TMI Tax Updates - e-Newsletter
October 17, 2018

Case Laws in this Newsletter:

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

TMI SMS

• SC upholds the time limitation for claiming ITC i.e 90 days from the date of purchase or before the end of the FY whichever is later

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Articles

• MAINTAINABILITY OF ADVANCE RULING APPLICATIONS
• Power sector - Income exemption under 80IA, Income Tax Act

News

• Auction for Sale (Re-issue) of Government Stocks

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• INDIA’S FOREIGN TRADE: September 2018

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Circulars / Instructions / Orders

Customs

• Instruction No. 17/2018-Customs - dated 15-10-2018
  Guidelines for handling and storage of valuable goods that are seized/confiscated by the Department.

Highlights / Catch Notes

GST

• Correction of errors in the TRAN-1 declarations - migration to GST Regime - transitional provisions - There is no scope for directing the respondents to allow the petitioner to correct the TRAN1 declaration already made.
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Income Tax

• Allowing mark to market loss on account of outstanding forward contract liability - the forward contract transactions so entered during the course of regular business and not a speculation transaction.
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• Exemption 10(37) - acquisition of the urban agricultural land as a compulsory acquisition - - merely because the sale price was fixed through a negotiated settlement, the character of acquisition would still remain compulsory.
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• Allowability of deduction u/s 80P - denial of claim by CIT-A solely on the ground that the assessee had not made a claim in the original or in the revised return of income - such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing officer.
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• Addition on account of share capital/premium received - The income/losses declared by the investor companies is not a sole criterion to examine the creditworthiness of the shareholders.
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• TDS u/s 194C - genuineness of transactions and the payments made for booking/hiring truck - If the truck owners make wrong statement then the revenue authorities are free to take action against them as per provisions of law because the details on Form 15I received by the assessee are furnished to the CIT
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• Reopening of assessment u/s 148 - rejection of objections raised by the assessee - the reopening of the assessment in the writ petitions with reference to Sections 147 to 153 is in accordance with law and there is no infirmity, as such.
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• Reopening of assessment u/s 148 - “Change of opinion” - The writ petitioner, being a 'Company', is duty bound to respond to the notice to prove their innocence or otherwise.
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• Scope of Exemption u/s 10(20) - Municipal Committee - Scheme of the Rajasthan Urban Improvement Act, 1959 does not permit acceptance of the contention of the appellant assessee that Urban Improvement Trust is a Municipal Committee within the meaning of Section 10(20) Explanation (iii).
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Customs

• Guidelines for handling and storage of valuable goods that are seized/confiscated by the Department.
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• Project Import - Finalization of provisional assessment - In the absence of any statutory time limit fixed for making the provisional assessment and when the second respondent has issued the impugned communication and called upon the petitioner only to give their explanation, no interference is required.
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Central Excise

• Refund - Since pursuant to the favorable adjudication order dated 24.12.2010, the appellant had filed the refund claim on 25.02.2011, such claim application cannot be rejected on the ground that the same is barred by limitation of time
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• Method of Valuation - Captive consumption - Since the goods are being used by the appellant assessee himself, it is not necessary that same need to be used only for the production and manufacture of other articles.
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• In respect of branded pickles put up in unit container cleared and sold by the appellant during the period 28.02.2005to 28.02.2006 are liable to duty @ 16% instead of 9%
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• Valuation - clearances of waste materials namely cinders to Dalmia Refractories without payment of duty - Department took the view that clearances of cinders are to be subjected to duty at tariff rate - the view is not correct - demand of duty cannot sustain.
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• CENVAT credit - input service - insurance premium paid towards Employees Compensation Insurance Policy - the said service is integrally part of the manufacturing activity and they are entitled to avail the cenvat credit on the said services
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• CENVAT credit - input services or not - GTA - Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent.
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• Refund of education cess and the higher education cess - Interpretation of statute - area based exemption availed - revenue directed to refund the education cess and the higher education cess paid by the petitioner from January, 2008 to December, 2015
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VAT

• Validity of assessment order - granting of personal hearing is mandatory and the same shall invariably be afforded to the dealer irrespective of whether the dealer has opted for such personal hearing or not.
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• Validity of time limitation for claiming input tax credit - claim to be made within 90 days from the date of purchase or before the end of the financial year whichever is later - Section 19(11) of TNVAT neither can be said to be arbitrary nor can be said to violate the right guaranteed to the dealer under Article 19(1) (g) of the Constitution
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Case Laws:

• GST

• 2018 (10) TMI 876
  Correction of errors in the TRAN-1 declarations - migration to GST Regime - transitional provisions - Three transactions which were in pipeline when the GST was brought into force, due to oversight, were not included in such declaration. - Held that:- There is no scope for directing the respondents to allow the petitioner to correct the TRAN1 declaration already made. We may recall, such time limit initially provided in the rules was extended from time to time and lastly upto 27.12.2017. Further, limited extension has been granted to cover cases where genuine hardships were felt in uploading said declarations due to technical glitches. The case of Bombay High Court in case of O/E/N India Ltd. & Anr. [2018 (10) TMI 199 - BOMBAY HIGH COURT] was very different. The petitioner had pointed out a typographical error in filling up figure of unused CENVAT credit available, the Court was of the opinion that said mere typographical error should not be the governing factor for deciding substantive rights. The Court primafacie felt that section 172 of the Act which enables the Government to take necessary decision to avoid hardships could be utilized. The present situation is entirely different. Petition dismissed.

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• 2018 (10) TMI 875
  Release of detained goods - allegation is that the same were not accompanied by proper documents - Held that:- The present petition is disposed of permitting the State to withdraw the order passed under Section 130 of the Act, confiscating the goods - In case the petitioner fails to deposit the amount of tax and penalty, if levied in terms of provisions of Section 129 of the Act, needless to add that the State shall be at liberty to proceed further in accordance with law.

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• Income Tax

• 2018 (10) TMI 874
  Scope of Exemption u/s 10(20) - Municipal Committee within the meaning of Explanation to Section 10(20) - Urban Improvement Trust constituted under the Rajasthan Urban Improvement Act, 1959 - local authority within the meaning of Explanation to Section 10(20) - Held that:- The Municipal Board, Kota performs its functions, in areas where Municipal Board still exists. There is no reason to accept that Urban Improvement Trust is a Municipal Committee within the meaning of Section 10(20) Explanation Clause (iii). Coming back to Section 105, which provides for ultimate dissolution of Trust and transfer of its assets and liabilities to the Municipal Board, this provision does not in any manner improve the case of the assessee. When the Trust is dissolved or at dissolution, properties and funds and dues vested in or realisable by the Trust shall vest in and be realisable by the Municipal Board, which is a provision for different purpose and object. The above provision does not support the contention that Improvement Trust is a Municipal Committee as referred to in Clause (iii) of Explanation to Section 10(20). We, thus, are of the view that Scheme of the Rajasthan Urban Improvement Act, 1959 does not permit acceptance of the contention of the appellant assessee that Urban Improvement Trust is a Municipal Committee within the meaning of Section 10(20) Explanation (iii). The purpose and object for expression “Municipal Committee” used in Section 10(20) Explanation (iii) has been explained, as already noticed above, by this Court’s judgment in Agricultural Produce Market Committee Narela, Delhi [2008 (8) TMI 8 - SUPREME COURT].

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• 2018 (10) TMI 873
  TPA - Comparable selection - Held that:- In a detailed order passed by this court, it has been held that there is a difference between services and business of comparable like Motilal Oswal Investment Advisors Pvt. Ltd. and the assessee. The Division Bench held that the activities of Motilal Oswal Investment Advisors Pvt. Ltd. were functionally incomparable to the activities of investment advisory services rendered by the assessee to its associate enterprise. Here as well, similar is the factual position. Once the factual findings rendered in the impugned order are based on the materials before the tribunal, then, it is not permissible for us to re-appraise and re-appreciate the same and arrive at a different conclusion. No perversity has been demonstrated in the view taken by the tribunal nor is it vitiated by an error of law apparent on the face of the record. Consequently, none of the questions proposed before us can be treated as substantial questions of law.

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• 2018 (10) TMI 872
  Reopening of assessment u/s 148 - “Change of opinion” - completed assessments are sought to be reopened after a lapse of six years - receipt of share capital with share premium - high value of share premium - sufficiency of the reasons and the modus operandi of the investigation - Held that:- The writ petitioner, being a 'Company', is duty bound to respond to the notice to prove their innocence or otherwise. This Court is of an undoubted opinion that if the AO has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. It is however, to be noted that the conditions stipulated in the Act must be fulfilled if the case falls within the ambit of Section 147. There are some materials on record and the informations with the Department of Income Tax, the reopening of the assessment in the writ petition with reference to Sections 147 to 153 of the Act, is in accordance with law and there is no infirmity, as such. Writ petitioner is bound to respond to the AO for the purpose of arriving a conclusion and for taking a decision. In the event of passing an order of assessment or reassessment, then the writ petitioner is entitled to prefer an appeal contemplated under the provisions of the Act. Based on the preliminary informations gathered by the AO, the notice issued for the purpose of reopening of the assessment would not provide a cause of action for filing of the present writ petition and this Court has no hesitation in holding that the writ petition is not only premature, even on merits the writ petitioner has failed to establish any acceptable reason to grant the relief, as such, sought for. This being the principles to be followed, the writ petitioner has miserably failed to establish any legally acceptable ground for the purpose of interfering with the actions initiated by the respondent by invoking the provisions of the Income Tax Act, 1961. Thus, there is no infirmity as such, in respect of the initiation of the proceedings for reopening of the assessment under the Act and the writ petition is devoid of merits. The respondent is empowered to proceed further in accordance with law. Accordingly, the writ petition stands dismissed.

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• 2018 (10) TMI 871
  Reopening of assessment u/s 148 - change of opinion - lapse of six and half years - rejection of objections raised by the assessee - It is contended that the respondents had not considered the objections raised by the writ petiioner. An order of rejection has been issued mechanically and without considering the legal grounds raised by the writ petitioner. - Claim of excessive depreciation on licence fee Held that:- Mere issuance of notice cannot be construed as a final order. Initiation of the proceedings are to be construed as informations to the Assessee and can never be concluded as a final proceedings. - Thus, the issuance of notice is an information provided to the Assessee, enabling him to avail of all further opportunities contemplated under the Statutes. Thus, the Court cannot come to the conclusion that non quoting of the reasons by the Assessing Officer in the impugned notice will vitiate the entire proceedings. The writ petitioner, being a Company, is duty bound to respond to the notice to prove its innocence or otherwise. This Court is of an undoubted opinion that if the AO has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. It is however, to be noted that the conditions stipulated in the Act must be fulfilled if the case falls within the ambit of Section 147. Considering the fact that there are some materials on record and the informations with the Department of Income Tax, the reopening of the assessment in the writ petitions with reference to Sections 147 to 153 is in accordance with law and there is no infirmity, as such. Thus, the writ petitioner is bound to respond to the Assessing Officer for the purpose of arriving a conclusion and for taking a decision. In the event of passing an order of assessment or reassessment, then the writ petitioner is entitled to prefer an appeal contemplated under the provisions of the Act. Contrarily, based on the preliminary informations gathered by the AO, the notice issued for the purpose of reopening of the assessment would not provide a cause of action for filing of the present writ petitions and this Court has no hesitation in holding that the writ petitions are not only premature, even on merits the writ petitioner has failed to establish any acceptable reason to grant the relief, as such, sought for. This being the principles to be followed, the writ petitioner has miserably failed to establish any legally acceptable ground for the purpose of interfering with the actions initiated by the respondents by invoking the provisions of the Income Tax Act, 1961. Thus, there is no infirmity as such, in respect of the initiation of the proceedings for reopening of the assessment under the Act and the writ petitions are devoid of merits.

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• 2018 (10) TMI 870
  Cancellation of registration u/s 12AA(3) - proof of charitable activities - Held that:- On the basis of the evidence and the authorities cited before the adjudicating bodies below, we say that the respondent revenue has not been able to establish the case so as to warrant cancellation of the registration of the appellant trust under section 12AA(3) of the Act. The respondent also has not been able to prove any complicity of the appellant trust in any illegal, immoral or irregular activity of the donors. The order of cancellation of the registration of the trust is set side. The respondent is directed to restore its registration within three weeks of communication of this order.However, this will not bar any action against the appellant in respect of any future activities. - decided in favour of assessee.

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• 2018 (10) TMI 869
  Addition u/s 40A - cash payment exceeding permissible limit - Held that:- The Rule relevant at the time, namely Rule 6 (DD) of the Income Tax Rules, 1962 would enable the Assessee to urge that the exceptional or unavoidable circumstances led to payment made in cash. However, the reliance was placed on the District Supply Officer's order and which does not mandate any mode of payment either in cash or by cheque. It only says that the essential commodity should reach ration shop holders on making payment and within three days thereof. Beyond that, it can never override the stipulation in the I. T. Act. Such is the understanding of both the First Appellate Authority as also the Tribunal. In fact, the First Appellate Authority has rendered a detailed finding of fact as to how the huge cash payment has been made by the Assessee who claims to be an Agriculturalist and his whole agricultural income is exempted from I. T. Act. Additionally, he is a dealer but at or near Solapur this Assessee's ration shop was located. There were banking channels available even when supplies have been effected from the remote corner of Maharashtra. It is in these circumstances that there is no justification to invoke the proviso are the concurrent findings of fact. These findings of fact are based on the material produced on record. They cannot be said to be vitiated by perversity or error of law apparent on the face of the record - Decided against assessee.

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• 2018 (10) TMI 868
  Amounts in the hands of the Trusts as assessed to payment of taxes under the Income Tax Act, 1961 - Held that:- Once the two affidavits are taken on record and they categorically say that there are no assessments pending insofar as Respondent Nos.2,3 and 4 are concerned, no writ be issued. The Petitioners have their remedies and they can approach the Competent Court / Forum and seek directions to the Official Liquidator with regard to disbursement of the amounts. They can make this application after the Official Liquidator spells out his stand on oath before us. Surely the writ Petitioners cannot seek a mandamus insofar as these three Trusts are concerned. They are not holding any amounts much less public funds in that sense. All the more, therefore, we are not inclined to keep this Petition pending. It is disposed off in the light of the stand taken by the Income Tax Department (Respondent Nos. 1 and 5). As far as the reliefs against Respondent Nos.2,3 and 4 are concerned, in terms of the statements made on oath by the Official Liquidator, liberty is reserved to the Petitioners to adopt appropriate proceedings and before Competent Forum / Court. Writ Petition is disposed off in the above terms.

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• 2018 (10) TMI 867
  Disallowance u/s 14A - assessee had earned dividend income - Held that:- Contention of the appellant-assessee that dividend income is not "exempt" income for the purpose of disallowance under Section 14A of the Income Tax Act, 1961 is a stale issue, which has already been answered in several cases We would clarify that the Assessing Officer while examining the question of disallowance under Section 14A would take into consideration all contentions and pleas of the appellant-assessee. Both the Assessing Officer and the appellant-assessee are bound by the ratio in Godrej and Boyce Manufacturing Company Ltd. (2017 (5) TMI 403 - SUPREME COURT OF INDIA) and Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT OF INDIA]

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• 2018 (10) TMI 866
  Addition u/s. 68 of customer’s Advances received against booking of motor cycles - Held that:- At the time of hearing before us, the Ld. AR of the assessee brought to our notice that the books of account duly audited by assessee has not been rejected by the AO and the AO has made the ad hoc disallowance u/s. 68 of the Act, which is arbitrary exercise of power and has to be deleted. Moreover, it has been brought to our notice that in assessee’s own case the Tribunal’s order for AY 2010-11 [2015 (10) TMI 2181 - ITAT KOLKATA] wherein the AO made similar addition u/s. 68 of the Act and the said addition was deleted by the Tribunal. This action of the Tribunal has been upheld by the Hon’ble jurisdictional High Court [2016 (6) TMI 115 - CALCUTTA HIGH COURT]. The action of the Ld. CIT(A) cannot be sustained. We also note that in this case, the claim of the assessee is ₹ 3,69,74,806/- whereas the AO has disbelieved ₹ 60,00,000/- which is an ad hoc disallowance without rejecting the audited books of account which is an arbitrary exercise of power which action of the AO/Ld. CIT(A) cannot be countenanced. - Decided in favour of assessee.

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• 2018 (10) TMI 865
  Capital Gain on compulsory acquisition of urban Agricultural Land - Whether interest awarded u/s.28 of the Act of 1894 is akin to compensation and chargeable to tax u/s.45(5) of the Act or under the head “Income from other sources” u/s.57(iv) read with Sec.56(2)(viii) and 145A(b)? - Held that:- Interest under section 28 of the Act of 1894 is an accretion to compensation and forms part of the compensation and, therefore, exigible to tax under section 45(5). Referring on decision of Hon’ble Supreme Court in the case of CIT v. Ghanshyam (HUF)[2009 (7) TMI 12 - SUPREME COURT], wherein it was held that interest under section 28 of the Act of 1894 is part of the amount of compensation whereas interest u/s 34 thereof is only for delay in making payment after the compensation amount is determined. Interest under section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under section 34. Allowing exemption u/s. 10(37) on the interest received by the assessee u/s. 28 of the Land Acquisition Act, 1894. We find no grounds to interfere with the impugned orders of the CIT(Appeals). Appeal of the revenue is dismissed.

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• 2018 (10) TMI 864
  Penalty levied u/s. 271(1)(c) - order imposing penalty does not contain the specific charge against the assessee - defective notice - Held that:- As decided in case of DR. MURARI MOHAN KOLEY [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] we find that there was no specific charge against the assessee in the notice. Revenue has missed out their opportunity to subject the assessee to the penalty proceeding by not issuing a proper notice. No specific case has been made out by the Revenue as to why the matter should be remanded except that the assessee had not participated properly in the assessment proceedings but for that reason best judgment assessment has been made and the income, which had escaped assessment has been added to the income of the assessee. - decided against revenue

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• 2018 (10) TMI 863
  Addition u/s 69A - unexplained cash balance - Held that:- We find the assessee, during the course of assessment proceedings, has shown opening cash balance of ₹ 13,48,852/- and the same has not been disputed by the Assessing Officer. We further find that the Assessing Officer has not considered the sale proceeds of the two properties which were deposited in the bank account as argued by the assessee. Further, the rectification application filed by the assessee u/s 154 is still pending. It is also an admitted fact that the assessee has given opening cash balance of ₹ 12,57,796/- as against ₹ 13,48,852/- given at the time of assessment proceedings. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate his case - Appeal filed by the assessee is allowed for statistical purposes.

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• 2018 (10) TMI 862
  Assessment u/s 153A - compensation received represents the investments which are not recorded in the books of account of the assessee and, therefore, are hit by the provisions of section 69B - Held that:- Since the addition made by the Assessing Officer is also based on the same agreement which was found from the premises of M/s Aarti Infrastructure & Buildcon Ltd. and since the Tribunal after considering the various submissions made by both the sides has dismissed the appeal filed by the Revenue on this issue by holding that the excel sheet containing in the seized Pendrive against the amount of ₹ 12,13,11,005/-, the word stated was “cost” and not the “sale value’ of the land and that in the agreement dated 01.04.2006 nowhere it was stated that the amount of ₹ 10,33,11,005/- receivable from Suncity Project (P) Ltd. was against the sale value of land in question, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the ld. CIT(A) in deleting the addition for the year under consideration in the hands of the assessee. Accordingly, the order of the ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

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• 2018 (10) TMI 861
  Purchases disallowance - Held that:- We find no merit in the instant argument as the Assessing Officer himself has made it clear in his remand report dated 25.05.2016 (supra) that assessee successfully verified the relevant purchase vouchers with the originals. He appears to have concluded that only vouchers of ₹2,99,461/- and tools amounting to ₹1,40,200/- could not be produced or were found to have been claimed as damaged / scrap. We conclude in these facts that the Revenue can hardly be held to be aggrieved against the CIT(A)’s findings since the AO has himself confirmed the impugned purchase disallowance to the extent of ₹4,39,661/- only during remand proceedings. We accordingly uphold the CIT(A)’s findings granting part relief to the assessee with a rider that same shall not be treated as a precedent in any other case. - Decided in favour of assessee.

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• 2018 (10) TMI 860
  Levy of penalty u/s 271(l)(c) - non-striking off of the inappropriate words - Sustainable of penalty levied u/s 271(1)(c) when the inappropriate words in the notice issued u/s 274 r.w.s. 271 of the Act have not been struck off - Held that:- A perusal of the notice issued u/s 274 r.w.s. 271 dated 28.11.2011 shows that the inappropriate words in the said notice have not been struck off and it is a printed notice. Even the last line of the said notice only speaks of Section 271 and does not even mention of section 271(1)(c) of the I.T. Act. The inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR has relied on various decisions to the proposition that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, all these decisions are of non-jurisdictional High Court decisions. - Decided in favour of assessee.

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• 2018 (10) TMI 859
  TDS u/s 194J - Non-deduction of TDS @ 10% on pollution control expenses payments made in the relevant accounting period - Held that:- This tribunal’s decision in Hindustan Aeronautics Ltd. vs. ITO [2008 (3) TMI 408 - ITAT BANGALORE-A] holds that subject-matter of the contract in these circumstances is of equipment purchase only. We take into account all the above narrated facts in light of foregoing judicial precedent to conclude that assessee had made the impugned payment for purchased of its air pollution control equipments which has been wrongly taken as fee for technical service requiring TDS deduction u/s 194J r.w.s 9(1)(vii) Explanation-2 of the Act. We accordingly direct the Assessing Officer to delete the impugned demand. The assessee succeeds in its former substantive ground. TDS u/s 194C in the nature of contractual payments - Held that:- Madhu Mehta vs. DCIT [2016 (4) TMI 524 - ITAT MUMBAI] mere reimbursement payments in the absence of any income or profit element embedded therein do not attract TDS liability. It has come on record that the AO had also not followed tribunal’s decision applying CBDT’s circular No.723 instead of Circular No.715 (supra) in violation of settled judicial discipline of binding precedents in absence of any judicial precedent to the contrary. We take into account all these facts and settled legal position in light of voluminous documentary evidence that the AO has erred in treating the instant taxpayer to be an assessee in default u/s 201(1) of the Act. We accordingly accept assessee’s latter substantive ground to reverse the Assessing Officer’s action in entirety.

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• 2018 (10) TMI 858
  Addition u/s 68 unexplained cash credits - share subscription amounts received - identity, genuineness and creditworthiness - Held that:- AO(s) made u/s 68 unexplained cash credits additions of share premium in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be accepted as genuine in respective investors entities’ end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. DR fails to dispute that the same very amount cannot be added twice in payees and recipients’ hands u/s 68 of the Act. No reason to accept Revenue’s instant former substantive ground. We affirm CIT(A)’s findings under challenge qua the instant former issue. Treatment of rental income derived from its warehouse as income form house property instead of business income - Held that:- Respectfully following the decision of the Hon’ble Supreme Court in the case of Chennai Properties [2015 (5) TMI 46 - SUPREME COURT], we hold that the CIT-A had rightly directed the AO to treat the warehouse rentals as income from business and consequentially allow the expenditure claimed in the return as business expenditure.

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• 2018 (10) TMI 857
  TDS u/s 194C - genuineness of transactions and the payments made for booking/hiring truck - additions/disallowance u/s 40(a)(ia) on account of non deduction of tax at source - Held that:- When on the basis of the record it is not disputed that the requirements of further proviso were fulfilled, the assessee was not required to make any deduction at source on the payments made to the sub-contractors. If that be our conclusion, application of section 40(a)(ia) would not arise. Once the condition of further proviso of Section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. Examining the facts of the instant appeal we find that the assessee received Form 15I from the truck owner namely Shri Kishorilal Birla on various dates in which detail of only one truck was mentioned. The conditions provided in further proviso of 194C(3) of the Act was duly complied as Form 15I was received by the assessee from the truck owner who was stated to be a owner of not more than two goods carriers. Due to this reason the assessee did not deduct tax at source accepting the details provided in Form 15I as genuine. It is true that Shri Kishorilal Birla owned more than two trucks but for the wrong statement given by him in Form 15I the assessee cannot be penalized. The assessee being engaged in transport business and come across with hundreds of truck owners and at the time of payment when Form No.15I is received he cannot just raise doubts about the genuineness of the details mentioned therein. If the truck owners make wrong statement then the revenue authorities are free to take action against them as per provisions of law because the details on Form 15I received by the assessee are furnished to the Commissioner of Income Tax within whose area of jurisdiction the office of the contractor is situated. Thus following the Hon'ble High Court of Gujarat in the case of CIT Vs Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] are of the considered view that no disallowance was called for u/s 40(a)(ia) - decided in favour of assessee.

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• 2018 (10) TMI 856
  Penalty u/s 271(1)(c) - addition for bogus purchase - Held that:- The instant appeal before us relates to penalty levied on the alleged addition of ₹ 21,64,100/-. The basis of calculating the penalty is the alleged addition. As Co-ordinate bench has deleted the addition to the extent of 75% of the alleged bogus purchases and the remaining addition is only at ₹ 5,41,025. We are of the considered view that the alleged penalty of ₹ 6,68,710/- also needs to be scaled down to 25% of the impugned penalty. We therefore in the given facts and circumstances of the case direct the Assessing Officer to levy the penalty at ₹ 1,67,178/- (being 25% of the penalty of ₹ 6,68,710/-).

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• 2018 (10) TMI 855
  Addition on account of share capital/premium received - unexplained share Premium Received by the assessee - unexplained unsecured loans received by the assessee - Held that:- After pointing out all these defects, CIT(A) directed the AO to file its remand report. On perusal of the remand report, we find that none of the above defects, stand meet out in the remand report. AO has only referred to some ITI report stating that none of the four companies were found in existence. The remand report further categorically speaks that the Assessing Officer needs 30 days’ more time to conduct deep enquiry from the AO of various companies regarding the transactions made, but the CIT(A) in the impugned order sustained the addition, without giving any further time to the AO sought for making proper enquiries. Such conclusion of the CIT(A), in our considered opinion, is not sustainable, which appears to have been reached on the basis of some alleged enquiries in other cases or with reference to the general statement of Shri Tarun Goel. CIT(A) appears to have stressed on the fact that the impugned share holders has shown meager income in their return of income. The income/losses declared by the investor companies is not a sole criterion to examine the creditworthiness of the shareholders. None of the authorities below have brought any material on record to falsify the fund flow shown in the bank statements of creditors filed by the assessee. Disallowance u/s. 24(a) - Held that:- The averment of the assessee has been that it was due to some calculation error at the end of AO. CIT(A) has also not given any cogent reasoning on this issue. AO is directed to verify the claim of assessee and to give benefit thereof, if found admissible under law.

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• 2018 (10) TMI 854
  Disallowance on account of Repair and Maintenance expenses - nature of expenses - revenue or capital - Held that:- We find that assessee has incurred expenditure on repairs and renovation in its existing premises. 76 existing make-up rooms have been repaired and renovated. From this it is evident that no new asset has come into existence. The existing make-up rooms have been renovated. The authorities below have found that the repairs are substantial, that they result in enduring benefit and that they are not current repairs. We find that as noted no new asset has come into existence. What the assessee has done is that existing make-up rooms have been renovated . This included replacement of urinal pans , removal of plaster, replacement of doors and windows, waterproofing treatment etc. In our considered opinion these expenditure cannot be said to be capital in nature and hence they are duly qualified for revenue expenditure. - decided in favour of assessee.

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• 2018 (10) TMI 853
  Allowability of deduction u/s 80P - denial of claim by CIT-A solely on the ground that the assessee had not made a claim in the original or in the revised return of income - Held that:- The reasoning of the CIT(A) cannot be appreciated in the light of law laid down by several High Courts wherein it was held that there is no embargo on the powers of the CIT(A) to entertain the legal claim which the assessee is entitled to. As in the case of CIT vs. Mitesh Impex [2014 (4) TMI 484 - GUJARAT HIGH COURT] after referring to the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co.Ltd. vs. CIT [1996 (12) TMI 7 - SUPREME COURT] if a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing officer. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has happened in the present case. - Appeal filed by the assessee is treated as allowed for statistical purposes.

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• 2018 (10) TMI 852
  Entitled to the benefit of section 10(37) - nature of land - acquisition of the urban agricultural land as a compulsory acquisition - Held that:- The assessee’s 70 cents of land at Vizhinjam Village was notified for compulsory acquisition by Government of Kerala for developing Vizhinjam International Seaport. Though the acquisition proceedings were taken under the Land Acquisition Act, the final price was fixed upon negotiated sale agreement. AO has allowed the claim of the assessee for deduction u/s 54B which provides for a deduction on account of transfer of land used for agricultural purpose and for purchase of another agricultural land. Therefore, admittedly, when deduction has been granted u/s 54B A.O. also categorically admitted that the land sold was an agricultural land. A.O., however, noticed that the land was within Trivandrum Municipal Corporation, and therefore, would be an urban agricultural land falling within the provisions of section 2(14)(iii). The only reason for the A.O. to deny the benefit of section 10(37) was that the impugned land was acquired by executing a sale deed in favour of Vizhinjam International Seaport and it was not a case of compulsory acquisition. The Hon’ble Apex Court in the case of Balakrishnan v. Union of India & Others [2017 (3) TMI 745 - SUPREME COURT OF INDIA] had categorically held merely because the sale price was fixed through a negotiated settlement, the character of acquisition would still remain compulsory. In the instant case, the entire procedure prescribed under the Land Acquisition Act was followed, only price was fixed upon a negotiated settlement. Therefore, in view of the above judgment of the Hon’ble Apex Court (supra), we hold that the acquisition of the urban agricultural land was a compulsory acquisition and the same would be entitled to the benefit enumerated in section 10(37) of the I.T.Act. - Decided in favour of assessee.

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• 2018 (10) TMI 851
  Revision u/s 263 BY CIT-A - addition u/s 68 - disallowance on account of cessation & remission of liability u/s 41(1) - Held that:- In the present case, the AO had made the additions of 10% of the creditors for the reason that the assessee could not produce the creditors although a request was made by the assessee to issue the commission to the respective AO’s having the jurisdiction over those creditors or issue the summons u/s 131(1) of the Act. As we have already pointed out that the disallowance made by the AO out of the sundry creditors was more than the increase in the sundry creditors during the year under consideration vis-à-vis the preceding year, therefore, it can be said that in the present case, the AO had taken one of the possible views, after making the intensive enquiries relating to the sundry creditors, so it was not a case of lack of enquiry or non-enquiry, at the most it may be categorized as a case of inadequate enquiry but that is not sufficient to discard the possible decision taken by the AO. For Unsecured loans it is noticed that the AO on the basis of the tax audit report asked the assessee to explain as to why the loans amounting to ₹ 33,60,500/- were accepted other than the account payee cheques or draft as has been mentioned in clause 24(a) of the tax audit report. The explanation of the assessee was that no loans exceeding to ₹ 20,000/- was received in cash and that the tax auditor wrongly mentioned the names of 12 persons only through whom the loans from different persons who had given cash loans of value less than ₹ 20,000/-, were received, therefore, there was no violation of the provisions of Section 269SS. AO was not satisfied with the above said explanation of the assessee and levied the penalty u/s 271D which was equivalent to ₹ 33,60,500/- that the amount received by the assessee. Therefore, it cannot be said that the AO had not made the enquiries relating to the unsecured loans and after making the proper enquiries, he considered that the loans were received by the assessee in violation of provisions of Section 269SS of the Act and levied the penalty of equivalent amount i.e. ₹ 33,60,500/- u/s 271D of the Act. In other words, he has taken one of the possible views. As regards to the other issues, on which the additions were made by the AO, CIT has not made any comment while exercising the powers u/s 263 of the Act. She did not mention anything about those issues in the show-cause notice dated 22.01.2018 and had not discussed in the impugned order as to how and in what manner, the order passed by the AO on those issues was erroneous in so far as it was prejudicial to the interest of the revenue and nothing is brought on record to substantiate that the ld. Pr. CIT had given any opportunity of being heard on the issues other than the two issues mentioned in the show-cause notice to the assessee. Therefore, without conducting necessary inquiry and without giving/recording a finding that the assessment order framed by the AO on those issues was erroneous in so far as it was prejudicial to the interest of the revenue, the remanding of the matter to the AO on those other issues alongwith the two issues mentioned in the show-cause notice issued u/s 263 of the Act, is vitiated in law. AO made the detailed enquiries relating to the sundry creditors as well as the unsecured loans and after making such enquiries he had taken a possible view. He also made the various additions apart from the addition on account of the sundry creditors and levied the penalty u/s 271D of the Act by invoking the provisions of Section 269SS of the Act on the unsecured loans. CIT was not justified in holding the assessment order dated 29.03.2016 passed by the AO as erroneous and prejudicial to the interest of the revenue. In that view of the matter, the impugned order passed by the ld. Pr. CIT u/s 263 is quashed. - Decided in favour of assessee.

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• 2018 (10) TMI 850
  Disallowance u/s 14A in computation of book profit u/s 115JB - Held that:- Hon’ble Supreme Court rendered in Apollo Tyres Ltd. Vs. CIT [2002 (5) TMI 5 - SUPREME COURT] which held that the Assessing Officer did not have the jurisdiction to go behind the net profit shown in the Profit & Loss Account except to the extent provided in Explanation to Section 115J. We hold that adjustment of disallowance u/s 14A was not required to be made in Book Profits for the purpose of Section 115JB. Revenue’s appeal stands dismissed.

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• 2018 (10) TMI 849
  Eligibility for netting the interest received from the interest expenditure incurred by the assessee - Net interest income included in the income of the assessee - Held that:- The total interest has been received from the booking to the date of cancellation by the HUF of ₹ 20,71,233/- which is eligible for deduction for the payment of interest of ₹ 34,32,926/- as per section 57 of the Act because this interest has been received out of the said loan taken from ICICI Bank, which was paid by HUF to M/s. Ansal Properties & Infrastructure Ltd. through co-parcener. It is not the case of the Revenue that any such expenditure of interest incurred by the assessee was claimed by him in the preceding assessment years. Thus, there is direct nexus between earning of interest and expenditure of interest as per section 57 of the Act. Therefore, the assessee is entitled for netting of interest from the expenditure incurred. This principle is settled down in the case of ACG Associates Capsules (P) Ltd. vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA] that the net interest income should be included in the income of the assessee - decided in favour of assessee.

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• 2018 (10) TMI 848
  Disallowance U/s.14A - exclude the investments made from own interest free funds and the investment which did not earn dividend income while computing disallowance - Held that:- We find that with respect to disallowance U/s.14A of the Act, we held that application of Rule 8D is not automatic. If the assessee computes to the satisfaction of the Ld.Revenue Authorities the expenses incurred by it with respect to investments earning exempt dividend then the same should be disallowed. Only when such computation is not possible Rule 8D should be applied for computing the disallowance U/s.14A of the Act.

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• 2018 (10) TMI 847
  Allowing mark to market loss on account of outstanding forward contract liability - Held that:- Issue under consideration is squarely covered by the decision of jurisdictional High Court in case of D. Chetan & Co.[2016 (10) TMI 629 - BOMBAY HIGH COURT] and also by London Star Diamonds Co. (India) Pvt. Ltd.[2016 (10) TMI 1110 - BOMBAY HIGH COURT]. We also found that CIT(A) has dealt with the issue threadbare and after giving detailed finding reached to the conclusion that restatement of the forward contract obligations was done in AS-11 in a consistent manner over the years. Furthermore, the forward contract transactions so entered during the course of regular business and not a speculation transaction. Respectfully following the various judicial pronouncements referred by CIT(A) in his order as well as jurisdictional High Court as mentioned above, we do not find any infirmity in the order of CIT(A) for deleting the disallowance. - decided against revenue.

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• 2018 (10) TMI 811
  Reopening of assessment - validity of reasons to believe - Held that:- If the Assessing Officer has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. It is however, to be noted that the conditions stipulated in the Act must be fulfilled if the case falls within the ambit of Section 147. Considering the fact that there are some materials on record and the informations with the Department of Income Tax, the reopening of the assessment in the writ petitions with reference to Sections 147 to 153 of the Act, is in accordance with law and there is no infirmity, as such. Thus, the writ petitioner is bound to respond to AO for the purpose of arriving a conclusion and for taking a decision. In the event of passing an order of assessment or reassessment, then the writ petitioner is entitled to prefer an appeal contemplated under the provisions of the Act. Contrarily, based on the preliminary informations gathered by the Assessing Officer, the notice issued for the purpose of reopening of the assessment would not provide a cause of action for filing of the present writ petitions and this Court has no hesitation in holding that the writ petitions are not only premature, even on merits the writ petitioner has failed to establish any acceptable reason to grant the relief, as such, sought for. This being the principles to be followed, the writ petitioner has miserably failed to establish any legally acceptable ground for the purpose of interfering with the actions initiated by the respondents by invoking the provisions of the Income Tax Act, 1961.

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• Customs

• 2018 (10) TMI 846
  Project Import - Finalization of provisional assessment - time limit for claiming provisional assessment - Held that:- Admittedly, the provisional assessment in respect of the goods imported has not taken place so far. There is no dispute to the fact that there is no time limit for making such provisional assessment. No doubt, the report of the DRI dated 04.10.2007 is now taken by the respondents for issuing the impugned communication. Perusal of the said communication would only show that the petitioner was called upon to explain their case regarding levy of differential duty along with applicable interest and personal penalty as discussed in the said communication. In the absence of any statutory time limit fixed for making the provisional assessment and when the second respondent has issued the impugned communication and called upon the petitioner only to give their explanation, I do not think that this Court, at this stage, is to interfere with such communication or the proceedings pending before the second respondent, since an order of adjudication is yet to be passed. No doubt, there is some delay on the part of the respondents in completing the provisional assessment, at the same time, when the alleged duty evasion is to the tune of ₹ 9.54 crores and that too, based on the DRI report, this Court is of the view that it is for the petitioner to make their reply to the said letter and explain all their stand in detail so that the second respondent will be in a position to finally make the provisional assessment without loss of any further delay. This Court is not expressing any view on the merits of the contentions raised by both parties with regard to the liability of the petitioner to pay the differential duty as alleged by the respondents, as this Court has only remitted the matter back to the second respondent to consider the same, based on the reply submitted by the petitioner - petition dismissed.

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• 2018 (10) TMI 845
  Maintainability of ROM Application - application sought to be filed in form of the review of the earlier order - Held that:- There is no reason to entertain this Appeal as the question as framed by the Revenue does not arise from the impugned order of the Tribunal - the impugned order relates to a rate of duty issue and therefore, not maintainable before this Court under Section 130 of the Act - appeal dismissed being not maintainable.

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• 2018 (10) TMI 844
  Principles of Natural Justice - opportunity to cross-examine not provided - Whether the Tribunal right to hold that since the order of not granting cross-examination goes to route of the matter, this Tribunal sets aside the letter No. S/1030/ 201617/ CAC/NS-III/ Comm/JNCH dated 06.10.2016 with a direction to adjudicating authority to grant cross-examination as sought by the assessee and decide the matter after following principles of natural justice without appreciating various authorities decisions? Held that:- Prima facie filing of such Appeals from the impugned order of the Tribunal which has worked itself out to the knowledge of the Appellant i.e. the Commissioner of Customs (NS-III) inasmuch as he has given effect to the impugned order of the Tribunal by passing the order dated 2nd February 2017 - In the absence of the above facts being pointed out in the Appeal memo and indicating the reason for filing this Appeal, it appears that it has been filed to harass an Assessee. Further, it is to be noted at the time of admission of Appeals, we do not insist on the Respondent being represented. The Appeal is adjourned to 26th September 2018 to enable the Revenue to explain/justify its conduct.

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• 2018 (10) TMI 843
  Interest and penalty - demand of differential duty - Held that:- Cases involving the very same issue in similar set of facts were dealt with by across the Tribunal and were remanded back to the original authority to decide the issue of jurisdiction, after the availability of decision of Hon’ble Supreme Court in the case of Mangali Impex [2016 (8) TMI 1181 - SUPREME COURT] - the present appeals are also remanded on the same terms - appeal allowed by way of remand.

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• 2018 (10) TMI 842
  Interest on delay in refund of Extra Duty Deposit - Held that:- Hon’ble Supreme Court in the case of Ranbaxy Laboratories Ltd. [2011 (10) TMI 16 - SUPREME COURT OF INDIA] has categorically held that the assessee is entitled to interest after the expiry of three months from the date of filing the refund application till the refund is finally sanctioned - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 841
  Rectification of Mistake - Held that:- This Tribunal has mentioned the names of all the appellants including the present appellant Shri Anand Kulkarni and allowed the appeals partly in relation to all the appellants by reduction in penalty imposed and confirmed against each of the appellants. However, in para 10.10, the name of the appellant could not be mentioned and the penalty imposed on him also not mentioned - at page 18 of the order in the 9th line of paragraph 10.10, instead of the expression “therefore reduced to Rs. One lakh each”, it should be read as “therefore reduced to Rs. One lakh each and penalty on Shri Anand Kulkarni is reduced to Rs. Two lakhs.” - ROM application allowed.

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• Service Tax

• 2018 (10) TMI 840
  Penalty u/s 78 of FA - non-payment of service tax - Construction of Residential Complex Service - Held that:- The assessee is engaged in the Construction of Residential Complex in terms of the Development Agreements entered with land owners and prospective buyers. The period of dispute is from 16.06.2005 to 31.01.2007. An explanation was added for the Finance Act 2010 in Section 65(105) (zzzh) of the Finance Act 1994 whereby it was clarified that levy of service tax on construction of complex by builder will be taxable only from 01.07.2010 and further the Board vide its Circular dated 10.02.2012 clarified that prior to 01.07.2010 service tax is not chargeable from builders/developer. Prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16.06.2005 to 31.01.2007 - penalty not maintainable. Appeal dismissed - decided against appellant-Revenue.

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• 2018 (10) TMI 839
  CENVAT Credit - input services - housekeeping/ cleaning services - Hotel accommodation services - denial on the ground that the above input services were not eligible for credit - Held that: - This Bench has remanded the matter in the appellant’s own case in respect of the Show Cause Notice for the earlier period, for fresh adjudication - The judicial propriety demands that when a co-ordinate Bench of this Court has set aside the appeal to the file of the lower authority for fresh adjudication, the same is required to be followed Appeal allowed by way of remand.

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• 2018 (10) TMI 838
  Management Consultant’s Service - royalty payments made by the appellant to the foreign collaborators - demand of service tax - Held that:- This issue is no more res integra and has been settled in the case of COMMISSIONER VERSUS MAJESTIC MOBIKES PVT. LTD. [2011 (9) TMI 956 - KARNATAKA HIGH COURT] - the service tax liability on any taxable service provided by a non-resident or a person located outside India to a recipient in India would arise w.e.f. 18/04/2006 i.e. the date of enactment of the Section 66A of the Finance Act, 1994 - Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 837
  Refund of service tax paid - refund claimed on the ground that he is not liable to pay the service tax and the service tax paid by him is to be considered as a deposit - CBEC Circular No. 108/02/2009-ST dated 29.1.2009 - Held that:- On an identical issue, the Division Bench of this Tribunal in JOSH P JOHN AND OTHERS VERSUS CST, BANGALORE AND OTHERS [2014 (9) TMI 597 - CESTAT BANGALORE] has disposed of 121 appeals by remanding the same to the original authority with directions to be considered while processing the refund claim of the assessees - appeal of the appellant allowed by way of remand to the original authority to consider the issue afresh in the light of the directions of the Division Bench in bunch of appeals - appeal allowed by way of remand.

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• 2018 (10) TMI 836
  Maintainability of appeal - Pre-deposit - non-compliance with mandatory pre-deposit as provided in Section 35F for hearing the appeal on merits - Held that:- As per Section 35F, the appellant is required to make a mandatory pre-deposit of 7.5%/10% of the duty in case where duty or duty and penalty are in dispute, or penalty, where such penalties are in dispute - Since in the present case, the appellant admittedly has not made mandatory pre-deposit and therefore, the appeal is not maintainable. This appeal has been filed after the amendment in Section 35F whereby mandatory pre-deposit has made compulsory in order to entertain and decide the appeal on merits - appeal dismissed being not maintainable.

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• 2018 (10) TMI 835
  CENVAT Credit - duty paying invoices - registration of premises - Held that:- It is an admitted fact on record that the appellant is a Company, duly incorporated under the Companies Act, 1956 and operates its business activities through various premises located in different parts of the country. There is no specific allegations being made by the department regarding non-payment of service tax, non-receipt of input service by the appellant. Since the address of the Chennai office was subsequently incorporated in the centralized registration certificate, the requirements of Cenvat statute, more particularly Rule 9 of the rules, have been duly complied with for the purpose of availment of the Cenvat benefit. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 834
  Short payment of Service tax - confusion with regard to discharge of appropriate service tax liability by the appellant during the disputed period - Held that:- The appellant had submitted copies of invoices / bills along with ledgers for the relevant period - The authorities below have confirmed the adjudged demand on the sole ground that no documentary evidences were produced, in support of claim of actual discharge of the service tax liability. Such finding of the authorities below are contrary to the contents of the letter dated 21.08.2014 of both the appellant as well as the Superintendent (Appeals). The matter is required to be looked into afresh by the original authority for ascertaining the correct position regarding discharge of appropriate service tax liability by the appellant - Appeal allowed by way of remand.

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• Central Excise

• 2018 (10) TMI 833
  Clandestine removal - unlabelled stock - Interpretation of Statute - Rule 10 of the Central Excise Rules 2002 read with the letter of the Board dated 9th November, 1964 - Held that:- There was a stock of unlabelled and unstamped plywood manufactured by the appellant. The stock may not have been very large but it is an admitted position that it was not taken into account at the time of calculation of the demand, by the respondent. A mixed question of facts and law arise from the said impugned order of the Tribunal. In our opinion, a thorough adjudication on facts is required to ascertain whether there was any quantity of unlabelled and unstamped plywood? Whether the appellant had entered this stock in the Daily Stock Account R. G. – 1 according to Rule 10 of the said Rules? What is the amount of duty that is to be adjusted against this stock of goods and in that event what would be the ultimate demand of the respondent? This Court is of the view that these questions of fact and law can be best answered by the tribunal or the adjudicating authorities below. Matter are remanded back to the Tribunal for de novo adjudication.

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• 2018 (10) TMI 832
  Maintainability of petition - alternative remedy of appeal - Held that:- These Writ Petitions are not entertained as there is an efficacious alternate remedy of challenging impugned order dated 31st January, 2018 of the Commissioner of Central Excise before the Tribunal under the Act - petition dismissed.

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• 2018 (10) TMI 831
  Refund of education cess and the higher education cess - Interpretation of statute - area based exemption availed - excise duty became exempt - whether the education cess and higher education cess were a part of the excise duty? - Held that:- The said issue was finally decided by the Hon’ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that the appellants therein were entitled to a refund of the education cess and the higher education cess, which was paid along with the excise duty, once the excise duty itself was exempted from levy. This Court directs the respondents in the Department of Excise/Goods and Services Tax of the Government of India, more particularly the respondent Nos. 4 to 6 to make an appropriate calculation and thereupon refund the education cess and the higher education cess paid by the petitioner from January, 2008 to December, 2015 - Appeal allowed by way of remand.

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• 2018 (10) TMI 830
  Maintainability of petition - invocation of extra ordinary jurisdiction to interfere with the impugned order - Principles of Natural Justice - grievance of the Petitioner to the common impugned order dated 31st March, 2017 is that it has been passed without giving an opportunity to the Petitioner to cross examine the person whose statement is being relied upon by the Revenue. Held that:- The jurisdiction of the Courts while exercising power under Article 226 of the Constitution is plenary. However, the Court has developed a self imposed rule that, in case, where there is an alternate efficacious remedy available, this Court would not normally exercise its discretion to entertain a Petition under Article 226 of the Constitution of India - Therefore, where the order is challenged is without jurisdiction (as opposed to an error within jurisdiction), or the process of decision making is such that it shocks the conscious of the Court and the interference on the above ground does not involve finding of fact and/or elaborate examination of evidence, then in the facts of the case, the Court may exercise its discretion to entertain the Petition. However, it needs to be emphasized that there can be no hard and fast rule in this matter. It is entirely for the Court to decide whether to exercise its discretion or not in the facts of the case before it. The impugned order dated 31st March, 2017 has considered and dealt with the issue of grant of cross examination to the Petitioner to come to the conclusion that in these facts, it need not be granted. Thus, if the Petitioner is aggrieved with regard to the manner in which the impugned order has refused to grant cross examination, that is an issue which could be appropriately agitated before the Appellate Authority i.e. the Tribunal. This for the reason that it would require factual determination of whether or not, in the facts and circumstance of the case, the cross examination as requested, ought to be given - in the present facts, the impugned order is not an order without jurisdiction, if at all, at the highest, it could be an error within jurisdiction. Therefore, a proper subject of appeal, before the Tribunal. There is no reason to exercise our extra ordinary jurisdiction to interfere with the impugned order dated 31st March, 2017 passed by the Commissioner of Central Excise. Petitioner does has an effective alternative efficacious remedy available under the Act - petition dismissed.

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• 2018 (10) TMI 829
  CENVAT credit - input services or not - Goods Transport Agency Services in respect of which the assessee had availed the Cenvat credit of service tax during the period from July, 2014 to March, 2015 for outward transportation of cement - place of removal - Held that:- In view of the amended definition of input service w.e.f. 01.03.2008 as also in the light of judgment of the Supreme Court in Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], judgment of the Tribunal cannot be sustained in law and the demand is liable to be revived - It was held by the Supreme Court that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent. The matter is remanded back to the Tribunal for consideration of the question of penalty to decide the same after hearing both the parties in accordance with law - appeal allowed by way of remand.

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• 2018 (10) TMI 828
  CENVAT Credit - input services - Tour Operator/Rent-a-Cab Service - period from 31.07.2005 to 31.01.2008 - Held that:- The issue relating to Rent-a-Cab Service has already been addressed to and decided, for the period prior to 01.04.2011, by the jurisdictional High Court in the case of C.C.E. & S.T., LTU, Chennai Vs. M/s. Turbo Energy Ltd. [2015 (3) TMI 632 - MADRAS HIGH COURT], where it was held that the Cenvat Credit has been properly availed in respect of outdoor catering services and rent-a-cab services - demand for the period up to 01.04.2011 set aside. For the subsequent period i.e, up to 30.11.2011 - Held that:- The Ld. Advocate has taken a specific contention that there was no service availed post 01.04.2011 and that only the invoice was raised and the credit was availed subsequently. This requires factual verification. Appeal allowed in part and part matter on remand.

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• 2018 (10) TMI 827
  CENVAT Credit - common inputs/input services, used for manufacture of exempted products and dutiable products - non-maintenance of separate records - credit on certain inputs services also denied - vehicles as well as insurance for money- in-transit. Held that:- It is indeed correct to say that the show-cause notice is silent as to what are the inputs and input services on which the appellants have availed credit for production of Bagasse, Press Mud and Electricity. It is vaguely stated that the appellants have availed credit on inputs and input services for production of Bagasse, Press Mud and Electricity. In the annexure to the show-cause notice also, there is no specific figure shown regarding credit availed separately on inputs and input services. The demand prior to 01.03.2015 has been dropped by the adjudicating authority observing that the requirement to maintain separate accounts would be applicable only to exempted goods prior to such date. That an amendment was brought forth with effect from 01.03.2015, wherein even if there is production of non-excisable goods, the assessee is required to maintain separate accounts - Therefore, after 01.03.2015, the adjudicating authority has confirmed the demand. It is found that since there is no credit availed on inputs or input services for products of Bagasse, Press Mud or Electricity even after 01.03.2015, the demand cannot sustain. Credit disallowed on input services relating to insurance on motor vehicles as well as insurance for transit-in-money - Held that:- The period involved being prior to 04.04.2011 - the credit is eligible as these services fall within the category of activities relating to business of manufacture. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 826
  CENVAT credit - input service - insurance premium paid towards Employees Compensation Insurance Policy - Held that:- The Chandigarh Bench of the Tribunal has in the case of Commissioner of Central Excise, Delhi-III Vs. Suzuki Motorcycle India Pvt. Ltd. [2016 (9) TMI 576 - CESTAT CHANDIGARH], where it was held that It is found that insurance service has been availed by the assessee of medical insurance of their employees which they are statutory required to availed in the light of employee State Insurance Act which provides that the assessee is compulsory required to take insurance of the employee, therefore, the said service is integrally part of the manufacturing activity and they are entitled to avail the cenvat credit on the said services - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 825
  Valuation - clearances of waste materials namely cinders to Dalmia Refractories without payment of duty - Department took the view that clearances of cinders are to be subjected to duty at tariff rate - Held that:- The Hon’ble Bombay High Court in the case of Hindalco Industries Ltd. Vs UOI relying upon the judgment of the Hon’ble Supreme Court in the case of Grasim Industries Ltd. Vs UOI [2011 (10) TMI 16 - SUPREME COURT OF INDIA], held that the order of the Tribunal holding that dross and skimming of Aluminium, Zinc and other non-ferrous metal arising as by-products during manufacture and sold by assessee, was manufactured goods after 10-5-2008 was contrary to the aforesaid judgment of the Apex Court. The impugned order upholding the view of original authority that cinder is a dutiable product and exigible to Central Excise duty cannot be sustained - Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 824
  Demand of Interest and penalties - Distribution of CENVAT Credit - violation of Rule 7 of Cenvat Credit Rules, 2004 - excess credit distributed to three units - reversal of credit before issuance of SCN - Held that:- The present appeals pertain to three Units. For two other units for the same very issue, the Commissioner (Appeals) has waived the penalties - following the same, penalties set aside - impugned order is modified to the extent of waiving penalties and without disturbing the demand or the interest thereof - appeal allowed in part.

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• 2018 (10) TMI 823
  Method of Valuation - fabrication of bodies of motor vehicles falling under Chapter heading 8704, for original equipment manufacturers - appellant paid duty on the basis of the cost construction - Revenue was of the view that the activity undertaken by the appellant is in the nature of job work and hence valuation is required to be determined in line with Rule 10A of the Central Excise Valuation Rules, 2000 - Held that:- Tribunal in various cases has held that the valuation is required to be determined in terms of Rule 10A of the Central Excise Valuation Rules, 2000 and accordingly differential duty demand has become payable - reliance placed in the case of M/S COMMERCIAL ENGINEERS & BODY BUILDERS PVT. LTD. VERSUS CCE, JABALPUR [2018 (10) TMI 456 - CESTAT NEW DELHI]. The adjudicating authority is directed to requantify and restrict the demand to the normal time limit - appeal allowed by way of remand.

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• 2018 (10) TMI 822
  100% EOU - SSI Exemption - use of brand name - Alleging that the product attracts normal rate of duty@ 16% in terms of Sr. No. 3 of Notification 23/2003-CE dated 31.3.2003, as the pickle was cleared bearing ‘brand name’ in unit containers, being not exempted during the period 28.2.2005 to 28.2.2006, demand made. Whether the appellant is entitled to avail the benefit of Notification No. 23/2003-CE (Sr. No. 4)? Held that:- The learned Commissioner (Appeals) taking into consideration the fact that such notification is not available to pickles being cleared in unit containers affixing the brand name upheld the order of the adjudicating authority - it is correctly held that in respect of branded pickles put up in unit container cleared and sold by the appellant during the period 28.02.2005to 28.02.2006 are liable to duty @ 16% instead of 9% as correctly held in the Order in Original (OIO). Time bar - Held that:- When the fact of goods bearing a brand name and put up in unit container is. not declared in returns, there is no way a Central Excise Officer can know about it. CERA or internal audit, if done, as claimed by assessee would not come to his rescue as audits are done on basis of selection and do not cover entire gamut of activities or documents - Moreover if documents are not revealing the correct status, the auditors will also not be able to know the reality by scrutinizing them. Therefore, the appellant is liable for penal action under Section 11 A(1) of the Central Excise Act, 1944.” Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 821
  Refund of excess duty paid - dispute regarding classification was involved - rejection of refund on the ground of unjust enrichment - Held that:- The appellant was directed to establish its eligibility and also the fact that they have not passed on the element of duty to the consumer, and as submitted by the learned Advocate, the said order has become final. It is deemed proper to give one more opportunity, in the interest of justice, to the appellant to go before the learned Commissioner (Appeals), comply with the directions of this Bench by producing all such necessary documents to prove its eligibility - appeal allowed by way of remand.

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• 2018 (10) TMI 820
  Rectification of Mistake/Recall of order - Section 35C(2) of CEA - Held that:- The applicant also sought for recall of the order passed by the Tribunal under Section 35C(1). Since only rectification would suffice the remedy sought in the Rectification of Mistake application, recalling of order is uncalled for. As found from the ROM, same appears to have been filed on 08.06.2018 which is almost 8 months after passing of the order and 7 months after receipt of the order by the appellant on dated 04.06.2018. No date stamp of receipt of Rectification of Mistake application by the Registry, CESTAT, Mumbai is found nor any date of filing is indicated anywhere in the office note for which no observation could be made as to if the ROM application is filed on time - the wording “adjudicating authority” found in para 6 of the order passed on 06.10.2017 is deemed to be meant as “Commissioner (Appeals)” and a formal amendment is permissible under Section 35C(2), under which the ROM application is filed. ROM Application allowed.

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• 2018 (10) TMI 819
  CENVAT Credit - input services - courier service utilized for delivery of goods at the buyer’s premises - place of removal - demand of Interest and penalty - Held that:- The issue with regard to availment of Cenvat Credit on GTA/courier service for delivery of goods at the buyers premises is no more res integra, in view of judgment of Hon’ble Supreme Court in the case of Ultratech Cements Ltd [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent - credit rightly denied. Demand of Interest - Held that:- The appellant had sufficient balance in its Cenvat account during the disputed period. Thus, it is evident that the disputed credit had not been utilized by the appellant for payment of Central Excise duty on the final product cleared by it. Therefore, under the amended provisions of Rule 14 of the Cenvat Credit rules, 2004, since the credit has not been utilized, no interest shall be demanded from the appellant. Demand of Penalty - Held that:- It is not a case that taking of regular credit by the appellant is owing to the reason of fraud, collusion, suppression of facts etc., with intent to defraud the Government revenue. Since the appellant had availed the credit based on the earlier circular issued by the CBEC, it cannot be said that the appellant had indulged into the fraudulent activity - the provisions of Rule 15(2) of the rules read with Section 11 of the Act cannot be invoked for imposition penalty. The impugned order, so far as it denied the Cenvat benefit on courier service, sustains. Interest and penalty confirmed therein is set aside - Appeal allowed in part.

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• 2018 (10) TMI 818
  Valuation - inclusion of bought out items which were directly used at the site in assessable value - SSI Exemption availed - Held that:- The Appellants are entitled to deduction of the bought out items and accordingly liable to pay duty on the reduced turnover of ₹ 73,69,638/- on which they have paid duty of ₹ 7,59,073/-. Accordingly, there is no duty implication on this score. Penalty u/s 11AC - Held that:- The Appellants have regularly informed the Department about its transaction and their intention to avail the exemption. For the transaction, it appears that if the Revenue was not clear about availability or non-availability of the exemption and the fact that Appellants were running from pillar to post for clarification, we hold that there is no malafide on the part of the Appellants - penalty set aside. Appeal allowed in part.

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• 2018 (10) TMI 817
  Method of Valuation - manufacture of end use car carrier - 25 car carriers for captive use for transportation of the cars - It has been contended by the Revenue that the cost of manufactured car carriers given by the Cost Accountant in their CAS 4 certificate is less than the value adopted by the Revenue for the previous period i.e. 2004-2005 to 2007-2008 - Rule 8 of Central Excise Valuation Rules, 2004 - Applicability of notification 6/2006 dated 1.3.2006 - Time Limitation. Whether the assessable value arrived by the appellant assessee for payment of Central Excise duty, on the car carrier body build by them, as per the provisions of Rule 8 of Central Excise Rules, 2000 read with section 4 of Central Excise Act, 1944 is correct as per provisions of law? - whether the demand of duty is hit by bar of limitation? Held that:- It is seen that section 4(1)a of the Central Excise Act provides that assessable value of final products shall be the transaction value where the goods are sold by the assessee for delivery within time and place of removal and where the assessable value and price of goods is the sole consideration of sale - In the present case of the appellant, the condition of sale of excisable goods is not being satisfied as manufactured goods are not being sold by the appellant assessee but used by them captively. The Rule 8 of Central Excise Valuation Rules specifically provides that where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be 110 % of the cost of production or manufacture of such goods - for determining the assessable value under the present situation under Rule 8 of Central Excise Valuation Rules, 2000 is the closest and more appropriate because the basic requirement of Rule 8 of Central Excise Valuation Rules, 2008 that (a) that the goods are not sold and (b) the goods are used for consumption by appellant assessee, are satisfied - Since the goods are being used by the appellant assessee himself, it is not necessary that same need to be used only for the production and manufacture of other articles. The method adopted by the appellant assessee for determination of assessable value under Section 4 of Central Excise Act, 1944, is legally correct and thus they have rightly discharged their Central Excise duty liability - there is no merit in the order of Commissioner (Appeals) and same is set aside. Applicability of N/N. 6/2006 dated 1.3.2006 - Held that:- Since same has not been subject matter either of the order in original or order of Commissioner (Appeals), therefore, there are no justification in commenting on the applicability of above notification in this case. Time limitation - Held that:- The present impugned show cause notice dated 26.04.2013 covers the period of financial year 2008-2009 and 2009-2010 which is much beyond the normal period of demanding duty under section 11AC of Central Excise Act, 1944 - Since the department has all along been aware about the practice followed by the appellant and they have also filed their return in time, there are no valid grounds for invoking extended time of limitation under Section 11A of Central Excise Act, 1944 - demand is barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 816
  Refund of duty paid - time limitation - unjust enrichment - Held that:- Since pursuant to the favorable adjudication order dated 24.12.2010 passed by the Additional Commissioner of Central Excise, the appellant had filed the refund claim on 25.02.2011, such claim application, in my considered opinion, cannot be rejected on the ground that the same is barred by limitation of time - refund application having been filed well within the prescribed time limit provided under the statute, the same is maintainable for consideration of the refund benefit. Unjust enrichment - Held that:- The documents available in the case records satisfies the requirements of the proviso attached to sub-section (2) of Section 11B of the Act that the incidence of excise duty as per the refund application, has not been passed on by the appellant to any other person and such incidence has all along been borne by it. Therefore, the refund application will not be hit by doctrine of unjust enrichment. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 815
  CENVAT Credit - input services - security services used in head office - security activities related to residential premises of its employees - denial on the ground of nexus - Held that:- The security service used/utilized by the appellant in its head office should be considered as an input service for the purpose of availment of the cenvat benefit - However, the disputed service utilized by the appellant for providing the security activities related to residential premises of its employees should not be considered as input service inasmuch as such service cannot be considered as used in relation to manufacture of the final product. Since such service has no nexus with the manufacturing activities undertaken by the appellant, it should not be eligible for the cenvat benefit. Demand of Interest - Held that:- Since the appellant had sufficient balance in its cenvat account, it cannot be said that there is loss of revenue to the Government exchequer and for that purpose, Revenue has to be compensated by way of charging interest. Thus, interest demand cannot be confirmed against the appellant. Penalty - Held that:- There is no element of fraud, collusion, suppression etc. on the part of the appellant in defrauding the Government revenue, by availing ineligible cenvat credit. Hence, imposition of penalty also is not proper and justified. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 814
  Input tax credit - time limit for claiming credit - legality and validity of provision of Section 19(11) of Tamil Nadu Value Added Tax Act, 2006 - appellant contend that substantive and vested right of a registered dealer to claim Input Tax Credit cannot be curtailed and fettered by an unreasonable restriction imposed under Section 19(11) of the Tamil Nadu VAT Act, 2006 requiring claim to be made within 90 days from the date of purchase or before the end of the financial year whichever is later. Challenge to a fiscal legislation - principles of statutory interpretation of a fiscal legislation - Whether Section 19(11) violates Article 14 and 19(1)(g) of the Constitution of India? - Whether Section 19(11) is inconsistent to Section 3(3) of the Act? - Held that:- Input Tax Credit is being allowed under Section 3 which is provision on levy of taxes on sale of goods . Section 3 is a charging section which provides for levy of taxes on sale of goods. Sub section (3) is the part of the same scheme where tax payable under sub section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods - this Court noticed the contradiction in phraseology of Section 8 sub-Section (4) and Section 13 sub section (4) and held that non mention of time in Section 8(4) is for clearly denying the rule making power to make any rule pertaining to the time. The input credit is in nature of benefit/ concession extended to dealer under the statutory scheme. The concession can be received by the beneficiary only as per the scheme of the Statute. The judgment on which learned Advocate General of Tamil Nadu had placed much reliance i.e. Jayam and Company versus Assistant Commissioner and Another, [2016 (9) TMI 408 - SUPREME COURT], is the judgment which is relevant for present case - In the above case, this Court had occasion to interpret provisions of Tamil Nadu Value Added Tax Act, 2016, Section 19(20), Section 3(2) and Section 3(3). Validity of Section 19(20) was under challenge in the said case. The interpretation put up by this Court on Section 3(2) and 3(3) and Section 19(2) is fully attracted while considering the same provisions of Section 3(2) and 3(3) and provision of Section 19(11) of the Act. The Statutory scheme delineated by Section 19(11) neither can be said to be arbitrary nor can be said to violate the right guaranteed to the dealer under Article 19(1) (g) of the Constitution - the validity of Section 19(11) of the Act upheld. Whether Section 19(11) is directory provision, non compliance of which cannot be a ground for denial of input tax credit to the appellants? - Whether denial of input tax credit to the appellants is contrary to the scheme of VAT Act, 2006? - Held that:- The conditions under which Input Tax Credit is to be given are all enumerated in Section 19. The condition under which the concession and benefit is given is always to be strictly construed. In event, it is accepted that there is no time period for claiming Input Tax Credit as contained in Section 19(11), the provision become too flexible and give rise to large number of difficulties including difficulty in verification of claim of Input Credit. Taxing Statutes contains self contained scheme of levy, computation and collection of tax. The time under which a return is to be filed for purpose of assessment of the tax cannot be dependent on the will of a dealer. The use of word shall in Section 19(11) does not admit to any other interpretation except that the submission of Input claimed cannot be beyond the time prescribed. Section 19(11), in fact, gives additional time period for claim of Input Credit - Section 19(11) thus allowed an extended period for Input Credit which if not claimed in any month can be claimed before the end of the financial year or before the 90 days from the date of purchase whichever is later. The provision of Section 19(11) is thus an additional benefit given to dealer for claiming Input Credit in extended period. The use of word shall make the claim needs no other interpretation - time period as provided in Section 19(11) is mandatory. The decision in the case of Dal Chand versus Municipal Corporation, Bhopal and another [1982 (6) TMI 252 - SUPREME COURT], has no bearing in the present case as in that case it was held that whether particular provision is mandatory or directory has to be determined on the basis of object of particular provision and design of the statute. The period of 10 days in submitting the report of the public analyst was held to be directory for the reason that on the negligence of those to whom public duties are entrusted no one should suffer. Such interpretation should not be put which may promote the public mischief and cause public inconvenience and defeat the main object of the statute - The interpretation of the Rule 9(j) in the above case was on its own statutory scheme and has no bearing in the present case. Whether Assessing Authorities could have extended the period for claiming Input Tax Credit beyond the period as provided in Section 19(11) of Tamil Nadu VAT Act, 2006? - Held that:- The expression shall occurring in Section 19(11) is mandatory whose compliance is necessary for claiming Input Tax Credit - The statute having not given any indication for extension of time which is a condition for claiming Input Tax Credit, the submission that period could have been extended by assessing authority is unfounded and cannot be accepted. Appeal dismissed.

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• 2018 (10) TMI 813
  Validity of assessment order - assessment years 2011-2012 to 2014-2015 - it is alleged that Assessing Officer erred in merely accepting the report filed by the Enforcement Officials, without independently applying his mind to the objections raised by the petitioner in pursuant to the notices of proposal - opportunity of hearing not provided while imposing penalty - principles of Natural Justice. Held that:- There is no dispute to the fact that the petitioner has filed the reply to such notices of proposal. The reply was rejected by the respondent, as an after thought, only by stating that the dealers have admitted every issue before the Inspecting Authorities at the time of inspection. The Assessing Officer has only taken into consideration of the Inspection Report filed by the Inspecting Authorities and not applied his independent mind to the reply submitted by the petitioner to each issues - the Assessing Officer cannot solely depend upon the Inspection Report and conclude the assessment by brushing aside the objections raised by the petitioner as an after thought, without applying his independent mind to those objections and give any finding on the same. The Assessing Officer has not afforded an opportunity of personal hearing to the petitioner, especially, when he has chosen to impose penalty under Section 27(3) of the TNVAT Act, 2006 - Circular No.7/2014 dated 03.02.2014, referred wherein, it is contemplated that granting of personal hearing is mandatory and the same shall invariably be afforded to the dealer irrespective of whether the dealer has opted for such personal hearing or not. This Court is inclined to interfere with the impugned orders of assessment and remit the matter back to the Assessing Officer to re-do the assessment once again on merits - appeal allowed by way of remand.

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• 2018 (10) TMI 812
  Levy of tax on sales - conveyor belts purchased from TNEB as second sales - Revision of assessment - TNGST Act - Held that:- The sales of old conveyor belts out of the purchases made from TNEB is exempted from tax as second sales upto 30.06.2002, however, the second sales of such conveyor belts would be liable to resale tax at 1% under Section 3-H of the TNGST Act, from 01.07.2002 onwards. Such revision of assessment cannot be countenanced and is set aside - petition allowed - decided in favor of petitioner.

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