TMI Tax Updates - e-Newsletter
January 22, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Valuation of supply - motor vehicle - inclusion of tax collected at source (TCS) u/s 206C of income tax in the value for GST - stay granted

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Articles

• PROFITEERING MAKES CHOCOLATES BITTER

News

• Auction for Sale (Issue) of New Government Stocks

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• Central Board of Direct Taxes (CBDT) clarifies regarding issue of Prosecution Notices

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Circulars / Instructions / Orders

Income Tax

• F. No. 275/192/2018-IT (B) - dated 18-1-2019
  CORRIGENDUM - Circular NO.1/2019 dated 1st January, 2019

Highlights / Catch Notes

GST

• Valuation of supply - motor vehicle - inclusion of tax collected at source (TCS) u/s 206C of income tax in the value of goods and services - The authority will not act on the clarification, pending the disposal of the writ petition.
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• Classification of goods - rate of tax - Tile Adhesive - Tile Grout - The products in question will be classifiable under Entry 24 of Schedule IV of Notification No. 1/2017 - liable to GST @ 28%
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Income Tax

• Payment of 3rd installment as per the Income Declaration Scheme, 2016 (IDS) been delayed - These are strong indications that the legislature does not envisage any extension of time for payment of tax under the Scheme. No directions contrary to such legislation scheme can be granted.
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• Treatment of unutilised MODVAT credit, balance as at the end of the year as payment of excise duty - Deduction u/s 43B - Excise duty paid in advance in the Personal Ledger Account (PLA) - Benefit of deduction allowed.
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• Denial of exemption claimed u/s 10AA - sale made by one SEZ unit to another SEZ unit - there is a provison in another enactment (SEZ Act) which contains non obstante clause then that would override the provision of the Income Tax Act - Benefit of exemption allowed.
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• Exemption u/s 10(23C) - assessee is a school of “Sanatam Dharma Paracharak Sabha” - when the assessee was running a school for educational purposes and not for earning profit, then it was entitled to the exemption u/s 10(23C)(vi)
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• Addition u/s 68B - acceptance of additions by the assessee contrary to legal position - it cannot be treated as a sale transaction at all being without consideration, factum of merely accepting the addition made by AO u/s 69B, would not change the legal position.
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• TDS u/s 194C - the assessee was not liable to deduct TDS u/s 194C of the Act where it acted as a facilitator or intermediary between client and truck owner and that there was no privity of contract between assessee and client for carriage of goods.
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• Validity of Notice issued u/s 142(1) - Anonymous Donations - 'Charity Box' (Gollak box) being the donations made by various followers and devotees visiting the Gurudwara - writ petition is not maintainable.
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Customs

• Maintainability of application before Settlement Commission - gold was detected and seized - burden to prove smuggled gold - the jurisdiction of the Commission to settle cases involving goods referred to in Section 123(2) is excluded.
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• Duty Drawback - re-export of aircraft - commercial use of engine - requirement of Guaranteed Remittance Declaration - there is no question of Customs Authorities insisting that the GR requirement was mandatory or that, in its absence, exemption from RBI was necessary.
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• Refund of SAD - When in one group of appeals arising out of the identical facts, the appellant has been permitted to claim the benefit of refund of 4% SAD on goods sold “as such”, the appellant cannot be denied the similar benefit in the other group of appeals.
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• Refund of excess Customs duty - self assessed bill of entry (BE) - there was no dispute about classification or valuation or description of the imported goods. Therefore there was no need to challenge the assessment.
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FEMA

• Stay of penalty imposed - Contravention and allegations against the appellant u/s 6(3)(d) of FEMA - Prima facie it is of the view that the Directorate of Enforcement has no jurisdiction to reinterpret the terms of the agreement between Google Ireland and Google India - stay granted.
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Corporate Law

• Winding up proceedings - failure to pay dues - It is clear that these are minor glitches that may have arisen while execution of the work. - there is nothing on record to show that the petitioner did not finally complete the work or that the respondent had to get the defective work corrected from some third contractor. - Provisional Liquidator appointed.
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Service Tax

• Levy of service tax - Development Fee collected by the appellant, from the passengers at IGI Airport - scope of ‘airport’ - it is a flat rate of charge to passengers - The service tax is not chargeable on Development Fee.
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• Refund of CENVAT Credit - the relevant date for deciding the time limit for claiming refund under Rule 5 of the Cenvat Rules is the end of the quarter in which the FIRC is received in cases where the refund claims are filed on quarterly basis.
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• Export of Service or not - Business Auxiliary Service - no condition under Export of Service Rules, 2005 that the services performed in India would not qualify as export of service. The rules only provide that recipient of service should be situated outside India - Benefit of export allowed.
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Central Excise

• Valuation - related party or not - Rule 9 of Valuation Rules - As the Appellant company is incorporated under the Companies Act and only for the fact that the partners of the partnership firm, namely, M/s AETC, are related, will not make them relative.
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• Cash refund of unutilized credit - closure of factory - Cenvat credit lying with the appellant is also a duty and cannot be treated separately as compared to the Revenue in PLA account.
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• Valuation - price variation clause - clearance of the finished products at the lower rate of duty but subsequently, cleared the goods at the higher rate of duty - Demand of duty confirmed, but no penalty since fact was declared in E-1 Return.
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• Clandestine removal - MS Ingots - the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.
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VAT

• Penalty u/s 10(A) of the Central Sales Tax Act, 1956 - the utilization of Form-C to import totally unconnected goods, namely, a single electricity generator set and nonwoven fabric was rightly found to be a case of false declaration - Penalty confirmed.
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Case Laws:

• GST

• 2019 (1) TMI 1022
  Valuation of supply - motor vehicle - inclusion of tax collected at source (TCS) u/s 206C of income tax in the value of goods and services - charging of tax, duties, cess or fee by the supplier - Held that:- The authority will not act on the clarification at Sl.No.5 of Ext.P1 pending the disposal of the writ petition - however, this arrangement shall be subject to the outcome of the writ petition and without prejudice to the rights of the Department in collecting the taxes in future if the writ outcome is adverse to the petitioner - petition disposed off.

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• 2019 (1) TMI 1021
  Classification of goods - rate of tax - Tile Adhesive - Tile Grout - Whether the two categories of products will be classifiable under Entry 24 of Schedule IV of Notification No. 1/2017,-Central Taxes (Rate) dated 28.06.2017 liable to CGST at 14% or Entry 97 of Schedule III of Notification No. 1/2017- Central Taxes (Rate) liable to CGST at 9%? Held that:- The applicant in their submissions have mentioned that the concerned products are non-refractory chemical-based preparation. Now it is seen that non-refractory preparations are covered under Chapter 3214 - resort shall be made the Explanatory Notes of Harmonized System of Nomenclature published by the World Customs Organization, Brussels (HSN Explanatory Notes) to interpret the above relevant Sub-headings. The group of Non refractory surfacing preparations which fall under Chapter 32.14 includes “preparations in powder form based on quartz and cement with small quantities of added plasticizers, used for instance, after adding water, for setting wall or floor tiles.”. The polymers used in the above mentioned products acts as plasticizers. As mentioned in their application the product Tile Adhesive mentioned by them are specifically used for setting tiles, whether on floor, walls or other tiles, etc and therefore it is apparent that their products would be classifiable under Chap. 32 and not Chap 38. Tile grout is compound used as joint filler between tiles. This product is also used for setting the wall/ floor tiles because the same is used between two tiles as an adhesive by way of filling the gap between two tiles so that the tiles become attached to each other. Ruling:- The products in question will be classifiable under Entry 24 of Schedule IV of Notification No. 1/2017-Central Taxes (Rate) dated 28.06.2017 liable to GST @ 28% (14% each of CGST and SGST).

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• Income Tax

• 2019 (1) TMI 1020
  Reopening of assessment - bogus purchases - material collected by the Sales Tax Department, prima facie suggesting that the assessee had indulged into bogus billing activities without actually carrying out the purchase and sale of the commodity - change of opinion - Held that:- AO had examined the material collected by the Sales Tax Department, prima facie suggesting that the assessee had indulged into bogus billing activities without actually carrying out the purchase and sale of the commodity. It is on this basis that the notice of reopening of assessment was issued earlier and addition of ₹ 2,96,284/was made. There are reasons recorded for issuing the impugned notice. AO now believes that not mere 2.25% of the total bogus purchase of ₹ 1.31 crores (rounded of) is to be added but the entire amount should have been added as the undisclosed income of the assessee. With respect to the validity of such a contention of the AO, we have no comment to offer. What cannot be denied is that the AO merely wishes to change the nature of the assessment previously made. As during the previous reassessment proceedings, AO examined the alleged bogus sales of the assessee, taxed 2.25% thereof as assessee's additional income and passed the order of assessment accordingly. The Assessing Officer now believes that taxing 2.25% of the sales, was an error and instead the entire amount should have been added to the assessee's income. This would be a mere change of opinion. The Act recognizes the revisional powers of the Commissioner to be exercised in case where the assessment order is erroneous and prejudicial to the interest of the Revenue. However, the reopening of assessment is an entirely independent and vastly different jurisdiction and cannot be confused with the revisional powers of the higher authority. - Decided in favour of assessee.

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• 2019 (1) TMI 1019
  Payment of 3rd installment as per the Income Declaration Scheme, 2016 been delayed - petitioner prayed for extension of time citing acute financial difficulties - Held that:- Perusal of the Scheme would suggest that the same does not provide for any extension of time for payment of any of the installments of payment of tax. Section 187 which pertains to time for payment of tax, in subsection (3) provides that if the declarant fails to pay the tax, surcharge and penalty in respect of the declaration made before the dates specified under subsection (1), the declaration filed by him shall be deemed never to have made under the scheme. These are strong indications that the legislature does not envisage any extension of time for payment of tax under the Scheme. No directions contrary to such legislation scheme can be granted. In this context, we may refer to the decision of the Supreme Court in the case of Hemalatha Gargya Vs. Commissioner of Income Tax [2002 (11) TMI 6 - SUPREME COURT].

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• 2019 (1) TMI 1018
  Initial year of commencement of assessee's manufacturing activity for the purpose of deduction under Section 80IB - Held that:- Section 80IB of the Act grants certain deduction of profits and gains from certain industrial undertakings. Sub-section (3) of Section 80IB of the Act provides that such deduction at the specified rate would be available to such industrial undertaking for a period of 10 consecutive assessment years, beginning with the initial assessment year. The term “Initial Assessment Year” has been explained in subsection (14) to Section 80IB of the Act inter alia as to mean, in case of an industrial undertaking, the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things. It was in this context, the question arose before the Assessing Officer. As noted, the CIT(A) and the Tribunal concurrently came to the conclusion that the initial year for assessee was A.Y. 1994-95. This was on the basis of material produced by the assessee to establish that it was only in this period that the assessee had procured the material and started manufacturing. The registration as an industrial unit was granted only during the said period. We find no perversity in the finding of the Tribunal. The decision of this Court in case of Penwalt India Ltd. [1991 (4) TMI 33 - BOMBAY HIGH COURT] was rendered in entirely different background. It was a case in which the assessee had claimed expenditure on scientific research. The Court held that the assessee can be said to be engaged in the manufacturing activity, which is done directly by himself or even in which the assessee engages the services of somebody else on contract basis. It was found that the manufacturing activity carried on behalf of the assessee was also under the direct quality control and supervision of the assessee. On such findings, the Court granted the depreciation allowance to the assessee. - decided against Revenue

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• 2019 (1) TMI 1017
  Deemed dividend addition u/s 2(22)(e) - member/shareholder of the concerned company where from loan/advance received - Held that:- The issue as to applicability of said provision to a non-member/ non-shareholder of the concerned company which has given the loan/advance has been settled by the decision in CIT Vs. M/s Ankitech Pvt. Ltd and others [2011 (5) TMI 325 - DELHI HIGH COURT] - thus we do not perceive any illegality in the findings arrived by the Commissioner, Income Tax (Appeals) and affirmed by the Tribunal that the assessee being not a member/shareholder of the concerned company the loan/advance received from such company is not deemed dividend u/s 2(22)(e) of the Act of 1961. Addition on account of income from house property as per the provisions of Section 22 read with Section 23 - Held that:- The reasonable rent can only be the standard rent which is in syntax with the municipal valuation (for an authority please see Dewan Daulat Rai Kapoor Vs. NDMC [1979 (12) TMI 3 - SUPREME COURT] ; Mrs. Sheila Kaushish Vs. CIT [1981 (8) TMI 1 - SUPREME COURT] and Amolak Ram Khosla Vs. CIT [1981 (8) TMI 3 - SUPREME COURT]. In view whereof, there being a concurrent findings of fact, we perceive no illegality as would give rise to a substantial question of law. Addition u/s 40A - payments made to specified persons on rates more that fair market rates - Held that:- Unless established on facts that the payment for such expenditure was excessive or unreasonable having regard to fair market value, it cannot be disallowed. In the case at hand, no such facts are available, nor commended at. There being pure findings of fact, duly concurred, no substantial question of law arises for consideration. - Revenue appeal dismissed.

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• 2019 (1) TMI 1016
  Treatment of unutilised MODVAT credit, balance as at the end of the year as payment of excise duty - Deduction u/s 43B - actual payment of duty or not - Excise duty paid in advance in the Personal Ledger Account ( PLA ) - accrual of expenses - whether amount of advance deposit did not represent actual payment of duty so as to entitle an assessee to the benefit of deduction under Section 43B? - Held that:- In view of the law laid down by the Apex Court in Modipon Limited s case (2017 (11) TMI 1429 - SUPREME COURT OF INDIA) holding that the advance deposit of Central Excise duty constitutes actual payment of duty within the meaning of Section 43B of the Act and that the assessee would be entitled to benefit of deduction of the said amount, the substantial questions of law raised in these appeals are answered in favour of the assessee and against the respondent-revenue.

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• 2019 (1) TMI 1015
  Denial of exemption claimed u/s 10AA - sale made by one SEZ unit to another SEZ unit - assessee is engaged in the business of manufacturing of scaffoldings and there export directly - Section 51(1) of SEZ Act, 2005 overriding effect over the income Tax Act - Held that:- Provisions of the Special Economic Zones Act, 2005 shall prevail over the provisions of the Income Tax Act and Hon’ble Delhi High Court in the case of CIT(A) Vs. Vaisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] has held that there is a provison in another enactment which contains non obstante clause then that would override the provision of the Income Tax Act. In such circumstances and facts of the case Section 51(1) of the Act as a non obstante clause and within the definition u/s 2(m) of the Special Economic Zones Act, 2005 exports includes providing services or supplying goods from one unit to another in the same or different Special Economic Zones. Accordingly, the view taken up by the CIT(A) and the A.O cannot hold good and is directed to be reversed. - Decided in favour of assessee. Addition of bad debts - Held that:- Bad debts were actually written off in the books of accounts that can be seen from the books of account for Assessment Year 2010-11. The said has been accepted by the Revenue. Therefore, the decision in case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] as well as the Circular No. 12/2016 dated 30/5/2016 is applicable in the present case. The CIT(A) as well as the Assessing Officer were not correct in making addition of ₹ 1,55,00,500/- under the head bad debts which were claimed by the assessee in the profit and loss account. - Appeal of the assessee is allowed.

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• 2019 (1) TMI 1014
  Unexplained cash credit u/s 68 - addition relying on the report of the Investigation Wing made at the back of the assessee without giving an opportunity of cross examination - denial of natural justice - Held that:- We find considerable cogency in the contention raised by the assessee’s counsel that the material on the basis of which report has been prepared by the investigation wing did not provided to the assessee and no opportunity was provided to cross examine the persons/witnesses whose statements have been used against the assessee, which issue was also raised before the Ld. CIT(A), who wrongly held that such right as held in various decisions, is not an absolute right and depends not only the circumstances of the case but also on the statute concerned, which is not proper. Similar facts and circumstances passed in case of Smt. Jyoti Gupta vs. ITO [ [2018 (11) TMI 1353 - ITAT NEW DELHI] ]wherein, held that since the impugned addition was made on the statement of Sh. Vikrant Kayan without providing any opportunity to the assessee to cross examine the same and Ld. CIT(A) has not considered the same ground, which is in violation of principle of natural justice and against the law laid down by the Hon’ble Supreme Court of India in the case of Andaman Timber vs. CIT [2015 (10) TMI 442 - SUPREME COURT] - Decided in favour of assessee.

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• 2019 (1) TMI 1013
  Computation of income of the assessee - applicability of provisions of section 44AD - application of the profit percentage at 8% on estimated turnover - Held that:- Referring to the submission of assessee before CIT(A) that if this amount of turnover is adopted then the provisions of section 44AD are not applicable because the same is applicable only up to turnover of ₹ 1 Crore we feel it proper to restore back the matter to the file of CIT(A) for fresh decision by way of a speaking and reasoned order as to what is the actual turnover of the assessee because if amount of turnover of ₹ 2,04,15,866/- is obtained by adding back the amount of purchases and sales then the same cannot be considered as turnover because in my considered opinion only the amount of sale is turnover and not the amount of purchase. But in this regard, the guidelines issued by The Institute of Chartered Accountants of India (ICAI) should also be considered. CIT-A should decide this aspect first by way of a speaking and reasoned order as to what is the turnover of the assessee. If it is found that the turnover of the assessee is less than ₹ 1 Crore then on the turnover so determined, rate of 8% rates can be applied to compute the income of the assessee but if it is found that the turnover is more than ₹ 1 Crore, then section 44AD of IT Act cannot be applied and the income has to be computed on a reasonable basis after examining the entire material available on record. - Appeal filed by the assessee is allowed for statistical purposes.

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• 2019 (1) TMI 1012
  Eligibility of deduction u/s. 80P for interest income from bank - Held that:- The assessee is directed to obtain certificate from RBI regarding the nature of business of assessee society within reasonable time and if it is certified by RBI that the assessee’s business is not that of a cooperative bank then it cannot be said that the assessee is a co-operative bank. If it is found that assessee is a co-operative bank then assessee cannot be allowed any deduction u/s. 80P but if it is found that the assessee is not a co-operative bank then in respect of deduction u/s. 80P for interest income from bank, the facts of the present case has to be examined in the case of PCIT and Another Vs. Totagars Co-operative Sale Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO [2015 (2) TMI 995 - KARNATAKA HIGH COURT] and if it is found that the facts of present case are in line with the facts in the case of PCIT and Another Vs. Totagars Co-operative Sale Society Ltd. (supra), then the issue should be decided against the assessee and if it is found that the facts of present case are in line with the facts in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (supra), then the issue should be decided in favour of the assessee

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• 2019 (1) TMI 1011
  Revision u/s 263 - bogus purchase and sales of shares - ground for revision is that the AO did not make any addition towards commission paid for arranging bogus capital gains - Held that:- It is worthwhile to note here that firstly no record or document is referred to by the PCIT to establish that the assessee had made any cash payment towards commission and secondly, a perusal of the assessment order reveals that the AO has made addition of the entire purchase value plus sale value totaling to ₹ 2,53,91,809/- to the total income of the assessee. It cannot be said that the AO has paid deaf ear to the aspect of commission which according to the PCIT, might have been paid by the assessee for arranging bogus capital gains. In such circumstances, for want of any whisper of commission payment in the assessment order, the said order may at the most be termed as erroneous, but it cannot be prejudicial to the interest of revenue particularly when the AO has added entire purchase value and sale value of shares declared to the income of the assessee as mentioned in assessment order. Unless both the conditions of assessment order being erroneous as well as prejudicial to the interest of Revenue are satisfied, PCIT was not justified to revise the said order u/s. 263 of the Act as held in several decisions cited by the assessee. No justification to sustain the impugned order. This order will not be an exemplar for other cases having different set of facts and will not be prejudicial to any other proceedings in the case of this assessee. - Decided in favour of assessee.

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• 2019 (1) TMI 1010
  Deduction u/s 80P(2)(a)(i) - interest income received by the assessee on investments made with Sub-Treasuries, Banks etc. - Held that:- Appeals is squarely covered in favour of the assessee by the consolidated order of the Cochin Bench of the Tribunal, in assessee’s own case [2018 (9) TMI 1463 - ITAT COCHIN] in the instant case the assessee had made investments with sub-treasuries and banks in the course of its business of banking / providing credit facilities to its members. Therefore, it was entitled to deduction u/s 80P(2)(a)(i) in respect of interest income that was received on such investments. It is ordered accordingly. - decided in favour of assessee.

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• 2019 (1) TMI 1009
  Entitlement to deduction u/s. 80P(2)(a)(i) - assessee are primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 - Held that:- Admittedly, the assessee are primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969. The Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. (2016 (4) TMI 826 - KERALA HIGH COURT) had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). - Decided in favour of assessee.

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• 2019 (1) TMI 1008
  Entitlement to deduction u/s. 80P(2) - Whether the interest income, commission from GDCS and processing fee are income from business or income from other sources? - Held that:- As decided in assessee's own case relying on NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. [2005 (8) TMI 28 - SUPREME COURT OF INDIA]can be applied to a Co-operative Society also where there is a claim of deduction u/s. 80P(2)(a)(i) of the Act. Considering all these aspects, we are of the opinion that the interest earned by the assessee could not have been treated under the head ‘income from other sources’ but only as a part of its business income. Cross Objection of the assessee is allowed.

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• 2019 (1) TMI 1007
  Claim for deduction u/s 80P(2)(a)(i) denied - nominal / associate members numbering 309 was in excess of 15% of the regular members, section 18 of the Karnataka Co-operative Societies Act, 1959 is violated - scope of Karnataka Co-operative Societies Act, 1959 as amended in 2014 - Held that:- CIT(A) has not dealt with the assessee’s contention raised before him that the decision of the Hon’ble Apex Court in Citizen Co-operative Society Ltd., (2017 (8) TMI 536 - SUPREME COURT) is distinguishable as the Karnataka Co-operative Societies Act, 1959 permits a Co-operative Society to admit nominal members and the assessee’s claims that the amendments of 2014 and 2016 to the Karnataka Co-operative Societies Act, 1959 refers only to associate members and therefore would not negatively affect the allowability of the assessee’s claim for deduction u/s 80P(a)(i) of the Act. In these circumstances, as narrated above the authorities below have not examined or considered whether the amendments to section 18 of the Karnataka Co-operative Societies Act, 1959 impacts the claim of deduction u/s 80 - set aside the orders of the authorities below and remand the matter of allowability of the assessee’s claim for deduction u/s 80P of the Act to the file of the AO for denovo examination and consideration and adjudication as per law in the light of the above observations. - decided in favour of assessee for statistical purposes

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• 2019 (1) TMI 1006
  Unexplained cash in hand - acceptance of books of accounts including the cash books - Held that:- The assessee maintained regular books of account which were produced before the AO and no defect was pointed out in those books. Assessee also furnished the quantitative tally and copy of the bill no. 395 dated 27.12.2011 showing the cash sale amounting to ₹ 3,44,006/-. The sale value arising out of the aforesaid bill was entered in the cash book The assessee explained that the cash found by the police was out of the cash in hand, said explanation of the assessee was not doubted, however, the addition has been made only for the cash sale bill. In our opinion, when the books of accounts including the cash books were accepted by the AO. There was no occasion to doubt the cash sale of the excisable goods particularly when the assessee furnished all the relevant documents relating to the sale vide Bill No. 395. We, therefore, considering the totality of the facts delete the impugned addition made by the AO and sustained by the learned CIT(A) Penalty u/s 271(1)(c) - Held that:- Since the addition sustained by the learned CIT(A) has been deleted in the former part of this order while deciding the appeal of the assessee therefore, the impugned penalty is also directed to be deleted. - Appeals of the assessee are allowed.

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• 2019 (1) TMI 1005
  Qualification for exemption u/s 10(23C) - assessee is a school of “Sanatam Dharma Paracharak Sabha” a society registered in the office of Registrar of Joint Stock Companies under Societies Registration Act on 5.2.1914 - no evidence of the assessee claiming exemption u/s 10(23C) (iiiad) of the Act in the past - assessee furnished its application in form No. 56D - Held that:- For claiming exemption u/s 10(23C)(iiiad) of the Act, the entity must be an University or other educational institute existing solely for educational purpose and not of the purposes of profit. In the present case it is not in dispute that the assessee is a school which is affiliated to the ‘Council for the India School Certificate of Examination’ (ISCE), copy of which is placed on the record. It is also not the case of the Department that the assessee school was existing for the purpose of the profit. See CIT and Another Vs Children Education Society [2013 (7) TMI 519 - KARNATAKA HIGH COURT] Thus when the assessee was running a school for educational purposes and not for earning profit, then it was entitled to the exemption u/s 10(23C)(vi) of the Act. - Decided in favour of assessee.

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• 2019 (1) TMI 1004
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- As decied in AMAN MEHTANI VERSUS DCIT [2017 (11) TMI 1759 - ITAT DELHI] Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2019 (1) TMI 1003
  Levy of penalty u/s 271(1)(c) - non specify the limb of Sec. 271(1)(c) for which the penalty proceedings had been initiated - defective notice - non deletion of irrelevant default from notice - Held that:- Admittedly, on a perusal of the ‘SCN’, dated 31.12.2010, it stands revealed that the Assessing Officer had failed to strike off the irrelevant default while calling upon the assessee to explain as to why the penalty u/s 271 (1) (c) of the Act may not be imposed on her. As both of the two defaults envisaged in Sec. 271(1)(c) i.e ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ are separate and distinct defaults which operate in their independent and exclusive fields, therefore, it was obligatory on the part of the A.O to have clearly put the assessee to notice as regards the default for which she was called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on her. As observed by us hereinabove, a perusal of the ‘Show cause’ notice issued in the present case by the A.O under Sec. 274 r.w. Sec. 271(1)(c), dated 31.12.2010 clearly reveals that there has been no application of mind on the part of the A.O while issuing the same. As penalty proceedings are in the nature of quasi criminal proceedings, therefore, the assessee as a matter of a statutory right is supposed to know the exact charge for which he is being called upon to explain that as to why the same may not be imposed. The non specifying of the charge in the ‘Show cause’ notice not only reflects the non application of mind by the A.O, but the same seriously defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envisaged under Sec. 274(1). Case of SA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SUPREME COURT] to be followed - Decided in favour of assessee

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• 2019 (1) TMI 1002
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Assessing Officer had ticked both the defaults in notice - Held that:- Admittedly, AO in the “SCN” dated 23.12.2011 had earmarked both the defaults viz “concealment of particulars of income” or “furnishing of inaccurate particulars of income”. Interestingly, though the AO had ticked both the defaults, however, the usage of the term “or” used between the said defaults clearly reveals that he had failed to point out the default for which the assessee was called upon to explain as to why penalty u/s 271(1)(c) may not be imposed upon him. In our considered view, on a bare perusal of the “SCN” dated 23/12/2011, it can safely be gathered that the Assessing Officer himself was not aware as to for what default the assessee was being put to notice and therein called upon to explain as to why penalty may not be imposed upon him - failure to specify the charge in the ‘Show cause’ notice clearly reflects the non application of mind by the A.O, and would resultantly render the order passed under Sec. 271(1)(c) in the backdrop of the said serious infirmity as invalid and void ab initio. - Decided in favour of assessee.

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• 2019 (1) TMI 1001
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2019 (1) TMI 1000
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- In the present case, it is an admitted fact that the AO initiated the penalty proceedings u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income but the penalty has been levied for concealment of income which was not the charge while initiating the penalty proceedings u/s 271(1)(c) of the Act. Therefore, the impugned penalty levied by the AO and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted. - decided in favour of assessee.

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• 2019 (1) TMI 999
  Correct head of income - income from leave and license charges and service charges - house property income V/S business income by the assessee - Held that:- As decided in assessee's own case we find that this issue is covered in favour of assessee and against Revenue by the decision of Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. Vs. CIT [2015 (5) TMI 46 - SUPREME COURT] the circumstances of the present case from which we arrive at irresistible conclusion that in this case, letting of the properties is in fact is the business of the assessee. The assessee therefore, rightly disclosed the income under the Head Income from Business. It cannot be treated as 'income from the house property' - Decided in favour of assessee. Disallowance of set off of brought forward business loss - AO had held that since assessee had not carried out any other business activity except for earning rental income and service charge, which according to AO was treated as income under the head ‘Income from House Property‟, therefore disallowed the set off of brought forward business loss by treating the business income as NIL. - Held that:- CIT(A) while appreciating the facts of the present case had rightly considered that AO has erred in holding the amount as Brought forward Business Loss and disallowing the said amount, which represents the credit available u/s 115JAA and hence the disallowance of the said amount made by the A.O. was rightly set aside by directing AO to give the credit for the said amount u/s 115JAA of the Income-tax Act, 1961. - Decided against revenue

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• 2019 (1) TMI 998
  Penalty levied u/s 271(1)(c) - addition on account of deposits made in the saving bank account - proof of concealing the particulars of income - defective notice - Held that:- In the present case, it is an admitted fact that the AO initiated the penalty proceedings u/s 271(1)(c) of the Act for concealing the particulars of income which is evident from page no. 5 of the assessment order dated 21.11.2011. However, the penalty was levied by the AO for furnishing of inaccurate particulars of income. Therefore, it is clear that the initiation of penalty proceedings were on different count then the levy of penalty. In that view of the matter, the penalty levied by the AO on different charge then the initiation of penalty proceedings was not justified - Decided in favour of assessee.

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• 2019 (1) TMI 997
  Deduction u/s 80P(2)(a)(i) - interest income earned from deposits held with nationalized bank - Assessee is a cooperative society registered under Gujarat Cooperative Societies Act, 1961 and engaged in providing credit facilities to its members - Allowance of prorata expenses in respect of interest income earned from deposits - Held that:- We find that Hon’ble jurisdictional High Court in the case of STATE BANK OF INDIA (SBI) VERSUS COMMISSIONER OF INCOME TAX [2016 (7) TMI 516 - GUJARAT HIGH COURT] has held that interest earned from investment made in scheduled bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction under section 80P(2). The Tribunal in earlier occasions on similar issue has taken a consistent view by following above judgment of the Hon’ble jurisdictional High Court. Since orders of the Revenue authorities are in accordance with judgment of the Hon’ble jurisdictional High Court cited supra, no interfere is called for in the impugned orders, which we confirm. However, any expenditure incurred by the assessee for earning such income could be allowed to it, if not already allowed. In other words, the AO has to allow prorata expenses in respect of interest income earned from deposits held with nationalized bank for computing deduction under section 80P(2) of the Act. -Appeal of the assessee is partly allowed for statistical purpose.

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• 2019 (1) TMI 996
  Revision u/s 263 - setting aside the assessment order framed u/s 147/ 143(3) - receipt of accommodation entries - order erroneous and prejudicial to the interest of revenue - scope of amendment made to the provision of section 263 - Held that:- There is a startling fact that seized material found during the course of search on the premises of the accommodation entry provider which shows that the credit in the books of account of the assessee are accommodation entries and such an important piece of evidence was the main reason of the opening of the assessment by issuing notice u/s 148 of the Act was not at all considered by the AO while making assessment u/s 147 of the Act. It was not at all confronted to the assessee as well as to the Directors of the depositor companies u/s 131 of the Act. It is further noted that all these decisions are not concerned with the amendment made to the provision of section 263 of the Act w.e.f. 01.06.2015 by the Finance Act 2015 wherein, the explanation 2 is inserted which even otherwise makes the order passed without making enquiries or verification which should have been made by the Assessing Officer are deemed to be erroneous insofar as it is prejudicial to the interest of the revenue. The impugned order passed by the ld CIT u/s 263 of the Act on 17.03.2017 also gets a statutory support from the above amendment. No infirmity in the order of the ld Pr. CIT in passing order u/s 263 of the Act - decided against assessee

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• 2019 (1) TMI 995
  Stay of demand - Penalty levied u/s 271AAB - Held that:- Assessee have already paid 1/3rd of the demand and the stay was granted at the time of filing the appeals, however, due to release of the appeals, the stay granted by the Tribunal was expired, we find it proper to grant stay against the balance outstanding demand up to 28/2/2019. The appeals of the assessee are now fixed for hearing on 06/3/2019, however, in view of the stay granted to the assessee up to 28/2/2019, the hearing of the appeals is prepone to 14/2/2019. The next date of hearing as pre-pone by us has been announced in the open court and has been noted by both the parties, therefore, no separate notice shall be issued in this regard. The parties are directed not to take any adjournment except in unavoidable circumstances. Stay petitions are allowed.

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• 2019 (1) TMI 994
  Levy of penalty u/s 271B - violation of provisions of Section 44AB - assessee did not attach tax audit report u/s 44AB of the Act, along with the return of income - Held that:- The assessee had only committed a technical venial breach without creating any loss to the exchequer. In the instant case, the tax audit report was very much made available before AO before the completion of the assessment proceedings. As In the case of Commissioner of Income-tax v. A.N. Arunachalam [1994 (1) TMI 65 - MADRAS HIGH COURT] in the context of filing of audit report for claiming deduction u/s 80J of the Act, had observed that once the audit report has been made available before the AO, before completion of the assessment proceedings, then the assessee should be granted deduction u/s 80J of the Act. We observe that this decision was rendered in the context of adjudication of quantum of deduction of the assessee. Hence the said analogy could very well be drawn and used in a penalty proceedings like that of the assessee. As assessee had committed only technical venial breach for which he could not be penalized. - Decided in favour of assessee.

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• 2019 (1) TMI 993
  Disallowance of weighted deduction u/s.35(2AB) - R & D Division Expenses - assessee is engaged in the business of manufacturing, trading, and export of dyes and dyes intermediates - Held that:- The issue is covered in favor of the assessee by the order of this Tribunal in assessee’s case [2018 (4) TMI 253 - ITAT AHMEDABAD] wherein as held that there is no scope for any other interpretation and since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under Section 35(2AB) of the Act by the assessee. Addition u/s. 14A r.w. Rule 8D - Held that:- As decided in assessee's own case [2018 (4) TMI 253 - ITAT AHMEDABAD] interest paid by the assessee was subsequently and assessee was having sufficient interest free fund to cover up the investment earning exempt income. Therefore, we are of the considered opinion that provisions of Section 14A are not attracted. Disallowance of depreciation expenses and vehicle expenses - allowable busniss expenses - personal use of asset - Held that:- We are of the considered opinion that such depreciation are allowed as it is not disputed that funds for purchases of the car were provided by the assessee company which is also reflected in the accounts of the assessee company. In our opinion, when the car is actually used for the purpose of business of the company depreciation thereon cannot be denied. Regarding the vehicle expenses and insurance expenses, we find that the cars were used by the body corporate and these were also shown as fixed assets in the balance sheet in the year under consideration. As we have allowed the depreciation in respect of such vehicles, we are inclined to allow the amount of vehicle and insurance expenses to the extent deleted by the CIT(A). We also note that the assessee was a limited company and, hence, it could act through its directors only. Thus, if cars were used by the directors for their personal use also, the same could be added to the income of the directors as perquisite but insofar as, the assessee-company was concerned the entire expenditure was for its business as the directors were appointed to look after the business of the assessee-company. Hence, no disallowance could be made in the hands of the assessee-company on account of personal use of directors. - Decided against revenue

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• 2019 (1) TMI 992
  Addition u/s 36(1)(iii) - disallowance of interest expenditure - assessee company has used the borrowed funds for non-business purposes - Held that:- It is not in dispute that the investments in mutual funds had not started till the time, the assessee started earning operating income from transmission of electricity. Not in dispute that the borrowed funds were entirely used by the assessee for investment in fixed assets for the purposes of business. In dispute that the assessee had adequate interest free funds of its own for making investments in mutual funds. Not in dispute that there were contractual restrictions imposed on assessee in respect of utilization of borrowed funds; and also, the assessee was liable for payment of substantial amounts of liquidation damages/pre-payment charges in case the assessee made pre-payment of loan repayments. Thus, it is also not in dispute that due to contractual restrictions and liquidation damages/pre-payment charges, as aforesaid; it was neither prudent for the assessee to divert any part of borrowed funds for non-business purposes; nor was it prudent to make pre-payment of loan repayments even if the assessee had its own interest free funds. In these specific and peculiar facts and circumstances, there is no case for any disallowance of interest u/s 36(1)(iii) of I.T. Act. Disallowance of interest U/s 36(1)(iii) on merits. Accordingly, both the appeals filed by the Revenue are dismissed.

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• 2019 (1) TMI 991
  Disallowance of Depreciation to assessee trust - whether capital expenditure was already allowed as application towards charitable purposes and allowance of depreciation thereon would amount to double deduction - Held that:- Apex Court in CIT Vs. Rajasthan and Gujarati Charitable Foundation (2017 (12) TMI 1067 - SUPREME COURT) has held that the assessee – trust is entitled to depreciation u/s 32 of the Act on assets whose cost has been allowed as application towards charitable purposes u/s 11(1)(a) of the Act - the amendment in section 11(6) of the Act brought about by Finance (No.2) Act, 2014 which became effective from Assessment Year 2015-16 and prohibited the allowance of depreciation in such cases, is prospective in nature. Thus the assessee is entitled to be allowed depreciation u/s 32 on assets whose cost has been allowed as application towards charitable purposes. - Decided in favour of assessee.

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• 2019 (1) TMI 990
  Unexplained machinery expenditure u/s 69C - failure of the assessee to produce the said party issuing bills - Held that:- Held that:- Revenue is not justified in treating the bills issued by the fifth party as bogus merely because of the failure of the assessee to produce the said party before him for verification, especially when the overwhelming evidence was produced by the assessee in the form of relevant bills, payments by cheque, tax deduction at source, etc. to support and substantiate his claim for the corresponding machinery expenses. As a matter of fact, the assessee even filed the copies of PAN Cards of these parties to establish their identity before the CIT(Appeals) and although the CIT(Appeals) accepted the factum of machinery expenses incurred by the assessee on the basis of the supporting evidence, he treated the bills issued by the concerned three parties as bogus on the basis of unfounded doubts expressed by the AO and sustained the addition to the extent of profit on estimated basis. Having regard to all the facts of the case as well as the evidence placed on record by the assessee, we are of the view that the ld. CIT(Appeals) ought to have deleted the addition made by the Assessing Officer on account of the alleged bogus machinery expenses when the claim of the assessee for such expenses was duly supported by the relevant and cogent evidence - Decided in favour of assessee.

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• 2019 (1) TMI 989
  Cancellation of registration granted to the assessee society u/s 12A - it was observed that assessee society has sold land belonging to it without permission of CIT (E) which makes its activities ingenuine - Addition u/s 68B - acceptance of additions by the assessee contrary to legal position - Held that:- When the assessee society has not become the owner of the land in question, there is no question of indulging in into ingenuine activities or that the activities of assessee society are not being carried out in accordance with the object of the Trust. It is nowhere the case of the CIT (E) that the assessee society is not running in accordance with its aims and objects. No doubt, assessee society has entered into a sham transaction by virtue of the sale deeds dated 24.07.2006 and 26.09.2007 qua the land in question in order to misrepresent AICTE to get the approval for setting up a polytechnic college, but this fact has not proved in any manner that the activities of the assessee trust are not genuine or are not being carried out in accordance with its aims and objects. Rather in the remand report it is recorded by the AO that assessee society is running an educational institution having 1000 students on its roll with huge teaching staff and no complaint has been received as to its activities. Contention of the DR that once the addition made by the AO u/s 69B of the Act qua the sale of land in question for a consideration of ₹ 7,50,000/- by the assessee society has been accepted by the assessee, the assessee society is estopped from claiming that it has not transferred the land in the name of Darshan Singh, is not sustainable as discussed in the preceding paras that it cannot be treated as a sale transaction at all being without consideration, factum of merely accepting the addition made by AO u/s 69B, would not change the legal position. CIT (E) has erred in cancelling the registration granted to the assessee society u/s 12A - Decided in favour of assessee.

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• 2019 (1) TMI 988
  Disallowance of the carry forward of the Business loss - provisions of section 14A r.w.r 8D applicability - as per revenue no business activity was being carried out by the assessee during impugned AY - receipts in the shape of dividend, interest and liabilities not payable were treated as Income from Other Sources against which the assessee was allowed expenditure - income from office premises was assessable as Business Income or Income from House Property? - Held that:- We are of the considered opinion that both the lower authorities have failed to clinch the issue in the proper perspective and therefore, we have no option but to remit the matter back to the file of AO for proper appreciation of the facts and re-adjudication as per law. It is made clear that income from office premises shall be assessed as per the statutory provisions depending upon the fact that whether the same is assessed as Income from House Property or as Business Income. The dividend income of ₹ 0.47 Lacs has been claimed as exempt, against which, disallowance u/s 14A, if deemed fit as per circumstances, may be computed. The liabilities not payable, prima-facie, seems to be of the nature covered by Section 41(1) and therefore assessable as Business Income. The interest on tax refund shall be assessable as Income from Other Sources. Whatever stand is adopted by lower authorities with respect to office premises, the expenditure found necessary to maintain the corporate personality / identity shall be allowable under the head Business Income. The deductibility of other expenditure including depreciation shall be ascertained at the threshold of stand of lower authorities with respect to fact that whether the income from office premises was assessable as Business Income or Income from House Property. - Appeal allowed for statistical purposes.

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• 2019 (1) TMI 987
  Deemed dividend addition u/s 2(22)(e) - assessee company has received certain amounts from M/S Euro Safety Footwear (P) Ltd., Shri Kulbir Singh is a shareholder having substantial interest in both the companies - collaboration agreement to be obtained from the Bank - proof of commercial transactions - CIT-A deleted the addition - Held that:- Assessee during the course of appellate proceedings placed on record the evidences in the form of collaboration agreement, sanction letter of bank etc. These evidences alongwith the submissions of the assessee were forwarded to the AO for comments. The AO made inquiries from the Bank and has confirmed the genuineness of the documentary evidences in the form of bank letter, collaboration agreement and bank sanction letter. Thus A.O. was given a reasonable opportunity to comment on the genuineness of the collaboration agreement and bank sanction letter. The CIT(A) specifically asked the A.O. vide letter and it was only after the receipt of remand report and after considering the same the appellate order has been passed. On the basis of the above, it is seen that the ld. CIT(A) was well justified in holding that deemed dividend can be taxed only in the hands of the recipient, either being individual shareholder, or the concern in which the individual has a substantial interest, or if any payment is made on behalf of, or for the individual benefit of the individual shareholder, which is not the case herein. - Decided against revenue

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• 2019 (1) TMI 963
  Validity of Notice issued u/s 142(1) - Anonymous Donations - 'Charity Box' (Gollak box) being the donations made by various followers and devotees visiting the Gurudwara - Exemption u/s 11 and exemption granted u/s 80G - charitable trust - Scope of 115BBC - Held that:- Since no adverse order was passed against the petitioner and the earlier writ petition was dismissed, the second writ petition would not be maintainable. However, it is again clarified that in case any adverse order is passed by the Assessing Officer against the petitioner in pursuance to notice issued under Section 142(1) of the Act, it shall be open to the petitioner to take recourse to statutory remedies in accordance with law. - writ petition is not maintainable.

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• 2019 (1) TMI 962
  Seeking for stay of demand of entire disputed tax - Held that:- It is evident that the order of assessment has not reached its finality. Needless to say that the petitioner is entitled to file stay petition before the Appellate Authority and canvas all the points in support of their stay petition. In this case, assessee have gone before the Principal Commissioner viz., the first respondent herein and sought for stay, who unfortunately rejected the petition by a single line order, without stating any reason or finding as to why the application is liable to be rejected. Therefore, find that the said order of the first respondent cannot be sustained. However, this Court is not inclined to remit the matter back to the first respondent for considering the petition once again, since the petitioner is entitled to file such stay petition before the Commissioner of Income Tax (Appeal) himself, where the appeal is admittedly pending. Accordingly, this writ petition is allowed and the impugned order is set aside. Consequently, the petitioner is directed to file a stay petition before the Commissioner of Income Tax (Appeals) in the pending appeal within a period of two weeks from the date of receipt of a copy of this order

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• 2019 (1) TMI 961
  Levy of penalty u/s 271(1)(c) - validity of notice - non specification of specific grounds - Concealment of income - Held that:- Substantial question of law is covered by the judgment of this Court in the case of THE COMMISSIONER OF INCOME TAX AND ANOTHER Vs. MANJUNATHA COTTON AND GINNING FACTORY [2013 (7) TMI 620 - KARNATAKA HIGH COURT]. Following the aforesaid judgment of this Court, the substantial question of law is answered in favour of the assessee

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• 2019 (1) TMI 960
  Addition u/s 14A r.w.r 8D - whether for assessment year 2006-07 the assessing Officer could rely upon Rule 8D of the Rules for working out the disallowance of expenses under Section 14A of the Act? - Held that:- As relying on ESSAR Teleholding Ltd.'s case [2018 (2) TMI 115 - SUPREME COURT OF INDIA] Rule 8D of the Rules is prospective in operation and could not have been applied to any assessment prior to assessment year 2008-09. Hence, the issue is decided against the revenue.

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• 2019 (1) TMI 959
  TDS u/s 194C - assessee has paid truck hire charges exceeding ₹ 50,000/- each to 26 persons aggregating ₹ 18,00,100/- without deducting TDS u/s 194C - existence of contract between assessee and client - Addition invoking the provisions of section 40(a)(ia) - Held that:- Assessing Officer simply brushed aside the submission of the assessee and held that the assessee was liable to deduct TDS u/s 194C of the Act - As find that the case of the assessee is squarely covered by the decision of Hon’ble Delhi High court in the case of Hardarshan Singh [2013 (1) TMI 314 - DELHI HIGH COURT] where it was held that the assessee was not liable to deduct TDS u/s 194C of the Act where it acted as a facilitator or intermediary between client and truck owner and that there was no privity of contract between assessee and client for carriage of goods. Therefore, set aside the orders of the lower authorities and delete the addition - Decided in favour of assessee.

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• Customs

• 2019 (1) TMI 986
  Maintainability of application before Settlement Commission - Jurisdiction - third proviso to Section 127B [read with Section 123(2)] of the Customs Act - gold was detected and seized from her person - burden to prove smuggled gold - Held that:- The decision in Ram Niwas Verma [2015 (9) TMI 197 - DELHI HIGH COURT] has analysed various judgments including the previous judgment in Ashok Kumar Jain [2013 (8) TMI 317 - DELHI HIGH COURT]. The Court held that by virtue of Section 123(2), jurisdiction of the Commission is barred on account of the third proviso to Section 127B(1), in cases involving or concerning smuggling of gold or watches. The plain reading of Ashok Kumar Jain [2013 (8) TMI 317 - DELHI HIGH COURT] that was relied upon by the respondent assessee, shows that the Court had not considered the impact of Section 123(2) upon the jurisdiction of the Settlement Commission in the light of the third proviso to Section 127B. A conjoint reading of these two provisions clearly bears out that the jurisdiction of the Commission to settle cases involving goods referred to in Section 123(2) is excluded. This court is of the opinion that the impugned order cannot be sustained which is hereby set aside - The matter is remitted to the concerned Adjudicating Officer, who shall proceed further and issue notice in the proceedings to be held thereunder.

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• 2019 (1) TMI 985
  Duty Drawback - Section 74 of Customs Act, 1962 - re-export of aircraft - commercial use of engine - requirement of Guaranteed Remittance Declaration - applicability of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 - Held that:- The exemptions under the original Regulation 4, by and large envisioned non-commercial export. Significantly, Regulation 4 (f) has dealt with the export of aircraft or aircraft engine and spare parts but for overhauling and/or repairs abroad subject to their re-import into India . The other condition was goods imported free of cost on re-export basis. The amendment by Regulation 4 generally empowered RBI subject to the terms and conditions stipulated by it to promote the export - In case the Revenue s stand were to be accepted, the petitioner would be bound to file a Guaranteed Remittance Declaration, which in turn would imply that it would remit back the amounts. The declaration is to ensure that the exporter [i.e. Indian resident by Regulation 7 of the said regulations] would receive the concerned amount. The requirement of a waiver, in the alternative, would arise only if the principal requirement of the GR declaration is at all attracted. In this case, it is undisputed that the exporter i.e. owner and the person entitled to the engine were one and the same i.e. the petitioner. Having regard to these circumstances, the necessity for blind adherence to a declaration and further necessity for waiver, in the opinion of the Court was entirely uncalled for. There is sufficient indication in the Regulations i.e. the manner of definition of export and even the phraseology of Regulations regarding non-commercial exports that in cases like the present one, if compelling circumstances lead the original owner to bring in goods to remedy an unforeseen eventuality, such as the need to fly back an aircraft, it is not to be subjected to such requirements. The absurdity is writ large on the face of the record. The Court is of the opinion that there is no question of respondents/Customs Authorities insisting that the GR requirement was mandatory or that, in its absence, exemption from RBI was necessary - petition allowed.

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• 2019 (1) TMI 984
  Refund of SAD - rejection on the ground that what was imported by the appellant was prime quality pre-painted aluminium zinc alloy coated steel sheet in coil form , whereas what was sold by the appellant as works contract service was material for laying of proflex roof, which fell under different classification - it was thus alleged that condition of N/N. 102/2007-Cus. dated 14.09.2007 that the goods imported were sold on payment of VAT/sales tax was not satisfied. Held that:- It is apparent that an anomaly has arisen in two different judgments of the Tribunal on identical facts, on account of the appeals being bifurcated on the basis of pecuniary jurisdiction. In the opinion of this court, when all the appeals arise out of a common Order-in- Appeal and the facts are also identical, for the purpose of uniformity a similar order is required to be passed in all the appeals. When in one group of appeals arising out of the identical facts, the appellant has been permitted to claim the benefit of refund of 4% SAD on goods sold as such , the appellant cannot be denied the similar benefit in the other group of appeals. Under the circumstances, the anomaly that has arisen on account of the aforesaid circumstances needs to be rectified. The technical plea that such an issue was not raised before the Single Member Bench of the Tribunal would not come in the way of this court in rendering substantial justice in the present case. The question is answered in the affirmative, viz., that the appellant is entitled to similar relief as granted by the Division Bench of the Tribunal in the group of appeals arising out of the common order of the Commissioner (Appeals) - appeal allowed - matter is restored to the file of the adjudicating authority to ascertain the quantum of as such sale of the imported material sold in coil or sheet form, which alone can be considered for refund of 4% SAD paid at the time of import.

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• 2019 (1) TMI 983
  Rectification of mistake - release of the bank guarantee in compliance with the directions given in the final order - Rule 41 of (CESTAT) Procedure Rules - Held that:- The Revenue is directed to comply with the directions by returning the bond and bank guarantee by 25.01.2019 and file the compliance report on or before 30.01.2019.

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• 2019 (1) TMI 982
  Refund of excess Customs duty - rejection on the ground that the assessment of the Bill of Entry was as per the amended Section 17 of the Customs Act, 1962 and the customs duty was paid by the appellant on the basis of their own assessment and that assessment has attained finality being not challenged by the appellant - unjust enrichment - Held that:- The appellants were eligible for concessional rate of duty as per Notification No.46/2011-Cus. in view of the fact that the goods were imported from Malaysia in terms of the ASEAN-India Free Trade Area Preferential Tariff Agreement. Also, in the present case, there was no dispute about classification or valuation or description of the imported goods. Therefore there was no need to challenge the assessment. Unjust enrichment - Held that:- The appellant has produced a certificate from the Chartered Accountant who after verification of the records has certified that the amount of duty paid is shown as receivables under the head Customs duty receivables in the books of accounts of the appellant. But the said certificate has been rejected by the Commissioner(Appeals) on the ground which is not sustainable in law - on identical issue, the Tribunal in the case of Indian Institute of Science [2011 (4) TMI 1289 - KARNATAKA HIGH COURT] has allowed the appeal of the assessee and remanded the case back to the original authority to decide the issue de novo after affording an opportunity of hearing to the assessee. Appeal allowed by way of remand.

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• Corporate Laws

• 2019 (1) TMI 981
  Winding up proceedings - failure to pay dues - non completion of work by petitioner - Held that:- The petitioner’s work orders dated 22.10.2007 and 11.06.2007 have both been duly issued by the respondents. They contain details of the work which was to be done. The work done by the respondents are duly spelt out in Annexure A attached to the work orders dated 22.10.2007 and the details are also attached to the final bill. The respondents are needlessly trying to create confusion by mixing up two work orders. Reference may also be had to some of the communications which have been filed by the respondent alongwith counter-affidavit. Copy of email dated 7.11.2007 has been filed which states that cove lights are not to be installed with LED lights instead the items which was approved in the tender be used. It also talks about 60 points (60Amps) teleport room (IV floor) for TV head end is required. Similarly, the communication dated 6.11.2007 lists out the urgent requirement and works which are to be done. A third communication dated 28.12.2007 where some complaint is made about work of first floor. In response, on the very same date the petitioner has stated that the first floor is virtually ready. It is clear that these are minor glitches that may have arisen while execution of the work. In fact these glitches appear to pertain to first contract dated 11.06.2007. That apart, there is nothing on record to show that the petitioner did not finally complete the work or that the respondent had to get the defective work corrected from some third contractor. It is clear that the defence raised by the respondent is not bona fide. The facts show that the defence raised by the respondents lacks bona fide and cannot be accepted. Accordingly, admit the present petition. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator.

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• FEMA

• 2019 (1) TMI 980
  Stay of penalty imposed - Contravention and allegations against the appellant u/s 6(3)(d) of FEMA - penalty imposed - delay in settlement of import dues - Held that:- The Appellants have prima facie demonstrated that there have been no violations of the provisions of FEMA, the Rules, Regulations and the Master Circular on Imports. Without prejudice to any of the aforesaid, and assuming without admitting that there was a violation, even then the RBI regularized the same by granting the permissions to settle the dues specifically from “FEMA Angle”. The Appellant has also able demonstrated the factual conditions which led to the delay in settlement of import dues. The RBI letter expressly states that the permission was issued from foreign exchange angle under FEMA. The limitation of the permission was only in respect of any other applicable laws other than FEMA. The Respondent is admittedly not seeking to impose penalty for alleged violation of any other law. In view of the aforesaid, the contentions of the Respondent especially at Para 16 are unsustainable. In this regard, the submissions of the Appellants in their Appeals, Stay Applications and the common Synopsis are reiterated. Prima facie it is of the view that the respondent has no jurisdiction to reinterpret the terms of the agreement between Google Ireland and Google India. Undue hardship that will be caused to the Appellants if they are made to make a deposit of any part of their respective penalty which is without basis in law and in any event highly disproportionate to the bona fide actions of the Appellants. In the present case, the RBI has specifically allowed the settlement of dues from FEMA angle In the light of the prima facie has been made by the appellant and the appellant will suffer hardship if the appellant is asked to deposit the penalty amount. After having through the facts and material placed on record, I am of the opinion that the chances of success of appeal are more than the failure of appeal. Thus, the prayer is allowed. M.P is disposed of. There shall be a stay of operation of the impugned order till the final decision of appeals.

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• Service Tax

• 2019 (1) TMI 979
  Levy of service tax - Development Fee collected by the appellant, from the passengers at IGI Airport - scope of airport - Held that:- An identical issue has been dealt with by the co-ordinate bench of Mumbai Tribunal in the case of Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai [2016 (8) TMI 1054 - CESTAT MUMBAI], where it was held that Since collection of development fee is not for any specific service rendered by them, but is a flat rate of charge to passengers, it cannot be said that the amount so collected is by way of service charge - the ratio of the said judgment squarely covers the case in hand. The service tax is not chargeable on Development Fee - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 978
  Quantum of Penalty u/s 78 of FA - Commercial Training or Coaching Centre Service - non-payment of service tax - Held that:- Section 11AC of Central Excise Act is relevant for the purpose. The same can be read in view of Section 83 of the Finance Act. The perusal thereof makes it clear that whenever excise duty of the service tax has not been paid which is the admitted fact of the present Appeal, the person who is liable to pay the tax shall be liable to pay the penalty as well at such rates as mentioned in the respective Sections i.e. 76-78 of the Finance Act, 1994 - The further perusal of Section 11AC makes it clear that the penalty so described under said Sections can be reduced to nil in case the duty /tax so demanded is paid even prior the issuance of the SCN. It stands reduced to 25% only in the case where the payment of the tax is made within 30 days of the issuance of the SCN. In the present case though the adjudicating authority failed to mention the entitlements of the assessee to the benefit of reduced penalty, but the fact remains is that when appellant herein is not entitled to the benefit of reduced penalty being not paid within 30 days of SCN, hence, no mention of this benefit in Order-in-Appeal is not relevant - penalty has already been reduced to 50% - appeal dismissed - decided against appellant.

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• 2019 (1) TMI 977
  Imposition of penalty - Manpower Supply Service - non-payment of service tax - case of appellant is that the Manpower Supply Service was not taxable till 01.07.2012 - Held that:- The demand as been raised qua receiving the manpower services was not taxable till 30.06.2012 i.e. till the preceding year of the period involved. No doubt till 29.10.2014 i.e. when the audit was conducted by the Department, the appellant had neither got itself registered nor had discharged the service tax liability but the aforesaid unawareness due to the impugned amendment being very much proximate to the period of demand, the possibility of appellant being unaware cannot be ruled out. Since the allegations of tax evasion on the ground of mis-representation and fraud are serious in nature, the heavier burden was upon the Department to prove some positive act on part of the appellant of the alleged intentional tax evasion. But except the submission that the tax was not paid till it was noticed by the Department there is no other evidence on record - also, it is also apparent from the e-challans enclosed on record dated 31.01.2015 that the entire amount of service tax as demanded was paid alongwith the interest on the said date i.e. much prior the issuance of the impugned SCN. For the given circumstances also, the question of imposition of penalty upon the appellant does not at all arise. Penalty not imposable - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 976
  Refund of CENVAT Credit - time limitation - relevant date for refund claim - Rule 5 of the Cenvat Rules - Held that:- It is, no doubt, true that the first appellate authority has remanded the matter to the adjudicating authority, but in view of the observations made in paragraph 9 of the order, the appellate authority will re-examine the matter by considering the date of invoice as the relevant date for calculating the limitation. This, in our opinion, would be contrary to the view expressed by the Larger Bench of this Tribunal in the case of CCE&CST, Bengaluru Service Tax-I [2018 (2) TMI 946 - CESTAT BANGALORE] - thus, in respect of export of services, the relevant date for deciding the time limit for claiming refund under Rule 5 of the Cenvat Rules is the end of the quarter in which the FIRC is received in cases where the refund claims are filed on quarterly basis. It is not in dispute that the refund claims were filed on quarterly basis. We, therefore, direct that the adjudicating authority while examining the matter pursuant to order passed by the Commissioner (Appeals), will take the end of the quarter in which the FIRC is received as the relevant date for determining the time limit - appeal allowed by way of remand.

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• 2019 (1) TMI 975
  Export of Service or not - Business Auxiliary Service - consideration of the marketing / sales promotion services provided in India - payment of commission to the assessee in freely convertible foreign currency - Held that:- Admittedly the appellants are providing the services to their foreign company situated outside India and their parent company does not have any commercial or industrial establishment or any office in India and the services by appellant are provided in relation to provision of service recipient i.e. IBM WTC. Further it is found that the appellant satisfied all the conditions that are required under the Export of Service Rules, 2005. Further, there is no condition under Export of Service Rules, 2005 that the services performed in India would not qualify as export of service. The rules only provide that recipient of service should be situated outside India and thus specifically acknowledges that export of service can be provided in India. Further the sales commission was received in India in freely convertible foreign currencies. Therefore the appellants have fulfilled all the conditions of export of services as provided under Rule 3(1)(iii) of Export of Service rules. Tribunal in the case of Microsoft Corporation (I) Pvt. Ltd. [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] after considering various decisions of the High Court and the Supreme Court has come to the conclusion that the BAS provided by the assessee to their Singapore parent company was delivered outside India as such was used there and is covered by the provisions of Export of Service Rules and are not liable to service tax. Appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 974
  Penalty u/s 76 of FA - condonation of delay of 1293 days in filing the cross objection - Tribunal rejected the application - HC directed the tribunal to reconsider the application, while tribunal as passed the Final Order itself - the factum of Final Order dated 02.07.2018 was not brought to the notice of the Hon’ble High Court of Madhya Pradesh despite that the said Order is acknowledged to be very much in the knowledge of the respondent-assessee - Held that:- The circumstances as narrated since were not brought to the notice of the Hon’ble High Court of Madhya Pradesh that the Ld. Counsel for the respondent assesses has requested time to seek clarification from the Hon’ble High Court itself. In the interest of justice and in view of the observations of Hon’ble High Court of Madhya Pradesh, time as requested is hereby given. Since before this Tribunal nothing is pending as on date, Appeal being already disposed of, liberty is given to the asseesse-respondent to seek the appropriate remedy, if required, subsequently. The present matter however stands disposed of as of now.

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• Central Excise

• 2019 (1) TMI 973
  Valuation - related party or not - Rule 9 of Valuation Rules - Whether the appellant i.e. Balmar Marketing Pvt Ltd. and one Aipiai Electric Trading is a partnership firm; and Whether they are related persons and attracting the provisions of Rule 9 of the Valuation Rules? - Held that:- As the Appellant company is incorporated under the Companies Act and only for the fact that the partners of the partnership firm, namely, M/s AETC, are related, will not make them relative as defined under Section 2(41) of the Company Act read with Schedule 1A of the Companies Act, as has been held by this Tribunal in case of CCE vs Akash Ispat Pvt Ltd. [2016 (2) TMI 683 - CESTAT NEW DELHI]. The appellant and said AITC/firm are not related persons and accordingly the provisions of Rule 9 of the Valuation Rules are not attracted - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 972
  CENVAT Credit - input - cement used in mines for filling pits after extraction of ore - whether the cement used by the appellant who were asked to extract ore from the proposed ore block but only after conducting stopping operations of the said ore blocks, can be called as input? - Held that:- The cement used herein is a good which has relation, though indirectly, with the extraction of ore thus it qualifies for audit under Rule 2(k), prevailing during the relevant period. Further, without filling of the ore pits the appellant was statutorily, not in position to extract the ore, i.e. the final product thus the use of cement was very much in relation to the manufacture which was extraction of ore in the impugned cases. Therefore, the appellant is entitled to treat the same as input. The clarification to this effect is rather available in circular no. 943/4/2011-CX dated 29.04.2011. Thus, the adjudicating authority below has committed an error while denying the credit on cement used by appellant in filling pits for making area fit for ore extraction - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 971
  CENVAT Credit - input services - commission paid to their agents - Contradicting decisions - Held that:- In view of the two contradictory decisions, the legislature took a call for explaining the meaning of sales promotion holding that Taking into circumstances under which the Explanation was inserted in Rule 2(l) of Rules, 2004 and consequence of the Explanation to extend the benefit to the assessee as per Board Circular, we hold that the Explanation inserted in Rule 2(l) of Rules, 2004 by Notification No. 2/2016-CX (N.T.) should be declaratory in nature and effective retrospectively. Commissioner(Appeals) has committed no error while allowing the assesees’ Appeal - appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 970
  Valuation - inclusion of investment subsidy received in assessable value - Held that:- The matter is no longer res-integra as on the similar facts, various decisions have been passed by this Tribunal, wherein it has been held that there is no justification for inclusion of the subsidy used for the payment of VAT amount in the assessable value and accordingly the demand of central excise duty on this account has been dismissed - reliance placed in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI] - amount need not be included in assessable value - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 969
  Clearance of goods to a specified project authority approved by the Government of India - Refund claim - exemption in terms of Notification No. 108/95-Ex dated 13.10.1995 - Held that:- The exemption certificate as furnished by the appellant was providing and was fulfilling all the conditions as are required to be fulfilled for seeking the benefit. The certificate has been signed by Executive Chief Project Implementing Authority/ Chief Project Manager. It has been clarified in the certificate itself that his post is equivalent to Joint Secretary in Government of India in Ministry of Railways. Commissioner(Appeals) has miserably been silent about acknowledging all the details furnished to him vide the exemption certificate rather has opted to be silent for the same. The mere emphasis upon the Notification without acknowledging the complete compliance thereof on the part of the appellant is opined unappreciable on the part of the adjudicating authority. Appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 968
  Cash refund of unutilized credit - closure of factory - due procedure has been followed by the appellant by informing the department about such closure - denial of credit on the ground that the refund of unutilised credit is not admissible to the appellant by way of granting cash refund under the provisions of Rule 17 of Chewing Tobacco and Unmanufactured Tobacco Packing Machine Rules 2010 - Held that:- In the case of Delphi-TVS Diesel Systems Ltd. Vs. CESTAT, Chennai [2015 (9) TMI 774 - MADRAS HIGH COURT], it is held that rules being subordinate legislation, cannot prescribe anything different than prescribed in the Act, rules can occupy a field that is not occupied by Statute. The rule cannot occupy a field i.e. already occupied of the statute. In view of the above judgement, the Hon ble High Court its very much intention that the ground taken by the first appellate authority to reject the refund scheme is not sustainable in the eyes of law. By application of aforesaid ratio in the present case, we find that by application of grant of refund inadmissible to the appellant needs to be refunded back to the appellant. We find that there are many decisions of the Tribunal as well as the superior Courts, that the Cenvat credit lying with the appellant is also a duty and cannot be treated separately as compared to the Revenue in PLA account. Thus, the appellant is entitled to refund of the Cenvat credit lying unutilised at the time of closure of their factory - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 967
  Method of Valuation - wall putty - mutually agreed price - principal-to-principal basis - job-worker or not? - applicability of Section 4(1)(a) of the Act or under Section 4(1)(b) of the Act read with Rule 10 A of the Central Excise Valuation? - Held that:- The issue is decided in appellant own case M/S. MIRAJ DRYMIX (P) LTD., SHRI ASHOK N MEHTA, DIRECTOR, SHRI SANJAY MAHAGAONKAR, AVP (TECH) , SHRI RAJ KUMAR YADAV VERSUS COMMISSIONER OF CGST RESPONDENT CC CE, ALWAR [2018 (8) TMI 162 - CESTAT NEW DELHI], where it was held that Under the provisions of Rule 10A with Explanation, the condition precedent, i.e supply of raw material by the principal to the other manufacturer, job worker is not satisfied in the facts of the present case. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 966
  Clandestine manufacture and removal - 28297.0 MT of M.S. Ingots - demand based on excess electricity consumption including the duty involved in alleged clandestine removal of MS ingots for the period w.e.f. 2005-06 to 2010-2011 - Held that:- The initial demand of ₹ 8,21,08,631/- has already been dropped to the major extent of ₹ 8,00,40,529/- qua excess consumption of electricity, relying upon the decision of Hon’ble Apex Court in the case of RA Castings Pvt. Ltd. [2011 (1) TMI 1302 - SUPREME COURT OF INDIA]. We do not find any infirmity in the order to that extent. The similar issue is no more res-integra as stand already been decided in favour of assessee. Therefore, to that extent, the order under challenge is upheld. Clandestine removal - entire case of the Revenue is based upon the records recovered from M/s Monu Steels about removal of finished goods to various customers and about details of procurement of raw-material and is based upon the statement of the representative of M/s Monu Steels - Held that:- Department has failed to obtain any document, as direct evidence, to corroborate the said recovered record. The same also finds mention in the order under challenge. Further, the Revenue has not made any other enquiries and has solely relied upon the entries made in the record of M/s Monu Steels - The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 965
  Valuation - price variation clause - clearance of transformer goods - clearance of the finished products at the lower rate of duty but subsequently, cleared the goods at the higher rate of duty - short payment of duty alongwith cess - penalties - Held that:- It is not found from the records that the assessement has been opted/made provisionally under the provisions of Rule 9(B). In that circumstance, once the clearance is without PVC, the price cannot be revised retrospectively, even after the issue of the circular at the lower rate. In such a situation, had the assessee having been the intention of opting for the lower rate as per E-I Return, they would have taken advantage of reduced rate of duty - the clearance of the impugned goods has rightly been done at the prevalent rate at the time of clearance of the goods. Penalties - Held that:- Once the ER-I Return has specifically been filed, there is a mention in the PVC, which is evident in the show cause notice itself - there is no suppression of material facts by the appellant with the Department and it is not fit for imposition of penalty, therefore, the penalty is required to be set aside in this case. CENVAT Credit - input services - insurance premium of cars, which were registered in the name of partners of the appellant firm - Held that:- Since it is being used in furtherance of the purpose of the manufacture of the goods and other related work by the Director of the Company, there is no bar to avail cenvat credit on the service tax paid - credit allowed. Appeal allowed in part.

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• 2019 (1) TMI 964
  Clandestine removal - MS Ingots - demand based on private records seized by the department from the premises of M/s Mono Steels - reliability on statements - Held that:- No evidences have been recovered from the manufacturing premises of the appellant No. I regarding excess manufacture, clandestine clearance and excess purchases at the end of the buyers of the finished goods. The Department has also not strived to prove that as to how such a huge quantity have been manufactured and as to how such a huge quantity was ultimately sold by the appellant in the market - The Department has failed to adduce any other documents to corroborate the said recovered record. Further, the Revenue has not made any enquiries regarding manufacturing of excess quantities of finished goods as well as further sale of same in the market and has solely relied upon the entries made in the record of M/s Monu Steels for demanding central excise duty. Similarly for the record from M/s Kailash Traders as far as the raw material is concerned, Department couldn’t adduce any other corroborative piece of evidence. The law i.e. as to whether the third party record can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Reliability on statements - Held that:- The statement of various persons recorded during the course of investigation can only be taken for consideration, if either there is a full proof corroboration or if the same has been confirmed under the cross examination during the course of adjudication - in the present case, neither there is a full corroboration of alleged excess manufacture or clearance or purchases of finished goods and raw material nor the statements of key persons has been established by cross-examination during the course of adjudication. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (1) TMI 958
  Penalty u/s 10(A) of the Central Sales Tax Act, 1956 - absence of the registration certificate being proven - burden to establish mens rea on the revenue - import of generator set and non-woven fabric - Held that:- There was no plea set up by the assessee to doubt the correctness of the allegation made by the revenue that it had imported generator set and non-woven fabric against Form-C without being authorized or permitted in it's registration certificate - Once the assessee failed to set up a plea either that it was authorized under the registration certificate to purchase generator set or non-woven fabric or that it was engaged in any activity other than sale of two wheelers vehicle, the misutilization of Form-C to import such items had to be tested in that context alone. Therefore the utilization of Form-C to import totally unconnected goods, namely, a single electricity generator set and nonwoven fabric was rightly found to be a case of false declaration - In the instant case, there is no connection between the items for which the assessee was registered and the items that were imported for it's utilization Form-C. Also the items thus imported had no connection with the activity for which the petitioner claims itself to have been registered being trading in two wheelers - Therefore, there does not appear any error in the order passed by the authorities in reaching the conclusion that the petitioner had made false utilization of Form-C to import generator set and non-woven fabrics. Consequently, the demand of penalty was rightly imposed against the assessee. Revision dismissed.

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