TMI Tax Updates - e-Newsletter
October 5, 2018

Case Laws in this Newsletter:

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

Articles

1. SURRENDER OF ‘DIRECTOR IDENTIFICATION NUMBER’

   By: DR.MARIAPPAN GOVINDARAJAN

2. Refund of input tax credit in textile sector particularly to manufacturer of manmade textile material or staple fabric

   By: DEVKUMAR KOTHARI

News

1. Commerce Minister chairs inter-ministerial meeting to promote economic growth

2. Reserve Bank of India imposes monetary penalty on Federal Bank Limited

3. Cabinet approves Second Protocol amending the Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore

4. Suresh Prabhu reviews progress of Sectoral Export Promotion Strategy

5. Government of India and The Asian Development Bank (ADB) sign $ 100 Million Loan Agreement to expand Sewerage and Drainage Coverage in Kolkata;To target expansion of sewerage and drainage services in selected peripheral areas of KMC to at least 3,000 additional households and provide sewage treatment for at least 100,000 households.

6. Financing standing working capital of Oil Marketing Companies (OMCs) by long term external borrowings

7. Direct Tax Collections for F.Y. 2018-19 up to September, 2018 (Half-yearly figures) show that gross collections are at ₹ 5.47 lakh crore which is 16.7% higher than the gross collections for the corresponding period of last year

Notifications

Central Excise

1. 21/2018 - dated 4-10-2018 - CE

Seeks to amend Notification No. 11/2017-Central Excise dated 30th June,2017 in order to reduce Central Excise duty rates on motor spirit (petrol) and High-speed diesel

Companies Law

2. F. No. 1/4/2016-CL-I-Part - S.O. 5099(E) - dated 1-10-2018 - Co. Law

Central Government appoints the 1st October, 2018 as the date of constitution of National Financial Reporting Authority

3. F. No. 1/4/2016-CL-I - S.O. 5098 (E) - dated 1-10-2018 - Co. Law

Central Government appoints the 1st October, 2018 as the date on which the provisions of sub-sections (1) and (12) of Section 132 of the Companies Act, 2013 shall come into force

Customs

4. 85/2018 - dated 4-10-2018 - Cus (NT)

Exchange Rates Notification No.85/2018-Custom(NT) dated 4.10.2018

DGFT

5. 40/2015-2020 - dated 3-10-2018 - FTP

Export of Red Sanders wood by Directorate of Revenue Intelligence (DRI) and Governments of Tamil Nadu and Maharashtra - Extension of time regarding

GST - States

6. G.O.MS.No. 499 - dated 28-9-2018 - Andhra Pradesh SGST

Section 52- Rate at which TCS to be collected.

7. G.O.MS.No. 498 - dated 28-9-2018 - Andhra Pradesh SGST

Services Exempted from Tax Clarifying the Scope and Applicability of the notification issued in G.O.Ms.No.588, Revenue (CT-II) Department, Dated:12.12.2017.

8. G.O.MS.No. 497 - dated 28-9-2018 - Andhra Pradesh SGST

Special Procedure for filing outward supplies in GSTR-1 for suppliers whose aggregate turnover is up to 1.50 crore rupees in the preceding financial year or the current financial year.

9. G.O.MS.No. 496 - dated 28-9-2018 - Andhra Pradesh SGST

Special Procedure for filing outward supplies in GSTR-1 for suppliers whose aggregate turnover is up to 1.50 crore rupees in the preceding financial year or the current financial year – Furnishing of Quarterly returns – July,2018 to March,2019- Extension of time.

10. 19/2018- State Tax (Rate) - dated 26-7-2018 - Arunachal Pradesh SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated the 28th June, 2017

11. 15/2018 - dated 7-9-2018 - Tamil Nadu SGST

Amendments in Notification number 11/2018 (Rc.46/2018/Taxation/A1) - State Tax dated the 10th August, 2018.

12. 14/2018-TNGST - dated 7-9-2018 - Tamil Nadu SGST

Amendments in the Notification number 09/2017 - State Tax dated the 15th September, 2017 (Rc.No.085/2016/Taxation/A1); and Notification number 02/2018 - State Tax dated the 23rd March, 2018 (Rc.No.085/2016/Taxation/A1).

13. 13/2018-TNGST - dated 7-9-2018 - Tamil Nadu SGST

Amendments in the notification number 05/2017 dated the 17th August, 2017 (Rc.No.085/2016/Taxation/A1), notification number 9/2017 - dated the 15th September, 2017 (RC. No. 085/2016//Taxation/A1); and notification number 15/2017-dated the 15th November, 2017 (Rc.No.085/2016/Taxation/A1),

14. G.O. Ms. No. 186 - dated 5-9-2018 - Telangana SGST

Prescription of Certain Procedure for Obtaining GSTIN by Certain Tax Payers

15. 14/2018 - dated 16-8-2018 - Telangana SGST

Payment of taxes for discharge of tax liability as per FORM GSTR-3B.

16. 13/2018 - dated 16-8-2018 - Telangana SGST

Extending the time limit for furnishing the details of outward supplies in FORM GSTR-1.

17. 12/2018 - dated 6-8-2018 - Telangana SGST

Extension of Time limit for filing FORM GSTR-6

18. KA.NI.-2-1881/XI-9(47)/17 - dated 25-9-2018 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-836/XI-9(47)/17-U.P. Act-1-2017, Order-(06)-2017 Dated 30 June 2017

19. KA.NI.-2-1879/XI-9(47)/17 - dated 25-9-2018 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-843/XI-9(47)/17-U.P. Act-1-2017, Order-(10)-2017 Dated 30 June 2017

20. KA.NI.-2-1828/XI-9(47)/17 - dated 19-9-2018 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-842/XI-9(47)/17- U.P. Act-I-2017-Order- (09) -2017 Dated 30 June 2017

Income Tax

21. 60/2018 - dated 1-10-2018 - IT

Notifies the transactions of acquisition of equity share for the purpose of special rate of tax u/s 112A

Circulars / Instructions / Orders

GST - States

1. CCW/GST/74/2015 - dated 28-9-2018

APGST Rules, 2017- Rule 142(5)-Demands in Form GST DRC 07 to be uploaded Electronically-Certain Instructions.

2. 1/2018-TNGST-Rc.393/2018/Taxation/A1 - dated 18-9-2018

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Tamil Nadu Goods and Service Tax Rules, 2017 in certain cases.

GST

3. F.No. 8/B/10(2)/HRD/EMC/2017 - dated 4-10-2018

Implementation of Tax Deduction at Source (TDS) under GST-reg.

Customs

4. Instruction No. 15/2018 - dated 4-10-2018

Clarification in relation to applicability of provisions of Customs Act to Cruise Tourism-reg.

Highlights / Catch Notes

GST

• Clean Energy Cess and States Compensation Cess serve different purposes; legislative policy determines any credit or set-off.

  Case-Laws - SC : The Clean Energy Cess and States Compensation Cess are entirely different from each other, payment of Clean Energy Cess was for different purpose and has no bearing or connection with States Compensation Cess. Giving credit or set off in the payment is legislative policy which had to be reflected in the legislative scheme.
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• Supreme Court Upholds Validity of State Compensation Cess Under GST Act, 2017; Not Colorable Legislation.

  Case-Laws - SC : Validity of the Goods and Services Tax (Compensation to States) Act, 2017 - State compensation cess is “with respect to” goods and services tax, it is a tax. - It is not a colourable legislation - Levy of Compensation to States Cess is an increment to goods and services tax which is permissible in law.
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• Printing Question Papers Classified as Service Supply Under Heading 9989 in GST Service Classification Scheme.

  Case-Laws - AAR : Classification of Supply - Supply of goods or services? - The activity of printing of question papers is an activity of supply of service classifiable under heading 9989 of the scheme of classification of services.
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Income Tax

• Equity Share Transactions Now Qualify for Special Income Tax Rate u/s 112A; Streamlined Tax Benefits Announced.

  Notifications : Certain Transactions of acquisition of equity share notified for the purpose of special rate of Income Tax u/s 112A
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• Court Rules Transfer Pricing Comparables Issues Often Lack Substantial Legal Questions in Arm's Length Price Cases.

  Case-Laws - HC : TPA - comparable selection - substantial question of law - the Revenue has routinely brought such matters before this Court knowing fully well that the Transfer Pricing particularly with regard to exclusion and inclusion of certain comparables to determine Arm's Length Price (ALP) would not necessarily give rise to purely legal questions or substantial questions of law.
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• TDS Deduction Failure u/s 194J Leads to Wrong Addition; No Expenditure Claimed, Section 40(a)(ia) Not Applicable.

  Case-Laws - HC : Failure to deduct TDS u/s 194J - Addition u/s 40(a)(ia) - Since, there is no claim of expenditure by the assessee, disallowance under section 40(a)(ia) as was done by the Assessing Officer does not arise.
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• Section 12AA Registration Denied: Lack of Charitable Activity Proof; Trustee Changes Irrelevant for Section 11 Evaluation.

  Case-Laws - AT : Registration u/s 12AA denied - Proof of charitable activities - The removal of the Trustee or directions given by the donor etc., are not relevant at this stage and could be considered by the A.O. at the time of considering the applicability of Section 11 of the I.T. Act.
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• Court Adjusts Profit Rate to 0.5% in Undisclosed Bank Transaction Dispute After AO's 3% Estimate Rejected.

  Case-Laws - AT : Estimation of income - Undisclosed bank transactions - assessee himself has offered profit of 0.30% before the AO which was rejected by him who estimated such income at 3%. - Adoption of 0.5% as net profit on such undisclosed transactions outside the books will meet the ends of justice.
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• Director's Salary Disallowed: No Tax Evasion; Reasonable Remuneration Needs No Central Govt Approval for Unlisted Loss-Making Firms.

  Case-Laws - AT : Disallowance of salary paid to director - There is no tax evasion and there is reasonableness of managerial remuneration. - higher remuneration - Now no approval is required from the Central Government for making payment of higher remuneration even in case of loss in the case of unlisted public company.
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• Assessment Orders Invalid: Chennai Tax Officials Lacked Jurisdiction, Kolkata Authority Failed to Issue Required Notices u/s 143(2.

  Case-Laws - AT : Validity of assessments orders - all the three assessments are non-est in the eyes of law since the DCIT/ACIT, Circle-11(4), Chennai issuing the section 143(2) notice(s) did not have jurisdiction and the assessing authority in Kolkata did not issue such scrutiny notices.
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• Penalty for Non-Compliance with Consolidated Notice Under Income Tax Act Section 271(1)(b) Needs Specificity for Justification.

  Case-Laws - AT : Penalty u/s 271(1)(b) - non compliance of a consolidated notice issued u/s 142(1) - there must be a specific notice to the assessee for specific assessment requirements to be complied with; that the compliance must have relevance to the assessment year in question.
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• Assessing Officer Can Maintain Unabated Assessment u/s 153A Without New Incriminating Evidence Found in Search.

  Case-Laws - AT : Assessment u/s 153A - In respect of unabated assessments, the legislature had conferred powers on the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment
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• Interest u/s 201(1A) of Income Tax Act not a business expense; not compensatory payment.

  Case-Laws - AT : Allowable busniss expenses - The interest paid u/s 201(1A) would not assume the character of business expenditure and could not be regarded as a compensatory payment.
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• Asset Holding Period Determines Capital Gain Type: Focus on Practical Holding, Not Legal Ownership Date for Tax Purposes.

  Case-Laws - AT : Gain on sale of property - LTCG or STCG - period of holding - for the purpose of determining the nature of capital gain, the period during which the asset was held by the assessee for all practical purposes on de-facto basis was to be considered and not the date of obtaining absolute legal ownership of the asset for determining the holding period.
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• Inconsistent AO Statements Challenge Validity of Section 148 Notice for Assessment Reopening, Citing Improper Consideration.

  Case-Laws - AT : Reopening of assessment - AO emphasised that the assessee did not file any return of income by contradicting himself in the body of the assessment order by admitting that return was filed on 18.10.2007 establishes only and only one thing, that notice u/s 148 vis a vis reasons are devoid of any application of mind.
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Customs

• DFIA Scheme: Transferable DFIA Means No Need to Prove Imported Goods Use in Exports.

  Case-Laws - HC : Duty Free Import Authorizations (DFIA) Scheme - Once the DFIA is made transferable by the licensing authorities, the Petitioner is not bound to show the actual use of the imported goods in the export product
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Corporate Law

• NFRA Established to Enhance Financial Reporting Quality and Enforce Auditing Standards Under Companies Law Effective October 2018.

  Notifications : Constitution of National Financial Reporting Authority (NFRA) w.e.f. 1.10.2018
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Service Tax

• SEZ Unit's Refund Delay Condoned After Review; Adjudicating Authority Grants Eligible Refund Claim.

  Case-Laws - AT : SEZ Unit - Refund claim - time limitation - The adjudicating authority, in the case in hand, despite recording the same and within his authority to condone the delay, did not do so. On merits, it is noticed that appellant is eligible for refund. - Delay condoned - refund allowed.
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• Appellant Accused of Fraud for Wrongfully Claiming CENVAT Credit on Trading Activities' Input Services.

  Case-Laws - AT : Since the appellant had availed irregular CENVAT Credit on the input services used for trading activity, the intention of the assessee is manifest in defrauding the Government Revenue.
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• Mumbai Court Rules Security Services Exempt from Service Tax Due to Sovereign Function Status.

  Case-Laws - AT : Security Agency Service - guarding the suit properties - assessee appointed by the Court Receivers (CR) of Hon’ble High Court, Mumbai and / Debt Recovery Tribunal - the service receiver is the CR, who performs the judicial functions as per the Court - Not taxable as sovereign function of the States
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• Manpower Agency's Service Tax Demand Overturned Due to Limitation Period; 41% Levy Deposited with GMSB.

  Case-Laws - AT : Valuation - Manpower Recruitment or Supply Agency Services - over and above the amount of wages, the appellant also collected 41% levy from the contractee and deposited the said amount with Grocery Markets and Shop Board (GMSB) - Demand set aside on the ground of period of limitation.
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Central Excise

• Packaging Manufacturers Granted Central Excise Exemption; No Grounds to Differentiate Between Printed Cartons and Catch Covers.

  Case-Laws - AT : Claim of exemption - manufacturers of packaging with designs - No specific entry in the exemptino notification - there is no reason to distinguish ‘printed cartons of paper or paperboard’ from ‘catch cover’ and to deny eligibility to exemption.
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VAT

• Court Criticizes Authority's Mishandling of Reassessment Order; Deputy Commissioner Ordered to Pay Rs. 50,000 Cost.

  Case-Laws - HC : This Court is surprised and is pained by the manner in which the authority has passed the impugned reassessment order in the second round of assessement just ignoring the applicable Notification and throwing it to winds. - Deputy commissioner directed to deposit ₹ 50000 as cost.
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• Goods Classification Must Align with Legislative Purpose: Consider Geography, Objects, or Occupations for Effective Categorization.

  Case-Laws - HC : Classification, of goods, might be founded on different basis, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
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• Leasing Hoardings Deemed Sale Under VAT: Charges Received Constitute Sale Price, Taxable as Per Laws.

  Case-Laws - AAR : Activity in the nature of sale or not - Deemed sale - leasing out the hoarding to the customer for specific period - If the transaction related to lease of hoarding is held as taxable then the "charges received from customers" will be the sale price.
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Case Laws:

• GST

• 2018 (10) TMI 201
  Classification of Supply - Supply of goods or services? - Levy of GST - activity of printing of question papers for Secondary and Higher Secondary Education Boards of various states and also at the national level and for various education institutes - N/N. 2/2017-Central Tax (Rate) dated 28.06.2017. Whether activity of printing of question papers on behalf of educational institutions can be classified as activity of supply of goods or supply of services? If it is supply of services, referring to Sr. No. 27 of Notification 11/2017-CTR dtd : 28.06.2017 as amended by Notification 31/2017-CTR dtd.: 13.10.2017, then benefit of Sr. No. 66 of Notification 12/2017-CTR dtd.. 28.06.2017 is allowable, as amended by Notification No. 2/2017-CTR of 25.01.2018? If it is supply of goods, then question paper printing should be treated as exempted goods at Sr. No. 1 19 of exempted list liable at Nil rate of tax under Chapter heading / subheading of 4901 10 10 of Printed books including Braille books? or It should be covered by Schedule I at Sr. No. 201 liable to tax at 2.5% under Brochures, leaflets and similar printed matter, whether or not in single sheets ? Supply of goods or services? - Held that:- The Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit, vide Circular No. 11/11/2017-GST dated 20, 10.2017, has issued clarification on taxability of printing contracts - The manuscript material for printing the Question Papers relating to the examinations is supplied to the applicant by the Education Boards / Educational Institutes. The scope of work of the applicant relates to compose, typeset, print, pack, transport, unload and supply sealed Question Papers to the Education Board / Educational Institutes. As the usage rights of the manuscript material of Question Papers (intangible inputs) are owned by the Education Boards / Educational Institutes and the physical inputs used for printing belong to the applicant, supply of printing is the principal supply in this case and the same would constitute supply of service falling under heading 9989 of the scheme of classification of services. Applicability of Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, or Sr. No. 27 of Notification No. 11/2017-CentraI Tax (Rate) dated 28.06.2017, as amended, (and corresponding Notifications issued under the Gujarat Goods and Services Tax Act, 2017) to the supply of service - Held that:- The expression relating to used in sub-item (iv) of item (b) of Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) widens the scope of the said entry and printing of question papers would be covered by the phrase services relating to admission to, or conduct of examination by, such institution - the supply in this case would constitute supply of service falling under heading 9989 of the scheme of classification of services, whereas column 2 of Sr. No. 66 of Notification No. 12/2012-Central Tax (Rate) refers to Heading 9992. However, Explanation (ii) at Para 3 of the Notification No. 12/2017-Central Tax (Rate), as amended, clarifies that Chapter, Section, Heading, Group, or Service Code mentioned in Column (2) of the Table are only indicative . Therefore, merely on the ground of classification of the service of the applicant under heading 9989 would not preclude it from being covered by Sr. No. 66 of Notification No. 12/2012-Central Tax (Rate), if it is otherwise covered under the said entry - Therefore, services provided by the applicant to educational institutions by way of printing of question papers for conduct of examination by such institutions would be covered by Sr. No. 66 of Notification No. 12/2012-Central Tax (Rate), as amended. The service of printing of question paper, supplied by the applicant to other than educational institutions will be covered by Sr. No. 27(i) of Notification No. 11/2017-Central Tax (Rate), as amended, and will attract Goods and Services Tax @ 12% (CGST 6% + SGST or IGST 12%). Ruling:- The activity of printing of question papers by M/s. Edutest Solutions Private Limited is activity of supply of service classifiable under heading 9989 of the scheme of classification of services. The service provided by M/s. Edutest Solutions Private Limited to educational institutions by way of printing of question papers for conduct of examination by such institutions would be covered by Sr. No. 66 of Notification No. 12/2012-Central Tax (Rate), as amended and Notification No. 12/2012-State Tax (Rate), as amended. The service provided by M/s. Edutest Solutions Private Limited to service recipients other than educational institutions by way of printing of question papers would be covered by Sr.No. 27(i) of Notification No: 11/20.17-Central Tax (Rate), as-amended, and Notification No. 11/2017-State Tax (Rate), as amended. As the activity of printing of question papers by M/s. Edutest Solutions Private Limited is held to be activity of supply of service, the question of appropriate classification as goods and applicable rate on such goods does not arise.

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• 2018 (10) TMI 200
  Validity of the Goods and Services Tax (Compensation to States) Act, 2017 enacted by Parliament as well as the Goods and Services Tax Compensation Cess Rules, 2017 - validity of Rules framed by the Central Government in exercise of power under Section 11 of the Goods and Service Tax (Compensation to States) Act, 2017 - Jurisdiction. Whether the Compensation to States Act, 2017 is beyond the legislative competence of Parliament? - Held that:- Part XI of the Constitution deals with the relation between the Union and the States, Chapter I of which deals with Legislative Relations . Article 245 deals with Distribution of Legislative Powers . The Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in Seventh Schedule of the Constitution - Article 246A provides that notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause(2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State . When Constitution provision empowers the Parliament to provide for Compensation to the States for loss of revenue by law, the expression law used therein is of wide import which includes levy of any cess - it cannot be accepted that Parliament has no legislative competence to enact the Compensation to States Act, 2017 - The Compensation to States Act, 2017 is not beyond the legislative competence of the Parliament. Whether Compensation to States Act, 2017 violates Constitution (One Hundred and First Amendment) Act, 2016 and is against the objective of Constitution (One Hundred and First Amendment) Act, 2016? - Whether the Compensation to States Act, 2017 is a colourable legislation? - Held that:- The expression used in Article 246A is power to make laws with respect to goods and services tax . The power to make law, thus, is not general power related to a general entry rather it specifically relates to goods and services tax. When express power is there to make law regarding goods and services tax, we fail to comprehend that how such power shall not include power to levy cess on goods and services tax. True, that Constitution (One Hundred and First Amendment) Act, 2016 was passed to subsume various taxes, surcharges and cesses into one tax but the constitutional provision does not indicate that henceforth no surcharge or cess shall be levied - power of Parliament to make law providing for compensation to the States for loss of revenue was expressly included by constitutional provision - Further, the Preamble of Compensation to States Act, 2017 expressly mentions the Act to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services Tax in pursuance of the provisions of the Constitution (One Hundred and First Amendment) Act, 2016. Thus, the Compensation to States Act, 2017 has been enacted under the express Constitution (One Hundred and First Amendment) Act, 2016. It cannot be accepted that Compensation to States Act, 2017 transgresses the Constitution (One Hundred and First Amendment) Act, 2016 - there is no substance in the submission of the petitioner that Compensation to States Act, 2017 is a colourable legislation - Having held that Parliament has full legislative competence to enact the Act and the Act having been enacted to implement the Constitution (One Hundred and First Amendment) Act and the object being clearly to fulfill the Constitution (One Hundred and First Amendment) Act s objective, the submission of the petitioner that Compensation to States Act, 2017 is a colourable legislation is rejected. The Compensation to States Act, 2017 does not violate Constitution (One Hundred and First Amendment) Act, 2016 nor is against the objective of Constitution (One Hundred and First Amendment) Act, 2016 - The Compensation to States Act is not a colourable legislation. Whether levy of Compensation to States Cess and GST on the same taxing event is permissible in law? - Held that:- The petitioner elaborating his contention submits that as per Section 8 of impugned legislation there shall be levied a cess on intraState supply of goods and services as provided in Section 9 of the CGST Act whereas CGST Act has been enacted to levy tax as provided under Article 246A of the Constitution. This is also true in respect of the cesses imposed on inter-State supplies of goods and services covered by Section 5 of IGST Act, 2017 - On the same very transaction there cannot be two levies, one under CGST Act and another under impugned legislation as it would amount to double taxation as levy is on the same taxable event and same subject. Thus, there is an overlapping on law which is not permissible. The principle is well settled that two taxes/imposts which are separate and distinct imposts and on two different aspects of a transaction are permissible as in law there is no overlapping - Goods and Services Tax imposed under the 2017 Acts and levy of cess on such intraState supply of goods and services or both as provided under Section 9 of the CGST Act and such supply of goods and services or both as part of Section 5 of IGST Act is, thus, two separate imposts in law and are not prohibited by any law so as to declare it invalid. Levy of Compensation to States Cess is an increment to goods and services tax which is permissible in law. Whether on the basis of Clean Energy Cess paid by the petitioner till 30th June, 2017, the petitioner is entitled for set off in payment of Compensation to States Cess? - Held that:- Compensation to States Act, 2017 or Rules framed thereunder does not indicate giving of any credit or set off of the Clean Energy Cess already paid till 30.06.2017. Thus, claim of the petitioner that he is entitled for set off in payment of Compensation to States Cess to the extent he had already paid Clean Energy Cess cannot be accepted - The petitioner is not entitled for any set off of payments made towards Clean Energy Cess in payment of Compensations to States Cess. Petition dismissed.

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• 2018 (10) TMI 199
  Unable to upload Form TRAN-1 - migration to GST Regime - input tax credit - Held that:- Our attention is drawn to Section 172 of the Act which inter alia provides for removal of difficulties which may arise during the implementation of the Act - It appears to us that it would be appropriate that the Central Government issues a general and/or special order under Section 172 of the Act addressing the above issue on general or special basis, taking into account the ground realities - the Petition is adjourned to 10th October 2018.

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• 2018 (10) TMI 198
  Unable to upload FORM GST TRAN-1 and FORM GST TRAN-2 - input tax credit - migration to GST Regime - N/N. 48/2018 Central Tax, New Delhi dated 10.09.2018 - Held that:- Admittedly, the petitioner has an opportunity to upload its FORM GST TRAN-1 and FORM GST TRAN-2 at Annexures-G and H of the Writ Petition on the official website of the GST Council on or before 31.03.2019, and therefore, to this extent the relief prayed for in this writ petition stands granted by the GST Department extending the period for submitting the declaration upto 31.03.2019. The present writ petition is disposed of as infructuous, with a liberty and direction to the petitioner-assessee to upload the said FORM GST TRAN-1 and FORM GST TRAN-2 on the official website of the GST Council on or before 31.03.2019, in accordance with law.

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• Income Tax

• 2018 (10) TMI 193
  Deduction u/s.37 - contribution made by the assessee for non-business purposes viz. Contribution to Ranbaxy Community Health Care Society and contribution to Ranbaxy science foundation - Held that:- The pension would be paid to the employees upon their resignation or retirement or to the member of the family in event of premature death of the employee the liability was ascertained through scientific method. The claim of deduction on the basis of provision made for future liability which is ascertainable and ascertained through scientific statistical data is well recognized through series of judgments. We do not see the Tribunal has therefore committed any error. Our attention was however drawn to the judgment in case of Dishergarh Power Supply Co. Ltd., vs. CIT, (1990 (3) TMI 374 - CALCUTTA HIGH COURT). It was however a case where the assessee had claimed deduction on payment of pension on actual basis as well as towards provision for future actuarial basis which the High Court found was not permissible. We notice that very High Court in case of this very assessee in case of Commissioner of Income-tax vs. Ranbaxy Laboratories Ltd.(2011 (3) TMI 1032 - DELHI HIGH COURT ) upheld the assessee's claim of deduction. This question is therefore not considered. VAT deduction claimed by the assessee under Section 35(2AB) - AO disallowed a part of the claim on the ground that it did not relate to the in-house research facility created by the assessee - CIT (A) under Tribunal ruled in favour of the assessee - Held that:- Tribunal, in impugned order, noted that the expenditure was incurred for vehicles, computers and other assets provided to the employees of the company who are working at the approved research facility and were directly engaged in the research and development activities. Thus, the expenditure was held to be related to the in-house research activity. This question is therefore not considered. Revenue expenditure claimed towards convertible bonds - Held that:- Tribunal while confirming the view of the CIT (Appeals) recorded that the conversion of the bonds into shares never took place. Entire loan was repaid alongwith redemption premium by the assessee. Learned counsel for the Revenue however submitted that by very nature of things, the bonds were convertible. The expenditure should therefore be seen as increasing the share capital of the company and therefore capital in nature. Since the facts on record suggest that the conversion of bonds into shares never took place and the entire borrowed amount was repaid with redemption premium, keeping a contention of the counsel for the Revenue open this question is not considered.

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• 2018 (10) TMI 192
  TPA - comparable selection - substantial question of law - Held that:- Tribunal came to the conclusion that the activities on account of the Infrastructure Management Services and E-learning and Digital Consulting constitute 17% and 35% respectively of the total revenue. These are IT enabled services. These are not akin to software design and development services being rendered by the Assessee and therefore benchmarking was improper. The comparables relied upon by the Transfer Pricing Officer were thus not comparable at all. Assessee rendered services such as software design and development. These are mere services which have been rendered in prior assessment year 2008-2009. If those services enable the Tribunal to take a view in favour of the Assessee for the prior assessment year, then, even for the following assessment year, the Tribunal found it safe to rely upon its own findings and conclusions for the prior assessment year. Very detailed reasons have been assigned but essentially on the above lines in the order under appeal. We have found that these are factual matters. We are unable to find any substantial question of law resulting from such an exercise. In fact, in the case of Principal Commissioner of Income Tax-1 v/s Barclays Technology Centre India Private Limited [2018 (8) TMI 574 - BOMBAY HIGH COURT] a Division Bench of this Court had an occasion to consider somewhat similar questions and it found that the Tribunal's view deserves to be upheld. This Court was rather surprised as to why the Revenue brings such Appeals to this court and regularly. The Courts in India seem to be taking a view that the Revenue has routinely brought such matters before this Court knowing fully well that the Transfer Pricing particularly with regard to exclusion and inclusion of certain comparables to determine Arm's Length Price (ALP) would not necessarily give rise to purely legal questions or substantial questions of law.

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• 2018 (10) TMI 191
  TDS u/s 194J - Addition u/s 40(a)(ia) - failure to deduct the tax on the hospital charges - assessee is appointed by various insurance companies to disburse amounts under what is styled as Mediclaim Insurance Policy - Held that:- The Tribunal found that the assessee is only facilitating the payment by the insurer to the insured for availing the medical facilities. The assessee is not rendering any professional services to the insurer or the insured and is only collecting the amount from the insurer and passing it on to various hospitals who were providing medical services to the insured. This is greatly distinct from the issue raised before the Division Bench and discussed and deliberated upon by it in terms of the Revenue's circular. The Tribunal found that for the transactions as are brought before it and equally before us now, there is no claim of expenses by the assessee and which was disallowed. The issue would have been different if the amounts were paid and in terms of Section 194J. We cannot deviate or depart from the view taken by the Division Bench of this Court in Health India TPA Services [2014 (2) TMI 1153 - ITAT MUMBAI] as held assessee is only facilitating the payments by insurer to the insured for availing of the medical facilities. The assessee has not rendered any professional services to the insurer or insured and only collecting the amount from the insurer and passing it on to various hospitals who were providing medical services to the insured. Since, there is no claim of expenditure by the assessee, disallowance under section 40(a)(ia) as was done by the Assessing Officer does not arise. - Decided against revenue

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• 2018 (10) TMI 190
  Registration u/s 12AA denied - Proof of charitable activities - Held that:- Assessee-Trust has been providing I.T. Education through different courses which is also admitted in the impugned order. Thus, the objects of the Assessee-Trust are ‘Education’ in nature and Assessee-Trust carrying on genuine activities of providing education. Other points raised by the Ld. CIT(E) in the impugned order are not relevant to the enquiry conducted at the stage of grant of registration under section 12AA of the I.T. Act. No evidence or material has been brought on record as to how Assessee-Trust has been doing business activities. The findings of the Ld. CIT(E) are vague and are not substantiated through any evidence or material on record. The removal of the Trustee or directions given by the donor etc., are not relevant at this stage and could be considered by the A.O. at the time of considering the applicability of Section 11 of the I.T. Act. No justification for Ld. CIT(E) to reject application for registration under section 12AA. In this view of the matter, we set aside the impugned order and restore the matter in issue to the file of Ld. CIT(E), New Delhi, with a direction to pass appropriate order under section 12AA of the I.T. Act to grant registration to the Assessee-Trust under section 12AA of the I.T. Act within one month from the date of the Order. Accordingly, appeal of the assessee is allowed.

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• 2018 (10) TMI 189
  Estimation of income - Undisclosed bank transactions - trading transactions of its regular course of business - Held that:- It is an admitted fact that the assessee had not disclosed the transaction reflected in the two bank accounts, the details of which are given in the earlier paragraph and the total transactions of which comes to Rs. 29.26 crores. AO rejected the offer of 0.30% given by the assessee during the course of assessment proceedings and estimated the income from such undisclosed transaction on account of cheque discounting at 3% of the total transactions. The assessee has filed certain decisions to substantiate that the profit element in such type of business varies from 0.15% to 0.25%, however, the fact remains that the assessee himself has offered profit of 0.30% before the AO which was rejected by him who estimated such income at 3%. Therefore, the question is that what percentage should be adopted for such transactions which remain undisclosed to the department in the instant case. The offer by the assessee appears to be too low and profit estimated by the Assessing Officer also appears to be on the higher side if we consider such rate of profit in the light of the various decisions cited before us. Adoption of 0.5% as net profit on such undisclosed transactions outside the books, in our opinion, will meet the ends of justice. The grounds raised by the assessee are accordingly partly allowed.

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• 2018 (10) TMI 188
  Disallowing the professional fee considering the same as prior period expenditure - crytalisation of liability - Held that:- Assessee relied on the bill raised by advocate and solicitor Shri T. Pooran, wherein professional charges from 01.01.2010 to 31.03.2011 was charged by a consolidated bill dated 21.07.2011 for an amount of Rs. 3,12,501/-. There is no dispute in the facts that the amount of Rs. 62,500/- pertains to the period of 01.01.2010 to 31.03.2010 relevant to AY 2010-11 i.e. prior period. But it is to be noted that the liability for this demand has been crystalized only on raising of bills by the concerned advocate cum solicitor vide bill dated 21.07.2011. Hence, these expenses are to be allowed because as the AO has never doubted the genuineness of the expenses. As the liability has been crystalized during the AY 2011-12 and assessee has rightly claimed the same. - Decided in favour of assessee Disallowance of remuneration paid to director - payment of higher remuneration - Held that:- There is no tax evasion and there is reasonableness of managerial remuneration. Now no approval is required from the Central Government for making payment of higher remuneration even in case of loss in the case of unlisted public company. In view of these facts, we are of the view that this is allowable expenditure and we allow the same accordingly. Orders of the lower authorities are reversed and this issue of assessee’s appeal is allowed.

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• 2018 (10) TMI 187
  Bogus LTCG - Long term capital gains arising from sale of shares - Held that:- As relying on NAVNEET AGARWAL, LEGAL HEIR OF LATE KIRAN AGARWAL VERSUS ITO, WARD-35 (3) , KOLKATA [2018 (8) TMI 509 - ITAT KOLKATA] AO at best could have considered the investigation report as a starting point of investigation. The report only informed the assessing officer that some persons may have misused the script for the purpose of collusive transaction. AO was duty bound to make inquiry from all concerned parties relating to the transaction and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. AO has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. We are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. We accept the evidence filed by the assessee and allow the claim that the income in question is a bonafide Long Term Capital Gain arising from the sale of shares and hence exempt from income tax. - Decided in favour of assessee.

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• 2018 (10) TMI 186
  TPA - ALP adjustment relating to its international transactions in the nature of provision of software services to its associate Eenterprises (AE) - working capital adjustment - Held that:- DRP has made it clear that the Assessing Officer would apply SBI’s prime lending rate as on 30th June of the relevant previous year as the interest rate qua the issue before us. The Revenue fails to dispute all these intervening developments. As in assessee's own case have also accepted similar working capital adjustment contentions against the Revenue. We therefore restore the instant lis back to the TPO for afresh proceedings qua the instant working capital adjustment to be considered / granted as per law Validity of assessments on account of AO’s failure in not issuing sec. 143(2) notice - scrutiny assessment - DCIT/ACIT jurisdiction - Held that:- DCIT/ACIT, Circle-II(4), Chennai lacked jurisdiction to issue the sec.143(2) notices. The assessee duly brought on record its objections to this effect before the Assessing Officer in its letter dated 08.10.2014. All this proved to be a futile exercise as the Assessing Officer framed assessment going by the earlier scrutiny notice(s) only and rejected the said jurisdictional plea. Thus all the three impugned assessments are non-est in the eyes of law since the DCIT/ACIT, Circle-11(4), Chennai issuing the section 143(2) notice(s) did not have jurisdiction and the assessing authority in Kolkata did not issue such scrutiny notices. We quash all these three assessments therefore for this precise reason alone - Decided in favour of assessee.

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• 2018 (10) TMI 185
  Validity of Reopening of assessment - revision u/s. 263 passed by the Ld. CIT setting aside the order passed u/s. 147/143(3) directing the AO to do fresh assessment- no proper opportunity before the AO during reassessment proceedings - denial of natural justice - Held that:- No proper opportunity was given to assessee by AO during the reassessment proceedings and so we are, therefore, of the opinion that assessee did not get proper opportunity before the AO during reassessment proceedings. In the light of decision in Tin Box Company [2001 (2) TMI 13 - SUPREME COURT] and taking into consideration the fact the order of the AO in similar cases being upheld up to the level of Apex Court, and taking note of order in Jansampark Advertising & Marketing Pvt. Ltd. [2015 (3) TMI 410 - DELHI HIGH COURT], and the DR accepted that assessee did not get proper opportunity before the AO during reassessment proceedings, we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2018 (10) TMI 184
  Penalty u/s. 271(1)(c) - disallowing the depreciation on account of excessive depreciation and addition on account of internal and tax audit fees for non deduction of TDS u/s. 40(a) - Held that:- We find that there is only the application of law as to the depreciation and other disallowance on which no penalty should be maintained. We further note that instead of carry forward loss the action of the AO allows the carry forward of the depreciation. Therefore, all the particulars on which the assessee claimed the depreciation were furnished alognwith return of income and it is not the case of the Revenue that any new facts were unearthed during the assessment proceedings so that a reasonable conclusion could be drawn that the assessee either concealed income or furnished inaccurate particulars of income. It is only a question of allowing the depreciation in this year or next year. As a matter of fact if the depreciation is not allowed this year the same will be carried forward and if depreciation is allowed, the loss will be carried forward. In these circumstances, we are of the considered opinion, that there is no element of concealment of income or furnishing of inaccurate particulars of income and the assessee does not stand the gain by claiming depreciation at a higher rate this year. The assessee has neither concealed the income nor furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be incorrect or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserves to be deleted. - Decided in favour of assessee.

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• 2018 (10) TMI 183
  Reopening of the assessment u/s 147/148 - Reasons to believe - Held that:- Assessing Officer referred to the information and the two directions as "reasons" on the basis of which he was proceeding to issue notice under Section 148. We are afraid that these cannot be the reasons for proceeding under Section 147/148. The first part is only an information and the second and the third parts of the beginning paragraph of the so-called reasons are mere directions. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Tribunal has arrived at the correct conclusion on facts. The law is well settled. There is no substantial question of law which arises for our consideration - reopening of the assessment is without any application of mind and examination of the facts - Decided in favour of assessee.

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• 2018 (10) TMI 182
  Penalty u/s 271(1)(b) - non compliance of a consolidated notice issued u/s 142(1) - non specification of reasons - Held that:- It is seen that in ‘Swarnaban M. Khanna’[2009 (12) TMI 669 - ITAT AHMEDABAD], it has been laid down that before levying penalty u/s 271(1)(b) of the Act, there must be a specific notice to the assessee for specific assessment requirements to be complied with; that the compliance must have relevance to the assessment year in question; that it must have apparent in question; that it must have apparent nexus with the assessment of the assessment year to be framed, and that the statutory provision for levy of penalty is not for mere technical non-compliance, but for actual or habitual defaulters. Referring to ‘Akhil Bhartiya Prathmik Sangh Bhawan Trust Vs. Assistant DIT’ [2007 (8) TMI 386 - ITAT DELHI-G], it was observed that if the assessment order is passed u/s 145(3) of the Act and not u/s 144 thereof, then the non-compliance is deemed to have been waived off. No contra decision has been cited to counter the above ratio decidendi of ‘Swarnaben M. Khanna’ (Supra), obviously, only one penalty can be levied for one default. As such, the grievance of the assessee is found to be justified. ‘Shri Khrishna Bihari Agarwal’ (Supra), relied on by the Ld. CIT(A) is of no consequence. The assessee has not been shown to be a heavily defaulter. - Decided in favour of assessee

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• 2018 (10) TMI 181
  Additions in the search assessment u/s 153A - incriminating material found during the course of search - reopening of assessment - Held that:- In respect of abated assessments (i.e pending proceedings on the date of search) fresh assessments are to be framed by the AO u/s 153A which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. In respect of unabated assessments, the legislature had conferred powers on the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. This would be the correct understanding of the provisions of section 153A as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A would become redundant and would lose its relevance. Hence the arguments advanced by the DR in this regard deserves to be dismissed. We hold that the assessment framed u/s 143(1) for the Asst Year 2012-13, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share application money and share premium u/s 68 is hereby directed to be deleted. It is not in dispute that there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium and the AO had only tried to explain the various layers through which the monies ultimately reached the assessee company. The other addition of commission is only consequential to the first addition. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the addition u/s 68 for the Asst Year 2012-13 and the commission of Rs. 72,500/-. Accordingly the grounds raised by the revenue in this regard are dismissed.

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• 2018 (10) TMI 180
  Addition being interest paid u/s 201(1A) on late deposit of TDS - allowable busniss expenses - Held that:- The interest paid for the period of delay takes colour from the nature of the principal amount required to be paid but not paid within time. The principal amount here would be the income-tax and the interest payable for delayed payment is the consequence of failure to pay the tax and in the circumstances, is in the nature of a penalty though not described as such in section 201(1A). The fact that the income-tax required to be remitted is not income-tax payable by the assessee but is ultimately for the benefit of and to the credit of the recipient of the income on which that tax is payable, does not in any manner alter the character of the payment, namely, its character as income-tax. The interest paid under section 201(1A), therefore, would not assume the character of business expenditure and could not be regarded as a compensatory payment. The disallowance of interest paid on late deposit of TDS is hereby confirmed. In the result, the ground of the assessee is dismissed. Disallowance of loading charges on account of non-deduction of TDS - Held that:- The decision rendered by the Delhi High Court in CIT vs. Ansal Land Mark Township Pvt. Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) which has been discussed by the tribunal in detailed, we are of the opinion that tribunal has not committed any error in allowing the appeal only for statistical purposes. Addition on account of commission paid to Arpit Khandelwal - Held that:- Given that Arpit Khandelwal also happens to be an employee of the assessee, the latter has to demonstrate that the former’s involvement in the purchase activity is in addition to his regular activity for which he has been compensated by way of regular salary. We are not suggesting that an employee cannot be paid compensation by way of commission in addition to his regular salary but the said arrangement has to be mutually agreed and reflected clearly and brought on record which has apparently not happened in the instant case. Further, merely the fact that the basis of payment has been specified in the payment voucher and the payment has been effected during the year or the fact that the latter has offered the same in his return of income doesn’t by itself is sufficient to hold that the services have been rendered and the expenditure is allowable. What is of relevance is the actual rendering of services and facilitation of purchase through the efforts of Arpit Khandelwal and the evidence so produced doesn’t inspire any confidence in us in accepting the same in support of assessee’s contention.

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• 2018 (10) TMI 179
  Disallowance u/s 40(a)(ia) - alleged expenditure on C&F commission and consultancy charges on 30.09.2008 i.e. before the due date of filing of return of income - Held that:- We find no reason in the findings of Ld.CIT(A) deleting the disallowance u/s 40(a)(ia) as the assessee has duly deposited the tax deducted at source on the alleged expenditure on and before the due date of filing of income u/s 139 of the Act. Appeal of the revenue is dismissed.

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• 2018 (10) TMI 178
  Gain on sale of property - LTCG or STCG - period of holding - indexation benefit - Held V/S acquire - Held that:- The expressions like 'owned' / ‘acquired’ has not been used for the purpose of determining the nature of asset as short term capital asset or long term capital asset. Thus, the intention of the legislature was clear that for the purpose of determining the nature of capital gain, the period during which the asset was held by the assessee for all practical purposes on de-facto basis was to be considered and not the date of obtaining absolute legal ownership of the asset for determining the holding period. The term "held" has been interpreted by the Courts wherein unanimous view has been that the said term 'held' is different from the term 'acquire'. As in the case of CIT Vs. Ved Prakash & Sons (HUF) [1993 (7) TMI 45 - PUNJAB AND HARYANA HIGH COURT], stated that the term 'held' is deliberately used as against term 'owned'. Hence, a person can hold the asset as owner, lessee, tenant, etc. Therefore, the right to the property is held by a person from the date when he enters into an agreement for purchase and not when he acquires possession. Viewed from any angle, we are unable to find ourselves in agreement with the conclusion of Ld. first appellate authority that the capital gains earned were Short Term in nature and therefore, we reverse the same. The resultantly gain as counted from date of agreement, in our opinion, was Long Term Capital gain eligible for indexation benefit. This ground stands allowed. Deduction u/s 54 - Held that:- We find that the lower authorities have denied the same primarily by concluding that the same was not available since the nature of capital gains was Short Term Capital Gains. Therefore, on factual matrix, the matter stand remitted back to the file of Ld. AO for re-adjudication & verification of deduction u/s 54 with a direction to the assessee to substantiate the same with documentary evidences / requisite information.

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• 2018 (10) TMI 177
  Disallowance of commodity loss - Held that:- As gone through the order of the ld CIT(A) and don’t see any infirmity in his findings whereby he has disallowed setting off of the loss on commodity derivates being speculative transaction against the normal business income in accordance with provisions of Section 73 of the Act. We donot agree with the contentions of the AR that the present transaction is covered by clause (d) of section 43(5) given that clause (e) which talks about trading in commodity derivative an an eligible transaction was brought on the statue books by the Finance Act 2013 w.e.f 1.4.2014 and is thus not applicable for the impugned assessment year. In the result, ground of assessee’s appeal is dismissed. Deduction U/s 54 - allowing the deduction in part - assessee filed revision in the quantum of such claim during the course of assessment proceedings- AO has not allowed the said claim holding that what has been purchased is a plot of land and not a residential house, besides other reasons -CIT(A) has however allowed the said claim of the assessee to the extent of purchase consideration and related expenses as per conveyance deed dated 7.6.2012, however he has not allowed the claim of Rs. 30,65,000/- Held that:- The findings of the ld CIT(A) are based on right appreciation of the conveyance deed duly corroborated by the pictures of the constructed rooms as well as domestic electric connection taken in the name of the seller. During the course of hearing, nothing has been brought to our notice to controvert the said findings of the ld CIT(A). Hence, we hereby confirm the said findings of the ld CIT(A) that the property so purchased by the appellant was a residential house eligible for deduction under section 54 of the Act. As far as claim of Rs. 30,05,000 is concerned, nothing has been brought on record which demonstrate that such cost has been incurred towards any refurbishment/renovation of the residential house so purchased.

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• 2018 (10) TMI 143
  Reopening of assessment - non independent application of mind - borrowed information - non filing of ROI - Held that:- In the penultimate para, the Assessing Officer has emphasised that the assessee did not file any return of income for the year under consideration whereas, as mentioned elsewhere, on page 2 of the assessment order, the Assessing Officer himself has admitted that return of income for the year under consideration was filed on 18.10.2007. Considering the reasons recorded by the Assessing Officer, which are undisputedly borrowed from somewhere else and considering the fact that he Assessing Officer has emphasised that the assessee did not file any return of income by contradicting himself in the body of the assessment order by admitting that return was filed on 18.10.2007 establishes only and only one thing, that notice u/s 148 vis a vis reasons are devoid of any application of mind. Reopening of the assessment is without any application of mind and examination of the facts. According, reopening is held to be invalid and the same is quashed. - Decided in favour of assessee

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• Customs

• 2018 (10) TMI 174
  Duty Free Import Authorizations (DFIA) Scheme - Restriction on duty free import of Bearings - benefit of customs notification No.98/2009-cus dated 11.09.2009 - restriction placed on the ground that the imported goods are not covered by the DFIA and that the imported goods must be actually used in the manufacture of export goods. On 2.8.2013, Circular No.3 (RE:2013) / 2009-14 was issued with the approval of respondent No.2, laying emphasis on para 4 which stipulates that “inputs actually used in manufacture of export product should only be imported under the authorization. Similarly, inputs actually imported must be used in export product”. The petitioners are aggrieved by the said policy Circular dated 2.8.2013 (Annexure P/11). Held that:- In terms of Clause 4.2.6 of the FTP, once transferability is endorsed, the authorization holder may transfer DFIA or duty free inputs except fuel and any other item(s) notified by DGFT. Meaning thereby, once the export obligation is discharged and transferability endorsement is made by the officers of the respondent No.1, the license and goods imported there under without payment of duty become freely transferable except the fuel and any other goods notified by the DGFT. In the case in hand, the resultant product is 'Agricultural Tractors' which is not specified under para 4.32.2 of HBP and therefore, the petitioners are not required to correlate the technical specification, quality and characteristics of the imported goods. The Transfer Letter issued by Pushpanjali Floriculture Ltd to Global Exim clearly indicates that transfer of DFIA which is permitted as per the provision of Para 4.2.6 of the FTP-(2009-14). The DFIA licenses are freely transferable and accordingly, the DFIA holder transferred the DFIA to Pushpanjali Floriculture Ltd., who in turn re-transferred the said DFIA to Global Exim as per Annxures P/2 and P/3 - In any event, insistence of actual use in the export product is contrary to the provision of Para 4.2.6 of Foreign Trade Policy – (2009-14). The said para stipulates that once transferability is endorsed, authorization holder may transfer the DFIA or duty free inputs, except fuel and any other items notified by DGFT. Once the imported goods are covered under the description, quantity as mentioned within the overall CIF value allowed in the DFIA, irrespective of the ITC (HS) Nos, there is no necessity to satisfy the requirement of Para 4.1.15 of FTP- (2009-14) and notification No.90 dated 21.08.2014. The petitioner is a bona-fide transferee of the said transferable DFIA cannot be denied exemption from payment of duties on the goods on the ground that only those actually used as inputs in the export product shall only be permitted for import which is applicable to a DFIA holder. Once the DFIA is made transferable by the licensing authorities, the Petitioner is not bound to show the actual use of the imported goods in the export product and is free to import any goods covered under the description and quantity mentioned within the overall CIF value allowed in the DFIA, (as amended upon competition of export), there is no necessity to satisfy the requirements of para 4.1.15 of FTP- (2009-14) - The petitioner No.1 is a DIFA transferee is entitled to import Alloy Steel Rods/Rounds/Billets and Hot Rolled/Cold Rolled Sheet/Wide Coils) covered under the DFIA's without showing actual use in the export product”. Petition allowed.

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• 2018 (10) TMI 173
  Offences punishable under Sections 132 and 135 of the Customs Act, 1962 - Pre-charge/post-charge evidence for prosecution - acts of commission or omission relating to the period of August, 1994. Held that:- A criminal case arising out of a complaint, though lodged by a public servant, given the nature of accusations levelled therein with reference to the provisions of Customs Act, 1962 requires to be tried as a case instituted otherwise than on police report under Chapter XIX of Cr.P.C. - the complainant is called upon to lead evidence at a stage which is commonly known as „pre-charge . Ideally, going by the expressions used (take all such evidence as may be produced in support of the prosecution) in Section 244(1) of Cr.P.C., the complainant must adduce its evidence in entirety at the stage of pre-charge evidence and it is only thereafter that the trial court Magistrate takes a call as to whether the accused is entitled to be discharged or, conversely, as to whether charge is made out for he to be put to trial thereupon, in terms of further provisions contained in Section 246 - The provision contained in sub- section (6) of Section 246 further clarifies that the law does not insist on the entire evidence to be produced at the stage anterior to framing of charge. The words “evidence of any remaining witnesses for the prosecution shall next be taken” appearing in the said clause leaves no room for doubt that the reliance of the complainant (or prosecution) cannot be restricted to the evidence that had been tendered at the stage of pre-charge evidence. Instead, the evidence presented at the stage of pre-charge may be supplemented by the „remaining evidence. While parting, this court, however, records its agreement with the grievance of the respondent as to the inordinate delay in conduct of the trial on the complaint presented by the petitioner. Twenty two years have already passed and there seems to be no end to the prosecution which seems to be turning into persecution. A citizen cannot be subjected to such harassment. There will have to be some sense of urgency and expedition. The mis-fortune is that the petitioner has not demonstrated any resolve to show expedition even in the petition at hand which has remained pending over three years, its counsel not inclined to appear on the matter being called out. It is directed that the petitioner will be entitled to produce all its remaining witnesses on two specific consecutive dates which shall be fixed for such purpose by the trial court upon receipt of copy of this order. In case of any default on the part of the petitioner, its right to lead further evidence will stand exhausted and closed, and no indulgence to be shown - petition disposed off.

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• 2018 (10) TMI 172
  Served From India Scheme - It is the contention of the petitioner that such scrips obtained by the Indian “Service Providers” under the SFIS scheme could be used for import of any capital goods, spares, professional equipment, office equipment, office furniture and consumables - Jurisdiction. Held that:- The show cause notice has been issued in the year 2014, the Policy Interpretation Committee under the Chairmanship of Director General of Foreign Trade has interpreted the policy on 27.12.2011 itself and on the premise that the proceedings are pending, petitioner claims to have approached the Court and this would not be a good ground to entertain the present writ petition, which has been filed belatedly. A litigant who seeks to invoke extraordinary jurisdiction of this Court cannot be heard to contend that representations or memorials were being submitted to the authorities and same was not disposed of and thereby a dead cause of action was alive and then, approach this Court belatedly. That apart, sub-article (2) of Article 226 of the Constitution of India would indicate that power conferred under sub article (1) to issue directions, orders or writs to any Government, authority or person can be exercised by any High Court exercising jurisdiction in relation to the territories within which cause of action, wholly or in part, arises. Jurisdiction - Held that:- In the instant case undisputedly the registered office of the petitioner is located at Mumbai. The show cause notice impugned in the writ petition has been issued by the Assistant Director General of Foreign Trade at Mumbai. Duty draw backs have been drawn at Mumbai Port. Thus, the entire cause of action having arisen within the territory of High Court of Mumbai. Hence, petitioner cannot be heard to contend that this Court has jurisdiction to entertain this writ petition under Article 226(1) - Merely because petitioner is also having a hotel at Bengaluru amongst being run by it chain of hotels across the country would not give rise for cause of action within the territorial jurisdiction of this Court to exercise the power vested under Article 226(1). Petition dismissed.

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• 2018 (10) TMI 171
  Re-classification of goods - goods declared as ‘rough marbles’ reclassifiable as rough lime stone blocks - revaluation - denial of cross-examination - principles of natural justice - Held that:- It is seen that appellant had sought cross-examination of the author of the report of the Geological Survey of India which was denied. Compounding the denial, the adjudicating authority, instead of either accepting or rejecting the said request, placed reliance on the record of cross-examination incorporated in the erstwhile order dated 15th March 2002. Furthermore, it is seen that the adjudicating authority has also placed reliance on the analysis in the erstwhile order which was endorsed, without any independent evaluation thereof, in the impugned orders to determine the market price for the computation of redemption fine. These two aspects in the impugned order are contrary to the principles of natural justice and are also in total disregard of the remand order of the Tribunal which directed a fresh decision. A decision is not merely the operative part of the order but should include findings of the adjudicating authority. It was improper on the part of the adjudicating authority to rely upon an order which has been set aside and, therefore, non-existent. Matter remanded back to the adjudicating authority for a fresh decision to be based on independent findings and with strict compliance to the order passed on the earlier occasion by the Tribunal - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (10) TMI 176
  Winding up of the company - commercial insolvency - Held that:- The defence of the company against the claim of the petitioner for the said amount of Rs. 15,92,544/- is that the goods supplied by the petitioner, from time to time covered by the said four invoices nos. HSC/101, HSC/169, HSC/181 and HSC/194 were of inferior quality. The total value of the said 4 invoices is Rs. 33, 82,350/-. However, the company could not explain as to how it went on issuing fresh orders to the petitioner for supply of the said goods. It is the company’s own case that it has utilised 20% of the said goods supplied by the petitioner covered by the last four invoices and paid Rs. 13,89,389/- to the petitioner. Even in the case of IDBI Trusteeship Ltd.(2016 (11) TMI 1529 - SUPREME COURT) cited by the company the Supreme Court has held that while dealing with the defence put up by a defendant in the affidavit for leave to defend, even if the defendant has raised a triable issues, if a doubt is left with the trial Judge about the defendant’s good faith, or genuineness of the triable issues, the trial Judge may impose conditions, for payment in Court or furnishing security. Subject to deposit of Rs. 15,92,544/-, together with interest thereon at the rate of 10%, per annum from the date of receipt of the notice under Section 434 of the Act of 1956 by the company with the Registrar, Original Side of this Court, within October 10, 2018, the present winding up application shall stand permanently stayed and the petitioner shall file a suit against the company, before the competent Civil Court for realisation of its dues. In the default of deposit of the aforementioned amount by the company with the Registrar, Original Side of this Court within the time stipulated above the present winding up application shall stand admitted for Rs. 15,92,544/-, together with interest thereon at the rate of 10%, per annum from the date of receipt of the notice under Section 434 of the Act of 1956. In that event the petitioner shall cause publication of the notice of the winding up application against the company once in the Bengali newspaper, ‘Bartaman’ and once in the English newspaper, ‘The Statesman’. In the said notices the petitioner shall also mention that this application shall appear before this Court on the first Monday falling after four weeks, from the publication thereof.

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• 2018 (10) TMI 175
  Reference to NCLT - maintainability of the appeal - Held that:- Petitioner approaches the National Company Law Tribunal within 60 days from today, the Tribunal should consider it on its merits and not reject it on the ground that it was preferred beyond the period of 180 days prescribed by the Act (on account of the pendency of these proceedings). We also clarify that if there is any dispute as to the locus standi of the present petitioner (Mahindra Sharma Group) with respect to the maintainability of the appeal, the same would be subject to the contentions of the parties and the decision of the NCLT on its own merits

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• Insolvency & Bankruptcy

• 2018 (10) TMI 197
  Claim to IRP on the basis of power of attorney - IRP to accept the claim of the applicant's claim as one of the members of the CoC as a representative of 86 debenture holders of the Corporate Debtor - Held that:- The terms of the debenture holders i.e. financial creditors are to appoint their agent to represent them in CoC. In this case, original trustees of a trust created by the Corporate Debtor to manage the affairs of debenture holders are debarred/restrained by the SEBI from acting as an Intermediary of the trust that was created by the Corporate Debtor. Now each debenture holder has to submit his claim to the IRP. Above provision allows the class of creditors to appoint their representative to attend the CoC meetings. IRP has to allow the applicant to act as representative of the creditors. However, it is further made clear that while raising claim of each of the debenture holder, IRP/RP has to keep in his mind the provisions of section 57 of the Companies Act, 2013.

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• 2018 (10) TMI 196
  Corporate insolvency proceedings - proof of default committed by Corporate Debtor - Held that:- Operational Creditor is able to establish total transactions under various Purchase Orders at Rs, 164,44,016/- and amount paid by Corporate Debtor under various invoices was totalling at Rs. 1,16,67,412/- and balance is Rs. 37,76,604/- and if interest @ 24% is added, the total amount due was Rs. 79,20,558/- since it is commercial transactions, the Operational Creditor is entitled to claim interest. The payment shall be made within 35-45 days as per purchase orders. The Corporate Debtor has committed default. The Operational Creditor is able to show balance payable by Corporate Debtor along with interest. The Corporate Debtor has committed default. This Petition is filed under Section 9 of I & B Code. This is an operational debt and Corporate Debtor committed default. The Petition is in conformity with the provisions of Section 9 of the Code. Therefore, there are grounds to admit the petition and CIRP to be started against the Corporate Debtor Company. The petition is therefore to be admitted. In the result, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code

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• 2018 (10) TMI 195
  Corporate Insolvency Resolution Process (CIRP) - whether there is Operational Debt which became due and payable by the Respondent to the Operational Creditor /Petitioner? - non-payment of debt - Held that:- In the case on hand Respondent did not submit even the PDCs. Even before the submission of PDCs there was correspondence between the petitioner and respondent in the form of e-mail which is referred to in page Nos. 39 and 40 of the Counter. There appears to be disputes between the Petitioner and Respondent for non-submission of PDCs as per MoM dated 24.04.2017. Above all whether non-submission of PDCs which are treated as securities creates any liability or obligation in respect of claim which is due from the Corporate Debtor to the Petitioner/Operational Creditor. The non-submission of PDCs by the Respondent to the Petitioner may at best amount to breach of terms of MoM but it cannot be equated with debt due and payable. Pausing for a movement even if PDCs were submitted by the Corporate Debtor to the Operational Creditor, Operational Creditor is not automatically entitled to realise those PDCs unless and until the activities mentioned in payment schedule-2 in respect of PDC-1 and PDC-2 respectively have been completed. Therefore, the non-submission of PDCs as securities or even otherwise do not amount to debt due and payable. When the debt is not due and payable Petitioner cannot treat it as a claim and cannot call it 'as operational debt'. In view of the findings there is no debt due and payable, the question of payment of the same do not arise. Therefore, there exists no operational debt which has become due and payable. When once this authority comes to the conclusion that there is no Operational Debt due and payable there is no need to dwell on the aspect whether there exist a dispute in respect of Operational debt prior to the issuance of the Demand Notice.

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• 2018 (10) TMI 194
  Corporate Insolvency Resolution Process - existence of financial debt - Held that:- There exists a financial debt and there is occurrence of default committed by the Corporate Debtor in respect of repayment of financial debt. Hon’ble Supreme Court in the Judgment in Innoventive Industries Limited v. ICICI Bank & ANR [2017 (9) TMI 58 - SUPREME COURT OF INDIA] held that if there is a default occurred in respect of financial debt and the movement the Adjudicating is satisfied that the default has occurred, the Application must be admitted unless it is incomplete.In view of the above said findings and in view of the judgment of the Hon’ble Supreme Court, this Petition is liable to be admitted since it is complete in all respects.

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• Service Tax

• 2018 (10) TMI 170
  Condonation of delay in filing appeal - Whether in the facts and circumstances of the case and in law was the Tribunal correct and justified in dismissing the application for condonation of delay? - Held that:- The Writ Petition No. 1724 of 2016, was filed against the order dated 13th January 2016 (received on 2nd March 2016) within the three months for filing an Appeal to the Tribunal under Section 35B(3) of Central Excise Act, 1944. In fact it was filed in 4th May 2016. Thus, there is 28 days available. Thereafter, if one excludes the delay in obtaining the certified copy of the High Court order, the Appeal to the Tribunal is filed after consuming 51 days. Thus, if one excludes the 28 days available from the 51 days, the Appellant has to explain 23 days delay. This delay was held to be not sufficiently explained by the impugned order only on the ground that as the Petitioner whose Petition is pending in the High Court for over a year, the Appellant should have been ready with their Appeal to the Tribunal and filed it immediately after the High Court refused to entertain their Petition. The aforesaid basis of the rejection of the application for condonation of delay was not justified as the explanation offered for the delay viz. preparing the Appeal to file it to the Tribunal is reasonable. A party who prosecutes a Writ Petition bonafide expecting to succeed cannot be expected to keep preparing for an alternate remedy even before his Petition is rejected. The substantial question of law is answered in the negative i.e. in favour of the Appellant-Assessee against the Respondent-Revenue - delay in filing appeal is condoned - appeal disposed off.

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• 2018 (10) TMI 169
  Refund of Service tax paid - rejection of refund on the ground of violation of conditions of N/N. 52/2011-ST, dated 30.12.2011 as there is absence of any co-relation between the mentioning of export invoices on the invoices raised by GTA service provider - Held that:- There is a definitive of the co-relation of the goods cleared from the factory premises and transported for export by transporters. Just because the transporter’s documents did not indicate the invoice number of the appellants vide which the goods were cleared, should not be the reason for denying appellant from the benefit he is legitimately due - Undisputedly, appellant herein is eligible for refund of the amount of service tax paid on the transport services for the goods sought to be exported. Hon’ble High Court of Delhi in the case of Wipro Limited vs. Union of India [2013 (2) TMI 385 - DELHI HIGH COURT] has taken a view that the condition mentioned in the notification if can be satisfied by co-relation, the benefit should not be denied to an assessee. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 168
  SEZ Unit - Refund claim - time limitation - various services received during the period April 2009 to March 2013 and March 2011 to July 2012, appellant had filed these returns on 07.10.2013 and 21.10.2013 - it was alleged that appellant had filed the returns belatedly i.e. beyond the period of one year - N/N. 9/2009-ST and N/N. 17/2011-ST, dated 1.3.2011. Held that:- It is not in dispute that appellant is an SEZ unit and he is not liable to pay any tax or duty for the services on the inputs received by him as per SEZ Act. In order to monitor as a facilitative mechanism, notification No. 17/2011-ST provided for discharge of service tax liability by the service providers first and subsequently the service recipient in SEZ to claim the said refund after making the payment to the service provider. The said notification, as rightly pointed out by Ld. Counsel, does have a clause for extending the time or condoning the delay in filing the refund claims by the jurisdictional Asst. Commissioner or Dy. Commissioner, as the case may be. In the case in hand, it is noticed that at the time of personal hearing before the jurisdictional Asst. Commissioner, the Counsel for appellant had specifically requested the Asst. Commissioner, to condone the delay made in filing of the refund claims - The adjudicating authority, in the case in hand, despite recording the same and within his authority to condone the delay, did not do so. On merits, it is noticed that appellant is eligible for refund. The adjudicating authority should have condoned the delay and processed the claim in a broader perspective. The delay is condoned and the refund claims being on merits admissible, are allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 167
  CENVAT Credit - common input services used for providing the taxable output services as well as for trading activities undertaken by it - non-maintenance of separate records - sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2004 - Held that:- On perusal of both the pre-amended and post amended definition of exempted service contained in Rule 2(e), there is no much of difference between the definitions inasmuch as the explanation added to amended definition with effect from 31.03.2011 has only clarified that “exempted services includes trading”. In interpreting the provisions of both pre and post amended definition of exempted service, the Hon’ble Madras High Court in the case of Ruchika Global Interlinks v. CESTAT, Chennai [2017 (6) TMI 635 - MADRAS HIGH COURT] have held that inclusion of trading in the explanation appended to Rule 2(e) was only clarificatory - thus, the grounds urged by Revenue that the trading was not considered as an exempted service during the disputed period, will not hold good and accordingly, cannot alter the findings recorded in the impugned order. Since, the assessee had reversed the credit attributable to input services used for the trading activities. Since such reversal is not in conformity with sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2004, we are of the view that the learned Commissioner has correctly interpreted the statutory provisions and confirmed the adjudged demand, to which the respondent was not legally entitled for CENVAT benefit - Since trading is not at all a taxable service as per the definition under the Finance Act, 1994, there was no occasion for availment of credit for such trading activity. Since the appellant had availed irregular CENVAT Credit on the input services used for trading activity, the intention of the assessee is manifest in defrauding the Government Revenue. Credit cannot be allowed - appeal allowed - decided in favor of Revenue.

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• 2018 (10) TMI 166
  CENVAT credit - duty paying invoices - invoices which have been issued from Kanpur - the head office was at Nashik, which did not have centralized registration - Held that:- It is deemed fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority to verify the said claim of the assessee - If the tax liability has already been discharged at Nashik in respect of services provided at Kanpur, the second time confirmation of demand against the appellant would not be justified - appeal allowed by way of remand.

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• 2018 (10) TMI 165
  Commercial & Industrial Construction Services - contracts related to supply and fixing of doors and supply and fixing of pre coated sheets - It was alleged by Revenue that the service receivers had paid the appellant towards Service Tax of Rs. 5,93,910/- more than the amount paid towards Service Tax by the appellant - Held that:- The nature of the contract was such that there was transfer of title of the goods supplied and also there was element of service - thus the matter needs to be examined taking the various contracts into consideration - appeal allowed by way of remand.

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• 2018 (10) TMI 164
  Valuation - includibility - Maintenance and Repair service to motor vehicles - whether the value of the spare parts procured by the appellant from M/s KTL is required to be added in the value of the services provided by the appellant? - Extended period of limitation. Held that:- Apart from the fact that M/s KTL is a separate private limited Company engaged in the sale and purchase of spare parts and hence having no relation to the maintenance and repair services provided by the appellant, the issue is otherwise also decided in favor of the appellant by the precedent decisions. Tribunal in the case of M/s Ketan Motors Ltd. Vs Commissioner of Customs, Central Excise &Service Tax, Nagpur [2014 (3) TMI 226 - CESTAT MUMBAI] has held that the value of the spare parts used in providing Maintenance and Repair services by a authorized substation is not includible in the value of the services even in a composite transaction. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 163
  Cash refund of accumulated CENVAT Credit - input services - renting of immovable property service - refund rejected on the ground that the two invoices on which Service Tax was paid claimed to have been issued in the same month - Held that:- The two invoices were raised for the rent amount of Rs. 3,93,488/- in the name of each of the co-owners against which Service Tax was paid - Also, on going through the TDS certificate, it is clear that separate invoices are raised by each of the co-owners and Service Tax accordingly paid by each of the co-owner. Therefore, there is no dispute about the admissibility of the CENVAT Credit on the Service Tax paid by the licensor to the extent of the ownership held by each of them in the property as a whole - rejection of refund is unsustainable - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 162
  Security Agency Service - guarding the suit properties - assessee appointed by the Court Receivers (CR) of Hon ble High Court, Mumbai and / Debt Recovery Tribunal - whether the security services provided by the appellants can be termed as sovereign function of the state and there is any specific exemption provided in the service tax statute for not taxing the said service? - Held that:- The facts are not in dispute that the appellants were engaged by the CR for providing taxable services and in no way, they were connected with the banks / financial institution, who ultimately reimbursed the expenses to the CR as per the applicable rules and instructions of the Court. Thus, the CR appointed by the Court for guarding the suit records cannot be considered as client of the appellant, in order to fall under the category of Security Agency Service. In this case, the service receiver is the CR, who performs the judicial functions as per the Court. Hence the activity undertaken by the appellant can be considered as sovereign function of the States in as much the Hon ble Court performs according to the mandates of the constitution of India. Appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 161
  Valuation - Manpower Recruitment or Supply Agency Services - over and above the amount of wages, the appellant also collected 41% levy from the contractee and deposited the said amount with Grocery Markets and Shop Board (GMSB) - Department interpreted that 41% levy collected by the appellant should form part of the gross value, on which service tax liability is required to be discharged by the appellant - time limitation. Held that:- With regard to the issue of additional 41% of levy paid to GMSB and the payment of gratuity/ex-gratia to the employees, we have perused the letter dated 19.09.2006 addressed by the appellant to the Jurisdictional Deputy Commissioner, explaining therein the entire activities undertaken by it including payment of additional levy etc. Time limitation - Held that:- The department did not issue the show-cause notice within the normal period provided under Section 73(I) of the Act. Since the entire activities undertaken by the appellant were within the knowledge of the department, the charges of suppression cannot be leveled, justifying issuance of show-cause notice beyond the normal period. Thus, the proceeding initiated by the department is barred of limitation of time. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (10) TMI 160
  CENVAT Credit - ineligible documents - the Department took the view that the goods cleared under those invoices had not suffered any Central Excise Duty - period April, 2003 to December, 2003. Held that:- During the disputed period, invoices for clearance of goods from the factory were required to be done so under cover of an invoice in conformity with Rule 11 of the erstwhile Central Excise Rules, 2002. A number of details were required to be compulsorily indicated on such invoices including Central Excise Registration, Duty payment details, etc. It is pertinent to note that none of the invoices recovered at the time of visit of the officers indicated any of these particulars, leave alone details of duty payment. From the facts on record it also emerges that none of the records available at the time of visit contained any details or documentations of such discharge of duty liability nor was any proof of such duty payment produced at the time of visit of the officers. The Show Cause Notice dated 02.02.2005 while referring to CENVAT Credit availment of Rs. 15,34,147/- and Rs. 1,18,544/- (AED(T)) by the appellants as shown in their ER-3 returns filed on 03.02.2004, has however found fault with some of the availments based on alleged ineligible documents like invoices issued by depot which is not registered, invoices not issued as per Rule 11 of the Rules and invoices issued prior to the date of registration, amounts to Rs. 6,98,444/- only. Thus, less than half of the amount claimed as CENVAT Credit by the appellant in their ER-3 returns amounting to Rs. 6,98,444/- was disputed by the Department. Penalty u/s 11AC - Held that:- Though the appellants had failed to discharge the Central Excise duty, they cannot be saddled with the intention to evade payment of duty for the reason that they had enough CENVAT Credit in their accounts for the disputed period so as to enable them to pay the duty - the allegation of suppression of facts with intention to evade payment of duty so as to impose penalty under Section 11AC is absent in the present case. The equal penalty of Rs. 12,30,993/- is therefore set aside. Appeal allowed in part.

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• 2018 (10) TMI 159
  Rectification of mistake - case of applicant is that their submissions were not only not taken on record but had also not been dealt with - Held that:- It is on record that four opportunities were provided to the appellant before the proceedings were concluded ex-parte. We take note that the order of the order of the Tribunal, in which it is alleged that the mistakes have occurred, did refer to a communication from the appellant about the pendency of the writ petition before the Hon'ble High Court of Bombay. Undoubtedly, it was letter dated 5th February 2008 that brought the fact to the notice of the adjudicating authority but order of the Tribunal, though dating the communication as 31st January 2008, did take note of the letter referred to now by Learned Counsel - The Tribunal has also taken note of the reasons for denial of cross-examination. Also taken note of is that the notice was issued on the basis of documents recovered from their factory and these were acknowledged to have been received by the co-noticee. The reference to letter dated 31st January 2008 in paragraph 5 of the order of the Tribunal may be read as 5th February 2008. Application disposed off.

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• 2018 (10) TMI 158
  SSI Exemption - manufacturers of packaging with designs with brand name - appellant was denied eligibility to exemption on the ground that catch cover manufactured by them was not specifically enumerated in the incorporated provision - benefit of N/N. 47/2008-CE dated 1st September 2008 - Held that:- It would appear from the amendment to the notification, and the subsequent exemption under section 11C of Central Excise Act, 1944, that legislative approval for exclusion from exemption did not intend to cover packaging manufacturers in the small scale sector who, by the very nature of their activity, were, undoubtedly, an ancillary but, undoubtedly, in the small-scale sector. The exclusion from exemption is applicable to goods which bear a brand name and the exclusion from coverage under these exclusion is limited to certain categories. There is no definition of printed cartons of paper or paperboard either in the notification or elsewhere. Accordingly, this description should conform to such as is commonly understood, and intended, in the industry - there is no reason to distinguish printed cartons of paper or paperboard from catch cover and to deny eligibility to exemption. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 157
  CENVAT Credit against payment of Education Cess and Secondary & Higher Education Cess on counter veiling duty (CVD) - Held that:- The case of the appellant in availing Education Cess and Secondary Cess and Higher Education Cess and viz-a-viz Cenvat credit can only be considered as bonafide mistake in not knowing the change of rule and the same cannot be treated as suppression of fact or mis-statement etc. as they have paid the entire duty demand amount by way of Cess which were no more leviable. It has been held that such conduct of appellant can never be treated as suppression of fact, willful misstatement of fraud or violation of statutory provision to invoke extended period and impose fiscal penalty on the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 156
  Rectification of Mistake - case of appellant is that F. No. II (3) T-II/EF/SCN/VVF/63/13/1423 dated 14th August 2013 should have been read us II (3) T-II/EF/SCN/VVF/63/13/1368 dated 7th August 2013 - Held that:- With this substitution the application for rectification of mistake is disposed off.

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• 2018 (10) TMI 155
  Rectification of Mistake - applicant contends that credit of the amount claimed had not been taken in the 'account current' and, in the absence of recording of this fact, the refund due to them arising from the order may well be denied - Held that:- It does not appear that any mistake exists or that there is any requirement for elaboration. That applicant was entitled to take appropriate credit in the 'account current' as a refund is in accord with the mechanism envisaged in the said exemption notification subject to any curative, with appropriate consequence, on the part of the competent authority. If the credit of the correct amount is taken in the 'account current', such corrective is not called for. The said paragraph has merely stated the provisions in the notification. Apprehension of mis-interpretation of such clear communication is not a valid justification that a mistake requiring rectification exists. The application for rectification of mistake is dismissed.

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• 2018 (10) TMI 154
  Rectification of Mistake - Rectification sought on the ground that the oral submission pertaining to applicability of the decision mentioned have not been considered while deciding the matter and that, in paragraph 10 of the said order, there is reference to terminal duties which was not the issue in dispute. Held that:- On a perusal of the file, there is no record of such submission or reference to the said decision. Learned Authorised Representative contends that the issue pertaining to paragraph 10 of the order does not find a place in the application - the application for rectification of mistakes is dismissed.

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• 2018 (10) TMI 153
  Benefit of concessional rate of duty - Cement cleared for captive use - N/N. 4/2007-CE dated 01.03.2007 - denial of benefit on the ground that appellant is not a mini-cement plant; the clearance being for captive consumption no retail sale is involved and the clearances are in packaged form only. Held that:- In terms of Standards of Weights and Measures (Packaged Commodities) Rules, 1977, the appellants are not required to declare RSP. Therefore, by virtue of the 3rd proviso they are to be assessed/ determined to duty as in the case of goods cleared in packaging form. Therefore, the impugned goods are required to be charged to duty in terms of 1C of the said Notification - Tribunal in the case of ACC Ltd Vs CCE, Coimbatore [2017 (8) TMI 1168 - CESTAT CHENNAI] held that cement cleared for self-consumption cannot be considered as ‘retail sales’ under Rule 3(q) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 152
  Recovery of refund erroneously granted - duty confirmed through the Order dated 15.06.2004 on finalization of assessment for the period from 25.07.2003 to 31.05.2004 was Rs. 1,85,35,232/- - duplicate demand - Held that:- At Sl. No.(xvii) of the written submissions filed by the learned Counsel for appellant, we find that there were payments of Rs. 30 lakhs, Rs. 1,02,67,350/- and Rs. 1,17,577/-. Further, Rs. 51,50,305/- are available in the Cenvat credit account. Therefore, we find that by confirmation of demand of Rs. 12,79,223/- there is duplication of payment of duty - confirmation of demand of Rs. 12,79,223/- set aside. Matter remanded back to the Original Adjudicating Authority for verification of payment of Rs. 77,590/- for the period from 17.06.2004 to 30.06.2004 and thereafter to pass appropriate order in respect of demand of Rs. 77,590/-. Appeal disposed off.

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• 2018 (10) TMI 151
  Penalty - Valuation - Department had observed that the appellant had contravened the provisions of Section 4A of the Central Excise Act, 1994 read with Rule 4 of Valuation (Determination of Price of Excisable Goods) Rules, 2000 and Rule 4, 6, 8 of the Central Excise Rules, 2002 - whether, penalty can be imposed under Section 11AC of the Act and whether there is element of fraud, collusion, willful misstatement of facts, etc. in defrauding the Government revenue by the appellant? Held that:- The appellant entertained a bonafide belief that no Central Excise duty is payable on the quantity discount provided to its customers for supplying of the goods. Section 11AC of the Act provides for imposition of penalty, only when the ingredients, viz., fraud, collusion, suppression of facts, etc. are present in defrauding the Government revenue. In the present case, since the appellant entertained a genuine and bonafide belief at the material time and paid the differential amount of duty along with interest subsequently, the provisions of Section 11AC of the Act cannot be invoked for imposition of penalty on the appellant. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 150
  Penalty u/r 15 (2) of CCR, 2004, read with Section 11AC of the CEA, 1944 - Irregular availment of credit on inputs and capital goods - availment of credit disputed on the ground that at the time of taking such credit, the godowns where such goods received, were not registered with the Central Excise department - Held that:- Since the appellant suo moto reversed the credit and also paid interest during the course of audit by the Central Excise department, it cannot be said that availment of Cenvat Credit was owing to the reason of fraud, collusion, suppression, etc. Since the statute clearly mandates imposition of penalties, in the eventuality, where there is involvement of fraud, collusion, etc., which admittedly was absent in this case, the imposition of penalty by the authorities below cannot be sustained in the eyes of law. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 149
  Penalties - CENAVT Credit - common inputs used in manufacture of taxable as well as exempt goods - electricity, bagasse and press-mud - Rule 6(3) of the Cenvat Credit Rules - Held that:- The issue is no more res-integra and it stands held in number of decisions that reversal of Cenvat Credit would not require invocation of the provisions of Rule 6(3) - Hon’ble Supreme Court in the case of Union of India vs. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] has held that in the case of emergence of bagasse and press-mud there is no requirement of reversal of Cenvat Credit, inasmuch as the same are not manufactured products. The appellant is not contesting the said reversal and the same is upheld - however penalties are set aside - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 148
  Clandestine removal - shortage of stock and finished goods - the entire case of the Revenue is based upon the entries made in the recovered records read with statement of various persons - Held that:- Commissioner has clearly observed that the second furnace though installed in the factory but was not in operation inasmuch as the said fact stands deposed by various deponents in the statement itself - The Adjudicating Authority has also verified the fact that the entries made in the so called incriminate documents fully match with the clearances reflected in the RG-1 record. Each and every entry has been dealt with by him and has been found to be cleared on payment of duty. Though there are minor variations on the comparison of both the entries but the Adjudicating Authority has observed that such differences, which are very minor are on account of wrong entries as almost all the entries have been found to have been cleared on payment of duty by reflecting the same in RG-1 register. The entire case of the Revenue is based upon entries made in the record resumed from assessee and there is no evidence of establishing clandestine activity on the part of the assessee. Even the separate case made out against them based upon the shortages of the raw material and final product stand allowed by Commissioner (Appeals) by way of different Order-In-Appeal, in the absence of any cogent evidences, duty demand cannot be upheld. The demand of duty cannot be upheld against the assessee on the allegations of clandestine removal - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 147
  Rate of tax - Classification of goods - Shaheen Misri - section 55 of MVAT ACT, 2002 - whether the Product 'Shahin Masheri' to be held as covered by the Entry E-1 Of the MVAT Act, 2002? Held that:- It is revealed that the tobacco and tobacco products are classified as unmanufactured tobacco, manufactured tobacco and different products of tobacco in different entries - Further it is seen that out of tobacco products cigar and cigarettes are subjected to higher rate of tax equal to 35 percent. Thus, it is found that most relevant schedule entry D-12 for the purpose of classification. On analysis of this schedule entry, it is seen that the manufactured tobacco products excluding cigar and cigarettes are grouped under this schedule entry. Thus, tobacco products are classified under two schedule entry appended to D schedule i.e. D-12 and D-14. Now, it is necessary to see whether the impugned product is classified in schedule entry D-12 or otherwise. The Masheri is roasted or burnt powdered tobacco. The salt is added to the tobacco and it is burnt and packed. In common parlance, it is understood in its popular sense, and in conversant with the class of people uses it as tooth powder. There is no doubt that it is the product of tobacco. It is applied on gum for consumption of Nicotine. It is also to be noted that for the purpose of MVAT ACT, 2002 the schedule entry provided was A-45A- as Unmanufactured tobacco covered by Tariff heading 2401for earlier periods. The appellant has stated that the Hon. Apex court held that the product is tooth powder and covered by the Excise heading 3306. So the product is manufactured tobacco product. Hence the masher is manufactured tobacco product - the nature of impugned product, Masheri is roasted or burnt powdered tobacco with addition of salt is prepared from tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. In common parlance it is identified as tobacco product and is advertised accordingly. Even Hon. Apex court in the appellant case held that it is tooth powder and classified under CETH No.3306.10. Analysis of Schedule entry D-12 and schedule entry E-1 - Held that:- On analysis of both entries, we found that the schedule entry D-12 is most specific related to tobacco and tobacco products. The another entry is residuary entry, and it is settled principle the resort of residuary entry shall be considered when the goods not covered in any of the other schedules namely Schedule-A, B, C and D of MVAT ACT, 2002. The Hon. Apex court and various High courts have laid dawn the principle that in taxing statute, the specific schedule entry overrules general schedule entry - The product "shahin Bhajki Masheri" is covered by schedule entry, D-12 of MVAT ACT, 2002. It is settled principle for applicability of specific entry or residuary entry that "only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry". Prospective effect - Held that:- It is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry". In present case, there is specific entry applicable to tobacco products so the ratio of various judgments relied upon are not applicable. Thus, the applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and would wipe out the legitimate tax liability. In these circumstances, we do not allow the use of prospective effect as a tool to protect or to wipe of legitimate tax liability. Ruling:- The product "shahin Bhajki Masheri" is covered by schedule entry, D-12 of MVAT ACT, 2002. Thus, the product is liable to tax at the prescribed schedule rate (20 %) as provided under the said schedule entry from time to time. The prayar to grant prospective effect to this order is rejected.

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• 2018 (10) TMI 146
  Validity of reassessment order - purchase tax u/s 3(2) of the KVAT Act, 2003 - N/N. FD 82 CSL 10(VI), Bangalore, dated 31.03.2010. Held that:- This Court is surprised and is pained by the manner in which the authority has passed the impugned reassessment order in the second round of assessement for the period 01.04.0211 to March 2012 just ignoring the applicable Notification and throwing it to winds. The said order is therefore nothing less than suffering from malice-infacts as well as malice-in-law. Therefore, the said responsible officer deserves to pay the exemplary costs for passing such whimsical order and the writ petition deserves to be allowed. The writ petition is allowed and the impugned order Annexure-A dated 28.10.2016 passed by the 1st Respondent is hereby quashed and set aside.

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• 2018 (10) TMI 145
  Rate of VAT - sale of Rectified Spirit - Case of Revenue is that as per Serial No.56, Part II of Schedule II of VAT Act on 'liquor', the petitioner is liable to pay VAT at the rate of 5% whereas, the 'Rectified Spirit' does not come within the aforesaid Schedule and, therefore, the petitioner is liable to pay VAT at the rate of 14% - Vires of Section 46 and 53 of the M.P. VAT Act, 2002, read with Rule 60 of M.P. VAT, Rules, 2006. Held that:- It is clear that rectified spirit is not alcohol and not fit for human consumption and hence, not an excisable article. In absence of such excise ability under the M.P. Excise Act, the question of levying excise or power to levy does not arise and hence the goods in question do not fall within preview of Entry 47, List I of VAT Act to be considered Tax free goods. Section 2(6) of M.P. Excise Act, 1915 says that excisable article means (a) any alcoholic liquor for human consumption, hence liquor is fit for human consumption and excisable article, but after 1.4.2013 liquor is also taxable by Entry 56 Schedule II of VAT Act - Rectified spirit is not fit for human consumption and by notification dated 01.04.2011, rectified spirit is not an excisable article. The Constitution Bench of the Apex Court in Mohd. Hanif Quareshi & others v. State of Bihar, [1958 (4) TMI 110 - SUPREME COURT] while dealing with the meaning, scope and effect of Article 14, reiterated what was already explained in earlier decisions that to pass the test of permissible classification, two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) such differentia must have rational relation to the object sought to be achieved by the statute in question. The Apex Court further stated that classification might be founded on different basis, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. Petition dismissed.

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• 2018 (10) TMI 144
  Validity of assessment order - years from 2008-09 to 2015-16 - TNVAT Act - the petitioner did not submit their objections to the revision notices though the petitioner was granted time - Held that:- Considering the fact that already a sum of Rs. 50 lakhs has been recovered and that the said amount is now retained by the Enforcement Wing, this Court is of the view that one more opportunity can be granted to the petitioner to go before the Assessing Officer and file their objections - the writ petitions are disposed of with a direction to the petitioner to treat the impugned proceedings as show cause notices and submit their objections within a period of 15 days from the date of receipt of a copy of this order.

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