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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter October 5, 2017 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI Short Notes 1. Change in accounting policy - When is to be changed - What should be the basis for change in accounting policy Income Tax: Summary: Accounting policies must ensure a true and fair representation of a business's financial state and income. The treatment and presentation of transactions should prioritize their substance over legal form. Changes to accounting policies should only occur with reasonable justification. These guidelines are outlined under ICDS I, which addresses income computation and disclosure standards, emphasizing the importance of consistency and reliability in financial reporting. 2. Accrual of income - Scope of ICDS - If there is conflict between Section 5 and Section 145, which would prevail Income Tax: Summary: The Madras High Court ruled that Section 145(1) of the Income Tax Act, which pertains to accounting methods, should not override the charge to tax under Section 5(2)(b) for non-residents with income accrued in India. The court emphasized that Section 145(1) is a machinery provision and cannot negate the charging provisions of the Act. The Supreme Court upheld this view, stating that income credited to a non-resident's account is taxable, regardless of the accounting method used. The court did not find it necessary to address any conflict between Sections 5(2) and 145, as the issue was not pertinent to the case. 3. ICDS - Accrual basis of Accounting - Accrual of income versus Receipt of income Income Tax: Summary: The Supreme Court has clarified the distinction between the accrual and receipt of income in several cases. In E.D. Sassoon & Co. Ltd. v CIT, it was noted that "accrues," "arises," and "is received" are distinct terms, with "accrues" and "arises" indicating a right to receive income before it is actually received. In Morvi Industries Limited v CIT, the Court stated that income accrues when it becomes due, regardless of when it is paid. Similarly, in CIT v Excel Industries Limited, the Court emphasized that income accrues when there is a corresponding liability to pay it. These rulings highlight the difference between income accrual and receipt. 4. Bad debts out of income recognised on the basis of ICDS but not yet recognised in books of account Income Tax: Summary: Income recognized under Income Computation and Disclosure Standards (ICDS) but not in accordance with traditional accounting standards may later become non-recoverable, resulting in bad debts. To address this, the Finance Act, 2016 added a proviso to section 36(1)(vii) of the Income Tax Act. This allows such debts, initially recognized under ICDS but not recorded in the accounts, to be written off as irrecoverable in the year they become non-recoverable. The provision ensures these debts are treated as written off for tax purposes, even if not recorded in the books. 5. Applicability of ICDS for the purpose of disallowance u/s 40(a)(i) and 40(a)(ia) Income Tax: Summary: The Income Computation and Disclosure Standards (ICDS) apply solely to income computation under "Profit & gains from business or profession" and "Income from Other Sources." ICDS provisions are not applicable for other purposes under the Income Tax Act. Regarding sections 40(a)(i) and 40(a)(ia), deductions may be claimed in a different year than when Tax Deducted at Source (TDS) occurs. If no TDS was required at the time of claiming expenditure, the amounts are not disallowable. Conversely, if TDS was deducted in a prior year, the expenditure is not disallowed under these sections, as the tax was already deducted. 6. Applicability of ICDS on TDS Income Tax: Summary: Income computation and disclosure standards (ICDS) do not influence the timing for crediting income for tax deduction at source (TDS). The timing for TDS remains based on the date of credit in the books of account or the date of payment. The expenditure amount subject to TDS is determined by the entry in the books of account rather than the computation or allowable expenditure under ICDS. This guidance is outlined in the technical guide by the Institute of Chartered Accountants of India (ICAI). 7. Maintenance of Books of accounts for the purpose of ICDS Income Tax: Summary: Income computation and disclosure standards (ICDS) may cause significant differences between figures reported under Accounting Standards (Ind-AS) and those under ICDS, potentially affecting income in future years. Auditors must certify that total income computations comply with ICDS provisions, as per the amended 3CD form. The Institute of Chartered Accountants of India (ICAI) suggests preparing a parallel profit and loss account and balance sheet based on ICDS to address these differences. Taxpayers are advised to reconcile these with their standard financial statements to ensure all necessary adjustments under ICDS are accounted for. Articles 1. CLUB FEES AND EXPENSES INCURRED TO MAINTAN CONTACTS, GOOD RELATIONS AND GOODWILL ARE ALLOWABLE BUSIENSS EXPENSES By: DEVKUMAR KOTHARI Summary: The Supreme Court ruled that club fees and expenses incurred by businesses for maintaining contacts and goodwill are allowable as business expenses under Section 37 of the Income Tax Act, 1961. This decision aligns with previous High Court judgments that have not been contested. The Court emphasized that such expenses, including entrance and periodical fees, are essential for business operations and should not be considered personal or capital expenditures. Despite this clarity, tax officers sometimes disallow these expenses on dubious grounds. The judgment underscores the importance of respecting business decisions regarding commercial expenses. 2. How to Change Email and Mobile no. on GST portal By: CA.VINOD CHAURASIA Summary: The article provides a step-by-step guide for taxpayers on how to change the email and mobile number of the primary authorized signatory on the GST portal. Users must log in to the GST portal, access the registration section, and select the non-core amendment option. They should add a new authorized signatory with the desired contact details, submit the application, and wait briefly. After logging in again, users must designate the new signatory as the primary one and ensure the correct email and mobile number are updated. For companies or LLPs, DSC is required, while EVC submission will need OTP verification. 3. ANTI PROFITEERING PROVISIONS AND AUTHORITY IN GST (PART-2) By: Dr. Sanjiv Agarwal Summary: The Anti-Profiteering provisions under the GST regime, as approved by the GST Council on June 18, 2017, and detailed in Chapter XV of the Central GST Rules, 2017, aim to ensure that benefits from tax reductions are passed to consumers. These rules establish the framework for the Anti-Profiteering Authority, including its constitution, powers, and duties. The authority can impose penalties, enforce price reductions, and refund undue profits with interest. The process involves scrutiny by state and central committees, with the Directorate General of Safeguards investigating complaints. The provision includes a sunset clause, limiting its operation to two years, and emphasizes fair implementation to avoid business disruption. News 1. Fourth Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India Summary: The Monetary Policy Committee (MPC) of the Reserve Bank of India decided to maintain the policy repo rate at 6.0%, with the reverse repo rate at 5.75% and the marginal standing facility rate at 6.25%. This decision aligns with a neutral monetary policy stance aimed at achieving medium-term CPI inflation of 4% while supporting growth. Global economic activity has strengthened, but domestic GVA growth slowed in Q1 2017-18. Retail inflation rose due to increased food and housing prices. The MPC noted geopolitical uncertainties and inflation risks, opting to keep the policy rate unchanged, with a focus on structural reforms and investment to boost growth. 2. Government takes note of the decision of the RBI Monetary Policy Committee to keep the policy rate and policy stance unchanged Summary: The government acknowledges the RBI Monetary Policy Committee's decision to maintain the current policy rate and stance. This decision reflects a revised real GVA growth forecast for 2017-18, lowered from 7.3% to 6.7%, indicating a larger output gap. Additionally, the CPI inflation forecast for the second half of the year has been slightly increased, with an annual average inflation expected to be under 4%. The government also supports RBI's initiatives to enhance B2B NBFC financing regulations and boost retail participation in government securities through bid aggregation by stock exchanges. 3. RBI Reference Rate for US $ Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 65.2899 on October 4, 2017, down from Rs. 65.5529 the previous day. The exchange rates for other currencies against the Rupee on October 4 were: 1 Euro at Rs. 76.8266, 1 British Pound at Rs. 86.6266, and 100 Japanese Yen at Rs. 58.00. The Special Drawing Rights (SDR) to Rupee rate is determined based on this reference rate. 4. The Government of India decides to reduce the Basic Excise Duty rate on Petrol and Diesel [both branded and unbranded] by ₹ 2 per litre with effect from 4th October, 2017; This major decision has been taken by the Government in order to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on Retail Sale Prices of Petrol and Diesel as well as to protect the interest of common man Summary: The Government of India has reduced the Basic Excise Duty on petrol and diesel by Rs. 2 per litre, effective from October 4, 2017. This move aims to mitigate the impact of rising international crude oil prices on retail fuel prices and protect consumers. The decision is expected to result in a revenue loss of Rs. 26,000 crore annually and Rs. 13,000 crore for the remainder of the current fiscal year. The increase in fuel prices had previously contributed to a rise in the Wholesale Price Index inflation to 3.24% in August 2017, prompting the government's action. Notifications Central Excise 1. 22/2017 - dated 3-10-2017 - CE Seeks to amend notification No. 11/2017-Central Excise so as to reduce the excise duty rates on Petrol and Diesel ( both unbranded and branded ) Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 22/2017-Central Excise to amend Notification No. 11/2017-Central Excise, reducing excise duty rates on both unbranded and branded petrol and diesel. The revised rates are Rs. 6.48 and Rs. 7.66 per litre for serial number 2 items, and Rs. 8.33 and Rs. 10.69 per litre for serial number 3 items. These changes are made under the authority of the Central Excise Act, 1944, and will take effect from October 4, 2017. DGFT 2. 32/2015-20 - dated 4-10-2017 - FTP Procedure for export of spices to the European Union countries Summary: The notification outlines the procedure for exporting spices to European Union countries, as per an amendment to the Foreign Trade Policy. A new entry, 54B, has been added to Chapter 09 of the ITC (HS) Classification of Export & Import Items, categorizing all spices under this chapter as free for export. The Spices Board India is designated as the competent authority to issue Health Certificates for these exports, which must be issued within 48 to 72 hours after receiving samples. The notification also clarifies the definition of "spice" and stipulates that future amendments to classifications will apply to spice exports. GST 3. 37/2017 - dated 4-10-2017 - CGST Facility of LUT extended to all exporters / registered persons subject to conditions Summary: The Government of India, through Notification No. 37/2017, permits all registered exporters to furnish a Letter of Undertaking (LUT) instead of a bond for exporting goods or services without paying integrated tax, subject to conditions. This applies unless the exporter has been prosecuted for tax evasion exceeding 250 lakh rupees. The LUT must be submitted on the registered person's letterhead and executed by an authorized individual. Failure to pay due taxes and interest will result in the withdrawal of this facility. The notification also applies to zero-rated supplies to Special Economic Zones without integrated tax payment. GST - States 4. 36/2017-State Tax - dated 29-9-2017 - Gujarat SGST The Gujarat Goods and Services Tax (Eighth Amendment) Rules, 2017. Summary: The Gujarat Goods and Services Tax (Eighth Amendment) Rules, 2017, amends the Gujarat Goods and Services Tax Rules, 2017. Key changes include extending deadlines in rules 24, 118, 119, and 120, replacing "30th September" with "31st October" and adjusting periods as specified in rule 117 or as extended by the Commissioner. Rule 120A introduces a marginal heading for revising FORM GST TRAN-1 declarations. In FORM GST REG-29, the headings are updated to reflect the cancellation of registration for migrated taxpayers, replacing "Provisional ID" with "GSTIN." These amendments are enacted by the Government of Gujarat. 5. 30/2017-State Tax (Rate) - dated 28-9-2017 - Gujarat SGST Amendments in the Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017 - Supply of Transit cargo services to Nepal and Bhutan Summary: The Government of Gujarat has amended Notification No. 12/2017-State Tax (Rate) dated June 30, 2017, under the Gujarat Goods and Services Tax Act, 2017. The amendment, effective from September 28, 2017, introduces a new entry, "9B," in the notification table. This entry specifies that the supply of services associated with transit cargo to the landlocked countries of Nepal and Bhutan is subject to a nil rate of state tax. This decision was made in the public interest following the recommendations of the GST Council. 6. (GHN-90)/GST-2017-S.9(3)(4)-TH - dated 25-9-2017 - Gujarat SGST Corrigendum - (GHN-34)GST-2017/S.9(3)(2)-TH, dated the 30th June, 2017 Notification No.13/2017-State Tax (Rate) Summary: The Government of Gujarat issued a corrigendum to amend the notification dated 30th June 2017 regarding State Tax (Rate). The amendment pertains to the description of services provided by advocates. The revised text clarifies that services provided by individual advocates, senior advocates, or firms of advocates include legal services offered directly or indirectly. "Legal service" is defined to encompass advice, consultancy, assistance in any branch of law, and representational services before any court, tribunal, or authority. This update aims to provide a clearer understanding of the scope of services covered under the State Tax (Rate). 7. J.21011/1/2017-TAX/Vol-II(i) - dated 19-7-2017 - Mizoram SGST Harmonised System of Nomenclature (HSN) Codes - Annual Turnover in the preceding Financial Year. Summary: The notification from the Mizoram Taxation Department mandates that registered persons under the Mizoram Goods and Services Tax Rules, 2017, must include Harmonised System of Nomenclature (HSN) Codes on tax invoices based on their annual turnover. For turnovers up to INR 1.5 crore, no HSN Code is required. For turnovers exceeding INR 1.5 crore and up to INR 5 crore, a 2-digit HSN Code is required. For turnovers of INR 5 crore and above, a 4-digit HSN Code is necessary. This regulation took effect on July 1, 2017. 8. J.21011/1/2017-TAX/Vol-II(i) - dated 17-7-2017 - Mizoram SGST CORRIGENDUM - Notification No. 2/2017 State Tax (Rate) issued vide No. J. 21011/1/2017-TAX(i) Dated 7.7.2017 Summary: Notification No. 2/2017 State Tax (Rate) issued on July 7, 2017, has been partially modified by the Taxation Department of Mizoram. The corrigendum, dated July 17, 2017, specifies changes in the schedule: for item 45, the description is amended to "Dried leguminous vegetables, shelled, whether or not skinned or split [other than put up in unit container and bearing a registered brand name]." Additionally, the phrase "[proposed GST Nil]" is omitted from item 148. The notification is issued by the Commissioner and Secretary to the Government of Mizoram, Taxation Department. 9. J.21011/1/2017-TAX/Part-III - dated 10-7-2017 - Mizoram SGST Prescribes the eligible registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees. Summary: The notification issued by the Governor of Mizoram under the Mizoram Goods and Services Tax Act, 2017, prescribes that eligible registered persons with an aggregate turnover not exceeding seventy-five lakh rupees in the preceding financial year may opt for a composition levy. This levy is calculated at one percent for manufacturers, two and a half percent for certain suppliers, and half a percent for other suppliers. However, those manufacturing specified goods like ice cream, pan masala, and tobacco products are excluded. For certain states, the turnover threshold is fifty lakh rupees. This notification is effective from July 1, 2017. 10. Corrigendum-01/2017 - dated 15-9-2017 - Nagaland SGST Corrigendum - In the Notification No. 06/2017 dated 24th August, 2017 Summary: In the corrigendum to Notification No. 06/2017 issued by the Government of Nagaland, Office of the Commissioner of Taxes, dated 24th August 2017, a textual amendment has been made. The term "the Board" in line 4 is replaced with "the Commissioner, on the recommendation of the GST Council." This change is documented under Corrigendum-01/2017, dated 15th September 2017, by the Commissioner of Taxes, Nagaland. 11. 14/2017 - dated 15-9-2017 - Nagaland SGST Last Date for filing of return in FORM GSTR-3B Summary: The Government of Nagaland, through the Office of the Commissioner of Taxes, has issued Notification 14/2017, mandating the electronic filing of returns in FORM GSTR-3B for specified months. The deadlines for filing are as follows: August 2017 by September 20, 2017; September 2017 by October 20, 2017; October 2017 by November 20, 2017; November 2017 by December 20, 2017; and December 2017 by January 20, 2018. Registered individuals must settle their tax liabilities, including tax, interest, penalties, and fees, by debiting their electronic cash or credit ledger by the respective deadlines. 12. F.NO.FlN/REV-3/GST/1/08 (Pt-1)/457 - dated 14-9-2017 - Nagaland SGST CORRIGENDUM - Notification No. F.No.FIN/REV-3/GST/1/08 (Pt-l) “D” dated 30th June, 2017 Summary: The Government of Nagaland's Finance Department issued a corrigendum to its previous notification dated 30th June 2017, concerning various amendments in the schedules of the Nagaland State Goods and Services Tax (SGST). The corrections include changes in tariff descriptions and classifications across several schedules, affecting items such as sugar, incense, photovoltaic cells, coconuts, dates, optical fibers, and video game consoles. These amendments adjust entries to correct typographical errors, clarify product descriptions, and update tax rate applicability. The notification is signed by the Additional Chief Secretary and Finance Commissioner, dated 14th September 2017. 13. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/466 - dated 14-9-2017 - Nagaland SGST The Nagaland Goods and Service Tax (Sixth Amendment) Rules, 2017 Summary: The Nagaland Goods and Services Tax (Sixth Amendment) Rules, 2017, issued on September 14, 2017, pertain to amendments in the Nagaland State Goods and Services Tax regulations. This notification, identified by reference number F.NO.FIN/REV-3/GST/1/08 (Pt-1)/466, outlines specific changes to the existing GST rules applicable within the state of Nagaland. The document is available for download in PDF format, providing detailed information on the amendments made to the state-specific GST framework. 14. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/461 - dated 14-9-2017 - Nagaland SGST Waiver the late fee who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 Summary: The Government of Nagaland, through its Finance Department, has issued a notification waiving the late fee for all registered individuals who did not submit their FORM GSTR-3B returns for July 2017 by the deadline. This waiver is enacted under the authority of section 128 of the Nagaland Goods and Services Tax Act, 2017, following the recommendations of the Council. The notification was signed by the Additional Chief Secretary & Finance Commissioner on September 14, 2017. 15. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/460 - dated 14-9-2017 - Nagaland SGST CORRIGENDUM - Notification F.No. FIN/REV-3/GST/1/08-"E"dated the 30th June, 2017 Summary: In the corrigendum issued by the Government of Nagaland's Finance Department, an amendment is made to a previous notification dated June 30, 2017. The corrections involve changes in the schedule: at Serial No. 59, the entry in column (2) is revised from "9" to "7, 9 or 10," and at Serial No. 102, the entry in column (2) is corrected to "2301, 2302." These changes are authorized by the Additional Chief Secretary and Finance Commissioner, dated September 14, 2017. 16. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/459 - dated 14-9-2017 - Nagaland SGST CORRIGENDUM - Notification No. F.No. FIN/REV-3/GST/1/08 (Pt-1)/453 dated 13th September, 2017 Summary: The Government of Nagaland, Finance Department (Revenue Branch), issued a corrigendum to its previous notification dated 13th September 2017. The correction specifies that in line 6 of the original notification, the reference to "paragraph 5" should be amended to "paragraphs 3.20 and 3.21." This change is officially documented by the Additional Chief Secretary and Finance Commissioner, dated 14th September 2017. 17. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/453 - dated 13-9-2017 - Nagaland SGST Letter of Undertaking in place of a bond. Summary: The Government of Nagaland, under the Nagaland Goods and Services Tax Rules, 2017, allows registered persons to furnish a Letter of Undertaking instead of a bond for exporting goods or services without integrated tax payment. Eligible parties include status holders per the Foreign Trade Policy 2015-2020 or those with foreign inward remittances of at least 10% of export turnover, not less than one crore rupees, in the previous financial year. They must not have been prosecuted for tax evasion exceeding 250 lakh rupees. The undertaking must be submitted in duplicate using FORM GST RFD-11 by authorized personnel. 18. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/452 - dated 13-9-2017 - Nagaland SGST Harmonised System of Nomenclature (HSN) Codes Summary: The Government of Nagaland's Finance Department issued a notification under the Nagaland Goods and Services Tax Rules, 2017, mandating the use of Harmonised System of Nomenclature (HSN) Codes on tax invoices based on annual turnover. Registered persons with a turnover up to INR 1.5 crore are exempt from using HSN codes. Those with a turnover exceeding INR 1.5 crore and up to INR 5 crore must use 2-digit HSN codes, while those with a turnover above INR 5 crore must use 4-digit HSN codes. This notification is effective from July 1, 2017. 19. 13/2017 - dated 11-9-2017 - Nagaland SGST Supersession of notification No. 10/2017, dated the 28th August, 2017 - Extends the time limit for furnishing the return by an Input Service Distributor. Summary: The Government of Nagaland, through the Commissioner of Taxes, has issued Notification 13/2017, superseding Notification 10/2017, to extend the deadline for Input Service Distributors to furnish their returns for July 2017. This extension, under the Nagaland Goods and Services Tax Act, 2017, allows submissions until October 13, 2017. The notification also indicates that the deadline for August 2017 returns will be announced later in the Official Gazette. 20. 12/2017 - dated 11-9-2017 - Nagaland SGST Supersession of notification No. 11/2017, dated the 5th September, 2017 - Extends the time limit for furnishing the details or return. Summary: The Government of Nagaland has issued Notification No. 12/2017, superseding Notification No. 11/2017, to extend the deadlines for submitting GST returns for July 2017. Taxable persons with a turnover exceeding 100 crore rupees must file GSTR-1 by October 3, 2017, while those with a turnover of up to 100 crore rupees have until October 10, 2017. All entities must file GSTR-2 by October 31, 2017, and GSTR-3 by November 10, 2017. The extension for August 2017 returns will be announced later in the Official Gazette. 21. 11/2017 - dated 5-9-2017 - Nagaland SGST Supersession of notifications No. 01/2017, dated the 8th August, 2017; No. 02/2017, dated the 8th August, 2017; and No. 03/2017, dated the 8th August, 2017 Summary: The Government of Nagaland, through the Office of the Commissioner of Taxes, issued Notification No. 11/2017 on September 5, 2017, superseding previous notifications from August 8, 2017. This notification extends the deadlines for submitting GST returns under sections 37, 38, and 39 of the Nagaland Goods and Services Tax Act, 2017. For July 2017, the deadlines are extended to September 10, 25, and 30 for Forms GSTR-1, GSTR-2, and GSTR-3, respectively. For August 2017, the deadlines are extended to October 5, 10, and 15 for the same forms. 22. 10/2017 - dated 28-8-2017 - Nagaland SGST Extends the time limit for furnishing the return by an Input Service Distributor. Summary: The Government of Nagaland has issued Notification 10/2017, extending the deadline for Input Service Distributors to submit their returns under the Nagaland Goods and Services Tax Act, 2017. According to the notification, the return for July 2017 must be filed by September 8, 2017, and for August 2017 by September 23, 2017. This extension is granted under the authority of section 39(6) and section 168 of the Act, following recommendations from the GST Council. The notification takes effect upon its publication in the Official Gazette. 23. 09/2017 - dated 28-8-2017 - Nagaland SGST GST Council extends the time limit for furnishing the return for the month of July, 2017. Summary: The GST Council has extended the deadline for filing the return for July 2017 for suppliers of online information and database access or retrieval services from outside India to non-taxable online recipients in Nagaland. The new deadline is set for September 15, 2017. This decision was made under the authority of the Nagaland Goods and Services Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017, following the GST Council's recommendation. The notification is effective from its publication date in the Official Gazette. 24. 08/2017 - dated 25-8-2017 - Nagaland SGST Amendment in the Notification-07/2017 NO.CT/LEG/GST-NT/12/17 dated 24th August, 2017. Summary: The Government of Nagaland issued Notification-08/2017, amending Notification-07/2017 related to the Nagaland Goods and Services Tax Rules, 2017. The amendment, effective from June 22, 2017, modifies clause (ii) to include the use of an electronic verification code generated through net banking login on the common portal, and the electronic verification code generated on the common portal. This change was made following the recommendation of the GST Council and was announced by the Commissioner of Taxes in Nagaland. 25. 07/2017 - dated 24-8-2017 - Nagaland SGST Notifies the following modes of verification Summary: The Government of Nagaland, through the Office of the Commissioner of Taxes, issued Notification 07/2017 regarding the verification modes under the Nagaland Goods and Services Tax Rules, 2017. The notification, effective from June 22, 2017, specifies two modes of verification: Aadhaar-based Electronic Verification Code (EVC) and bank account-based One Time Password (OTP). It mandates that verification using these methods must be completed within two days of submitting the documents. The notification was issued on August 24, 2017, following recommendations from the GST Council. 26. F.No.12(46)FD/Tax/2017-Pt-II-105 - dated 29-9-2017 - Rajasthan SGST The Rajasthan Goods and Services Tax (Eighth Amendment) Rules, 2017. Summary: The Rajasthan Goods and Services Tax (Eighth Amendment) Rules, 2017, issued by the Government of Rajasthan, amends several provisions in the existing Rajasthan Goods and Services Tax Rules, 2017. Key changes include extending deadlines in rules 24, 118, 119, and 120, replacing "30th September" with "31st October" in rule 24, and allowing for extensions by the Commissioner in rules 118, 119, and 120. Additionally, a new heading is added in rule 120A, and modifications are made to FORM GST REG-29, changing "Provisional ID" to "GSTIN" and updating the application heading for cancellation of registration of migrated taxpayers. 27. F.No.12(56)FD/Tax/2017-101 - dated 28-9-2017 - Rajasthan SGST Amendment in the Notification number F.12(56)FD/Tax/2017-Pt.-I-50 dated 29th June, 2017. Summary: The Government of Rajasthan has amended its notification dated June 29, 2017, under the Rajasthan Goods and Services Tax Act, 2017. This amendment, effective from September 28, 2017, introduces a new entry, serial number 9B, in the notification's table. This entry pertains to the supply of services related to transit cargo to the landlocked countries of Nepal and Bhutan. The services under this category are exempted from tax, with both the rate of tax and conditions being set at nil. The amendment was made following the recommendations of the Council and in the public interest. 28. F.No.12(56)FD/Tax/2017-Pt-II-96 - dated 25-9-2017 - Rajasthan SGST CORRIGENDUM - Notification Number F.12(56)FD/Tax/2017-Pt.-I-51 dated June 29, 2017 Summary: The Government of Rajasthan's Finance Department issued a corrigendum to its notification dated June 29, 2017, regarding the Rajasthan SGST. The correction pertains to the description of services provided by advocates. The revised text clarifies that services provided by individual advocates, senior advocates, or firms of advocates include legal services offered directly or indirectly. "Legal service" is defined to encompass any service related to advice, consultancy, or assistance in any branch of law, including representational services before courts, tribunals, or authorities. Circulars / Instructions / Orders SEZ 1. No. D.12/4/2013-SEZ(Pt.) - dated 19-9-2017 Strict adherence to Rule 27(6) of SEZ Rules, 2006 Summary: The circular from the Ministry of Commerce and Industry, Government of India, addresses Development Commissioners of all Special Economic Zones (SEZs) to ensure strict adherence to Rule 27(6) of the SEZ Rules, 2006. It clarifies that the previous directive stating "and precious metals supplied to SEZ Units should be sourced only through Nominated Agencies" should be interpreted as "precious metals imported by SEZ Units on loan basis should be sourced only through Nominated Agencies." The communication is approved by the concerned authority and issued by the Under Secretary to the Government of India. 2. File No. D.12/4/2013-SEZ (Pt) - dated 28-8-2017 Strict Adherence of Rule 27(6) of SEZ Rule, 2006-reg. Summary: The Ministry of Commerce and Industry's SEZ Division issued a circular on August 28, 2017, addressing violations of Rule 27(6) of the SEZ Rules, 2006. During a recent Development Commissioners' meeting, it was noted that some exporters in Special Economic Zones (SEZs) were not complying with the rule, specifically G&J Units failing to source precious metals from Nominated Agencies. The circular mandates strict adherence to the rule, emphasizing that precious metals imported on a loan basis by SEZ Units must be sourced exclusively through Nominated Agencies. This directive is approved by the Additional Secretary. Income Tax 3. Instruction No. 7/2017 - dated 21-7-2017 Supersession of Instruction No.9 of 2006, Dated 7-11-2006; Instruction No.16 of 2013, Dated 31-10-2013 and Circular No. 8/2016, Dated 17-3-2016 Summary: Instruction No. 7/2017, dated July 21, 2017, supersedes previous instructions to enhance the efficiency of handling income tax audit objections. It aims to streamline the audit process by leveraging the Income-tax Business Application (ITBA) and a new web-based portal for monitoring audit workflows and accountability. The instruction outlines a detailed procedure for managing audit objections, including categorization, response timelines, and remedial actions. It emphasizes the importance of maintaining proper records, ensuring timely communication, and resolving objections through a structured process involving various tax authorities. The instruction also includes provisions for accountability and monitoring of audit-related activities. GST - States 4. GSL/S.5(3)/B.5 - dated 3-10-2017 Officers Empowered to Collect Affidavit for Brand Name Summary: The Commissioner of State Tax, Gujarat, issued an order on October 3, 2017, under the Gujarat Goods and Services Tax Act, 2017. The order assigns specific functions to officers within their jurisdiction. The Assistant Commissioner and State Tax Officer are designated to receive affidavits related to Notifications No. 27/2017 and No. 28/2017, dated September 22, 2017, under sections 9(1) and 11(1) of the Act, respectively. These functions are to be performed only within the officers' jurisdiction unless specified otherwise. Customs 5. 120/2017 - dated 27-9-2017 SUB : Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed vide circular 37/2017-Customs dated 20.09.2017 –reg. Summary: The circular outlines the implementation of electronic sealing for export containers under a self-sealing procedure, replacing the previous method involving CBEC officials. Exporters can self-seal containers at their premises using RFID seals, which must meet international standards. The seals are to be procured directly by exporters, and any tampering will trigger mandatory customs examination. Vendors must provide certification of seals and ensure data integration with customs systems. The deadline for mandatory adoption of RFID seals is extended to November 1, 2017, allowing exporters to voluntarily adopt the new procedure earlier if facilities are available. Concerns about reader availability at inland container depots are addressed, with custodians urged to facilitate installation. 6. 121 /2017 - dated 27-9-2017 Sub: Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes - reg. Summary: The Central Government has introduced the Customs and Central Excise Duties Drawback Rules, 2017, effective from October 1, 2017, replacing the 1995 rules. The All Industry Rates (AIRs) of Drawback have also been revised. Key changes include amendments to the definition of drawback, discontinuation of composite rates, and specification of alternative AIRs for garment exports. Provisional drawback payments are aligned with AIRs, and brand rate applications must follow new guidelines. Exporters must apply for new brand rates for exports dated from October 1, 2017. Queries can be directed to the Deputy/Assistant Commissioner of Customs. Central Excise 7. 1059/8/2017-CX - dated 3-10-2017 Writing off of arrears of Central Excise, Service Tax and Customs duty - Constitution of Committees to advise the authority for writing off of arrears-reg Summary: The circular from the Ministry of Finance addresses the writing off of arrears related to Central Excise, Service Tax, and Customs duty. It establishes committees composed of Chief Commissioners and Commissioners to evaluate and recommend cases for writing off irrecoverable arrears. Due to logistical challenges in committee participation, the circular proposes replacing certain members with other available officers. The committees have the authority to abandon fines and penalties and write off duties up to specified limits. It clarifies that writing off the principal duty or tax will automatically include the associated interest. Field formations are instructed to implement these guidelines. Highlights / Catch Notes GST LUT Facility Extended to All Exporters Under GST for Tax-Free Exports, Subject to Conditions. Notifications : Facility of LUT extended to all exporters / registered persons subject to conditions Visit to Get Source Income Tax Electronic Tax Assessment Streamlined: Section 119 Enhances Transparency and Accountability in Time-Barring Scrutiny Cases. Circulars : Conduct of Assessment Proceedings electronically in time-barring scrutiny cases - Order u/s 119 Visit to Get Source Partial Depreciation Disallowance Doesn't Result in Tax Evasion; Taxpayer Can Claim in Future Years. Case-Laws - HC : The partial disallowance of depreciation in the year under consideration in any case would not result into any evasion of tax. In short, the assessee would earn no benefit out of the reduced depreciation which can always be claimed in later years. - HC Visit to Get Source High Court Clarifies No TDS Liability on Demat Charges by NSDL and CDSL as Cost Recovery, Not Services. Case-Laws - HC : TDS - payments of demat charges and other charges levied by NSDL and CDSL - such charges were in the nature of recovery of cost or expenses at large and not for providing any professional or technical service - No TDS liability - HC Visit to Get Source High Court Orders Tax Refund Assessment Completion by October 31, 2017, After Delay by Assessing Officer. Case-Laws - HC : Release the refund - AO withhold the refund arising out of return filed by an assessee til the completion of assessment - AO directed to complete the assessment latest by 31.10.2017. - HC Visit to Get Source Court Rules No TDS Liability u/s 194J for Temporary Arrangements Between Assessee and HRTC. Case-Laws - HC : TDS u/s 194J - stop gap arrangements between assessee and HRTC - no service, which can be termed to be technical service, was provided by HRTC to the development authority, so also no managerial, technical or consultancy services were provided - No TDS liability - HC Visit to Get Source Successor Officers Must Honor Predecessor's Decision for Personal Hearings in Tax Cases, Ensures Fairness in Administrative Process. Case-Laws - HC : Natural Justice - the successor officer cannot state that there is no necessity to afford an opportunity of personal hearing, when his predecessor had thought it fit to do so. - HC Visit to Get Source Customs Customs and Excise Duty Drawback Rules 2017 Updated; New All Industry Rates Announced for Compliance. Circulars : Sub: Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes - reg. Visit to Get Source Judicial Principle of Truth Guides Validity of Show Cause Notice in Preliminary Legal Challenges. Case-Laws - HC : Validity of SCN - Ultimately, it is the quest of truth and truth alone being the guiding star in the process of the judicial dispensation and that should be the touch stone for testing such challenges at the preliminary stages of the proceedings. - HC Visit to Get Source DGFT DGFT Updates Spice Export Procedures to EU: Quality Standards & Documentation Key for Compliance. Notifications : Procedure for export of spices to the European Union countries Visit to Get Source Indian Laws SIM cards and recharge coupons face Local Body Tax, but electronic recharges are exempt within municipal limits. Case-Laws - HC : Levy of Local Body Tax (LBT) - Even though SIM cards, recharge coupons are not liable to sales tax / VAT, these are liable to LBT on its entry into municipal limits - e-recharge not liable to LBT - HC Visit to Get Source Service Tax Service Tax Demand Overturned Due to Vague Show Cause Notice, Leaving Appellant Confused About Allegations. Case-Laws - AT : The SCN is vague and incomprehensible, leaving the appellant-assessee wondering as to what is the exact nature of allegations they are required to meet - demand of service tax set aside. Visit to Get Source Central Excise Committees Formed to Advise on Writing Off Central Excise, Service Tax, and Customs Duty Arrears for Efficient Resolution. Circulars : Writing off of arrears of Central Excise, Service Tax and Customs duty - Constitution of Committees to advise the authority for writing off of arrears-reg - Circular Visit to Get Source Case Laws: Income Tax 2017 (10) TMI 110 Addition u/s 68 - booking advances received from the prospective customers - tribunal confirmed part addition - Held that:- Tribunal allowed the assessee to produce further evidence at second appellate stage. To the extent, the additions were explained through such further evidence, the Tribunal remanded the issue before the Assessing Officer for verification. Only to the extent where there was no further material, the Tribunal confirmed the disallowance of Rs. 96.60 lakhs. It can thus be seen that the entire issue is based on appreciation of evidence and essentially a factual one. No question of law arises. We did not discern any ratio that section 68 of the Act cannot be applied in case of advances received for plot bookings. If all the ingredients of section 68 exist, nothing would prevent the Revenue from invoking the said provision. With respect to the addition of Rs. 26.32 lakhs confirmed by Commissioner of Income Tax (Appeals), we primafacie find that the counsel for the appellant is correct in pointing out that the Tribunal failed to give any finding on this issue. The Tribunal has neither confirmed nor deleted the addition. Let there be NOTICE for final disposal, returnable on 04.10.2017. 2017 (10) TMI 109 Relief for release of gold and jewellery - Department has released the gold and jewellery to the petitioner's brother under similar circumstances - Held that:- Considering submission made by the petitioner that apart from search and seizure operation conducted in the business premises of the petitioner, similar search and seizure operation was conducted in the business premises of the petitioner's brother. Though order of assessment has been passed against the petitioner's brother, till date they have not paid taxes, but the Department has released the gold and jewellery to the petitioner's brother. It is not known under what basis, the third respondent has released the gold and jewellery to the petitioner's brother, especially when they are defaulters in payment of tax as computed by the Assessing Officer. In my considered view, this aspect of the matter can also be placed before the ITAT by the petitioner in an application, which they can move for appropriate interim direction for release of gold and jewellery. Accordingly, this writ petition stands disposed of by giving liberty to the petitioner to file proper interlocutory application in the pending appeal before the ITAT seeking for release of gold and jewellery. It is open to the petitioner to place all points before the ITAT and if, such application is filed, the ITAT is requested to give preference to the application and consider for an earlier disposal of the application, in the light of the fact that the gold and jewellery are in the custody of the Department for over five years. The petitioner is also entitled to raise plea that he alone has been discriminated, when his brother has been granted the relief for release of the gold and jewellery. 2017 (10) TMI 108 FBT - Writ of Declaration to declare Sections 115 WA(2) and 115 WB(1) and 115 WB (2) as introduced by the Finance Act, 2005 ultra vires of Article 14, 19(1)(g) and 265 of the Constitution of India - Held that:- Considering the fact that the matter is now seized of by the Hon'ble Supreme Court, these Writ Petitions can be disposed of with appropriate directions, leaving it open to the parties i.e. the petitioners as well as the Revenue to abide by the decision of the Hon'ble Supreme Court. Revenue expressed an apprehension that in the event the Hon'ble Supreme Court uphold the provisions as being a valid piece of legislation, then the assessees like the petitioners should not plead that the action that may be initiated by the Department or in the process of being initiated, is barred by limitation. The Revenue need not have any apprehension in this regard, as the Court proposes to safeguard the interest of the Revenue by passing the following orders: “The petitioners are directed to abide by the decision of the Hon'ble Supreme Court where the challenge to the impugned provisions are pending. It is made clear that in the event the Hon'ble Supreme Court upholds the impugned legislation and the Department initiates action or proceeds with the action already initiated, the petitioners/assessees are not entitled to plead limitation and the period during which these Writ Petitions are pending as well as the period till the matter is decided by the Hon'ble Supreme Court, shall stand excluded for computation of limitation”. 2017 (10) TMI 107 Penalty under Section 271D - review petition - Held that:- Agreement describes the extent of the property as 0.20 cents. Such description of the extent, would ordinarily be taken as 20 Sq. Links, as done by the Tribunal. On the other hand, if the extent was, in fact, 20 cents, the description should have been either as 20 cents or 0.20 acres. Therefore, the Tribunal cannot be faulted for its conclusion that the extent of the property is 0.20 Sq. Links. This being the factual situation, we are not persuaded to differ from the views taken by the Tribunal and in the judgment, relying on Annexure-A, a valuation report obtained subsequent to the judgment of this Court, now produced along with this review petition. Even otherwise, a reading of the order of the Income Tax Appellate Tribunal would show that, in paragraph 8 of its order, the Tribunal has given reasons (a) to (g) to hold that the theory that Rs. 15 lakhs was received by the assessee as property advance under the agreement, is not a convincing one. It is only in sub para (b) that the Tribunal has held the extent of the property to be 20 Sq. Links. Even if that finding is found to be vitiated, the other reasons given by the Tribunal in para 8(a) and (c) to (g) are independent of sub para (b) and are unassailable. Therefore, so long as these conclusions remain valid, which it should be, the conclusions as contained in sub para (b) cannot have any impact thereon. We are not persuaded to think that the judgment deserves to be reviewed. 2017 (10) TMI 106 Reopening of the assessment u/s 143(3) r.w.s.147 - period of limitation - Held that:- The notice u/s 148 was issued on 14.3.2013 and the order which was the subject-matter of appeal before the Tribunal was dated 30.06.2011. The A.Y before us is 2005-06 and as per section 149(1)(b) of the Act, six years from the end of the relevant A.Y is 31.03.2012 beyond which period a notice u/s 148 cannot be issued for the A.Y 2005-06. Since as per section 2 of section 150, the notice u/s 148 cannot be issued if the order under appeal before the Tribunal, was beyond the limitation period prescribed u/s 149(1)(b) of the Act. However, we find that the order of the CIT (A) which is subject matter of appeal before the Tribunal is dated 30.06.2011 is well within the period of six years from the end of the relevant financial year and therefore, the proceedings initiated by the AO by issuance of notice u/s 148 for the A.Y 2005-06 in the case of the assessee is sustainable. Therefore, we see no reason to interfere with the order of the CIT (A) on this issue. Entitlement to deduction u/s 54F in respect of more than one residential flats received by virtue of a development agreement - Held that:- As by virtue of various decisions of the Tribunal and also the jurisdictional High Court in the case of Shri Syed Ali Adil (2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT) and also CIT vs.V.R. Karpagam (2014 (8) TMI 899 - MADRAS HIGH COURT) and CIT vs.Smt. K.G. Rukminiamma (2010 (8) TMI 482 - Karnataka High Court ), the assessee was entitled to deduction u/s 54F of the Act in respect of more than one residential flats received by virtue of a development agreement. Capital gain computation - applicability of the provisions of section 50C - Held that:- We find that the AO has adopted the SRO value of flats received by the assessee as consideration for the transfer of the land under the development agreement u/s 50C of the Act. In our opinion, this is not correct. The cost of the constructed area received by the assessee should be taken as the consideration received by the assessee in lieu of the development agreement and not the SRO value. The SRO value u/s 50C of the Act would come into play when the assessees sell their share of the flats and if the sale consideration received by them is less than the SRO value. Therefore, the AO is directed to take the cost of construction of the flats by the builder as the sale consideration received by the assessee for transfer of land to the development for computing the long term capital gain 2017 (10) TMI 105 Income accrued in India - income assessable to tax at Singapore on the basis of accrual or remittance - AO brought to tax part of the receipt on the ground that the assessee has not furnished the proof of its remittance to the assessee in Singapore - India-Singapore DTAA - Held that:- It has never been the case of the AO or the CIT (A) that the assessee has not filed the evidence of offering the income to tax in Singapore. In fact, the AO has considered the fact that the offshore income of a Singapore entity is not taxable in Singapore unless and until it is remitted or received in Singapore by virtue of Article 24(1) of India-Singapore DTAA. Thus, the consequence of receipt in Singapore is that it is taxable in Singapore and that is the reason why the AO has accepted part of the remittance in respect of which the proof has been furnished during the assessment proceedings as exempt from tax in India. Since the assessee has filed proof of remittance of a part of balance of the freight charges, we are of the opinion that the assessee is entitled to exemption in respect of only the freight charges remitted to Singapore. In respect of USD in respect of which, there is no proof of remittance, it has to be brought to tax in India. We find that similar issue had arisen before the Hon'ble Gujarat High Court in the case of M.T. Maersk Mikage & 4 Petitioners vs. DIT (International Taxation) (2016 (9) TMI 19 - GUJARAT HIGH COURT). The AO is therefore, directed to tax only such part of the freight charges which have not been remitted to the assessee in Singapore. Assessee’s appeal is partly allowed. 2017 (10) TMI 104 Person in default u/s 201(1)/201(1A) - validity of notice u/s 201(1)/(1A) since the assessee falls within the jurisdiction of ACIT/DCIT instead of ITO (TDS-1) - jurisdiction - person responsible (PR) of the assessee bank has not deducted tax at source @20% in the cases where the persons / depositors furnished Form 15G/15H with the bank having invalid/wrong/no PAN - Held that:- Notice issued under section 201(1)/(1A) of the Income Tax Act, 1961 by the Ld. AO was without assuming proper jurisdiction, since the assessee falls within the jurisdiction of ACIT/DCIT instead of ITO (TDS-1) and therefore the impugned notice under section 201(1)/(1A) of the Income Tax Act, 1961 itself was illegal and void-ab-initio and hence, the consequent assessment framed u/s 201(1/)(1A) of the Income Tax Act, 1961 is without jurisdiction, invalid, void ab initio an liable to be annulled . See National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax [1996 (12) TMI 7 - SUPREME Court] 2017 (10) TMI 103 Reopening of assessment - reasons to believe - depreciation under section 32(iia) - written off inventory treating them as non moving and absolute in nature - Held that:- The Revenue's contention that the Assessing Officer had not made specific mention of these issues in the assessment order also did not find favour of the Tribunal observing that the assessee would have no control over the manner in which the Assessing Officer would treat such issues in the order of assessment after full scrutiny. With respect to written off inventory there was no dispute that such issue did not come up for consideration before the AO in the original assessment. However, on this ground the Tribunal entered into the merits and held that the same could not have formed the basis for making any additions. Without so elaborating, the Tribunal examined the question whether on the third ground, the Assessing Officer could have formed a belief that income chargeable to tax had escaped the assessment. The Tribunal ultimately held it against the Revenue. If we peruse the order in this respect more minutely, the issue pertains to offering certain interest income to tax. The assessee had given a loan to one GSIL but had not received interest on such loan for a long time, perhaps on the ground that there was no interest stipulation in the loan document. In the past, the assessee would offer notional interest on accrual basis. However during the period relevant to the assessment year in question, the issue came to be referred for arbitration. The Board of Directors of the assessee company therefore, passed a resolution not to offer the interest income to tax in view of such uncertainty in its receipt itself. The Tribunal noted that much later the arbitral award was available holding the assessee entitled to interest at the rate of 11.5%. The Tribunal therefore, found that the assessee was justified in not accounting for such interest in the return when there was no stipulation for interest in the agreement between the parties. - Decided in favour of assessee. 2017 (10) TMI 102 Additional tax to be charged under section 143(1A) - effect of reducing the loss declared by the assessee in the return of income - Held that:- Supreme Court in case of Commissioner of income Tax and others v. Sati Oil Udyog Ltd. and another [2015 (3) TMI 854 - SUPREME COURT] in which it was held and observed that section 143(1A) can be invoked where it is found on facts that the lesser amount stated in the return filed by the assessee was a result of an attempt to evade tax lawfully payable by the assessee and the burden of proving such fact is on the Revenue. The Tribunal observed that the assessee was a government undertaking and was since long running into huge losses year after year. The partial disallowance of depreciation in the year under consideration in any case would not result into any evasion of tax. In short, the assessee would earn no benefit out of the reduced depreciation which can always be claimed in later years. The assessee was a government company and was running into huge losses year after year consistently. The reduction of loss was only on account of disallowance of depreciation claimed by the assessee. The Tribunal also noted that if the disallowance was on the dispute of the machinery not having been installed during the year under consideration, such depreciation would always be available to the assessee in the later years. Since there was consistent loss offered by the assessee, this shifting of the depreciation to a later year would have no impact on its tax. - Decided in favour of assessee. 2017 (10) TMI 101 TDS u/s 194C or 194J - payment to National Stock Exchange in the nature of transfer charges - payments of demat charges and other charges levied by NSDL and CDSL - Held that:- The Tribunal while reversing the view of the Commissioner of Income Tax (Appeals) observed that there were no elaborate reasons recorded to hold that the TDS was required to be deducted under section 194J and not under section 194C of the Act. The Tribunal noted that the stock exchange provides services to the assessee company for purchase and sale of shares of their clients. Such charges are merely in the nature of recovery of expenses of the exchange and cannot be termed as charges for providing any professional or technical service. We are broadly in agreement with the view of the Tribunal. The Stock Exchange cannot be termed as providing professional or technical services. This question is therefore not required to be considered. Disallowance of lease line charge paid u/s.40(a)(ia) - Held that:- This issue has been decided by the Supreme Court in case of Commissioner of Income Tax vs. Kotak Securities Ltd. reported in [2016 (3) TMI 1026 - SUPREME COURT] in which held that the brokers make payment to the stock exchange for the facilities of faceless screen based transactions made available at the stock exchange which was compulsory for the brokers to use. In the opinion of the Supreme Court, this was not a payment of fee for technical service rendered by the stock exchange inviting deduction at source under section 194J of the Act. Deduction of tax for payments of demat charges and other charges levied by NSDL and CDSL - Held that:- Tribunal was of the opinion that such charges were in the nature of recovery of cost or expenses at large and not for providing any professional or technical service. To this extent, we are concur with the view of the Tribunal. While rejecting this question, we should not be seen to be confirming the Tribunal's further observation that even if there was a shortfall in tax collection at source, section 40(a)(ia) of the Act for disallowance cannot be invoked. We will examine such an issue in an appropriate case. 2017 (10) TMI 100 Release the refund - AO withhold the refund arising out of return filed by an assessee til the completion of assessment - whether notice under sub-section (2) of section 143 authorize AO to withhold the refund till the last date for finalizing the assessment? - Held that:- The return was filed on 29.09.2015 for which, the time limit under the normal provision of subsection (1) of section 143 of the Act for processing the return is over long back. Even though as discussed earlier, the Assessing Officer having issued notice under sub-section (2) of section 143 of the Act, he would get an extended time for proceeding under sub-section (1) as highlighted in case of Tata Teleservices Ltd. (2016 (5) TMI 724 - DELHI HIGH COURT) and Group M Media India Pvt. Ltd. Mumbai (2017 (1) TMI 1149 - BOMBAY HIGH COURT ), it would be wholly inequitable for the Assessing Officer to merely sit over the petitioner's request for refund citing the availability of time upto the last date of framing the assessment under sub-section (3) of section 143. We simply cannot accept the interpretation of the counsel for the Revenue that once a notice under sub-section (2) of section 143 is issued, the suspension of the refund arising out of the return filed by the assessee would be automatic and till the passing of the order of assessment under sub-section (3) of section 143. The reasonable interpretation of the statute and the situation in such a case would be, to expect the Assessing Officer to take up an expeditious disposal of the processing of return under sub-section (1) of section 143 of the Act at least once the assessee requests for release of the refund, and send as an intimation to the assessee if he wishes to withhold the same. AO is directed to complete the process of the assessee's return under sub-section (1) of section 143 of the Act latest by 31.10.2017. If any refund arises out of said exercise, grant the same to the petitioner as per the statutory provisions. Insofar as the assessment of the year 2016-17 is concerned, the time for processing the return under sub-section (1) of section 143 read with proviso is not yet over. We do not propose to issue any direction in this respect for curtailing the statutory time limit envisaged therein. 2017 (10) TMI 99 Higher compensation for the land acquired for implementation of the Krishna Water Project - the land owner K.Veerasamy passed away, the petitioner was directed by the Court to disburse the amount to the legal heirs of the deceased land owner - arrears of income tax - notice under section 226(3) - Held that:- Unfortunately, the petitioner is no more and therefore, there cannot be summons by the respondent for enquiry to establish that he had paid the enhanced compensation amount to Mr.K.V.Lakshmipathi on 20.12.2003 and to the other legal heirs on different dates and according to the deceased writ petitioner, he has got receipt to establish the same. Thus, considering the peculiar facts and circumstances of the case, the writ petition is disposed of, directing the respondent to issue notice to the legal heirs of the writ petitioner as well as the legal heirs of the deceased land owner, call them for enquiry, in which the respondent shall verify the original receipt obtained by the petitioner and if satisfied, exonerate the petitioner/legal heirs from any claim and if there is arrears of tax payable by the original land owner, liberty is granted to the Income Tax department to proceed against the legal heirs of the original land owner. 2017 (10) TMI 98 TDS u/s 194J - payments made by the assessee to HRTC - arrangement arrived at inter se M/s. Himachal Pradesh Bus Stand Management Development Authority (Development Authority) and Himachal Pradesh Road Transport Corporation (HRTC) can be said to be in the nature of latter providing professional or technical services to the former? - whether reimbursement of expenditure incurred by the latter would not attract the provisions of Section 194J - Held that:- The arrangement inter se the development authority and HRTC was clear and simple. It was by way of a stop gap arrangement. Till such time the authority developed its infrastructure and recruited the staff, the work of development and management was required to be carried out by HRTC. Hence, employees of HRTC were called upon to continue to discharge such duties. It is in this backdrop, two entities decided to share their resources by arriving at an arrangement, whereby salaries of certain staff and other expenditure incurred by HRTC was to be shared proportionately. Such an arrangement arrived at between two entities cannot be said to be that of rendering professional services. No legal, medical, engineering, architectural consultancy, technical consultancy, accountancy, nature of interior decoration or development was to be rendered by HRTC. Similarly, no service, which can be termed to be technical service, was provided by HRTC to the development authority, so also no managerial, technical or consultancy services were provided. The arrangement was purely simple. The staff of HRTC was to carry out the work of development and management of the development authority till such time, the said authority developed its infrastructure and the expenditure so incurred by HRTC was to be apportioned on the agreed terms. It is only pursuant to such arrangement, the development authority disbursed the payment to HRTC and, as such, in our considered view, no amount of TDS was required to be deducted on the same. It is only a reimbursement of an expense so incurred by HRTC. - Decided in favour of assessee. 2017 (10) TMI 97 Rectification of application u/s 154 - petitioner's application u/s 264 requesting CIT to delete the addition made to the total income for the assessment year 2000-2001 was dismissed for non-prosecution - Held that:- A cursory perusal of the order dated 30.03.2005 shows that there is no finding rendered by the 1st respondent on the merits of the matter except stating that the reports of the Assessing Officer and the Additional Commissioner of Income Tax have been perused and the records have been gone through. This is insufficient to show that there was application of mind to the facts of the case. In any event, if the 1st respondent had considered the matter on merits, then reasons should have been assigned in the order dated 30.03.2005. In the absence of any reasons assigned, it has to be held that the merits of the matter were not gone into by the 1st respondent. The observation that there was no necessity to afford an opportunity of personal hearing is incorrect for the simple reason that, the predecessor in office, in her discretion, had afforded an opportunity of personal hearing. That being so, the successor officer cannot state that there is no necessity to afford an opportunity of personal hearing, when his predecessor had thought it fit to do so. Thus this Court is of the view that the petitioner should not be non-suited on technicalities. Accordingly, the writ petition is allowed and the orders dated 05.06.2006 & 30.03.2005 are set aside and the 1st respondent is directed to hear the petition filed under Section 264 of the Act and take a decision on merits Customs 2017 (10) TMI 96 N/N. 24/2015-20 and 25/2015-20, both dated 25th August, 2017 - Import of Gold from Seoul, South Korea - restricted item - restrictions put upon the import of Gold by the notifications dated 25th August, 2017 - case of petitioners is that they should be allowed to import Gold without any restrictions brought in by the notifications - Held that: - The Court proceeds on the basis for the purpose of passing this order, that the two impugned notifications were published in the Gazette electronically in terms of Section 8 of the Information Technology Act read with OM dated 30th September, 2015 issued by the PSP Division, only on 28th August, 2017 i.e. after the dates of the respective imports of the two consignments from Seoul, in South Korea - the Court is satisfied that the Petitioners have made out a prima facie case for grant of interim relief as prayed, for the provisional release of the consignments covered by the B/Es presented by the Petitioners to the Customs Authorities - the Court directs that till the next date of hearing, the SCNs issued to the Petitioners shall not be proceeded with by the Respondents. 2017 (10) TMI 95 Provisional release of goods - insistence to furnish Bank Guarantee - Held that: - similar issue decided in the case of M/s. Sri G.P.R. Leathers, Proprietor Shri G. Prakash Reddy, M/s. Parveen Leather Exports Versus The Commissioner of Customs (Exports) , The Deputy Commissioner of Customs [2017 (7) TMI 834 - MADRAS HIGH COURT], where it was held that seeking security in the form of bank guarantee is uncalled for and in a sense, dilutes the very essence of the order - goods granted provisional release on fulfillment of conditions imposed by the Court - petition allowed. 2017 (10) TMI 94 N/N. 24/2015-20 and 25/2015-20, both dated 25th August, 2017 - Import of Gold from Seoul, South Korea - restricted item - restrictions put upon the import of Gold by the notifications dated 25th August, 2017 - case of petitioners is that they should be allowed to import Gold without any restrictions brought in by the notifications - Held that: - The Court proceeds on the basis for the purpose of passing this order, that the two impugned notifications were published in the Gazette electronically in terms of Section 8 of the Information Technology Act read with OM dated 30th September, 2015 issued by the PSP Division, only on 28th August, 2017 i.e. after the dates of the respective imports of the two consignments from Seoul, in South Korea - the Court is satisfied that the Petitioners have made out a prima facie case for grant of interim relief as prayed, for the provisional release of the consignments covered by the B/Es presented by the Petitioners to the Customs Authorities - the Court directs that till the next date of hearing, the SCNs issued to the Petitioners shall not be proceeded with by the Respondents. 2017 (10) TMI 93 100% EOU - Violation of import conditions - marble and granite - validity of SCN - it was alleged that the petitioner, a Proprietary concern has not only violated the conditions of import of marble and granite from other countries free from payment of customs duty and then instead of re-exporting the finished products manufactured out of this marble and granite blocks, since it was a 100% EOU, diverted the finished goods through its sister concerns into the domestic market - Time limitation u/s 11A of the Central Excise Act, 1944 - maintainability of petition - Held that: - all the contentions which are sought to be raised by the petitioners before this Court for assailing the impugned show cause notice can very well be raised before the said Respondent No.2-concerned authority also and the said authority can also very well decide these objections and contentions in accordance with law. The mixed question of facts and law about the limitation under Section 11A of the Act and the period of 10 years covered under the show cause notice, various stages of adjudication and appellate proceedings pending before the different authorities of the Respondents-Department, their inter se effect on each other, are all complex cobweb of facts which requires adjudication by the competent authority only and this Court cannot be called upon to pronounce upon the allegations, their merit, the possible defence its reply and reasons to be assigned by the concerned authority for adjudicating the same in a particular manner - It would be premature and undesirable to cut short the said enquiry and adjudication process at this stage. Ultimately, it is the quest of truth and truth alone being the guiding star in the process of the judicial dispensation and that should be the touch stone for testing such challenges at the preliminary stages of the proceedings. This Court does not find any good ground for interference in the Show Cause Notice at this stage - petition dismissed - decided against petitioner. 2017 (10) TMI 92 Violation of import condition - import of certain capital goods as an STPI unit undertaking to export services as per the license granted to them - SCN was issued to the appellant for demand of the customs duty as appellant could not produce any evidence in respect of exports made by them - Held that: - In the absence of any documents even before the Tribunal to indicate that they have complied with the obligation of export, the impugned order of the 1st Appellate Authority is correct - appeal dismissed - decided against appellant. 2017 (10) TMI 91 Absolute Confiscation - Penalty - Gold Buscuit - non-production of any valid document of the possession of the foreign origin gold - Held that: - the foreign origin gold is a notified item u/s 123 of the Act, 1962 and the burden of proof lies with the person from whose possession the goods were seized - the Ld. Advocate stated that the appellant purchased the seized gold upon payment through RTGS. But no evidence was placed. Considering the value of gold, the quantum of penalty imposed on the appellants should be reduced. Penalty imposed on Shri Utpal Kr. Dey and Shri Dipak Sen is reduced to Rs. 5,00,000/- and Rs. 1,00,000/- respectively - absolute confiscation upheld - decided partly in favor of appellant. Corporate Laws 2017 (10) TMI 89 Oppression and mismanagement - eligibility of meeting appointing the AD - Held that:- Here no grounds are given for removal of the petitioner as Director. The contention of respondents that they have issued notice to convene AGM on 29.12.2010 to transact the business of removal of petitioner as Director. This is a notice dated 07.12.2010 said to have been sent to the petitioner under Certificate of posting. The notice fixing the date for EGM did not contain any reasons for removal of petitioner as Director. There was no E-mail communication to the petitioner about the proposed AGM on 29.12.2010. It is surprising to see as to why the notice was sent to the petitioner by Certificate of posting than through E-mail. There was lot of correspondence between the petitioner and the respondents and vice versa through E-mail only concerning all important matters of the Company. It is very surprising that Respondents No.1 to 3 have chosen the mode of communication through Certificate of posting rather than e-mail. From the above, the intention of Respondents is evident that they wanted to keep the petitioner in dark so that they can take drastic action against him. The petitioner being 50% shareholder of the 1st Respondent Company and also a promoter, his removal as Director of the Company on the ground of causing loss to the Company is totally unsustainable. It is clear that the said allegation was invented with a view to take control of the Company by Respondents No.2 and 3 by removing the petitioner. Thus, all these actions were initiated behind the back of the petitioner. We are of the opinion that the petitioner has made out a case of oppression and mismanagement against Respondents No.2 and 3 and consequently, we pass the following reliefs against Respondents No. 2 and 3 by allowing the petition. (1) By declaring that the meeting held on 24.08.2010 by which Respondent No.3 was appointed as Additional Director as illegal and is therefore, his appointment is set aside; (2) By declaring that the removal of petitioner as Director of the 1st respondent company in the impugned AGM dated 29.12.2010 as illegal and contrary to law and is therefore set aside and the petitioner is restored as Director of the 1st respondent Company; Relief No. 3 deleted in lieu of modified order dated 30.08.2017 (3) In the facts and circumstances of the case elaborated above, the petitioner may be permitted to invest for allotment of 22,500 shares at the current valuation + 67,500 shares of the Company and the Company should have further shares to the petitioner in terms of the provisions of Section 62 of the Companies Act, 2013 (4) By declaring that Form-32 dated 29.12.2010 filed before the Registrar of Companies, Karnataka at Bangalore, as null and void Insolvency & Bankruptcy 2017 (10) TMI 90 Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 (I&B Code) - fulfillment of necessary procedures by Operational Creditor - Held that:- The Operational Creditor has fulfilled all the requirements of law and has also proposed the name of IRP after obtaining the written consent in Form-2. We are satisfied that Corporate Debtor committed default in making payment of the outstanding debt. Therefore, TCP/385/(IB)/CB/2017 is admitted and we order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. We appoint Mr. R. Krishnamurthy, as IRP as proposed by the Operational Creditor. There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in IBBI website. The IRP is directed to take charge of the Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed. We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016 Service Tax 2017 (10) TMI 86 CENVAT credit - input services - outdoor catering services - Rent-a-Cab services - Held that: - In case of Principal Commissioner v. Essar Oil Ltd. [2015 (12) TMI 1062 - GUJARAT HIGH COURT], Division Bench of this Court on the question of charges for rent a cab services, and held that the term 'input service' would mean any service used by the manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final product from the place of removal and credit allowed. On the question of charges for rent a cab service, Division Bench of this Court in case of Commissioner of Central Excise v. Ferromatik Milacron India Ltd., [2010 (4) TMI 649 - GUJARAT HIGH COURT], has held that canteen services which are indispensable in relation to manufacture of the final products would certainly fall within the ambit of “input service” and the credit was allowed. Appeal dismissed - decided against Revenue. 2017 (10) TMI 85 Jurisdiction of Commissioner (Appeals) - Power to remand - Whether the learned Commissioner (Appeals) vide the impugned order, have rightly remanded the matter to the Deputy Commissioner to hear the respondent-assessee and dispose of the objections with respect to the rebate claim, in accordance with law? Held that: - the Hon'ble Gujarat High Court in the case of Commissioner of Service Tax Vs Associated Hotels Ltd. [2014 (4) TMI 406 - GUJARAT HIGH COURT] have held that Sub-section (4) of section 85 itself contains the width of the power of the Commissioner (Appeals) in hearing the proceedings of appeal under section 85. The scope of such powers flowing from sub-section 85(4) therefore cannot be curtailed by any reference to sub-section (5) of section 85 of the Finance Act, 1994 - decided against Revenue. 2017 (10) TMI 84 SSI exemption - turnover within threshold limit - validity of SCN - case of appellant is that the SCN is vague and full of ambiguity - Held that: - the allegations in the SCN are vague and do not contain the gist of accusation and/or the basis on which the appellant is required to respond. The amount have been taken from the balance-sheet, trading or profit and loss account of the appellant and tax have been calculated thereon. Further, in spite of categorical averments made by the appellant in their reply to the show cause notice, the same have not been considered nor any findings recorded as to why a particular services is taxable, although claimed exempt by the appellant - the SCN is vague and incomprehensible, leaving the appellant-assessee wondering as to what is the exact nature of allegations they are required to meet. Although the SCN discusses the various classifications of service but it fails to give the basis of categorization of the services under particular heads - appeal allowed - decided in favor of appellant. 2017 (10) TMI 83 Rectification of mistake - the applicant has failed to produce FIRC issued by the Bank - Held that: - It is evident from the record that the appellant failed to produce FIRC certificate issued from the Bank that remittance is convertible Foreign Exchange - the bankers had not given clear confirmation in respect of foreign exchange - there is no mistake apparent on the fact of the record - ROM application rejected. Central Excise 2017 (10) TMI 82 Penalty - input credit on parts used for construction of fixed and semifixed structures - Held that: - When the assessee bonafide carrying a belief which cannot be stated to be wholly untenable that cenvat credit on such inputs was available, claimed the same with full knowledge of the department, merely because eventually such credit was disallowed, would not give rise to penalty proceedings - appeal dismissed - decided against Revenue. 2017 (10) TMI 81 Additional ground incorporated in appeal - Whether the Customs, Excise and Service Tax Appellate Tribunal could have gone into the merits of the additional grounds sought to be incorporated in Appeal, while deciding the application made by the appellant under Rule 10 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982? - Sub-Rule (1) of Rule 8 of the said Rules - Held that: - On conjoint reading of SubRule (1) of Rule 8 and Rule 10, it is apparent that hearing before the Appellate Tribunal need not be confined to the grounds of Appeal set forth in the Memorandum of Appeal filed in accordance with Rule 8. Only embargo on the power of the Tribunal in considering the grounds which are not raised in the Memorandum of Appeal is that the parties to the Appeal should be put to notice that a particular ground which is not specifically set out in the Memorandum of Appeal will be considered by the Appellate Tribunal on merits. The issue whether the additional grounds sought to be urged had any merit could not have been gone into while deciding the application made containing limited prayer as aforesaid. The issue to be decided while considering the said application was whether the appellant should be allowed to urge additional grounds set out in the application at the time of final hearing of the Appeal. The merits of the additional grounds could have been considered at the time of final hearing. Hence, even the order passed on the said application will have to be set aside and the said application will have to be allowed. Appeal allowed in part. 2017 (10) TMI 80 Restoration of Appeal - Condonation of delay of 2659 days in filing appeal - According to the appellant, it was unaware of the judgment and it was therefore, that the delay has occurred - Held that: - The assertion of the appellant that it was unaware of the judgment of the Apex Court has not been found to be untrue. Similarly, the Tribunal has also not found untrue the claim of the appellant that the relevant files were misplaced - considering the huge financial liability that will be fastened on the appellant, the Tribunal should not have dismissed the application for condonation of delay filed by the appellant - delay condoned - appeal restored. 2017 (10) TMI 79 Clandestine removal - copper wires, falling under Chapter 74 of the Central Excise Tariff Act, 1985 - penalty - Held that: - the Appellant had recorded the stock particulars of the finished goods in the statutory records, the same cannot be confiscated and redemption fine cannot be imposed on the Appellant - On perusal of case records, the Appellant had produced the records/documents to show that the goods were not removed in the clandestine manner. However, such documents and explanation furnished by the Appellant have not been considered by the authorities below and the adjudged demand was confirmed solely based on the allegations levelled in the SCN - prudence and justice require that confessional statement should not be made sole ground from proving guilt. Thus, guilt should be established beyond reasonable doubt on the basis of material/evidence available on record. The Department has not established its case satisfactorily in support of clandestine removal of goods - demand withheld. As regards confiscation of finished goods in the case of Appellant No.2, the ld. Commissioner (Appeals) has upheld the confiscation, stating that the goods were not accounted for and no documentary evidences with regard to the legitimate possession of the same were produced - Held that: - Since, the Department has taken the divergent views regarding maintenance of records; confiscation of finished goods cannot be upheld in absence of proper substantiation. Thus, the impugned order upholding confiscation of finished goods is not legally sustainable. Further, the documents/records / explanation furnished by the appellant with regard to alleged clandestine removal of goods have not been addressed properly by the authorities below. Without any independent corroborative evidence of the buyer of the goods, mode of transport, method of receipt of sale proceeds etc., the statement recorded from the supervisor Shri Satish Kashyap alone, cannot be relied upon to support clandestine manufacture and clearance of the finished goods - demand withheld Appeal allowed - decided in favor of appellant. 2017 (10) TMI 78 SSI Exemption - use of brand name - It appeared to Revenue that appellant have availed the SSI exemption wrongly in contravention of provision of Para-four of N/N. 8/2002 CE read with N/N. 8/2003 CE, which states that the exemption contained in the Notification shall not apply to specified goods bearing a brand name or trade name whether registered or not except in the case of exemption provided therein - Held that: - there is no averment in the SCN and or finding that Hi-Tech brand (as used by appellant) is owned by the other manufactures, namely M/s Hi-Tech Medical Products Private Limited and M/s Aman Medical Products Private Limited - save and except making a bald allegation that the appellant company is a related person with the other two companies, no facts have been brought on record as regards common shareholding or common management etc. Further, in view of the clarification issued by the Ministry of Finance, Department of Revenue dated 01 September, 1994, it has been clarified with the example of lock manufacturers that where a brand name does not belong to any particular manufacturer, any unit is free to use any name or such name - In the facts of the present case, it is clear that the brand name Hi-Tech was not owned by any particular person or company and thus, the appellant cannot be deprived the benefit of the small-scale exemption scheme under N/N. 8/2002 read with 8/2003 CE as amended - further, the name of the appellant company is M/s Hi-Tech Syringes Private Ltd and thus putting their name on their product does not amount to use of brand name of another. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 77 CENVAT/MODVAT credit - fabrication and installation of machine, machinery parts - whether the respondent has rightly availed Modvat credit on HR Sheet, Plate, Channel, Shape & Section, Round, Angle etc. used in fabrication of machine, machinery parts and support structure necessary for installation of heavy machinery? - Held that: - The Hon’ble High Court of Chhattisgarh in the case of U.O.I. Vs. Associated Cement Company Ltd. [2010 (10) TMI 1142 - CHHATTISGARH HIGH COURT] has held that structural items-Angles, Channels, Plates, Rods etc. required to make machines function without any vibration or movement, cannot be said to be used in construction of buildings but linked with machinery used in production of final product, therefore, the Cenvat credit is admissible - credit allowed - appeal dismissed - decided against Revenue. 2017 (10) TMI 76 Suo moto Abatement for the period of closure of factory - Pan Masala Packing Machines (Collection of Duty and Determination of Capacity) Rules, 2008 - Held that: - similar issue is squarely covered by the ruling of Hon’ble Gujarat High Court in Thakkar Tobacco Products Private Ltd. [2015 (11) TMI 319 - GUJARAT HIGH COURT] in favor of the appellant, where it was held that When the rules do not provide for the manner in which duty is required to be abated, nor do they provide that abatement shall be by an order of the Commissioner or any authority, but nonetheless provide for abatement of duty and the extent of entitlement to such abatement, no fault can be found in the approach of the assessee in suo motu taking the benefit of such abatement. Demand of interest u/s 11AB - Held that: - the restarting of operation of the factory subsequent to 05/08/2009, amounts to increase in the number of operating packing machines in the factory during the month - the payment of duty was required to be made by the 5th day of the next month, being September, 2009, which admittedly have been paid on such date - no interest is payable under Section 11 AB of the Act by the appellant assessee in the facts of this case. Whether the appellant is entitled to abatement, as they have cleared raw material and packing goods which are not the notified goods? - Held that: - the intention of legislature has been clarified by the subsequent amendment that the word goods appearing in the second part of the first proviso are only notified goods and nothing else. In this view of the matter, we set aside the impugned order and allow the appeal with consequential benefits. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 75 Ajustment of refund claim against the interest amount outstanding - no SCN issued - Held that: - the impugned order adjusting the sanctioned refund claim is required to be set aside and the matter is required to be remanded for verification of facts as well as the fact as to whether any interest proceedings stands initiated by the adjudicating authority pending against the assessee - appeal allowed by way of remand. 2017 (10) TMI 74 Clandestine removal - demand of duty of Central Excise amounting to Rs. 9,80,772/- is based mainly on the fact that the goods were cleared under six fake/parallel invoices - Held that: - The appellant has not been able to give any evidence to counter the facts given in the impugned order - demand upheld. Clandestine manufacture and removal - demand of Rs. 19,96,320/- with interest on account of finished goods manufactured by using raw material received by the appellant and which were not accounted for in their records - Held that: - there is no evidence on record positively to indicate that the appellant manufactured finished goods out of the raw material and sold it clandestinely - appellant pleads that they have not been given opportunity for cross-examination of the persons whose statements were relied upon in this regard by the department - matter is remanded to original adjudicating authority for fresh decision after giving opportunity to the appellant for cross-examination - matter on remand. Appeal allowed in part by way of remand. 2017 (10) TMI 73 Area Based exemption - N/N. 50/2003 CE dated 10/06/2003 - products cleared from their factory established in the Eureka Forbes Industrial Area - Held that: - it is not the intention of Revenue that exemption be allowed with respect to only particular plot numbers. The notification starts with the words Exemption to goods other than specified goods cleared from units located in the Industrial Growth Centre or Industrial Infrastructure Developer Centre, etc. of Uttranchal and Himachal Pradesh - there is no intention of the Government in the said notification to give exemption with respect to particular plot numbers - appeal allowed - decided in favor of appellant. 2017 (10) TMI 72 Penalty u/r 25 of CER, 2002 - non-payment of duty on clearance value - Held that: - there is no case of any suppression or clearance of goods without proper maintenance of record. Further, there is no proposal of any confiscation of any goods in the SCN - the elements or the condition precedent for imposing penalty under Rule 25 are not obtaining in the facts of the present case - penalty set aside - appeal allowed - decided in favor of appellant. 2017 (10) TMI 71 SSI exemption - use of Brand Name of others - the assessee is partnership firm which was established by two brothers and they have surrendered their right in favour of their sons - Held that: - trade mark was used by the sons who replaced their fathers as partner - they are entitled to use the trade mark specially when this trade mark is not belonging to any other person or nobody or claimed by any other person. Reliance placed in the case of Kali Aerated Water Work, Salem Versus Commnr. of Central Excise, Madurai [2015 (6) TMI 226 - SUPREME COURT], where it was held that Trade name 'Kalimark Aerated Water Works' and trade mark mentioned in the said agreement would remain vested in all the parties including the appellant and the appellant was also allowed to use the same. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 70 100% EOU - Goods cleared to DTA from EOU - exemption under N/N. 6/2006-CE dated 01.03.2006 - duty calculation as per Section 3 proviso of Central Excise Act, 1944 - Held that: - The duty payable for such clearance is in terms of the proviso to section 3 of the Central Excise Act, 1944. The said section stipulates that the duty shall be equal to aggregate of duties of customs which would be leviable under Customs Act, 1962 or any other law for the time being enforced, on the like goods produced or manufactured outside India, if imported into India. Admittedly the aggregate of duties of customs will include additional duty of customs which is computed based on the rate applicable to goods produced or manufactured in India - In the present case, the N/N. 6/2006-CE is applicable to goods manufactured in India. The objection of the Revenue is that the said Notification issued under section 5A of the Act did not specifically indicate that the same is available to goods produced or manufactured in 100% EOU. In the absence of such stipulation the rate of duty applicable should be determined without extending the benefit of N/N. 6/2006-CE. While calculating the duty to be paid in terms of proviso to section 3, the appellant-assessee can avail the exemption N/N. 6/2006-CE. - appeal allowed - decided in favor of appellant. 2017 (10) TMI 69 Interpretation of Statute - notified goods - Rule 10 of the Pan Masala Packing Machine Rules, 2008 - Compounded Levy Scheme - refund/abatement claim - rejection of said refund/abatement claim on the ground is that the word used in the second clause first proviso of Rule 10 is goods and not notified goods and therefore no removal of goods including inputs should have been effected by the appellant during the closure period from 16/10/2009 to 31/10/2009 - Held that: - the word goods used in the second part of the first proviso to Rule 10 of the PMPM rules indicates only notified goods and nothing else. By no stretch of imagination, the word goods includes inputs - in the several provisions of the Central Excise Act and the Rules the word inputs has been used exclusively and never interchangeably with the words goods. Further, this interpretation is also substantiated by the amendment of the the said PMPM Rules, 2010, wherein the word notified has been added before the word goods in the second part of the first proviso to the said Rule 10. The said amendment was brought by N/N. 8/2010-CE (NT) dated 27/02/2010. The intention of legislature has been clarified by the subsequent amendment that the word goods appearing in the second part of the first proviso are only notified goods and nothing else - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2017 (10) TMI 68 Whether iron wire obtained from iron rods is a separate and distinct commodity from iron rods so as to make the same taxable separately over and above the sales tax already paid on iron rods? Held that: - reliance placed in the case of COLLECTOR OF CENTRAL EXCISE Versus TECHNOWELD INDUSTRIES [2003 (3) TMI 123 - SUPREME COURT OF INDIA], where it was held that Merely because there are two separate entries does not mean that the product becomes excisable. The product becomes excisable only if there is manufacture - iron rods and iron wires are one and the same commodity - appeal dismissed - decided against Revenue. Indian Laws 2017 (10) TMI 88 Levy of Local Body Tax (LBT) - SIM cards, recharge coupons and e-recharge on its entry into municipal limits of a Municipal Corporation u/s 127(2)(aaa) of the Maharashtra Municipal Corporations Act, 1949 - Held that:- SIM cards are normally made of plastic or paper. The SIM cards are capable of being bought and sold. The SIM cards have utility value. The SIM cards are capable of being transferred, stored and possessed. The concept of Sales Tax and LBT are not the same. LBT can be levied on the goods brought within the limits of a Municipal Corporation even if the same are not sold, but the same are brought either for consumption or use. As far as e-recharge is concerned, by no stretch of imagination, it can be said that e-recharge is capable of being brought into limits of a city. In clause 133 quoted above, e-recharge is not specifically included. Assuming that it is included, it is nothing but an electronic download by use of internet. Hence, e-recharge cannot be subject to levy of LBT. E-recharge is capable of being used. But it cannot be said that by downloading e-recharge through internet, e-recharge is brought into limits of a Municipal Corporation. Hence, LBT cannot be recovered on e-recharge. Now, coming back to SIM cards and recharge coupons/cards, as held earlier, the same will be covered by the definition of goods under subsection 25 of section 2 of the said Act. Charging section for LBT under the said Act is section 152P. LBT is leviable on the entry of goods into the limits of city for consumption, use or sale. Hence, the first respondent was well within its powers to levy LBT on SIM cards and recharge voucher in physical form. Hence, the petition must succeed in part and we pass the following order: (I) We hold that e-recharge is not covered by the Item No.133 of the Government Notification dated 28th March 2013 and that in any event, LBT cannot be levied on e-recharge; (II) We reject the contention of the petitioner that the LBT is not payable on the SIM cards and recharge vouchers/coupons brought into the limits of the first respondent-Municipal Corporation; 2017 (10) TMI 87 Offence punishable under Section 138 of the Negotiable Instruments Act - dishonor of cheques - Held that:- The accused has failed to prove that the cheque was not issued for a consideration. It is proved on record that the accused has utilized the money of the complainant to the extent of cheque, he has issued the cheque to the complainant towards repayment and it is for the consideration. After going through the facts of the present case, this Court finds that the accused has failed to rebut the initial presumption in favour of the complainant, as the cheque was issued towards the repayment of money, the accused has withdrawn from the account of the complainant. So, this Court comes to the conclusion that initially presumption in favour of the complainant that it was issued for consideration towards the payment of money, which the accused was liable to pay the complainant, is not rebutted. Complainant has proved its case beyond the shadow of reasonable doubt. Now, coming to the arguments of learned Senior counsel appearing on behalf of the accused that as the complainant has also maintained a suit for the recovery of this amount, which was dismissed in default and so, the complaint requires dismissal. This Court finds that no substance in the arguments of learned Senior Counsel for the accused that the complainant should enforce has a right by way of civil litigation, the complainant has proved its case beyond the shadow of reasonable doubt. This Court finds that no force in the arguments of learned Senior Counsel for the accused. The petition maintained by the petitioner is without any merit, as the complainant has proved its case beyond the shadow of reasonable doubt. The cheque was issued for consideration, so the judgment of conviction passed by the learned Trial Court and affirmed by the learned lower Appellate Court, needs no interference. The present revision petition, which sans merits, deserves dismissal and is accordingly dismissed.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter October 5, 2017

TMI Short Notes

1. Change in accounting policy - When is to be changed - What should be the basis for change in accounting policy

2. Accrual of income - Scope of ICDS - If there is conflict between Section 5 and Section 145, which would prevail

3. ICDS - Accrual basis of Accounting - Accrual of income versus Receipt of income

4. Bad debts out of income recognised on the basis of ICDS but not yet recognised in books of account

5. Applicability of ICDS for the purpose of disallowance u/s 40(a)(i) and 40(a)(ia)

6. Applicability of ICDS on TDS

7. Maintenance of Books of accounts for the purpose of ICDS

Articles

1. CLUB FEES AND EXPENSES INCURRED TO MAINTAN CONTACTS, GOOD RELATIONS AND GOODWILL ARE ALLOWABLE BUSIENSS EXPENSES

2. How to Change Email and Mobile no. on GST portal

3. ANTI PROFITEERING PROVISIONS AND AUTHORITY IN GST (PART-2)

News

1. Fourth Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India

2. Government takes note of the decision of the RBI Monetary Policy Committee to keep the policy rate and policy stance unchanged

3. RBI Reference Rate for US $

Notifications

1. 22/2017 - dated 3-10-2017 - CE

2. 32/2015-20 - dated 4-10-2017 - FTP

3. 37/2017 - dated 4-10-2017 - CGST

4. 36/2017-State Tax - dated 29-9-2017 - Gujarat SGST

5. 30/2017-State Tax (Rate) - dated 28-9-2017 - Gujarat SGST

6. (GHN-90)/GST-2017-S.9(3)(4)-TH - dated 25-9-2017 - Gujarat SGST

7. J.21011/1/2017-TAX/Vol-II(i) - dated 19-7-2017 - Mizoram SGST

8. J.21011/1/2017-TAX/Vol-II(i) - dated 17-7-2017 - Mizoram SGST

9. J.21011/1/2017-TAX/Part-III - dated 10-7-2017 - Mizoram SGST

10. Corrigendum-01/2017 - dated 15-9-2017 - Nagaland SGST

11. 14/2017 - dated 15-9-2017 - Nagaland SGST

12. F.NO.FlN/REV-3/GST/1/08 (Pt-1)/457 - dated 14-9-2017 - Nagaland SGST

13. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/466 - dated 14-9-2017 - Nagaland SGST

14. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/461 - dated 14-9-2017 - Nagaland SGST

15. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/460 - dated 14-9-2017 - Nagaland SGST

16. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/459 - dated 14-9-2017 - Nagaland SGST

17. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/453 - dated 13-9-2017 - Nagaland SGST

18. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/452 - dated 13-9-2017 - Nagaland SGST

19. 13/2017 - dated 11-9-2017 - Nagaland SGST

20. 12/2017 - dated 11-9-2017 - Nagaland SGST

21. 11/2017 - dated 5-9-2017 - Nagaland SGST

22. 10/2017 - dated 28-8-2017 - Nagaland SGST

23. 09/2017 - dated 28-8-2017 - Nagaland SGST

24. 08/2017 - dated 25-8-2017 - Nagaland SGST

25. 07/2017 - dated 24-8-2017 - Nagaland SGST

26. F.No.12(46)FD/Tax/2017-Pt-II-105 - dated 29-9-2017 - Rajasthan SGST

27. F.No.12(56)FD/Tax/2017-101 - dated 28-9-2017 - Rajasthan SGST

28. F.No.12(56)FD/Tax/2017-Pt-II-96 - dated 25-9-2017 - Rajasthan SGST

Circulars / Instructions / Orders

1. No. D.12/4/2013-SEZ(Pt.) - dated 19-9-2017

2. File No. D.12/4/2013-SEZ (Pt) - dated 28-8-2017

3. Instruction No. 7/2017 - dated 21-7-2017

4. GSL/S.5(3)/B.5 - dated 3-10-2017

5. 120/2017 - dated 27-9-2017

6. 121 /2017 - dated 27-9-2017

7. 1059/8/2017-CX - dated 3-10-2017

Highlights / Catch Notes

GST

LUT Facility Extended to All Exporters Under GST for Tax-Free Exports, Subject to Conditions.

Income Tax

Electronic Tax Assessment Streamlined: Section 119 Enhances Transparency and Accountability in Time-Barring Scrutiny Cases.

Partial Depreciation Disallowance Doesn't Result in Tax Evasion; Taxpayer Can Claim in Future Years.

High Court Clarifies No TDS Liability on Demat Charges by NSDL and CDSL as Cost Recovery, Not Services.

High Court Orders Tax Refund Assessment Completion by October 31, 2017, After Delay by Assessing Officer.

Court Rules No TDS Liability u/s 194J for Temporary Arrangements Between Assessee and HRTC.

Successor Officers Must Honor Predecessor's Decision for Personal Hearings in Tax Cases, Ensures Fairness in Administrative Process.

Customs

Customs and Excise Duty Drawback Rules 2017 Updated; New All Industry Rates Announced for Compliance.

Judicial Principle of Truth Guides Validity of Show Cause Notice in Preliminary Legal Challenges.

DGFT

DGFT Updates Spice Export Procedures to EU: Quality Standards & Documentation Key for Compliance.

Indian Laws

SIM cards and recharge coupons face Local Body Tax, but electronic recharges are exempt within municipal limits.

Service Tax

Service Tax Demand Overturned Due to Vague Show Cause Notice, Leaving Appellant Confused About Allegations.

Central Excise

Committees Formed to Advise on Writing Off Central Excise, Service Tax, and Customs Duty Arrears for Efficient Resolution.

Case Laws:

Income Tax

Customs

Corporate Laws

TMI Tax Updates - e-Newsletter
October 5, 2017