2018-TIOL-NEWS-154 Part 2, Dated: Monday, July 02, 2018

2018-TIOL-NEWS-154 Part 2 | Monday July 02, 2018

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CASE STORIES


	I-T - Authority formed by State Legislature for development of certain areas cannot seek benefit of Sec. 10(20) merely by claiming status of 'local authority': SC I-T - Deduction u/s 10B(1) cannot be restricted merely because third party through which export has been made is not 100 % EOU: HC I-T - HC cannot entertain an issue by exercising its power u/s 260A(6) when such issue was neither raised before ITAT nor determined by it: HC ST - Despite the inclusion of 'commercial' in description of taxable service, absence of a profit motive, does not, of itself, alter tax liability : CESTAT I-T - Verification of nature of liability as either contingent or ascertained is essential before disallowing provisions created by taxpayer for such liabilities: HC

DIRECT TAX


	2018-TIOL-232-SC-IT + Case Story New Okhla Industrial Development Authority Vs CCIT Whether an authority formed by the State Legislature for development of certain areas is covered under the term 'Municipality' as per the Constitution of India simply because it performs various municipal functions - NO: SC Whether therefore, such an authority can seek benefit under amended Sec. 10(20) of the I-T Act based on its status as a 'local authority' - NO: SC - Assessee's appeal dismissed : SUPREME COURT OF INDIA 2018-TIOL-231-SC-IT Windlass Steel Craft Vs CIT Having heard the parties, the Apex Court directed to issue notice to the parties. - Notice issued: SUPREME COURT OF INDIA 2018-TIOL-230-SC-IT Virbhadra Singh Vs PR CIT Having heard the parties, the Apex Court directed to issue notice to the parties. - Notice issued: SUPREME COURT OF INDIA 2018-TIOL-1226-HC-KAR-IT + Case Story PR CIT Vs International Stones India Pvt Ltd Whether the word 'export', as defined by Explanation-2 of Sec. 10B(9A) includes 'Deemed Export' also and therefore, the same will be covered under the ambit of 'Export Turnover' - YES: HC Whether therefore, benefit of deduction u/s 10B(1) cannot be restricted merely because the third party, through which the export has been made by the assessee, is not a 100 % EOU - YES: HC - Revenue's appeal dismissed: KARNATAKA HIGH COURT 2018-TIOL-1225-HC-MAD-IT + Case Story CIT Vs Rambal Pvt Ltd Whether the High Court can entertain an issue by exercising its power u/s 260A(6) when such issue was neither raised before the Tribunal nor adjudicated by it - NO: HC Whether the assessee can claim deduction towards the expenses incurred while paying the liquidated damages if the lower authorities already note that the assessee's liability has been quantified & has been recorded in the supplementary MoU - YES: HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2018-TIOL-986-ITAT-MUM Garodia Syntex Pvt Ltd Vs DCIT Whether when it is settled law that a corporate entity cannot be said to incur personal expenses, can conveyance & travelling expenses be disallowed on grounds of being personal expenses - NO: ITAT Whether the AO can make ad hoc disallowance of business promotion & advertisement expenses, without pointing out how such expenses were incurred for non-business purpose - NO: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2018-TIOL-985-ITAT-KOL DCIT Vs Hindustan Windows MFG CO Whether disallowance of 50% of site expenses & wages can be made, solely considering the assessee's business income & without making any independent judgment - NO: ITAT Whether disallowance of 30% of alleged unverified and un-vouched site expenses and wages is reasonable enough while estimating assessee's business income - YES: ITAT - Revenue's appeal partly allowed: KOLKATA ITAT 2018-TIOL-984-ITAT-AHM Havmor Ice Cream Ltd Vs DCIT Whether disallowance u/s Sec. 2(24)(x) r/w Section 36(1)(va) can be made when ESI contibution is deposited out of the labour expenses payable to the employees - YES: ITAT Whether fresh adjudcation is warranted when AO capitalises an interest paid in respect of capital borrowed for extension of the existing business merely for want of information and supporting evidences - YES: ITAT - Assessee's appeal partly allowed: AHMEDABAD ITAT 2018-TIOL-983-ITAT-AHM Nitesh G Thakkar Vs ITO Whether penalty can be imposed where disallowance of 25% made on undoubted bogus purchases stands upheld by Tribunal - YES: ITAT - Assessee's appeal dismissed: AHMEDABAD ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2024-CESTAT-MUM

Sushil Agarwal Vs CCE

ST - Assessee was liable to tax w.e.f. June 2007 when 'renting of immovable property' was made taxable with retrospective effect - Being a retrospective legislation, assessee cannot be held to have had any intent to evade tax - At the same time, he was expected to discharge the tax liability at least with respect to the period thereafter - On a perusal of record, it is seen that assessee did discharge tax liability as per its own computation - The first appellate authority has given due consideration to all these aspects before coming to conclusion that the liability to tax up to 8th May 2010 does not exist - The contention raised by Revenue do not controvert this finding - Accordingly, the appeal of Revenue is without any basis - Turning to the appeal of assessee, Tribunal take net of discharge of tax liability in full before issue of SCN - Considering the circumstances in which legislation was retrospectively made applicable and the pendency of various disputes in various Courts on same issue, it would be appropriate to invoke section 80 of FA, 1994 and waive the penalty thereof: CESTAT - Revenue's appeal dismissed: MUMBAI CESTAT

2018-TIOL-2023-CESTAT-BANG

Uniq Detective And Security Services Pvt Ltd Vs CCE

ST - The assessee is engaged in providing security agency service - It availed Cenvat credit in respect of service tax paid on input services - During audit, the Revenue opined that the assessee availed inadmissble Cenvat credit on input service - Duty demand was raised & penalty imposed on the assessee - Hence, the present appeal - Held - In the present case, the entire demand is time barred - There is no finding by the Revenue saying that there was any intent to evade payment of service tax by the assessee - Therefore, the extended period cannot be invoked - The intent to evade duty must be proved for invoking extended period of limitation - Following the ratio laid down by the Supreme Court and Tribunal in the case of Cosmic Dye Chemical Vs. Collector & Shree Ranie Gums & Chemicals Pvt. Ltd., respectively - The demand against the assessee is set aside: CESTAT (Para 2, 4, 5, 6) - Appeal Allowed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-2025-CESTAT-MAD

Ranganathar Industries Pvt Ltd Vs CCE

CX - Assessee, SRIPL engaged in manufacture of Stainless Steel and Mild Steel Rough and availing cenvat credit of inputs like Steel Scrap and MS scrap received mainly from Central Excise registered dealers - Pursuant to certain investigations, it appeared to department that SRIPL, Unit-I & II had taken ineligible cenvat credit fraudulently on non-duty paid scrap in guise of receiving HR coil, HR sheet, MS rounds, MS Bar rods etc. whereas they have received only MS scrap / SS scrap from concerned Central Excise dealers - Shri A. Periakaruppan both in his initial statement and also in a subsequent one, has asserted that he had supplied only such SS coils / plates etc. received from the manufacturers, after cutting them to size as was required by SRIPL - Tribunal is not able to understand how the department has differed with stand that was taken in earlier proceeding and further why statements of A. Periakaruppan have not been relied upon or made part of the SCN - Main planks of department's case against assessee do not stand to scrutiny - There is also no other cogent or compelling evidence which can prop up department's allegation - If department alleges that assessee has not received any goods as per the Cenvat invoices and has only received scrap which is locally procured then, the department has to establish from where and how assessee have procured such local scrap - There is no evidence of suppliers of local scrap, transporters and payment to such suppliers - The case of department therefore does not sustain on merits.

As regards to limitation, major part of periods sought to be covered in SCN are beyond the normal period of limitation - Although extended period of limitation has been invoked, Tribunal is not able to appreciate how there can be an intent to "evade" payment of duty considering that the major chunk of their final products of these assessees were exported - The proviso to Section 11 A (1) would be attracted when there is suppression of facts with intent to evade payment of duty - The department has no case that assessee utilized the alleged wrongly availed credit to discharge duty liability - It would be appropriate to draw inference from Supreme Court in case of Cosmic Dye Chemical 2002-TIOL-236-SC-CX-LB holding that it is not correct to say that there can be suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of proviso to Section 11A (1) of the Central Excise Act - Ther e is no justification for invoking extended period of limitation: CESTAT - Assessee's appeals allowed: CHENNAI CESTAT

CUSTOMS

NOTIFICATION

cscaadri08-2018

CBIC appoints officers to adjudicate SCNs issued by DRI to certain parties

dgft18not016

Amendment in import policy of fresh ginger under Chapter 09 of the ITC (HS) 2017, Schedule - I (Import Policy)

dgft18not015

Amendment in import policy of Peas under Chapter 7 of the ITC(HS) 2017, Schedule-I (Import Policy)

CASE LAW

2018-TIOL-2022-CESTAT-AHM

Mittal Pigments Pvt Ltd Vs CC

CUS- The assessee is engaged in importing of waste and scrap of lead in powder form - The assessee imported 'Lead Concentrate' and classified it Heading 26070000 where the duty was 2.5% - However, the Revenue considered the same as 'waste' and treated it as 'Concentrate' and classified it under Chapter Heading 78020090 and charged duty @ 5% - Duty demand was raised -

Held: Considering the test report and other material, it is held that the item falls under the classification of Heading 'Concentrate' under 26070000 - Hence, order in challenge is set aside : CESTAT (Para 2, 8, 9) - Appeal Allowed: AHMEDABAD CESTAT

MISC CASE

2018-TIOL-229-SC-SERVICE

Common Cause Vs UoI

Apex Court finds no grounds to quash the appointment of CVC and VC – Observes that complaints against CVC and VC were made and they were looked into; that it is not for this Court to decide on the choice of appointment – Remarks that - ‘We are nowadays in the scenario that such complaints cannot be taken on face value. Even against very honest persons, allegations can be made. Those days have gone when filing of the complaints was taken as serious aspersions on integrity.” – Writ Petitions disposed of accordingly: Supreme Court - SUPREME COURT OF INDIA

NEWS FLASH


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