TMI Tax Updates - e-Newsletter
January 4, 2017

Case Laws in this Newsletter:

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

Articles

1. Action Points before GST implementation

   By: Ravi Kumar Somani

2. TRANSITIONAL PROVISIONS-PART-VII Sec 173 - Exempted goods returned to the place of business on or after the appointed day

   By: Pradeep Jain

News

1. Finmin seeks report on malpractices by bank officials

2. IT to ensure no grievance remains pending over 30 days

3. RBI Reference Rate for US $

4. Government realizes ₹ 21,432.38 crore, by end-November 2016, through CPSEs’ disinvestment receipts, constituting around 59.53 % of the Budgeted Target of ₹ 36,000 crore ;

5. Auction for Sale (Re-issue) of ‘Government of India Floating Rate Bonds

6. Issuance Calendar for Marketable Dated Securities for the Period January 02, 2017 to February 10, 2017

Circulars / Instructions / Orders

Customs

1. 183/2016 - dated 29-12-2016

Intimation of updation of WCO Harmonized System of Nomenclature & Steps taken for its smooth implementation – Reg.

Central Excise

2. F.No.276/104/2016-CX.8A (Pt.) - dated 3-1-2017

Inclusion of Show Cause Notice issued in relation to sub-section (11) of Section 28 of the Customs Act, 1962 on the competency of officers of DGDRI, DGCEI and Customs (Prev.) in the Call Book

Highlights / Catch Notes

Income Tax

• Taxpayer's Deduction u/s 54F Shouldn't Be Denied Based on Assumptions About Wife's Mortgage Contribution.

  Case-Laws - AT : Disallowance of deduction U/s 54F - the wife of the assessee could have included the value of construction for mortgage purposes and this alone does not mean that construction was carried out by the wife of the assessee out of her own funds so as to deny the assessee the benefit of deduction - AT
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• Debate Over 150% Penalty Under Income Tax Act Section 271(1)(c): Misuse and Misinterpretation Concerns Raised.

  Case-Laws - AT : Levy of penalty - there is change in opinion and basis for levy of penalty for concealment varies - there is no merit in levy of penalty under section 271(1)(c) of the Act and there is no merit at all in levying the penalty @150% - AT
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• Sales Commission Expenses Valid Despite Agent's Absence; Evaluate Based on Case Merits, Not Physical Presence.

  Case-Laws - HC : Allowance of expenditure of sales commission - Merely because commission agent has not appeared, expenses cannot be disallowed. - HC
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• Educational Institutions Can Retain Tax-Exempt Status Despite Incidental Surplus u/ss 11 or 10(23C)(iiiab.

  Case-Laws - HC : Exemption u/s 11 / 10(23C)(iiiab) - charitable activity - If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes - HC
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Customs

• Vessels Operated Outside India's Territorial Waters Classified as "Foreign Going Vessels" u/s 87 of Customs Act, 1962.

  Case-Laws - AT : The vessels of the appellants in question, while in operation on high-seas i.e. outside the territorial waters of India, should be reckoned as ‘foreign going vessel’ - provisions of Section 87 of the Customs Act, 1962 extended, to the bunker in question, consumed onboard the vessels - AT
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• EOUs Must Pay Customs Duty on Inputs in Waste or Scrap Materials Like Dross or Slag.

  Case-Laws - AT : 100% EOU - taxability - Waste/ scrap - applicable customs duty will have to be paid on the inputs contained in the dross/slag. - AT
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Service Tax

• Milk Chilling Facilities Classified as Manufacturing; Exempt from Service Tax under Business Auxiliary Services Category.

  Case-Laws - AT : Business auxiliary service - chilling facilities - chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - AT
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• Appellant accepts liability for value mismatch; penalties imposed, Section 80 not invoked due to lack of contest.

  Case-Laws - AT : Imposition of penalties - mis-match of value - as the appellant having accepted the liability and also having not defended the show cause notice, even after getting opportunity, the beneficial provision of Section 80 need not be invoked. - AT
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• Service Tax to be Paid on 20% of Works Contract Value in Valuation Case; 80% for Materials, 20% for Services.

  Case-Laws - AT : Valuation - works contract - payment of service tax on 20% of the value - the action of spilt-up the consideration received in two components:- 80% towards supply of materials and 20% towards rendering of services confirmed - AT
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Central Excise

• CENVAT Credit Denied for Industrial Construction and Works Contract Services; Ruling Deems Denial Legal and Proper.

  Case-Laws - AT : CENVAT credit on industrial construction/works contract service - the appellant cannot claim credit on works contract service and therefore, the denial of credit is legal and proper - AT
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VAT

• Assessing Officer Must Independently Review Objections, Cannot Rely on Inspecting Officer's Directives for Proposal Implementation.

  Case-Laws - HC : On notice being sent to the dealer, if the dealer files his objections, then it is for the AO to independently apply his mind to the objections and then rule on the objections. While doing so, the AO cannot state that he has been directed by the Inspecting Officer to implement a proposal - HC
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Case Laws:

• Income Tax

• 2017 (1) TMI 188
  Levy of penalty u/s 271 (1) (c) - non recording of satisfaction for initiating penalty - assessee furnished the returns of income in response to the notice issued under section 153A - Held that:- Assessing Officer has to at initial stage itself come to a finding as to whether the additions made in the hands of assessee justify the levy of penalty proceedings under section 271(1)(c) of the Act on account of concealment of income or furnishing of inaccurate particulars of income. We find that in the present set of facts, the Assessing Officer has recorded satisfaction for initiating penalty proceedings on account of concealment of income and furnishing of inaccurate particulars of income. Under the provisions of section 271(1)(c) of the Act, penalty for concealment is leviable where the assessee has fulfilled either conditions i.e. concealment of income or furnishing of inaccurate particulars of income. The Assessing Officer while initiating penalty proceedings has to be satisfied as to under which limb, the penalty is leviable and consequent thereto, issue notice in this regard. However, in the facts of the present case and as pointed out hereinabove, the Assessing Officer has failed to record satisfaction correctly and consequently, we hold that initiation of penalty proceedings against the assessee are not valid for non-recording of satisfaction by the Assessing Officer while completing assessment proceedings. Assessing Officer has failed to strike off either of the limbs of section 271(1)(c) of the Act, which are not satisfied by the assessee and consequently, notice issued under section 274 r.w.s. 271(1)(c) of the Act is bad in law and order levying penalty for concealment thereafter, is infructuous. Accordingly, we hold so. The Statute has provided distinction between concealment of income and furnishing of inaccurate particulars of income, which may be thin line of distinction, but the same has to be kept in mind while recording satisfaction by the Assessing Officer. - Decided in favour of assessee.

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• 2017 (1) TMI 187
  Claim of deduction under 80IB(10) - claim was rejected as project of the assessee was approved prior to 01/04/2004, therefore, the assessee is not entitled to the benefit as the amendment made by the Finance Act, 2005 - Held that:- The notification issued by the Board dated 5th January 2011 clearly stipulates that the benefit of Section 80IB(10) shall be available to projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004, and before 31st day of March, 2008, thereby making the incomes arising from such projects eligible for deduction under sub section (10) of section 80IB from the assessment year 2005–06 onwards. There is no equity in tax legislation and the exemption provisions are to be strictly construed wherein the assessee has to establish at the first stage the eligibility for the benefit of deduction u/s 80IB(10) of the Act in accordance with the provision of the statute and once the assessee establishes its entitlement to the said deduction, then deduction provisions are to be liberally construed to give the full intended benefit of Section 80IB(10) of the Act to the assessee so that the intended purposes of beneficial provisions can be fully achieved. The Courts shall not adopt to the principles of contemporance expositio when the plain language of the statute is clear and unambiguous. Considering the factual matrix we are of the view that the proviso introduced by Finance Act , 2004 clearly grant relief to slum redevelopment or reconstruction projects which are approved by Central Government or State Government and the scheme is notified by the Board. The Board Notification clearly stipulate that benefit shall be granted to the projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004, and before 31st day of March, 2008, while in the case of the assessee the projects are approved prior to 1st day of April 2004 as set out above in preceding para’s, and the assessee is not able to establish its entitlement to deduction u/s 80IB(10) of the Act at the first stage itself for reason cited above. Thus, the contention of the assessee cannot be accepted and hence are rejected. - Decided against assessee

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• 2017 (1) TMI 186
  Income from share transactions - short term capital gain (STGC) and long term capital gain (LTCG) OR business income - Held that:- The intention of the assessee in this respect can be gauged from the fact that the assessee is drawing salary income and therefore not occupied primarily as a trader. Secondly, the acquisition of capital asset are from own funds which are to the tune of 5.15 crores. Thirdly, the shares were declared to have been held as “capital asset” in the earlier years which have been sold during the year giving rise to LTCGs. Similarly, the shares hold as Short Term Capital Asset were also held for fairly long time prior to its sale giving rise to STCGs. On the totality of these facts, we find no reason to disturb the conclusion reached by the CIT(A). Mere fact that the assessee has also quickly sold shares in some instances within short interval would not ipso facto lead to conclusion that the assessee was a trader in the shares. - Decided in favour of assessee

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• 2017 (1) TMI 185
  Disallowance of the bad debts claim - business loss admissibility - Held that:- In the present case, the amount 2,93,611/- paid by the assessee in excess of agreed consideration to discharge the liability of vendor of capital asset has not been received back by the assessee. Ostensibly, the said amount has become irrecoverable, therefore, the same is allowable as business loss under the provisions of section 28 of the Act. The amount paid by assessee to discharge the liability of vendor that has been adjusted against sale consideration partakes the character of capital expenditure. Thus in view of the facts we are of the considered opinion that although the amount of 2,93,611/- excess paid by the assessee cannot be allowed to write off as bad debt however, the said amount can be considered as business loss u/s 28 of the Act. - Decided partly in favour of assessee Disallowance of interest on loan and pre-payment charges - Held that:- A.R. could not place any other document to show that the building was complete in every respect and was ready to use during the period relevant to the assessment year under appeal. The only document i.e., building completion certificate on which the Ld. A.R. has placed heavy reliance could not support the case of assessee. The matter has travelled three stages. The assessee could not obtain the rectified or the correct building completion certificate either at the time of assessment or at the time of first appeal proceedings. Even during the second appeal stage, the assessee has filed the same document. There is no other document on record to substantiate the claim of assessee. Thus, we are of considered view that the building was not ready during the period under consideration. Under such circumstances, the interest paid and pre-payment charges paid by the assessee cannot be allowed as revenue expenditure. We do not find any infirmity in the order of ld. CIT(A) in rejecting the claim of the assessee and to treat the expenditure as revenue in nature - Decided against assessee

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• 2017 (1) TMI 184
  Recomputation of deduction u/s 80HHC without reducing the amount of deduction u/s 80IB from the eligible profits - Held that:- It is noted that the Co-ordinate bench in the case of EIH Ltd vs DCIT [2015 (10) TMI 2022 - ITAT KOLKATA came to the conclusion that for the purpose of computing deduction u/s 80lA, the deduction u/s 80HHD need not be reduced as both the deductions are independent of each other, which we agree and concur with the said view. It is also a well settled position of law that in a case where two views are possible, the view which favours the assessee must be adopted. The said view has been affirmed by the Hon'ble Supreme Court in CIT -vs.- Vegetable Products Ltd.(1973 (1) TMI 1 - SUPREME Court ).Similar view has been taken in ACIT -vs.- Hindustan Steel Industries [2004 (9) TMI 289 - ITAT AGRA ] and Deputy Commissioner Of Income-Tax. Versus Oxemberg Fashions Limited. [2007 (3) TMI 284 - ITAT BOMBAY-E ] . Therefore we concur with the contention of the assessee and thus confirm the order of the ld. CIT(A). - Decided in favour of assessee

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• 2017 (1) TMI 183
  Claim made U/s 54B - disallowance of claim on the ground that the property has been purchased in the name of his wife and the investment made in construction of the house on the property belonging to the wife of the assessee - Held that:- As decided in Kalya Vs. CIT & Ors [2012 (6) TMI 239 - RAJASTHAN HIGH COURT ] a bare reading of Section 54B of the Income Tax Act does not suggest that assessee would be entitled to get exemption for the land purchased by him in the name of his son and daughter-in-law. In the facts and circumstances of the case also aforesaid inference has not been drawn. Same is question of fact. No substantial question of law arises in appeal. Question whether purchase was by assessee or by son, is a question of fact. Secondly, the word "assessee" used in the Income Tax Act needs to be given a 'legal interpretation' and not a 'liberal interpretation', as contended by the learned counsel for the appellant. If the word 'assessee' is given a liberal interpretation, it would be tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government, which the law does not permit. The Income Tax Appellate Tribunal, having considered all the facts and circumstances of the case, is found to have rightly disallowed the exemption under Section 54B of the Act. - Decided against assessee Disallowance of deduction U/s 54F - Held that:- Hon’ble Jurisdictional High Court in the case of Kalya Vs. CIT & ors. (supra) had occasion to deal with the question of eligibility of Section 54B of the Act but has not examined the claim made U/s 54F of the Act, therefore, the revenue has not brought our notice any other binding precedent of the eligibility of deduction U/s 54F of the Act. Therefore, by respectfully following the judgment of the Hon’ble Karnataka High Court in the case of CIT Vs P.R. Seshadri (2009 (7) TMI 814 - Karnataka High Court ) wherein held though the land may be in the ownership of the assessee' s spouse, nevertheless the Tribunal has recorded a categorical finding that construction work was in progress during April 21, 1995 till August 31, 1996, and the wife of the assessee could have included the value of construction for mortgage purposes and this alone does not mean that construction was carried out by the wife of the assessee out of her own funds so as to deny the assessee the benefit of deduction under section 54F, we direct the Assessing Officer to allow deduction U/s 54F of the Act to the assessee - Decided against revenue

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• 2017 (1) TMI 182
  Claim preferred u/s. 54B - appellant assessee had purchased the agriculture lands before sale of agriculture land on which capital gain arised - Held that:- The assessee had sold the agricultural land on 04.11.2010 and as per the provisions of section 54B of the Act, the investment has to be made within period of two years after the date of sale. Since the assessee had purchased the new agricultural land on 16.07.2010 and on 30.09.2010, there is no merit in the claim of assessee for deduction under section 54B of the Act. Another point which was raised by the assessee was that the investment for purchase of new land out of advance received against the sale of agricultural land. First of all, the investment made is in violation of provisions of section 54B of the Act and secondly, despite opportunity being allowed to the assessee, the assessee has not appeared nor filed translated copies of Marathi documents of sale deed nor has furnished any other evidence to prove its case. In view thereof, there is no merit in the claim of assessee and the same is rejected. - Decided against assessee Un-reconciled purchases vis-à-vis TCS Certificate - Held that:- The assessee had agreed that there was difference in purchase figure and had also accepted adoption of GP addition on the said purchases. However, the assessee offered 10% on the said unreconciled purchases for which, the assessee has not given any basis. The Assessing Officer and CIT(A) have applied the GP rate declared by the assessee to be the basis for computing addition in the hands of assessee vis-àvis un-reconciled purchases. There is no merit in the plea of assessee in the absence of any evidence and in view thereof, the addition is upheld. - Decided against assessee

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• 2017 (1) TMI 181
  Levy of penalty u/s.271(1)(c) - Returns filed u/s.153A - as result of search and seizure operation, some incriminating documents were found and seized relating to transaction of purchase and sale of plots, shops etc. - on-money offered by the assessee - Held that:- The satisfaction as recorded by AO which is evident from the assessment order itself does not establish the case of Revenue against the assessee that it is liable for levy of penalty for concealment under which limb i.e. for concealment of income or for furnishing of inaccurate particulars of income. The notice issued under section 274 by the Assessing Officer also does not show cause the assessee as to make him aware of exact charge levied against him. In the absence of same, it causes prejudice to the right of reasonable opportunity to be allowed to the assessee before levy of penalty under section 271(1)(c) of the Act. Consequently, penalty notice issued in the present case suffers from infirmities i.e. lack of satisfaction and lack of notice being issued in making the assessee aware of exact charge against him, hence the same is quashed. The penalty proceedings completed pursuant to such notice are vitiated and the same are held to be invalid. The assessee had offered additional income on account of on-money on sale of plots. The Assessing Officer had accepted the same and had initiated penalty proceedings under section 271(1)(c) of the Act. The CIT(A) during the course of appellate proceedings relating to section 271(1)(c) of the Act issued enhancement notice to the assessee. Thereafter, he had gone through the seized documents and elaborately referred to them and even reproduced the scanned copies of such documents and comes to conclusion that loans were received from Ratanlal Bafna, but still upholds the penalty levied under section 271(1)(c) of the Act. Once the finding of CIT(A) is that these are loans received from Bafna and are not on-money received on sale of plots, then in cases where penalty proceedings have been initiated on a different footing and the CIT(A) reverses the same and holds the same to be loans received by the assessee, there is change in opinion and basis for levy of penalty for concealment varies. In such circumstances, there is no merit in levy of penalty under section 271(1)(c) of the Act and there is no merit at all in levying the penalty @ 150%. Accordingly, we allow the claim of assessee even on merits. Thus, the grounds of appeal raised by the assessee and additional ground of appeal raised by the assessee are allowed. - Decided in favour of assessee

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• 2017 (1) TMI 180
  Interest income not exempt u/s 11 and 12 and was taxable under the head Income from other sources - Held that:- There is nothing brought on the record by either of the authorities below that the said funds, the fees or the interest income have been used for other purpose other than the objects of the assessee society. The assessee enjoys the exemption u/s 11 of the Act having registration u/s 12A(a) of the Act as mentioned in our various orders hereinbefore and also the exemption u/s 10(23C)(iv) of the Act and there is nothing on record that the assessee has diverted the income to the specified persons u/s 13 of the Act and therefore no addition can be made on these accounts and the order of the ld. CIT(A) confirming the action of the AO is reversed. - Decided in favour of assessee

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• 2017 (1) TMI 179
  Estimation of income - GP addition - assessee engaged in the whole sale business of Stones - Held that:- Tribunal has committed serious error in estimating the income at 4 lacs, without any basis. Therefore, as such the addition of 4 lacs made by the Tribunal is arbitrary and without any basis. In the fact of the present case Tribunal has fallen into an error even the estimating GP rate @ 10.38% on the basis of retailer's turnover particularly looking to the assessee's turnover which has been shown to the 40 times to his capital, while in all other cases it ranges between 2.5 times to 7 times only. - Decided in favour of the assessee.

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• 2017 (1) TMI 178
  Allowance of expenditure of sales commission - disallwoance on the ground that if the lady is Pardanashin, then question arises how could she conduct business and came to the conclusion that payment made by the assessee is not actually commission payment - Held that:- Taking into consideration the fact that the payment pursuant to agreement was made by account payee which is reflected in the books of accounts of the assessee. Merely because commission agent has not appeared, expenses cannot be disallowed. In our view the view taken by the tribunal is required to be reversed. The expenses which are incurred by assessee is required to be allowed. The issue is required to be answered in favour of the assessee

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• 2017 (1) TMI 177
  Capital asset treatment - transfer of membership ticket of stock exchange - Held that:- The membership of Stock Exchange is a personal privilege or a license and not a Capital Asset within the meaning of sec.2(14) of the Income Tax Act. As such admission fee paid by the assessee cannot be treated to be cost of acquisition. See M/s Techno Shares & Stocks Ltd. Versus The Commissioner of Income Tax IV [2010 (9) TMI 6 - SUPREME COURT OF INDIA ] and Stock Exchange, Ahmedabad Versus Assistant Commissioner of Income-Tax [2001 (3) TMI 2 - SUPREME Court ] . The questions are therefore answered in favour of the assessee and against the department.

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• 2017 (1) TMI 176
  Payment of commission disallowed - non genuine payment - Held that:- Some of the persons who are known to Mr. P.C. Kothari, he is one of the person but not relative but in that view of the facts on record, we are of the opinion that finding of both the authorities are just and proper. The expenses which are incurred are doubtful payment made only with a view to get rid of hassles of higher tax slab. In our opinion, the transaction is not based on expenses which are disallowed but it is not for the business exigency and purpose is to get rid of the hassles. In that view of the matter, the view taken by the tribunal is just and proper. The issues are required to be answered in favour of the department and against the assessee.

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• 2017 (1) TMI 175
  Unexplained cash deposit in ICICI and Axis Bank - Held that:- We find that the revenue was not able to prove with material evidences on record that the previous withdrawals made in the said bank accounts were utilized for some other purposes by the assessee thereby failing to act as a source for future cash deposits. It is not in dispute that the assessee had received a sum of 5,58,719/- in cash from M/s Piyanshu Projects Pvt Ltd towards transport receipts apart from cheques received from them. It is also not in dispute that the assessee was in receipt of hire charges from M/s Piyanshu Projects Pvt Ltd. This fund is also available for explaining the source for cash deposits. With regard to the cheque deposits of 10 lacs and 5 lacs credited in the said bank account, we find that the assessee had duly explained the source and nature of those credits together with the party (Sri Suresh Kumar Gourisiria) from whom the same were received which were also subject to verification by the Inspector of Income Tax. With regard to the other cheque deposits of 5 lacs and 2.50 lacs, the same were explained by the assessee to be received towards sale of cars. This fact has not been disputed by the revenue before us. In fact, the same AO had accepted this fact while framing a separate addition towards capital gains on sale of the said cars. Hence we hold that there is no case made out by the revenue for making an addition in the facts and circumstances of the case. - Decided against revenue Unexplained investment in Max Life Insurance - Held that:- We find that the ld CITA had categorically observed that the investment in Max Life Insurance is duly reflected in the cash book of the assessee. This finding has not been controverted by the revenue before us. Hence we find no infirmity in the order of the ld CITA in deleting addition - Decided against revenue Unexplained advance receipt and payment made to two different parties - Held that:- We find that the sums of 15,00,000/- has been received as advance from Suresh Kumar Gourisaria which fact was also accepted by the ld AO pursuant to the physical verification by the Inspector of Income Tax. However, he only observed that the nature of the transaction has not been proved by the said party with evidence. We find that the ld CITA had also stated that the said sum was received as advance from the said party which was also refunded to the said party on 22.2.2011. He also observed that the assessee had indeed registered the sale deed for which the advance was originally received from Mr. Suresh Kumar Gourisaria but the deal did not fructify and ultimately the sale deed was registered in favour of M/s. Riddhi Siddhi Health Care Pvt Ltd on 11.2.2011. None of these facts were controverted by the revenue before us. - Decided against revenue

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• 2017 (1) TMI 174
  Exemption from payment of tax under the provisions of Section 10(23C)(iiiab) - Exemption u/s 11 - charitable activity - proof of working of school or purposes of education - Held that:- In exercise of powers conferred by the sub-clause (vi) of the Clause (23C) of Section 10 of the Income Tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes vide order dated 23.3.2007 hereby approves that an income received by any person on behalf of “M/s. Model Public School Society, Opp Ashiana Green, Bhiwadi” (hereinafter the “Institution”) shall not be included in the total income of such person as assesseable. The Supreme Court in the case of Visvesvaraya Technological University vs. Assistant Commissioner of Income Tax [2016 (4) TMI 874 - SUPREME COURT], in para 6 has held as under: The relevant principles of law which will govern the first issue i.e. whether an educational institution or a university, as may be, exists only for educational purpose and not for profit are no longer res integra, having been dealt with by a long line of decisions of this Court which have been elaborately noticed and extracted in a recent pronouncement i.e. Queen's Educational Society v. Commissioner of Income Tax [2015 (3) TMI 619 - SUPREME COURT ] wherein held as Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes. - Decided in favour of assessee

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• 2017 (1) TMI 173
  Addition u/s 69A - unexplained silver bars discovered in search - Held that:- When the material which has been recovered for the rental premises of the assessee, the same is added to his income as a natural consequence and thus loss by confiscation by the DRI official of the Custom Department is business loss. In view of the decision in Commissioner of Income Tax, Patiala Vs. Piara Singh [1980 (5) TMI 2 - SUPREME Court] , the issue is required to be answered in favour of the assessee. Therefore, the issue referred by the Tribunal is decided in favour of the assessee.In view of the answer to the reference, penalty order of the Tribunal is required to be quashed and set aside and the matter is required to be remitted back to the Tribunal for deciding both the matters together as one issue is answered in favour of the assessee.

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• 2017 (1) TMI 172
  Disallowance under section 40 (a) (ia) - discount purportedly allowed by the appellant on sale of prepaid products to its distributors - Held that:- Respectfully following the decision of the Hon’ble Bombay High Court in CIT versus Kotak securities limited (2011 (10) TMI 24 - Bombay High Court ) we also hold that disallowance under section 40 (a)( ia) cannot be made in this case in view of the old practice of not deducting tax at source which has been accepted by the revenue and existence of bonafide belief of the assessee for non-deductibility of tax at source on such payments. However the above direction is subject to verification by the Ld. assessing officer that recipient of the income has discharged their own tax liability. In view of this we set aside this ground of appeal to the file of the Ld. assessing officer for verification that recipient of the income has discharged their tax liability and if found so to delete the addition accordingly. The other argument of the assessee was that if the payee has included the above sum and discharged the tax liability no disallowance should be made in the hands of the assessee in view of the amendment made by the finance act 2012 by insertion of the 2nd proviso to the provisions of section 40 (a) (ia) of the act. The coordinate bench in the Shri Kumar Roy versus income tax officer in [2016 (3) TMI 588 - ITAT KOLKATA] has held that above proviso inserted by the finance act 2012 can be said to be declaratory and curative in nature and therefore, should be given retrospective effect from 1-4-2005. No other contrary decision was pointed out by the learned departmental representative. In view of this we accept the argument of the assessee that the 2nd proviso inserted by the finance act 2012 should be given retrospective effect from 01/04/2005. Therefore this argument of the appellant is also set aside to the file of the ld. assessing officer with a direction to give the benefit of the above proviso to the appellant in case the 1st contention of bonafide belief of the assessee does not survive on any amount. Non-deduction of tax at source on discount on prepaid Sim cards - Held that:- When there is a bonafide belief about non-deduction of tax then if the payee has discharge its liability no disallowance is called for under section 40() (ia) of the income tax act. We have further held that that the 2nd proviso inserted in the above section effect from finance act 2012 applies retrospectively and directed the learned assessing officer to grant benefit of the same. In view of this we also hold accordingly that there is a bonafide belief for non-deduction of tax at source on discount on prepaid Sim cards to the dealers and therefore no disallowance can be made in the hands of the assessee for non-deduction of tax at source, provided the assessee proves to the satisfaction of the Ld. assessing officer that recipient of that income has discharged their tax liability. Therefore we set aside this ground of appeal to the file of the assessing officer for the above verification. The Ld. assessing officer is further directed to grant benefit of 2nd proviso to the above section while calculating the disallowance. He is further directed that in case the deduction of tax has been made by the assessee in subsequent year then the claim of the assessee for deduction of those expenses is also allowable in subsequent year.

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• Customs

• 2017 (1) TMI 140
  Valuation - classification under code 47A and 47B - DEPB scheme - entire case was decided against the appellant only on the basis of the so called market survey conducted by the officers - natural justice - Held that: - In absence of test of the market goods, it cannot be said that the goods are identical, consequently, value declared by the appellant can not be disputed - It is very important to note that the Appellant had sought the cross examination of the officers who conducted the market survey but the adjudicating authority neither considered their request nor even explicitly denied. At this stage, after almost 13 years of the case, no purpose will be served even if we direct the adjudicating authority for cross examination - the department did not discharge the burden of proving the charge of overvaluation of the goods exported by the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 139
  Maintainability of petition - grant of interim relief - conversion tax - development of SEZ - whether the demand for the payment of Conversion Tax under Section 67A of the Gujarat Land Revenue Code, 1879 (“the Code”), made by the respondent State Government upon the petitioner in relation to lands allotted to it for the purpose of developing a Special Economic Zone (“SEZ”) is legally justified or contrary to the provisions of Section 67A of the Code, or not? Held that: - Emphasis has been laid upon the judgment of the Supreme Court in Siliguri Municipality And Others v. Amalendu Das And Others [1984 (1) TMI 63 - SUPREME Court] where it has been stated that it is only in exceptional cases that an interlocutory order for the recovery of tax should be stayed. As pointed out by the learned Senior counsel for the petitioner, in this judgment, the Supreme Court was dealing with the constitutional validity of the provision whereby tax was levied - In the present case, the petitioner has raised a question regarding the very legality and validity of the levy of conversion tax under the provisions of Section 67A of the Code. It falls for the determination of the Court whether the requirements of the said provision, in order to constitute the taxable event, has occurred at all, in the case of the petitioner - petitioner has succeeded in establishing a good primafacie case for the admission of the petition and the grant of interim relief. By way of interim relief, the respondents are restrained from recovering conversion tax from the petitioner till the final decision of the petition - petition allowed - decided in favor of petitioner.

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• 2017 (1) TMI 138
  Valuation of imported goods - camphor powder - enhancement of value based on contemporaneous invoices from US $ 1550 PMT to 1890PMT - Held that: - the lower authorities were in error in loading the value of the goods imported by the appellant without producing any evidence of the contemporaneous imports for that value - the loading of the value by the lower authorities in respect of the same goods imported from the same supplier is incorrect. We set aside the impugned order and hold that the declared value of US $1550 PMT is the correct transaction value - appeal disposed off - decided in favor of appellant.

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• 2017 (1) TMI 137
  Legality of order - Release of gold only after completion of adjudication - the petitioner says that bank guarantee, equivalent to 50% of the value put down in the communication dated 10.11.2016, could be furnished, coupled with a personal bond for the remaining amount of the value of the seized goods i.e., the gold bars - Held that: - Seizure in this case took place on 23.12.2015, that is nearly a year ago. To date, adjudication has not been completed - the communication dated 10.11.2016 is quashed. Respondents are, however, given liberty to conclude the adjudication with due expedition, though, not later than four (4) weeks from the date of receipt of a copy of this order. The respondents will, however, release the seized goods i.e., the gold bars to the petitioner on a bank guarantee being furnished, equivalent to 50% of the value of the seized goods, as indicated in the communication dated 10.11.2016 - the petitioner will furnish a personal bond for the remaining 50% of the value of the seized goods i.e., the gold bars - petition disposed off - decided partly in favor of petitioner.

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• 2017 (1) TMI 136
  Imposition of ADD - Purified Terephthalic Acid - import from China PR, Iran, Indonesia, Malaysia and Taiwan - exclusion of RIL from the purview of the domestic industry - Held that: - RIL had disclosed that they are related to the company in Malaysia, who is the sole producer of the subject goods in that country - the related company of RIL, located in Malaysia, is exporting substantial quantity to India. We find that the DA s findings on this ground cannot be assailed. Correctness of considering MCPI as a domestic industry for injury analysis in view of the fact that the said unit is sick and is under BIFR - Held that: - MCPI has not imported the product under consideration in India during the relevant period from any of the exporters, who were related to them. The injury of domestic industry has been properly analysed and we find no reason to disagree with the DA on this account. Cumulative assessment is proper subject to fulfillment of certain conditions. The dumping margin in the case of China is 20 to 30% and the quantum of export is above 3%. The subject goods imported from China are in direct competition with the like articles made in India. As such, the conditions for commutations are met. Violation of principles of natural justice - Held that: - though originally the IOCL was only supporting the petitions filed by the other domestic industry, later they have provided some data regarding production, sales and profitability of subject goods during the POI, on confidential basis. We note that the DA has not considered the said data for injury analysis and investigation - no ground to sustain the plea of the appellant regarding violation of principles of natural justice. RIL has been disqualified as an eligible domestic industry for the reason of their related company situated in Malaysia producing and exporting the subject goods to India. We find no justification on legal basis for a separate investigation with reference to Malaysia and other countries. ADD rightly imposed - appeal rejected - decided against appellant.

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• 2017 (1) TMI 135
  Recovery of Cost recovery charges - for period when ICD remained non-functional - Held that: - It is clearly recorded that on perusal of the proposed arrangement between the third party and the appellant, that if such agreement was approved it will amount to virtually handing over the ICD to the third party which will be in violation of the appointment of custodian with related conditions. For such proposed action, the appellant cannot blame the delay on the part of the Revenue, for ICD being non-functional or not requiring the already appointed officers of Customs to discharge the work. We find no justification in the claims made by the appellant in this regard. Regarding the payment of arrears consequent to 6th Pay Commission, we find that this is directly relating to the pay and allowances of the Officers deployed when the officer were deployed to do the duties at the ICDs of the appellant. It is necessary that the cost recovery charges as fixed by the Government are to be paid by the appellant. The lower authorities were bound by the provisions of Customs Act, 1962. HCCAR, 2009 and guidelines issued by the Board while appointing and monitoring the working of ICDs. The lower authorities in compliance of such statutory obligations have proceeded to recover the cost recovery charges as mandated in the said Regulation. We find no reason to interfere with such action - appeal dismissed - appellant liable to pay cost recovery charges - decided against appellant.

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• 2017 (1) TMI 134
  Jurisdiction - whether the Customs officers of Visakhapatnam were proper officers for the area of Continental Shelf of India and Exclusive Economic Zone and consequently had jurisdiction to issue the show cause notice or confirm the demand or impose penalties? Held that: - Following the decision in Sagarika Sea Crafts [2009 (11) TMI 745 - CESTAT BANGALORE], I am of the view that facts being identical the Customs Authorities of Visakhapatnam has no jurisdiction during the relevant period to issue show cause notice and confirm demand or impose penalties. Demand of duty - fishing trawlers - whether foreign ongoing vessel or not? - the vessels of the appellants in question, while in operation on high-seas i.e. outside the territorial waters of India, should be reckoned as ‘foreign going vessel’ and, I hold that the provisions of Section 87 of the Customs Act, 1962 have to be extended, to the bunker in question, consumed onboard the vessels of the appellants, while acting as chase boas, beyond the territorial waters of India. It is for this very reason alone, I find that the order of the Additional Commissioner is liable to be set aside. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 133
  Classification of imported goods - polyester fabrics - classified under CTA 540761.90 or under CTA 54076900 extending the benefit of Notification No. 36/03-Cus (SI.53)? - scope of SCN - Held that: - the classification arrived at by the adjudicating authority after due process of law is incorrect inasmuch as, it is traveling beyond the show-cause notice issued to the appellant for the classification of the imported goods. It is settled law that if an order is passed beyond the scope of show-cause notice it is liable to be set aside as held by the Hon'ble Supreme Court in the case of CC v. Toyo Engineering India Ltd. [2006 (8) TMI 184 - SUPREME COURT OF INDIA] - On this point itself the entire impugned order is liable to be set aside. As regards the appeal filed by an individual, the appeal abates due to sad demise of the appellant during the pendency of the appeal; even otherwise since we are holding that the impugned order is travelling beyond the show-cause notice issued, question of imposing penalty on the individual does not arise.

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• 2017 (1) TMI 132
  100% EOU - taxability - Waste/ scrap - dross - demand of duty and penalty - Held that: - The excisability of dross is now set to rest by the Hon’ble Apex court and other appellate forums in a number of decisions. The adjudicating authority has correctly placed reliance on the ratio of the judgment of Apex Court in the case of CCE Vs. Indian Aluminium Co. Ltd. [2006 (9) TMI 6 - SUPREME COURT OF INDIA] where it has been unequivocally held that dross and skimming are not excisable to duty - In the event, condition No.3 of Notification No.52/03-cus referred to above will definitely impact the appellant and they will have to necessarily pay Customs duty equal to amount that leviable on proportionate Aluminium ingots obtained under that Notification - applicable customs duty will have to be paid on the inputs contained in the dross/slag. Being an interpretational issue and also taking note of the fact that the appellant was paying duty on clearances of dross and slag even before issue of show-cause notice, we are of the considered opinion that the penalty of 15 lakhs imposed under Section 112 of the Customs Act is not sustainable. Appeal disposed off - decided partly in favor of assessee.

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• 2017 (1) TMI 131
  Legality of DEPB scrips - demand of duty and interest - scrips whether forged or not? - Held that: - it is clear from the Order-in-Original itself that the DEPB scrips were per se not forged, but that scrips were obtained by fraudulent means by exporter - Analyzing the transaction between Jai Exports and appellant, the Commissioner (Appeals) has arrived at the conclusion that there is nothing even remotely to suggest that appellants were aware of the fraud committed by the exporter. He held that the purchase of the DEPB scrips by appellant was a bonafide commercial transaction - demand set aside. Jurisdiction of jurisdiction - Held that: - the Commissioner (Appeals) has observed that the Show Cause Notice itself is issued without jurisdiction by the Assistant Commissioner. In that case even though, the contention of department that Order-in-Original passed by the Assistant commissioner lacks jurisdiction is to be accepted, no purpose will be served by remanding the matter as the Show Cause Notice itself is admittedly without jurisdiction - Remanding the matter as prayed by the department would be a futile exercise as the Show Cause Notice itself is without jurisdiction. Appeal dismissed - decided against Department.

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• Corporate Laws

• 2017 (1) TMI 125
  Grant of Scheme under sections 391 and 394 of the Companies Act, 1956 - Held that:- Upon considering the approval accorded by the members and creditors of the Petitioner Companies to the Scheme; the circumstance that the objections raised by way of the affidavit filed by the Regional Director, Northern Region, Ministry of Corporate Affairs have been satisfied; and the report Official Liquidator attached to this High Court whereby no objections have been raised, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will however, comply with the statutory requirements, in accordance with law. A certified copy of the order, sanctioning the scheme, be filed with the ROC, within thirty (30) days of its receipt.

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• 2017 (1) TMI 124
  Maintainability of appeal - Limitation period under Section 10-F - Special provision for limitation for filing an appeal against the orders of the Company Law Board - Held that:- The order dated 04.03.2016 passed on petitioner’s application purporting to be one under Section 151, 152 CPC read with Regulations 44, 45, 46 before the Company Law Board cannot be said to entail merger of the order dated 10.03.2015 therein, for time beginning to run for filing an appeal qua the Company Law Board’s order dated 10.03.2015. The doctrine of merger applies to appeals not to application of varied kinds filed in respect of orders. For the aforesaid reasons, I am of the considered view that this appeal against order dated 10.03.2015 filed on 13.05.2016 is wholly beyond the prescribed limitation and cannot be entertained to that extent. Regulations 44 is in the nature of inherent power of the Company Law Board a la Section 151 CPC. It cannot possibly be argued that the inherent powers of the Company Law Board empower it to reconsider on merits its own order. The application under Section 151, 152 CPC read with Regulation 44, 45, 46 seeking reconsideration of the order dated 10.03.2015 has therefore rightly been dismissed by the Company Law Board which is not vested with the power of review of its orders. The said application despite its camouflage was not maintainable. Even otherwise the jurisdiction of this Court under Section 10-F of the Act of 1956 can only be exercised where a question of law arises from the impugned order challenged in appeal. And no question of law even remotely arises from the order dated 04.03.2016 nor was even so argued.

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• Service Tax

• 2017 (1) TMI 171
  Manpower Recruitment or Supply Agency - demand of tax on the gross value paid as services, salaries, allowances, dearness allowances, gratuity, wages, bonus, incentive and other statutory dues payable to the employees by other sugar manufacturer who used the respondent’s facilities for manufacturing of sugar - Held that: - the respondent herein did not receive any consideration from the users of manufacturing facility; Revenue has not contraverted this factual finding of the adjudicating authority. On this factual findings if the respondent did not receive any amount from any one, for the use of manufacturing facility as well as all the employees, question of taxing the services will not arise is the correct finding recorded by the adjudicating authority - impugned order upheld - appeal rejected - decided against Revenue-petitioner.

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• 2017 (1) TMI 170
  Business auxiliary service - providing chilling facilities - whether the service comes under the head BAS and is taxable? - Held that: - the issue has come up before the Tribunal in appellant’s own case M/s Vinayak Industries Versus CCE & ST, Jaipur-I [2016 (6) TMI 1072 - CESTAT NEW DELHI], where it was held that There is no doubt that chilling of milk is a treatment which renders the milk marketable. Consequently by virtue of the chapter note, chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - demand not sustained - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 169
  Valuation - inclusion of freight charges in assessable value - sale of yarn - Held that: - It is discussed in the order in detail that appellant has adopted this method of showing reduced taxable value during the earlier periods also. The act of the appellant is definitely suppression of facts with intent to evade payment of tax. Therefore the Show Cause Notice issued invoking extended period as well as the equal amount of penalty imposed under Section 78 are correct and proper - penalty upheld - appeal dismissed - decided against assessee.

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• 2017 (1) TMI 168
  Renting of immovable property services - whether the appellant is liable to discharge the service tax liability on the rent collected from M/s Spencers’ Retail Ltd.? Held that: - I am of the view that the matter requires to be remanded to the adjudicating authority - The adjudicating authority shall also consider the issue of limitation put forward by the appellant - appeal allowed by way of remand.

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• 2017 (1) TMI 167
  Rectification of mistake - We have, after due deliberation in the order, held that M/s Gondwana Club is not liable to tax as provider of 'club or association service' on the payments received from its members under various heads. Our order also makes it clear that the tax collected on receipts from catering contractors is to be treated as proper discharge of tax liability notwithstanding the payment having been made under the category of 'club or association service'. We have also held that the entire amount paid by the contractors, attributed to any head of expense, is to be adopted as taxable value. The proper officer shall compute the tax liability and any consequential relief arising therefrom. Penalty amount under section 78 of the Finance Act, 1944 is upheld - penalty under section 76 is set aside. Application of ROM allowed.

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• 2017 (1) TMI 166
  GTA services for the outward transportation of goods - non-payment of tax due to unawareness - Held that: - The appellant does not have any valid contention to establish that there was sufficient ground for non-payment of Service Tax. The ignorance of law cannot be considered as an excuse for non- payment of tax. In view thereof, I do not find any infirmity in the impugned order - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 165
  Imposition of penalties - mis-match of value - intent to evade tax - Held that: - The contention of the appellant is that the short payment of service tax occurred because of the difference in the amounts collected and the amounts reflected in the balance sheet. On coming to know of the fact the appellant made payment of 1,63,913/- and requested for remand of the matter to verify whether there was actually any difference in the amount reflected in balance sheets and that actually received - It is seen that appellant has not replied to the show cause notice. Even though no reply was filed, it has to be considered that the appellant has attended the personal hearing - Further written submissions was filed on behalf of the appellant in the personal hearing held on 18-10-2007 before the Commissioner (Appeals). In the said written submission, it is stated that the appellant accepted the liability of service tax, and prayed for waiving the penalty by invoking Section 80 of the Finance Act. This being so, as the appellant having accepted the liability and also having not defended the show cause notice, even after getting opportunity, I am of the view that the beneficial provision of Section 80 need not be invoked. I find penalty imposed under Section 78 to be legal and proper. However, the penalty imposed u/s 76 is set aside - appeal allowed - decided partly in favor of appellant.

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• 2017 (1) TMI 164
  Imposition of penalty u/s 78 - Classification of services - providing advertising services by erecting advertisements in the exhibition centres and collecting advertisement charges /sponsorship charges from customers - classified as Business Exhibition Service or advertising agency service? - Held that: - the respondent is a society registered under Societies Act - That, therefore, there cannot be any intention on the part of Managing Committee to evade payment of service tax by reason of mis-statement - On going through the designation of Members in the Managing Committee of the respondent's society, I am convinced that the view taken by Commissioner (Appeals) is setting aside penalty is correct and proper - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 163
  Valuation - works contract - payment of service tax on 20% of the value - Electrical wiring, fittings and related services - demand - on 80% of the consideration received the appellant failed to discharge service tax under the category of management, maintenance and repair services. It was held that the appellants artificially spilt-up the consideration received in two components:- 80% towards supply of materials and 20% towards rendering of services. Held that: - revenue is not correct to say that the whole work order has been considered as service contract only and subjected to levy to the full. We find such assertion is factually untenable. No examination of quantum of materials supplied has been made. The appellant's claim based on the written contract, as agreed upon by the recipient of services, has been rejected without valid grounds. We further find that the appellants submitted that the supply of materials in terms of the work order always exceeds 80% to the total value. It was further asserted that this can be established from their accounts and the bills raised to the recipient of service. Demand set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (1) TMI 189
  CENVAT credit - demand of credit with interest and penalty - demand on the ground that the credit availed on GTA services received was irregular - Held that: - the appellant have all the documents in the form of invoices raised on the customers by the appellant during the relevant period and also lorry receipts raised by the transporters on the appellant on the basis of which service tax was paid and credit availed during the relevant period but the authorities below have not considered these documents to arrive at a finding as to when the ownership in the goods has taken place - I allow the appeal of the appellant by setting aside the impugned order and remanding the matter to the original adjudicating authority for fresh decision after considering the documents filed by the appellant - appeal allowed by way of remand.

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• 2017 (1) TMI 162
  Rejection of refund claim - section 11B of Central Excise Act, 1944 - denial on the ground that since demand matter was remanded by the Tribunal for the fresh adjudication, refund is pre-mature - time bar - Held that: - I find that refund was admittedly submitted on 9-2-2002 in respect of amount deposited in March, 2001 though the appellant subsequently again filed the refund claim on 29-7-2005 but the refund claim filed first time should be considered as filing of refund which is well within the prescribed time limit of one year. In view of these facts I hold that refund is not time bar. Premature refund - Held that: - I find that show cause notice as well as adjudication order was only on the ground of time bar. The Commissioner(Appeals) was not suppose to address any other issue for this reason order of the Ld. Commissioner(Appeals) is not reasonable - it was also not brought on record that what is the status of demand case. The sanctioning authority should also decide the refund claim taking into consideration the status of demand case - appeal allowed by way of remand.

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• 2017 (1) TMI 161
  Clandestine removal - worn out parts of the capital goods from the factory without payment of duty - Rule 3(4) of Cenvat Credit Rules, 2002 - Held that: - From the plain reading of the above Rule 3(4), it is clear that the duty is required to be paid only if the capital goods is removed as such - In the present case, it is undisputed that the worn out parts of the capital goods were cleared, therefore in case of used parts/capital goods Rule 3(4) is not applicable - appeal allowed - decided in favor of assessee

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• 2017 (1) TMI 160
  Cenvat credit on freight outward - Held that: - Transportation within a factory would be covered by the inclusive clause. However, where depot is a place of removal, freight from depot to customer s premises would be covered by the means clause by the expression service used directly or indirectly or in relation to clearance of final products from place of removal . Similarly, where the factory is the place of removal freight from factory to customer s premises would be covered by the term service used directly or indirectly, in relation to clearance from place of removal - Appeal dismissed.

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• 2017 (1) TMI 159
  Reversal of Cenvat credit under protest - Rule 6 (3) of CER 2004 - No separate book of account maintained for exempted goods - Unjust enrichment - Held that: - The law contained in proviso (c) to Section 11 B (2) of Central Excise Act, 1944, is noteworthy. The proviso to Sub-Section 2 of Section 11B states that if the refund is sought of credit of duty paid on excisable goods used as inputs in accordance with rules made, or any notification issued under the Act, the refund instead of being credited to the Consumer Welfare Fund is to be paid to the appellant - Appeal dismissed - decided in favor of the assessee.

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• 2017 (1) TMI 158
  Refund - Time bar - Since in all the three appeals, the learned Commissioner has not discussed the merits of the case and has merely rejected the refund claim only on time-bar except in Appeal No. E/27953/2013 wherein also substantial period from 01.01.2010 to 22.03.2010 has been held to be beyond limitation - Appeal allowed by way of remand.

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• 2017 (1) TMI 157
  Disallowance of Cenvat credit - Interest - Penalty - Held that: - I do not understand on what basis the original authority disallowed 2,03,462/- when the same officer held that credit of 26,93,931/- is eligible. I do not find any logic in allowing part of the credit and disallowing a portion of 2,03,462/- on the ground that it has not been utilized prior to 01/03/2008. The assessee was under bona fide belief that the process undertaken by them amounted to manufacture. They took registration, paid excise duty and also availed credit on inputs - The assessee can utilize this credit taken prior to 01/03/2008 for paying the duty on the products which have become excisable after 01/03/2008 - Decided in favor of the assessee.

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• 2017 (1) TMI 156
  Cenvat credit on capital goods - Held that: - in the appellant’s own case, in the appeal filed by the Department, for the period October 2006 to April 2007, the appeal was dismissed by the Tribunal - Appeal dismissed.

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• 2017 (1) TMI 155
  Cash refund - amount pre-deposited through cenvat account - refund sought on the ground that the respondent stopped paying the excise duty for the reason that they were availing exemption N/N. 30/2004-CE dt. 9.7.2004, therefore the respondent claimed the refund in cash. The adjudicating authority allowed the refund by way of re-credit in the cenvat account - whether the seeking of refund in cash justified? Held that: - merely by debit in the cenvat account the nature of cenvat credit cannot be changed to cash at the time of sanctioning of refund. Cash refund can be given only in situation where either the assessee has paid the amount in cash or refund is against the export of goods which is not the case here - the refund in cash ordered by the Ld. Commissioner (Appeals) is absolutely without authority of law - appeal allowed - decided in favor of Revenue.

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• 2017 (1) TMI 154
  Valuation - amount on account of spot fabrication for all LPG Bullets should from part of assessable value or not? - time bar - Held that: - the entire demand has been dropped by the adjudicating authority and upheld by the Commissioner (Appeals) on the ground of limitation even though some observation was given by the adjudicating authority and Commissioner (Appeals) on the merits of the case but the demand does not survive and same stand dropped. Since the issue is not of recurring nature there is no consequential adverse effect of the observation given by the lower authorities on appellant. We are therefore the view that observation on merits which was challenged by the appellant will not prejudice the appellant. We therefore do not need to address the merits of the case - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 153
  Imposition of penalty - irregular credit on the capital goods - credit reversed prior to issue of SCN - Held that: - The appellants have reversed the irregularly availed credit prior to utilization and even prior to issue of SCN. The question whether the appellants are liable to pay penalty when the credit which was irregularly availed was reversed before utilization has been decided in favor of the assessee in the case of CCE & ST, LTU, Bangalore Vs M/s Bill Forge Pvt Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available - further reliance also placed in the case of M/s Hemarus Industries Ltd., Vs CCE, Kolhapur [2016 (11) TMI 54, CESTAT, Mumbai], where it was held that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty - penalty not imposable - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 152
  CENVAT credit - canteen facility to employees - input services as defined under Rule 2(l)(ii) of CENVAT Credit Rules (CCR), 2004 - manufacturer of petroleum products - Held that: - the issue is squarely covered in favour of the assessee by the judgments in the case of CCE, Chennai-III vs. Visteon Powertrain Control Systems (P) Ltd. [2015 (3) TMI 736 - MADRAS HIGH COURT], where it was held that definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product - providing the canteen facility to employees is a statutory obligation imposed under Section 46 of the Factories Act, 1948 and it has become a condition of service as far as employees are concerned - credit allowed - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 151
  100% EOU - Rejection of refund claim - Rule 5 of the CCR read with N/N. 5/2006 CE (NT) dated 14.03.2006 - product liability insurance - Held that: - I am of the considered opinion that the product liability insurance is covered in the definition of ‘input service’ as contained in Rule 2(l) of the Central Excise Rules, 2004 and therefore I allow the appeal of the appellant by setting aside the impugned order with consequential relief - refund allowed - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 150
  Valuation - the deduction on account of freight, octroi and insurance and allowance of the deduction on account of sales tax to the extent of 5% - natural justice - Held that: - When the required information was submitted by the appellant to the adjudicating authority and the same was not considered in the appeal, then we deem it fit to remand the matter to the Commissioner (Appeals) to examine the said evidence and decide the issue de novo but by providing reasonable opportunity to the appellant-assessee - appeal allowed by way of remand.

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• 2017 (1) TMI 149
  CENVAT credit - MS angle, flat etc - The assessee availed cenvat credit items which are similar to the final products manufactured by them - Held that: - It is a fact that the entire cenvat credit availed by the assessee already stands reversed at the time of clearance of the goods as such. In such Revenue neutral scenario, we find no reason to interfere with the impugned order - credit allowed - appeal rejected - decided against Revenue.

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• 2017 (1) TMI 148
  Refund - the provisions of Rule 57Q(3) whereby restriction for taking MODVAT credit to the extent of 75% - appellant filed refund claim in respect of remaining 25%. The refund was rejected on the ground that the appellant has not paid any duty for which they claimed refund - Held that: - the appellant was supposed to get 100% MODVAT credit whereas they have availed only 75% and for the remaining 25% they have filed a refund claim. The authority below, even if they had the view that the refund is not governed by Section 11B, they could very well allow MODVAT credit by way of credit in the MODVAT account. Under the circumstances, when the law permits for availing 100% credit whether by way of refund or by way of allowing the credit, the appellant is entitled for the credit and the substantial benefit which is legally permissible, the appellant cannot be deprived of the same - the appellant is entitled to take credit of 25% in their MODVAT/CENVAT account - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 147
  MODVAT credit - invoices marked for carriers and not on duplicate invoices - denial on the ground that the invoices are bearing the mark (for carriers) whereas it should be “duplicate copy for transporter” - Held that: - the mere incorrect marking appearing on the invoices but no other discrepancy such as dispute on the amount of duty, receipt and used inputs in the product was not raised. MODVAT credit for such a small discrepancy MODVAT credit cannot be denied - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 146
  Valuation - packing charges - whether the packing charges are includible in the assessable value? - Held that: - the conveyor belt in normal course dos not require any packing. However, in the supplies made under this contract there is a condition for packing that too for safe transportation. This shows that these packing are not meant for marketing of the goods but only for safe transport of the goods - reliance placed in the case of Ponds India Ltd [1989 (10) TMI 54 - SUPREME COURT OF INDIA], where it was held that irrespective of the fact, whether it is primary or secondary packing but if it is done for transportation of goods and not for marketing of the goods the same is not includable in the assessable value - packing charges not to be included in assessable value - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 145
  Processing loss - short-receipt of material - job work - demand on the ground that 16% loss is abnormal - Held that: - the Revenue could not produce any evidence to show that there is a diversion of input or generation of physical waste and scrap which was cleared clandestinely either by the appellant or by the job worker. The demand on 16% process loss is on the basis of assumption and presumption - The appellant had produced Chartered Engineer certificate wherein it was certified that the process loss in the job work from 16% to 27% - the demand cannot be confirmed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 144
  100% EOU - Rejection of refund claim - Rule 5 of CCR, 2004 - consultancy service - financial service - photocopy machine service - testing service - Held that: - reliance placed in the decision of the case of Coca Cola India Pvt. Ltd. vs. CCE, Pune-III [2009 (8) TMI 50 - BOMBAY HIGH COURT], where the issue is covered in favor of the appellant and all the input services on which the CENVAT credit has been denied relates to the business of the appellant and therefore, I allow the appeal - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 143
  CENVAT credit - CHA services - denial on the ground that place of removal is the factory gate therefore any services received beyond the place of removal will not be eligible for the Cenvat Credit - Held that: - It has been held by this Tribunal in various judgments that in case of export the port of export is treated as place of removal. The CHA service is provided upto the port of export, hence the CHA service is admissible as input service - in Board Circular dt. 28.2.2015, it is clarified that the port of export is place of removal, therefore the Cenvat credit is admissible on the CHA service - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 142
  CENVAT credit on industrial construction/works contract service - services qualify as input services or not? - Held that: - The invoices show that though the appellant has paid Vat on the works contract services, service tax is seen paid only on the labour component of the said works contract service. On such score, the appellant cannot claim credit on works contract service and therefore, the denial of credit is legal and proper - appeal dismissed - decided against appellant-assessee.

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• 2017 (1) TMI 141
  Cement - CENVAT credit - various structural/ steel items like TMT bars, coil, steel tubes and pipes, modified armor plate, rectangular bar, PCC chequred plate, chain conveyor etc. falling under Chapters 72 and 73 of the First Schedule to the Central Excise Tariff Act, 1985 - Held that: - the ‘user test’ evolved by the Apex Court in the case of CCE, Coimbatore Vs. Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT OF INDIA], which is required to be satisfied to find out whether or not particular goods could be said to be ‘capital goods’ - When we apply the ‘user test’ to the case in hand, we find that the structural items used in the fabrication of support structures would fall within the ambit of ‘capital goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat credit - appeal allowed - decided in favor of assessee.

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• CST, VAT & Sales Tax

• 2017 (1) TMI 130
  Levy of tax @ 12.5%, interest as well as penalty u/s 61 of the Act - explanation provided and records found establishing the sales effected - Held that: - in the instant case there are no statements recorded of the owner/proprietor of the respondent firm and there is no deficiency/discrepancies and rather they have supported with proper bills and vouchers, which in my view is a finding of fact recorded by both the appellate authorities - petition dismissed - decided in favor of assessee.

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• 2017 (1) TMI 129
  Imposition of penalty u/s 22-A(7) of the Act - mis-declaration of weight of goods - material difference in the chungi receipt vis a vis actual weight - Held that: - when there is a specific finding by the Tax Board that the bill which was found contained narration of 5.825 mt ton as well as Excise Gate Pass which showed the same quantity, in my view, merely because the driver tried to avoid actual payment of chungi at the checkpost, cannot be a reason to hold the assessee liable for penalty - petition dismissed - decided in favor of assessee.

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• 2017 (1) TMI 128
  Imposition of penalty u/s 76(6) of the Act - levy of VAT u/s 76(13) of the Act - declaration Form 47 - once the assessee had sold/supplied the material to JVVNL, it became the property of JVVNL, these are the properties of JVVNL after it was supplied at Jaipur, and it was the duty of the assessee to supply the material to be carried out for installation and commissioning at various sites of Jaipur Discom - Held that: - the assessee could not have been found to be penalised for no purpose when the owner accepts that the goods are belonging to them, after being supplied by the petitioner and merely to facilitate transportation, the AO ought not to have interfered in transportation of such goods. In my view, the finding reached by the Tax Board is perverse and requires to be interfered - it is a fit case where the assessee being only a supplier, was not required to be either taxed or to be penalised u/s 76(13) of the Act - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 127
  Imposition of penalty u/s 77(8) of the RST Act, 1994 - unaccounted stock - whether a voluntary statement can be contested later? - Held that: - if there is voluntary statement and not complained of to the higher authorities within a reasonable period, such a fact cannot be accepted in appellate proceeding later on and after a considerable long period - the order of Tax Board is not sustainable and is required to be interfered and is accordingly interfered and the finding reached by the AO and DC(A) is just and proper and is accordingly sustained, and thus the penalty was rightly levied - petition allowed - decided in favor of petitioner.

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• 2017 (1) TMI 126
  Revision of turnover - reversal of input tax credit - discrepancies and errors found in records - Held that: - the Assessing Officer did not made any endeavour to direct the petitioner to produce those documents, infact in the earlier Writ Petitions, the direction was to the said effect by directing the Assessing Officer to direct the petitioner to produce the account books and the Assessing Officer to look into the objections as well as the documentary evidence. Therefore, the correct procedure that should have been adopted by the first respondent is to direct the petitioner to produce the books of accounts and other details and then find out as to whether the objection raised by the petitioner is sustainable or not. This having not been done, is sufficient to send back the matter for redoing the matter. On notice being sent to the dealer, if the dealer files his objections, then it is for the Assessing Officer to independently apply his mind to the objections and then rule on the objections. While doing so, the Assessing Officer cannot state that he has been directed by the Inspecting Officer to implement a proposal, if this is done then it would amount to clear abdication of the statutory duties of the Assessing Officer. This is also one more reason to remit the matter to set aside the impugned order and remit the matter to the Assessing Officer for fresh consideration. Petition allowed - matter on remand.

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• Indian Laws

• 2017 (1) TMI 123
  Maintainability of appeal - alternative remedy already availed of by the petitioner - Held that:- In the present case, all the grounds urged were in the realm of legal contentions and no jurisdictional error could be pointed out which would persuade the court to entertain the petition. There is no gainsaying that order of the District Magistrate under section 14 is a stage post 13(4), at which stage remedy of appeal under section- 17 is available. In this case, it is already availed of.It is trite that in the matters involving commercial disputes, the rule of availing alternative statutory remedy has to be adhered to steadfast. It may not be out of place to mention while parting with that during the pendency of section 14 proceedings before the District Magistrate, the present petitioner had moved Special Civil Application on the ground that all the conditions required under section 14(2) were not complied with. The said petition was dismissed with costs. Also is an aspect staring on the face of the record that the petition filed in the month of March, 2015 was not pursued and was not heard for admission. Subsequently, civil applications were filed raising urgency that the mortgaged properties are to be auctioned. For the aforesaid reasons, when the petition itself is not entertained by this court on the aforesaid ground, no further prayers could be entertained. The petition is dismissed only on the ground of alternative remedy already availed of by the petitioner.

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