2018-TIOL-NEWS-132 Part 2, Dated: Wednesday, June 06, 2018

2018-TIOL-NEWS-132 Part 2 | Wednesday June 06, 2018

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	Legal Wrangle \| Corporate Law \| Episode 76

CASE STORIES


	Cus - No material to support conclusion that Detenue possesses propensity or potentiality to indulge in smuggling activities in future - Detention order quashed: HC I-T - Writ court interference is not warranted, when Tribunal has adjudicated the case based on similar allowance granted to assessee in previous FYs: HC CX - Since VAT was actually paid and subsidy is sanctioned by State government and credited to bank account of assessee, same cannot be included in transaction value: CESTAT

DIRECT TAX


	2018-TIOL-212-SC-IT CIT Vs Sunita Dhadda Having heard the parties, the Supreme Court found no ground to interfere with the order of High Court and hence dismisses the SLP filed by Revenue Department. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2018-TIOL-801-ITAT-MUM Madhu Sarda Vs ITO Whether where transactions are genuine and traded at fair market value, AO can disallow the setting off of the capital loses against capital gains earned during the same period, based on the wrong presumption - NO: ITAT - Assesse's appeal allowed : MUMBAI ITAT 2018-TIOL-800-ITAT-DEL OM Logistics Ltd Vs DCIT Whether levy of penalty deserves to be quashed, in case penalty notice suffers from procedural defect of not recording reasons for initiating penalty - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2018-TIOL-799-ITAT-CHD ITO Vs Himachal Winding Wire Products Whether diferences in valuation of stock resulted only due to change in method of accounting, is no basis for making any additions on account of discrepancy - YES: ITAT - Revenue's appeal dismissed: 2018-TIOL-798-ITAT-BANG ITO Vs Ministry Of Communications Employees Co-Operative Housing Society Ltd Whether amount paid on purchase of completed property involving carrying out of civil works before its delivery, amounts to works contract thereby attracting TDS deductions - NO: ITAT - Revenue's appeals dismissed: BANGALORE ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-1734-CESTAT-DEL

Maharaja Sawal Vs CCE & ST

ST - Assessee engaged in providing services under taxable category of mandap keeper service and renting of immovable property service - Upon scrutiny of records maintained by assessee, department observed that assessee has short paid Service Tax on account of renting of immovable property - Further, Department observed that assessee had wrongly availed the benefit of Notfn 24/2007-ST inasmuch as, no documentary evidences were produced to show the actual property tax paid by assessee for letting out the properties - Renting of immovable property is categorize as a taxable service under Section 65 (105) (zzzz) of FA, 1994 - For providing such taxable service, assessee had availed services of security agency service - Since such service was in relation to providing taxable output service, service tax paid on such service should be available as Cenvat credit to assessee in terms of Rule (2) (l) of Rules - Tribunal in case of Maharashtra Cricket Association 2015-TIOL-2418-CESTAT-MUM has held that Circular issued by TRU is ambiguous and is not confirming to definition of input service - Thus, the Circular relied on by Department cannot be acted upon for deciding the issue differently - Therefore, denial of Cenvat credit of Service Tax paid on security agency service is not proper and justified - Accordingly, assessee should be entitled to cenvat benefit of service tax paid on security agency service - With regard to availment of benefit of Notfn 24/2007-ST, assessee had not produced the documentary evidences before original authority and therefore, without extending the benefit, the adjudication order has confirmed the Service Tax demand on assessee - Since the onus entirely lies with assessee to prove entitlement of its claim for benefit provided under Notfn, demand confirmed by original authority is not improper - However, considering the submission of assessee that it can produce the documents before original authority to show that property tax has been paid and the same should be entitled for abatement, matter remanded to original authority for verification of such documents: CESTAT - Matter remanded: DELHI CESTAT

2018-TIOL-1733-CESTAT-CHD

CCE & ST Vs Ludhiana Gurdev Handling Pvt Ltd

ST - Assessee is registered under category of clearing and forwarding agent service and paying service tax thereon - On information that assessee is paying service tax on less amount and receiving higher amount from service recipients, therefore, a SCN was issued to assessee - In impugned order, Commissioner has recorded the finding that they do not qualify for CHA service but has not given any finding on classification of their service - Whether the issue can be classified under category of "Clearing and Forwarding Agent Service" or not, therefore, the matter needs consideration - Further, in SCN as well as in appeal papers filed by Revenue, it has been alleged that assessee was receiving transporting charges for transporting import cargo cleared to their clients under category of GTA service who was discharging service tax as consignee - On this fact, no finding has been given by adjudicating authority - Therefore, before passing any order, adjudicating authority shall give a concrete and definite finding on said issue - Further, on the service of transportation, service tax has been discharged by service recipient, in that circumstance, no service tax is payable by assessee - Adjudicating authority shall also examine the issue of pure agent service - In view of said analysis, matter remanded back to the adjudicating authority for fresh adjudication: CESTAT - Matter remanded: CHANDIGARH CESTAT

CENTRAL EXCISE

2018-TIOL-1732-CESTAT-MAD

CCE Vs BHEL

CX- The assessee manufactured boilers & seamless steel tubes - The assessee did not pay duty on SS Tubes & SFW Tubes used for captive consumption and the same were covered by the exemption Notification No. 67/95 - The final products were removed without payment of duty by availing the whole exemption under Notification No. 6/2006 - The Department opined that since the inputs were not used in manufacture of excisable commodities, no exemption was available - Duty demand was raised for recovery along with interest & penalty - However, the Commr.(A) set aside the order -

Held - The issue at hand is whether the assessee is eligible for exemption from payment of duty on inputs of final products which are cleared availing exemption of Notification No. 6/2006 - As substantial portion of the imported inputs were used for the manufacture of relays - The balance not used was re-exported in order to reduce their export obligation - Thus the assessee is eligible for exemption: CESTAT (Para 2, 6) - Revenue's Appeal Dismissed: CHENNAI CESTAT

2018-TIOL-1731-CESTAT-ALL

Kunj Forgings Pvt Ltd Vs CCE

CX- The assessee are engaged in the manufacture of forged products of carbon steel, alloy steel and stainless steel - A major portion of the production of 'flanges' was exported - In the course of business, raw material was sent to various job workers by issuing challan for carrying out different processes - The Department conducted search & inspection of the factory premises - During the course of physical verification, it was found that there were some shortages in the stock of raw material, scrap and finished goods, involving Central Excise duty - The assessee was maintaining a private register & job work register - The weight of the goods received back was different in all three registers - The dispatch details for job work register were found tallying with the said two private registers - The Revenue was of the opinion that assessee in the case of forgings manufactured through job workers, had shown excess production of scrap and burning loss - A SCN was issued on the premise that goods sent for job work were not received & cleared from job worker's premises - The Commissioner (A)confirmed total proposed demand with cess & interest, penalty was imposed on Assessee- Director under rule 26 -

Held - The assessee's disclosed higher percentage of production and less percentage of scrap plus burning loss, during the disputed period - Held- The Revenue without quantifying the material difference, presumed that there could be situation where the goods were issued/sent for job work but not received back, & in the job work register it is reflected but not received - Assumptions and presumptions however strong cannot take place of evidence - This follows from the SC case of M/s Tega India Ltd. wherein production had been assumed on iron and steel items, based on standard consumption of electricity - Therefore, the w.r.t. disallowance of captive consumption of inputs/semi finished goods, shortage in the stock of raw materials, scrap and finished goods the demand is set aside -Further, demand with regard to receipts of inputs of goods which were sent on job work without invoice is confirmed, however, the penalty is deleted as during investigation Cenvat credit was reversed - The personal penalty on Director-assessee company is deleted as well - The assessee had also prayed for cross-examination of the employees of the assessee-company which was allowed by way of remanding the matter back to the Authorities : CESTAT (Para 2,8 ,8.1 ,8.2, 8.3) - Partly allowed: ALLAHABAD CESTAT

2018-TIOL-1730-CESTAT-MUM

CCE Vs Panchsheel Filters Pvt Ltd

CX - The issue is regarding confirmation of demand of an amount calculated @ 6% of value of exempted goods cleared using common inputs and input services - It was the case of Revenue in SCN that assessee had availed CENVAT credit on common inputs and input services and cleared dutiable as well as exempted and did not opt for any of the options available under Rule 6 and did not maintain separate account, hence the provisions mandate for reversal of 6% of value of exempted goods was cleared - First appellate authority has considered the provisions of Rule 6(2) and (3) of CCR, 2004 in its entirety as also the judgment of Tribunal in case of Cranes and Structural Engineers and held that the option to avail or exercise the provisions of Rule 6(3) is a procedural one - Accordingly, assessee having reversed the entire CENVAT credit attributable to the common inputs and input services, the question of confirmation of an amount under Rule 6(3) does not arise - Issue is covered by ratio which has been laid down in case of Jost's Engineering Co. Ltd. 2013-TIOL-732-CESTAT-MUM wherein the bench has held that once the entire CENVAT credit on common inputs services is reversed the question of confirmation of demand of an amount equivalent to 6% of value of goods does not arise - Impugned order is correct and does not require any interference: CESTAT - Appeal rejected: MUMBAI CESTAT

CUSTOMS

NOTIFICATIONS/ CIRCULAR

cuscir15-2018

IGST Refund claims stuck on account of SB005 error - date extended for Shipping Bills filed upto 30.04.2018 - correction tool developed for SB003 error

cscaadri07-2018

CBIC modifies details of SCN issued by DRI to certain noticee

cscaadri06-2018

CBIC appoints common authority for adjudicating SCNs issued to certain parties

CASE LAW

2018-TIOL-1729-CESTAT-MUM

SKS Logistics Ltd Vs CC

Cus - Appellant imported containers by availing exemption under notification 104/94-Cus which required that the containers should be re-exported within six months - case of Revenue is that 31 containers were re-exported but after the prescribed time period, therefore, adjudicating authority ordered confiscation of the containers and imposed redemption fine along with penalty - appeal to CESTAT.

Held: As per the available facts, containers which were ordered to be confiscated were never seized and released provisionally nor are the containers available for confiscation, therefore, order of confiscation and consequent redemption fine cannot be imposed as held by the Larger Bench in Shiv Kripa Ispat Pvt. Ltd. - 2009-TIOL-388-CESTAT-MUM-LB - since there has been admitted violation of condition of notification 104/94-Cus inasmuch as the appellant did not re-export the containers within six months, therefore, for such violation, appellant is liable for penalty - penalty reduced from Rs.1 lakh to Rs.50,000/- - appeal disposed of: CESTAT [para 4, 4.1] - Appeal disposed of: MUMBAI CESTAT

NEWS FLASH

Hyderabad DRI seizes FC worth Rs 27 lakhs and 1.4 kg gold at Airport

GST - Govt clarifies PSLCs & RECs falling under 4907 to attract 12% tax rate

Monetary Policy Review - RBI hikes repo rate by 25 basis points; Business Chambers not enthused

Union Cabinet okays revised guidelines on time bound closure of sick and loss making CPSEs and disposal of assets + approves proposal to revise wages of Dak Sevaks + continuation of Satellite Launch Vehicle Mark-III