TMI Tax Updates - e-Newsletter
January 25, 2018

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. THE NEGOTIABLE INSTRUMENTS (AMENDMENT) BILL, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

2. ARREST PROVISIONS UNDER GST (PART-2)

   By: Dr. Sanjiv Agarwal

News

1. Anti-dumping duty likely on a chemical from 3 countries

2. Power Point Presentation on Banks' Recap & Reforms

3. Japan’s Official Development Loan Assistance to India for an amount of Yen 45 billion (=Rs.2587 crore approx.) for Bengaluru Water Supply and Sewerage Project (Phase 3) (I)

4. The Government of India announces details of Bank recap and Comprehensive Reform Plan

5. RBI Reference Rate for US $

6. Grant of Presidential Award of Appreciation Certificate to 44 Officials of the Customs & Central Excise on the Eve of Republic Day, 2018

7. Final arbitration hearings on India tax demand in Aug: Cairn

8. Income Tax Department tableau on the theme 'Operation Clean Money' will be displayed at the Republic Day Parade, 2018

Notifications

Companies Law

1. File No. 1 /1 /2018-CL.I - dated 23-1-2018 - Co. Law

Regarding commencement of Companies Amendment Act 2017

Customs

2. 03/2018 - dated 23-1-2018 - ADD

Seeks to impose definitive anti-dumping duty on imports of "Toluene Di-Isocyanate (TDI)" originating in or exported from China PR, Japan and Korea RP

DGFT

3. 46/2015-2020 - dated 24-1-2018 - FTP

Amendment in import policy condition of Urea under ITC (HS) code 3102 10 00 of Chapter 31 of ITC (HS), 2017 - Schedule -1 (Import Policy)

GST - States

4. S.O.104/P.A.5/2017/S.11/2017 - dated 1-12-2017 - Punjab SGST

Amendment in Notification No. S.O.37/P.A.5/2017/S.11/2017, dated the 30thJune, 2017

5. S.O.103/P.A.5/2017/Ss. 9, 11, 15 and 16 /2017 - dated 1-12-2017 - Punjab SGST

Amendment Notification No. S.O.17/P.A.5/ 2017/Ss.9, 11, 15 and 16/2017, dated the 30th June, 2017

6. S.O.102/P.A.5/2017/S.11/2017 - dated 1-12-2017 - Punjab SGST

Exemption of tax over and above 2.5% for public funded research institutes

7. S.O.101/P.A.5/2017/S.54/2017 - dated 1-12-2017 - Punjab SGST

Amendment in Notification No. S.O.29/P.A.5/2017/S.54/2017, dated the 30th June, 2017

8. S.O.099/P.A.5/2017/S.11/2017 - dated 1-12-2017 - Punjab SGST

Amendment in Notification No. S.O.18/P.A.5/ 2017/S.11/2017, dated the 30th June, 2017

9. S.O.098/P.A.5/2017/S.9/2017 - dated 1-12-2017 - Punjab SGST

Amendment in Notification No. S.O.16/ P.A.5/2017/S.9/2017, dated the 30th June, 2017

10. S.O.096/P.A.5/2017/Ss. 9, 11, 15 and 16/2017 - dated 29-11-2017 - Punjab SGST

Amendment in Notification No. S.O.17/P.A.5/2017/Ss.9, 11, 15 and 16/2017, dated the 30th June, 2017

11. S.O.068/P.A.5/2017/S.9/2017 - dated 1-11-2017 - Punjab SGST

Amendment Notification No. S.O.16/P.A.5/2017/ S.9/2017, dated the 30th June, 2017

12. G.O.Ms.No. 292 - dated 20-12-2017 - Telangana SGST

Seeks to limit the maximum late fee payable for delayed filing of return in FORM GSTR-3B from October, 2017 onwards

13. G.O.Ms.No. 291 - dated 18-12-2017 - Telangana SGST

Seeks to exempt suppliers of services through an e-commerce platform from obtaining compulsory registration

14. 38/2017 - dated 22-11-2017 - Telangana SGST

Seeks to extend the due date for submission of details in FORM GST-ITC-04

15. 37/2017 - dated 22-11-2017 - Telangana SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-6 for the month of July, 2017

16. 36/2017 - dated 22-11-2017 - Telangana SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-5A for the months of July to October, 2017

17. 35/2017 - dated 22-11-2017 - Telangana SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-5, for the months of July to October, 2017

18. 34/2017 - dated 22-11-2017 - Telangana SGST

Seeks to extend the time limit for filing of FORM GSTR-4

19. 32/2017 - dated 17-11-2017 - Telangana SGST

Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores

Circulars / Instructions / Orders

FEMA

1. Press Note No. 01 (2018 Series) - dated 23-1-2018

Review of Foreign Direct Investment (FDI) policy on various sectors

DGFT

2. F. No. 01/94/180/261/AM18/PC-4 - dated 24-1-2018

Corrigendum to Public Notice No. 53/2015-2020 dated 17.01.2018.

Customs

3. 04/2018 - dated 24-1-2018

Amendments to the All Industry Rates of Duty Drawback effective from 25.01.2018

Highlights / Catch Notes

GST

• Rule 138B of CGST Rules 2017: Ensuring GST Compliance Through Document Verification and Goods Inspection to Prevent Tax Evasion.

  Act-Rules : Verification of documents and conveyances. - Rule 138B of the CGST Rules, 2017 as amended.
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• E-Way Bill Rules Overhauled: Goods Exemption List Shrinks from 154 to 8 Under Amended CGST Rule 138.

  Act-Rules : Information to be furnished prior to commencement of movement of goods and generation of e-way bill. - Complete overhaul - List of exempted goods from e-way bill curtailed from 154 to 8 only. - Rule 138 of the CGST Rules, 2017 as amended.
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• Refund Restrictions on Integrated Tax for Exports Under Deemed Export Procedure per Rule 96(10) CGST Rules 2017.

  Act-Rules : Refund of integrated tax paid on goods or services exported out of India - Restrictions on refund where goods have been received under Deemed Export procedure - See Rule 96(10) of the CGST Rules, 2017 as amended.
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• CGST Rule 89: Understanding Refund Claims for Deemed Exports under Sub-Rules 4A & 4B.

  Act-Rules : Application for refund of tax, interest, penalty, fees or any other amount - Receipt of supplies in case of Deemed Export - Sub-Rule 4A and Sub-Rule 4B of Rule 89 of the CGST Rules, 2017 as amended.
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• Transporters Must Carry Tax Invoice or Bill of Supply When E-Way Bill Not Required: Rule 55A, CGST Rules 2017.

  Act-Rules : Documents to be carried by the transporter where e-bill is not required - he shall carry a copy of the tax invoice or the bill of supply issued in the absence of an e-way bill - See new Rule 55A of the CGST Rules, 2017
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• New Tax Invoice Rules for ISDs and Service Recipients in Same State u/r 54(1A) of CGST 2017.

  Act-Rules : Tax invoice in special cases - ISD invoice - new format particulars where ISD and recipient of services both are located within the same state i.e. having same pan and state code - See Rule 54(1A) of the CGST Rules, 2017 as amended.
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• Changes to Rule 43 CGST: Impact on Input Tax Credit Reversal for Capital Goods and Definition of Exempted Supplies.

  Act-Rules : Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases - Scope of the term exempted supplies amended - See Rule 43 of the CGST Rules, 2017 as amended.
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• Migrated persons must apply to cancel GST registration by March 31, 2018, per Rule 24(4) CGST Rules, 2017.

  Act-Rules : Cancellation of GST registration in case of Migrated Persons registered under the existing law - Application for cancellation can be submitted on or before 31.3.2018 - Rule 24(4) of the CGST Rules, 2017 as amended.
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• GST Registration Cancellation Allowed Within One Year of Voluntary Registration per Rule 20 of CGST Rules 2017.

  Act-Rules : Application for cancellation of registration - application for cancellation may be submitted in before the expiry of one years from the date of voluntary GST registration - Rule 20 of the CGST Rules, 2017 as amended.
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• Traders under composition levy taxed at 1% on taxable turnover, excluding non-taxable supplies per amended Rule 7, CGST Rules.

  Act-Rules : Rate of tax of the composition levy - Traders - Rate of tax shall be 0.5% (CGST) + 0.5% (SGST) = 1% on the taxable turnover only [non-taxable supplies to be excluded w.e.f. 1.1.208 from the turnover] - Rule 7 of the CGST Rules, 2017 as amended.
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• Tax Rate for Manufacturers Cut to 1% Under Amended Rule 7 of CGST Rules, 2017 Effective Jan 1, 2018.

  Act-Rules : Rate of tax of the composition levy - Manufacturers - Rate of tax shall be 0.5% (CGST) + 0.5% (SGST) = 1% on the turnover including non taxable supplies w.e.f. 1.1.2018 [earlier it was 2%] - Rule 7 of the CGST Rules, 2017 as amended.
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• GST Composition Levy Intimation Period Extended to 180 Days for Registrations Before March 31, 2018, per Rule 3 Amendment.

  Act-Rules : Intimation for composition levy - Provisional registration or new registration before 31.3.2018 - period of limitation extended from 90 days to 180 days - Rule 3 of the CGST Rules, 2017 as amended.
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• Unified GST Portal and E-Way Bill Platform Launched to Simplify Tax Compliance and Boost Administrative Efficiency

  Notifications : Notifying common GST portal and e-way bill website.
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• Deadline Extended: Input Service Distributors Can File FORM GSTR-6 for July 2017-February 2018 Until March 31, 2018.

  Notifications : Extension of date for filing the return in FORM GSTR-6 - return by an Input Service Distributor - for the months of July, 2017 to February, 2018 - Now GSTR-6 can be furnished till the 31st day of March, 2018.
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• Late Submission of FORM GSTR-6 Incurs Reduced Fee of Rs. 25 Per Day.

  Notifications : Failure to furnish the return in FORM GSTR-6 by the due date - late fee reduced to twenty-five rupees per day
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• Late Fee for Nil Integrated Tax Returns in FORM GSTR-5A Reduced to 10 Rupees Per Day for Late Submission.

  Notifications : Failure to furnish the return in FORM GSTR-5A by the due date - where the total amount of integrated tax payable in the said return is nil - late fee reduced to ten rupees per day
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• Late Fee for Delayed FORM GSTR-5A Submission Now Reduced to Rs. 25 Per Day When Integrated Tax is Due.

  Notifications : Failure to furnish the return in FORM GSTR-5A by the due date - where the total amount of integrated tax payable in the said return is not nil - late fee reduced to twenty-five rupees per day
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• Late Fee for Nil Tax GSTR-5 Filing Reduced to Ten Rupees Per Day for Delayed Submission.

  Notifications : Failure to furnish the return in FORM GSTR-5 by the due date - where the total amount of central tax payable in the said return is nil - late fee reduced to ten rupees per day
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• Late GSTR-5 Submission with Central Tax Due? Pay Only Rs. 25 Per Day Late Fee.

  Notifications : Failure to furnish the return in FORM GSTR-5 by the due date - where the total amount of central tax payable in the said return is not nil - late fee reduced to twenty-five rupees per day
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• Late Fee Imposed for Late GSTR-1 Submission; Reduced to Rs. 10/Day for Nil Supplies.

  Notifications : Failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date - in case where outward supplies is Nil - late fee reduced to ten rupees per day
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• Late Fee of Rs. 25/Day for Delayed FORM GSTR-1 Submission When Outward Supplies Aren't Nil.

  Notifications : Failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date - in case where outward supplies is not Nil - late fee reduced to twenty-five rupees per day
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Income Tax

• Central Government Amends Tax Exemption Notification for International Sporting Event u/s 10(39) of Income Tax Act 1961.

  Notifications : U/s 10(39) of IT Act 1961 - Central Government notifies the international sporting event, persons and specified income for the purpose of the said clause - Notification as amended.
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• Exemption Eligibility u/s 54F: Technical Default Doesn't Warrant Penalty if Intent and Investment Criteria Are Met.

  Case-Laws - AT : Eligibility to exemption u/s.54F - Although the failure of the assessee to deposit the sale proceeds in a Capital Gains Account Scheme, 1988 for intervening period was undoubtedly a technical default, he should not be penalized for the same because he satisfied the real intent as well as essence of the provisions by depositing the sale proceeds in FDR since beginning, not using it for any other purpose and investing the sale proceeds in acquisition of a new house within statutory period of 2 years. - AT
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• CSR Expenses Not Tax-Deductible as Business Expenses u/s 135 of Companies Act, 2013, Effective April 1, 2015.

  Case-Laws - AT : Addition on account of CSR/donation expenses - w.e.f. 1.4.2015, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession - there was no such embargo for the preceding years - AT
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Customs

• Anti-dumping duty imposed on Toluene Di-Isocyanate imports from China, Japan, and South Korea to protect domestic industries.

  Notifications : Definitive anti-dumping duty on imports of "Toluene Di-Isocyanate (TDI)" originating in or exported from China PR, Japan and Korea RP imposed.
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• Temporary Import of Professional Equipment and Sports Goods Exempt from Customs Duty and IGST Under A.T.A. Carnet System.

  Notifications : Exemption from Customs Duty and IGST - Temporary Import of Professional Equipment and Sports Goods under A.T.A. Carnet
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• Dhamra and Dighi Ports Now Eligible for Export Promotion Schemes under Recent Customs Amendments.

  Notifications : Inclusion of Dhamra and Dighi Ports in the list of ports mentioned in Export Promotion (EP) Schemes Notifications - 20 Notifications as amended.
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• Customs Broker avoids license revocation; fined Rs. 50,000 and forfeits security deposit for CBLR violations.

  Case-Laws - AT : Revocation of CHA License - violation of various CBLR Regulations - revoking the CB license would be too grave a penalty to be imposed for the above violation - The ends of justice will be met by imposing a penalty of ₹ 50,000/- on the appellant, in addition to forfeiture of the whole amount of security deposit. - AT
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• Petitioner Entitled to Terminal Excise Duty Refund for Deemed Exports to EOUs Before April 18, 2013, Under FTP.

  Case-Laws - HC : Refund of Terminal Excise Duty (TED) - It is not disputed that the goods supplied by the petitioner to the EOUs constituted 'deemed exports' and thus, the petitioner had a vested right to claim refund of excise duty in respect of goods supplied during the period prior to 18.04.2013 in terms of the then applicable FTP. - HC
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DGFT

• Import of Defective Steel Now Allowed via Nhava Sheva and ICD-Tughlakabad Under Policy Condition No. 2, Chapter 72.

  Notifications : Import of seconds/defectives of steel items as mentioned at Sl. No. 1 to 7 of Policy Condition No.2 of Chapter 72 of ITC (HS), 2017, Schedule-I (Import Policy), shall be allowed also through Nhava Sheva (JNPT) and at ICD-Tughlakabad, New Delhi, besides the existing Customs sea port at Mumbai, Chennai and Kolkata.
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Service Tax

• Appellant Not Recognized as Commission Agent; Activities Classified u/s 65(19)(i) for Promotion and Sale of Goods.

  Case-Laws - AT : BAS - Though they are called as broker under the Association rules that will not enable the appellant to claim that they are only commission agent for the purpose of section 65(19) ibid. The services performed by the appellant is thus promotion and sale of goods produced or provided or belonging to their clients and thus fall within the ambit of section 65(19)(i) of the Act. - AT
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• Tax Consultancy Services Not Management Consultancy: Clarification on Advisory Roles and Legal Promotion Distinction.

  Case-Laws - AT : Management Consultancy Service - tax consultancy service / tax compliance service - It may indirectly keep the organization within the ambit of legal promotion work for their further business. This by itself will not make the consultancy or advisor in tax matters management consultant - AT
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• Appellants Liable for Service Tax Under Business Auxiliary Service Despite Client's Service Exemption.

  Case-Laws - AT : BAS - they are promoting the services of clients. Such service on the part of the client is exempted by itself will not make the appellant as not providing any taxable service - appellants are liable to tax under 'Business Auxiliary Service'. - AT
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Case Laws:

• Income Tax

• 2018 (1) TMI 1082
  Penalty u/s 271(1)(c) - unaccounted production/unaccounted sales - estimated additions based on the electricity consumption - Held that:- DR’s argument that the profit relatable to the unaccounted production constitutes concealed income and therefore the penalty is leviable stands rejected for the reason that the unaccounted sales as well as quantification of the related profits/concealed income/additional income has reduced in estimations despite the fact of unaccounted production and clandestine removal of the goods-cum-unaccounted sales the concealment is unsustainable in law, if the estimation of profits involved and no specific relatable income is precisely quantified. Therefore, we are of the opinion that the orders of the CIT(A) in these 4 appeals are fair in deleting the penalty. See Bhagyalaxmi Steel Alloys Pvt. Ltd. [2018 (1) TMI 1081 - ITAT PUNE] and Shree Om Rolling Mills Pvt. Ltd [2018 (1) TMI 1073 - ITAT PUNE] - Decided in favour of assessee

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• 2018 (1) TMI 1081
  Capital gain on transfer of the depreciable long term capital assets - rectification of mistake - Tax income from STCG @ 20% instead of regular tax rate - whether the rate of 20% is applicable to the gains earned on transfer of the depreciable long term capital assets within the meaning of section 50 of the Act? - Held that:- The applicable rate of tax on the deemed short term capital gains generated out of depreciable long term capital assets is the matter of debate. The judgment of jurisdictional High Court in the case of Ace Builders Pvt. Ltd. (2005 (3) TMI 36 - BOMBAY High Court ) is on the facts of reinvestment of such long term capital assets-linked deemed short term capital gains; whereas in the assessee’s case, it is not a case of reinvestment. This makes the difference. Therefore, we are of the opinion that the order of CIT(A) should be confirmed on the ground of debatability linked to the jurisdiction of AO u/s.154 of the Act. As we have considered the arguments of the Ld. Counsel for the assessee that the CIT(A) allowed the appeal of the assessee basing on the arguments that revolve around the” debatability” on this issue. Explaining the same, Ld. Counsel submitted that, for the rate purposes, the applicable tax rate on the capital gains relatable to sale of transfer of the depreciable long term capital assets and which are not reinvested u/s.54E of the Act constitute long term capital gains or short term capital gains is a matter of debate. On seeing the debatability, CIT(A) granted relief. On considering the same, we are of the opinion that the AO invalidly invoked the provisions of section 154 of the Act in this case. Accordingly, the relevant ground raised by the Revenue are dismissed. Suppressed production of TMT bars - CIT-A deleting the addition - Held that:- CIT(A) has considered all the aspects which led the assessee to disclose 982.82 units per MT which include that the assessee maintained the records properly and the books of accounts have been audited, no method for recorded day-to-day electricity consumption, declaration of 7% burning loss by various steel manufacturing units in Jalna & surrounding area, reports of Excise Department that for 1 MT of MS Ingots/Billets, 1026 electricity units are required, etc., and the decision of Hon’ble CE&S Tribunal and the Pune Bench of the Tribunal in the case of SRJ Peety Steels Pvt. Ltd. (2015 (1) TMI 1228 - ITAT PUNE) etc. Nothing incriminating material has been brought by the Revenue authorities to take a contrary view against the findings of CIT(A). We therefore find the order of the CIT(A) to be a reasoned one and accordingly affirm the same

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• 2018 (1) TMI 1080
  Bogus purchase/sale of shares - Addition on account of sham share transactions - ITAT upholding the order of the CIT(A) deleting the addition - Held that:- Issue raised is to be decided against appellant as relying on The Pr. Commissioner of Income Tax (Central) , Ludhiana Versus Sh. Hitesh Gandhi [2017 (4) TMI 1150 - PUNJAB & HARYANA HIGH COURT] as held AO was not able to contradict the facts regarding purchase of shares and sale thereof. Further, it was recorded that the assessee had sold shares through MTL shares and Stock Broker limited which is a SEBI registered Stock Broker. The payment for sale of shares was received through banking channels. All the documentary evidence being in favour of assessee, the deletion of the addition made by the CIT(A) was correctly upheld by the Tribunal. - Decided against revenue Addition made on the basis of seized document - ITAT confirming deletion of addition - Held that:- The documents on which the Assessing Officer relied upon in the appeal were not put to the assessee during the assessment proceedings. The CIT (Appeals) nevertheless considered them in detail and found that there was no co-relation between the amounts sought to be added and the entries in those documents. This was on an appreciation of facts. There is nothing to indicate that the same was perverse or irrational. Accordingly, no question of law arises.

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• 2018 (1) TMI 1079
  Addition u/s 69B - assessee enjoying cash credit facility from Dena Bank against hypothecation of stock - assessee had shown excess stock to the bank - Tribunal deleted the addition - Held that:- There is nothing on record to show that the bank officials have physically verified stock as on 31.3.2010 and were of the view that on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of accounts and the statement furnished to the banking authorities. More so, when the stock statement given to the bank reflects inflated value of the stock otherwise there being no difference in the quantity. Commissioner (Appeals) as well as the Tribunal have recorded a concurrent finding of fact that there was no difference in the quantity of stock as reflected in the books of account and in the statement submitted to the bank, it is not possible to state that the conclusion arrived at by the Tribunal suffers from any legal infirmity. - Decided in favour of assessee Deemed dividend addition u/s 2(22)(e) - ITAT allowed the claim - Held that:- In the present case, the assessee has not made any payment by way of advance or loan to a shareholder, but on the contrary, has received a loan from Akik Tiles Pvt. Ltd. and Marbolite Granito India Ltd. Therefore, if at all the provisions of section 2(22)(e) of the Act were applicable, it would be applicable to the companies who have made such payments, provided the assessee had the requisite share holding. In the present case, the assessee is a recipient of such amounts and hence, the Tribunal was wholly justified in holding that there was no question of invoking section 2(22)(e) of the Act.- Decided in favour of assessee

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• 2018 (1) TMI 1078
  Computation of exemption u/s 10A - sight consultancy services expenses, Telecommunication expenses, travel expenses, expenses borne by the customers of the Assessee Company on behalf of the Assessee Company need to be reduced from Total Turnover while computing exemption - ITAT allowed the claim as relying on HC decision against which there is a pending of Special Leave Petition before the Apex Court - Held that:- Appellate Tribunal while dismissing the Appeal preferred by the Appellant-Revenue first relied upon a decision of this Court [2011 (6) TMI 769 - BOMBAY HIGH COURT] and while deciding the said case, relied upon a decision in the case of CIT vs. Gemplus Jewellery Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] wherein held what is excluded from `export turnover’ must also be excluded from the `total turnover’ Referring to Appeal preferred by the Appellant Revenue against the decision of this Court in the case of Gemplus Jewellery Ltd.(supra) is pending before the Apex Court, the law is very well settled. So long as the decision of the Coordinate Bench of this Court is not set aside by the higher Court, all Coordinate Benches of this Court continue to be bound by the said decision. Even if a judgment of the Coordinate bench is stayed by the higher Court, as far as this Court is concerned, it continues to be bound by the judgment. No substantial question of law arises Not allowing set off of the loss incurred by the Assessee Company from the Non-STPI Unit with the profit of the STPI Unit to arrive at the profits of the business eligible for exemption u/s 10A - Held that:- Appellate Tribunal has followed the decision of Karnataka High Court dated 9th August, 2011 in the case of CIT vs Yokogawa India Ltd.[2011 (8) TMI 845 - Karnataka High Court] also confirmed by Apex court[2016 (12) TMI 881 - SUPREME COURT]

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• 2018 (1) TMI 1077
  Disallowance of bad debts u/s 36(2) - Held that:- It appears that disallowance has been upheld considering this claim as for bad debts and not fulfilling the conditions of section 36(2) of the Act. However, since this was an advance given in the course of business and neither services rendered nor advance returned back, the claim is required to be allowed as a business loss. In the interest of justice, we restore the matter back to AO and we direct the AO to verify the facts and decide afresh. We direct accordingly. Non granting deduction for provision for leave encashment - Held that:- We have considered rival contentions and found that issue is squarely covered by the decision of the Supreme Court in case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME Court] . Respectfully following the same, we direct the AO to delete the disallowances as claimed by assessee on account of provision for leave encashment. Disallowance of depreciation on plant and machinery - assessee was unable to prove that the machinery was used in production - Held that:- Respectfully following the order of Tribunal in assessee’s own case for the A.Y.1996-97, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of disallowance of depreciation on plant and machinery wherein held that the machine in question is used for cutting and wrapping confectionary toffees and were delivered at ready to use condition. Thus, it is evident that the machine has no role to play in the production activity. Therefore, when the learned Commissioner (Appeals) has accepted the fact that the machine was purchased and commissioned and formed part of the fixed asset in the relevant financial year, there is no reason to disallow assessee's claim of depreciation. Disallowance on account of foreign travel expenses - Held that:- As during the year under consideration, assessee has incurred foreign travel expenses for visit of Directors as well as Executives to Switzerland. As per the noting on passport, the travel was for the purpose of business. The correspondence with the foreign parties also indicate that travel was for business purpose. Thus restore the matter back to the file of the AO for deciding afresh Disallowance u/s.14A r.w.R. 8D - Held that:- Keeping in view the decision of Bombay High Court in the case of HDFC Bank Ltd. [2016 (3) TMI 755 - BOMBAY HIGH COURT] we do not find any merit for the disallowance of interest in so far as share capital reserves and surplus of the company was much more than the investment. With regard to the disallowance of administrative expenses under Rule 8D(2)(iii), following the reasoning given in the A.Y.2008-09, we restore the mater back to the file of AO for deciding afresh. We also direct AO to consider only those investments wherein exempt income is received during the year. Furthermore, strategic investments are not to be considered while computing disallowance under Rule 8D (2)(iii).

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• 2018 (1) TMI 1076
  Validity of proceedings u/s 153C - unexplained property purchased - eligibility of satisfaction note - Held that:- When the property was purchased by the assessee through agreement to sale dated 05.05.2006 has already been disclosed in the regular books of account, therefore, the same could not be treated as undisclosed income of the assessee or incriminating material in nature against the assessee. AO in the assessment order did not question the aforesaid seized document i.e agreement to sale for the purpose of making any addition against the assessee. The reasons assigned by the AO in the satisfaction note were silent about any incriminating information or unaccounted or undisclosed hidden, income, seized by the Revenue from the assessee. The reasons recorded by the AO in the satisfaction note are factually incorrect or without sustenance because the property in question purchased on 05.05.2006 was already disclosed in the regular books of accounts for AY 2007-08. Therefore, there is no question of AO being satisfied with conditions of section 153C of the Act so as to initiate proceedings u/s 153C of the Act against the assessee. Reasons assigned by the AO in the satisfaction note were silent about any incriminating information or unaccounted or undisclosed hidden, income, seized by the Revenue from the assessee - Decided in favour of assessee

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• 2018 (1) TMI 1075
  Addition u/s 68 - unexplained cash credit - non providing Proper and reasonable opportunity - Held that:- Proper and reasonable opportunity was not provided during the course of assessment proceedings because copies of confirmation, ITR, Balance Sheet of all the companies who invested in share capital in the assessee company were duly filed during the assessment proceedings to prove the identity, genuineness and credit-worthiness whereas the same have been overlooked by AO. Also AO lost sight of the fact that the shares allotted to investing companies were not bought back till date and are still existing in the name of investing companies. As per record it reveals that sufficient compliance was made to notice issued u/s 133(6) of the I.T. Act, 1961 of the investing companies on 17.02.2015 establishing the fact of all these entities genuinely existed, which has been overlooked by the A.O. Further it is noted that since statement of Sh. Sanjeev Jain, Chairman of M/s Surya Vinayak Industries Ltd. was recorded on 25.11.2013 by Investigation Wing, New Delhi during the course of post search proceedings wherein he has completely denied giving any accommodation entry and clarified that the amount was given on account of genuine business transaction. Thus the issues in dispute are remitted back to the file of the AO to decide the issues in dispute afresh - Assessee’s Appeal is allowed for statistical purposes.

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• 2018 (1) TMI 1074
  Addition on account of the opening cash in hand - Held that:- It is a fact that a statement was filed before the AO which contained certain mistakes. The AO has not commented on this fact in his remand report dated 03.12.2012. All the evidences in the paper book submitted by the assessee alongwith application for additional evidence were not considered by him. However, the correct statement of cash reveals that at no point of time did the assessee have cash in hand which was less than Rs. 8,19,700/-. However, there was an amount of Rs. 8,19,700/- at its maximum, therefore, Ld. CIT(A) has rightly allowed the credit upto that amount only and sustained the amount of Rs. 4,09,000/- (Rs. 12,28,700 less Rs. 81,19,700) only, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue. Addition on account of Earned Money received in respect of sale of agriculture land - Held that:- when the existence of the parties concerned is not in doubt and the majority of the earnest money was received by cheque – details were made available to the AO, and the AO has not proved nor challenged their capacity to give such an earnest money, assessee was not called upon to produce those parties or to file confirmation letters, it was illegal on his part to tax the amount under section 68 of the Act. Non refund of the amount (though it was actually refunded – as is shown in the ‘statement of cash’ which was prepared at his instructions), it is immaterial in law for taxing the amount as it was received under ‘agreement to sell’ the agricultural land. In view of the Ld. CIT(A) has rightly deleted the entire addition - Decided against revenue Addition on Earned Money received in respect of sale of flat - Held that:- This is not borne out by facts, as the payments which were to be made to the assessee by the buyers in terms of a clause in the agreement, did happen. We note that one of the buyers, Sh. Vikram Singh, appeared before the AO and said that he received a monthly rental income of Rs. 25,000/- to Rs. 30,000/- per month, as also owing 10 acres of agricultural land. He also stated that he had given the advances to the assessee from time to time and also confirmed that the amount was returned with a penal amount of Rs. 1 lakh on cancellation of agreement. In our opinion, the said purchaser has proved his identity, genuineness and capacity to make the impugned payments. No where the AO been able to prove that this was the assessee’s own money channelized through a third party, therefore, Ld. CIT(A) has rightly deleted the entire addition

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• 2018 (1) TMI 1073
  Penalty u/s 271(1)(c) - unrecorded sales and profit estimation - estimation on the estimated sale of the goods clandestinely removed by the assessee - CIT-A deleted the penalty - Held that:- Revenue is not privy to the relevant facts (1) precise quantity of such recorded sales and (2) precise income out of the sale of such goods and they merely relied on the figures given by the assessee. The quantity of unaccounted production is estimated by the Excise Department and the taxable income is estimated for the income-tax Department by the assessee applying the flat rate of 4%. Despite the absence of any discussion in the order of the CIT(A) on this part of the issue of argument, specially, the CIT(A) granted relief presuming that this segment of income is also arrived at by the estimation. In our view, the said presumption is fair and reasonable. Nothing is brought to our notice by the Ld. DR to demonstrate the estimations are not involved both in arriving at the figure of unrecorded sales and the taxable income. For our mind, it appears that the income of Rs. 76,48,922/- is also the product of estimation and the same is accepted by the AO/CIT(A)/ITSC. Therefore, it constitutes a reasonable presumption by the CIT(A). Therefore, the order of CIT(A) is fair and reasonable for the said reasons too. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2018 (1) TMI 1072
  Addition u/s 68 - unexplained cash credit - Held that:- On 28.12.2017, Ld. DR has filed an Application dated 28.12.2017 stating therein “During the course of previous hearing Hon’ble Bench directed to obtain the case record from field formation. Letter were issued to the concerned AO, but assessment record are not received” and sought adjournment. Accordingly, the case was adjourned for 18.01.2018. Again on 18.1.2018 the Ld. Sr. DR unable to produce the assessment records as asked by the Bench vide its order sheet dated 12.12.2017, as aforesaid and in the absence thereof the Bench is unable to decide the case in a proper manner. Therefore, in the interest of justice, the issues in dispute are remitted back to the file of the AO to decide the issues in dispute afresh, after giving adequate opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

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• 2018 (1) TMI 1071
  Penalty u/s 271(1)(c) - income in question has been surrendered and accepted by the AO - eligibility to protection u/s 273B - Held that:- As assessee though surrendered the amount when confronted with the entries entered in the diaries found and seized in the search operation but when his revised return was accepted and the explanation of the assessee that this occurred due to inadvertent lapse on his part and being the youngest member in the group having been assigned all the jobs to accomplish, have little time for him to pay attention to his personal accounts and have a check on the accountant’s work, has been accepted when the surrendered income along with interest has been accepted in the revised return of income. So, the explanation could be treated as bonafide and reasonable. So, we are of the considered view that in these circumstances, the penalty is not leviable. - Decided in favour of assessee.

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• 2018 (1) TMI 1070
  TDS treated as deemed income u/s 198 - adding the TDS as income of the assessee - Held that:- CIT(A) in the impugned order has brushed aside and not examined or considered the assessee’s contentions that since his case falls clearly under the provisions of sec. 199(3) r.w. Rule 37BA(3)(ii), carry forward of earlier years TDS commencing from Financial Year 2008-09 should be allowed for reducing year wise utilization, by giving credit thereof across the various years in which such income was assessable to tax. This fact on record, that the ld CIT(A) had failed to address the aforesaid claim of the assessee, was not controverted before us by Revenue. Thus set aside the finding of the authorities below on this issue and remand the same for examination, verification and consideration to the file of the ld CIT(A) - Decided in favour of assessee for statistical purposes.

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• 2018 (1) TMI 1069
  AO exceeding his jurisdiction in the limited scrutiny - case was selected for scrutiny through CASS - addition of capital gain - Held that:- AO has not exceeded its jurisdiction in limited scrutiny by verifying and consequently making an addition on account of capital gain. The appellant has pleaded that the jurisdiction of the AO is limited to examining the source of cash deposit. However, it’s only in the process of examining the source of cash deposit that the AO verified the claim of the appellant and thereby ended up making the addition on account of capital gain. Thus, this ground of assessee's appeal is dismissed

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• 2018 (1) TMI 1068
  Revision u/s 263 - undisclosed sales - Held that:- Order under Section 263 of the Act passed, was on the basis of some diary which was allegedly stated to be incriminating material by the Revenue and the said diary found in the possession of the third party was held not sufficient to draw an inference about the alleged undisclosed income by the Tribunal [2015 (5) TMI 849 - ITAT DELHI] and all the advances were deleted by the Tribunal. - Decided in favour of assessee

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• 2018 (1) TMI 1067
  Addition on account of CSR/donation expenses - what is the effect of CSR commitments from tax deductibility perspective? - allowable busniss expenditure - Held that:- The general norm has been to allow a deduction for donations, contributions, etc., made for charitable purposes under Section 80G. The corporate houses were expecting relief under section 37 (1). It is a residuary section in the Act to allow business expenditure which is done in the normal course of business and profession. The requirement is that it should have a nexus with business objectives and should not be of a personal nature. In the instant case, the assessee has donated the amounts to the institutions, which are engaged in medical treatment; school for mentally handicapped and education for poor and needy children. These itself prove that the expenditure incurred by the assessee are for charitable purposes. Hence, the deduction under section 37 is to be allowed. - Decided in favour of assessee The CIT(A) has referred to the amendment made in Finance Act (No.2) 2014 w.e.f. 1.4.2015 in Section 37, wherein, it is declared that for the purposes of sub-section(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. The CIT(A) has held that there was no such embargo for the preceding years. Disallowance u/s.14A - as per AO the assessee has incurred certain expenditure towards interest and also these investments were made out of borrowed funds in the group companies - Held that:- CIT(A) found that the assessee has made investment in the sister concern out of its non-interest bearing funds, which is not disputed by ld D.R. and also the investments have been made with profit motive. Thus the CIT(A) correctly found that the disallowance is not in order - Decided against revenue.

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• 2018 (1) TMI 1066
  Disallowance of interest u/s.36(1)(iii) - loan on which the interest was paid was utilized for non business purposes - Held that:- Assessee’s arguments requires to be rejected considering assessee’s failure to discharge the preliminary onus with regard to correctness of the borrowed sum of Rs. 25.50 crores to the Vishwaroop Infotech Pvt. Ltd.. It is an admitted fact that assessee failed to submit evidences by way of said MOU and the Deed of Cancellation. The submission of these papers admittedly happened during the first appeal proceedings. Why these documents could not be submitted by the assessee during the assessment proceedings is a matter of question, still not answered by the assessee even before us. Reasoning of failure of the assessee to discharge the preliminary onus, the claim made by the assessee u/s.36(1)(iii) is dismissed, in principle. Regarding the alternate claim raised by the assessee’s counsel before us, it is an admitted fact that assessee did not record any core business activities apart from the interest payments and earnings. The details provided in the financial statements placed at page 15 of the paper book evidences the same. Para 10 of his written submission deals with the arguments raised without prejudice and praying for restricting the disallowance only to Rs. 88,46,924/-, the difference of the interest incurred and interest earned by the assessee. Considering the peculiar facts of this case and subject to verification of the figures by the AO, restricting the disallowance to the said amount of Rs. 88,46,924/- should meet both ends of justice.

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• 2018 (1) TMI 1065
  Eligibility to exemption u/s.54F - denial of claim because prior to investment in flat, the assessee deposited sale proceeds of original assets in FDR account and not in capital gain account scheme - Held that:- The assessee sold his flat on 2nd April, 2008 for a consideration of Rs. 30,40,000/- - entire sale proceed was invested in term deposit on 07.04.2008 because he was under bonafide belief that it would meet the requirements of Sec.54 i.e. investment of sale proceeds in a bank account and its investment in a house within two years from the date of transfer of original asset - Return of Income was filed on 22.07.2009 (Due date in terms of Sec. 139(1) and 139(4) was 31.07.2009 and 31.03.2011 respectively). He acquired a new flat on 21.11.2009 out of proceeds of term deposit and such acquisition was within two years from the date of sale of original capital asset. Thus he satisfied the primary requirement of Sec.54(1). Although the failure of the assessee to deposit the sale proceeds in a Capital Gains Account Scheme, 1988 for intervening period was undoubtedly a technical default, he should not be penalized for the same because he satisfied the real intent as well as essence of the provisions by depositing the sale proceeds in FDR since beginning, not using it for any other purpose and investing the sale proceeds in acquisition of a new house within statutory period of 2 years. Sec.54 is an incentive provisions and it should be interpreted and applied liberally as held by the honourable Supreme Court in the case of Bajaj Tempo Ltd. Vs. C.I.T. (1992 (4) TMI 4 - SUPREME Court). - Decided in favour of assessee

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• Customs

• 2018 (1) TMI 1064
  Refund of Terminal Excise Duty (TED) - supplies made by the petitioner to 100% Export Oriented Units (EOU) - According to the petitioner, it is entitled to refund of TED on the supplies made to 100% EoUs as in terms of paragraph 8.2 (b) of the Foreign Trade Policy 2009-14 (FTP), the supply of goods to EOUs would qualify as ‘deemed exports’ and thus in terms of paragraph 8.3(c) read with paragraph 8.5 of the FTP, the same were eligible for refund of TED. Held that: - In view of the settled position of law, the Central Government could also not make any substantive changes in the FTP, which had the effect of taking away any vested right. In the present case, the FTP expressly provided for the refund of TED in certain cases. It is not disputed that the goods supplied by the petitioner to the EOUs constituted 'deemed exports' and thus, the petitioner had a vested right to claim refund of excise duty in respect of goods supplied during the period prior to 18.04.2013 in terms of the then applicable FTP. Powers of DGFT - Held that: - This Court is also not persuaded to accept the policy circular issued by the DGFT (Policy Circular No. 16 (RE-2012/2009-14) dated 15.03.2013) seeking to clarify that no refund of TED should be provided in cases where the supplies of goods are ab initio exempted from payment of excise duty, is binding. The same is clearly beyond the powers of the DGFT - the DGFT is appointed for the purposes of the Act and is responsible for carrying out the export-import policy that may be formulated by the Central Government. The role of the DGFT is limited to advising the Central Government in formulation of the export import policy and to exercise certain other powers of the Central Government, which are exercisable under the Act. However, that does not include the power to either frame or amend the FTP. The impugned orders/communications - orders dated 05.06.2013, 23.01.2014 and 28.08.2014 - rejecting the petitioner’s claim for refund of TED in respect of the goods supplied between January, 2012 and 17.04.2013 on the ground that the said goods were exempted from excise duty, are set aside - petition allowed.

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• 2018 (1) TMI 1063
  Revocation of CHA License - forfeiture of security deposit - violation of various CBLR Regulations - it was alleged that CB did not declare the details of the imported goods correctly in the bill of entry - mis0declaration of goods - Held that: - The appellant has obtained the authorization from Shri Dinesh which becomes null and void since he was not the actual importer. Consequently the infraction of Regulation 11 (a) sands established. Regarding Regulation 11(d), the CB is expected to advice their client, to comply with the provisions of the Customs Act, it stands established that the appellant has not met the actual importer. In view of above, the failure to observe Regulation 11(d) stands established. Regulation 11(e) - Held that: - Shri Vinod Kumar was the actual beneficiary of all the transactions but the entire documentation was shown in the name of M/s Shiva Enterprises. The CB has made no efforts to verify the functioning of his client at the given address and the correctness of IEC code number. It is evident that the CB has failed to verify antecedents, correctness of IEC details, etc. - Both the persons have admitted the fact that Shri Vinod Kumar is the owner of the imported goods but Shri Dinesh was shown as proprietor of M/s Shiva Enterprises. Regarding the CB, Shri Vinod Kumar has been changing his stand as to whether the CB was aware of the mis-declaration in the consignment. Anyhow, in the facts and circumstances of the present case, we are convinced that the appellant is guilty of the violation of CBLR, 2013 but considering the peculiar circumstances, we are also of the view that revoking the CB license would be too grave a penalty to be imposed for the above violation - The ends of justice will be met by imposing a penalty of Rs. 50,000/- on the appellant, in addition to forfeiture of the whole amount of security deposit. Revoking of CB license is set-aside and penalty of Rs. 50,000/- is imposed, in addition to forfeiture of security deposit - appeal allowed in part.

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• 2018 (1) TMI 1062
  Refund of excess customs duty paid - unjust enrichment - Held that: - In the case of admitted fact that at the time of import and for the year 2008-09, the higher customs duty formed part of costing, we are not able to appreciate how such a certificate that full customs duty is not hit by unjust enrichment could have been issued by the Chartered Accountant - Further, the stock as on 1.4.2009 and the utilization and costing principles followed in 2008-09 and 2009-10 has not been elaborately dealt in the said Chartered Accountant certificate to satisfy the lower authorities that appellant is not hit by bar of unjust of enrichment. Summary certificate of this nature now produced before us cannot satisfy the legal requirement. The appellants have not satisfactorily established that the duty burden has not been passed on to third party and as such could not escape the bar of unjust enrichment - Appeal dismissed - decided against appellant.

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• 2018 (1) TMI 1061
  Valuation - Rule 2(2) of the Customs Valuation Rules - Article 19 of the Technical Collaboration Contract - includibility of certain expenses - Held that: - the requirement of Rule 10(1) (e) are satisfied and hence, such payments made are required to be loaded on to the invoice value of Masters Samples/Utility Models. The Commissioner (Appeals) appears to have proceeded on the wrong understanding that such payments are by way of royalty which is paid in consideration for the technical assistance. Whether such loading can be extended to imports already made for the period prior to the renewal of SVB order? - Held that: - Revenue has justified the demand for the past period by alleging that the respondent has mis-declared the answer to question No.20 of the SVB Questionnaire - Revenue has justified mis-declaration on the part of the respondent and invoking extended period of limitation. Appeal allowed.

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• 2018 (1) TMI 1060
  Classification of imported goods - Zinc Ash in free flowing form - Department took the view that the imported goods being zinc ash should be classified under CTH 26201900 attracting BCD of 7.5% instead of CTH 79020090 declared by the appellant - Held that: - goods were declared as 'zinc ash' and have been found to be zinc ash. Appellants also declared that the goods contained minimum 65% zinc. This being so, goods will necessarily fall within the ambit of Ash and residues containing mainly of zinc and hence correctly classifiable under CTH 26201900 as held by the adjudicating authority. Valuation - enhancement of value - Department took the view that declared import value of US$ 220/MT should be rejected under Valuation Rules and redetermined at US$ 1024.42/MT - Held that: - the enhancement has been caused based on NIDB data and that too of an import from Nigeria. Various judgments and decisions of courts have consistently held that enhancement of declared value cannot be done on the basis of NIDB data - the declared values will sustain. There cannot be any confiscation of the goods under Section 111 (m) and imposition of any redemption fine thereof - Penalty under Section 112 (a) is also set aside - appeal allowed in part.

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• 2018 (1) TMI 1059
  Redemption fine - penalty - mis-description of imported goods - Heavy Melting scrap - Held that: - there is clear mis-declaration of description of goods and hence the original authority confiscated the goods under Section 111 (m) of the Customs Act, 1962 - appellant has suffered huge detention/demurrage charges which is also a mitigating factor while considering the quantum of redemption fine and penalty applicable in such circumstances. we therefore reduce the redemption fine to Rs. 1,00,000/- and penalty to Rs. 50,000/-, without disturbing the re-determined value of the imported goods - appeal allowed in part.

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• Service Tax

• 2018 (1) TMI 1058
  Business Auxiliary Service - business of canvassing advertisements for publications like Daily Thanthi, Rani Weekly and getting fixed retainership fee for their work - Held that: - the tax entry with reference to advertising agency and also auxiliary activities of space selling has no relevance to the activities of the appellant in the present case. The appellants are engaged in improving advertisement revenue of the client. In other words, they are promoting the services of clients. Such service on the part of the client is exempted by itself will not make the appellant as not providing any taxable service - appellants are liable to tax under 'Business Auxiliary Service'. Time Limitation - Held that: - the issue involved is certainly one of interpretation. It is also to be noted that appellant acquired business from M/s.Sovereign Media marketing (P) Ltd. who was never subjected to service tax for the same activities. This admittedly led to bonafides of the appellant - extended period and penalty cannot be invoked. Appeal allowed in part.

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• 2018 (1) TMI 1057
  Management Consultancy Service - dispute in the present case relates to some part of their activities which are essentially with reference to giving opinion, updates on tax, legal position, filing of tax returns under various statutes relating to Income Tax, Service Tax, Sales Tax etc. under various auxiliary services with reference to compliance of these tax laws by the client - Held that: - The legal assistance either for direct planning or compliance is within the ambit of various tax laws has no direct relevance to working or improving any organization of the client in order to avoid penal consequence. It may indirectly keep the organization within the ambit of legal promotion work for their further business. This by itself will not make the consultancy or advisor in tax matters management consultant - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 1056
  Demand of Service Tax, interest and imposition of penalties under Sections 76, 77 & 78 of the Finance Act, 1994 - erection, commissioning and installation services - benefit of N/N. 1/2006 - Held that: - reliance placed in the case of COMMR. OF SERVICE TAX, BANGALORE Versus LINCOLN HELIOS (INDIA) LTD. [2011 (4) TMI 586 - KARNATAKA HIGH COURT], where it was held that it cannot be said that there is any willful attempt to evade the payment of tax on the part of the assessee. It is in the nature of transitional period and the benefit of doubt that existed in the mind of the assessee is to be given to him - the appellants are liable to pay service tax on the service aspect of the transaction. Extended period of limitation - Held that: - A perusal of the impugned order says that it indeed does not deal with the issue of limitation raised by the appellant and consequently it fails to deal with the imposition of penalties specifically - the impugned order is not a speaking order. The matter is remanded to the Commissioner (Appeals) to decide afresh - appeal allowed by way of remand.

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• 2018 (1) TMI 1055
  Adjustment of remittance of wrong assessee code / registration number - denial on the ground that there is no provision for said adjustment under the Finance Act, 1994 - Held that: - The Board is issued a Circular dated 20.5.2003 wherein it is clarified that the assessee shall not be asked to pay service tax again if he has paid service tax under a wrong accounting code - reliance placed in the case of M/s. Sahara India TV Network Versus C.C.E. & S.T., Noida [2015 (10) TMI 2037 - CESTAT NEW DELHI], where Tribunal had set aside the demand as well as the penalties imposed directing the adjudicating authority to make necessary adjustment - impugned order cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 1054
  Whether the appellant can be allowed to adjust the excess paid service tax to the liability payable for the subsequent months? - Held that: - The Tribunal in the case of General Manager (CMTS) Vs. Commissioner of Central Excise, Chandigarh [2014 (8) TMI 589 - CESTAT NEW DELHI], where it was held that if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised, as a result of which he had determined his tax liability or estimation basis, the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit - the demand raised on this ground is unsustainable and requires to be set aside. CENVAT credit - service tax paid on advertisement on MTC buses - Held that: - As per Rule 3 of CENVAT Credit Rules, credit can be availed on service tax / duty when the documents evidence the payment of the same. Since the documents on which credit has been availed does not evidence the payment of service tax, we are of the view that the credit availed is incorrect - demand upheld. CENVAT credit - rent-a-cab service - Held that: - During the relevant period, prior to 1.4.2011, the definition of input services included the words activity relating to business . Therefore, the definition had wide ambit and had included the services namely rent-a-cab service - In Commissioner of Central Excise, Raipur Vs. Beekay Engg. & Castings Ltd. [2009 (6) TMI 96 - CESTAT, NEW DELHI], the said services have been held to be eligible for credit - the disallowance of credit is unjustified. CENVAT credit on capital goods imported during the period January 2007 - Held that: - According to Rule 4(2) of CENVAT Credit Rules, 2004, credit can be availed not exceeding 50% of duty paid on capital goods in the same financial year and the balance amount of CENVAT credit has to be availed in the subsequent year. Therefore, availment of entire credit in the same financial year is irregular - The appellant has not contested the same and therefore the demand of service tax under this category is sustained. Penalties - Held that: - The ld. counsel has explained that the appellant had not rendered any sponsorship service and they had only extended donations to orphanage and charity purpose and it was wrongly accounted in their books of accounts as sponsorship service. Taking into consideration these aspects, the penalties in regard to these issues are unwarranted and requires to be set aside which we hereby do. Appeal allowed in part.

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• 2018 (1) TMI 1053
  Non-payment of service tax - extended period of limitation - Architect services - It was alleged that appellant was charging and collecting service tax from the clients but had not remitted the same to the department - Held that: - there definitely was lack of clarity on the taxability of the impugned services during the period of dispute - penalty cannot be imposed. In addition to the directions for reworking of the demand of Annexure-II & III, as ordered by the Commissioner (Appeals), the de novo adjudicating authority will also look into other contentions of the appellant that they have in fact not collected any tax from their clients that as per the settled law, there cannot be any service tax liability in respect of tax already discharged by the sub-contractor and also in respect of reimbursable expenses. Appeal allowed by way of remand.

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• 2018 (1) TMI 1052
  Business Auxiliary Services - It appeared to the department that appellants are providing services of Promotion or Marketing or Sale of Goods produced or provided by or belonging to various clients, i.e. tea factories in the auctions conducted at Coonoor, which fall under taxable service of Business Auxiliary Service - benefit of N/N. 13/2003 - case of appellants is that they have acted as commission agents and therefore are eligible for exemption from payment of service tax - Extended period of limitation. Held that: - Notification No. 13/2003-ST was amended with effect from 9.7.2004 vide Notification No. 8/2004-ST specifically to expand exemption to commission agent services in relation to sale and purchase of agricultural produce - Vide Notification No. 19/2005-ST dated 7.6.2005, the clause (i) to Explanation to Notification No.13/2003-ST which gave the definition of Commission Agent was omitted. The appellants, no doubt are called brokers in terms of the Coonoor Tea Trade Association Rules. However, they do not merely cause the sale of goods on behalf of their clients, the tea sellers, for a consideration that is based on the quantum of the sale. They are also engaged in drawing samples, undertaking printing of catalogues, distribution of samples to their buyers and conduct of auction in accordance with the procedure laid down by the Coonoor Tea Trade Association. Upon completion of the auction, the sales consideration is received not by the sellers but by the appellants. Thereafter, the appellant themselves issue delivery orders which enables the buyers to take delivery of the tea from the warehouse. They do the billing work and collection of sale proceeds on behalf of their clients. The appellants also collect lot money not only from their clients but also from the buyers. Appellants also make advances to their clients in anticipation of receipt of goods for sale. They are also engaged in activity of collection and payment of tax namely sales tax on behalf of their clients. The appellants promote the sale of the tea produced by their clients by sending out samples to their prospective buyers advertising by way of printing and distribution of catalogues. It therefore appears to reason that this wide gamut of activities of the appellant would go far beyond the scope of a commission agent since the services rendered by them are not restricted only to sale of goods on behalf of the sellers for consideration, which is the main edifice of the definition of commission agent. Notwithstanding the fact that the appellant may have been appointed as a broker, that by itself is only a requirement of Coonoor Tea Trade Association. Though they are called as broker under the Association rules that will not enable the appellant to claim that they are only commission agent for the purpose of section 65(19) ibid. The services performed by the appellant is thus promotion and sale of goods produced or provided or belonging to their clients and thus fall within the ambit of section 65(19)(i) of the Act. The services provided by the appellant will not fall either in the category of commission agent under section 65(19) or as a commission agent under Notification No. 13/2003-ST or for that matter under auction of property service under section 65(7a) but only under Business Auxiliary Service for promoting sale and marketing of goods of the tea sellers as falling under section65(19)(i) of the Act. The services rendered by appellants for private sales also being of the same genre, they would also fall under the ambit of section 65(19)(i) only. Penalty - Held that: - the whole dispute has been based on interpretation as to classification of their services. This being so, we find that there is a strong case for setting aside the penalties - penalties set aside. Appeal allowed in part.

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• 2018 (1) TMI 1051
  Penalty - non-payment of service tax - GTA Service - Reverse charge mechanism - appellant is a cooperative society, established with objective of assisting the farmers for selling their agricultural produce at the MSP fixed by the GovernmentHeld that: - there was a bonafide belief for non-payment of Service Tax within the stipulated time, in view of the Circular No.89/7/2006-ST dated 18/12/2006 and Notification No.04/2010 dated 27/02/2010 regarding payment of Service Tax on GTA service under reverse charge mechanism - the benefit of Section 80 of the Act should be available to the appellant for non-imposition of penalties under Section 76,77 and 78 of the Act. This Tribunal in appellant own case M/s. Chhattisgarh State Co-Operative Marketing Federation Ltd. Versus Commissioner of Central Excise [2016 (11) TMI 788 - CESTAT NEW DELHI], has extended the benefit of Section 80 of the Act on the ground that the appellant being a statutory Government body, no malafide can be attributed to evade payment of Service Tax. Thus, non-payment of tax within the prescribed time frame was due to the bonaife belief that the same was not payable by the cooperative society. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (1) TMI 1050
  Whether the duty liability has been reworked out in the denovo proceedings in proper compliance with the directions laid down by the Tribunal in its earlier final order dated 20.9.2007? - Held that: - With such remand directions before him, it was incumbent on the authority adjudicating denovo, to have analyzed the matter afresh to satisfy himself whether there was cogent findings based on irresistible evidence concerning the allegation that the assessee had clandestinely manufactured and removed excisable goods. We are unable to find any attempt in this direction in the entire impugned order. In our view, the denovo adjudication order is nothing but a rehash of the earlier one which was set aside by the Tribunal - Without any further cogent or reasoned discussion thereafter, the adjudicating authority has proceeded to confirm the very same amount of Rs. 15,88,954/- on the appellant without any justification. When the Tribunal had vacated the penalty and which decision became final since not appealed by the Revenue, we are at a loss to fathom how and why the Commissioner in his denovo proceedings has once against foisted even a higher quantum of penalty under different provisions. Not only that, he has also sought to demand interest which was not demanded in the earlier adjudication order. The adjudicating authority has not complied with the directions given in the earlier order of the Tribunal dated 20.9.2007 and has not brought forth findings based on irresistible evidence to uphold allegations of clandestine manufacture and removal - appeal allowed.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 1049
  Rejection of gross profit claimed by the revision petitioner - Whether the adoption of 10% notional Gross Profit on the purchases effected, while arriving deemed sale turnover by the Assessing Officer is correct or not? Held that: - It is the duty of the respondent dealer to furnish the value of materials used in the execution works contract with appropriate inclusion of gross profit relatable to those materials. In practice it is not humanly possible to cull out each and every item transferred along with related Gross Profit. Thus the liability on the part of the dealer have to be arrived notionally be calculating deemed sales taxable turnover. Hence, it has been a practice of the dealers to adopt 10% Gross Profit on the purchase value of the items used in the purchase value of the items used in the works contract and thereby arrived a deemed sales turnover for which tax at the respective rate is being paid to the Department. This conventional method of adopting 10% Gross Profit and working out the liability in respect of works contractors have also been accepted by the Department. This has been in in vogue ever since the introduction of Section 3B of the TNGST Act 1959 and continued to be in course even for the liabilities pertaining to Section 5 of the TNVAT Act 2006 - it could be deduced that while doing so, the tribunal has also verified the audited Profit & Loss statement and Balance Sheet of the assessee / revision petitioner, for the relevant years. Was the Tribunal correct in giving a judgment entirely based on perverse assertions that had no relation to either the established facts or the accounts maintained by the petitioners in the normal course of their business, audited and certified by a Chartered Accountant? - Held that: - Though, learned counsel for the revision petitioner urged that the certificate issued by the Chartered Accountant, for the period between 01.01.2007 and 31.03.2007, 01.04.2007 and 31.03.2008, 01.04.2008 and 31.03.2009 & 01.04.2009 to 31.03.2010 of the Assessment years 2006-07, 2007-08, 2008-09 and 2009-10, respectively, corroborated the accounts and balance sheet and therefore, the certificates issued by the Auditor, ought to have been given weightage, for the calculation of gross profit, which according to him, was actually earned by the assessee, and further reiterated the grounds of challenge for reversal of the orders of the tribunal Section 142(2) of the Income Tax Act, 1961, states that for the purpose of obtaining full information in respect of the income or loss of any person, the Income Tax Officer, may make such enquiry, as he considers necessary, and as per Section 142(3) of Income Tax Act, 1961, the assessee, shall, except where the assessment is made under Section 144, be given an opportunity of being heard, in respect of any material gathered on the basis of any enquiry, under sub-section (2) and proposed to be utilised for the purpose of the assessment - the tribunal, has considered the submissions of the learned counsel, perused the relevant documents, stated supra, and passed a well considered orders in STA Nos.109 & 110 of 2015 and 200 & 201 of 2014 dated 25.06.2015, and that the same do not call for any interference. Tax revision dismissed.

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