2019-TIOL-842-ITAT-JAIPUR + Case Story

Ajmer Thermotech Pvt Ltd Vs ACIT

2019-TIOL-841-ITAT-DEL  

Cotton Textiles Mills Pvt Ltd Vs PR CIT

Whether before excising revisionary power u/s 263, Pr. CIT should carry out some prima facie enquiry so as to reach to a conclusion that the inquiry conducted by the AO is insufficient for relevant matter - YES : ITAT

- Assessee's appeal allowed: DELHI ITAT

BGA Tradelink Pvt Ltd Vs DCIT

Whether addition made by the AO u/s 14A without successfully controverting the existence of the fact that assessee was having sufficient funds to earn dividend income, is sustainable - NO: ITAT

- Assessee's appeal partly allowed: AHMEDABAD ITAT

Apollo Sugar Clinics Ltd Vs DCIT

Whether when the specific madate of section 56(2) is intorduced to consider the transaction of share premium which is capital in nature as income, the AO cannot bring such income to tax in any other provision - YES: ITAT

Whether the notional recognition of dividend income as the difference between the actual investment and value of the balance sheet by the assessee, is a real declaration of exempt income chargeable to tax u/s 14A - NO: ITAT

- Assessee's appeal dismissed: HYDERABAD ITAT

Ozone Pharmaceutical Ltd Vs ADDL CIT

Omega Biotech Ltd Vs ITO

2019-TIOL-836-ITAT-DEL

ACIT Vs Ferrous Infrastructure Pvt Ltd  

Whether allowance of expenditure submitted for deduction on the basis of principle alone by the CIT(A) without any corroboration from the documentary evidences, warrants remand of issue - YES: ITAT

- Revenue's appeal allowed: DELHI ITAT

SERVICE TAX

2019-TIOL-1173-CESTAT-HYD

Eenadu Television Vs CC, CE & ST  

ST - The appellant-company is registered for providing Broadcasting Services - During the relevant period, the Revenue allehed that the appellant earned revenue from SMS from cellular phone operators - It was noted that the operators enabled their customers to view news on their mobile phones - The appellant broadcasts a scrolling advertisement quoting the operator's name and SMS code to enable customers to view the news - During the relevant period, the Revenue issued SCNs proposing duty demand with interest u/s 75 of the Finance Act along with penalties u/s 76, 77 & 78 of the Finance Act 1994 - On adjudication, the demands were sustained, albeit with option of reducing the penalty conditional upon such reduced amount being paid within 30 days - On appeal, the Commr.(A) sustained the demands.

Held: It is seen that broadcasting services would mean that said services are to be rendered to a client by a broadcasting agency or organization in relation to broadcasting in any manner - In the present case, the appellant is not rendering any services to individuals who pay for SMS sent by them to telephone service providers - Here, the television service providers only scroll the numbers on which SMS is to be sent and they get paid from telephone service providers - Besides, the appellant also claimed that the amount received by television operators on the charges levied by them to individual subscribers is covered under Telephone services & the appellants are paid only 50% of the net revenue - Moreover, it is seen that an audit was conducted at the appellant's premises & the result was conveyed by a letter - Such letter indicates the grounds which are also raised by the Revenue in this appeal - Despite such letter, an SCN was issued - Hence the appellant succeeds on limitation grounds as well - Hence the order in challenge merits being quashed: CESTAT (Para 2,5,6)

- Assessee's appeal allowed: HYDERABAD CESTAT

Bayer Crop Science Ltd Vs CCE & ST

ST - The assessee-company claimed refund of service tax, during the relevant period, on grounds that its commission agent paid service tax under BAS for sale & distribution of Hybrid seeds & that the services relating to agriculture or agricultural produce were covered under the Negative List - Hence the assessee claimed that no service tax was payable - The Revenue issued SCN rejecting such refund claim - On adjudication, it was held that Hybrid Seeds were not agricultural produce on which refund could be claimed - On appeal, the Commr.(A) sustained the findings of the O-i-O - Hence the present appeal.

Held: The Commr.(A) relied upon the findings of the Andhra Pradesh High Court in Proagro Seed Company Pvt. Ltd. Writ Petition No.16733 of 2004 - The assessee raised no grounds to prove that such precedent judgment is inapplicable to facts of the present case - Hence the O-i-O & O-i-A warrant no interference: CESTAT

- Assessee's appeal dismissed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-1171-CESTAT-ALL  

Summit Auto Seats Industry Vs CC, CE & ST

CX - The assessee is engaged in manufacture of car accessories and were availing the benefit of Cenvat credit of duty paid on inputs, capital goods and input services under CCR, 2004 - During audit, the scrutiny of their balance sheets revealed that the ratio of inputs used and finished goods manufactured had wide variations during the two financial years - It was further noticed that the production during period 2006-07 was much lower, though the higher credit was availed, then the production during the financial year 2007-08, even though the less credit was availed - It is well settled law that the quantum of final product manufactured by an assessee cannot be arrived at on the basis of input output ratio - The assessee have explained that 2006-07 was the first year of their manufacture and as such having started the commercial production in that year only, there was huge loss of inputs during course of manufacture - Further it stands contended by them that they are in the manufacture of high precision products to be used for luxury cars, which require 100% sophistication and no manufacturing defects are accepted by customers - After the issuance of inputs, an assessee is entitled to the credit even if such inputs gets converted into waste and scrap during the manufacturing line - As such, in the absence of any evidence to the contrary that the assessee cleared their inputs "as such" after availing the Cenvat credit of duty and in fact in the absence of any allegation to that effect, no justifiable reasons found to deny the credit to assessee merely on the basis of input output ratio - Accordingly, the demand is set aside along with setting aside of penalty - As regards the denial of Cenvat credit availed by assessee in respect of rejected products, in terms of Rule 16(1) of Cenvat Credit Rules, assesseeduring the course of adjudication before the Commissioner admitted to pay the said duty and did not contest the same inasmuch as the rejected goods were not processed by them - Inasmuch as the same were accepted by assessee as payable, the confirmation of the same is upheld - However, inasmuch as there is no mala fide on their part and everything was being reflected in records, the invocation of penal provision against them on the said demand would not be justified - Accordingly, the penalty imposed upon them is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

Sun Pharmaceutical Industries Ltd Vs CGST & CE

CX - Appeals are filed by assessee against the Order passed by Commissioner (A) wherein the Credit on input services is denied - With regard to denial of CENVAT Credit on Telephone Services, primarily the CENVAT Credit on Telephone Service is eligible as per Rule 2(l) which is covered under the inclusive definition and that telephone is used by marketing officials for carrying out promotional activities of assessee’s finished goods - With regard to GTA/Courier, the CENVAT Credit of service tax paid on the outward freight from the factory to the place of the customer being not available, the assessee itself had reversed the CENVAT Credit - With regard to Security Services, the drugs manufactured by assessee are captively consumed by various units of group company and hence, the final product is transferred to assessee’s godown at Pallavaram Unit for selling to various distributors in the State of Tamil Nadu - Since all the goods are stored at the above Pallavaram Unit, the services of security are availed to protect against any possible theft, damage or loss - The issues have been decided at various levels and the same are more or less settled which is also applicable to the period after 01.04.2011 - Therefore, the appeals are allowed with consequential benefits: CESTAT

- Appeals allowed: CHENNAI CESTAT

CUSTOMS

2019-TIOL-1169-CESTAT-KOL  

Opel Exports Vs CC

Cus - The appeals have been filed against Orders for Provisional Release in respect of various Bills of Entry filed by assessee for import of electronic goods - The goods were seized by DRI during investigation in to the allegation of massive undervaluation as well as mis-declaration - In particular, assessee is aggrieved by the condition stipulated for release of goods under Section 110A ibid, directing the execution of Bank Guarantee/Security Deposit - The amount stipulated for bank guarantee/security deposit is said to be unreasonably high - It has been prayed that the goods may be allowed for provisional release on the basis of much more modest valuation as per NIDB data for similar goods - Assessee has also submitted a table of such values said to be of comparable goods - But the Revenue has strongly contested and opposed the plea for adopting such valuation - They have insisted that the bank guarantee value was determined by Commissioner by taking into account various factors to safeguard the Revenue’s interest including the likely fine and penalties, in addition to the differential duties - The dispute with Customs Department has progressed to the next stage in as much as SCN on the alleged customs offence has been issued by DRI, on completion of investigation - The SCN has indicated the basis for redetermination of value of imported goods - Since SCN for the alleged offence has already been issued, the adjudicating authority is directed to complete the adjudication of case within a period of two months - In the meantime the adjudicating authority has discretion to allow provisional release of the seized goods under Section 110A ibid upon execution of Bond as already ordered - Alongwith Bank Guarantee/Security Deposit whose amount will be redetermined by taking into account the valuation proposed in SCN: CESTAT

- Appeal disposed of: KOLKATA CESTAT

CCE Vs Serum Institute Of India Ltd

Cus - Clearances of various medicinal products by respondent from their unit in a Special Economic Zone (SEZ) to their own undertaking in the Domestic Tariff Area (DTA) as stock transfer - Commissioner(A) granting relief of Special Additional duties u/s 3(5) of CTA in terms of Notification 45/2005-Cus - Aggrieved, Revenue is in appeal before CESTAT.

Held: It is apparent that the exemption will not apply only if such goods when sold in domestic tariff area are exempted from value added tax attendant on a specific notification providing for 'Nil' rate of duty - In the present case, the payment of Value Added Tax is merely postponed till actual transaction of sale occurs - exclusion from VAT is fleetingly temporary and the exemption test cannot be applied except when that transaction takes place - that which cannot be subjected to the test cannot fail the test - Postponement of VAT liability or even evasion of that liability does not derogate from taxability - as the said goods are taxable under the relevant revenue laws of the State, Revenue appeal against the order of the Commissioner(A) is mis-directed - appeal without merit, hence dismissed: CESTAT [para 5 to 7]

- Appeal dismissed: MUMBAI CESTAT

Volex Interconnect India Pvt Ltd Vs CC

Cus - The application is filed by assessee seeking early hearing of the appeal - The very same issue was considered by Tribunal in assessee's own case imported through Chennai Seaport and the same has been decided in favour of assessee - The early hearing application is allowed: CESTAT

- Application allowed: CHENNAI CESTAT