT Whether current depreciation can be deducted in the first place, from the income of the business to which it relates - YES: ITAT - Assessee's Appeal Allowed: KOLKATA ITAT 2018-TIOL-350-ITAT-MUM Rhein Chemicals Pvt Ltd Vs ITO Whether alleged bogus purchases can be disallowed entirely, where the sales of the same are not doubted - NO: ITAT Whether making purchases from the grey market, resulting in non-payment of tax & causing loss to the exchequer, warrants disallowance - YES: ITAT - Assessee's Appeal Partly Allowed: MUMBAI ITAT 2018-TIOL-349-ITAT-KOL Sibendu Basu Vs DCIT Whether expenses claimed on account of commission paid should be disallowed, where the identity of the recipients of the commission amount is not established - YES: ITAT Whether an amount of business loss can be written off as bad debt on revenue account, where corresponding income from the same source is treated as capital receipt in an earlier AY - NO: ITAT - Assessee's Appeal Dismissed: KOLKATA ITAT 2018-TIOL-348-ITAT-MUM Ravi Steel Industries Vs ITO Whether purchases can be treated as bogus based on material findings of the Sales Tax department, but without allowing the assessee to access such material or cross examine the supplier of the material - NO: ITAT - Assessee's Appeal Allowed: MUMBAI ITAT

INDIRECT TAX

SERVICE TAX SECTION

2018-TIOL-761-CESTAT-DEL

Chhattisgarh State Co-Operative Marketing Federation Vs CCE

ST - Penalty - Assessee is a cooperative society, incorporated with objective of extending support to farmers, for selling their agricultural produce (mainly paddy) at Minimum Support Price (MSP), fixed under Price Support Scheme of Government - Since the assessee did not discharge service tax on GTA service, demand of Service Tax confirmed under Section 73 and Section 73 A (4) of FA, 1994 - Penalties also imposed under Section 76, 77 & 78 of the Act on assessee - Assessee has claimed the bonafide belief for non-payment of Service Tax within stipulated time, in view of Circular No. 89/7/2006-ST and Notfn 04/2010 regarding payment of Service Tax on GTA service under reverse charge mechanism - Thus, the benefit of Section 80 of the Act should be available to assessee for non-imposition of penalties under Section 76,77 and 78 of the Act - Under identical set of facts, Tribunal in case of assessee itself in 2016-TIOL-3168-CESTAT-DEL, has extended the benefit of Section 80 of the Act on the ground that the assessee being a statutory Government body, no malafide can be attributed to evade payment of Service Tax - Thus, non-payment of tax within prescribed time frame was due to the bonaife belief that same was not payable by cooperative society - No merits found in impugned order, so far as it imposed penalties on assessee: CESTAT - Appeal allowed: DELHI CESTAT

2018-TIOL-760-CESTAT-MAD

Bharat Heavy Electricals Ltd Vs CST

ST - Assessee engaged in construction, erection and commissioning of various power projects in terms of agreements entered into with different clients - Revenue contended that assessee is liable to discharge service tax on gross value of all these contracts categorizing the same under "Erection, Commissioning or Installation Services" for all the period - The abatements claimed by assessee was also sought to be denied - Admittedly, dispute relates to on-going contracts, at the time of introduction of new tax entry as "Works Contract Service" w.e.f. 1.6.2007 - The law laid down by Apex court in case of L&T 2015-TIOL-187-SC-ST makes it clear that there can be no service tax liability on assessee for such composite works contract prior to 1.6.2007 - Assessee themselves had followed the different classification apparently on the basis of separate agreements though for overall same power project - In such case, when agreements are identified and separately executed, question of their classification under 'composite works contract service' has to be examined with basic documents to ascertain whether or not any supply of materials are involved - In case, contracts under dispute are to be held as works contract, then liability will arise only from 1.6.2007 - The next point will be whether assessee shall be eligible for composition scheme for such works contract - In case contracts are held to be works contracts, then necessarily the application of composition scheme to such contracts cannot be denied only on the ground that there was no option exercised during the material time - Claim of assessee that they have discharged more than the required tax on these services even if the claim of the department is taken into consideration for treating the contracts as a whole, requires re-examination - Though the Revenue dealt with services under erection, commissioning or installation, applicability of works contract service in line with decision of Supreme Court requires examination - The question of availability of composition will be consequent to such finding: CESTAT - Matter remanded: CHENNAI CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-759-CESTAT-CHD

CCE Vs Batra Associates Ltd

CX - Assessee engaged in manufacture of S C valves, pressure regulators, head lamps and parts thereof railway clips and they were availing credit on inputs used for manufacturing of finished goods - During course of manufacture of final product, brass scrap comes into existence, which was being cleared by them on payment of duty for conversion into brass rods - Allegation against assessee is that they are clearing brass scrap on lower price to job worker as compared to value shown in balance sheet - It is admitted fact that the job charges Rs.14/- per kg for conversion of the brass scrap into brass rods and brass scrap after conversion has been received by assessee - Assessee has suffered duty on final product i.e. brass rod although clearing the brass scrap at lower price - In that circumstance, there is no loss of revenue to the department - Charge of undervaluation is not sustainable against assessee - Assessee was filing their RT 12 returns regularly and maintaining statutory records - There was also periodical audits conducted in factory premises of assessee and the balance sheet were examined by audit party, in that circumstance, the activity of selling brass scrap at a lower price was well known to the department, thus, extended period of limitation is not invokable: CESTAT - Appeal dismissed: CHANDIGARH CESTAT

2018-TIOL-758-CESTAT-ALL

Bright Enterprises Pvt Ltd Vs CCE & ST

CX - Assessee is running a hotel business under brand name Radisson - They also have got restaurant and other services in Hotel - SCN was issued alleging that there is a in-house bakery for the manufacture of cakes, pastries etc. situated in premises of Hotel, are being transferred to pastry shop situated on ground floor inside the Hotel - From the pastry shop, which is known as chocolate box the cakes pastry etc. are sold to the customers who visit the pastry shop - It appeared to Revenue that assessee is using the brand name of Radisson below the words chocolate box on packing material - It is mentioned "Radisson MBD Hotel, Noida" - They had been filing their service tax returns which have never been found to be untrue and rejected by Revenue - The earlier SCN was finally settled in their favour and refund allowed in July, 2010 - Further, there was audit by Commissionerate in July, 2010 and their books of accounts and balance sheet were all scrutinized and no objection was raised - Assessee had suo motu taken registration under Central Excise, in March, 2014 for manufacture and clearance of branded confectionery - No case of mis-interpretation, suppression or concealment of facts is made out against assessee - Accordingly, extended period of limitation is not invocable - There is no demand for normal period as admittedly the assessee have taken registration since April, 2014 and are paying duty in accordance with law - Accordingly, SCN is not maintainable: CESTAT - Appeals allowed: ALLAHABAD CESTAT

2018-TIOL-757-CESTAT-BANG

Kerala Minerals And Metals Ltd Vs CCE, C & ST

CX - Assessee is manufacturer of Titanium Dioxide, Beneficiated Ilmanite and Titanium Tetrachloride and availing Cenvat credit of central excise duty paid on inputs and capital goods as well as service tax paid on input services in accordance with provisions of CCR - They had engaged various persons for various kinds of construction works like erection of structures and fabrication under works contract service - On verification of statutory returns of assessee showing cenvat credit taken during the month filed along with ER-1 returns, it was seen that they had taken cenvat credit on works contract service after 01/04/2011 in contravention of clause (l) of Rule 2 of CCR - Denial of credit on invoice of Vijay Ele-Techs (P) Ltd. which assigned the work of erection and commission of 3 nos. VFD panels in boiler, VFD panels are part of boiler which is used in connection with manufacture of final product and therefore in view of Circular No.956/09/2012, the denial of credit is not sustainable in law - Therefore, assessee is entitled to avail the credit in respect of erection and commissioning of 3 nos. of VFD panels in boiler.

Further with regard to CENVAT credit of Rs.3,76,642/-, assessee has conceded that it pertains to service part of which was completed after 01/04/2011 and they have reversed the same and has only pleaded for dropping of interest and penalty - They have also produced a statement of their CENVAT account which has substantial amount of credit of Rs.50,13,232/- as balance which shows that they have only availed the CENVAT credit and not utilised the same and subsequently reversed - Moreover, assessee is a state government undertaking and allegation of fraud and suppression cannot be alleged against government undertaking - Decision of High Court of Karnataka in case of Bill Forge (P) Ltd. 2011-TIOL-799-HC-KAR-CX is applicable where High Court has held that if CENVAT credit is availed but not utilised and is reversed then assessee is not liable to pay interest - This view was reiterated by Larger Bench of Tribunal in case of J.K. Tyre & Industries 2016-TIOL-1781-CESTAT-BANG-LB: CESTAT - Appeal allowed: BANGALORE CESTAT

CUSTOMS SECTION

2018-TIOL-762-CESTAT-ALL

Sangeeta Maheshwari Vs CC & CE

Cus - Locker of assessee was opened under Panchnama proceedings in presence of assessee and witnesses - In said locker, some cash was found and gold jewellery and two gold bars biscuits having foreign marking respectively - The said two gold bars were seized under Panchnama and were taken into possession by Central Excise Officers - Seizure of gold biscuits and subsequent proceedings are prima facie vitiated, there being no warrant of search in name of assessee - It is apparent from record that no reason was recorded against assessee for any alleged evasion of duty - Assessee at the time of Panchnama proceedings on locker, in statement recorded on the spot, have stated categorically that the two gold bars/biscuits had been gifted or received by her from her late mother - Further, within a few days thereafter, she has produced the copy of purchase/sale Bill dated 26/12/1996 issued by R.D. Jewellers, Bombay, evidencing sale of two gold bars to her late mother Smt. Meena Devi Kabra - In course of enquiry, said R.D. Jewelers was found to be in existence and also registered with Sales Tax Department - Assessee have discharged onus as required under Section 123 of Customs Act, 1962 - Accordingly, order of confiscation and penalty set aside: CESTAT - Appeal allowed: ALLAHABAD CESTAT

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