2018-TIOL-NEWS-205 Part 2, Dated: Friday, August 31, 2018

2018-TIOL-NEWS-205 Part 2 | Friday August 31, 2018

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	GST - Mend and Amend: Technical Session - Legislative Amendments

CASE STORIES

GST - Petitioners, tax practitioners, are not espousing cause of a weaker section of the society who are unable to knock door of justice - PIL jurisdiction cannot be exercised: High Court

I-T - Unpaid tax dues of private company should not be recovered from its directors, without establishing that non-recovery is on account of misfeasance on part of directors in relation to affairs of company: HC

Cus - Without specific demand in SCN issued u/s 124, Revenue is not entitled to recover customs duty u/s 125 of Customs Act, 1962: HC

ST - If an activity has been clarified to be not taxable, based on which demand was dropped, then revenue cannot take a stand that Commissioner(A) had traveled beyond SCN which disputed classification: CESTAT

I-T - Sundry creditors are not equivalent to own funds of assessee and can't be used for giving interest-free advance to others : ITAT

DIRECT TAX


	2018-TIOL-1758-HC-MAD-IT CIT Vs Uppili Balaji Whether once tax effect in appeals pending consideration, are less than the threshold monetary limit prescribed by way of Board's Circular itself, they deserves dismissal - YES: HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2018-TIOL-1757-HC-MUM-IT PR CIT Vs Ujjwal Construction Whether appeals having tax effect below the monetary limit prescribed by the CBDT, need not be pressed or deserves to be withdrawn - YES: HC - Revenue's appeal dismissed: BOMBAY HIGH COURT 2018-TIOL-1394-ITAT-MUM Suresh A Shroff And Co Vs ACIT Whether the AO can make disallowance by invoking the provisions of Sec. 14A r/w Rule 8D(2)(iii) without verifying the details of the expenses incurred by the assessee to earn an exempt income - NO: ITAT - Case Remanded: MUMBAI ITAT 2018-TIOL-1393-ITAT-AHM Gujarat Fluorochemicals Ltd Vs DCIT Whether receipts received on sale of carbon credit can be brought to tax by treating the same as revenue in nature - NO: ITAT Whether when the assessee has paid the PF contribution within the stipulated time but, the same was not deposited in the govt account due to technical glitches then, disallowance of the assessee's claim is not justified - YES: ITAT Whether if the assessee has disclosed an amount u/s 50D towards slump sale made to its subsidiary company with FMV then, the same can be replaced by the AO to charge the assessee with capital gain - NO: ITAT - Assessee's appeal partly allowed: AHMEDABAD ITAT 2018-TIOL-1392-ITAT-VIZAG ACIT Vs Guntur Cooperative Central Bank Whether the AO can make additions on account of overdue interest accrued by the so-called assessee relating to the NPA - NO: ITAT Whether addition u/s 40(a)(ia) is sustainable, where the assessee is required to deduct the TDS u/s 194C of the Act but failed to do so - YES: ITAT - Revenue's appeal partly allowed: VISAKHAPATNAM ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2683-CESTAT-DEL

RK Engineers And Contractors Vs CCE & ST

ST - Assessee was engaged in rendering construction services - Dispute is regarding payment of Service Tax on construction activities carried out by assessee for the period 2006-07 to 2008-09 - Out of the total Service Tax demand of about Rs. 29.39 lakhs, the submission of assessee is that an amount of Rs. 27.53 lakhs has already been paid by them along with taxable interest of Rs. 2.83 lakhs, even before the issue of SCN - It has further been submitted that the lower authorities have not extended the benefit of calculation of Service Tax with the cum tax benefit - The benefit of calculation of Service Tax payable with cum tax benefit is allowable to assessee in line with the decision of Apex Court in case of M/s Maruti Udyog Ltd. 2002-TIOL-34-SC-CX-LB - Same is evident from the provisions of Section 67 of FA, 1994 - Once the entire Service Tax dues are paid with interest, the Revenue need not have issued the SCN - Demand of Service Tax upheld after extending the cum tax benefit along with interest - All penalties are set aside by taking recourse to Section 80: CESTAT

- Appeal partly allowed: DELHI CESTAT

2018-TIOL-2682-CESTAT-BANG

Butchaiah And Associates Vs CCT

ST - Assessee is a Chartered Accountant and is a proprietary concern who rendered services to three clients during year 2006 but there is no dispute with regard to Service Tax in reference to Syndicate Bank and Bg SE Financial Ltd. - The dispute only relates to SKPCL which engaged the assessee as a financial advisor for a specified assignment - The assessee resigned from the said engagement but he has paid Service Tax liability as an abundant caution and thereafter, he filed a refund claim on the ground that total value of services for the said period was within the threshold limit of exemption vide Notfn 6/2005-ST - Same was rejected - As per exemption Notfn 6/2005-ST, there is a condition which is to be complied with by service provider and as per the condition, provider of taxable service has an option not to avail the exemption and such exemption once exercised in a financial year, shall not be withdrawn during the remaining part of year - This condition has been violated by assessee and therefore, the Commissioner (A) has rightly come to the conclusion that the assessee is not entitled to the refund amount - By following the decision in case of Choudhary Cotton Ginning & Pressing Factory, no infirmity found in the impugned order which is upheld by dismissing the appeal of assessee: CESTAT

- Appeal dismissed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-2681-CESTAT-ALL

Electroparts India Pvt Ltd Vs CCE

CX - Assessee is before the Tribunal which is third round of litigation - Assessee states that the SCN is ab initio void in view of ruling of Supreme Court in I.T.C. Ltd. 2006-TIOL-141-SC-CX wherein Supreme Court under similar facts and circumstances, where provisional assessment was ordered and SCN under Section 11A of the Act was issued before finalization of provisional assessment - SCN issued prior to finalization of provisional assessment, when admittedly the assessees were under provisional assessment scheme, is ab initio void - Accordingly, SCN is not maintainable - Impugned order set aside and assessee shall be entitled to consequential benefits in accordance with law - Adjudicating/Competent Authority is directed to finalize provisional assessment of M/s Venugopal Engineering Ltd., now known as M/s Electroparts India Private Ltd. and M/s Domebell Electronics India Private Ltd., with effect from 01/03/1994 - So far M/s Videocon International Ltd. is concerned the penalty against them stands deleted - The assessees are also directed to appear before the Competent Authority with a copy of this order within a period of 3 months for finalization of their provisional assessments, alongwith the relevant details: CESTAT

- Appeals allowed: ALLAHABAD CESTAT

2018-TIOL-2680-CESTAT-MUM

Hindustan Petroleum Corporation Ltd Vs CCE

CX - ROM filed against order dated 29.11.2017 - 2018-TIOL-97-CESTAT-MUM on the ground that the Tribunal decided only the issue regarding admissibility or otherwise of CENVAT credit on various services but no finding has been given in the matter of interest and penalty; they the appellant had relied on the apex court decision in Indian Aluminium Co. Ltd. - 2010-TIOL-135-SC-CX to assert that no penalty is imposable since the appellant had not acted in malafide manner; that interest is also not leviable since appellant always had a balance of Rs.50 lakhs in the CENVAT credit register.

Held: Apparently, no findings have been given in the impugned order in the matter of penalty and interest, therefore, paragraphs 9A and 9B are added in the order dated 29.11.2017; held that interest is payable as no data was appended with the appeal memorandum to substantiate their claim and no data is produced at the time of hearing also; as appellants are a public sector undertaking they cannot have ulterior motive, no blatant availment of credit is observed and as issue of whether services are Input services is debatable, penalty is set aside - ROM Application is disposed of: CESTAT [para 3, 4]

- Application disposed of: MUMBAI CESTAT

2018-TIOL-2679-CESTAT-HYD

Maxworth Plywood Pvt Ltd Vs CCT

CX - The assessee is manufacturer of Plywood, Flush Doors, Black Boards and Liquid Resins - They also avail benefit of CENVAT credit - During audit, it was pointed out that assessee had wrongly taken credit on invoices on the ground that they took credit on documents which are not in their name but in the name of their CHA; that they have taken credit of entire amount of freight instead of service tax paid on it; that they have taken credit on tax paid on insurance amounts - Of the three grounds on which CENVAT credit was said to be taken wrongly by assessee, they conceded their mistake as far as taking credit of the amount of freight instead of tax paid on it is concerned - Of the three issues, they conceded one and about the other two, needs factual verification of the individual documents to see whether the invoices raised in the name of their CHA were actually related to the services rendered for the assessee - Similarly it is also to be ascertained whether the insurance service on which they claimed service tax credit is relatable to their inward transport of inputs - As far as the interest and penalty are concerned they are liable to be imposed if the assessee had taken credit in contravention of CENVAT Credit Rules, with an intention to evade payment of duty - As held by Tribunal in case of K. Madhav Kamath Brothers & Co., the amount of mandatory penalty does not get reduced by the fact that they have reversed amount before the issue of SCN - In conclusion, matter remanded for considering the issue afresh - The amount of interest and penalty will also vary if the amount of ineligible CENVAT credit gets altered: CESTAT

- Matter remanded: HYDERABAD CESTAT

CUSTOMS

2018-TIOL-2678-CESTAT-HYD

Sachdev Overseas Vs CC, CE & ST

Cus - Dispute is regarding classification of 'billiards cloth' under heading number 5112 1930 and 5112 3030 as held by adjudicating authority and under heading number 9504 9090 as claimed in the bills of entry - Samples from live consignment sent for testing to Textile Committee were found to be either mixture of fabric and wool or of pure wool - The report of Textile Committee was the basis for the impugned order to reclassify the goods and to visit detrimental consequences on the live consignment as well as earlier imports - The goods have been imported in running length and not as cut pieces for ready use as covering on billiards table - There is no reason to misdoubt the claim of assessee that cloth for use on billiard tables may be of same material but, in the absence of presentation in 'made to measure' form or for direct use on billiard tables, find unable to accept the proposition that intended use should be inferred from the declaration - Consequently, no reason found to discard the re-classification of goods under chapter 51 of First Schedule to Customs Tariff Act as determined in adjudication order - The earlier bills of entry had been filed on 10th February 2006, 4th July 2006 and 10th May 2007 whereas the SCN was issued on 8th November 2007 which is clearly beyond the normal period of limitation - There is no cause for a finding of wilful misdeclaration or suppression of material fact that would empower the adjudicating authority to invoke the extended period prescribed in section 28 of Customs Act, 1962 - Therefore, differential duty on goods imported under earlier bills of entry is not recoverable - For this reason, demands pertaining to earlier bills of entry are set aside - As the differential duty arising from re-classification is limited to Rs. 5,907/-, and without the taint of misdeclaration on the part of importer, the goods are not liable for confiscation, under section 111 of the Act, 1962, and, therefore, penalty under section 112 of the Customs Act, 1962 does not also lie: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

2018-TIOL-2677-CESTAT-KOL

Soma Clearing Agents Pvt Ltd Vs CC

Cus - Assessee being a CHA, filed this appeal against imposition of penalty under Section 112 (a) and 112 (b) of Customs Act, 1962 - The Settlement Commission imposed penalty on M/s JVL - It is revealed from impugned order that the assessee was involved in offence - The assessee cannot shirk its responsibility in respect of offence committed by M/s JVL - Therefore, imposition of penalty on assessee was justified - Assessee submitted that the matter should be heard by a Division Bench of Tribunal as per the instructions Circular dated 18.11.2013, as issued by Registrar, CESTAT - Circular is pertaining to all matters regarding Clearing agents and CHAs and shall be heard by a Division Bench - Assessee filed the appeal against imposition of penalty of Rs. 1 lakh u/s 112 of Customs Act, 1962 - Hence, it is not a case of CHA under CBLR, 2013 - Therefore, the contention of assessee cannot be accepted - It is contended that SCN was issued by DRI officer who was not competent to issue the notice under Customs Act - He relied upon the decision of Mangali Impex Ltd. 2016-TIOL-877-HC-DEL-CUS - In that case, it has been held that the DRI officer has no jurisdiction to issue SCN as per provisions of law in force - In the present case, the main noticee has already acted upon the notice and in such circumstances the plea of assessee herein who is a co-noticee has no substance - Therefore, there is no reason to recall the Final order of Tribunal in this case: CESTAT

- Application rejected: KOLKATA CESTAT

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