TMI Tax Updates - e-Newsletter
October 25, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. NO ANTI-PROFITEERING BY SUBWAY FRANCHISEE

   By: Dr. Sanjiv Agarwal

2. Key 8 suggestions on Annual Return Format – Form GSTR-9

   By: Bimal jain

News

1. Competition Commission of India brings-out Policy Note on ‘Making Markets Work for Affordable Healthcare’

2. High level Vietnamese delegation in Delhi for trade talks with TPCI

3. Cabinet approves MoU between the Institute of Chartered Accountants of India and Certified Professional Accountants Afghanistan (CPA Afghanistan)

4. Cabinet approves appointment of Adjudicating Authority and establishment of Appellate Tribunal under Prohibition of Benami Property Transactions Act, 1988

5. Cabinet approves Memorandum of Understanding between India and Singapore on setting up of a joint working group on FinTech

6. Cabinet approves signing of Bilateral Investment Agreement between India Taipei Association in Taipei and the Taipei Economic and Cultural Center in India

Notifications

DGFT

1. 42/2015-2020 - dated 23-10-2018 - FTP

Amendment of import policy condition of Pet Coke

GST

2. 57/2018 - dated 23-10-2018 - CGST

Seeks to exempt post audit authorities under MoD from TDS compliance

3. 56/2018 - dated 23-10-2018 - CGST

Exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration - But, e-way bill is required.

Income Tax

4. 73/2018 - dated 23-10-2018 - IT

Income–tax (Dispute Resolution Panel) (First Amendment) Rules, 2018

5. 72/2018 - dated 23-10-2018 - IT

Income–tax (10th Amendment) Rules, 2018 - Form of appeal to the Appellate Tribunal

6. 71/2018 - dated 22-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Gujarat Real Estate Regulatory Authority’, Gandhinagar, a body constituted by the Government of Gujarat, in respect of the specified income arising to that body

7. 70/2018 - dated 22-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘District Legal Service Authority’ constituted by Government of Haryana for every District in the State of Haryana in exercise of powers conferred by sub-section (1) of section 9 of the Legal Services Authorities Act, 1987 (Central Act No. 39 of 1987), as a ‘class of body’ in respect of the specified income arising to that body

8. 69/2018 - dated 22-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘West Bengal Unorganised Sector Workers Welfare Board’, Kolkata, a board constituted by the Government of West Bengal, in respect of the specified income arising to that board

9. 68/2018 - dated 22-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Kozhikode District Sports Council, Kozhikode’, a body constituted under Section 9 of the Kerala Sports Act, 2000 (Act 2 of 2001), in respect of the specified income arising to that body

SEZ

10. S.O.5347 (E) - dated 17-10-2018 - SEZ

Central Government notifies the 10.43 hectares area at Sy. No. 20/3, Kesarapalli Village, NH-5, Gannaavaram Mandal, Vijayawada, Andhra Pradesh and constitutes a Approval Committee

Circulars / Instructions / Orders

Customs

1. 39/2018 - dated 23-10-2018

Electronic sealing – Deposit in and removal of goods from Customs bonded Warehouses, clarification - reg.

2. 67/2018 - dated 20-9-2018

Uploading of Supporting Documents - Mandatory - Reg

Highlights / Catch Notes

GST

• Casual taxable persons selling handicrafts are exempt from GST registration but must generate e-way bills for transport.

  Notifications : Exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration - But, e-way bill is required.
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• Court to Reconsider Petitioners' Claim on Failed GST TRAN-1 Filing Due to Server Error, Input Tax Credit at Stake.

  Case-Laws - HC : Rejection of petitioners’ request to receive their return in FORM GST TRAN-1 which would enable them to claim input tax credit for the tax paid prior to the introduction of GST - The impugned order does not deal with the petitioners’ claim of inability to file their return in FORM GST TRAN-1 on 27.12.2017 because of server error. - To be reconsidered afresh.
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• Inter-state transfers of rented, leased, or hired medium heavy-duty cranes are taxable under GST without usage rights transfer.

  Case-Laws - AAR : Supply or not - inter-state branch transfers - levy of GST - providing medium-sized heavy-duty cranes on rental/lease/ hire basis to its clients without transferring the right to use the cranes - the movement is a taxable supply - GST would be payable on the movement of both type of cranes i.e. tyre mounted cranes and crawler cranes.
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• Goods and Vehicle Detained Over E-way Bill Issue; Discrepancy in Order Timing Raises Concerns of Malintent.

  Case-Laws - HC : Detention of goods with vehicle - production of e-way bill - while passing the impugned order dated 27.03.2018 no time has been mentioned by the respondent no. 2 whereas while issuing notice/detention memo he has specifically mentioned the time. This clearly goes to show the ill intention on the part of the respondent no. 2.
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• Seizure Order Invalidated: E-way Bill Not Mandatory Before March 31, 2018; Section 129(1) & 129(3) Set Aside.

  Case-Laws - HC : Validity of Seizure Order u/s 129 (1) - goods not accompanied with E-way bill - Admittedly, till 31st March, 2018 it was not mandatory to download the E-way bill from the official portal - The order as passed on 25.3.2018 and the show cause notice issued u/s 129 (3) of the Act are hereby set aside
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• Seizure of Goods u/s 129(1) Deemed Illegal Due to Lack of Transaction Declaration Form, Penalty Inapplicable.

  Case-Laws - HC : Seizure of goods u/s 129(1) - Transaction Declaration Form (T.D.F.) was not attached with the consignments - the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is clearly illegal.
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• Court Directs Petitioner to Submit Representation on GST Impact for Pre-July 1, 2017 Railways Contracts.

  Case-Laws - HC : Implication of GST on the contracts between petitioners and Railways entered into before 1.7.017 - Since the petitioner has not given a representation to the authorities, the Court directs him to do so within a time frame
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• EOT Grab Cranes in Waste to Energy Plants Classified Under Sl. No 234, Schedule I with 5% IGST Rate.

  Case-Laws - AAR : Classification of goods - rate of GST - EOT Grab Cranes are integral part of the Waste to Energy Plants project for manufacturing and generation of end product of electricity and therefore the EOT Grab Cranes being used in waste to energy plant - covered under Sl. No 234 of Schedule I - liable to IGST @5%.
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Income Tax

• Income-tax (10th Amendment) Rules, 2018: New Form for Appeals to Appellate Tribunal to Streamline Tax Process.

  Notifications : Income–tax (10th Amendment) Rules, 2018 - Form of appeal to the Appellate Tribunal
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• 2018 Amendments Revamp Income Tax Dispute Resolution Panel Rules for Improved Efficiency and Clarity in Tax Matters.

  Notifications : Income–tax (Dispute Resolution Panel) (First Amendment) Rules, 2018
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• Unabsorbed Depreciation Can Offset Long-Term Capital Gains Even with Late Filing, Section 32(2) Prevails Over Section 139(1.

  Case-Laws - AT : Disallowing set-off of unabsorbed depreciation against income of long Term Capital Gain - belated filing of returns of income - the condition of filing return of income within the time prescribed u/s. 139(1) of the Act is not applicable for the provisions of sec. 32(2).
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• Arm's Length Price Unaffected by Business Tools If Functions and Filters Are Consistent for Tax Comparability.

  Case-Laws - AT : Determination of arm's length price - Merely because the assessee is carrying on its business through different tools simply cannot make it non comparable, if the functions performed by them and various filters applied in accept/ reject matrix allows it to be included.
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• Administrative Services Not Classified as "Fees for Technical Services" u/s 9(1)(vii) or India-South Africa Tax Treaty.

  Case-Laws - AT : Fees for technical services - the consideration received by the assessee for rendering purely administrative services, cannot be brought within the sweep of the definition of “FTS” within the meaning of Explanation 2 to Sec.9(1)(vii) of the Act or Article 12 of the India-South Africa tax treaty.
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• Section 80IC: Assembling Watch Parts Qualifies as Manufacturing for Income Tax Deduction Eligibility.

  Case-Laws - AT : Deduction u/s 80IC - proof of manufacturing activity - assembling of various parts in a specified manner and the net results into watches which are used by the public at large for different purposes and is commercially known differently, therefore, it amounts to manufacturing.
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• Assessment Officer Can't Dictate Business Cash Use; CIT(A) Approves Accounting Method u/s 68, No Income Additions Needed.

  Case-Laws - AT : Addition u/s 68 - AO cannot determine how the cash should be utilized in the business. Ld. CIT(A) has already verified the method of accounting and he has satisfied with the method. - No additions.
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• Charitable Exemption u/s 11 Stands Despite Rejection of Previous Approval u/s 10(23C)(vi).

  Case-Laws - AT : Exemption u/s 11 - Charitable activity - exemption cannot be denied merely on the ground that, earlier the approval u/s 10(23C)(vi) was rejected.
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• Mandatory Penalty for Late TDS Returns u/s 272A(2)(k); Possible Waiver with Reasonable Cause per Section 273B.

  Case-Laws - AT : Penalty levied u/s 272A(2)(k) r.w.s. 200(3) - late filing of TDS Returns - the word used in section is ‘shall’ and not ‘may’ - But, penalty can be deleted in case the assessee fulfills the conditions of reasonable cause as provided in section 273B
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• Tax Deduction Dispute on Interest Payments to NBFC u/s 194A, Verification Ordered by Assessing Officer.

  Case-Laws - AT : TDS u/s 194A - payment of interest to NBFC - addition u/s 40(a)(ia) - IT is claimed that NBFC has included interest into its income - admission of additional evidence - CA certificate filed by the assessee not admitted by the CIT(A) - CA certificate admitted - AO directed to verify the facts.
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• Interest Income from FDRs and NSCs Classified as Business Income, Not Other Sources, Part of Total Business Receipts.

  Case-Laws - HC : The interest income from FDRs and NSCs of the petitioner has to be treated as income from business and not income from other sources as the income is part of the total receipts and not from other sources.
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Customs

• Customs Officers Must Accept e-SANCHIT Documents; Hard Copies Not Required When Uploaded Digitally.

  Circulars : Uploading of Supporting Documents - Mandatory - no officer shall insist on hardcopy of documents when it is on e-SANCHIT.
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• Transaction Value Rejected; NIDB Data Not Mandatory, Lacks Evidence for Officer's Doubt Under Relevant Rules.

  Case-Laws - AT : Valuation - related person - Rejection of transaction value at the time of reviewing order - Since, NIDB data is not a mandatory requisite under the Rules, the same cannot be held to be a cogent evidence proving the reasonable doubt of the assessing officer.
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• Customs Commissioner in Noida Lacked Authority to Adjudicate Mis-Declared SEZ Import Case Involving Three Consignments.

  Case-Laws - AT : SEZ unit - mis-declaration of description and value of imported goods - The Commissioner of Customs, Noida did not have jurisdiction to adjudicate matter related to import of three consignments by the importer who was a unit located in SEZ, Noida
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DGFT

• DGFT Revises Import Policy for Pet Coke to Enhance Environmental Compliance and Sustainability; Importers Must Adapt Strategies.

  Notifications : Amendment of import policy condition of Pet Coke
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Indian Laws

• Trial Judge's Error Overlooked in Cheque Dishonor Case; Conviction Affirmed Without Addressing Mistake by Appeal Judge.

  Case-Laws - HC : Dishonor of Cheque - I am saddened to note that even the Additional Session Judge, while dealing with the Criminal Appeal, did not notice the error committed by the trial Judge and he affirmed the Judgment of conviction passed by the trial Judge, as it is.
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Wealth-tax

• Royal Buggy Exempt as 'Work of Art' Under Wealth Tax Act, Tribunal Erred with Outdated Judgment.

  Case-Laws - HC : Treatment to the Royal Buggy as ‘work of art’ and exempted u/s 5(i)(xii) of the Wealth Tax Act, 1957 - ITAT committed an error for applying an old Judgement which was prior to the amendment for the subsequent period.
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Service Tax

• Appellant's Deliberate Service Tax Shortfall Due to Rate Increase Leads to Confirmed Demand for Outstanding Payment.

  Case-Laws - AT : Short payment of Service Tax on account of enhancement in rate of tax - The appellant herein had deliberately not made the payment for the impugned period - Demand has rightly been confirmed
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• Cash Refund of CENVAT Credit Approved for Export of Performance-Based Services, Including Technical and Consultancy Work.

  Case-Laws - AT : Cash Refund of accumulated CENVAT Credit - export of services or not? - Performance based service - the technical and consultancy service, commences from the stage of undertaking test on the goods procured and completes on delivery of the necessary test report to the overseas client - refund allowed.
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• Appellant Gains Entitlement to Service Tax Rebate Due to Retrospective Amendments, Overturning Initial Adjudicating Authorities' Decision.

  Case-Laws - AT : Rebate/Refund of service tax - Though in the circumstances available before the adjudicating authorities, the order had no infirmity but in view of the subsequent amendments, which have been given the retrospective effect entitling the appellant for the rebate.
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• CENVAT Credit Allowed for Re-Insurance Input Services Due to Nexus with Output Service, Aligns with Statutory Obligations.

  Case-Laws - AT : CENVAT Credit - input services - the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy - credit allowed.
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• Educational Institute Exempt from Service Tax; Not a Commercial Training Center per Section 65(27) of Finance Act.

  Case-Laws - AT : Coaching services - The appellant is an Institute, which issues certificates, degree or diploma on educational qualifications recognized by law, as in force, during the relevant time and accordingly, were not a Commercial Training or Coaching Centre as defined under Section 65(27) of the Finance Act.
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• Court Rules Scholarships Excluded from Taxable Service Valuation; Demand Overturned.

  Case-Laws - AT : Valuation of taxable services - inclusion of amount of concession in the name of scholarship given by the appellant to its various students in assessable value - not allowed - demand set aside.
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• Commissioner (Appeals) Must Issue De Novo Order, Consider Facts and Grounds, and Provide Hearing Opportunity.

  Case-Laws - AT : The Commissioner (Appeals) has only given general principles for granting the refund without adverting to the facts of the present case - Commissioner (Appeals) directed to pass a De novo order after considering the facts and the grounds of appeal and after affording an opportunity of hearing to the appellant
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• Authorities Overlooked ST-3 Returns, Relied Only on Finance Act Section 66D(3), Leading to Record Error.

  Case-Laws - AT : The absence of adjudicating authorities below qua the ST-3 Returns as provided by the appellant alongwith aforesaid reply and completely ignoring the same while solely relying upon Section 66D sub clause (3) of the Finance Act seems to be an error apparent on record.
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Central Excise

• Flexible Plastic Hollow Corrugated Board Confirmed Under Heading 3916; Exemption Benefits Secure Under Central Excise Tariff Act, 1985.

  Case-Laws - AT : Classification of goods - flexible plastic hollow corrugated board - The classification of the said goods under heading no.3916 of the Schedule to the Central Excise Tariff Act, 1985 has attained finality which cannot be re-opened to deny the benefit of exemption.
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• Appellant's Intentional Non-Compliance with Excise Laws Highlights Consequences of Evading Tax Responsibilities Under Excise Regulations.

  Case-Laws - AT : Clandestine removal - Since ignorance of law can never be an excuse, the non-registration and non-discharge of the excise liability on the part of the appellant cannot be ruled out to be a strategy to avoid his liability.
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• SEZ Unit Denied Refund Claim for Benefits Before Official Designation; Benefits Apply Post-SEZ Status Only.

  Case-Laws - AT : SEZ Unit - refund claim - The appellant was awarded the status of SEZ w.e.f. 16 November, 2010 whereas appellant is claiming benefit of the said notification for the period prior to the attaining the status of SEZ - not allowed.
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• Show Cause Notice Invalid: Amendments via Corrigendum and Revenue Neutrality Make Extended Limitation Period Unsustainable.

  Case-Laws - AT : Validity of SCN - amendment made in SCN by way of corrigendum - the Show Cause Notice is not sustainable for invoking the extended period of limitation, only for the sake of change of opinion and the situation being wholly revenue neutral.
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• Appellant Can Choose Between 0% or 4% Duty Notifications; Denial of Credit Deemed Unjustified.

  Case-Laws - AT : Rebate Claim - on the same date there were two notifications one of which prescribed nil rate of duty and the other prescribed 4% duty - The appellant can opt for a notification which is beneficial to him - Thus, the denial of credit is without any basis and unjustified.
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Case Laws:

• GST

• 2018 (10) TMI 1245
  Levy of GST - Rate of tax - civil works contract for construction of roads, factory godown etc, for M/s. Madhepura Electric locomotive private limited, Madhepura (MEL) - exemption under N/N. 20/2017. Held that:- M/s. Madhepura Electric locomotive private limited, Madhepura (MEL) is a Joint Venture company, which is formed as a Special Purpose Vehicle (SPV) - Electric Locomotives will be manufactured by Madhepura Electric locomotive private limited, Madhepura, which will be suppled to Indian Railways against Valuable Consideration - also, the locomotives would be maintained by this company. The works contract are given by MEL to M/s. Tata Project pvt. ltd. for construction of factory, roads, godowns etc - Works done by M/s. Tata Project will get covered under Section 2(119), and the works done by Tata Project will not be connected to Railways. Ruling:- Works done by Appellant Tata Project is not connected to railways and is not covered under N/N. 20/2017-(tax), Sl. no. 3(V) - the same wil be taxable at 9% GST and 9% CGST.

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• 2018 (10) TMI 1244
  Levy of GST - whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags - supply to Army by applicant against tender - weight not mentioned - Scope of unit container - slaughtering and processing of sheep/ goat meat and supplies these products to army against tender - N/N. 1/2017 and 2/2017 - Integrated Tax (Rate) both dated 28th June 2017and further amended by notification no 43/2017 and 44/2017- Integrated Tax (Rate) both dated 14th November, 2017. Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by applicant against tender shall qualify as product put up in unit container ? Held that:- This authority has already given ruling on the same issue in case of M/S. Ahmednagar District Goat Rearing and Processing Co-operative Federation Ltd. [2018 (5) TMI 1393 - AUTHORITY FOR ADVANCE RULING - MAHARASTRA]. In this case this authority held that whole animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such bags further packed in HDPE bags being supplied to Army against tender shall qualify as product put up in unit container . It was further held that impugned product will be covered by schedule entry 4 of the notification of 1/2017 - Integrated Tax (Rate) during the period 01/07/2017 to 13/11/2017 and schedule I of the said notification for the period from 14th November, 2017 onwards. It is required to examine whether the facts mentioned in respect of M/S Ahmednagar District Goat Rearing and Processing Cooperative Federation Limited as presented at the time of proceedings in that case, have any similarity with the facts of the present case. From the facts submitted by the applicant and ascertained and vetted by jurisdictional officer by paying visit to the factory we find that the facts of the present case are partly different from the facts in the case of M/s. Ahmednagar District Goat Rearing and Processing Co-operative Federation Ltd. - To summarize the facts we find that the period in case of ARA ruling is from 01/07/ 2017 till present and going forward whereas in case of appellant it is from 01/04/2018 till present and going forward. The product supplied in both the case is same i.e. frozen goats and sheep carcass. However in respect of packaging of the product supplied which is a crucial aspect with respect to tax liability being there or not, we find that there is a part difference. In case of applicant there is no printing or marking of weight or number of carcass packed in such bags and there is no mentioning of brand name. Further as per the tender pursuant to which impugned supplies are to take place there is no requirement from Army regarding mentioning weight or number on the packaging material. Whereas in case of M/S. Ahmednagar District Goat Rearing and Processing Co-operative Federation Ltd packaging conditions mentioned in Terms and Conditions RFP given by Army required mentioning of actual weight on the secondary packaging. Unit Container - Held that:- Each package is containing different weight and no weight/number is mentioned on packages. In view of above we are convinced that impugned supply would not satisfy the requirement of the definition of unit container as found in both the notifications - the supply of whole sheep/ goat carcass in frozen state packed in LDPE bag and further packed in HDPE bag which do not indicate any information related to weight /number of the carcass packed in such bags would tantamount to being as a product not put up in a unit container for the purpose of notification 1/2017and 2/2017- Integrated Tax (Rate) dated 28th June, 2017. Whether the products as mentioned in query 1 shall be taxable under GST as per entry no. 4 of schedule II of the Notification no. 1/2017-lntegrated Tax (Rate) dated 28th June 2017 up to 14th November 2017 and thereafter as per entry no. 1 of schedule I of the Notification No, 43/2017-lntegrated Tax (Rate) dated 14th November 2017 or fall under exemption list as per entry no 10 of Notification No. 2/2017-lntegrated Tax (Rate) New Delhi dated 28th June 2017 up to 14th November 2017 and thereafter as per entry no. 9 of the Notification No. 44/2017-lntegrated Tax (Rate) dated 14th November 2017? - Held that:- The period relevant in respect of present application for Advance Ruling as stated by the applicant is from 1st April, 2018 till present and continuing period. We therefore restrict ourselves to the entry as is applicable for the period from 1st April, 2018. The supply of whole sheep/ goat carcass in frozen state packed in LDPE bag and further packed in HDPE bag which do not indicate any information related to weight [number of the carcass packed in such bags would not be a product put up in a unit container for the purpose of notification 1/2017and 2/2017- Integrated Tax (Rate) dated 28th June 2017. As such impugned supply is covered by notification 2/2017 - Integrated Tax (Rate) dated 28th June, 2017 as amended by serial 9 Of the notification no. 44/2017 - Integrated Tax (Rate) dated 14th November, 2017 and would be exempt from whole of GST as per this Notification. Ruling:- The whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by applicant against tender shall not qualify as product put up in unit container . The impugned product would be covered by notification 2/2017 - Integrated Tax (Rate) dated 28th June, 2017 as amended by serial no.9 of the Notification no.44/2017 - Integrated Tax (Rate) dated 14th November 2017 and would be exempt from whole of GST.

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• 2018 (10) TMI 1243
  Classification of goods - rate of GST - Electric Overhead Traveling Grab Crane (EOT Grab Crane) - N/N. 1/2017 dated 28.06.2018- IGST (Rate). Whether the Electric Overhead Traveling Grab Crane (EOT Grab Crane) to be supplied by the applicant to the buyer for use in the waste-to-energy project is covered under SI. No 234 of Schedule I of Notification 1/2017 dated 28.06.2018- IGST (Rate) as Renewable energy devices and parts for the manufacture of waste to energy plants/devices , attracting 5% levy? Held that:- From N/N. 1/2017-lntegrated Tax Rate) dated 28 the June 2017, it is seen that the prescribed rate of tax@ 5 % is applicable to those supplies which are renewable energy devices parts for their manufacture. Thus to avail the benefit of notification entry as above applicant has to satisfy two conditions namely, that the goods must be covered by chapter heading 84 , 85 or 94 and secondly the goods shall satisfy the description renewable energy devices parts for their manufacture and the applicant is claiming their goods would be covered under entry ( e) of this Sr. No.234 of this notification which reads as under waste to energy plants /devices.. Whether the goods are covered under chapter heading 84 or 85 of the Central Excise tariff code? - Held that:- Chapter heading 84 is related with Nuclear reactors, boilers, machinery, and mechanical appliances, parts thereof. The relevant Tariff heading with sub heading and Tariff Items are produced herewith - The Tariff heading 8426 covers the items SHIP S DERRICKS; CRANES INCLUDING CABLE CRANES; MOBILE LIFTING FRAMES, STRADDLE CARRIERS AND WORKS TRUCKS FITTED WITH A CRANE. The Applicant is claiming to supply the 15 T EOT crane with 8.0 CUM Smag peiner make Grab i.e. the Electric Overhead Travelling Grab Cranes [ 2 quantity] to the waste to energy project. The above cranes are the overhead travelling cranes on fixed support. It is attached to the main plant, at the project site. From the above table we find that the impugned product is classifiable under Tariff heading 84261100 as overhead travelling cranes on fixed support . Thus applicant satisfies first condition that the goods are covered chapter 84. Whether the impugned goods i.e. Electric Overhead Travelling Grab Cranes is a device or parts for the manufacture of especially waste to energy plants / devices? - Held that:- The Word devices and parts are not defined under the provision of IGST Act or Rules or the notifications issued thereunder. We may refer to the dictionary meaning of the words. The dictionary meaning of devices is as - The Devices means - an object or machine that has been invented to fulfill a particular purpose - The dictionary meaning reveals that EOT Grab Cranes is a device. EOT Grab Cranes are integral part of the Waste to Energy Plants project for manufacturing and generation of end product of electricity and therefore the EOT Grab Cranes being used in waste to energy plant as per details given in present case clearly fall under serial no. 234 of schedule of notification 1/2017 - Integrated Tax (Rate) and liable to IGST @5%. Ruling:- The EOT Grab Cranes fall under serial no. 234 of schedule of notification 1/2017 - Integrated Tax (Rate) and liable to IGST @5%.

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• 2018 (10) TMI 1242
  Supply or not - inter-state branch transfers - levy of GST - providing medium-sized heavy-duty cranes on rental/lease/ hire basis to its clients without transferring the right to use the cranes - As the movement of cranes involves significant time and cost, SML has set up various branches (SML branch offices) across India at strategic locations to minimize transportation time and costs - with the introduction of GST with effect from 1 July, 2017, all the branches of a single legal person located in different States are treated as distinct person and any supply of taxable goods/ services between distinct persons with or without consideration, is subject to applicable GST. Whether movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to customers would be treated as taxable supply under GST law or whether GST would not be let-liable on the said movement as per the clarification issued by the CBEC vide Circular No. 21/ 21/ 2017 - CGST read with Circular No. 1/ 1/ 2017 - IGST? - Held that:- From the co-joint reading of section 7 and schedule - II applicant s activity of providing crane on hire is nothing but transfer of right in cranes without the transfer of title thereof and is therefore a is supply of services - if we read this provision with activities to be treated as supply even if made without consideration as mentioned in Schedule-I of the GST Act, we find that supply of goods or services or both between related person or distinct person without any consideration, when made in the course or furtherance of business is also supply as contemplated in section 7 of the GST Act - this supply is not exempt from tax under the GST Act and hence is a taxable supply. IGST would be leviable on the interstate movement of both type of cranes from SML HO to SML branch offices registered in another state for further supply on hire charges to customer and thus the circular 21/21/2017-IGST is not applicable to the facts of the present transaction. If GST is payable on the aforesaid transaction, whether the recipient office of SML duty registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit of GST charged? - Held that:- This question is in respect of recipient office of SML registered under the GST Act in a taxable territory other than Maharashtra State. We are, therefore, of the opinion that applicant is not proper person to raise this question and therefore we are not expressing our opinion on this question. In case when a lyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purpose, without any further supply to unrelated customers, whether such movement of crane would be treated as taxable supply under the GST law or can it be said that it would not tantamount to supply as per clarification issued by the CREC vide Circular No. 21/ 21/ 2017 - CGST read with Circular No. 1/1/2017 - IGST? - Held that:- Only that interstate movement of tyre mounted crane or crawler crane wherein the crane is moved from registered office of SML in the state of Maharashtra to another registered office of SML in other state and the movement iss solely for the purpose of upkeepment and maintenance purpose and not for further supply of the crane on hire charges - the situation as mentioned above is squarely covered by the clarification issued by Tax Research Unit vide circular no. 21/21/2017- GST DT. 22nd November, 2017. As such the interstate movement of cranes is neither a supply of goods nor supply of services and consequently no IGST would be applicable on such movement. However, tax is leviable on repairs and maintenance done for such goods. Whether GST would be payable Only on the movement of tyre-mounted cranes being goods on wheels or GST would also be payable on movement of both types of cranes (i.e. tyre-mounted cranes and crawler cranes)? - Held that:- Both types of cranes i.e. tyre mounted cranes and crawler cranes are covered by the expression all goods on wheel [like crane] used in the circular No. 21/21/2017-GST and as such GST would be payable on the interstate movement of both types of cranes from SML HO Maharashtra to SML branch office in other state for further supply of such cranes on hire charges. What should be the value under section 15 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the rules made thereunder for discharging applicable GST on movement of cranes from one GST registered office to another registered office in case the said movement is considered to be a taxable supply? - Held that:- The transaction between SML HO and SML branch office is supply having regards to Section 25(4) and Schedule I of the GST Act. As per section 25(4) of the GST Act, as mentioned above, the SML HO and SML Branches are distinct persons for the purpose of this Act and as per schedule-I supply even if made without any consideration between two distinct persons as specified in section 25(4) is also supply when made in the course or furtherance of business - In the present transaction of supply we find that value considered by the applicant for levying GST is approximately 95% of the value charged to the customer by the SML. Branch. The determination value of supply as aforesaid by the applicant is as per the first proviso to Rule 28 of the GST Rules. We presume that SML Branches are eligible for full input tax credit. In such situation and as per Second proviso to Rule 28 of the (GST Rules, the value declared in the invoice shall be deemed to be open market value. In view of this we do not find any irregularity in the value of supply considered by the applicant for levying GST which is approximately 95% of the value charged by SML branches to the Customer of the branches. Ruling:- The movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to customers would be treated as taxable supply under GST law - Further circular No.2i/21/2017- IGST which exempts from tax interstate movement of rigs, tools, spares, and al! goods on wheels [like cranes] where interstate movement of such goods is not for further supply of same goods is not applicable to the facts of present transaction as in the present case interstate movement of goods from SML HO in Maharashtra to SML branches in other states is for further supply of goods on hire. The question whether the recipient office of SML duty registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit of GST charged, is not answered by this authority as the applicant is not the proper person to raise this question. In case when a tyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purpose, without any further supply to unrelated customers, such movement of crane would not be treated as taxable supply under the GST law - The impugned movement as per circular 21/21/2017-GST would be neither as a supply of goods nor supply of service. However, taxis leviable on repairs and maintenance done for such goods. GST would be payable on the movement of both type of cranes i.e. tyre mounted cranes and crawler cranes. The value for the purpose of section 15 where the recipient branch office in other state is eligible for full input tax credit would be the value declared in the invoice as open market value of the services for the purpose of levy of tax and alternatively and amount equivalent to 90% of the price charged for the supply of goods of like, kind and quality by the recipient to his customer.

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• 2018 (10) TMI 1241
  GST default - Bail application - offence committed under Section 132(1)( c) read with Section 132(5) of the Central Goods Services Act, 2017 - Relaxation and/or modification and/or waiver of the conditions of the bail - Held that:- GST Authority and their Investigating Officer has failed to submit charge sheet against the petitioners and even no extension of time to complete the investigation has been sought for by them. The courts cannot extend investigation period under Section 167 of the Code of Criminal Procedure. This Court is pleased to relax the conditions of bail imposed by this Court s order dated July 12, 2018 so as to enable their release on bail as they have statutory right to be released and further bearing in mind the principles as to presumption of innocence and the right of liberty guaranteed under Article 21 of the Constitution of India and accordingly the petitioners be released on furnishing personal bond of Rs. 50,00,000/- each to the satisfaction of learned Additional Chief Judicial Magistrate, Sealdah - application disposed off.

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• 2018 (10) TMI 1240
  Validity of order - rejection of petitioners request to receive their return in FORM GST TRAN-1 which would enable them to claim input tax credit for the tax paid prior to the introduction of GST - Held that:- The petitioners claim that their representation dated 14.03.2018, made by them to the GST Council, is still pending consideration of the Council. It is wholly unnecessary for us to examine whether or not the inability of the petitioners to submit their return, in FORM GST TRAN-1 by 27.12.2017, was on account of technical glitches or a server error or any such other difficulties, as these are all matters for the 3rd respondent to examine. The impugned order dated 27.06.2018 does not deal with the petitioners claim of inability to file their return in FORM GST TRAN-1 on 27.12.2017 because of server error; and, instead, relies on general statistics to justify rejection of the petitioners claim to have made attempts to file FORM GST TRAN-1 on 27.12.2017. Since the petitioners are entitled to have their case considered in accordance with law, and in terms of the notifications dated 10.09.2018 and the order dated 17.09.2018, the impugned order dated 27.06.2018 is set aside - petition disposed off.

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• 2018 (10) TMI 1239
  Implication of GST on the contracts between petitioners and Railways entered into before 1.7.017 - works contract services done by the petitioner for the work orders entered into prior to introduction of GST and works completed after implementation of GST - the petitioner, without submitting any representation to the respondents, has straight away approached this Court and seeks for a direction - Circular dated 27. 10. 2017. Held that:- The said contention is not acceptable for the reason that the Circular issued by the Railway Board dated 27. 10. 2017 states that for dealing with the impact of GST in individual contracts, a supplementary contract has to be entered into. Therefore, to study the impact of GST in individual contracts, occasion may arise for the Railway Administration to consult the 5th respondent and in such an event, the 5th respondent would be in a position to issue necessary clarification or guidelines to the Railway Administration. Since the petitioner has not given a representation to the authorities, the Court directs him to do so within a time frame - petition disposed off.

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• 2018 (10) TMI 1238
  Seizure order u/s 129(1) of the U.P. GST Act, 2017 - penalty u/s 129(3) of the said Act - Transaction Declaration Form (T.D.F.) was not attached with the consignments - Held that:- The issue is settled in the case of SATYENDRA GOODS TRANSPORT CORP. THRU. PROP. BHUWAN KOHLI A VERSUS STATE OF U.P. THRU. PRIN. SECY. TAX REGISTRATION OTHERS [ 2018 (4) TMI 807 - ALLAHABAD HIGH COURT] , where it was held that On the relevant date i.e. 17.12.2017 there was no requirement of carrying T.D.F. Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the C.G.S.T. Act 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is clearly illegal. The impugned seizure order dated 24.03.2018 passed by respondent no. 2 under Section 129(1) of the Act, 2017 and consequential notice issued under Section 129 (3) of the said Act are rendered illegal and are not liable to be sustained - petition allowed.

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• 2018 (10) TMI 1237
  Validity of Seizure Order u/s 129 (1) of UPGST Act, 2017 - penalty u/s 129 (3) of the Act - goods not accompanied with E-way bill - petitioner has submitted that since the respondent No. 2 has directed for furnishing/presentation of the E-way bill, the same has been downloaded from the official portal on 24.3.2018 at 7:30 PM i.e. just after half an hour from detention/interception of the vehicle and there is no malafide intent. Held that:- The writ petition clearly indicates the charge of IGST at the rate of 18% on value of the goods has been paid - even the net value which includes the value of the goods as well as tax charged has been duly mentioned by the transporter while issuing the goods receipt. There is no other reason except of non submission of the E-way bill at the time of interception of the vehicle in question. We have also perused the E-way bill which has been generated by the person Incharge of the vehicle immediately within half an hour from the time of detention/interception of the vehicle - We failed to understand as to why the authority has not considered all the aforesaid relevant facts and has arrived to a conclusion that the transaction in question was not a bonafide transaction and has seized the goods and vehicle. Admittedly, till 31st March, 2018 it was not mandatory to download the E-way bill from the official portal. We find the substance in the submission of the learned counsel for the petitioner that only with effect from 1st April, 2018 the requirement of downloading of the E-way bill is compulsory - thus, the goods were bonafidely dispatched and are travelled from Raipur for the delivery at Basti are illegally and arbitrarily detained by the respondent No.2. The order passed under Section 129 (1) of the Act passed on 25.3.2018 and the show cause notice issued under Section 129 (3) of the Act are hereby set aside - petition allowed.

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• 2018 (10) TMI 1236
  Detention of goods with vehicle - production of e-way bill - respondent has directed the petitioner to appear and file his reply before him on 28.03.2018 at 11-00 a.m. whereas the impugned seizure order has been passed on 27.03.2018 - Held that:- The impugned seizure order cannot sustain in the eyes of law as the same has been passed ignoring the fact that the time and date has been given by the respondent no. 2 to the petitioner for appearance and for production of the relevant documents on 28.03.2018, whereas the order has been passed on a day before the date allowed by the respondent no. 2. Also, while passing the impugned order dated 27.03.2018 no time has been mentioned by the respondent no. 2 whereas while issuing notice/detention memo he has specifically mentioned the time. This clearly goes to show the ill intention on the part of the respondent no. 2. The seizure order dated 27.03.2018 passed by the respondent no. 2 as well as consequential notice issued under Section 129(3) of the Act are quashed - petition allowed.

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• Income Tax

• 2018 (10) TMI 1267
  Reopening of assessment - no information with regard to DEPB or Duty Draw Back was furnished by the appellant - deduction under Section 10BA - Held that:- We find that the questionnaire issued to the assessee during the assessment proceedings and the assessment order dated 19.11.2010 passed on that basis make it clear that no information with regard to DEPB or Duty Draw Back was furnished by the appellant. There was indeed no adjudication on that aspect of the matter and, therefore, the concurrent view taken by the lower authorities cannot be faulted with. The appellant failed to show from the record whether the Assessing Officer has indeed considered the issue of allowability of deduction under Section 10BA of the Act in respect of Duty Draw Back. Had this issued been actually considered, some query would certainly have been raised on this aspect and reply thereto, if any, would also have been submitted by the appellant. Obviously, the Assessing Officer did not apply his mind to this aspect of the matter. Since the appellant failed to point out that the Assessing Officer formed any opinion on this issue, it cannot be held that initiation of re-assessment proceedings under Section 148 of the Act was based on mere change of opinion. It is only when the Assessing Officer later realised that the deduction under Section 10BA of the Act was not allowable in respect to Duty Draw Back and that exemption of Rs. 15,88,601/- was allowed on account of this mistake, he initiated re-assessment proceedings by recourse to Section 148 of the Act vide notice dated 29.03.2012. - decided in favour of revenue. Deduction u/s 10BA - DEPB and DDB received by appellant - CIT(A) relying upon the judgment of the Supreme Court in Liberty India [2009 (8) TMI 63 - SUPREME COURT] held that Duty Draw Back and other such incentives are not profits derived from the eligible business and accordingly exemption under Section 10BA of the Act cannot be allowed - Held that:- In CIT Jaipur Vs. Suresh Kumar Bajoria [2017 (5) TMI 1492 - RAJASTHAN HIGH COURT] remanded the matter back to the Assessing Officer to reconsider the entire material all over again. Thus Impugned judgments are set aside to that extent and the matter is remanded back to the Assessing Officer to decide the same afresh in accordance with law, however, leaving it open for both the parties to raise all the contentions before the Assessing Officer. We make it clear that we have not expressed any opinion so far as the second substantial question of law is concerned.

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• 2018 (10) TMI 1266
  Stay of demand - additions made to the income of the Appellant by the AO stem from the primary finding of the AO that the Appellant has fixed place and agency Permanent Establishment in India - Appellant is a company incorporated in and is a tax resident of United States of America - penalty levied at 100% of the alleged tax sought to be evaded - Held that:- We find that in the case of CIT vs. Liquid Investment Limited [2010 (10) TMI 1021 - DELHI HIGH COURT], has held that when substantial question of law is admitted by the Hon'ble High Court, the issue becomes debatable and, therefore, no penalty u/s. 271(1)(c) is leviable. Here also substantial question of law has been admitted before the Hon’ble Delhi High Court, as stated by the Ld. Counsel for the assessee, therefore, we grant the stay on the outstanding demand in dispute for the period of 180 days or till the disposal of the Main Appeal

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• 2018 (10) TMI 1265
  Disallowance of traveling expenses - allowable busniss expenditure U/S 37 - disallowance of 50% of travel expenses being personal or capital in nature - Held that:- The assessee did discharge its burden by placing entire material on record and no addition is warranted towards disallowance of 50% of the travelling expenses and we hereby order deletion of additions as were made by the AO and confirmed by Ld. CIT(A). - Decided in favour of the assessee. Disallowance of salary expenses - AO observed that the assessee is engaged by its parent holding company in Shanghai which is the only revenue generating activity of the assessee - 20% of the salary expenses stood disallowed on the grounds of being excessive vis-a-vis turnover/income declared in return of income filed with Revenue - Held that:- The Revenue has not brought on record comparative analysis of other independent entities to bring on record cogent material to prove that the salaries paid to these employees were excessive. The only grievance of the revenue is that the said salary expenses were on the higher side vis-a-vis business generated by the assessee during the year, which in our opinion is no reason for making disallowance keeping in view factual matrix of the case and the explanation submitted by the assessee. We are of the considered view that no disallowance of 20% of the salary expenses is warranted keeping in view factual matrix of the case, which we order deletion .- Decided in favour of the assessee. Additions made u/s. 92 - assessee has purchased software for Rs. 3.2 crore from its foreign parent company based in Shanghai, China which was sold by the assessee for Rs. 3.2 crore to HCL Technologies Limited , without any mark-up for the assessee - Held that:- The contention of the assessee that it has not incurred any expenses nor it did any value addition to software supplied by the foreign parent company cannot be prima-facie accepted on its face value based on material on record and it is for the assessee to support the same with cogent evidences. The complete details to that effect are not placed by the assessee before the authorities below as well before us. Restore the matter back to file of the AO for denovo determination of the issue on merits in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.

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• 2018 (10) TMI 1264
  Disallowance set-off of Short Term Capital Loss against Long Term Capital Gain - claim rejected on the ground that assessee company did not furnish bills or vouchers in support of the sale of the said assets. Secondly, the assets which were discarded could have fetched scrap value which is not accounted by the assessee. - Held that:- the lumpsum sale consideration of Rs. 60 lakhs includes value of land and electrical installation, equipment, building, furniture, etc. AO is directed to adjust the Short term capital loss being the written done value of these assets of Rs. 6,85,490/- against the Long term capital gain on the sale of the land. With these directions, we allow this ground of appeal raised by the assessee. Additions towards waiver of loan - the assessee had applied for one-time settlement to the bank whereby the ‘principal amount’ of the loan was repaid and the interest on the loan amount was waived. The said interest though provided in the books was not claimed while computing income in view of sec.43B as the said interest was not paid. Therefore, the waiver of the interest amount was not offered for taxation. - No additions. Disallowing set-off of unabsorbed depreciation against income of long Term Capital Gain - belated filing of returns of income - Held that:- In this respect our attention was drawn to the decision of the Appellate Tribunal, Mumbai Bench,in the case of ACIT vs. Anil Printers Ltd. [2016 (4) TMI 907 - ITAT MUMBAI] wherein the Tribunal held that the condition of filing return of income within the time prescribed u/s.139(1) of the Act is not applicable for the provisions of sec.32(2) and therefore, carry forward and set off of the unabsorbed depreciation can be allowed even though the returns of those respective years were not filed within the time prescribed u/s. 139(1) of the Act. Thus we hold that brought forward unabsorbed depreciation be allowed for set off against Long Term Capital Gains and we direct accordingly. - Assessee appeal allowed.

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• 2018 (10) TMI 1263
  Disallowance of expenditure - commencement of business or not - launching of fund - Held that:- In the instant case, assessee is engaged in the business of asset management positively and in case of service industry the criteria for determining when the business can be said to have been set up will differ and would be based on the facts of each case. In the instant case, assessee company has been incorporated to manage the assets of the mutual funds and it is incorporated with the said object. Upon its incorporation, it took various steps to commence its business such as hiring of people application to SEBI, organizing for space etc, and this amounted to setting up business and the entire expenses ought to be allowed. In any case, to acting as an AMC for the fund, it is necessary for it enter into an Investment Management Agreement with the Trustee Company, which was entered into on December 15, 2006. The assessee there on started the process of launch of the fund. The assessee successfully launch the first fund in May, 2007. As stated earlier, it has already started its activities for launching of fund. We hold that the AO was not justified in not accepting the claim of the assessee that its business activities are commenced from the date of its incorporation. Accordingly, we direct the AO to verify the expenses alleged to incur wholly and exclusively for the purpose of the business to allow the same as per law - decided in favour of assessee for statistical purposes

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• 2018 (10) TMI 1262
  Determination of arm's length price of international transaction qua selection of comparables - Held that:- Assessee is primarily engaged in the business of provision of IT enabled services in the area of medical transcription to its associates enterprise and it provides such services exclusively to its foreign AE i.e. M/s. Heartland Medical Information services inc., USA. Assessee is remunerated on total cost plus basis for services rendered, thus on account of different business model, we direct the ld AO/ TPO to exclude the indifferent companies for comparability study. Merely because the assessee is carrying on its business through different tools simply cannot make it non comparable, if the functions performed by them and various filters applied in accept/ reject matrix allows it to be included. The assessee is relying on Annexure A to the Director's report where the assessee is required to show the efforts made by it in technology absorption and innovation. Further, the report says that the company has made considerable progress in development of its own web based software. Therefore, it is apparent that for the year it did not carry its business with different tools need to be added. The nature of filter applied by the TPO which is generally not applicable in service industry. The non utilization of the assets or under utilization thereof may be internal inefficiency built in of the comparable company however, when it is functionally comparable it cannot be rejected.

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• 2018 (10) TMI 1261
  Consideration received for providing Line production Services - India-South Africa DTAA - FTS or Royalty - amount received by the assessee for rendering of administrative services cannot be characterised as “FTS” - consideration received by the assessee for providing Line production Services as “royalty” and “Fees for technical services” - payments are neither taxable under Article 12 of the India- South Africa Tax Treaty nor under Section 9 of the Income Tax Act, 1961. Held that:- As the various coordination/facilitation services rendered by the assessee viz. arranging for locational crew, producer, transportation, paper work for various stunts to be performed and other requirements for setting up and filming the series etc, are in the nature of Line Production Services, thus, the same cannot be termed as technical, managerial or consultancy services. Thus, the consideration received by the assessee for rendering of the aforesaid services, which are purely administrative in nature, cannot be brought within the sweep of the definition of “FTS” within the meaning of Explanation 2 to Sec.9(1)(vii) of the Act or Article 12 of the India-South Africa tax treaty. The amount received by the assessee for rendering of the aforesaid administrative services cannot be characterised as “FTS”. we have already observed that the services rendered by the assessee to Endemol India Pvt. Ltd. are not in the nature of a managerial, technical or consultancy services, therefore, we refrain from further adverting to and adjudicating upon the observations arrived at by the A.O/DRP in context of the rulings of the Hon’ble AAR [2014 (2) TMI 902 - AUTHORITY FOR ADVANCE RULINGS]. We are of the considered view that as the term royalty under Article 12 of the India-Sought Africa Tax Treaty, takes within its sweep only consideration received for the use or right to use, any copyright, thus, the observations of the lower authorities that the consideration received by the assessee was for ‘transfer’ of the copyright to Endemol India Pvt. Ltd., in any way, would on the said count also fall beyond the sweep of the term “royalty” as defined in Article 12 of the India20 South Africa tax treaty. We thus, after deliberating on the contentions advanced by the assessee to buttress its claim that the lower authorities had wrongly characterised the amount received from Endemol India Pvt. Ltd. as ‘royalty”, are inclined to accept the same. In terms of our aforesaid observations, we are of the considered view that the lower authorities had erred in characterising the consideration received by the assessee for providing Line production Services as “royalty” and “Fees for technical services”. - Addition to be deleted - decided in favour of assessee.

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• 2018 (10) TMI 1260
  Deduction u/s 80IC - proof of manufacturing activity - as per revenue assessee failed to prove that actually 8,57,826 watches were manufactured in a year with just 13 employees, who are not professionally qualified and just with minimal electric consumption - CIT-A allowed claim - Held that:- We find that the resultant end product is commercially known differently in the trading world, therefore, certainly it can be said that the activity of the assessee amounts to manufacture, consequently, entitled to deduction u/s 80IC because, assembling of various parts in a specified manner and the net results into watches which are used by the public at large for different purposes and is commercially known differently, therefore, it amounts to manufacturing. The resultant end product is outcome of combination of efforts with the help of men and machine. So far as, assembling is concerned, the assessee gave a live demonstration in the court room with respect to the process of assembling, wherein, only some screw were tightened up of already manufactured parts and the end product resulted into a watch. At this stage, the assessee, stated that the assessee is merely screwing up some parts/components, used for manufacturing of the watches. So far as, consumption of electricity is concerned, it was explained that the electricity is used only for light purposes and it is not the case that some machinery used in the process rather broadly the screw drivers are used. Also explained that clearance is granted by the check post by the Excise and the VAT department for raw material as well as for finished watches/end product and the sales tax returns and excise returns filed by the assessee for every quarter has been accepted by the receptive Department. The assessee, during hearing before us, also filed the photocopy of the wages register to demonstrate that employees were employed and due wages were paid, therefore, it cannot be said that the assessee is not dong manufacturing activity. So far as, carrying forward losses of the unit eligible for 80IC deduction is concerned, the issue has been dealt with in para 2.3.7 of the impugned order in which also, we find no infirmity. Thus, the stand of the Ld. Commissioner of Income Tax (Appeal) is affirmed.- Decided against revenue.

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• 2018 (10) TMI 1235
  Addition u/s 14A - calculation of disallowance figures - Tribunal did not accept the figure of disallowance worked out by the assessee - Held that:- Delay condoned. The special leave petition is dismissed. The question of law is kept open.

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• 2018 (10) TMI 1234
  Penalty u/s 271(1)(c) - payment made under the VRS scheme could have been deducted only to the extent of 20% under Section 35DDA - Held that:- SLP dismissed.

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• 2018 (10) TMI 1233
  Liability of Insurance Company to deduct income tax at source (TDS) on the interest paid on the compensation paid under Motor Vehicles Act, 1988 - Held that:- Delay condoned. No merit in these Special Leave Petitions. The Special leave Petitions are, accordingly, dismissed.

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• 2018 (10) TMI 1232
  Nature of amount received as award against damages for breach of contract - capital receipt or revenue receipt - Compensation of a settlement for loss of its bottling rights with Coca Cola Company, USA - whether the amount partakes the character of income in terms of section 2(24) of the Act and to be taxed as income from other sources? - Tribunal held that compensation received was a capital receipt, that was not taxable - Held that:- SLP dismissed.

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• 2018 (10) TMI 1231
  Revision u/s 263 - denial of exemption granted by the AO u/s 54EC and 54F towards investments in capital gains by way of purchasing bonds and residential property, as those investments were made beyond the time limit specified under the aforementioned provisions - Held that:- The Special Leave Petition is dismissed on the ground of low tax effect. The question of law is kept open. Pending application stands disposed of.

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• 2018 (10) TMI 1230
  Assessment of income from the sale of 18 flats - selection of assessment year - “transfer” in terms of Section 2(47) - Held that:- The Special Leave Petition is dismissed on the ground of delay as well as on merits. Pending application stands disposed of.

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• 2018 (10) TMI 1229
  Claim as interest expenditure as business expenditure - interest on funds borrowed to purchase land which is part of inventory of the assessee company is an allowable deduction u/s 36(1)(iii) - ‘put to use’ - Held that:- The Special Leave Petition is dismissed. Pending application stands disposed of.

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• 2018 (10) TMI 1228
  Review petition - deficit of the due amount payable for the months of July to September - Held that:- Application seeking exemption from filing certified copy of the impugned order is allowed. Delay condoned. Issue Notice. When the next installment becomes due, Rs. 10 lakhs will be paid.

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• 2018 (10) TMI 1227
  Petitione's right to represent the company before and after winding up - Held that:- Admittedly, the offence was committed before the winding up proceedings were initiated against the company and at that time official liquidator had not taken over. Liability, if any, cannot operate with retrospective effect. The petitioners are responsible for omissions or commission on behalf of company when the company had not gone into the winding up. Revisional court below has dealt with the arguments raised by the petitioner relying upon the judgment of Supreme Court and Bombay High Court. No contrary judgment has been cited. Hence, no interference is warranted by the third court and all the three petitions are dismissed.

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• 2018 (10) TMI 1226
  Nature of interest income - interest received from FDRs/NSCs - discounts received from suppliers of material - income from other sources OR busniss income - nexus with business activity - Rejection of books of accounts - Held that:- We find that appellant being a civil contractor was required to provide a performance guarantee to the various works departments for obtaining contracts of civil construction. He to keep such performance guarantee alive by way of utilizing the bank overdraft limit against which he had to furnish FDRs/NSC for execution of the contracts. His failure to submit the performance guarantee or inability to keep them alive would have resulted in termination of the contract awarded to him and in that event, the concerned departments/employer could encash the security. Release of such performance guarantee is dependent on fulfillment of certain conditions. It is not that the appellant had invested surplus money lying idle with him only in FDRs/NSCs with a view to earning interest. Obtaining of FDRs/NSCs and furnishing of the same against the performance guarantee by the appellant, therefore, had an inextricable nexus with his business of securing civil contracts and integral to his working as civil contractor. The income of interest earned from the interest such FDRs/NSCs by the appellant therefore, in our considered view, cannot be treated as income from other sources and would rather be an income earned from business. The interest income from FDRs and NSCs of the petitioner has to be treated as income from business and not income from other sources as the income is part of the total receipts and not from other sources. Matter is remitted back to the AO for passing fresh order of assessment in accordance with law keeping view the question answered by this Court in THE COMMISSIONER OF INCOME TAX VERSUS M/S BHAWAL SYNTHETICS (INDIA) UDAIPUR [2017 (5) TMI 540 - RAJASTHAN HIGH COURT]

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• 2018 (10) TMI 1225
  TDS u/s 194A - payment of interest to NBFC - addition u/s 40(a)(ia) - IT is claimed that NBFC has included interest into its income - admission of additional evidence - CA certificate filed by the assessee not admitted by the CIT(A) - Held that:- CIT(A) before whom the certificate was filed for the first time rejected the same at threshold without admitting the same on the grounds that it was obtained post filing of return of income and also post assessment farmed by the AO. CIT(A) was also of the view that second proviso to Section 40(a)(ia) of the 1961 Act as introduced by Finance Act, 2012 w.e.f 01-04-2013 cannot be given retrospective effect. In the case of Ansal Land Mark Township Private Limited [2015 (9) TMI 79 - DELHI HIGH COURT] had held that insertion of second proviso to Section 40(a)(ia) of the 1961 Act is to be given retrospective effect wef 01-04-2005. CA certificate filed by the assessee is a material evidence for adjudicating this issue and we admit the said additional evidence filed by the assessee in the interest of justice. Contents of the said CA certificate was not verified by any of the authorities below and hence in the interest of justice and in fairness to both the parties, we are restoring the matter back to the file of the AO for necessary verification of the said CA certificate and thereafter if the contents of the CA certificate are proved to be correct , the AO is directed to grant relief to the assessee keeping in view second proviso to Section 40(a)(ia). Disallowance of delayed pay-in-charges to share brokers for making delayed payments against share purchased by the assessee - non deduction of TDS - Held that:- Assessee cannot be accepted and the delayed pay-in-charges payable by the assessee to sharebroker for making delayed payment of purchase consideration for purchase of shares is infact "interest" within meaning of Section 2(28A) of the 1961 Act and the assessee was required to deduct income-tax at source on such interest of Rs. 4,21,773/- within the provisions of Section 194A. Since, the assessee fails to deduct income-tax at source on this payment the assessee will be hit by provisions of Section 40(a)(ia) of the 1961 Act and the disallowance as was done by the AO and as confirmed by learned CIT(A) is upheld. The assessee fails on this issue.

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• 2018 (10) TMI 1224
  Penalty levied u/s 272A(2)(k) r.w.s. 200(3) - late filing of TDS Returns - sub-contractors not having PAN, - whether appellant was prevented from reasonable cause for not filing the Returns in time - whether appellant had paid TDS along with interest, the default remained only a technical breach and there was no malafide intention for not filing the returns within specified time? - assessee pointed out that he had not received notice of hearing from the Assessing Officer and the order had been passed without providing opportunity of hearing to the assessee Held that:- On perusal of record and the orders of authorities below, we find merit in the plea of assessee, wherein he has admitted to have filed TDS returns belatedly on the ground that he had not received PAN numbers of deductees. The assessee was a proprietor of his business and has deducted tax at source out of payments made to sub-contractors and also on account of rent and professional fees. The TDS return for the first quarter was due on 15.07.2010 and was filed on 22.02.2012. The TDS return for quarter No.2 in Form No.26Q was due to be filed on 15.10.2010 and for quarter No.3 by 15.01.2011 and for quarter No.4 by 15.05.2011, but all these TDS returns were filed on 26.02.2012. Referring to assessee's plea in view of peculiar circumstances of sub-contractors not having PAN, which were applied at a later date and hence, the delay in filing TDS returns late but the taxes were paid along with interest upto date we find merit in the plea of assessee, wherein under section 273B of the Act, if the assessee established its case of reasonable cause, which had resulted in failure of assessee to comply with the requirement of law, then penalty merits to be deleted in the hands of assessee. The facts of each case has to be seen independently and under such circumstances, reasoning of CIT(A) that the word used in section is ‘shall’ and not ‘may’ and hence, it was mandatory upon the assessee to comply with the provisions of the Act by filing the TDS return within prescribed time, cannot hold. Undoubtedly, in the said section, the word used is ‘shall’ but thereafter, the provisions of section 273B of the Act are also provided in the Statute and reading two together would show that levy of penalty can be deleted in case the assessee fulfills the conditions of reasonable cause as provided in section 273B of the Act. Similar issue had arisen before the Tribunal in bunch of appeals with lead order in Nav Maharashtra Vidyalaya Vs. Addl. CIT (TDS) Range, Pune [2017 (1) TMI 722 - ITAT PUNE] has decided the issue of levy of penalty under section 272A(2)(k) of the Act. - Decided in favour of assessee

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• 2018 (10) TMI 1223
  Revision u/s 263 - depreciation on non-compete fees - order erroneous and prejudicial to the revenue - Held that:- During the course of assessment proceedings, u/s 143(3) the AO vide questionnaire issued along with notice dated 26.06.2013 had called for explanation of the assessee to justify its claim of depreciation on non-compete fees. In reply to it, the assessee vide written submission dated 15.01.2014 had explained the basis on which it had claimed depreciation on non-compete fees. It is found that the AO had made adequate inquiry while allowing depreciation of Rs. 5,50,29,78,040/- out of the claim of Rs. 6,75,23,77,744/- made by the assessee-company in its revised return of income. The same is evident from para 9 of the assessment order dated 21.03.2014 made by the AO. We find that the assessee had filed a copy of (i) computation of depreciation admissible u/s 32(1)(ii) and (ii) details of licensing rights under the head “Intangible Assets”. Thus in the instant case the AO had made sufficient inquiries while allowing depreciation on non-compete fees. In the case of Ingersoll Rand International Ind. Ltd. [2014 (6) TMI 934 - KARNATAKA HIGH COURT] has held that whenever assessee makes payment of non-compete fee, commercial right comes into existence and therefore, that right which assessee acquires on payment of non-compete fee confers in him a commercial or a business right which is held to be similar in nature to knowhow, patents, copyrights, trade marks, licences, franchises and the commercial right so acquired by assessee unambiguously falls in category of an ‘intangible asset’ and, consequently, depreciation provided u/s 32(1)(ii) is to be allowed. In the case of Max India Ltd.[2007 (11) TMI 12 - SUPREME COURT OF INDIA] it is held that if two views were possible on the disputed issue on the day when the Commissioner passes the order, then the order u/s 263 is not tenable. AO had made necessary inquiries before allowing depreciation on non-compete fees and also the ground that two views were inherently possible on the same issue on the day when the Commissioner passed his order u/s 263, we are inclined to set aside the impugned order. - decided in favour of assessee.

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• 2018 (10) TMI 1222
  Levy of penalty u/s 271(1)(c) - Concealment of income - disclosure of income in pursuance to the survey conducted u/s 133A - Held that:- The assessee did not disclose the income voluntarily but it was disclosed in pursuance to the survey conducted u/s 133A of the Act. During the course of survey, certain documents were found and seized which were sufficient enough to make the addition in the hands of the assessee. Therefore the assessee has disclosed income of Rs. 53,09,666/-. Thus, in our considered view had there not been survey u/s 133A of the Act, the assessee would not have offered such undisclosed income. Therefore, in our considered view, the penalty u/s 271(1)(c) was correctly levied by the authorities below. - Decided against assessee.

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• 2018 (10) TMI 1221
  Exemption u/s 11 - Charitable activity - earlier, the approval u/s 10(23C)(vi) was rejected - allegation that investment in purchase of farm houses and land not used for the purpose of education - Held that:- It may be noted here that the issue involved in this appeal is benefit of Sections 11 and 12 of the I.T. Act to the assessee-society and not under section 10(23)(vi) of the I.T. Act. In A.Ys. 2006-2007, 2009-2010, 2010-2011, 2011-2012 and 2012-2013, the A.O. passed the scrutiny assessments and claim of the assessee-society under sections 11 and 12 have been allowed and these Orders have been passed by the A.O. after Judgment of Hon’ble Punjab & Haryana High Court under section 10(23C)(vi) of the I.T. Act, 1961. It may also be noted that the land purchased at Dhokra was in earlier year for which no adverse inference has been drawn in earlier years. Therefore, nothing could be attributable against the assessee-society, if assessee-society violated conditions of Section 11. Considering the totality of the facts and circumstances of the case and history of the assessee-society, in the light of Order of the Tribunal for A.Y. 2007-2008 dated 24.09.2014 (supra), we do not find any justification to interfere with the Order of the Ld. CIT(A) in granting exemption under section 11 of the I.T. Act. The Order of the CIT(A) is confirmed and Departmental Appeal stands dismissed. Denying exemption for investments in properties - Held that:- The findings of the Ld. CIT(A) that Section 11(3) is applicable is also not correct because income accumulated under section 11(2) was applied for educational purposes. Considering the totality of the facts and circumstances of the case noted above in the light of finding of fact recorded by the Ld. CIT(A) and Tribunal in A.Y. 2007-2008, it is clear that no addition could be made against the assessee-society of such nature. The order of the Ld. CIT(A), therefore, cannot be sustained in law for enhancing the income of assessee-society of Rs. 6,77,16,875/- and that too by invoking Section 11(1B) and Section 11(3) of the I.T. Act, which are not applicable to the case of the assesseesociety. The decisions relied upon by the Ld. D.R. are not applicable to the facts of the case. In view of the above discussion, we set aside the Order of the Ld. CIT(A) and delete the addition of Rs. 6,77,16,875/-. Accordingly, appeal of the assessee-society is allowed.

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• 2018 (10) TMI 1220
  Unaccounted income of the assessee - proof of loan advanced to the assessee - proof of withdrawal of money - Held that:- In the unregistered agreement dated 23/09/2006, there is no reference to Mr. M. Viswa Mohan. It is only entered by Mrs. K. Bhanumathi. That apart, CIT(A) gave a categorical finding that there were no withdrawals from his bank account; that apart neither Mrs. K. Bhanumathi nor Mr. M. Viswa Mohan has made a mention about the details of the payment i. e. when money has withdrawn, how much money was withdrawn, how much was paid etc. Therefore, when huge money is advanced to the assessee on the guise of unregistered sale agreement in 2006 in so far, the assessee either executed the sale deed or repaid the amount. There is no correspondence available on record to show that subsequent to the payment of the advance, neither by Mrs. K. Bhanumathi nor by M. Viswa Mohan made any efforts to receive the amount or to register the sale deed in their favour. Under these facts and circumstances of the case, these confirmation letters issued by both the parties Mrs. K. Bhanumathi and Mr. M. Viswa Mohan cannot be considered as evidence that the assessee has received amount from the above parties. In view of the above, we are of the opinion that the Assessing Officer has rightly made the addition as unaccounted income of the assessee and the same is confirmed by the ld. CIT(A). - decided against assessee.

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• 2018 (10) TMI 1219
  Estimation of income - rejection of books of accounts - assessee failure to produce the books of account/bills etc. - Genuineness of expenditure - loading/ unloading and hire charges for vehicle - CIT-A upholding the estimation of Income @5% of gross turnover - Held that:- Assessee has made transport business to the extent of Rs. 20.34 crores. He maintains or arranges lorry from others for the purpose of transport. The average hire charges per lorry ranges from Rs. 3,000/- to Rs. 10,000/- according to the distance/load. The assessee maintains books on gross daily receipts and payments. He maintains separate register for collection of advance and final collection with the full details of trips based on each lorry. This traceable with the lorry registration number. The particular trip sheet contains the advance collection, hamali charges for loading and unloading charges. These are traceable on day-wise/trip-wise. These micro information are not available in the regular receipts & payment register maintained by the assessee. In our view, each industry has its own method of accounting. AO has to understand the system of the particular industry. In this case, the ld. CIT(A) has verified the system himself and found to be proper. We are in agreement with the findings of ld. CIT(A). Addition u/s 68 - Held that:- We notice that assessee maintains cash book for all these ventures and wherever there is requirement in all three ventures, he utilizes the funds. In that process, in the hands of the assessee, he controls the same in his capital account. AO has accumulated the whole year transactions and came to the conclusion that there is huge capital introduced. In the day to day activities, the requirement of capital is across the venture/business may not be to that extent. It is the maximum utilization of available funds as per the method suitable to the assessee. AO cannot determine how the cash should be utilized in the business. Ld. CIT(A) has already verified the method of accounting and he has satisfied with the method. AO has not even tried to understand the method followed by the assessee and we are in agreement with the findings of ld. CIT(A). Accordingly, we uphold the action of the CIT(A) in deleting the addition Revenue appeal dismissed

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• 2018 (10) TMI 1218
  Unaccounted investment and interest income accrued on FDR - Undisclosed income - laptop seized in search operation from the assessee - as per assessee amount belonged to sister residing in USA for purchasing FDRs to be spent by her as and when she visits India - Held that:- When the addition has been made on the basis of seized material u/s 132(4)/292C and the assessee has failed to rebut the presumption that the amount of FDRs belongs to her, there is no scope to interfere into the findings returned by ld. CIT (A) moreover when sister of the assessee is residing in USA, there is not an iota of evidence on the file as to how the amount of Rs. 4,00,000/- has travelled to the assessee to be deposited in the FDR with Bansal Credits Ltd.. Such a huge amount in 2007-08 must have been transferred through banking channel, but no evidence is there on file. Furthermore when the interest on these FDRs has been accruing on year to year basis at least the same might have been declared by her sister in her return of income. Merely on the basis of contentions of the assessee that US authorities had not kept the record intact does not absolve the assessee to rebut the presumption attached to the fact that the FDRs are admittedly in the name of the assessee as per seized material. Assessee has also failed to prove if the remaining amount of Rs. 2,00,000/- has been transferred to her by her mother and fatherin- law by proving the fact that if they had shown the same in their return of income. Similar are the facts to the addition of Rs. 3,00,000/- as assessee has taken the defence that the amount of Rs. 3,00,000/- belonged to her sister residing in USA for purchasing FDRs to be spent by her as and when she visits India. So, for this amount also, except confirmation no document has been brought on record by the assessee to prove as to how this amount was transferred to the assessee or if the sister of the assessee was in possession of such an amount with her - addition of Rs. 6,00,000/- and Rs. 3,00,000/- for AYs 2007-08 & 2008-09 respectively as unexplained income of the assessee confirmed - decided against the assessee. Explained property {flat) purchased - Held that:- Assessee to rebut the information contained in the seized material only relied on the fact that subsequently assessee preferred to buy a 2BHK flat for Rs. 42,48,072/- instead of 3BHK flat for Rs. 60,00,000/- and relied upon the confirmation given by Vatika Limited showing details of payment of Rs. 42,48,072/-. First of all, confirmation letter relied upon by the assessee does not disclose the name of the issuing authority. Secondly, un-rebutted seized document Annexure ‘B’ categorically shows that the payment of Rs. 17,00,000/- in cash was made by the assessee to Vatika Limited on behalf of her husband. The assessee has also not brought on record sale deed / allotment or transfer deed for purchasing 2BHK instead of 3BHK for which amount of Rs. 57,00,000/- is proved to have been paid. Furthermore, when the assessee has spent an amount of Rs. 3,00,000/- on the sale deed for 3BHK flat, she has failed to clarify on file if that sale deed has got cancelled for executing of the new sale deed of 2BHK by paying stamp duty of Rs. 2,28,481/-. Thus CIT (A) after appreciating the facts in the light of the settled principles of law in CIT vs. Sonal Construction [2012 (11) TMI 11 - DELHI HIGH COURT] has rightly confirmed the addition made by the AO in view of the provisions contained u/s 132 (4) of the Act read with section 292C. - decided against assessee. Unexplained expenditure in marriage of daughter on stay expenses, videography, flower decoration etc. - Held that:- We are of the considered view that when the misc. expenses of Rs. 4,20,000/- has been accepted by the Revenue authorities, there is no need to go for estimation. Moreover, in the marriage of a daughter, some expenses are invariably made from the savings made by the family members. So, we are of the considered view that addition made by the AO and sustained by ld. CIT (A) is not sustainable. So, we order to delete the amount of Rs. 1,00,000/-.

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• 2018 (10) TMI 1217
  Depreciation on Goodwill / Non-Compete Fee - whether capital in nature? - Held that:- Respectfully following the decisions of the Hon'ble Karnataka High Court in the case of Ingersoll Rand International Ind Ltd.(2014 (6) TMI 934 - KARNATAKA HIGH COURT) and of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Years 2010-11, 2011-12 and 2012-13, we uphold the impugned order of the learned CIT (Appeals) in allowing the assessee's claim for depreciation on the additional amount paid by the assessee. - Decided against revenue.

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• Customs

• 2018 (10) TMI 1258
  Valuation - related person - non-speaking review order - Rejection of transaction value at the time of reviewing order - Comparison with NIDB data not done - Held that:- The detailed inquiry into the transaction value is not required to be conducted at every instance except where the proper officer has previously examined the relationship between the parties or where the proper officer has detailed information about the buyer and the seller. In addition, none of these Rules require the adjudicating officer to inquire into NIDB data as was directed vide the order under review dated 18.05.2015 and has been accepted vide order under challenge - The law has been settled that onus to prove that the declared price did not reflect the true transaction value is always on the Department and that Department is bound to accept the transaction value entered between the two parties, unless and until, Department has a cogent evidence that identical or similar goods were imported by other importers at higher price. It is an admitted fact that appellant’s/ importer’s relationship with foreign suppliers was previously examined in terms of SVB order dated 09.03.2011. After the expiry of subsequent three years, the importer provided detailed information about itself as well as about the foreign suppliers in the requisite format - It becomes clear that the requirements for Rule 3(3) of the Valuation Rules for acceptance of declared transaction value has been fulfilled. Since, NIDB data is not a mandatory requisite under the Rules, the same cannot be held to be a cogent evidence proving the reasonable doubt of the assessing officer. The order under challenge has wrongly rejected the transaction value at the time of reviewing order dated 09.03.2011 merely for want of its comparison with NIDB data. There is no evidence otherwise for supporting the doubt that the relationship of the parties herein had influenced the transaction value. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1214
  SEZ unit - mis-declaration of description and value of imported goods - three consignments containing Chinese Mobile Phones - confiscation - redemption fine - penalty - Jurisdiction of Commissioner of Customs, Noida to pass such order. Held that:- Identical issue decided in appellant own case MORGAN TECTRONICS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2014 (9) TMI 985 - CESTAT NEW DELHI], where it was held that in terms of the Section 53(1) of the SEZ Act, 2005, the SEZ is deemed to be territory outside the Customs Territory of India, and the goods imported were meant for the unit in SEZ Noida. The Commissioner of Customs, Air Cargo, New Customs House, New Delhi had no jurisdiction to confiscate these goods and impose penalty on the appellant and it is only the Joint/Dy. Commissioner/Asstt. Commissioner of Customs, in Noida SEZ unit, who had the jurisdiction to take necessary action. The Commissioner of Customs, Noida did not have jurisdiction to adjudicate matter related to import of three consignments by the importer who was a unit located in SEZ, Noida - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (10) TMI 1259
  Non-compliance of relevant provisions in the holding of AGM - Held that:- Considering the documents on record when the petition is perused, it must be said that no material to make out a case is there to spell out cause of action and no prima-facie case is made out for the various allegations. The Petitioner himself was not witness to the happenings in the meeting and no Affidavits or any other proof is filed of his alleged authorized representative or proxy, or anybody else. When no supportive material is available to make out cause of action or prima facie case, it is not necessary to go into roving inquiry into the manner in which the AGM was conducted. As such the arguments raised by the Appellant on the legal question relating to interpretation of Section 97 needs no discussion in the present case, as Appellant failed to cross the first hurdle itself to make out case invoking jurisdiction. Although the Appellant failed to make out a cause of action or prima facie case, the NCLT still considered his grievances and found it fit to dismiss the Petition at the preliminary stage itself. We do not find any reason to interfere.The Company Petition is dismissed. Impugned Order is maintained.

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• Insolvency & Bankruptcy

• 2018 (10) TMI 1216
  Corporate Insolvency Resolution Process - accrual of debt - Held that:- We find that advancement of loan and default stand admitted. Even otherwise there is overwhelming documentary evidence on record to support those findings in the case. Reading the provisions of Section 7(2) and Section 7(5) of IBC form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a. default has occurred and the application under sub-section (2) of Section 7 is complete. The name of the IRP has been proposed and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional. As a sequel to the above discussion, this petition is admitted and Mr. Debashis Nanda with the address C-304, Paradise Apartments 40 IP. Extension, Delhi-110092 and Mobile No. 9717000163. His registration number is IBBI/IPA-003/TP-P00040/2017-18/10316 is appointed as the Interim Resolution Professional.

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• 2018 (10) TMI 1215
  Corporate Insolvency Resolution Process - application as maintained by a Financial Creditor - default in repayment - Held that:- The expressions “Financial Creditor” and “Financial debt” have been defined in Section 5(7) and 5(8) of the Code and precisely “Financial debt” is a debt along with interest, if any, which is disbursed against the consideration for time value of money. The applicant ‘financial creditor’ has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. In the case on hand, it is seen that respondent corporate debtor has committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. Accordingly, it is seen that the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted.

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• Service Tax

• 2018 (10) TMI 1257
  Short payment of Service Tax on account of enhancement in rate of tax - erection, commissioning and installation service - differential rate of tax - the Service Tax rate for the period upto 31st March, 2012 was at the rate of 10.30%. However, w.e.f. 01.04.2012, the Service Tax rates were enhanced to 12.36% - Held that:- It was the incumbent duty of the appellant to make good the deficiency for the disputed period since when the said enhancement had come into effect. But the appellant opted to not to make good the short levy even at the time of filing his ST-3 Return in November, 2012. The said short payment was never subsequently informed by the appellant on his own to the Department. Resultantly, the same was never in notice of the Department unless and until they conducted the audit of appellants record and observed the impugned short levy. The appellant could have well complied with the above provision at the time of filing his return for the disputed period in November, 2012. The failure on his part amounts to violation of the provisions of the Act. Non-disclosure of the impugned admitted short-levy till the audit conducted by the Department is definitely a suppression of relevant fact arising out of appellants own fault. The possibility of said suppression with clear intention to evade the said short payment cannot therefore be ruled out. It is rather held that the appellant despite acquiring knowledge of the rate of duty being enhanced has failed to make good the deficiency for the disputed period. The appellant herein had deliberately not made the payment for the impugned period - Demand has rightly been confirmed with the appropriate interest and the proportionate penalties - Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1256
  Rectification of Order - first ground urged is that the Tribunal has wrongly overturned the relief granted by the Adjudicating Authority on the ground of time bar - Held that:- Upon perusal of the Final Order, it is seen that the Tribunal has discussed this aspect in para 10 and detailed findings have been given, rejecting the claim of the assessee that they were under bonafide doubt. This is a conscious decision of the Tribunal and it cannot be said that the same was taken by mistake of fact - If the assessee is aggrieved with the same, the right course of action would be to challenge the Final Order in the appropriate forum - rectification rejected. The second ground urged is that the Tribunal has failed to take note of the fact that the assessee is recognized under the Convergence Scheme and hence the courses conducted by them should be considered as leading to award of degree recognized by law - Held that:- The only copy of the degree which is available on record shows that the students getting education from the assessee have been granted degree by assessee themselves. The degree, pertinently, is not issued by any University constituted under the force of law - rectification rejected. Liability of Service tax - vocational courses conducted by them i.e. Diploma in Design - period up to the date 27/02/2010 - Held that:- We accept the submission of the assessee that they will not be liable for payment of Service Tax up to the date 27/02/2010 - necessary rectification is made. ROM Application allowed in part.

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• 2018 (10) TMI 1255
  GTA Service - Reverse Charge Mechanism - payment of Service Tax made - invocation of sub-section (1) of Section 73 - extended period of limitation - Held that:- The adjudged demand was confirmed on the appellant on the ground that it did not pay the service tax on GTA service, as per the provisions of Rule 2(1) (d) of the Service Tax Rules, 1994 - From the findings recorded in the adjudication order, it transpires that the department has not specifically alleged regarding non-payment or short payment of service tax. Thus the ingredients mentioned in the proviso to sub-section (1) of Section 73 of the Act are absent inasmuch as there is no question of fraud, collusion, suppression, will full misstatement etc., on the part of the appellant, in defrauding the Government revenue. The show cause proceedings initiated beyond the normal period, is clearly barred by limitation of time and as such, the adjudged demand confirmed against the appellant cannot be sustained on the ground of limitation alone - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1254
  Cash Refund of accumulated CENVAT Credit - inputs used in providing exported services - Performance based service - export of services or not? - rejection on the ground that the services provided by the appellant to their overseas service recipient was in the nature performance based service in India, hence not an export service - Held that:- In their own case, this Tribunal has already taken a view that the aforesaid services rendered by the appellant are in the nature of export of service and hence eligible to cash refund of accumulated CENVAT Credit. In the case of Advinus Therapeutics Ltd. [2016 (12) TMI 34 - CESTAT MUMBAI], this Tribunal more or less in similar circumstances, considering all aspects of the issue, interpreting Rule 3, 4 of Place of Provision of Services Rules, 2012, and Rule 6A of Service Tax rules, 1994, applying the principles of law laid down in this regard and the Board’s clarification held that scientific or technical consultancy service provided in the development of drugs, to the overseas recipient of such service, is an ‘export service’. The appellants are eligible to cash refund of the accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004, except in relation to input service denied by the learned Commissioner (Appeals) observing that there is no nexus between the input and output service, as the necessary evidences in relation to Building maintenance charges were not produced and the rent-a-cab service has been mentioned in the exclusion clause of input service after amendment to Rule to 2(l) of the Cenvat Credit Rules, 2004 with effect from 01.4.2011. Matters are remanded to the adjudicating authority to calculate the admissibility refund amount except the credit availed on Building maintenance charges and rent-a-cab service - appeal allowed by way of remand.

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• 2018 (10) TMI 1253
  Rebate/Refund of service tax - N/N. 41/2012 dated 29.06.2012 - Amendment in notification - effect of amendment - Service Tax deposited on input service procured for exporting their manufactured yarn during the period July, 2012 to September, 2012 - Held that:- It is observed that the adjudicating authority has rejected the application based on two reasons; one, that the rebate claim is not maintainable under Notification No.32/2011 continued upto 30th June, 2012 as the same being superseded by another Notification No.41/2012-ST dated 29.06.2012. Secondly, that even Notification No.41 permits rebate only on such services as were procured beyond the place of removal, which is the port of export in the present case. Since the services procured herein were prior to reaching port of export the Authority has rejected the claim. In view of the Notifications as have been brought to my notice as on day and have simultaneously being conceded by the Department, it is held that all these Notifications were not available to the adjudicating authorities below - The perusal of all the said amended notification makes it clear that the exporters were made entitled for rebate for procuring services by shifting their manufactured product from the factory for being exported to the port. The services herein admittedly are the services for the said purpose. The appellant becomes entitled to claim the rebate thereof, retrospective effect being given to the said amendment. Relying upon the case of 20 Microns Limited vs. CCE & ST, Vadodara [2016 (9) TMI 95 - CESTAT AHMEDABAD] that in view of retrospective amendment in the impugned Notification, refund in respect of the services beyond factory to the port is permissible - the appellant entitled to the benefit of rebate. Though in the circumstances available before the adjudicating authorities, the order had no infirmity but in view of the subsequent amendments, which have been given the retrospective effect entitling the appellant for the rebate, the order in hand is hereby set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1252
  CENVAT Credit - input services - re-insurance policies taken by them for making a cover for the insurance contract entered by them as an output service provider - Department has entertained a view that the insurance and re-insurance are two separate contracts and same are independent of each other - Held that:- So far as the availment of Cenvat Credit of the Service Tax paid by the appellant on the premium of the re-insurance taken by them for providing the insurance service to their customers - the matter is no longer res integra as it has already been decided by this Tribunal and Hon’ble High Court of Karnataka in case of Commissioner of Service Tax, Bangalore Vs PNB Metlife Insurance Co. Ltd. [2015 (5) TMI 68 - KARNATAKA HIGH COURT], where it was held that the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy - credit rightly availed. Demand of Rs. 37,83,124/- - excess paid Service Tax was utilized by them for payment of their Service Tax liability for the month of November, 2007 and during the month of January and March, 2008 - Held that:- If any excess payment of service tax has been made by the appellant, they are certainly entitled to make adjustment of same in their liability of subsequent months as per the provisions of Service Tax Rules, however, this only needs meticulous verification of challans / payments and ST -3 returns at field level - the Commissioner has not applied his mind on this and routinely confirmed the demand of service tax without getting the claim of the appellant verified - the matter remanded to original adjudicating authority only with regard to the second demand of Rs. 37,83,124/- for necessary verification of the claim of the appellant and accordingly decided the same on the merits. Appeal allowed in part and part matter on remand.

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• 2018 (10) TMI 1251
  Commercial coaching or training services - providing education for different degree courses like BBA, BCA, B.Tech, which were recognised by law during the period under dispute i.e. 2005-2006 to 2010-2011 - demand of service tax - Held that:- The appellant is an Institute, which issues certificates, degree or diploma on educational qualifications recognized by law, as in force, during the relevant time and accordingly, were not a Commercial Training or Coaching Centre as defined under Section 65(27) of the Finance Act. Thus, consequently, the appellant was not liable to pay service tax on its activities of educating for diploma courses enabling the students to secure admissions in University in USA - impugned order is set aside along with penalties. As the appeal is allowed on merits, we leave the issue of limitation open - Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1211
  Construction Services - composite contracts - Commercial or Industrial Construction Service - construction of “Residential Complex Service” - It was noticed that appellant did not pay service tax on their share of construction of residential complex service for the period from January 2009 to June 2009. Held that:- The issue stands squarely covered by the decision of this Bench in appellant’s own case REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. The impugned order cannot then sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1210
  Refund claim - Rule 5 of Cenvat Credit Rules 2004 read with N/N. 27/2012 dated 18.06.2012 - rejection of refund on the ground that the services of the appellant relating to Sales and Marketing in respect of the products owned by their principal in India fall in the definition of ‘intermediary service’ - principles of Natural Justice - Held that:- The impugned order has been passed without giving proper reasons and without considering the facts involved in the case - the Commissioner (Appeals) has only given general principles for granting the refund without adverting to the facts of the present case - also, the impugned order has been passed without affording an opportunity of hearing. The impugned order which is passed in complete violation of the principles of natural justice and without considering the facts and the grounds of appeal is liable to be set aside - case remanded back to the Commissioner (Appeals) to pass a De novo order after considering the facts and the grounds of appeal and after affording an opportunity of hearing to the appellant - appeal allowed by way of remand.

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• 2018 (10) TMI 1209
  CENVAT Credit - input services - exempt output service - Export Cargo Handling Charges - Department alleged that they were not allowed credit on the input services used for provisions of exempted services - Held that:- Despite availing the benefit of exempted services, the appropriate duty seems to have been paid by the appellant as far as the weighment income as a part of Cargo Handling Service is concerned. Perusal of the orders of the adjudicating authorities below seems to be absolutely silent qua the payment of duty / tax as shown in the ST-3 Returns - Apparently the silence is due to no such submission/argument on part of the appellant to this aspect. However, still the requisite document was very much on record. Show cause notice makes it clear that the entire demand is based on the details as were asked by the letter of February, 2016. The absence of adjudicating authorities below qua the ST-3 Returns as provided by the appellant alongwith aforesaid reply and completely ignoring the same while solely relying upon Section 66D sub clause (3) of the Finance Act seems to be an error apparent on record. The Adjudicating authority below is required to look into all the documents as that of Service Tax Returns of the impugned period and after re-assessing those documents then to adjudicate the controversy in question about alleged nonpayment - appeal allowed by way of remand.

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• 2018 (10) TMI 1208
  Valuation of taxable services - inclusion of amount of concession in the name of scholarship given by the appellant to its various students in assessable value - Department has entertained a view that the amount of concession in the name of scholarship given by the appellant to its various students is in a way a non-monetary consideration and as per Section 67 of the Finance act, 1994 read with Rule 3 of Service Tax Valuation Rules, 2006. Held that:- The matter is no longer res integra and it has already been decided by this Tribunal in the case of M/S RESONANCE EDUVENTURES PVT. LTD., SHRI R.K. VERMA, MANAGING DIRECTOR, M/S ALIEN CAREER INSTITUTE VERSUS CCE & ST, JAIPUR [2017 (11) TMI 1276 - CESTAT NEW DELHI], where it was held that there are no reason to consider the concessional portion of fee which is as per the pre-declared publicity material, as part of non-monetary consideration requiring addition to the monetary consideration to arrive at the gross value. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1207
  Demand of differential tax - demand of Rs. 12,64,097/- - undisclosed receipts - demand of different tax is on account of reliance on rough register and rough ledger - extended period of limitation. Demand of Rs. 12,64,097/- - Held that:- Such demand has been raised on the basis of some rough note books seized from the premises of the appellant and the author of said note book have not been identified - there is no enquiry made by Revenue regarding from the person who are named therein if they have paid such amounts to the appellant assessed as mentioned therein - there is no cogent basis for this demand. Further, against proposed demand of Rs. 1,28,54,902/- in the show cause notice, the demand confirmed in the impugned order is Rs. 94,57,303/-. Thus it appears that the show cause notice was issued without due diligence. Balance demand of Rs. 81,92,240/- - the appellant have before issue of SCN deposited Rs. 76,88,206/- out of the said amount and before adjudication have deposited the balance amount of Rs. 5,05,000/- - Penalty - Held that:- No penalty was impossible on the appellant under Sections 70, 77 and 78 of the Act. The appellant is not liable to pay any tax over and above amount of Rs. 81,92,240/- and accordingly, appellant is entitled to refund of the amount paid over and above the said amount and also refund of the amount of penalty if any deposited. Appeal allowed.

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• 2018 (10) TMI 1206
  Security Services - Service tax was collected from clients but was not paid - Benefit of reduced penalty - Held that:- Hon’ble Supreme Court in the case of Commissioner of Central Excise & Customs V/s R. A. Shaikh Paper Mills Pvt. Ltd. [2016 (4) TMI 1076 - SUPREME COURT] has dealt with an identical situation and referring to the Board’s Circular dated 22.05.2008, has observed that in this case there was no mention of reduced penalty under Section 11AC of the Central Excise Act in the Order-In-Original, the order of the High Court allowing benefit of reduced penalty subsequently is not required to be interfered with. The option is extended to the assessee to deposit the entire duty along with interest & 25 % of the penalty imposed upon them within a period of 30 days from the date of receipt of the order in which case penalty shall stand reduced to 25% - appeal disposed off.

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• 2018 (10) TMI 1205
  Short paid/not paid Service Tax - income in respect of the services shown in the balance sheet for the period 2005-06 to 2007-08 - Composite works contract services - Penalties - Held that:- The work order for repair supply fixing of cow catchers at State warehouse is a composite contract including supply of material and the benefit of composition scheme is to be extended to the assessee-Appellants as they have intimated to the Department about the exercise of the said option - on this short ground alone, matter remanded to the original authority for quantification of Service Tax to be paid under composition scheme - penalties set aside - appeal allowed by way of remand.

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• 2018 (10) TMI 1191
  Construction of residential complex service - Composition scheme - The department has taken the view that the appellants have to discharge service tax under construction of residential complex service for Swarup Heritage and under commercial or industrial construction service in the case of Jayant Tech Park - Works Contract (Composition Scheme for Payment of Service Tax) Rules 2007. Held that:- The Tribunal in the case of Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] has considered the very same issue and has held that after 1.6.2007 also, in the case of composite contracts, the levy of service tax can only be under works contract service for the period disputed in this appeal. It is not disputed that the works contract executed in these projects are of composite in nature for the reason that the appellants have availed the benefit of Notification No. 1/2006-ST which is not disputed by the department - the demand of service tax cannot sustain - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (10) TMI 1250
  Levy of duty - matter pending before Tribunal - process amounting to manufacture or not? - Held that:- We take note of the pendency of a matter remanded by the Tribunal with direction to the lower authorities to decide on the dutiability of the goods made by the appellant which would effectively decide the dispute impugned before us now. And as the earlier decision on taxability had been remanded by us, it would be appropriate for us to have this matter also placed before the first appellate authority to take a decision in congruity with the dispute on de-registration pending before him - the first appellate authority is directed to decide both matters together - impugned order set aside.

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• 2018 (10) TMI 1249
  Classification of goods - flexible plastic hollow corrugated board - whether classified under CETH 3920.39 or CETH 3916 of the Schedule to the Central Excise Tariff Act, 1985? - Benefit of N/N. 15/94-CE dated 1st March 1994 and N/N. 4/97-CE dated 1st March 1997 - Scope of SCN - Validity of proceedings. Held that:- The show-cause notice proposed the classification as 3020.39 of the Schedule to the Central Excise Tariff Act, 1985 instead of 3926.90 which would have entitled them to the benefit of notification no.15/94-CE dated 1st March 1994 at serial no.21. The proposed classification of goods under heading no. 3920.39 of Schedule to Central Excise Tariff Act, 1985 would also have denied them to the benefit of the said exemption. The classification of the said goods under heading no.3916 of the Schedule to the Central Excise Tariff Act, 1985 has attained finality which cannot be re-opened. Consequently, the proposal in show-cause notice to subject goods to the burden of duty, as well as fiscal deterrent, from a revised classification is beyond the scope of proceedings under Central Excise Act, 1944. The proceedings for the proposed classification being without authority of law, the denial of exemption notification is, in consequence, without authority of law - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1248
  Rectification of mistake - Held that:- Since the final order was pronounced and dictated in the presence of the ld. Advocate, we are of the view that ROM cannot be entertained, since it amounts to review of the final order which is not permissible in law - ROM Application dismissed.

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• 2018 (10) TMI 1247
  100% EOU - clearance of goods into the ‘domestic tariff area’ if manufactured out of exclusively indigenous raw material - Benefit of N/N. 8/97-CE - case of Revenue is that there is neither physical nor accounting mechanism to facilitate segregation of imported and indigenously procured cotton and also that the assessee had been mixing wastes/rejects with prime cotton without discriminating between those arising from use of imported and indigenous raw material. Held that:- The order now impugned before us is dealt with the dispute that had been brought up before us on an earlier occasion as also the demand of duty for a subsequent period that was not covered by our remand order - The remand by the Tribunal was specific in directing the original authority to consider the contents of the balance-sheet adduced by the appellant for the first time ever. It was mandated on the part of the original authority to delve into the conclusions that could be drawn from the balance sheet referred to; any other interpretation of the contents of the order would be non-contextual. It would appear that the audited balance sheet, evidencing specific quantities and values of imported and indigenously procured cotton would imply the existence of records that facilitated such segregation for statutory audit. The direction of the Tribunal was intended to that end. The original authority has failed to do so and, thereby, vitiated the impugned order. In the impugned order, the original authority has drawn upon an additional ground of waste of unidentifiable provenance having been mixed with prime cotton to conclude that the strict segregation mandated in the exemption notification supra has been contravened - On that issue, the decision of the Hon’ble Supreme Court in re Favourite Industries [2012 (4) TMI 65 - SUPREME COURT OF INDIA] has, in upholding the decision of the Tribunal, cleared the ambiguity holding that There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the Courts. The wordings of the exemption notification have to be given its natural meaning, when the wordings are simple, clear and unambiguous. Matter remanded back to the original authority to decide the matter afresh after considering the availability of records that segregate imported from indigenously procured cotton and in the light of the decision of the Hon’ble Supreme Court - appeal allowed by way of remand.

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• 2018 (10) TMI 1204
  CENVAT Credit - input services - denial on account of nexus - place of removal - whether the value of CHA Service and outward transportation in the case of sale to the customer, the value has to be the part of the transaction value so as to entitle the appellant to avail the cenvat credit or not? Held that:- It is only upto the place of removal that the service can be treated as input service whereupon the cenvat credit can be availed. The place of removal is the place from where the finally manufactured product is cleared after payment of excise duty. Thus any expense incurred beyond this point is not to be included in the value as such will not be the input thereby no cenvat credit will be available on any such expense. GTA service being the services beyond the place of removal therefore cannot be considered as the input services. However, in case of imports, port is the place of removal. The CHA services apparently have been rendered till the concerned port hence are the service rendered upto the place of removal. As such are very much the input services as per the definition above. The appellant is therefore held entitled to avail cenvat credit on CHA Service - disallowance of credit for CHA is set aside. Appeal allowed in part.

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• 2018 (10) TMI 1203
  SEZ Unit - refund claim - services used as input service by SEZ developers - N/N. 39/2002 of Central Excise dated 13 August, 2002 - Held that:- N/N. 39/2002 allows duty free clearances of goods when such goods are brought into Special Economic Zone by a developer of Special Economic Zone. The appellant was awarded the status of SEZ w.e.f. 16 November, 2010 whereas appellant is claiming benefit of the said notification for the period prior to the attaining the status of SEZ - appellant not eligible for availment of benefit under such notification for the period covered by these appeals - appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1202
  Rebate Claim - Duty @ 4% advalorem on cotton yarn - It appeared to the department that N/N. 29/2004 dt. 09.07.2004 prescribing the effective rate of duty of 4% on the said cotton yarn was amended by Notification No.58/2008 dt. 07.12.2008 prescribing the ‘Nil’ rate - a N/N. 11/2009-CE dt. 07.07.2009 was issued also referring to erstwhile N/N. 29/2004-CE and restore duty of 4% advalorem on cotton yarn. Held that:- The issue per se has already been decided in the decision of this very Bench in the case of Ambika Cotton Mills Ltd. [2018 (7) TMI 760 - CESTAT CHENNAI], where it was held that cotton yarn was never an exempted product for the disputed period. Though there were parallel notifications wherein one of the notification prescribed duty at the rate of 4% on cotton yarn, there was another notification 58/2008 dated 7.12.2008 which prescribed nil rate of duty. Thus, on the same date there were two notifications one of which prescribed nil rate of duty and the other prescribed 4% duty - The appellant can opt for a notification which is beneficial to him and the appellant herein has chosen to pay duty at the rate of 4% and claim rebate. Thus, the denial of credit is without any basis and unjustified. So also the denial of rebate claim is also unjustified. The impugned order cannot be sustained and requires to be set aside - Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1201
  SSI Exemption - opportunity of cross-examination declined - Clandestine procurement of raw-material used in the manufacture of excisable goods - ignorance of law - entire case of the Department as is also apparent from the Order of Commissioner (Appeals) is based upon the record as that of kachcha parchies being allegedly recovered from the appellants premises - extended period of limitation - Held that:- Apparently and admittedly the appellant is engaged in manufacturing activities as well and has not been registered under Excise. Though the appellant was claiming an SSI exemption but as apparent on record that despite affording that exemption of Rs. 1.5 Crores, the Excise liability is still apparent against the appellant. The CA certificate of appellants own firm also corroborates the activity of the appellant as not only of re-selling but also of sale of manufactured items. Since ignorance of law can never be an excuse, the non-registration and non-discharge of the excise liability on the part of the appellant cannot be ruled out to be a strategy to avoid his liability. Extended period of limitation - Held that:- The confirmation of confiscation of unaccounted finished goods is also opined to have no infirmity - the appellant has failed to discharge his liability of tax. He is not entitled to SSI exemption, his income being beyond Rs. 1.5 Crore. The non-registration despite doing excisable activity is rather opined to be the sufficient positive act on his part, which can be categorized as an act with intent to evade duty - Department was therefore justified to invoke the extended period of limitation. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1200
  SSI Exemption - classification of manufactured goods - Whereas the revenue has classified the appellants final product as “PU Foam Sheets” classifiable under Chapter Heading No.39211310 of First Schedule to Central Excise Tariff Act, which is not entitled to the SSI benefit in terms of N/N. 8/2003-CE dated 01.03.2013 - appellants have contended that the product being manufactured by them is “Waste Scrap Foam Sheet” and is properly classifiable under Tariff Heading No.39211900, which is eligible for the benefit of SSI N/N. 8/2003-CE - extended period of limitation. Held that:- The Appellate authority has simplicitor gone by the facts of pre dominance of PU polyurethane in the product as reported by Chemical Examiner. He has not gone through the other part of the said report which indicates that the sample is do different colours and also contains plastic material and also adhesives material - Apart from that, there is no rebuttal to the findings of the adjudicating authority that the appellant do not have the machinery to manufacture PU Foam and the manufacturing process adopted by them clearly show that what is being manufactured is Waste Foam Sheet. The Original Adjudicating Authority has also examined the raw materials required for the manufacture of PU Foam and has clearly come to a finding that no such material was purchased by the appellant from the market. Such evidences adopted by the Joint Commissioner, has not been considered by Commissioner (Appeals) and there is neither any finding on the same nor any rebuttal. The order of Original Adjudicating Authority restored - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1199
  Clandestine removal - the entire case of the Revenue is based upon the hand written rough entries made in the two registers - Held that:- It is seen that apart from the said rough entries made in the two sheets, there is virtually no other evidence to establish that the appellant manufactured and cleared their final products in a clandestine manner. Even Vinod Kumar has disputed the fact that the said entries were in his hand writing - there is no evidence of receipt of excess raw material, there conversion into final products and there clearance to the identified buyers. It is well settled law and does not require the support of any precedent decision that such rough entries in the register found from the residential premises, by itself, without their being any corroborative evidences cannot lead to the findings of clandestine activities. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1198
  Validity of SCN - amendment made in SCN by way of corrigendum - Time Limitation - change of opinion - Revenue neutrality. Revenue neutrality - Held that:- The appellant, Muzaffarnagar unit is clearing the 95% of its production to their Faridabad unit which manufactures, further taxable goods which are cleared on the payment of appropriate duty - whatever Excise duty is paid by the Muzaffarnagar unit, the same shall be available as Cenvat Credit at the Faridabad unit. Thus, making the situation wholly revenue neutral. Time limitation of SCN - Held that:- The effective Show Cause Notice will be the date of corrigendum dated 23/01/2007 as the proposed demand in SCN is increased substantially above 25% - the show cause and the corrigendum is for the sake of change of opinion only, based on the cost of production taken by Revenue - the Show Cause Notice is not sustainable for invoking the extended period of limitation, only for the sake of change of opinion and the situation being wholly revenue neutral. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1197
  CENVAT Credit - goods/ transformers returned by the buyers u/r 16(1) of CER 2002 - duty paying documents - credit availed on the basis of triplicate copy of invoices meant for the consigner - whether triplicate copy of invoices are valid documents in terms of Rule 9 of Cenvat Credit Rules, 2004 for availing Cenvat Credit - extended period of limitation. Held that:- The provisions of Rule 9 of Cenvat Credit Rules, 2004 are not applicable in case of manufacturer who takes credit under the provisions of Rule 16 (l) of Central Excise Rules, 2002 as it is a special provision by way of exception to the normal rules. The decision of Tribunal in the case of BAPL Industries Ltd. vs. CCE [2006 (1) TMI 6 - CESTAT, CHENNAI] is squarely applicable to the facts of present case, wherein it was held that such credit taken on the basis of manufacturer's own triplicate copy of invoice under which the final product was originally cleared. These invoices are invoices of input-manufacturer. Hence, it cannot be said that during the disputed period there is no provision of law for using triplicate copy for Cenvat purposes. Therefore, triplicate copy was valid for Cenvat purpose during the disputed period. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1196
  CENVAT Credit - stock transfer - DG Sets - It is alleged in the SCN that, the credit availed is inadmissible, in as much as the inputs were not used in further manufacturing and as such the availment of credit was not proper - whether the appellants have rightly taken Cenvat credit on D.G. Sets, transferred from their trading unit at Bangalore to the factory at Ghaziabad? Held that:- It is admitted case of Revenue that the appellant, upon receipt of the D.G. Sets from their trading unit, have done further value addition by way of addition of Control Panel etc. and testing the same, which amounts to manufacture under the definition of manufacture as given in Section 2 (f) of the Act - SCN are not maintainable in law - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1195
  CENVAT Credit - electricity being exempted from excise duty - whether the respondent is liable to reverse Cenvat credit on the electricity so wheeled out, under Rule 6 (3) of Cenvat Credit Rules, 2004, relating to the period from November, 2010 to October, 2011? Held that:- The issue has been decided in the case of GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2013 (7) TMI 159 - ALLAHABAD HIGH COURT], where it was held that Electrical energy was neither excisable under Section 3 of CEA, 1944 nor exempted goods under Rule 2(d) of Cenvat Credit Rules, 2004. Thus, same was neither excisable nor exempted goods, hence Rule 6 of CCR was not applicable - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 1246
  Imposition of penalty u/s 15A(1)(o) of the Act 1948 - alleged violation of section 28-A of the Act 1948 - Transit Declaration Form (TDF) not accompanied the goods at the check post - case of revisionist dealer is that this was just a technical lapse and all necessary was fulfilled on being pointed out, there was no mala fide intent, hence penalty should not be imposed - case of Revenue is that TDF though filed later on, was not presented at requisite centre entailed violation of section 28-A and that entry-tax was not deposited on the imported goods, there fore penalty was warranted. Held that:- For the purposes of section 28-A sub-sections (2), (6) and (8) of section 13-A relating to seizure of goods apply mutatis mutandis to the detention of goods referred therein in view of sub-section (7) of section 28-A. Now, if there is violation of section 28-A, then the penalty is imposed under section 15-A - in this case under clause (1)(o) of section 15-A, as, there was contravention of the provisions of section 28-A while importing or transporting the goods. - The penalty referred under section 15-A is to be imposed after such inquiry, if any, as the Assessing Authority deems necessary. The question as to whether mens rea or malintent to evade tax is necessary for imposition of penalty under the aforesaid provisions, came up for consideration before a Division Bench of this Court in the case of M/s Oriental Carbon Ltd. [2010 (12) TMI 1075 - ALLAHABAD HIGH COURT], wherein it was held that mere breach of provision of section 28-A would not be sufficient for imposition of penalty under section 15-A(1)(o) of the Act 1948, meaning thereby malintent i.e. the intent to evade tax was necessary for imposition of such penalty. There are a catena of decisions of this Court wherein it has been held that for imposition of penalty under section 15(1)(o) of the Act 1948 the intent to evade tax i.e. a malintent, is necessary. Even otherwise, in the present case the record reveals that the Assessing Authority recorded a categorical finding that there was no malintent on the part of the revisionist to evade tax yet it imposed penalty on the ground that there was violation of section 28-A. The First Appellate Authority held that there was an intention to evade Entry Tax (not a tax under the Act 1948 under which the proceedings were being held). This conclusion was arrived at by the first Appellate Authority merely because the declaration form -31 which admittedly was duly filled and complete, could not be produced by the driver of the vehicle at the check-posts - this Court is of the view that the evasion of tax intended had to be of a tax under the Act 1948 and not any other enactment as the penalty proceedings were under section 15(1)(o) read with section 28-A of the Act 1948 and not under any other enactment, therefore, for the First Appellate Authority and the Tribunal to record a conclusion that the nonproduction of Form-31, though it was duly filled and complete, but was not produced at the check-posts established the intent to evade Entry Tax cannot be a ground for sustaining the penalty proceedings under the Act 1948. Entry Tax was leviable under a separate enactment. This Court is also of the view that once the Tribunal and other authorities have held that the consignment was accompanied by the requisite documents and Form-31A duly filled and complete then there was no question of misuse of the said form nor could there be any intent to evade tax under the Act 1948 as such reasoning given by the Tribunal in this regard is not sustainable on this count especially in view of plethora of decisions where, in similar situations, similar conclusions have been arrived at. It is based on conjectures and surmises and is not sustainable on facts and in law. The impugned orders are hereby quashed - The Assessing Authority is directed to refund the amount, if any, deposited by the revisionist towards penalty in pursuance to the impugned orders - Revision allowed.

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• 2018 (10) TMI 1194
  Pre-deposit - Held that:- There is no reason to interfere - The special leave petition is accordingly dismissed.

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• 2018 (10) TMI 1193
  Time limit of framing assessments - period for framing the assessment was increased from 3 years to 6 years vide amendment carried on 15.11.2013 vide Punjab Act No. 38 of 2013 - whether such amendment have prospective or retrospective effect? - in the present case the assessments have been filed within six years, whether will be considered valid or will be time barred? Held that:- The validity of the aforesaid amendment was subject matter of consideration in Amrit Banaspati Company Limited's case [2015 (8) TMI 742 - PUNJAB AND HARYANA HIGH COURT]. In the aforesaid case for the assessment year 2006-07, notice for framing of assessment was issued on 23.9.2014. The writ petition was filed challenging the amendment claiming that the same was not retrospective, hence, will not take away the vested rights of the assessee, the period of assessment having lapsed. While dismissing the writ petition, Division Bench of this Court held the amendment to be retrospective in nature. The amendment carried out vide Punjab Act No. 38 of 2013 has been held to be retrospective in nature and the period for framing assessment has been extended to 6 years from 3 years and in the case in hand, the assessment of the appellants in all the cases was framed within the period of six years from the last date fixed for filing of returns, hence, the same cannot be said to be beyond limitation. Appeal dismissed - decided against appellant.

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• Wealth tax

• 2018 (10) TMI 1192
  Treatment to the Royal Buggy as ‘work of art’ and exempted under Section 5(i)(xii) of the Wealth Tax Act, 1957 - Tribunal held the issue in favour of the assessee as relying on Shantadevi P. Gaekwad Vs. Wealth-tax Officer [2017 (6) TMI 687 - GUJARAT HIGH COURT] - Revenue drew our attention to certain legislative changes, which took place in the said Act and that Clause (xii) of Sub-Section (1) of Section 5 stood deleted with effect from 01.04.1993 by virtue of Act 18 of 1992. Held that:- The assessee appeared on caveat and consented to final disposal of the Tax Appeals at this very stage. He candidly agreed to the contentions raised by the Counsel for the Revenue. It does not appear that legislative changes were brought to the notice of the Income Tax Appellate Tribunal and resultantly, the Tribunal fell in error in applying the ratio of judgment of this Court, which was rendered in the backdrop of the Assessment Year 1972-73 when Clause (xii) of Sub-Section (1) of Section 5 of the Act was still in force. As noted with effect from 01.04.1993, this Section came to be dropped. We are concerned with the Assessment Year 2004-05 and onwards. In the result, the impugned common judgment of the Tribunal rendered in favour of assessee in the Cross Appeals for the respective Assessment Years is set aside. The judgment of the Revenue authority is restored. - Decided against assessee.

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• Indian Laws

• 2018 (10) TMI 1213
  Dishonor of Cheque - Section 138 of The Negotiable Instruments Act - rebuttal of presumption u/s 139 of Negotiable Instruments Act - Held that:- It appears that both the trial Judge as well as the Appellate Judge has committed an error in pronouncing the Judgment as against one accused whereas there was two accused arrayed in the complaint filed by the complainant. I am saddened to note that even the Additional Session Judge, while dealing with the Criminal Appeal, did not notice the error committed by the trial Judge and he affirmed the Judgment of conviction passed by the trial Judge, as it is. In this connection, it has to be stated under the Code of Criminal Procedure that certain procedures have been prescribed and they have to be followed while imposing sentence of imprisonment by the Metropolitan Magistrate Court or Criminal Court to any person. In the instance case, while the second accused was not shown in the Judgment it is not known as to how the second accused could be imposed with a sentence of six months by the Trial Magistrate. Even prior to the quantum of sentence passed both the Trial Court and the Lower Appellate Court they have proceeded as if there is only one accused. Yet another issue is that, the Appellate Court had treated the appeal as if one year sentence was awarded by the Trial Magistrate, while it is only six months and furthermore, here confirmed the sentence for one year, which is bad in law. Revision allowed.

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• 2018 (10) TMI 1212
  Strength of the post in each of the cadre - determination by Government from time to time - Rule 4 of the Rajasthan Excise Service (General Branch) Rules, 1974 - Held that:- Determination of cadre post under the Rules exist so the post not encadred - there is no reason to struck down the Rule 4 (2) (c) and Rule 13 of the Rules of 1974 - petition dismissed.

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