TMI Tax Updates - e-Newsletter
October 1, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise

Articles

1. Export related clarification

   By: Ashwarya Agarwal

News

1. Monthly Review of Accounts of Union Government of India upto the month of August 2021 for Financial Year 2021-22

2. NITI Aayog, AWS,and Intel Collaborate to Accelerate Digital Innovation in India

3. Holding clerical recruitments for Public Sector Banks in 13 Regional Languages along with Hindi and English

4. “At 87%, India has the highest FinTech adoption rate in the world against the global average of 64%”: Shri Piyush Goyal

Notifications

Customs

1. 53/2021 - dated 29-9-2021 - ADD

Amendment in Notification No. 49/2017-Customs (ADD), dated the 17th October, 2017

2. 45/2021 - dated 29-9-2021 - Cus

Seeks to exempt COVID-19 vaccines from basic Custom duty till 30th June, 2022.

GST - States

3. 38/1/2017-Fin(R&C)(216)/1886 - dated 27-9-2021 - Goa SGST

Seeks to extend timelines for filing of application for revocation of cancellation of registration to 30.09.2021, where due date for filing such application falls between 01.03.2020 to 31.08.2021, in cases where registration has been canceled under clause (b) or clause (c) of section 29(2) of the GGST Act

4. 38/1/2017-Fin(R&C)(215)/1885 - dated 27-9-2021 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(87) dated the 31st December, 2018

5. 38/1/2017-Fin(R&C)(214)/1884 - dated 27-9-2021 - Goa SGST

Goa Goods and Services Tax (Seventh Amendment) Rules, 2021.

6. S. R. O. No. 714/2021 - dated 27-9-2021 - Kerala SGST

Amendment in Notification No. G.O. (P) No. 124/2017/Taxes. Dated 21st October, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/632 - dated 30-9-2021

‘Guidelines for Investment Advisers’ - Extension of timelines

GST - States

2. TRADE CIRCULAR No. 18/2021 - dated 22-9-2021

Clarification regarding extension of time limit to apply for revocation of cancellation of registration in view of Notification No. 1004-F.T. dated 14th September, 2021.

FEMA

3. 14 - dated 30-9-2021

Exim Bank's Government of India supported Line of Credit (LoC) of USD 15 million to the Government of the Republic of Sierra Leone

4. 15 - dated 30-9-2021

Exim Bank's Government of India supported Line of Credit (LoC) of USD 100 million to the Government of Democratic Socialist Republic of Sri Lanka

Highlights / Catch Notes

GST

• GST Not Applicable to Employee Canteen Charges u/s 46 of Factories Act; Not a Supply Transaction.

  Case-Laws - AAAR : Levy of GST - amount recovered from employee on account of third party canteen services provided by Company - obligation under Section 46 of the Factories Act - As the appellant is not carrying out the said activity of collecting employees’ portion of amount to be paid to the Canteen Service Provider, for any consideration, such transactions are without involving any ‘supply’ from the appellant to its employees and is therefore not leviable to Goods and Services Tax - thus the Goods and Services Tax is not applicable on the collection, by the appellant, of employees’ portion of amount towards foodstuff supplied by the third party / Canteen Service Provider. - AAAR
  Visit to Get Source

  ---

• Solid Waste Management Services in Vapi Not Exempt from GST, Says AAAR Under Notification No. 12/2017.

  Case-Laws - AAAR : Classification of services - Benefit of exemption from GST - pure services or not - solid waste management service provided by the applicant to Notified Area Authority, Vapi - As the appellant has not been providing services to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity, the benefit of Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is not admissible to the appellant even if the appellant is providing ‘pure service’ in relation to solid waste management which is a matter enlisted in Twelfth Schedule of the Constitution. - AAAR
  Visit to Get Source

  ---

• Gujarat Royalty on 'Black Trap' Mining: 18% GST Applicable via Reverse Charge, Service Code 999113.

  Case-Laws - AAAR : Classification of services for which royalty paid - Rate of GST - appellant is required to pay Royalty to the Government of Gujarat by calculating an amount per Metric Ton of ‘Black Trap’ mined or a fixed amount per year - the service involved in the present case merit classification under Service Code 999113 as “Public administrative services related to the more efficient operation of business”. - Liable to GST @18% - GST is payable under Reverse Charge method - AAAR
  Visit to Get Source

  ---

• Tax Reduced on Zip Rolls: Slide Fasteners Tariff Item 9607 20 00 Now at 12% GST, Down from 18.

  Case-Laws - AAAR : Classification of goods - HSN Code - rate of tax - Zip Roll (i.e. Slide Fasteners) - ‘Zip Rolls’ is classifiable under Tariff Item 9607 20 00 - ‘Zip Rolls’ was liable to Goods and Services Tax @ 18% (CGST 9% + SGST 9%) during 01.07.2017 to 30.09.2019 and taxable @12% thereafter - AAAR
  Visit to Get Source

  ---

• GST on Royalty for Tertiary Treated Water: Applicant Pays via Reverse Charge to Nagpur Municipal Corporation.

  Case-Laws - AAR : Levy of GST - Royalty paid or payable by the applicant to Nagpur Municipal Corporation (NMC) for supplying “Tertiary Treated Water” to Mahagenco, by treating the Sewage Water supplied by NMC - The activity is liable to GST - The taxes are to be paid by the applicant under reverse charge basis (RCM). NMC is not liable to pay taxes on the subject transaction as discussed in present order - AAR
  Visit to Get Source

  ---

Income Tax

• Show Cause Notice Flawed: Issued Under Wrong Section and By Wrong Authority, Violating Income Tax Act Procedures.

  Case-Laws - HC : Transfer of case u/s 127 - show cause notice issued is under Section 127 (1) when all applicable provisions are under Section 127 (2) (a) of the Act. Even in the order impugned, respondent no.1 states that the assessee was provided opportunity under Section 127 (1) but he exercised his powers under Sub Section 2 of Section 127 - that also shows non application of mind by respondent no.1. Respondent no.1 also should have dealt with all the points raised by petitioner in his reply, which he has failed to do. Moreover, the show cause notice has been issued by one Income Tax Officer (HQ), International Taxation – 3 and not by the Commissioner of Income Tax, who was exercising his power. On that ground also the show cause notice itself is defective. - HC
  Visit to Get Source

  ---

• High Court Rules Authority Wrong in Rejecting Declaration for Disputed Interest under VSV Act, Sections 234A, 234B, 234C.

  Case-Laws - HC : Benefit of the VSV Act - The disputed interest is defined under Sub Clause h (ii) of Sub Section 1 of Section 2 to mean “the interest determined in any case under the provisions of the Income Tax Act, 1961 where an appeal has been filed by the appellant in respect of such interest”. - , petitioner was eligible to file this declaration under the VSV Act for the disputed interest that was charged under Section 234A or Section 234B or Section 234C. The concerned authority was, therefore, not correct in rejecting the declaration of petitioner - HC
  Visit to Get Source

  ---

• Rectification of Mistake: No Hearing Needed for Case Transfer Within City u/s 127, No Re-Issuance of Notice Required.

  Case-Laws - AT : Rectification of mistake u/s 254 - non issuance of valid notice u/s 143(2) - transfer of case u/s 127 - Legislative intent becomes clear with reading to Section 127(3) and Section 127(4) of the Act that while Section 127(3) makes right to be heard dispensed with if the case transferred from one Assessing Officer to another in same city, place or locality and the assessee has agreed these facts. That Section 127(4) is clear that re-issuance of notice already issued by the Assessing Officer having jurisdiction and now subsequently transferred to another Assessing Officer shall not be required. - AT
  Visit to Get Source

  ---

Customs

• Department Fails to Prove Base Oil SN 50 as High-Speed Diesel; Classification Claim Collapses in Court.

  Case-Laws - AT : Classification of imported goods - Base Oil SN 50 - even if the product is base oil or otherwise but since it was not proved by the department beyond doubt that the impugned goods are HSD; the case of department got failed - irrespective of whether the base oil was correctly declared by the appellant or otherwise but since the proposed classification by the department does not sustain the case of department clearly fails, for this reason also the impugned order is not sustainable. - AT
  Visit to Get Source

  ---

• Imported Milling Equipment Classified Under CTH 8437: Screw/Drag Conveyors and Bucket Elevators Included.

  Case-Laws - AT : Classification of imported goods - screw / drag conveyors and bucket elevators - The impugned goods imported for specific use in the milling factory merits classification under CTH 8437 - AT
  Visit to Get Source

  ---

Service Tax

• Court Allows Petitioner to Refile Claim Under Sabka Vishwas Scheme, Grants Delay Condonation to Retain Benefits.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - permission to file claim under the correct category under the SVLDR Scheme - condonation of delay in filing application - seeking not to declare the petitioner as defaulter under SVLDR Scheme and not to disallow the benefits made available to it under the SVLDR Scheme - it would be in the interest of justice that an opportunity be granted to the petitioner to avail the benefit of the scheme, if any other conditions under the scheme are being fulfilled by the petitioner. - HC
  Visit to Get Source

  ---

• Appellate Authority Resolves CENVAT Credit Refund; Show Cause Notice Invalid, Tribunal Remands for Quantification Only.

  Case-Laws - HC : Refund of CENVAT Credit - The issue stands decided at the level of the first Appellate Authority and hence the show cause notice purporting to re-open the question of entitlement to credit, is bad in law. It is only on the aspect of quantification that the matter has been remanded by the Tribunal and the respondent ought to have restricted himself to a verification of this aspect alone. - HC
  Visit to Get Source

  ---

• Objections Raised on Service Tax Demand Set Aside Due to Lack of Suppression or Willful Misstatement; Revenue Neutrality Noted.

  Case-Laws - AT : Extended period of limitation - On perusal of the letter issued by department, it is seen that after verification of accounts certain objections have been raised inter alia demanding service tax under the above categories. There is no positive act of suppression of facts or willful mis-statement brought out by the department so as to invoke the extended period. Further, the appellant is called upon to pay the service tax under reverse charge mechanism for the services. The appellant would be able to avail credit of the same and the situation is entirely revenue neutral. - Demand set aside - AT
  Visit to Get Source

  ---

• Refund Claim Approved: Invoice Issuer Requirement Changed Post-Notification No. 41/2007-S.T., Refund Granted Despite Initial Rejection.

  Case-Laws - AT : Refund of service tax - input services - port services - The rejection of refund claim is with respect to Service Tax paid on Port Services and not Customs House Agent services. Though the invoice is not issued by the port, as per Sl. No. 2 of the Notification No. 41/2007-S.T., it is not required to establish that the services were rendered by the port or any person authorized by the port during the relevant period and this condition was included only in the subsequent Notification i.e., Notification No. 17/2009-S.T. - Refund allowed - AT
  Visit to Get Source

  ---

• Finance Act Section 78A Penalty Dispute: Authority Misjudged Intentional vs. Uncontrollable Nonpayment; Insufficient Evidence Against Appellant.

  Case-Laws - AT : Levy of penalty u/s 78A of FA - tax not deposited - The authority has miserably failed to distinguish the nonpayment of tax for the reasons beyond the control of the assessee from the situation where the assessee has failed to deposit tax with the sole intention to not to deposit the same. Section 78 / 78A can be attracted only in the later situation - Mere oral submission of an employee (Finance Director) that he was acting under the guidance of the appellant cannot be fully sufficient for holding at least that the appellant had the knowledge and the intent to not to make the impugned payment. - AT
  Visit to Get Source

  ---

Central Excise

• CENVAT Credit Claim Period Extended to One Year by Notification No. 21/2014-CE for Post-Notification Invoices.

  Case-Laws - AT : CENVAT Credit - time limitation - entitlement for Credit beyond six month - since the time limit has been extended from six months to one year by substitution in the Notification No.21/2014-CE (N.T.) dated 11.07.2014, the time limit shall be taken as one year and as per the submission of learned counsel, the invoices issued after the date of notification dated 11.07.2014 credit was taken within one year. - AT
  Visit to Get Source

  ---

• Court Upholds Penalty for Wrongly Claimed MODVAT Credit & Depreciation; Deviations from Prescribed Rules Not Allowed.

  Case-Laws - AT : Recovery of MODVAT Credit - capital goods - claim of depreciation on the invoice value - When the rules clearly provide that amount claimed as modvat credit should not be part of the value on which depreciation is claimed appellants are barred. It is settled principle in law that when statue provides a manner for doing some things then that is the only manner in which it is to be done and all other manner of doing the same barred. - Levy of penalty with interest confirmed - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (9) TMI 1293
  Levy of GST - amount recovered from employee on account of third party canteen services provided by Company - obligation under Section 46 of the Factories Act - HELD THAT:- The appellant does not supply any goods or services to its employees against the amount collected from the employees. The appellant collects employees portion of amount and pays the consolidated total amount, which includes appellant s share of amount also, to the Canteen Service Provider towards the foodstuffs provided to employees by the Canteen Service Provider. The appellant neither keeps any margin in this activity of collecting employees portion of amount nor makes any separate supply to the employees. Furthermore, it is not the appellant who is supplying the foodstuff or canteen service to its employees, but it is a third party who is supplying the foodstuff or canteen service to the employees of the appellant. As the appellant is not carrying out the said activity of collecting employees portion of amount to be paid to the Canteen Service Provider, for any consideration, such transactions are without involving any supply from the appellant to its employees and is therefore not leviable to Goods and Services Tax - thus the Goods and Services Tax is not applicable on the collection, by the appellant, of employees portion of amount towards foodstuff supplied by the third party / Canteen Service Provider.

  ---

• 2021 (9) TMI 1292
  Valuation of supply - transaction of sale of residential/ commercial property with undivided rights of land - construction of residential/commercial complex - builder charges an amount which is inclusive of land or undivided share of land - actual cost of Land can be deducted for the for the purpose of arriving at the taxable value of supply or not - HELD THAT:- In para 2 of N/N. 11/2017-CT (Rate) dated 28.06.2017, as amended vide N/N. 1/2018-C.T. (Rate), dated 25-1-2018, there is deemed provisions that the value of transfer of land or undivided share of land, as the case may be, and the value of such transfer of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply. Accordingly, the appellant contention to allow the deduction of actual value of land from the sale value on the grounds that their land value is ascertainable and other grounds is not legal in terms of para 2 of Not. No. 11/2017-CT (Rate) dated 28.06.2017 as amended vide Not. No. 1/2018-C.T. (Rate), dated 25-1-2018. The reliance of Rule 18(A)(A) of the erstwhile Gujarat Value Added Tax Rules, 2006 is unjustified in the instant case since the Value Added Tax Act has been subsumed with GST Act. The Value Added Tax Act does not have any legal value in determination of GST liability since the value of supply is to be arrived in terms of the provisions of the GST Act. Appeal dismissed.

  ---

• 2021 (9) TMI 1291
  Classification of services - pure services or not - solid waste management service provided by the applicant to Notified Area Authority, Vapi - exemption under N/N. 12/2017- Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The NAA, Vapi is neither a Municipality, nor a Municipal Committee, nor a Zilla Parishad, nor a District Board. The appellant has also not submitted any evidence so that the NAA, Vapi can be termed as any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund . The submission of the appellant that the NAA, Vapi is a wing of municipal corporation, which is basically a local body established by the State Government to function as a self-government under Part-IX of the Constitution of India, is without any basis and not supported by any evidence - The NAA, Vapi also does not fall under any of the sub-clauses (d) to (g) of clause (69) of section 2 of the GST Acts. There are no merit in the submission of the appellant that the NAA, Vapi, like any other local body, provides municipal services in the industrial area of GIDC, Vapi, therefore, the NAA, Vapi is a local authority for the simple reason that the definition of the local authority under section 2(69) of the GST Acts do not provide so. The said definition do not provide that any authority providing municipal services can be termed as local authority . The definition of local authority under section 2(69) of the GST Acts is an exhaustive definition inasmuch as it uses the word means and not includes . Therefore, the scope of the definition cannot be expanded. As the NAA, Vapi do not fall under any of the sub-clauses of the definition of local authority , as defined in clause (69) of section 2 of the GST Acts, the same cannot be considered as local authority . It is apparent from the composition of the Board of Management prescribed under Rule 3 of Gujarat Industrial Development (Notified Area) Rules, 2007, that the Government does not have 90 per cent, or more participation by way of control on the NAA, Vapi. Further, neither the aforesaid Rules provide anything regarding Government s participation by way of equity in the Notified Area Authority, nor the appellant has submitted anything to this effect - the NAA, Vapi cannot be considered as Governmental Authority . The activities being carried out by the appellant viz. solid waste management service provided to the NAA, Vapi under the agreement, is not covered under Sr. No. 3 of Notification No. 12/2017- Central Tax (Rate), as amended, and Notification No. 12/2017-State Tax (Rate), as amended.

  ---

• 2021 (9) TMI 1290
  Classification of services for which royalty paid - Rate of GST - to be classified under Tariff Heading 9973, specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? - applicability of N/N. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it - Applicability of reverse charge mechanism - scope of exclusion clause number (1) of entry no 5 - HELD THAT:- Group 99733 covers Licensing services for the right to use intellectual property and similar products which is further sub-categorized to include licensing services for right to use several intangible properties e.g. right to use computer software, right to broadcast and show original films, sound recording, radio and television programme, right to reproduce original art works, right to reprint and copy manuscript, books, journals and periodicals, right to use research and development products, right to use trademarks and franchises, right to use minerals including its exploration and evaluation, right to use other natural resources including telecommunication spectrum and right to use intellectual property products etc. Looking from this angle also, the services received by the appellant from the Government of Gujarat, whereby the appellant is required to pay Royalty to the Government of Gujarat by calculating an amount per Metric Ton of Black Trap mined or a fixed amount per year, whichever is higher, also merit classification under Administrative services of the Government (Group 99911) and more specifically as Public administrative services related to the more efficient operation of business (Service Code 999113), as against the Group covering Licensing services for the right to use intellectual property and similar products (Group 99733) inasmuch as permitting the appellant by the Government of Gujarat to extract the mineral (Black Trap) subject to certain conditions and on payment of Royalty is definitely a part of administrative services of the Government and more specifically public administrative service related to the more efficient operation of business. Thus, the service involved in the present case merit classification under Service Code 999113 as Public administrative services related to the more efficient operation of business . Whether the Explanatory Notes to the Scheme of Classification of Services can be referred and relied for classification of service under Scheme of Classification of Services attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended? - HELD THAT:- Though the aforesaid judgement of the Hon ble Supreme Court in LML LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2010 (9) TMI 12 - SUPREME COURT] is in respect of reliance to be placed on the HSN Explanatory Notes while interpreting the Central Excise Tariff and the Customs Tariff, the ratio laid down therein is equally applicable for interpreting the Scheme of Classification of Services attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 inasmuch as the said Scheme of Classification of Services adopted for the purpose of Goods and Services Tax is in accordance with the United Nation s Central Product Classification (UNCPC) and Explanatory Notes. Applicable Rate of Goods and Services Tax - HELD THAT:- As the service involved in this case is classifiable under Service Code 999113 as Public administrative services related to the more efficient operation of business , it is not deemed necessary to discuss various arguments put forth by the appellant in support of the contention that the said service is covered within residual sub-entry (vi) or (vii) or (viii) (as renumbered from time to time) of Sl. No. 17 of Notification No. 1/2017-Central Tax (Rate) pertaining to Heading 9973. Liability to pay Goods and Services Tax - HELD THAT:- The appellant M/s. Raj Quarry Works is required to pay Goods and Services Tax as per Sl. No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 on the aforesaid service received by the appellant from the Government of Gujarat, whereby the appellant is required to pay Royalty to the Government of Gujarat.

  ---

• 2021 (9) TMI 1289
  Classification of goods - rate of tax - Micro-manipulator system - Intracytoplasmic Sperm Injection (ICSI) with ejaculated, epidymal or testicular spermatozoa used in Assisted Reproductive Technology Procedures - classifiable under tariff heading 9018 or 9011? - HELD THAT:- Chapter Heading 9011 covers compound optical microscope as used by amateurs, teachers etc. and those for industrial use or for research laboratories, whether or not they are presented with their optical elements (objectives, eyepieces, mirrors etc.). This Chapter Heading also include Surgical microscopes for use by surgeons when operating on a very small portion of the body, in which their light sources result in independent light paths which provide a three-dimensional image. It has specifically been mentioned that this Chapter Heading excludes Ophthalmic binocular- type microscope (heading 90.18). Chapter Heading 9018 covers a very wide range of instruments and appliances, which in the vast majority of cases are used only in professional practice (e.g. by doctors, surgeons, dentists, veterinary surgeons, midwives) either to make a diagnosis, to prevent or treat an illness or to operate etc. Instruments and appliances for anatomical and autoptic work, dissection etc. and for dental laboratories (under certain conditions) are also included in this Chapter Heading. It has specifically been mentioned that this Chapter Heading does not cover Microscopes etc. of heading 9011 or 9012 - The Explanatory Notes for Chapter Heading 9018 also provides that the group Instruments and appliances for human medicine and surgery includes Ophthalmic instruments , which falls into various categories, including Diagnostic instruments such as opthalmoscopes; binocular loupes with head bands and binocular type microscopes, consisting of a microscope, an electric lamp with a slit, and a head rest, the whole being mounted on an adjustable support, for the examination of the eyes; tonometers (for testing the intra-ocular tension) eye specula . The MM System is also known as IVF technology in the medical world; that the MM System is a device which is used to physically interact with a sample under a microscope, where a level of precision of movement is necessary which cannot be achieved by the unaided human hand and may typically consist of an input joystick (a mechanism for reducing the range of movement) and an output section with the means of holding a micro-tool to hold, inject, cut or otherwise manipulate the object as required; that mechanism for reducing the movement usually requires the movement to be free of backlash which is achieved by the use of kinematic constraints to allow each part of the mechanism to move only in one or more chosen degrees of freedom, which achieves a high precision and repeatability of movement, usually at the expense of some absolute accuracy - MM System is a device used in ICSI procedure, IVF procedure or ART. It also appears that MM System consists of above mentioned five main components / elements which include inverted microscope , micro manipulator and micro injector . In case the MM System is supplied in unassembled or disassembled form, still the classification will be the same in view of Rule 2(a) of General Rules for the interpretation of the CTA, 1975, which provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article; that it shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled - MM System supplied by the appellant is appropriately classifiable under Chapter Heading 9018 of the CTA, 1975. Rate of Goods and Services Tax - HELD THAT:- As per N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 and N/N. 1/2017-State Tax (Rate) dated 30.06.2017, Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments falling under Chapter Heading 9018 attracts Goods and Services Tax of 12% vide Sr. No. 218 of Schedule II of the said Notifications. Therefore, MM System supplied by the appellant are chargeable to Goods and Services Tax of 12%.

  ---

• 2021 (9) TMI 1288
  Classification of goods - HSN Code - rate of tax - Zip Roll (i.e. Slide Fasteners) - applicability of N/N. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended by the N/N. 18/2018-Central Tax (Rate) dated 26.07.2018 - HELD THAT:- As per the manufacturing process of Zip Rolls described by the appellant, the polyester tape and polyester cord with teeth are stitched together on the stitching machine with one inner edge of each being fitted with scoops of plastics; that the two narrow strips of textile materials with one inner edge fitted with scoops of plastics are interlocked on the machine to form the Zipper Rolls - It is evident from the manufacturing process and the description of the product Zip Rolls given by the appellant that Zip Rolls being supplied by the appellant conforms to the description narrow strips of any length mounted with chain scoops . Therefore, in our considered view, the said product Zip Rolls merit classification under Tariff Item 9607 20 00 of the CTA, 1975 as Parts of Slide Fasteners. The product Zip Roll is classifiable under Tariff Item 9607 20 00 of the CTA, 1975 as Parts of Slide Fasteners in terms of the heading / sub - headings. As per Rule 1 of the General Rules of Interpretation of the CTA, 1975, classification is required to be determined according to the terms of the headings and any relative Section or Chapter Notes - Rule 2(a) of the General Rules of Interpretation is not applicable for classification of Zip Rolls in the present case. Thus, Zip Rolls being supplied by the appellant are appropriately classifiable under Tariff Item 9607 20 00 as Parts of Slide Fasteners. Rate of GST on Zip Rolls - HELD THAT:- Zip Rolls being supplied by the appellant were covered under entry 446 of Schedule - III of the Notifications from 01.07.2017 to 30.09.2019, attracting Goods and Services Tax of 18%. However, with effect from 01.10.2019, the said product Zip Rolls being supplied by the appellant is covered under entry 231B of Schedule - II of the Notifications and is attracting Goods and Services Tax of 12% - The description of goods at S. No. 231B of Schedule - II of Notifications during 26.07.2018 to 30.09.2019 was slide fasteners , unlike the description of goods Fasteners and poly wadding materials in the Notification issued under the Customs Act, 1962. Thus, Zip Rolls is classifiable under Tariff Item 9607 20 00 - Zip Rolls was liable to Goods and Services Tax @ 18% during 01.07.2017 to 30.09.2019 under Sr. No. 446 of Schedule - III of Notification No. 1/2017-Central Tax (Rate) and Notification No. 1/2017-State Tax (Rate), and @ 12% from 01.10.2019 onwards under Sr. No. 231B of Schedule - II of N/N. 1/2017-Central Tax (Rate) and Notification No. 1/2017-State Tax (Rate).

  ---

• 2021 (9) TMI 1287
  Levy of GST - Royalty paid or payable by the applicant to Nagpur Municipal Corporation (NMC) for supplying Tertiary Treated Water to Mahagenco, by treating the Sewage Water supplied by NMC - Built Operate and Transfer basis (BOT basis) - forward charge mechanism or reverse charge mechanism - entitlement for input tax credit - HELD THAT:- Applicable GST is being, charged by the applicant and the NMC is paying the GST to the applicant. In addition, the applicant also has been given the right, by the NMC, to sell the Treated Effluent/ Tertiary Treated Water to any person for non-potable purposes. The applicant supplies such Treated Effluent/ Tertiary Treated Water to the Maharashtra State Electricity Generating Co. Ltd. (hereinafter referred as MAHAGENCO), Maharashtra. The impugned product is called as Tertiary Treated Water (TTW) which is generated from the Sewage Treatment Plant (STP) and such TTW is sold by the applicant to Mahagenco for consideration - Applicant has entered into tri-party contract with the NMC and Mahagenco. As per the Agreement, it is the applicant s responsibility to set up the Tertiary Treatment Plant; NMC has granted to the applicant, a special right to sell the Treated Effluent/ TTW to any person for non-potable application subject to the payment of royalty to the NMC; the sale consideration of Treated Effluent/ TTW is to be deposited by the applicant in an ESCROW Account opened with the designated bank. The ESCROW Bank is Trustee for NMC, the lenders representative and the concessionaire i.e. the Applicant. Entire sale proceeds generated out of sale (supply) of TTW is deposited by applicant in the trustee bank in the ESCROW Account. Liability of GST on royalty paid /payable by the applicant to NMC - HELD THAT:- The amount deducted by NMC through ESCROW arrangement is not a consideration/royalty but it is a revenue sharing arrangement/ reduction in applicant s consideration for service to NMC - the applicant has stated that the amounts to be paid to NMC on account of sale of treated water is not payment against royalty services received from NMC. Rather it is a revenue sharing arrangement between the applicant and NMC. In the present transaction in hand, it is observed that there is transfer of rights by NMC to sell the processed water. The supplier of services is NMC and the recipient of such service is the Applicant. It is further observed that against the transfer of such rights, NMC is getting consideration in the form of royalty , from the applicant. The term Royalty is defined in the agreement itself and its quantum is also to be decided as mentioned in Schedule 13 - the amounts to be paid to NMC by the applicant on account of treated water sold is nothing but amounts paid against Royalty services received from NMC. It is not a revenue sharing model because in lieu of the amounts to be received by the NMC against sale of treated water, the fact is that, NMC is reducing its payment to the applicant against such amounts receivable. The subject question raised by the applicant pertains to applicability of GST on payments made by it to NMC against licence given to them to sell the TTW which is termed as Royalty in the impugned agreement. Even though this can be considered as Pure Service it is seen that such services are not rendered by the applicant to a local authority. Rather the said service is rendered by the local authority to the applicant and is therefore out of the purview of the said Entry No. 3 - the consideration paid by the applicant to NMC against receipt of Royalty service is not exempt from GST. Royalty paid or payable by the applicant to Nagpur Municipal Corporation (NMC) for purchase of license or right of supplying Tertiary Treated Water to Mahagenco, by treating the Sewage Water supplied by NMC is liable to tax under the GST Act. Whether tax is to be paid by NMC or by the recipient (applicant) under reverse charge basis? - HELD THAT:- As per N/N. 13/2017-Central Tax (Rate) dated 28.06.2017, it is found that Entry Serial No. 5 prescribed that services supplied by the Central Government, State Government, Union Territory or local authority to a business entity in that case, the liability to pay tax is on the recipient of such service on RCM basis. Hence, since NMC is a Local Authority, the liability to pay tax is cast on recipient of the supply i.e. the applicant. Hence, as per the aforesaid notification entry, applicant would be liable to pay GST on reverse charge basis under section 9(3) of CGST Act. Whether the applicant would be entitled for Input Tax Credit (ITC), if tax is to be paid under Reverse Charge Mechanism? - HELD THAT:- In the present matter, applicant has supplied the taxable goods i.e. treated water, to Mahagenco which is the applicant s outward supply on which GST is payable by the applicant. The subject supply of Royalty services is taxable under reverse charge mechanism in the hands of the applicant. Hence, the applicant would be eligible for ITC as per the provisions of section 16 to 21 of CGST Act, subject to fulfilment of conditions as mentioned under the GST Act. ITC is available when the inputs are used in course of business or furtherance of business when supplier is making outward taxable supply - Transfer of rights to sale of processed water is provided by NMC to the applicant on the basis of which, the applicant is supplying the treated water to Mahagenco on payment of consideration. The applicant can avail the ITC as per the provisions of law on the subject transaction only if it satisfies the relevant conditions mentioned under the GST Act, relating to availment of ITC. Whether the applicant satisfies the conditions depends on facts during the relevant period and the provisions applicable during that period, for which no details or facts are provided in the present matter. Hence, ITC would be available to the applicant subject to the conditions mentioned under the provisions of section 16 to 21 of CGST/MGST ACT, 2017.

  ---

• Income Tax

• 2021 (9) TMI 1286
  Addition u/s 68 - unexplained credit - Onus to prove - identity and creditworthiness of the lenders and genuineness of the loans proved or not? - HELD THAT:- Keeping in view the fact that CIT(A) had not considered the appellant s defence with regard to identity and creditworthiness of lenders and genuineness of the loans in question, this Court remands the matter to the CIT(A) to consider the appellant s said defence under Section 68 of the Act - the finding given by the CIT(A) in the impugned is set aside.

  ---

• 2021 (9) TMI 1285
  Income accrued in India - PE in India - Whether assessee has a business connection in India under Section 9(1)(i) of the Income Tax Act, 1961 and has a PE, in the form of M/s L.G. Electronics India Ltd. under Article 5(1) 5(2) of DTAA between India and Korea? - HELD THAT:- As LG Electronics India Limited [ 2020 (11) TMI 209 - ITAT DELHI] covers the case of the present Respondent-assessees for the assessment years under consideration wherein the CIT(A) in the 201 proceedings held that none of the AEs, apart from LG Korea, had PE in India.

  ---

• 2021 (9) TMI 1284
  Reopening of assessment u/s 147 - Registration under Section 35(1)(ii) - Expenditure on scientific research - Sum paid to a research association which has as its object the undertaking of scientific research - substantial question of law or fact - as per revenue assessee had not filed the list of donors along with auditor s report for Assessment Year 2007-08 and as such had failed to comply-with the precondition mentioned in Rule 5D(4) of the Income Tax Act - HELD THAT:- As original assessment was completed under Section 143(3) of the Act and there was no failure on the part of the appellant to disclose fully and truly all material facts necessary for assessment - the statement of donations as received was very much available before the Assessing Officer at the time of original assessment and consequently the assumption of jurisdiction under Section 147 of the Act after four years based on the ground that it was not filed along with the audit report is bad in law and has been assumed on technical ground not mandatory in nature. In the opinion of this Court, the stipulation under Rule 5D(4) of the Act that the statement of donations shall be filed along with audit report is not a mandatory condition and is considered to have been complied with the moment the details of donation were filed before the Assessing Officer prior to the completion of assessment. Keeping in view the concurrent findings of fact by the CIT(A) and the Tribunal, this Court is of the view that the said findings should not be lightly interfered with. In fact, the Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 CPC the jurisdiction of the High Court to interfere with the orders of the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence - there is a difference between question of law and a substantial question of law . Consequently, this Court finds that there is no perversity in the findings of the CIT(A) and ITAT. Accordingly, the present appeal is dismissed.

  ---

• 2021 (9) TMI 1281
  Transfer of case u/s 127 - transfer proposed is from one commissionerate to another commissionerate - reasonable opportunity denied - HELD THAT:- Sub Section (1) of Section 127 is not applicable to the case at hand because the transfer proposed is from one commissionerate to another commissionerate. Sub Section 1 applies only where a transfer is proposed to be made from one AO subordinate to the same Commissioner to any other AO also subordinate to the same Commissioner. In this case, the transfer was proposed to be made by one Commissioner to an Assessing Officer under another Commissioner and both AO are not subordinate to the same Commissioner. Reasonable opportunity would mean that the show cause notice or the intimation issued should contain such details that would enable the assessee to know the reasons for which the case is being transferred. In the intimation notice dated 20th June 2019, apart from stating you are connected to this group there are no other details as to how petitioner is connected to the Salagaocar Group. The word connected has varied and a wide meaning. Respondents ought to have mentioned in the show cause notice how petitioner was connected to Salagaocar Group of companies. The purpose of show cause notice is to enable a party to effectively deal with the case made out by respondent. If a vague show cause notice is given without specifying anything or the grounds, then it can be held that reasonable opportunity of showing cause against an order of transfer being made by the Commissioner was not given, because the assessee would be totally unaware of the grounds which prompted the Commissioner to arrive at prima facie conclusion that the power u/s 127 (2) of the Act was required to be exercised. Issuance of show cause notice is the preliminary step which is required to be undertaken before giving opportunity of hearing under Section 127 (2) Also show cause notice issued is under Section 127 (1) when all applicable provisions are under Section 127 (2) (a) of the Act. Even in the order impugned, respondent no.1 states that the assessee was provided opportunity under Section 127 (1) but he exercised his powers under Sub Section 2 of Section 127 - that also shows non application of mind by respondent no.1. Respondent no.1 also should have dealt with all the points raised by petitioner in his reply, which he has failed to do. Moreover, the show cause notice has been issued by one Income Tax Officer (HQ), International Taxation 3 and not by the Commissioner of Income Tax, who was exercising his power. On that ground also the show cause notice itself is defective.

  ---

• 2021 (9) TMI 1280
  Benefit of the VSV Act - Rejection of declaration and undertaking filed under the provisions of Direct Tax Vivad Se Vishwas Act 2020 (the VSV Act) as there is no disputed income as the return filed by assessee has been accepted in assessment proceedings and as assessee has disputed interest charged u/s 234A/B/C and interest charged is mandatory and there is disputed income - HELD THAT:- The VSV Act was enacted to provide for resolution of disputed tax and for matters connected therewith and incidental thereto. In the VSV Act, there is no provision to exclude interest charged under Section 234A, 234B or 234C of the Act as stated in the order impugned. The disputed interest is defined under Sub Clause h (ii) of Sub Section 1 of Section 2 to mean the interest determined in any case under the provisions of the Income Tax Act, 1961 where an appeal has been filed by the appellant in respect of such interest . Appellant means under Clause a (i) of Sub Section 1 of Section 2 a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the Income Tax Authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date . Therefore, petitioner was eligible to file this declaration under the VSV Act for the disputed interest that was charged under Section 234A or Section 234B or Section 234C. The concerned authority was, therefore, not correct in rejecting the declaration of petitioner for reasons quoted above. Thus the order of rejection issued by respondent no.1 is bad in law. Respondent no.1 is directed to process the declaration cum undertaking filed by petitioner under the provisions of VSV Act.

  ---

• 2021 (9) TMI 1275
  Rights of the writ petitioner to prefer an appeal against the impugned Assessment Order i.e., appeal under Section 246A - Statutory appeal - Alternate remedy - Point on Section 80B of IT Act was not raised before the Assessing Officer - HELD THAT:- There is no pre-deposit condition and the statutory appeal is under Section 246A of IT Act. This Court is informed that Appellate Authority is CIT(A), Coimbatore. This Court is also informed that there is no cap qua Condonation of Delay ( COD ) with regard to filing of the appeal and it is at the discretion of the Appellate Authority. The most important and significant aspect of the matter even according to the impugned order is, a show-cause notice dated 04.03.2021 has been sent to the writ petitioner /assessee and writ petitioner has not sent any reply or explanation. Owing to this, the respondent has concluded that the Assessee has no objection qua addition/disallowance made in the draft Assessment Order. That point that is being canvassed turns on Section 80B of IT Act was not raised before the Assessing Officer though an opportunity was given to the writ petitioner and writ petitioner did not avail the same. In this view of the matter, nothing prevents the writ petitioner from raising this very point in an appeal. The right of the writ petitioner to raise this point before the Appellate Authority is preserved. This Court has repeatedly held that alternate remedy, though not a absolute rule i.e., a rule of discretion and self imposed restraint qua writ court has to be applied strictly when it comes to fiscal statutes as long as exceptions such as NJP violation are not attracted. Captioned writ petition is, therefore, disposed of holding that the rights of the writ petitioner to prefer an appeal against the impugned Assessment Order i.e., appeal under Section 246A of IT Act to Commissioner of Income Tax (Appeals), Coimbatore, Appellate Authority raising all points available to the writ petitioner including the points raised in the instant writ petition are preserved. If there is any delay in preferring the appeal, it is open to the writ petitioner to seek COD and if such an COD prayer is made, Appellate Authority shall decide the same on its own merits and in accordance with law.

  ---

• 2021 (9) TMI 1273
  TDS u/s 194H - Principal-Agent relationship - discount given on sale of prepaid services, SIM and recharge vouchers by the cellular operator (assessee) to its distributors - whether definition of Commission or brokerage does not make the principal- Agent relationship sine qua non for the application of Section 194H? - HELD THAT:- As decided in BHARTI AIRTEL LTD. [ 2014 (12) TMI 642 - KARNATAKA HIGH COURT] the order passed by the authorities holding that section 194H of the Act is attracted to the facts of the case is unsustainable. Therefore, the substantial question of law is answered in favour of the assessee.

  ---

• 2021 (9) TMI 1270
  Addition of 20% of the expenses and addition u/s 68 - non-appearance of the assessee before the A.O. and non-filing of the details - HELD THAT:- It is an admitted fact that due to non-appearance of the assessee before the A.O. and non-filing of the details, the A.O. made various additions to the total income of the assessee. We find the Ld. CIT(A) in his elaborate order has sustained the various additions made by the A.O. So far as the disallowance of 20% of the expenses perusal of the detail of the expenses show that the entire expenses have been incurred by the appellant in cash. Thus, there is always possibility to inflate the expenditure on the basis of self-made vouchers/in absence of proper bills/vouchers. Further, without producing bills/vouchers of various expenses, the authenticity of the expenses cannot be ascertained. Under these circumstances, I find that the AO was justified to disallow out of the claim of the appellant. Upholding the addition of 20% sundry creditors above confirmations did not contain the PAN of the party and were undated. Even the Ledger account of these parties filed by the assessee only shows that the assessee had been making only cash payment to these parties against purchases of Rs. 20,000/- each on continuous dates. Hardly any payment has been made through cheques. Unexplained cash deposit in the Bank A/c under section 68 appellant has offered no creditable explanation about the amounts credited in his bank account, the entire receipts therefore cannot be treated as explained. In appeal, the additional evidence filed by the appellant has been examined, and perused, however, in the absence of application for admission of additional evidence, the same has not been admitted and taken cognizance of. The additions made by the Assessing Officer is therefore upheld. Since the assessee did not to appear before the Tribunal and since there is no other evidence before us to take a contrary view than the view taken by the Ld. CIT(A) in sustaining the various additions made by the A.O, we do not find any infirmity in his order. - Decided against assessee.

  ---

• 2021 (9) TMI 1266
  Rectification of mistake u/s 254 - HELD THAT:- The scope of powers under section 254(2) of the Act is only to correct the mistakes that are apparent on the face of the record. The objections raised by the assessee in this MP cannot be said to be mistakes apparent on the face of the record. The assessee cannot reargue the matter and seek review of the order of the Tribunal. In this case, the order was passed by the CIT(A)-11 on 17.7.2018 and admitted position is that that by notification dated 16.07.2018, issued u/ s.120 of the Act, by the Principal Chief Commissioner of Income Tax, Karnataka Goa, the appeals pending before Commissioner of Income Tax (Appeals) - 11 were transferred to Commissioner of Income Tax (Appeals) - 12, Bengaluru. Therefore, in the present case, the assessee cannot have any grievance whatsoever as the impugned order suffers from an irregularity which is not curable and the Tribunal has therefore adopted the right course by setting aside the impugned order. We do not find any mistake in the order which is apparent on the face of the record. Accordingly, this MP is devoid of any merit and is liable to dismissed.

  ---

• 2021 (9) TMI 1265
  Rectification of mistake u/s 154 - levying penalty u/s 271(1)(c) - bogus export to Russia has been made for conversion of black money through Hawala channel and the assessee claimed deduction u/s 80HHC - HELD THAT:- There is no error pointed out by the assessee before the ld AO and the ld CIT(A) based on which it could have been said that there is a mistake apparent from the record in absence the order u/s 271 (1) (C) of the Act by the ld AO - AO is also justified in passing the order u/s 271 (1) (C) of the Act as the appeal of the assessee was dismissed by learned CIT A and further merely because some rectification is pending before the ld CIT(A) against quantum proceedings it cannot become a mistake apparent from the record in the penalty proceedings. Of course, if there is error in the order of the ld CIT(A) in quantum proceedings and if the addition is deleted, naturally the penalty could be deleted thereafter. In fact this is the appeal against the order passed u/s 154 of the act in penalty order levying penalty u/s 271 (1) (C) of the and not the appeal against the penalty order passed u/s 271(1)(c) of the Act. Even the ground of appeal raised by the assessee do not support the respective orders attached with the appeal

  ---

• 2021 (9) TMI 1263
  Addition being cash deposit in the saving bank account - cash deposits treated as undisclosed income - Assessee argued that deposit made by the assessee on 29.11.2010 has been deposited out of the cash withdrawn earlier - HELD THAT:- The cash withdrawals made earlier by the assessee has not been controverted by Revenue but however the contention of the assessee that the cash deposits are out of such cash withdrawals was not accepted by the AO as there was a huge difference between the dates of cash withdrawal and cash deposits. Before us, Revenue has not placed any material to demonstrate that the cash withdrawal made by the assessee was not available with the assessee as it has been spent by the assessee or has been invested and therefore was not available for deposits. In such a situation, without their being evidence to the contrary, we are of the view that the explanation of the assessee of the cash deposits being out of the withdrawals made earlier cannot be simply brushed aside. We therefore, direct the deletion of cash deposits of Rs. 2 lakh. - Decided in favour of assessee. Bogus purchases - assessee argued that the impugned purchase made from Aggarwal Canvas Co., the sales have been made and the sales have been accepted by the Revenue and in such a situation, no disallowance of purchases is called for - HELD THAT:- As assessee could not produce the copy of the purchase invoice of Aggarwal Canvas Co. before the CIT(A) nor has it been produced before us. It is also a fact that alternatively it is the contention of the Learned AR that the gross profit of the sales made from the impugned purchases could be added to the income. Before us, assessee has not placed any record to point out the gross profit earned by the assessee during the year. Considering the totality of the facts and also the fact that the appeal is of A.Y. 2011-12, we are of the view that ends of justice shall be met in the present case if the disallowance is restricted to Rs. 15,000/-. We therefore direct the disallowance be made of Rs. 15,000/- and direct the deletion of the balance disallowance of Rs. 1,56,220/-. Thus the ground of the assessee is partly allowed.

  ---

• 2021 (9) TMI 1262
  Rectification of mistake u/s 254 - non issuance of valid notice u/s 143(2) - Whether transfer of case u/s 127 proved? - assessment u/s.143(2) of the Act was completed by the ITO, Ward 2(4), Aurangabad whereas, the notice u/s.143(2) of the Act was issued to the assessee by the ITO, Ward 2(1), Aurangabad - HELD THAT:- As in the present case of the assessee, it is not the case that notice u/s.143(2) of the Act was not issued to the assessee. The facts in the Hotel Blue Moon case [ 2010 (2) TMI 1 - SUPREME COURT] is distinguished from the facts of the present case in respect of the assessee in so far that the judgment of the Hon ble Supreme Court says, notice u/s.143(2) of the Act shall be issued by the AO making assessment but here is the case where such notice was already issued by the Assessing Officer having jurisdiction and now subsequently it was transferred to another AO for making assessment. Assessee has not challenged the jurisdiction of the AO and has constantly filed return with the Assessing Officer having jurisdiction, whereas, such notice is already sent u/s.143(2) of the Act to the assessee, now no further re-issuance of notice is required. Therefore, the Hotel Blue Moon case (supra.) is factually distinguishable. Legislative intent becomes clear with reading to Section 127(3) and Section 127(4) of the Act that while Section 127(3) makes right to be heard dispensed with if the case transferred from one Assessing Officer to another in same city, place or locality and the assessee has agreed these facts. That Section 127(4) is clear that re-issuance of notice already issued by the Assessing Officer having jurisdiction and now subsequently transferred to another Assessing Officer shall not be required. Considering the legislative intent as enshrined in the provision of Sections 127(3) and Section 127(4) of the Act, we are of the opinion that there has crept in mistake apparent from record in the order of the Tribunal [ 2019 (8) TMI 1764 - ITAT PUNE ] is hereby recalled subject to dismissal of ground No.1 of the appeal.

  ---

• 2021 (9) TMI 1259
  Addition u/s 68 - Unexplained cash credit - HELD THAT:- No cash credits were found in the books of accounts during the previous year relevant to the assessment year for which the assessee could not offer explanation. What was found by the AO was sundry creditors were converted into share application money in the hands of one of the Directors and reflected the same as share application money. The sundry creditors were reduced and the share application money was increased. Subsequently, the sundry creditors balances were reversed back and the company has paid the same. The assessee also furnished evidence in the paper book in the form of copies of confirmation letters from the creditors. There was no cessation of liability and facts are identical to case of M/s Srinivasa Hair Industries, Eluru [ 2019 (2) TMI 1463 - ITAT VISAKHAPATNAM ] - In the facts and circumstances of the case we, hold that there is no case for making addition u/s 68 and the Ld.CIT(A) has rightly deleted the addition, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.

  ---

• 2021 (9) TMI 1258
  Revision u/s 263 by CIT - eligibility for deduction in terms of section 80IB(11A) - case of the appellant was selected for scrutiny - as per CIT AO had failed to make necessary enquiry/verification of the issues referred to in paragraph 4 and 5 of the show cause notice - HELD THAT:- The assessment record produced before us, clearly shows that the assessing officer and made various enquiries/ verification from the assessee, and the assessee gave the reply to the said enquiries/ verification during the assessment proceedings. AO asked various questions/ show cause notice/ verification in respect of alleged fall in GP. The perusal of the Performa of audit report dated 29th November 2013, clearly shows that the assessee has mentioned in the four Performa the initial year of the assessment year for which the deduction was claimed and also mentioned the date of commencement of the activities. Thus the finding of the Ld. PCIT that AO had not made enquiry with respect to the initial year of assessment for which deduction was claimed is factually incorrect as the assessing officer made sufficient enquiries. The assessee filed the detailed reply on 4thAugust 2016, explaining elaborately how the assessee satisfies the conditions, as required under section 80 IB - thus it is abundantly clear that the assessing officer while framing the assessment had made an extensive, elaborate and necessary enquiry with a view to find out whether the assessee fulfils the conditions mentioned in section 80IB or not. The reading of the notice and the reply and subsequent notices and replies clearly shows that the assessing Officer was satisfied that the assessee had fulfilled all the conditions necessary for claiming the deduction under section 80 IB. As sufficient, necessary enquiries were made by the assessing officer during the assessment proceedings, therefore the action on the part of the principle CIT cannot be countenanced and the invocation of jurisdiction under section 263 , was devoid of any merit and is liable to be set aside and annulled . As AO at the first instance was holding the view that no addition can be made based on either non-fulfilment of the Commissioner under section 80IB and thereafter he had turned around and proposed that additions are required to be made on account of non-fulfilment of the conditions of section 80 IB and non-verification of the GP ratio of the assessee. Similarly, If we believe the assessing officer, that the order section was given by the Commissioner income tax framing the assessment and making the additions again the assessee at the time of passing the assessment order, the Commissioner was holding a view and was also simultaneously discussing the matter with the assessing officer, however quite contrary to this he chooses to issue the show-cause notice based on the proposal given by the assessing officer and pass the order under section 263, thus substantially both the officers were having two views for deleting the additions in making the addition. The law is reasonably settled when two views are possible, then the proceedings under section 263 are required to be dropped and quashed.- Decided in favour of assessee.

  ---

• 2021 (9) TMI 1256
  Disallowance of deferred revenue expenditure and pre-operative expenses - expenditure incurred on opening and publicity of branches was treated as deferred revenue expenditure and pre-operative expenses in books of accounts - HELD THAT:- AO has extracted the details of proportionate deferred revenue expenses and pre-operative expenses claimed by the assessee during the year under consideration. As rightly pointed out by Ld. D.R., those expenses are in the nature of revenue expenses only. It is an admitted fact that these expenses have been incurred in an earlier year in connection of opening of branches in Mumbai and Gurgaon. In the books of account, the assessee chose to treat these expenses as deferred revenue expenses pre-operative expenses and was claiming proportionate amount every year. The assessee has chosen to claim proportionate amount under Income tax Act also while computing total income. Under the Income tax Act, the total income is computed in accordance with the provisions of the Act. The issue relating to allowability of deferred revenue expenses has been examined by the Ahmedabad special bench in the case of ACIT vs. Ashima Syntex Ltd. [ 2006 (3) TMI 188 - ITAT AHMEDABAD-B] In the instant case nature of expenses claimed by the assessee under deferred revenue expenses/pre-operative expenses did not result in creation of any capital asset nor they could be clearly and unambiguously identified over specified future time periods. Admitted the expenses have been incurred in the past year in connection of opening of branches and they are in the nature of revenue expenses. The claim made by the assessee during the year under consideration is part of those expenses, which was claimed as amortisation of those expenses over certain years. The principles laid down by the Special bench [supra] there is no concept of deferred revenue expenses under the Income tax Act and hence the revenue expenses incurred in an earlier year cannot be allowed as deduction during the year under consideration. The various case laws relied upon by Ld. A.R. have been rendered in a different context Principle of Consistency - As rightly submitted by Ld. D.R., the returns of income filed for earlier years have been processed u/s. 143(1) of the Act and hence there was no scrutiny of similar claims made in the earlier years by the AO. Hence the principle of consistency will not apply to this claim.- Decided against assessee.

  ---

• 2021 (9) TMI 1255
  Penalty u/s. 271(1)(c) - disallowance of deduction u/s. 35(2AB) as the assessee not voluntarily disclosed the fact of not receiving DSIR Certificate for - revised computation was filed by the assessee only after AO questioned him on deduction u/s. 35(2AB) during the assessment proceedings - CIT-A Deleted the penalty levy - HELD THAT:- CIT(A) has give a categorical finding that the assessee was under the genuine belief that approval will be granted by the appropriate authority i.e. DSIR and accordingly made the claim for deduction u/s. 35(2AB) of the Act for the Assessment Year under consideration. But the approval was granted by DSIR w.e.f. 01.04.2013 and, therefore, the assessee withdrawn the weighted deduction claim by filing revised computation of income before the Assessing Officer in ongoing assessment proceedings. This cannot be termed as concealing income or furnishing inaccurate particulars of income. Besides this, the assessee has also given explanation before the Assessing Officer as relates to revised computation of income. Thus, in case of CIT Vs. Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] - Thus, there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed.

  ---

• 2021 (9) TMI 1254
  Correct head on income - Income from revenue operation from common area maintenance charges received from the tenants - income from house property or income from business - HELD THAT:- Issue decided in favour of assessee as relying on own case [ 2021 (8) TMI 210 - ITAT DELHI] maintenance charges received were towards maintenance and promotion of common area and the amounts received towards maintenance charges were business receipts liable to be assessed under the head Income from business . - Decided against revenue.

  ---

• 2021 (9) TMI 1253
  Disallowance of interest expenditure related to the amounts advanced to VVCIPL under the head business income - CIT(A) found that as there was excess expenditure incurred by the assessee, the Ld.CIT(A) held that there is no case for making the addition and accordingly deleted the addition - HELD THAT:- In the instant case, there is no dispute that the assessee has earned interest income on the amounts lent to VVCIPL and at the same time, the assessee also paid the interest on borrowed funds. Since the assessee has earned interest of equal amounts and offered to tax, there is no loss of revenue. The department has not disputed the fact that the assessee has received income from VVCIPL and offered the same under the head income from other sources . There is no loss of revenue and the Ld.CIT(A) rightly deleted the addition. Hence, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. This ground of the revenue is dismissed. Addition on account of profits admitted - Since the assessee could not explain the nature of the expenditure, the AO made the addition to the returned income - HELD THAT:- Though the assessee has claimed that the interest was paid on advance received on sale of flat which was cancelled subsequently, no details were made available either in the assessment proceedings or in the appeal proceedings. The assessee is supposed to furnish the details with regard to flat No., identify the buyer etc. to claim the expenditure. Without having furnished the above details, the AO cannot verify the genuineness of the expenditure. It also appears that the AO did not make any effort to collect the details. Therefore, we remit the matter back to the file of the AO with a direction to re-examine the issue in detail and decide the issue afresh on merits. Appeal of the revenue on this ground is allowed for statistical purpose. Disallowance of expenditure u/s 40(a)(ia) - Non deduction of commission, salary, electrical works, land development charges, carpentary works, NMR works, painting works etc - HELD THAT:- There is no dispute that the assessee is maintaining the books of accounts and the books of accounts were duly audited by qualified Chartered Accountant and given his findings on TDS liability. The assessee has furnished the details of TDS made before the CIT(A) and the CIT(A) has given a finding that TDS is applicable only on commission payment, carpentary works and painting works and the assessee has deducted the TDS. The remaining payments were outside the purview of TDS since each payment was less than the threshold limit for deduction of TDS - AO did not identify each payment and the quantum of TDS that is required to be made. It is the obligation of the AO to ascertain the details of payments made to each person from the books of accounts and determine the TDS liability to make the addition. During the appeal hearing, the Ld.DR did not place any material to controvert the finding given by Ld.CIT(A). Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Appeal of the revenue on this ground is dismissed. Addition u/s 69A r.w.s. 115BBE - cash deposits made in the bank account during demonetization period - CIT- A deleted the addition - HELD THAT:- Since the facts are identical respectfully following the view taken by this Tribunal in Mr.Jaya Prakash Babu 2021 (9) TMI 1192 - ITAT VISAKHAPATNAM] and M/s Karthik Constructions [ 2018 (3) TMI 39 - ITAT MUMBAI ] we uphold the order of Ld.CIT(A) and dismiss the appeal of the revenue. Addition u/s 68 - unexplained cash credit - HELD THAT:- The source for infusion of capital was the amount given by his father Shri Jaya Prakash Babu through transfer from his capital account. As per the ledger account, the said sum was credited in the capital account on 01.04.2016. Since, the assessee has submitted the ledger account of Shri V.Jaya Prakash Babu, which clearly shows that the said sum was credited in the capital account of the assessee, the source stands explained. In fact Shri Jaya Prakash Babu also assessed in the same circle/ward and the AO did not cause any enquiries to ascertain the correctness and thus did not make out any case for addition u/s 68.

  ---

• 2021 (9) TMI 1249
  Addition u/s 68 - Unexplained deposits - HELD THAT:- Cash deposit on 12.11.2010 which was available with the assessee as per her bank statement and which was then withdrawn on 13.01.2011. It is noted that the claim of the assessee regarding frequent cash withdrawal and deposit for the purposes of availing OD limit has been accepted by the AO in his remand report for the year under consideration and duly considered and accepted by the ld. CIT(A) while working out the peak credit. Where similar transactions of deposits and withdrawals exist in the previous financial year, the explanation of the assessee duly supported by her bank statements cannot be disputed without any adverse material on record - assessee has disclosed income in her return of income and which has been accepted by the AO which again explain the source of part of deposits in the bank account. We therefore find that the assessee has reasonably explained the source of deposits in her bank account and the additions so confirmed by the ld. CIT(A) is hereby directed to be deleted - Decided in favour of assessee.

  ---

• 2021 (9) TMI 1248
  CIT-A upholding the order passed u/s. 250 granting part relief out of disallowances made u/s. 14A of I.T. Act read with Rule 8D - HELD THAT:- Bare perusal of the impugned order passed by the ld. CIT(A) goes to prove that relief has already been granted to the assessee by ld. CIT (Appeals)-16 vide as disallowance u/s. 14A of the Act read with rule 8D of the I.T. Rules made by the AO has already been deleted. Even assessee has filed the present appeal by raising vague and ambiguous ground from which it is difficult to discern as to what relief is being sought - finding no illegality or infirmity in the impugned order passed by the ld. CIT(A), present appeal filed by the assessee is hereby dismissed.

  ---

• 2021 (9) TMI 1244
  Capital gain - year of assessment - CIT-A holding 50% of the sale consideration received in the year under consideration is chargeable to tax - HELD THAT:- As the issue raised is similar to the facts therein in the case of Shri Rajendra S. Goel [ 2017 (1) TMI 1765 - ITAT PUNE] and applying the principle laid down by the ITAT Pune Benches deleted the addition made by the AO by holding the capital gain is chargeable to 50% of the consideration which has been received in the year under consideration. CIT(A) discussed the issue in detail and we find no dispute with appellant-Revenue regarding the receipt of 50% of sale consideration by the assessee in the year under consideration. There is no order contrary to the view taken by the ITAT Pune Benches in the case of Shri Rajendra S. Goel brought on record and therefore, we find no infirmity in the order of CIT(A) and it is justified. Appeal of Revenue is dismissed.

  ---

• 2021 (9) TMI 1243
  TP Adjustment - payment made for intra group services - CIT(A) directed the TPO to grant 50% of the adjustment claimed by the assessee on account of intra-group services - scope of commercial expediency - HELD THAT:- Since the issue has already been decided by the Tribunal [ 2020 (2) TMI 1567 - ITAT DELHI] favour of the assessee by deleting 50% of disallowance sustained by the Ld. CIT(A), therefore, in view of the Order of the Tribunal, we do not find any infirmity in the Order of the Ld. CIT(A) in deleting the adjustment on account of payment of intra group service to A.E. Ground Nos. 1 to 3 of the appeal of the Revenue are accordingly dismissed. Reimbursement payment from the operating cost - international transaction relating to provision of management consultancy services provided to AEs and reimbursement of expenses from AEs - HELD THAT:- As decided in own case[ 2020 (2) TMI 1567 - ITAT DELHI] .restored the issue to the file of A.O./TPO with a direction to verify the analysis done by them in subsequent years and find-out as to whether this company is functionally similar or dissimilar to that of the assessee company and decide the issue as per fact and law.

  ---

• 2021 (9) TMI 1241
  Estimation of net profit from Trading in Scraps and Granules - Profit on unrecorded sales of scraps - estimation of net profit @25% on unaccounted sales - Certain diaries inventorized as A-1 to A-8 were found and seized by the search party - As argued the unrecorded sales of scrap was not effected by the appellant only in one previous year relevant to A.Y. 2011-12 but factually, it was effected by him in two previous years relevant to A.Y. 2011- 12 and A.Y. 2012-13 - HELD THAT:- AR failed to demonstrate with any positive evidence that the jottings made in these diaries pertain to two financial years. Since, the assessee himself is claiming that he had commenced the unaccounted business of scrap trading during the financial year relevant to A.Y. 2011-12 only and further since, from the seized diaries the assessee has failed to demonstrate that these transactions were also carried out by him during the subsequent financial year too, we find absolutely no infirmity in the views taken by the authorities below that the transactions of unrecorded trading of scrap were carried out by the assessee during the financial year relevant to A.Y. 2011-12 only and consequently, the entire income arising from carrying out such unrecorded transactions is liable to be taxed in the hands of the assessee for the A.Y. 2011-12 only. Accordingly, the Ground No. 1(b) of the assessee is dismissed. Determination of undisclosed income from the undisclosed and unrecorded trading transactions in scrap carried out by the assessee - HELD THAT:- Considering the facts that the assessee has carried out only a trading business on wholesale basis which was commenced by him only in the financial year under consideration and further considering the amount of investment, rate of return on investment etc. in our view, the estimation of the net profit rate so made by the CIT(A) at 25% is quite at a higher side. In all the fairness to both the parties , we restrict the estimation of net profit at 10% of the undisclosed sales. Before us, the assessee has also taken two separate grounds bearing nos. 1(c) and 1(d) for allowing him the benefit of telescoping of the total undisclosed income shown in the return against the net undisclosed income/investment finally determined. We are of the considered view that an assessee is eligible for claim of set-off of the undisclosed income voluntarily shown by himself in the return of income filed u/s. 153A against any undisclosed income/undisclosed investment, finally determined. Accordingly, the AO is directed to work out the net profit at the rate of 10% on the unaccounted sales and after giving due benefit of telescoping of the undisclosed income already shown by the assessee in his return of income (other than those undisclosed income for which a separate specific claim for set-off is made by the assessee), re-compute the total income of the assessee. Unexplained Expenditure being Purchase of Scraps and Granuels - HELD THAT:- It would be fair and reasonable to estimate that the assessee had made initial investment for carrying out undisclosed trading business of scrap equivalent to a half month s sales of the entire sales made during the period under consideration. Accordingly, in our considered view, the undisclosed investment of the assessee in the initial capital of the business should be computed at 1/24th of the total annual sales of Rs. 9,30,89,378/- found recorded in the seized diaries which works out to be at Rs. 38,78,724/- as against the same determined by the Ld. CIT(A) at Rs. 55,28,966/-. We also direct the Ld. AO that assessee would be eligible to set off of this amount of Rs. 38,78,724/- against the total income of Rs. 3,60,00,000/- surrendered in the return of income furnished under s.153A. Advance payment by the assessee to one Mr. Rahul by invoking the provisions of s.69 - HELD THAT:- We find that the amount of Rs. 29,90,000/- has already been considered by both the authorities below while making/ restricting the addition as aforesaid, in our considered view, no further addition is required on account of advances amounting to Rs. 29,90,000/- made by the assessee to Mr. Rahul. It is well known maxim of the law that the same addition cannot be made twice. Since, while making the separate addition of Rs. 7,83,60,000/-, which includes the advances amounting to Rs. 29,90,000/- given by the assessee to Mr. Rahul, the AO has separately determined the interest amounting to Rs. 1,25,23,200/-, in our considered view, no separate addition is required even in respect of receipt of interest on advance to Mr. Rahul. Accordingly, the Ground Nos. 3(a) 3(b) of the assessee are allowed. Benefit of telescoping to the assessee in respect of advances given to Mr. Rahul against the additional income surrendered and shown by the assessee himself in his return of income - HELD THAT:- Once the CIT(A) has confirmed the addition under s.69 of the Act, it has to be necessarily held that the advances were given by the assessee during the year under consideration only and not in the earlier years, for the reason that under the provisions of s.69 of the Act, an addition can be made only for the year in which the assessee has been found to have made undisclosed investment. In our view, the Ld. CIT(A) was not correct in sailing on two boats inasmuch while confirming the addition, he has presumingly affirmed that the assessee had made the investment only during the year under consideration but, while considering the benefit of telescoping, the Ld. CIT(A) has presumed that the assessee might have made such investments by giving advances to Mr. Rahul in earlier years. In our considered view, since, we have fully deleted the addition so made by the AO, as aforesaid, the question of telescoping has become academic in nature only. Accordingly, the Ground No. 3(c) of the assessee is allowed. Addition u/s 69 - sale proceeds of land - HELD THAT:- Having held that the assessee had derived income amounting to Rs. 12,60,000/- from partial sale of land, it has to be necessarily held that the sales proceeds of such land amounting to Rs. 40,80,000/- was available with the assessee. We find that the transaction of purchase of land has its nexus with the letter dated 12.01.2011. Business of trading in scrap and other related activities are since the beginning of the year and another seized paper showing loans and advance is having a date of December. Therefore this plea of the assessee that sale proceeds of land was used in giving loans and advances and used in the business of scrap has no merits. Accordingly, the ground no. 5 of the assessee appeal for A.Y. 2011-12 is dismissed.

  ---

• Customs

• 2021 (9) TMI 1279
  Permission to file the self-assessed Bill of Entry for imported Procleix Ultrio Elite Assay Kit as well as for future consignments - mandatory speaking order under Section 17(5) of the Customs Act, 1962 - direction to pass provisional assessment order under Section 18 of the Act during the pendency of reassessment proceedings - seeking to allow future imports to be cleared on the basis of provisional assessment on the basis of reasonable security without insistence of deposition of 100% disputed customs duty demand - violation of principles of natural justice - HELD THAT:- The provisional release of the goods can be challenged by the petitioner in accordance with law before the appropriate forum. However, looking to the facts of the case, especially the fact that no order has been passed under Section 17(5) of the Customs Act, 1962, the concerned respondent authority is directed to pass a speaking order under Section 17(5) of the Customs Act, 1962 upon the Bill of entries which are mentioned hereinabove which have already been filed by the importer petitioner in the month of July, 2021. The petitioner shall cooperate during the hearing with the respondents for passing an order under Section 17(5) of the Customs Act, 1962. This order shall be passed within a period of two weeks from today. The Officers of the respondents are also present on video conference hearing which has taken place today. Petition disposed off.

  ---

• 2021 (9) TMI 1278
  Principles of natural justice - Smuggling - Gold - proper opportunity to respond to the show cause notice was not provided - extended lock down period up to 31.05.2021 - confiscation - penalty - HELD THAT:- In this case, on 30.04.2021, personal hearing notice was given, whereby, a date was fixed as 10.05.2021 at 10.00 a.m. to 5.00 p.m. for personal hearing. It is also to be noted that, the said personal hearing was through video conference. In response to the same, the learned counsel appearing for the petitioners did appear through video conference on 10.05.2021 and, it seems that he had sought further time up to 31.05.2021 to respond to the show cause - Though time was given upto 31.05.2021, that was also accepted on behalf of the petitioners to respond to the show cause notice, they could not make it. The reason for not responding to the show cause notice, on or before 31.05.2021, is obvious that, during the said period, there has been a complete lock down throughout the State, and in this regard, the lock down already imposed had been extended from 24.05.2021 to 31.05.2021. In this case, after the 10.05.2021 notice, that is, record of personal hearing, whereby, the time was given up to 31.05.2021, no further time was given or no extension of time was given to the petitioners to respond and thereafter, the impugned order of confiscation of goods had been passed on 03.08.2021. Therefore, this Court feel that such order can be said to be vitiated, in view of the lock down period, where, the expected time since was not given by the respondents, beyond 31.05.2021. This Court feel that the impugned order can be interfered with only for the limited purpose of remitting the matter to the respondents to give one more chance to the petitioners to respond to the show cause notice and for personal hearing and thereafter, they can proceed to pass final orders - petition allowed by way of remand.

  ---

• 2021 (9) TMI 1276
  Application for early hearing - HELD THAT:- The application is allowed. Main matter i.e. Special Civil Application no.6687 of 2021 is to be posted on 1st October, 2021 along with the other matters.

  ---

• 2021 (9) TMI 1267
  Classification of imported goods - Base Oil SN 50 - classifiable under Customs Tariff chapter hearing 27101960 as claimed by the appellant in the bill of entry or the same is classifiable as HSD under Chapter heading 27101930 of Customs Tariff Act, 1975 as claimed by the revenue? - Confiscation - redemption fine - penalty - HELD THAT:- The entire case was decided on the basis of test conducted initially by the Central excise and Customs Laboratory at Vadodara and CRCL New Delhi. Subsequently on the intervention of Hon ble Gujarat High Court in the petition filed by the appellant and as per direction of Hon ble High Court the test was conducted at IOCL, Mumbai. As per IS 1460:2005 there are 21 Parameters and as per amended IS 1460:2017 it is 22 parameters. However, IOCL Lab tested 21 parameters as per IS 1460:2005. The adjudicating authority decided the confiscation on the basis of test report given by IOCL laboratory. The test report if read with the explanation given by the Shri Gobind Singh, who tested the samples, it is clear that though 14 parameters were tested as per IS 1460:2005 but in absence of testing of remaining 8/7 parameters it cannot be concluded that the goods is HSD. Upper limit of flash point - HELD THAT:- In the present case even though the Flash point tested was above 93 C on that basis the goods cannot be classified as HSD. We also observed that the department with the pre- determined mind got the goods tested for HSD. Whereas in the first attempt since the goods was declared as base oil the sample should have been tested with parameters of base oil also and if the parameters are not meeting for the base oil than only the department should have resorted to carry out the test for classifying the goods either under HSD or any other classification. In the case of GULF FIRST PETRO PRODUCTS INDIA P. LTD. VERSUS CC., ST. EX., COCHIN [ 2015 (2) TMI 297 - CESTAT BANGALORE] , the dispute was whether the goods are base oil or lubricating oil on the chemical test by the customs laboratory. The flash point of the imported product was found to be above 94 C as per chapter note 27 lubricating oil means any oil which is ordinarily used for lubrication excluding hydrocarbon oil which has its flash point below 93.3 C. It was held by this tribunal that product having flash point above 94 C cannot be classified as lubricating oil and the classification as base oil has been maintained - In the present case also the flash point is 112 C applying the ratio of the aforesaid judgment the goods having flash point above 94 C will merit classification as base oil only. In this position goods cannot be classified as HSD. Since all the parameters as specified under IS 1460:2005 has not been tested it is not proved that product imported by the appellant are HSD. Since Supplementary note to chapter 27 defines the meaning of HSD that means hydrocarbon oil conforming to the Indian standard subsequently by IS 1460:2005 as amended from time to time - In the present case admittedly all the 21/22 parameters were not tested therefore product cannot be called as conforming to IS 1460:2005 and consequently cannot be classified as HSD. Thus, even if the product is base oil or otherwise but since it was not proved by the department beyond doubt that the impugned goods are HSD; the case of department got failed - irrespective of whether the base oil was correctly declared by the appellant or otherwise but since the proposed classification by the department does not sustain the case of department clearly fails, for this reason also the impugned order is not sustainable. The goods are not classifiable as HSD under CTH 271031930. Consequently the claim of the appellant for classification of goods as base oil under CTH 271019160 is maintained. The appellant have submitted that irrespective decision of classification they seek permission to re- export of goods. Though we have decided the classification as claimed by the appellant in their favour but as per the concession made by the appellant we allow the appellant to re-export the goods. As the goods are not classifiable as HSD as claimed by the revenue, the redemption fine and penalties imposed on the appellants are set aside - appeal allowed in part.

  ---

• 2021 (9) TMI 1257
  Classification of imported goods - screw / drag conveyors and bucket elevators - to be classifiable under CTH 84379090 or under CTH 8428? - HELD THAT:- The very same issue was analyzed by the Tribunal in the case of M/S ANNAPURNA AGRONICS MACHINERY PVT LTD VERSUS CCE ST- SONEPAT (DELHI-III) [ 2018 (12) TMI 854 - CESTAT CHANDIGARH] where it was held that the appellants have produced various technical opinions as well as the data from Customs and Central Excise Department wherein the importer as well as exporter of elevators and conveyors used specifically designed for rice milling have been classified under heading No. 8437 of the CETA. The impugned goods imported for specific use in the milling factory merits classification under CTH 8437 - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1251
  Absolute Confiscation of imported goods - import of used Digital Multifunction Printing and Copying Machines (MFDs) - restricted goods or not - hazardous waste or not - seeking benefit of reduced fine and penalty - HELD THAT:- The original adjudicating authority in the remand proceedings has totally ignored the direction of Tribunal given in its order dt. 20/12/2019. Learned Commissioner(Appeals) has also ignored the said order - in the identical circumstances, Tribunal in the case of ACCORD DIGITECH VERSUS C. C-BANGALORE [ 2020 (12) TMI 647 - CESTAT BANGALORE] has granted the benefit of reduced redemption fine and penalty. Respectfully following the decision of the Tribunal in the case of Accord Digitech, the appeals are allowed partially by reducing the redemption fine to 10% of the enhanced value and penalty to 5% of the enhanced value - appeal allowed in part.

  ---

• Insolvency & Bankruptcy

• 2021 (9) TMI 1272
  Liquidation of the Corporate Debtor - no Resolution Plan was approved by the Committee of Creditors within the CIRP period - Section 33(1)(a) of the I B Code - HELD THAT:- In the present case, it cannot be brushed aside that the Committee of Creditors had rejected the Resolution Plan in the meeting that took place on 15.11.2019. Moreover, the Corporate Insolvency Resolution Process came to an end on 15.11.2019, which date 651 days rolled by from the commencement date of insolvency on 02.02.2018 - As a matter of fact, the Resolution Applicant, on 19.11.2019 had acknowledged the rejection of its Resolution Plan by the Committee of Creditors and had prayed for the refund of Earnest Money Deposit and subsequently had requested for a deliberation / discussion with the State Bank of India for mutual Resolution of the concerns of the Bank. Apart from that, the Resolution Professional filed CA 1077/2019 on 19.11.2019 and sought for an additional 75 days to complete the CIRP process. In the present case, it is to be borne in mind that the Resolution Applicant had acknowledged the decision of the CoC in regard to the rejection of the Resolution Plan through an email dated 19.11.2019 and claimed the refund of the Earnest Money Deposit . Further, it cannot be lost sight of that the Resolution Applicant had not furnished the revised Resolution Plan including the suggested changes and instead proposed, more modifications to the commercials and term of the Resolution Plan and later withdrew its interest in any Resolution Plan. Suffice it for this Tribunal to point out that on 19.3.2020 the Resolution Applicant withdrew its interest for pursuing the Resolution Plan, perceiving that the Committee of Creditors had not approved the Resolution Plan till date of withdrawal - In the present case, indisputably, the CIRP period came to an end on 15.11.2019 and because of the direction dated 30.10.2019 issued by the Adjudicating Authority the Resolution Professional had no option but to file an IA. No. 412/2020 praying for a Liquidation Order be passed as per Section 33(1)(a) of the Code. Moreover, liberty was prayed for to withdraw an application seeking extension of CIRP period as grounds were claiming extension and holding further CoC meeting for consideration of Resolution Plan had disappeared and the CIRP period got lapsed on 15.11.2019. This Tribunal considering the facts and circumstances of the entire conspectus of the instant case in an encircling manner, bearing in mind a primordial fact that the Committee of Creditors had not approved the Resolution Plan till 15.11.2019(viz. the final day of CIRP), the CIRP period was not extended by the Adjudicating Authority on 19.03.2020 when the Resolution Applicant / Maritime Trade Corporation had withdrew its interest for pursuing the Resolution Plan, the CoC becoming Functuous Officio and the Resolution Applicant despite the State Bank of India conveying the acceptance of Plan by its authorities subject to the inclusion of changes proposed by its legal team on 07.02.2020 and the Resolution Applicant / Maritime Trade Corporation had not submitted the modified Resolution Plan etc.; comes to a consequent conclusion that in the present case, there is no approved plan of the Committee of Creditors . Appeal dismissed.

  ---

• 2021 (9) TMI 1268
  Seeking approval of Resolution Plan - section 33(1) r/w Section 60(5) of the I B Code, 2016 - HELD THAT:- Taking note of the fact that the instant Company Appeal is pending on the file of this Tribunal, keeping in mind that the Liquidation Order is dated 31.12.2019, and also considering the primordial fact that the Eighth Respondent had taken steps based on the Liquidation Order dated 31.12.2019 comes to a resultant conclusion that (i) the Prima Facie (ii) the Balance of convenience are not in favour of the grant of interim relief of stay of all further proceedings carried on by either the NCLT or by the Liquidator(including stay of E-Auction to be held on 29.9.2021 between 11.00 a.m. and 3.00 P.M. by the Liquidator in terms of Public Notices as per Public Notices (as prayed for in IA 436/2021 in TA No. 91/2021 in Comp. App.(AT)(Ins.) No. 314 of 2020) and viewed in that perspective dismisses the I.A. No. 436/2021 filed by the Applicant/Appellant, to secure the ends of justice. Application dismissed.

  ---

• 2021 (9) TMI 1246
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - violation of Principles of Natural Justice - HELD THAT:- Appellant is harping upon the fact that the reply was to the MA and not to the petition. This deserves to be rejected. If one peruses Annexure A-5, it shows that in para 1 of the Reply although the Corporate Debtor referred to Miscellaneous Application (which was already withdrawn), the Corporate Debtor in para 3 stated that the Appellant was filing this affidavit for the purpose of opposing the Company Petition. In said reply the contentions of the company petition are met for the purpose of opposing the company petition. The reply goes on to answer averments of the petition. The receipt of the loan is admitted. The debt outstanding is not disputed and the re-payments made till March, 2016 are pointed out. The fact that the Financial Creditor has obtained Recovery Certificate under Section 101 of the Maharashtra Co-operative Societies Act on 21.01.2015 is also not disputed - we discard the claim being made by the Corporate Debtor that he did not get opportunity to file reply to the petition. Violation of principles of natural justice - HELD THAT:- Once the party has appeared in the proceeding in the original forum where the further dates are given in the proceedings, and pendency of the proceeding is known to a party, it is the responsibility of the party also to keep track of the proceedings and to participate in future developments in the matter. The Corporate Debtor sought time to amicably settle the matter. It was recorded that failing settlement the matter will be heard on merits on next date of hearing and the matter came to be adjourned to 07.04.2020. The matter could not be heard on 07.04.2020 and was taken up on 24.11.2020 and the order dated 24.11.2020 shows that the Adjudicating Authority referred to hearings that took place on earlier dates and that the Corporate Debtor had filed reply. The Adjudicating Authority by way of abundant caution directed the Registry to send a court notice to the Corporate Debtor as although the Counsel for Petitioner was present nobody was present for the Corporate Debtor. Time Limitation - HELD THAT:- The Adjudicating Authority came to a right conclusion that there was a debt which was in default and the debt outstanding was within limitation - Hon ble Supreme Court referred to the judgment of Sesh Nath Singh Anr. vs. Bidyabati Sheoraphuli Co-operative Bank Ltd. Anr. , [ 2021 (3) TMI 1183 - SUPREME COURT ] to observe that IBC does not exclude the application of Section 14 or 18 or any other provision of the Limitation Act. It is quite clear that Certificate of Recovery issued would also give fresh right to recover the amounts for which the Recovery Certificate has been issued - In the present matter the Recovery Certificate was issued on 21.01.2015. Then there are undisputedly part-payments made. Thus Section 19 of Limitation Act is also helpful to Financial Creditors. The Application filed under Section 7 on 22.11.2019 cannot be said to be time barred. Appeal dismissed.

  ---

• 2021 (9) TMI 1245
  Seeking dissolution of M/s. BSM India Private Limited - voluntary liquidation - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- The Special Resolution was passed by members on 17.02.2020 after a gap of 101 days from Declaration by Directors (08.11.2019) as against requirement of 28 days as per Section 59(3)(c) of the Code. After special resolution, petition with NCLT was filed after 17 months as against requirement of 12 months. It was orally submitted by the Counsel that the reasons for delay in conducting the liquidation process and the statutory compliance U/s. 59(3)(c) was neither intentional nor deliberate. Accordingly, the delay is condoned in completing the process of liquidation. There is no legal impediment in allowing the prayer of the applicant - the Liquidator is allowed to dissolve the Company U/s. 59 of the Code and the said company is hereby dissolved with effect from the date of the present order.

  ---

• 2021 (9) TMI 1242
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors/personal Guarantor - existence of debt and dispute or not - HELD THAT:- The Guarantee of the Personal Guarantor was invoked by the bank by way of notice dated 24.08.2020 and a Demand Notice in Form B under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtor) Rules, 2019 was issued by the Financial Creditor, i.e., State Bank of India on 24.08.2020 to the Personal Guarantor in respect of the unpaid debt due from M/s. C C Constructions Limited. (Corporate Debtor) under rule 7(1) of the IBC, 2016. Counsel for the Applicant mentioned that there has been no response from the Respondent side to the demand notice - applicant in Part- III of Form-C has submitted that the Record of Default by Information Utility, M/s. National e-Governance Services Limited, recording of debt committed by the Corporate Debtor M/s. C C Constructions Limited. has also been annexed with the application. The application is complete and is admitted - moratorium declared. List the matter for further proceedings in the case on 22.09.2021.

  ---

• PMLA

• 2021 (9) TMI 1283
  Seeking grant of stay on arrest warrants - Money Laundering - non-speaking order - issuance of non-bailable warrants for the appearance of petitioners - offence punishable under Section 3 read with Section 4 of the PML Act - HELD THAT:- Without commenting upon detailed merits of the cognizance order, it would suffice to hold that the petitioners have not been able to demonstrate any prima facie case for staying the impugned order by which cognizance has been taken against them. Looking to the various pronouncements of Hon ble Supreme Court in which it has been held that severity of the offence for which a cognizance has been taken against the petitioners and other relevant factors, the trial court has discretion to issue non-bailable warrants. Keeping in mind that the cognizance has been taken for offences punishable under the PML Act against the petitioners, which is an economic offence and Hon ble Apex Court has consistently held that such offences need to be treated on a different footing. Also keeping in mind the provisions of Section 45 of the PML Act, at this stage it cannot be held that the learned trial court has committed any legal error in passing the order of issuance of non-bailable warrants. The petitioners have not been able to prima facie make out any case for staying the arrest warrants directed to be issued against them - Stay application dismissed.

  ---

• Service Tax

• 2021 (9) TMI 1282
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - permission to file claim under the correct category under the SVLDR Scheme - condonation of delay in filing application - seeking not to declare the petitioner as defaulter under SVLDR Scheme and not to disallow the benefits made available to it under the SVLDR Scheme - HELD THAT:- Section 123(a)(i) of the Scheme interalia permits eligibility of an assessee whose appeal arising out of an order-in-original is pending as of June 30, 2019, for consideration of the total amount of duty which is being disputed in the appeal. Admittedly the petitioner s appeal challenging the order in original dated March 16, 2018 was pending on the cut-off date, i.e., on June 30, 2019, as the same was dismissed by the Commissioner(Appeals) at a later date, that is, on July 9, 2019. This apart, the petitioner s application under the scheme was also considered to be appropriate as Form SVLDR-3 was generated calling upon the petitioner to deposit Rs. 40,20,877/-, the payment whereof was to be made on or before June 30, 2020, which the petitioner did not make - petitioner had inadvertently filed its declaration under SVLDR Rule 3(2)(b), i.e., amount in arrears, instead of SVLDR Rule 3(2)(a), which is under the category where the show cause notice of one or more appeals is pending as on June 30, 2019. It appears that such mistake was a bonafide mistake of having filed the SVLDR form under a wrong category. Thus, it would be in the interest of justice that an opportunity be granted to the petitioner to avail the benefit of the scheme, if any other conditions under the scheme are being fulfilled by the petitioner. Condonation of delay in filing application - HELD THAT:- The condonation of delay application was rejected by the Commissioner (Appeals) on the assumption that he had no power to condone delay after 90 days, though in fact the appeal was filed within 90 days. Considering the fact that the order-in-original dated March 16, 2018 was received by the petitioner on March 24, 2018 and the appeal was filed on June 21, 2018, which is on the 88th day, in our opinion, the Commissioner (Appeals) was not correct in rejecting the appeal as time barred. On this count, the order dated March 16, 2018 passed by the Commissioner (Appeals), would be required to be set aside and the petitioner s appeal to be restored to the file of the appellate authority. Petition allowed in part.

  ---

• 2021 (9) TMI 1274
  Refund of CENVAT Credit - cenvat credit on common input services used for providing both taxable service and exempt service - rejection on the ground that there was no identity of input services as far as direct trading and incentive trading were concerned - non-adherence to the procedure laid down under the Rules for payment/reversal - burden of prove - HELD THAT:- Since the impugned communication is a show cause notice, the burden lies heavy upon the petitioner to establish that the same is bereft of jurisdiction, as the scope of interference under Article 226 in such case is limited. The scope of examination is restricted to the question as to whether the impugned show cause notice stretches beyond the scope of remand by the CESTAT. Entitlement to credit - HELD THAT:- The issue stands decided at the level of the first Appellate Authority and hence the show cause notice purporting to re-open the question of entitlement to credit, is bad in law. It is only on the aspect of quantification that the matter has been remanded by the Tribunal and the respondent ought to have restricted himself to a verification of this aspect alone. There are two opportunities that present to the respondent. The first is the filing of an appeal in terms of Section 86(1) of the Finance Act, 1994 which provides for an appeal to be filed by a person aggrieved by an order of the first appellate authority within three months from the date of receipt of the order. The second is in terms of Section 86(4) where either the Department or an assessee who has not filed an appeal against the order of the first appellate authority may, within 45 days of receipt of notice of an appeal filed by the other party, file a memorandum of cross-objection which shall be disposed by the Appellate Tribunal as though it were an appeal presented within the time stipulated for filing of an appeal. The identity of input services stands settled and it is only on the quantification thereof that the petitioner can be called upon to respond. Thus the respondent will issue a fresh show cause notice limiting the scope of examination to the quantification of input service alones, call upon the petitioner to file a response and conclude the matter within a period of eight (8) weeks from the date of uploading of this order. Petition disposed off.

  ---

• 2021 (9) TMI 1271
  Levy of service tax - Intellectual Property Service - amount collected towards license fee for using the software provided, would fall under IPR services or not - management consultancy services - extended period of limitation - HELD THAT:- The agreement is for right to use software and the activity will not fall under the definition of Intellectual Property Right Services - the software fees have to be treated as an IPR as registered outside India. Only intangible property which is registered within India would fall under IPR service during the relevant period. The software admittedly is registered outside India - the demand under Intellectual Property Right Service cannot sustain and requires to be set aside. Management Consultancy Service - HELD THAT:- Admittedly, there is no agreement furnished by the department to establish that the appellant has received management consultancy service from M/s. Fox Conn, China. On perusal of the invoices, it is seen that the amounts are in the nature of vehicle hire charges, cost of fuel charges, hostel charges, selling expenses, meal expenses, salary to staff attending the foreign personnel etc. There is no evidence for payment of remuneration to the foreign personnel in foreign currency by the appellant. Even though the appellant might have expended huge amounts for the said foreign personnel, unless there is evidence that these amounts are paid to foreign personnel for providing management consultancy service, the demand is incorrect - There is also no evidence to prove that they have received management consultancy service or paid fees for such services so as to be liable to pay service tax under reverse charge mechanism. On this ground, the demand under Management Consultancy Service cannot sustain. Extended period of limitation - HELD THAT:- On perusal of the letter issued by department, it is seen that after verification of accounts certain objections have been raised inter alia demanding service tax under the above categories. There is no positive act of suppression of facts or willful mis-statement brought out by the department so as to invoke the extended period. Further, the appellant is called upon to pay the service tax under reverse charge mechanism for the services. The appellant would be able to avail credit of the same and the situation is entirely revenue neutral. For these reasons, we hold that the demand is time-barred. The appellant succeeds on limitation also. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1269
  CENVAT Credit - input services - Job Charges - fixed and variable charges - Supply of Tangible Good Service - suppression of facts or not - invocation of extended period of limitation - HELD THAT:- The appellant have actually entered into an agreement for manufacture on job work basis. Evidently, as per the agreement the job charges have been spread over in two tier billing i.e. fixed charges and variable charges. The reason being that in summer season there is more demand of packed water and beverages, whereas in other months, the demand is lower. Keeping in view the constant availability of funds to meet the fixed charges and finance charges and for variable cost towards job charges, two tier billing has been provided, to the appellant job worker to meet the financial obligation round the year. Admittedly, appellant has paid the excise duty on the goods manufactured and cleared for the principal manufacturer, as is evident from the copy of excise returns filed before the Tribunal. The job charges received by the appellant have formed part of the cost of manufacture, which have suffered excise duty. Accordingly, service tax cannot be levied on the fixed components of job charges. There is no nature of pure civil construction service in the facts and circumstances and the facts stated by the appellant and as taken by audit team are undisputed - erection of storage tank and/or pipeline for carrying the concentrate or beverage for processing from one machinery or the other are essential part of the manufacturing process and accordingly the input credit is rightly taken by the appellant. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1252
  Refund of service tax - input services - port services - refund rejected on the ground that the invoices in regard to port services have been issued by M/s. Natvar Parekh Industries and not by the port or any person authorized by the port - N/N. 41/2007-S.T. dated 06.10.2007 - amendment brought forth in the definition of taxable service contained in Section 65(105)(zn) of the Finance Act, 1994 with effect from 01.07.2010 - HELD THAT:- It can be seen that prior to 30.06.2010, the definition of Port Services was such that only services rendered by a port or any person authorized by such port would come within the purview of taxable service. However, while giving the description of port services in Notification No. 41/2007-S.T. (supra), this description has not been adopted. The description of taxable services given in the Notification in regard to Port Services is services provided for export of said goods . The requirement that the services have to be provided by a port or any person authorized by the port has been included in the description of port service in the subsequent Notification No. 17/2009-S.T. dated 07.07.2009. The rejection of refund claim is with respect to Service Tax paid on Port Services and not Customs House Agent services. Though the invoice is not issued by the port, as per Sl. No. 2 of the Notification No. 41/2007-S.T., it is not required to establish that the services were rendered by the port or any person authorized by the port during the relevant period and this condition was included only in the subsequent Notification i.e., Notification No. 17/2009-S.T. The issue on merits is held in favour of the assessee - the rejection of refund on Port services cannot sustain - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1247
  Levy of penalty u/s 78A of FA - tax not deposited - case of appellant is that the entire liability towards the impugned demand stands discharged by the Company under SVLDR Scheme - collusion of facts - HELD THAT:- The penalty under the Section is imposed for the same reasons as it is being imposed under Section 78 but for the similar offence being committed by the Director of the concerned Company - perusal of the section makes it abundantly clear that the penalty under these Sections can be imposed, if and only if, there has been an evasion of tax that too with utmost intent to not to pay the said tax. Reverting to the facts of the present case, the period of demand is from April 2013 to June 2017. The appellant was appointed as Director on 1st December, 2016. This apparent fact is sufficient to falsify any involvement as that of intent/knowledge of the appellant being the Director about tax evasion by the appellant for the period from April, 2013 to November, 2016. For the remaining period, no doubt, there is an admission of the appellant that the impugned demand was not paid at the relevant time, but the admission is rather more in the form of acknowledgement that the non-payment was due to unavoidable circumstances as that of grave medical illness of the spouse of the appellant who finally succumbed to that illness on 24th June, 2017. This fact has been brought to the notice of the Department since the time the Show Cause Notice has been issued but the same has not at all been considered by the Adjudicating Authority below. The authority has miserably failed to distinguish the nonpayment of tax for the reasons beyond the control of the assessee from the situation where the assessee has failed to deposit tax with the sole intention to not to deposit the same. Section 78 / 78A can be attracted only in the later situation - The financial statements in the form of balance-sheets, tax returns etc. as placed on record bear his signature as the person authorized for the Company. None of those documents bear the signature of the appellant. Department has not produced any such documents for a subsequent period where the appellant would have been a signatory to such returns. Mere oral submission of Mr. Amar Singh Gautam that he was acting under the guidance of the appellant cannot be fully sufficient for holding at least that the appellant had the knowledge and the intent to not to make the impugned payment. Fraud and collusion or not - HELD THAT:- It is evident that the intent to evade duty is build into these words. So far as the misstatement or suppression is concerned, they are clearly qualified by the word wilful preceding the words mis-statement or suppression of facts which again means intent to evade duty. Apparently, there is no deliberate intent on part of appellant to not to pay the duty. The Commissioner has erred while imposing penalty upon the appellant while ignoring the unavoidable circumstances as were explained to be reasons for not depositing duty in time - appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (9) TMI 1277
  Levy of penalty u/r 26 of the Central Excise (No.2) Rule 2001 / Central Excise Rules 2002 read with Rule 209A of the Central Excise Rules 1944 - no evidence or partly relevant or partly irrelevant evidence - HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CENTRAL EXCISE THANE - II COMMISSIONERATE, MUMBAI VERSUS KAMAL SINGHANIA, DIRECTOR OF M/S. USHA FASHIONS PVT. LTD. M/S. USHA FASHIONS PVT. LTD., M/S. S.P. THAKKAR TRANSPORT COMPANY, [ 2021 (9) TMI 1107 - BOMBAY HIGH COURT] and the answer is given in affirmative. Appeal dismissed.

  ---

• 2021 (9) TMI 1264
  Levy of Interest on reversed CENVAT credits for the extended period - violation of Rule 4(5)(a) of CENVAT Credit Rules, 2004 - suppression of facts or not - extended period of limitation - HELD THAT:- Show-cause cum demand notice was issued on 06.10.2016 for recovery of credit of Rs. 29,41,851/- against reversal of credits of Rs. 31,39,532/- made on 23.02.2016. It is needless to mention here that learned Commissioner (Appeals) had treated the other units as the sister concerns of the appellant in which the capital goods were installed (para 7.1 and 7.3 of his order). However, he has confirmed the interest component as to him it is a civil liability under Section 11AA of the Central Excise Act and the same is unrelated to the intention of the appellant to evade payment of tax, though he found imposition of penalty as harsh punishment unless there is clear evidence of fraud, mis-statement or suppression of fact etc. with an intention to evade payment of Central Excise duty and he was satisfied that appellant had accepted the mistake and reversed the credit (duty). Such a finding on the learned Commissioner (Appeals) attained finality as no appeal is preferred by the respondent-revenue department against such order, which learned Authorised Representative submits to be not appealable as covered under litigation policy. It is a settled principle of law that if the assessee feels it a duty to pay or discharge tax liability of any past period, there is no prohibition to do so but such a liability can never be realised through the process of law unless the statute authorised the respondent-department to travel beyond the stipulated period as liability of the person to pay duty for the extended period would arise only when his/her intention to evade payment of duty is established - Be that as it may, in the instant case, the issue is reversal of credits which appellant had made immediately upon bringing the fact to its knowledge and much before issue of show-cause notice. Order imposing interest on reversed CENVAT credit is here by set aside - appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1261
  CENVAT Credit - time limitation - entitlement for Credit beyond six months from the date of issue of invoice in terms of N/N. 21/2014-CE (N.T.) dated 11.07.2014 which was substituted by amendment N/N. 06/2015-C.E. (N.T.) dated 01st March, 2015 - HELD THAT:- This issue has been considered in various judgments and it was interpreted that all the invoices issued prior to the issuance of the notification dated 11.07.2014, the notification shall not apply consequently, there is no time limit for taking credit in respect of those invoices. In the present case, most of the invoices were issued after the date of notification, since the time limit has been extended from six months to one year by substitution in the Notification No.21/2014-CE (N.T.) dated 11.07.2014, the time limit shall be taken as one year and as per the submission of learned counsel, the invoices issued after the date of notification dated 11.07.2014 credit was taken within one year. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 1260
  Clandestine removal - removal of input as such in the guise of Waste Scrap - removal of Film grade granules as such clandestinely which is not capable of being used in the manufacture of final product - shortage of stock - HELD THAT:- The demand was raised on the removal of granules as such on the basis of Annexure C on the ground that the granules are of film grade which cannot be used in the manufacture of the final product of the appellant - there is also evidence i.e. Diaries recovered from the appellant s office on the basis of those diaries demand was raised taking the evidence as invoice of waste and scrap which was prepared for removal of granules under the guise of waste and scrap. Therefore, there is a force in the submission of the learned counsel that once again demand of the same removal was made showing in Annexure C for which the demand was computed in Annexure E1. However, there is a duplication of demand in respect of 10 Invoices which are appearing in Annexure A as well as Annexure C since the department has made out the demand even for Annexure C, considering Annexure B therefore, it is implied that the Annexure A has been considered in Annexure B that is the reason that no separate demand was raised in Annexure A. The 10 invoices which are common in Annexure A C demand in respect of those invoices needs to be reduced from the total demand of Rs. 13,31,112/-. As regard the remaining demand of Rs. 4,41,142/-, it is found that the representative of the appellant have given a categorical statement that the film grade granules are not used in the manufacture of their final product and rather the film grade granule was not received in the factory therefore, it is clear that it was sold directly. This statement has not been retracted nor the appellant has cross-examined the witness. Therefore, on the basis of this statement it is clear that the granules for which Cenvat amount of Rs. 4,41,142/- the same quantity was not used in the manufacture therefore, Cenvat Credit on this ground is not available to the appellant. Hence, the demand of Rs. 4,41,142/-, interest and penalty is upheld. Appeal allowed in part.

  ---

• 2021 (9) TMI 1250
  Recovery of MODVAT Credit - capital goods - depreciation on the invoice value under Section 32 of Income Tax Act - HELD THAT:- It cannot be disputed that appellant have claimed depreciation of the value of the capital goods which represent the specified duty paid by them on these capital goods and have also claimed the modvat credit of the same. From the plain reading of the Rule 57 R (5) as it existed from 1994 onwards, it is clear that the pre requisite for claiming the modvat credit of the specified duty paid on capital goods, appellants should have not claimed the depreciation of that part of the value of the capital goods which represented the specified duty. Having claimed the depreciation under Section 32 of the Income Tax Act, 1962 of the value representing the specified duty, appellants are not allowed the modvat credit of that amount. Appellants have sought to justify their action by taking recourse to the accounting practice. When the rules clearly provide that amount claimed as modvat credit should not be part of the value on which depreciation is claimed appellants are barred. It is settled principle in law that when statue provides a manner for doing some things then that is the only manner in which it is to be done and all other manner of doing the same barred. Since the appellants have taken the inadmissible credit, the demand of interest in respect of the inadmissible credit is justified in terms of provisions of. It is now settled law that interest under Finance Act, 1994 is statutory liability put on the person who has unduly withheld the amounts due to government - Further when it is held that appellants by way of making misdeclaration have availed of the modvat credit which was not admissible to them the penalty imposed on them is justified. Appeal dismissed - decided against appellant.

  ---