2018-TIOL-NEWS-215, Dated: Wednesday, September 12, 2018

2018-TIOL-NEWS-215| Wednesday September 12, 2018

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	GST - Mend and Amend: Technical Session - Automation & Compliance

CASE STORIES

I-T - No denial of exemption u/s 11 if registration of charitable society continues to be valid u/s 12AA: ITAT

Cus - View taken by Tribunal on facts, as available before it, is a possible view and no substantial question of law arises: High Court

DIRECT TAX


	2018-TIOL-1510-ITAT-DEL + Case Story DCIT Vs India Habitat Centre Whether a charitable society with its registration u/s 12AA already in force, should not be denied exemption benefit u/s 11 - YES: ITAT Whether interest income of a charitable society can be taxed, when its entire income stands exempted following the 'principle of mutuality' - NO: ITAT - Revenue's appeal dismissed: DELHI ITAT 2018-TIOL-1509-ITAT-BANG DCIT Vs TTK Prestige Ltd Whether if tax is deducted at source on legal and professional charges paid, for conducting due diligence in the course of business, the same can be allowed as Revenue expenditure - YES : ITAT Whether provision for warranty liability can be allowed if assessee correctly demonstrate that anticipated liability on account of warranty claims is based on its own past experience - YES : ITAT - Case Remanded: BANGALORE ITAT 2018-TIOL-1508-ITAT-DEL Dhara Singh Vs ITO Whether if actual consideration received on sale of immoveable property is higher than the circle rate applicable on the date of registered agreement to sale, then for the purpose of sec 50C, circle rate on the date of sale deed has no application - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2018-TIOL-1507-ITAT-DEL Better Option Estates Pvt Ltd Vs DCIT Whether when the assessee disputes the increase in the sale consideration as per section 50C for computation of capital gains then AO should refer the matter to the DVO for the valuation of the property - YES : ITAT - Case remanded: DELHI ITAT 2018-TIOL-1506-ITAT-MUM DCIT Vs Indorigin Electric Ltd Whether the assessee can claim a proportionate deduction where, it has constructed the flat seize of less than 1500 sq.ft. and has also complied with the conditions as prescribed u/s 80IB(10) - YES: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2018-TIOL-1505-ITAT-MUM Hikal Ltd Vs DCIT Whether income earned on deposit with bank can constitute 'profits and gains of business' of the eligible undertaking, when the same would fall within the scope of expression 'Income from profits and gains' incorporated in sec. 10B(4) - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2018-TIOL-1504-ITAT-HYD Electronics Corporation Of India Ltd Vs DCIT Whether while computing the business profits for the succeeding AY, deduction claimed u/s 10(5) is allowable if the assessee has shown both income as well as prior period expenses - YES: ITAT - Assessee's appeal allowed: HYDERABAD ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2789-CESTAT-DEL

State Bank Of India Vs CCE & ST

ST - Issue is regarding demand of differential service tax liability for period 2004-2005 to 2007-2008 - It is undisputed that the service tax liability is on the commission and exchange received by assessee - The procedure followed by assessee in the books of records seems to be the closing balance minus opening balance on commission and exchange received records for calculation of tax liability, accordingly discharged - The entire case of Revenue is that due this kind of erroneous method of calculation followed month after month and differential service tax liability remained evaded and is correctly confirmed by lower authorities by invoking extended period - The copy of audit report filed by assessee in appeal memorandum clearly indicates that entire records were made available to the audit party and audit record specifically states that the service tax of audit is of Branch accounts and they had pointed out same discrepancy of non-payment of tax on foreign exchange remuneration and income received from the Government transactions, syndication fees - These details indicate that assessee had in fact produced all the records before the authorities to check and come to a conclusion, whether the tax liability was correctly discharged or otherwise - Tribunal in case of Trans Engineers India Pvt. Ltd. 2015-TIOL-1947-CESTAT-MUM had followed the decision of High Court of Karnataka in case of MTR Foods Ltd. 2011-TIOL-696-HC-KAR-CX and the decision of High Court of Bombay in case of Rajkumar Forge Ltd. 2010-TIOL-622-HC-MUM-CX wherein, it is held that extended period cannot be invoked for demanding service tax if the audits have taken place - If the tax liability itself cannot survive on limitation the question of penalty does not arise - In view of authoritative judicial pronouncements, the penalty imposed on assessee is set aside - As regards the appeal filed by Revenue, since provisions of Section 80 invoked for setting aside the penalties imposed an acceptable justifiable reason, Revenue's appeal is rejected: CESTAT

- Assessee's appeal allowed: DELHI CESTAT

2018-TIOL-2788-CESTAT-HYD

Vodafone Mobile Services Ltd Vs CST

ST - Assessee is engaged in business of providing telecom services as that of International Inbound Roaming (IIR) services to Foreign Telecom Operators (FTOs) having their fixed place of business located outside India - As per the contract, with these FTOs, assessee has to provide telecommunication services to subscribers of these FTOs even when they travel beyond their home jurisdiction i.e., a service known as the roaming facility - The assessee while considering its services to be the export services, has claimed rebates in accordance of Notfn 11/2005-ST vide six separate Refund Claims - However, six of them have been rejected - When assessee is providing telecom services to the customer of a foreign telecom service provider while he is in India using assessee’s telecom network, there is no contract or agreement between the assessee and said subscriber - The agreement is with FTO situated outside and the subscriber is customer/service recipient of the said FTO who is the customer/service recipient of assessee - The impugned transaction is to be construed as export, the recipient being located outside India and the assessee receiving service charges in convertible foreign exchange - Support drawn from the case of Vodafone Cellular Ltd. 2014-TIOL-319-CESTAT-MUM - Since the transaction is that of export, the principle of unjust enrichment would not be applicable - Since the assessee has opted for Rule 5 of claiming rebate for providing export services, the decision of both the lower authorities for holding the said claim of rebate as unjust enrichment, is, therefore, opined to be wrong and being beyond the legal provisions for the purpose - In the present case, six rebate claims are in question - Four have been filed within a period of one year, i.e., not only within the limit of time prescribed under Section 11B, but also within the period of reasonable time for the purpose - Since the assessee has failed to exercise the same doctrine of reasonable time with respect to remaining two claims, those have rightly been rejected by Commissioner (A) being barred by time: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

CENTRAL EXCISE

2018-TIOL-1883-HC-MAD-CX

Annapoorna Re-Rolling Pvt Ltd Vs CCE & ST

CX - The assessee-company is an SSI unit engaged in manufacturing MS Rounds, CTD Bars & MS Flats - It availed exemption under Notfn No 08/2003-CE during the relevant AY but did not pay duty u/r 11(2) of the CCR 2004 - It was served an SCN raising duty demand with interest & Education Cess u/r 14 of CCR 2004 - The assessee also claimed to have crossed the limit for claiming SSI exemption and so started paying duty - The assessee also availed Cenvat credit on inputs & raw materials purchased - However when such availment was challenged by the Revenue pursuant to report by the Audit wing, the assessee reversed part of the amount prior to issue of SCN - Although such payment was acknowledged in the SCN, on subsequent adjudication, demands were raised for the entire amount - On appeal, the Commr.(A) set aside the entire amount - On Revenue's appeal, the Tribunal set aside the O-i-A - Hence the present appeal.

Held - The assessee admittedly returned to the exemption limit for SSI exemption - The crux of the matter is whether the Revenue can recover credit availed on inputs used in manufacture of goods during the time when exemption in respect of such inputs is unused - As the assessee crossed the limit for SSI exemption, it would lose the exemption and so began to pay Excise during the relevant period - For the SSI unit claiming exemption, any credit availed is reversable during the exemption period - However, the closing stock contained some quantity of inputs on which Cenvat was availed - Hence when the assessee again became eligible for SSI exemption, the assessee must reverse the credit availed, considering that the stock lying unused would be used in manufacture - Thus the duty demanded is justifiable and is in keeping with relevant provisions of the CCR 2004 & CEA 1944 - Hence the Tribunal's order warrants no interference: HC (Para 2-13,39-42)

- Assessee's appeal dismissed: MADRAS HIGH COURT

2018-TIOL-2787-CESTAT-MUM

CCE & ST Vs Ajay Biotech India Ltd

CX - Refund - Admitted fact on record that respondent assessee had recovered the differential CE duty through debit note dated 31.03.2006 from its buyer - Even assuming for the sake of discussion that the duty amount in question had been refunded by the respondent to its buyer and, therefore, they should be eligible for refund, the accepted position is that the same was returned in the Financial year 2015-16 and not in the period to which the dispute relates i.e. 2005-06 - it is evident that the assessee had enjoyed the duty benefit all along and utilized such amount for its business requirement - it cannot be said that the respondent had suffered any injury or loss on account of payment of such differential duty for which the refund claimed amount should be paid to it and not credited to the Consumer Welfare Fund - on perusal of the Balance Sheet for the year 2005-06, the refund amount in question had not been reflected by the respondent under the head of account of loans and advances, as "claims receivable" from the Central Excise department - impugned order set aside and Revenue appeal is allowed: CESTAT [para 5, 6]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-2786-CESTAT-MUM

Amphenol Interconnect India Pvt Ltd Vs CCE

CX - CENVAT credit of service tax paid on GTA service for transportation of chemical sludge from the factory of the appellant, whether an Input service in terms of rule 2(l) of CCR, 2004.

Held: Fact is not in dispute that chemical sludge arising out of manufacturing process is a hazardous waste and its disposal/removal from the factory is not only required for smooth and hassle free manufacturing operations but also for complying with the requirement of statutory pollution control norms - service tax paid for transportation of such waste material should be considered as Input service for the purpose of availment of CENVAT credit - SC decision in Indian Farmers Fertiliser Coop Ltd. - 2002-TIOL-146-SC-CX relied upon - impugned order set aside and appeal allowed: CESTAT [para 3, 4]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-2785-CESTAT-DEL

Hindustan Coca Cola Beverages Pvt Ltd Vs CCE

CX - Assessee is engaged in manufacture of Aerated Water and Kinley Soda - While importing sugar in India, the assessee had paid Additional Duty of Customs equivalent to Basic Excise Duty (CVD) and besides that, they had also paid 'Sugar Cess' - Sugar, being the basic input raw material for manufacture of beverage, was used by assessee in manufacture of excisable goods and at that time they took Cenvat Credit of CVD comprising of Basic Excise Duty - The assessee also availed Cenvat Credit of Sugar Cess in the month of July, 2014 and informed the same to the department - According to department, assessee had wrongly availed and utilized Cenvat Credit of Sugar Cess which was not covered under Rule 3(1) of CCR, 2004 - The demand was confirmed by both the Adjudicating Authority as well as Appellate Authority - The question whether sugar cess is a tax or fee, was specifically dealt with by High Court of Karnataka in the matter of Shree Renuka Sugar Ltd. 2014-TIOL-98-HC-KAR-CX in which it was held that the sugar cess paid under Sugar Cess Act is tax and to be precise it is duty of excise and not fee and therefore in view of it, the assessee is entitled for Cenvat credit of Sugar Cess - Appeal filed by department in Supreme Court against the said order of Karnataka High Court has been dismissed by Supreme Court - Case is squarely covered by said decision of High Court and the Commissioner (A) erred in not relying upon the said order merely by stating that it has not attained finality - In an identical issue in assessee's own case where also the department denied Cenvat credit paid on Sugar cess to the assessee, this Tribunal-Bangalore Bench allowed the appeal filed by assessee - Therefore, it is settled that Sugar Cess is a tax and not a fee: CESTAT

- Appeal allowed: DELHI CESTAT

CUSTOMS

2018-TIOL-1886-HC-MUM-CUS + Case Story

Suresh Gangaram Hole Vs CC

Cus - Smuggling of foreign currency - Penalty u/s 114 of Customs Act, 1962 - Tribunal reducing penalties, however, appellant contending that penalty imposed him as a carrier was excessive since Smt.Bharati Bhutada, wife of the master mind has been imposed a penalty of only Rs.1 lakh - view taken by the Tribunal, on the facts as available before it, is a possible view and no substantial question of law arises - in the absence of it being pointed out that the role of Smt. Bharati Bhutada was much more than mere handing over the foreign currency, no reason to interfere with the impugned order can arise.

- Appeal dismissed: BOMBAY HIGH COURT

2018-TIOL-1885-HC-MUM-CUS

CC Vs Refco Industries

Cus - COD of 778 days - Affidavit in Support of the Motion is most casual - It does not mention even the date or the manner in which they realized their mistake and took steps to file an appeal - The Affidavit ought to have been indicated the person who was under mistaken belief - The Department as an entity has no mind of it's own so as to be under mistaken belief as stated in the Affidavit - Affidavit in Support does not inspire any confidence - There is no fixing of responsibility for alleged misunderstanding on the part of the Customs Department - Revenue regularly files Appeal from orders of the Tribunal to this Court and the statute under which they function, provides for the same - Thus, there is gross negligence on part of the officers of the Customs in not filing an appeal from the impugned order dated 13th March 2015 within time and thereafter till 5th December 2017, when the appeal was filed - Consequently, no occasion to condone the delay of 778 days in filing accompanying appeal arises: HC

- Notice of Motion dismissed: BOMBAY HIGH COURT

2018-TIOL-1884-HC-KERALA-CUS

CC Vs Adani Exports Ltd

Cus - The issue is as to the correct duty entitlement of assessees, all of whom are engaged in export of marine products - The exporters who export marine products for human consumption had classified the goods they export under Sl.No.2 entitled to 5% duty entitlement - The Customs Authorities however, felt that the duty entitlement was @ 2%, the goods being covered under Sl.No.1 - The Tribunal found that the issue boils down to the correct interpretation of the term "preserved" - It was held that, what was exported was admittedly marine products and that too for human consumption, which requires some amount of preservation - However, there was no mandate as to the method of preservation to be applied or for use of chemicals in preserving the exported goods - Sl.No.2 speaks of processed, preserved and frozen fish and other marine products, while Sl.No.1 speaks only of dried marine products and other live marine organisms, including frozen meat - Drying of marine products and freezing the meat is one method of preservation - Since Sl.No.2 specifically speaks about the processed preserved and frozen marine products, the export of which is undertaken by assessees - The description of goods as claimed by assessees is only proper for the purpose of granting duty entitlement - Impugned order upheld: HC

- Appeal rejected: KERALA HIGH COURT

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