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TMI Tax Updates - e-Newsletter October 9, 2017 Case Laws in this Newsletter: Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles CUSTOMS AND CENTRAL EXCISE DRAWBACK – PART I AUTHORISED REPRESENTATIVE UNDER GST News Don't want business class to get caught in red-tape: PM on GST changes Post-GST, tax collection in Goa drops 22 per cent GST - Changes in Rate of tax on Supply of Services - Decisions taken by the GST Council in the 22ndmeeting held on 6th October 2017 Press note export packages - GST Sovereign Gold Bond Scheme 2017 -18– Series-III Government rescinds the Notification No. 4/2017 dated 23rd August, 2017 relating to Gems and Jewellery sector; Another notification will be issued separately in due course Notifications GST - States 04/2017 - State Tax - dated 29-9-2017 - Delhi SGST Last Date for filing of return in FORM GSTR-3B No. F. 3(29)/Fin(Rev-I)/2017-18/DS-VI/636 - dated 28-9-2017 - Delhi SGST Corrigendum - Notification No. 13/2017-State Tax (Rate) dated the 30th June, 2017 28/2017–State Tax - dated 27-9-2017 - Delhi SGST Lt. Governor of the National Capital Territory of Delhi, on the recommendations of the Council, waives the late fee payable under section 47 of the Delhi Goods and Services Tax Act, 2017, for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July 2017 by the due date. 22/CTD/2017 - dated 7-9-2017 - Sikkim SGST Goods & Services Tax is not prescribed on supply of liquor for human consumption, crude oil, petrol, diesel, air turbine fuel and natural gas. G.O. (Ms) No. 120 - dated 28-9-2017 - Tamil Nadu SGST Amendment in the Notification No.II(2)/CTR/532(d-15)/2017, dated the 29th June, 2017 - Services exempt from state tax. G.O. Ms. No.115, II(2)/CTR/793(d-2)/2017 - dated 22-9-2017 - Tamil Nadu SGST Amendments in the Notification No. II(2)/CTR/532(d-5)/2017, dated 29th June, 2017. G.O. Ms. No.114, II(2)/CTR/793(d-1)/2017 - dated 22-9-2017 - Tamil Nadu SGST Amendments in the Notification No. II(2)/CTR/532(d-4)/2017, dated 29th June, 2017 G.O. Ms. No. 116, II(2)/CTR/793(d-3)/2017 - dated 22-9-2017 - Tamil Nadu SGST Amendment in the Notification No.II(2)/CTR/532(d-8)/2017, dated 29th June, 2017, G.O. Ms. No. 113, II(2)/CTR/793(c-3)/2017 - dated 21-9-2017 - Tamil Nadu SGST Exempts intra-State supply of heavy water and nuclear fuels. G.O. Ms. No. 112, II(2)/CTR/793(c-2)/2017 - dated 21-9-2017 - Tamil Nadu SGST Amendment in the Notification No. II(2)/CTR/532(d-15)/2017, dated the 29th June, 2017 G.O. Ms. No. 111, II(2)/CTR/793(c-1)/2017 - dated 21-9-2017 - Tamil Nadu SGST Amendments in the Notification No. II(2)/CTR/532(d-14)/2017, dated the 29th June, 2017 G.O. Ms. No. 108 - SRO A-41(a)/2017 - dated 15-9-2017 - Tamil Nadu SGST The Tamil Nadu Goods and Services Tax (Fourth Amendment) Rules, 2017. G.O. Ms. No. 107 - II(2)/CTR/783(c-3)/2017 - dated 15-9-2017 - Tamil Nadu SGST Recommendations of the Council TDS deduction from the payment made or credited to the supplier of taxable goods or services or both. G.O. Ms. No. 106 - II(2)/CTR/783(c-2)/2017 - dated 15-9-2017 - Tamil Nadu SGST Casual taxable persons making inter-State taxable supplies of handicraft goods - Exemption from obtaining registration. G.O. Ms. No. 105 - II(2)/CTR/783(c-1)/2017 - dated 15-9-2017 - Tamil Nadu SGST Waiver of late fee payable under Section 47 F.1-11(91)-TAX/GST/2017(Part-VII)-26/2017-State Tax (Rate) - dated 26-9-2017 - Tripura SGST Exempt supply of heavy water and nuclear fuels from DAE to NPCIL from GST. F.1-11(91)-TAX/GST/2017(Part-VII)-25/2017-State Tax (Rate) - dated 26-9-2017 - Tripura SGST Amendments in the Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017 and Notification No. 21/2017-State Tax (Rate), dated the 22nd August, 2017, F.1-11(91)-TAX/GST/2017(Part-VII)-24/2017-State Tax (Rate) - dated 26-9-2017 - Tripura SGST Amendments in the Notification 20/2017-State Tax (Rate), dated the 22nd August, 2017. .F.1-11(91)-TAX/GST/2017(Part-VI) - dated 25-9-2017 - Tripura SGST The Tripura State Goods and Services Tax (Seventh Amendment) Rules, 2017. F.1-11(91)-TAX/GST/2017(Part-VI) - dated 22-9-2017 - Tripura SGST All taxable persons making inter-state taxable supplies of Handicraft goods from obtaining registration under TSGST Act, 2017 F.1-11(91)-TAX/GST/2017(Part-VI) - dated 22-9-2017 - Tripura SGST Notification appointing the day which shall come into force of sub-section (1) of Section 51 of the TSGST Act, 2017 F.1-11(100)-TAX/GST/2017 - dated 16-9-2017 - Tripura SGST Notification regarding Last date for filing of Return in Form GSTR 3B for the month of August to December, 2017 F.1-11(100)-TAX/GST/2017 - dated 13-9-2017 - Tripura SGST Notification on waiving of late fee for late filing of Return in Form GSTR-3B for the month of July, 2017 F.1-11(92)-TAX/GST/2017(Part) - dated 6-9-2017 - Tripura SGST Notification on State Level Screening Committee on Anti-Profiteering for the State of Tripura Income Tax 86/2017 - dated 5-10-2017 - IT Income-tax (23rd Amendment) Rules, 2017 Money Laundering G.S.R. 1223(E) - dated 6-10-2017 - PMLA Central Government rescind the notification No. 4/2017, dated the 23rd August, 2017 Circulars / Instructions / Orders GST - States F.12(5)FD/Tax/2017 - dated 6-10-2017 Registration of Tax Deductor at Source under GST 17/2017-18 - dated 3-10-2017 Modalities for retention of record F.1-11(91)-TAX/GST/2017(Part-VI)/8734-41 - dated 26-9-2017 Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Tripura State Goods and Services Tax Rules, 2017 F.1-11(91)-TAX/GST/2017(Part-VI)/8726-33 - dated 26-9-2017 Extension of time limit for submitting the declaration in FORM GST TRAN- 1 under rule 120A of the Tripura State Goods and Service Tax Rules, 2017 24/FIN/ACCTT/2017-18 - dated 21-9-2017 Office memo for TDS authorities under GST F. No. AC/Export Cell/W-208/2017-18/848-877 - dated 7-9-2017 Issues related to acceptance of Bond/LUT Central Excise F. No. 278A/33/2016-Legal - dated 5-10-2017 Approved panel of Sr/jr standing Counsel for handling CBEC cases of Indirection taxation under various High Courts etc Highlights / Catch Notes GST Package of relief and incentives for exporters with immediate affect Visit to Get Source Customs Classification of goods imported as ‘Video Door Phone’ - Learned authority rightly classified the goods under the CTH 8517 Visit to Get Source PMLA Government rescinded the notification under PMLA - specifying the reporting entity - the dealer in precious metals, precious stones and other high value goods having a turnover of rupees two crore in a financial year Visit to Get Source Central Excise CENVAT credit - place of removal - warehouse situated outside India - Since tax was not, in the first instance, payable and the appellants merely have taken credit of what was not payable by them Visit to Get Source The refund of cenvat credit should be allowed even in circumstances when exports were not made under bond, although it is a requirement of Rule 5 as well as Rule 6(6)(v) of CCR. Visit to Get Source Classification of goods - news print - It is not necessary that the buyer should be compulsorily print the newspaper - The criteria is limited to the buyer should be registered as newspaper, which is not under dispute. Visit to Get Source Case Laws: Income Tax 2017 (10) TMI 323 Income from capital gain - transfer exigible to tax by reference to Section 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882 - rights emanating from the JDA, legal effect of non registration of JDA, its alleged repudiation etc. - delivery of possession - Held that:- As has been stated there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no transfer can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question. However, the High Court has held that Section 2(47)(vi) will not apply for the reason that there was no change in membership of the society, as contemplated. We are afraid that we cannot agree with the High Court on this score. Under Section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The High Court has not adverted to the expression or in any other manner whatsoever in sub-clause (vi), which would show that it is not necessary that the transaction refers to the membership of a cooperative society. We have, therefore, to see whether the impugned transaction can fall within this provision. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose -the purpose being to develop the property, as envisaged by all the parties. We are, therefore, of the view that this clause will also not rope in the present transaction. In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains arose from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. - Decided in favour of assessee. 2017 (10) TMI 322 Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils u/s 44BB - Tender for two platform facilities for off-shore oil exploration and drilling - sub-contractor liability to pay various amounts by way of tax, both under Section 44BB - whether Clause 13.2.8 would not come in the way of ONGC having to pay amounts paid by the sub-contractor by way of tax because of a change in law? Held that:- It will be noticed on a perusal of the award of the Umpire, that a decision has been rendered on an issue which was never referred to the learned Umpire. The award was ultimately only on the said issue. In passing, the Umpire did refer to Clause 13.2.7, which was the only bone of contention left between the parties, but stated that since Clause 17.3 of the contract was not attracted, and since consequently the Claimants were not liable to indemnify the sub-contractor, Clause 13.2.7, would squarely come into play. From this it can be seen, that there was no independent reasoning or conclusion with regard to the applicability of Clause 13.2.7. This being the case, and the matter being a fairly old one, we are of the view that the award of the Umpire has to be set aside on the ground that his ultimate decision was on a matter not referred to him, but indeed on a matter which had been concluded in favour of the appellant. This being the case, it would be necessary to remit the matter to the Umpire. Inasmuch as the Former Chief Justice Y.V. Chandrachud is no longer alive, with the consent of the parties, we appoint Justice Aftab Alam to be the Umpire in this case to decide the narrow issue as to whether Clause 13.2.8 would apply so as to interdict the application of Clause 17.3 which has been held by both learned Arbitrators to apply to the parties. We request the learned Arbitrator to take up the matter as early as possible and deliver his award within a period of three months from the date on which he receives the papers from the parties. By consent, it is recorded that the matter being an old one, this award would not be subjected to the drill of appeals before the High Court, but would come back directly to us for further adjudication. 2017 (10) TMI 321 Initiation of the penalty proceedings u/s 158BFA - whether the initiation of the penalty was time barred inasmuch as it was beyond six month’s time from the end of the month in which the order of the ITAT was received by the Commissioner of Income Tax (‘CIT’) (Judicial) and not the “concerned CIT”? - Held that:- The Court finds that the expression “received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner” appearing in Section 158BFA(3)(c) is identical to the expression in Section 260A(1) of the Act which was interpreted by this Court in Odeon Builders Pvt. Ltd. (2017 (3) TMI 1266 - DELHI HIGH COURT) as any CIT and not necessarily the 'concerned' CIT. In other words, for the purpose of Section 158BFA(3)(c) of the Act, if the order of the ITAT was received by the CIT (Judicial), the limitation of 6 months within which the penalty order had to be passed would begin to run from that date regardless of the fact that the order of the ITAT was received by the concerned CIT only thereafter. As far as the second submission is concerned, this Court in Odeon Builders Pvt. Ltd. (supra) declared the law as it always stood. The question of the said decision applying only prospectively does not arise. While it will not result in matters that have attained finality being reopened, it will apply to cases that are pending at various levels in the hierarchy of authorities. - Decided against revenue 2017 (10) TMI 320 Reopening of assessment - sham transaction converting the black money into that of share money or security money through a shell company - Held that:- In the present case after conclusion of the assessment order under Section 143(3) of the Act, the Assessing Officer received information that the disclosure, as made by the petitioner in the return, is bogus for the reason that it was a sham transaction only for the sake of converting the black money into that of share money or security money through a shell company. The aforesaid material was in no way unreliable or unauthentic, inasmuch as it was on the basis of statement of the person, running the shell company, who himself has confessed that the petitioner is one of the company, which had received a sum of ₹ 14,70,15,000/- as security premium during the assessment year 2008-09. The narration of facts and material in the reasons to believe impliedly amounts to saying that the assessee is guilty of not disclosing the true and full material facts necessary for assessment. In such a situation, even if there was a disclosure of the aforesaid amount in the return filed by the petitioner under Section 139 of the Act and the assessment was completed under Section 143(3) of the Act, it would not amount to be a full and true disclosure of the material facts necessary for completion of the assessment. We do not deem it fit to interfere with the re-assessment proceedings or impugned notice issued under Section 148 of the Act. - Decided against assessee. 2017 (10) TMI 319 Penalty u/s 271(1)(c) - concealment of particulars of income or furnishing of inaccurate particulars - validity of notice - Held that:- The notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. See CIT & Anr. Vs. M/s SSA’s Emerald Meadows – 2015 (11) TMI 1620 – Karnataka High Court. Appeal filed by the Assessee stands allowed. 2017 (10) TMI 318 Assessment in hands of legal heirs - assessment in the hands of the vendee as well as the co-owner - capital gain - Held that:- ITAT in the earlier proceedings, had clearly considered the issue and had set aside the assessment to the file of the AO observing that the cases of the vendee Shri Sai Sree Projects and the co-owner, Smt. N. Andalamma have been set aside to the file of the AO. Consequent to this direction, the AO is required to consider the assessments in the hands of the vendee as well as the co-owner before completing the assessment in the hands of the assessee to adopt a uniform and rational approach. Further, we also find that the assessment was initially completed in the hands of Shri A. Ramulu, who has died thereafter, and all his legal heirs have to be brought on record to bring to tax his income. Though the assessee has brought to the notice of the AO that Shri A. Ramulu is survived by three sons, the AO has refused to bring them on record stating that the assessee has not filed the legal heir certificate. We cannot find fault with this approach of the AO, since the assessee has not filed the legal heir certificate even before us at this stage. But, the assessee can file such certificate even at this stage. Neither the AO nor the CIT (A) have correctly followed the earlier directions of the Income Tax Appellate Tribunal. In view of the same, we deem it fit and proper to remand the issue to the file of the AO with a direction to consider the assessee’s application for bringing all the legal heirs of Shri A. Ramulu on record and to complete the assessments in the hands of the assessee and the other legal heirs de novo after making due inquiries and also after making due inquiries with regard to assessee’s contentions that possession of the property was never handed over to the vendees and that the construction permission has been given to the other co-owners of the property, to come to a conclusion on the question as to whether there is a transfer of the property. 2017 (10) TMI 317 Deduction u/s.80P(2)(e) - income from godown rent - Held that:- The provision of Sec.80P(2)(e) provides that any income derived by the co-operative Society from the letting of godowns or warehouse for storage, processing or facilitating the marketing of commodities shall be fully entitled for deduction. Since, the appellant satisfies the conditions that claim for deduction is justified. In our considered opinion, assessee claim u/s.80P(2)(e) is allowed. Income by way of interest or dividends - Held that:- The appellant has earned dividend and interest income from other Co-operative Societies and it has accordingly claimed deduction u/s.80P(2)(d) of the Act. The details filed by the appellant show that it has made investment in shares and debentures of various cooperative societies details of which are given in schedule for of the balance sheet. As per the provisions of this section any income by way of interest or dividends derived by any Co-operative society from its investment any other Co-operative Society the whole income would be entitled for deduction. Since, the dividend has been received from other Co-operative Societies the deduction is allowable. Deduction on account of agricultural commission income - Held that:- A perusal of the details filed by the assessee show that the appellant has earned this income from Gujarat State Co-operative Marketing Federation Ltd. for acting as an agent. The assessee company is acting as the nodal agency for all the smaller agencies at Taluka level. The provisions of the section clearly shows that the deduction is allowable for purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members. The assessee has acted as a marketing agent for supplying the fertilizers to its subsidiary cooperative societies meaning thereby that the product is being marketed to the members. Since, the income has been earned from a specified activities, the deduction claimed by the assessee were rightly allowed by the learned CIT(A). The reliance is also placed on the Supreme Court’s decision in the case of appellant himself Sabarkantha Zilla Kharid Vechan Sangh Ltd. V/s. CIT [1993 (8) TMI 2 - SUPREME Court]. It is also noted that the AO has disallowed the estimated expenditure disallowed by the appellant from the activity of commission as it has completely disallowed the claim. The claim made by the assessee was justified as the net profit was rightly allowed as deduction and not the gross income. CIT(A) has rightly allowed the agricultural commission to the assessee. 2017 (10) TMI 316 Addition on account of loss in trading of shares - Assessment u/s 144 - plea of the assessee that it may be provided adequate opportunity to present its case - Held that:- It is evident from the assessment order that the addition on account of loss in trading of shares was made in absence of any details. Before the Ld. CIT (A) also, the assessee could not furnish relevant details like the basis of valuation of shares, the date of purchase of shares and the working of the loss said to have been incurred on account of trading in shares. Thus, the assessee was not able to substantiate its claim before the Ld. CIT (A) also. However, before us, the Ld. AR has given an assurance that the assessee shall fully co-operate with the AO if it is given another opportunity to furnish the required details/evidences/ documents. Therefore, looking into the overall facts and circumstances of the case and keeping in mind that a high pitched assessment at ₹ 1,62,44,980/- has been made as against the returned income of ₹ 4,984/-, we deem it fit to restore the issue to the file of the AO for fresh adjudication after giving the assessee a proper opportunity. We also direct the assessee to fully co-operate with the AO in the assessment proceedings 2017 (10) TMI 315 Disallowance of deduction of excise duty - Held that:- As the assessee has itself prayed for a set aside and the learned Departmental Representative also does not have any objection, we deem it fit to restore the issue to the file of the Assessing Officer for a fresh verification and consideration after giving proper opportunity of being heard to the assessee in light of the observations of the order of the ITAT for assessment year 2010-11 2017 (10) TMI 314 Rental income received by the appellant from letting out of retail space in mall - “business income” or “income from house property” - legal owner - Held that:- Qua the retail space, the assessee was not carrying on any systematic or organized activity of providing service to the occupiers of the shops, albeit other service charges pertaining to the common maintenance, event and advertising, parking fees, etc., has been offered separately for tax under the head profits and gains of business of profession. So far as retail space is concerned, it is lease rent simplicitor, which is evident from the copy of sample lease deed which has been placed by the assessee and also the copies of MoU. Thus, on the facts of the present case and also relying upon the principle laid down in the case of Raj Dadarkar & Associates vs. ACIT (2017 (5) TMI 586 - SUPREME COURT OF INDIA), we hold that the receipts from the lease rent/license fee from lease of retail space in the shopping mall is to be taxed under the head “income from house property” under section 22; and consequently, the assessee is liable for deduction under section 24(a) and other deductions of interest of pre-construction period and interest on loan which are to be allowed while computing the income from house property. Accordingly, disallowance made by the Assessing Officer for the sums aggregating to ₹ 18,19,71,202/- is directed to be deleted. Disallowance under section 14A read with rule 8D - Held that:- Since the assessee’s only grievance before us is that, the disallowance under section 14A should be restricted to the extent of exempt income of ₹ 7,63,867/-, therefore, following the ratio and principle laid down by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT), we restrict the disallowance at ₹ 7,63,867/- as disallowance of expenses cannot exceed the income earned. Thus, ground No.2 of the assessee is partly allowed. Deemed dividend under section 2(22)(e) - interest payment on OFCD held by Select Holiday Resorts Pvt. Ltd. which is one of the holding company of the assessee-company - Held that:- We are unable to appreciate such a hypothesis of the Revenue to approach the payment of interest to holding company/ sister concern; firstly, payment of interest on OFCD can never be reckoned as loan or advance given as stipulated in section 2(22)(e), as OFCD is one of the mode of securing an unsecured loan and there is no payment of loan or advance from accumulated profits; and secondly, there is no diversion of any interest bearing fund, because assessee has offered OFCD to a separate entity which has been subscribed by them, on which assessee is paying interest. Hence, there could be no case of diversion of any interest bearing loan or advance of fund to sister concern for non-business purposes. Thus, the ground raised by the Revenue has no merits and the addition has rightly been deleted by Ld. CIT (A). Accordingly, ground raised by the revenue is dismissed. Disallowance of depreciation on plant and machinery - assessee had not produced relevant purchase bills and evidences and assessee did not put to use the aforesaid assets during the relevant previous yea - Held that:- Journal entry for capitalization of plant and machinery from capital work-inprogress passed on 31/3/2008 does not in any manner can lead to an inference that assets were installed and put to use on that date only and were not installed or put to use on 29/9/2007, because the assessee had shown the revenue in the form of rent and maintenance charges in relation to the said complex and also filled various contemporaneous evidences which have been highlighted at page 31 of the impugned appellate order. Based on these facts and evidences, the ld. CIT (A) has given a finding of fact that, since the assessee has shown income from business during the year and there is no way income would have been earned without utilizing the assets like lift, parking equipments, etc. and such income has been accepted by the Assessing Officer, then depreciation on such assets cannot be disallowed. Such a finding of the ld. CIT (A) is based on correct appreciation of facts and law and we do not find any reason to deviate from such a finding or set aside the issue to the file of the AO as contended by the Ld. CIT-DR, because all the relevant material to corroborate the claim are already on record and confronted to the AO. Accordingly, ground No.2 is dismissed. 2017 (10) TMI 313 Deductibility of the amount paid as compensation u/s 48 - capital gain computation - CIT(A) has doubted the genuineness of the agreement and has even hinted at the possibility of the assessee having fabricated the story to suit his ends - Held that:- CIT (A) are not backed by any cogent evidence but are more in the realm of surmises and conjectures. Even the Ld DR, during the course of arguments before us, did not put any sort of argument to remotely doubt the genuineness of the agreement. The Ld. DR could not refute the assertion of the Ld. AR that the payee had duly accounted/disclosed the said amount as income in its hands. However, a perusal of the assessment order shows that this aspect has not been looked into at all by the AO. Thus, the findings by the AO and the Ld. CIT (A) are based on two different footings. It remains undisputed that the assessee was not specifically confronted on this issue and a simple order sheet entry was made before making the disallowance. Therefore, on an overall appreciation of the circumstances he failure of the AO to issue a show-cause notice before making the proposed disallowance, the failure of the Ld. CIT (A) to specifically adjudicate on the issue of admissibility of assessee’s claim u/s 48 of the Act coupled with the AO not examining the sale agreement to test its veracity, we are of the considered opinion that the entire issue needs to be restored to the file of the AO for re-examining the issue in light of the evidences filed by the assessee as well as the settled judicial precedents. Accordingly, we restore the issue of determination of the deductibility as an admissible deduction to the file of the AO to be decided in terms of our observations above after giving a proper opportunity to the assessee. Addition towards the cost of improvement - Held that:- To meet ends to justice, taking into account holistic consideration of all the facts, we are of the opinion that half of the amount claimed may be treated as allowed as the factum of improvement by incurring expenses is not doubted and we accordingly sustain 50% of the same. 2017 (10) TMI 312 Determination of extent of deduction under section 54F - Capital gain computation - net consideration for the purposes of section 54F - consideration as determined under section 50C - Held that:- The consideration which is actually received or accrued as a result of transfer has to be invested in the new asset. In the instant case, undisputedly, the consideration which has accrued to the assessee as per the sale deed is ₹ 24,60,000 and the whole of the said consideration has been invested in the capital gains accounts scheme for purchase of the new house property which is again not been disputed by the Revenue. The consideration as determined under section 50C based on the stamp duty authority valuation is not a consideration which has been received by or has accrued to the assessee. Rather, it is a value which has been deemed as full value of consideration for the limited purposes of determining the income chargeable as capital gains under section 48 of the Act. Therefore, in the instant case, the provisions of section 54F(1)(a) are complied with by the assessee and the assessee shall be eligible for deduction in respect of the whole of the capital gains so computed under section 45 read with section 48 and section 50C of the Act. We are therefore of the considered view that the provision of section 50C(1) of the Act are not applicable to section 54F for the purpose of determining the meaning of full value of consideration. Appeal filed by the Revenue is dismissed. 2017 (10) TMI 311 Reopening of assessment - waiver of loan on subsequent dates - Held that:- Having regard to the rival contentions and the material on record, we find that the present proceedings are consequent to the proceedings of the CIT (A) dated 24.12.2012 who deleted the addition by following the decision of the Hon'ble Supreme Court in the case of Tata Iron & Steel Co. Ltd (1997 (12) TMI 5 - SUPREME Court) wherein it was held that the waiver of loan on subsequent dates will not affect the cost of assets, which has since been negated by the Tribunal vide order dated 29.07.2015. In view of the same, we hold that the assessment proceedings and also the consequential appellate proceedings are not sustainable. 2017 (10) TMI 310 TDS liability on Payment to consultant doctors - employer-employee relationship - payments are salary so as to bring into effect of section 192 or section 194J - assessee is a domestic company, engaged in providing health care services, operates a hospital - payments made to consultant doctors attached to the hospital - Held that:- This issue is squarely covered in favour of the assessee by the decision of this Tribunal in assessee’s own case for AY 2011-12 held that these "Consulting Doctors" are generally well skilled and knowledgeable in their area of specialization and hence, attract patients on their own strength and goodwill and do not depend upon the hospitals for a continuous flow of patients. Further the Consulting Doctors are free to treat and manage their patients as they feel fit and in the course of the treatment, the Consulting Doctors use the infrastructure of the hospital to which they are attached. In return for being permitted to use the infrastructure of the hospital, the Consulting Doctors pay a certain percentage of their fees towards costs. The fee to be charged to the patient is determined after mutual consultation understanding between Hospital and Doctor. However, for the administrative, commercial and accounting ease, the hospital collects the fees from the patients and remits the same to the Consulting Doctor after retaining its share as agreed upon. These Doctors merely use the infrastructure and facilities of the hospital and pay for the usage out of the fees collected from the patients. Since the Consulting Doctors retain their independent status, they take their own professional indemnity insurance, which means in the event of any negligence, they are accountable to compensate the patients. These aspects are sufficient to prove that the consultant doctors are very much different from the regular employees doctor of the assessee. We find no infirmity with the findings of Ld. CIT(A) and, therefore, we hold that the payments made to the consultants doctors are not salary, and, therefore, tax is not deductible u/s.192 of the Act. Hence, the relief granted to the assessee is sustained - Decided against revenue 2017 (10) TMI 309 Grant of registration u/s 12A denied - communication on wrong address - Held that:- As considered the order passed by the Ld. CIT(A) as it reflects from the same that application u/s 12AA was filed before the Ld. CIT(E) on 16.03.2016 but up to 29th August, 2016 nothing was done by the Ld. CIT(E) and by letter dated 10.08.2016 it was reminded by the Ld. AR to the CIT(E) for doing the needful and it reflects from the proceedings that thereafter only the Ld. CIT(E) acted, however, although the Ld. CIT(E) tried to communicate about the proceedings by sending the notices to the assessee but could not get success because the letters could not be delivered due to in-sufficient address on which the Ld. AR submitted that the address of the assessee is correct, even otherwise it reflects from the ITR 2015-16 as well. However, the Ld. AR failed to understand how the communication had not received by whereas the address of the assessee is correct. We are of the considered opinion that in order to give proper opportunities of being heard, it would be in the interest of justice to offer proper and reasonable opportunities to the assessee to represent its case. Hence, we remit the case to the file of the Ld. CIT(E) to decide afresh. Notices to be again sent to the address mentioned in form No.10A or correct address provided by the Assessee. 2017 (10) TMI 308 Income deemed to accrue or arise in India - Addition holding that Federal Taxes withheld in the USA is part of Salary Income of the assessee - scope of total income for a resident in India is provided in Section 5(1) - P.E. in India - Held that:- Section 198 of the Act provides that the taxes which are deducted at source in accordance with the provisions of the Act is deemed to be income which is received. Accordingly, taxes deducted at source is deemed income as the same is not actually received by the assessee. There is no inclusion under Section 198 of the Act of the sums deducted at source abroad. Accordingly, there is no specific provision under the Act to include sums deducted abroad. • Additionally, Section 5(1)(c) of the Act defines the concept of total income which covers only income accrues or arises to him outside India during such year. Scope of income under Section 5(1)(c) does not include income which is deemed to accrue or arise outside India. • Therefore, tax deducted abroad is neither income which is accruing or arising outside India nor there is any provision similar to Section 198 to cover taxes deducted at source abroad. Accordingly, taxes deducted at source abroad is not taxable in India in the absence of any specific provision under the Act. For clause (c) of section 5(1), grossing up of income is not required and only net income after TDS is to be taxed in India but for granting the benefit of Federal tax withheld in USA, the same has to be quantified as per Article 25 of Indo US DTAA. Section 9(1)(ii) of the Act states that when services are rendered in India, salary for such services are earned in India. On a converse interpretation of this section, if services are rendered outside India, then salary for such services is earned outside India and it cannot be construed as accruing in India. Based on the above, during the Appellant's tenure of employment with FIS, he was rendering services outside India and salary was earned outside India. Since, the A.O. has determined the amount of credit of tax paid in USA after including the US tax amount as an income taxable in India; this issue has to go back to his file for a fresh decision. Hence, set aside the order of CIT (A) and restore the matter back to the file of the AO for a fresh decision with the direction that the tax withheld in USA (Federal and State Tax) should not be added back to quantify the income taxable in India as held by Hon’ble M. P. High Court in the case of CIT vs. Yawar Rashid [1995 (12) TMI 68 - MADHYA PRADESH High Court] of the assessee and relevant Para reproduced above. The amount of foreign tax credit to be allowed to the assessee should be quantified afresh as per Article 25 of Indo US DTAA after providing adequate opportunity of being heard to the assessee because foreign tax credit cannot exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States. Taxable salary income in India we follow the judgment of Hon’ble Delhi High Court rendered in the case of CIT vs. Lala Sridhar [1971 (3) TMI 21 - DELHI High Court] and hold that this is not taxable because it cannot be said that it has accrued or arisen in the absence vested right. 2017 (10) TMI 307 Revenue receipts from charterer hire of AHTS for exploration and exploitation by ONGC in offshore areas of operation in India - taxable in the hands of the assessee in India or not under Article 7 of the Treaty by holding that the assessee has a PE in India within the meaning of Article 5(2) of India Dutch and India UK DTAA - P.E. in India - Held that:- Here in this case vessel given on hire by the assessee company to ONGC, for ONGC's operation will not qualify for a 'place of management' for the assessee as contemplated in Article 5(2)(a), because such a leasing/hiring has to be through fixed place of business. The vessel here in this case cannot be reckoned either as 'fixed place of business' or 'a place cf management'. We have already discussed in detail above that firstly, personnel do not belong to the assessee and secondly, in any case the personnel are under the control and directions of ONGC and qua the assessee these personnel do not have any wide responsibility in participation of the decisions of hiring, therefore, it cannot be held that the activity of the lessor/assessee is done by these personnel or it constitute an entrepreneurial activity which can be reckoned as PE. Thus, in our conclusion, firstly, the hiring of AHTS vessel of assessee by ONGC for its operation in India does not qualify to make vessel a place of management for the assessee in India; secondly, the Crew and Master of the vessel does not belong to the assessee as settled by the Hon'ble High Court in assessee's own case; and lastly, in any case Master and Crew of the vessel do not have power to make significant decision over the assessee, because they are under control and directive of ONGC as per the agreement discussed above. It cannot he held that assessee has some kind of.PB, because the assessee vessel cannot be reckoned as installation or structure used for exploration and exploitation of national resources as it is being done by the ONGC. The ONGC has only hired the vessel from assessee for carrying out exploration of oil and natural gases and therefore, under this clause aiso it cannot be held that the assessee's vessel/ AHTS constitute a PE in India. Thus, in our view there exists no PE of assessee in India and therefore, the revenue from ONGC cannot be taxed in India in terms of Article 7 of DTAA. On this ground alone the assessee gets relief from taxation. - Decided in favour of assessee. Customs 2017 (10) TMI 306 Smuggling - Absolute confiscation - Sandal Wood Chips - penalty - Section 129 (E) of the Customs Act - The appellant mainly objected the adjudication on the ground that Section 125 of the Customs Act, 1962, requires exercise of judicial discretion by the adjudicating authority and grant option to the exporter or importer to redeem goods. He explained that the goods were sandalwood chips and were procured from genuine sources and not attempted to smuggle - Held that: - if the party was prevented from appearing due to sufficient cause and when the cause shows the prevention of the party from appearing before the authorities, the Tribunal or Court may take into consideration of recalling the order. The show cause notice was issued in the year 1992 and the original authority passed confiscation order and imposed penalty. Even after a lapse of 25 years, the authority was not able to implement the order till date, which would go to show that the appellant, was not interested in pursuing the adjudication and tried to protract the matter in one way or the other either before adjudicating authority or before this court - the appellant, in one way or the other, has protracted the proceedings, right from the year 1992, till date and on perusal of the application made before the authority for recalling the order, it would show that no sufficient cause was established for preventing the person from appearing before the authority. Without establishing sufficient cause for non-appearance before the authority, that too, when the appellant has filed a petition to recall the order when he all along, agitated the case before the authorities, his non-appearance before the Appellate Authority in his appeal, this Court, is not convinced with the reason given in the application for recalling the order - decided against appellant. 2017 (10) TMI 305 Rectification of Mistake - Ld. Counsel for the applicant argued that the Tribunal in its order dated 03/01/2017 failed to consider certain issues which have resulted in apparent error in the said order - the Tribunal order does not give any specific findings on the first ground of appeal, which relates to non-supply of certain documents relied in the order by the Commissioner. These documents are the webpage of Citizen Watch Company and the examination report of customs to the appellants. These were not relied upon documents in the Show Cause Notice but the Commissioner has relied upon the same in his order. We find that this was the very first ground of appeal and the same has not been dealt with in the order of tribunal dated 3.1.17 - Held that: - o evidence of supply of the said Bill of Entry containing the Examination report was given by the revenue. We therefore come to the conclusion that the said documents have not been supplied to the appellant and therefore their assertion, in so far as it relates to non-supply of documents is concerned, is correct. Reliance on these documents without supplying the same to the appellant has obviously resulted in failure to follow the principles of natural justice on the part of the Commissioner. If this non supply of documents has resulted in an apparent error in the order of the Tribunal dated 03/01/2017 or the order of the Commissioner? - Held that: - The Commissioner comes to a conclusion that the quantity mentioned in the invoices of K Line corresponds to the quantity mentioned in the invoices produced by the appellant relying on these documents. The value is thereafter arrived at using the quantity mentioned in the invoices produced by the appellant and the value mentioned in the invoices obtained from K Line. The charge of undervaluation itself is proved relying on these documents which were not supplied to the appellants. This issue has not been dealt in the order of Tribunal dated 3.1.17. Failure to deal with the issue of cross examination of Shri K Miwa - Held that: - It is seen that the appellants have raised this issue in their appeal before Tribunal as well. The order of Tribunal does not deal with this issue specifically. It is seen that the Commissioner has denied the request of Cross Examination on the ground that it is not a primary evidence but only corroborative evidence. This cannot be a valid ground for rejection of request for cross examination. This becomes more important in view of the fact that the letter of Shri K Miwa is based on investigations carried out and not from his personal knowledge, and that too in respect of an event more than five year old. Revenue has contended that cross examination has not been offered in terms of Section 138 B of the Customs Act 1962 as the person is not based in India. This letter of Shri K Miwa is not a statement given before Gazetted officer but still a demand of cross examination has to be tested in terms of Section 138 B of the Customs Act 1962. Even revenue has argued on the same lines - No such examination is forthcoming from the order of the Commissioner. No examination in terms of said section has been done by Commissioner. This issue was raised by the appellants in their appeal as ground ‘I’ thereof. The order dated 3.1.17 does not deal with this aspect. ROM application allowed - the error needs rectification - appeal allowed by way of remand. 2017 (10) TMI 304 Refund of CVD paid - CVD paid under protest - Held that: - when amount collected as CVD, which was not due and for which exemption N/N. 10/2006 dated 1.3.2006 was available, it is to be termed as the tax collected without the authority of law. Factually, there is no dispute that the goods imported by the appellant are eligible for the benefit under N/N. 10/2006 dated 1.3.2006 - The Constitution of India does not permit the State to collect any tax which is not authorized by law. Article 265 of Constitution of India clearly says that Taxes not to be imposed save by authority of law No tax shall be levied or collected except by authority of law. The Hon’ble Supreme Court in the case of Salonah Tea Co. Ltd. vs. Superintendent of Taxes, Nowgong & Ors. [1987 (12) TMI 3 - SUPREME Court] clearly held that a taxing authority has no authority to retain the money collected without the authority of law and, as such, is liable to refund the same. Refund allowed - appeal allowed - decided in favor of appellant. 2017 (10) TMI 303 100% EOU - clearance of scrap - fixation of SION - The Department found that percentage of scrap generated and cleared is more than SION - Held that: - this is not a case where the appellant has unauthorisedly removed the inputs from their EOU. The period involved is from April 2005 to January 2007, whereas SION have been fixed by the DGFT Committee only on 3.10.2006. In the present case, thus at the most SION fixed could be made applicable only for about four-month period. In the present case, the appellant has paid the duty on the scrap which has been found in excess of Norms fixed. It is pointed out that when the Norms have been fixed in the month of October, there cannot be any demand for the period prior to 3.10.2006, the date when the Norms were fixed by the DGFT Committee. When the appellant has already paid the duty of Central Excise on the scrap arising out of the manufacturing process under Section 3 of the Central Excise Act, there is no justification for demanding Customs Duty on the raw material which they say has been consumed in excess of SION and has gone into the scrap on which duty of Central Excise has been paid by the appellant. The Department is demanding Customs duty under Section 72, whereas there is no proof that the appellant improperly removed the goods from their 100% EOU. Considering the ratio of the Tribunal s decision in the case of Cosco Blossoms Pvt. Ltd. vs. CC, Delhi [2003 (12) TMI 114 - CESTAT, NEW DELHI], we do not find any justification for the present demand of Customs duty from the appellant. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 302 Valuation - includibility - demurrage charges - High Sea Sales Commission (HSSC) - Whether demurrage charges are to be included in the assessable value or not? - Held that: - the issue of inclusion of demurrage charges in the assessable value has been decided by the Hon’ble Supreme Court in the case of CCE, Mangalore vs. M/s Mangalore Refinery Petrochemicals Ltd. (MRPL) [2016 (1) TMI 325 - SUPREME COURT] wherein it has been held that demurrage charges are incurred after the goods reach Indian Ports and hence, this is a post importation event, and cannot form part of transaction value. Whether the penalty on the appellant M/s. BPCL is imposable and if so, how much it is to be? - Held that: - goods were initially assessed provisionally and later assessed finally under Section 18 of the Customs Act, and the fact that when the mistake of non-declaration of payment of 1.5% HSSC to M/s. IOCL was noticed, the appellant, BPCL paid the differential duty along with interest on 6.9.2004, the penalty under Section 114A of the Customs Act, 1962 is not liable to be imposed - penalty set aside. Whether Redemption Fine is imposable? - Held that: - the matter of imposition of redemption fine has been discussed by the Larger Bench of the Tribunal in the case of Shiv Kripa Ispat Pvt. Ltd. CCE [2009 (1) TMI 124 - CESTAT MUMBAI], wherein it has been held that where the goods had been cleared without execution of any bond /undertaking, no redemption fine could be imposed under Section 125 in lieu of confiscation - the impugned order imposing redemption fine of ₹ 5,00,000/- is hereby set aside. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 301 Levy of duty on goods actually imported - Import of Methanol - Department confirms the demand of duty of Customs based on the quantity of goods mentioned in invoice and the transaction value given irrespective of the quantity of the goods imported received at the Port - Held that: - the issue is settled by the Hon’ble Supreme Court s decision in the case of Mangalore Refinery & Petrochemicals Ltd. vs. CCE [2015 (9) TMI 245 - SUPREME COURT] wherein it has been held that the duty of customs is to be charged only on the quantity actually received into shore tank in Port in India; the quantity shown in the Bills of Lading cannot be used for charging duty as it does not reflect the quantity of the goods received at the place of importation - appeal allowed - decided in favor of appellant. 2017 (10) TMI 300 Classification of goods - the goods imported were ‘Video Door Phone’ and those were of Chinese origin - According to appellant, learned authority below mis-classified the goods although those were really ‘calling bell’ for which adjudication fails - Held that: - The goods that came to India were packed in container declaring to be ‘Video Door Phone’. Central Excise Notification No.14/2008 -CE(NT) dated 01.03.2008 grants abatement to the goods covered by CTH 8517. The goods covered by that entry should be “telephone sets, including telephones with cordless handsets, video phones”. But the goods of the appellant were ‘Video Door Phone’ which is excluded from the purview of benefit of the abatement - When the goods came in disassembled form did not lose the characteristic thereof as complete goods and assembly of 3 components, was to result in complete goods of a description appearing in Customs Tariff Act, 1975 which was subject to RSP valuation. Mis-declaration of description as well as value (RSP) was made. Learned authority rightly classified the goods under the CTH 8517 which is not challenged by the appellant. Redemption fine upheld - penalty also upheld - appeal allowed in part. 2017 (10) TMI 299 Mis-declaration of goods - Revenue alleged that the goods contained serviceable wheels - Revenue says that the end-use certificate obtained by appellants is not the basis to hold that appellant had imported scraps when such certificate does not disclose description of the scrap - Held that: - It is well settled that post-importation condition is immaterial for the purpose of classification - in the present case, when physical examination of the goods was done, that revealed that alloy wheels were in the consignment. When mis-declaration is made by importer deliberately and that is proved resulting in confiscation of goods, appellant looses its right to plead innocence. It was given opportunity of redemption, valuing the confiscated goods following Rule of Rationale. Right to claim any reduction in redemption fine and penalty is lost by appellant. Appeal allowed in part. Insolvency & Bankruptcy 2017 (10) TMI 298 Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- The Application is complete in all respects. The material placed on record clearly establish that Respondent/Corporate Debtor committed default in repayment of operational debt due to the Applicant Company. Respondent Company also did not raise any dispute regarding the existence of operational debt, quality of goods supplied etc. In view of the above discussion, the Application deserves to be admitted and it is accordingly admitted under Section 9(5)(i) of the Code. This Adjudicating Authority hereby appoint Shri Parag Sheth, as ‘Interim Insolvency Resolution Professional’ having address at 404, Sachet-2, Opp: GLS University, Maradia Plaza, C.G. Road, Ahmedabad-380006 and having Registration No. IBBI/IPA-002/IP- N00142/2017-18/10381 under Section 13(1)(c) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of the initiation of ‘Corporate Insolvency Resolution Process’ and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This Adjudicating Authority hereby order moratorium under Section 13(l)(a) of the IB Code prohibiting the following as referred to in Section 14 of the Code 2017 (10) TMI 297 Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- A perusal of the Application and its Annexures clearly show that the Application is complete in all respects. A perusal of the Table showing the amount disbursed and the payments made, and the documents executed by the Respondent Company clinchingly establish that Respondent committed default in repayment of money borrowed from Reliance Capital Limited on interest which debt was assigned to the Applicant Company by virtue of a demerger order in a Demerger Scheme. Therefore, the Applicant is a Financial Creditor and the amount due to the Applicant is a financial debt. The material on record clearly establish that the Respondent Company committed default in repayment of financial debt. The Applicant proposed the name of Shri Subodhkumar Bajranglal Kedia as Interim Resolution Professional' and also filed his Written Communication. In view of the above discussions, the Application deserves to be admitted and it is accordingly admitted under sub-section 5(a) of Section 7 of the Code 2017 (10) TMI 296 Corporate Insolvency Resolution Process - application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - Whether any dispute has been raised by the Respondent/Corporate Debtor within the meaning of sub-section (6) of Section 5 or sub-section (2) of Section 8 of the IB Code - sufficient compliance of Section 9(c) of the IB Code - Held that:- A part of the argument of the learned Counsel for the Applicant that is in respect of agreeing for reconciliation is correct. But, as can be seen from the Reply Notices dated 17.11.2016 and 3.1.2017 that were placed on record that due to the dispute amongst the Directors there was an understanding among family members of the Respondent Company and the Applicant family people to pay 50 per cent of the amounts and rest of the amount in 20 equal monthly instalments. In view of the said statement in the Reply Notices, it cannot be said that there is any dispute regarding the existence of amount of debt. It only suggests that there is an understanding between the family of the Applicant and the family of the Respondent to pay 50% at once and pay rest of the amount in instalments. Such understanding cannot be treated as a dispute regarding the existence of the amount of debt. More so, it confirms the existence of debt. The dispute raised in reply notice dated 17.11.2016 is only in respect of the authority of the person has signed the cheques but not to the existence of debt. This Adjudicating Authority directed the Applicant to comply with Section 9(c). The Applicant filed Additional Affidavit along with Certificate of the Banker. In the Affidavit, it is stated by the Deponent that he is enclosing a copy of the Certificate from the Financial Institution maintaining the account of the Operational Creditor confirming that there is no payment of unpaid operational debt by Corporate Debtor. The Certificate reads as to what are the cheques received from Durolam Limited for clearing. The Applicant party also filed Statement of Account from the Bank and therefore there is sufficient compliance of Section 9(c) of the IB Code. The Application is complete in all respects. There is no dispute raised by the Respondent regarding the existence of the amount of debt, or quality of goods supplied. In view of the above said findings, the Application deserves admission and accordingly the Application is admitted under sub-section (5) of Section 9 of the Code. This Adjudicating Authority hereby appoint Shri Nimai Shah, as Interim ‘Insolvency Resolution Professional’ having office at 605-606-607, Silver Oaks, Near Mahalaxmi Char Rasta, Paldi, Ahmedabad-380007 and having Registration No. IBBI/IPA-001/IP-POO 154/2017-18/10323 under Section 13(1)(c) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of the initiation of ‘Corporate Insolvency Resolution Process’ and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 2017 (10) TMI 295 Corporate insolvency procedure - grievance of the appellant is that the impugned order has been passed in violation of the rules of natural justice without notice to the appellant - Held that:- As decided in Innoventive Industries Ltd. Vs. ICICI Bank & Anr [2017 (6) TMI 959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI] Adjudicating Authority is bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of existence of default based on material submitted by the corporate debtor and to find out whether the application is complete and or there is any other defect required to be removed. In the circumstances, as above the impugned order has been passed in violation of rules of natural justice, we set aside the impugned order. The case is remitted to the learned Adjudicating Authority, Principal Bench, New Delhi to decide the professional fee of Interim Resolution Professional, if appointed, and if any amount is payable, will direct the appellant to pay the same and will close the case in view of the settlement. 2017 (10) TMI 294 Corporate Insolvency Resolution Process against the “Corporate Debtor” - proof of default - Held that:- From a perusal of the record and the arguments advanced by the Learned Counsel for the parties, we are satisfied that the ‘Operational Creditor’ has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 9 of the Code. Corporate Debtor has stated at the Bar that he does not have any opposition to the amount as claimed by the Operational Creditor. We further find that the application is complete in all respects as the Insolvency Professional, Advocate Ashok Kumar Juneja has also been proposed who has filed his consent and copy of registration issued by IBBI on 02nd June, 2017. As a sequel to the above discussion, this petition is admitted and Advocate Ashok Kumar Juneja, whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency & Bankruptcy Board of India, is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of Section 14 (1)(a), (b), (c) & (d) 2017 (10) TMI 293 Corporate Insolvency Resolution Process - petition under Insolvency and Bankruptcy Code, 2016 - Held that:- We are of the considered view that the Corporate Debtor has failed to satisfy the Adjudicating Authority as per various provisions especially Section 10 of IBC, for admission of the case. Therefore, it is not a fit case to admit the case. The account of Corporate Debtor was classified as NPA as early as 26.12.2013 and bank has spent sufficient time, money and energy to recover the debt from the Corporate Debtor, which could be seen from the pre-paras. In the interest of the case, we would like to narrate few important steps taken by the bank such as number of default notices issued to the Corporate Debtor, legal notices issued to the Corporate Debtor and also to the guarantors, demand notice issued under section 13(2) of the SARFAESI Act. The Demand notice got published in Deccan Chronicle and Eenadu in January, 2013, rejoinder issued on 04.03.2017, Possession Notice dated 17.04.2017 got issued under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 and again published in Indian Express and Andhra Jyothy in April, 2017, Notice Prior to Sale under Rule 8(5) and 8(6) of Security Interest (Enforcement) Rules in May 2017 and E-auction sale notice in July, 2017 etc, which involved substantial cost to the Financial Creditor/Bank. Therefore, we impose a cost of ₹ 10 lakhs on the Corporate Debtor. Service Tax 2017 (10) TMI 291 Classification of services - Online Information and Database Access or Retrieval” or not? - The case of the appellant was that no service tax was liable to be paid by the appellant as the appellant was dealing with copyrights and services of copyrights were not within the purview of service tax - Held that: - providing a data or information to the customer through computer network, whether retrievable or not is covered by clause (75) of section 65. The service provided to the customer by a commercial concern i.e. appellant in relation to online information and database access in electronic form through computer network is a taxable service, whether it includes retrieval or not. In paragraph3 of the impugned judgment, the Appellate Tribunal has noted the submissions canvassed on behalf of the appellant. A specific submission canvassed was that the appellant has got copyright over the photographs which are visible on its website and hence, the appellant charges the amount for copyright - The Appellate Tribunal has confirmed the findings of fact recorded by the first appellate authority about the nature of activities carried out and services rendered by the appellant. The said findings are in conformity with the factual statements made by the appellant in paragraph2.3 of the memorandum of appeal - information technology software service is completely different from the service rendered by the appellant in the facts of the case. Appeal dismissed - decided against appellant. 2017 (10) TMI 290 Condonation of delay of one year in filing appeal - the reason for delay was that Appellant was suffering from Jaundice for 3-4 months, the Appellant has attached certain medical certificates also - Held that: - there are doubts with regard to the genuineness of the certificates because even the word “Lumbar Spondylosis” has not been spelt correctly. A Doctor is expected to at least spell a simple word like “Lumbar Spondylosis” correctly. Secondly, the averments made on affidavit is that the Appellant was suffering from Jaundice and the certificate produced is of “Lumbar Spondylosis”. Assuming that this is a mistake on the part of the Typist, then also, no application for correction of the same has been filed for the last 4-5 months. There is no explanation for the period 20.09.2015 till 06.01.2016 or for the period 26.04.2016 to 23.09.2016. - delay not condoned - application of COD dismissed. 2017 (10) TMI 289 Classification of services - GTA service or clearing and forwarding agency service? - Valuation - GTA service - bonus - includibility - The risk of non-conforming coal being supplied was eliminated by inclusion of penalty and bonus clauses in the agreement - whether this bonus amount required to be included in assessable value? - Held that: - we are able to conclude that ‘clearing and forwarding agent service’ is one where a manufacturer or its representative engages such an entity to handle the place utility function in a commercial chain with the goods delivered to customers on instruction of that principal. Such a function can hardly be re-designed to describe the very reverse for delivery of procurements required by the principal. It would appear that the tax authority in its anxiety to deny the abatement that is the entitlement of provider of ‘goods transport agency service’ sought to bring the activity under an omnibus head that being bereft of a specific definition could be resorted to for that purpose, failed to identify the various services that were elements of this composite contract. Some of those could possibly have been taxable services. Nevertheless, section 65A of Finance Act, 1994 lays down the principles that should guide classification of composite services. It would appear that transportation is the most prominent of these and the classification that was declared by the appellant cannot be faulted for its legality. More so, as the impugned order has failed to consider such an option. Nay, even the show cause notice is regrettably bereft of such a scrutiny. The activity of the appellant is not classifiable as ‘clearing and forwarding agents service’ and the demand on that head must fail. Issuance of SCN - applicability of section 73(3) - Held that: - If the entire tax and interest had been paid before the issue of notice, the claim of the appellant that notice should not have been issued cannot be denied - matter requires re-examination. The service is taxable as ‘goods transport agency service’ and set aside the demand arising from re-classification of the service - regarding issuance of SCN, matter remanded to the original authority to determine whether section 73(3) is applicable. Appeal allowed in part and part matter on remand. 2017 (10) TMI 288 Cargo Handling Services - activities of loading and unloading for transportation of lime stone/ screen earth / rejected stones etc. from the mines of M/s. Chettinad Cement Corporation Ltd. and M/s. Larsen & Toubro Ltd., situated at various places and also at their own mines on contract basis - Held that: - The issue whether loading/unloading of limestone and rejects in mining area would fall under ‘Cargo handling services’ is covered by the judgment in the appellant’s own case Commissioner Vs. Thriveni Earthmovers [2017 (1) TMI 717 - SUPREME COURT], where it was held that the services are not in the nature of Cargo Handling Services - appeal dismissed - decided against Revenue. 2017 (10) TMI 287 Penalty u/s 76 - non-payment of service tax - section 73 (3) of the Act - Held that: - The appellant in the present case was duly aware of its legal obligations as they were registered with the serviced tax department and were following due procedure prior to the period in question. The appellant's stand that service tax was not being paid on account of financial crunch can not be appreciated inasmuch as they were collecting service tax from their customers and instead of depositing the same it was being pocketed. Even if it is assumed that tax was not being deposited on account of financial difficulties, nothing stopped the appellant to file the statutory returns disclosing their liability to pay service tax, in which case, it would have been a it cannot be a case of delayed payment and not of non-payment. The fact of non-disclosure and non-filing of returns leads to the inevitable conclusion that the appellant was doing so with malafide intention, in which case, there is clear mandate of law contained in the provisions of section 76, for imposition of penalties - penalty upheld - appeal dismissed - decided against appellant. 2017 (10) TMI 286 Levy of Service tax - incentives - the appellants are receiving commission for the promotion and marketing of the goods for various manufacturers. Over and above this commission, the appellants are paid incentives for achieving sales targets - Held that: - the issue whether discounts / incentives received by the advertising agency, through print media, is subject to levy of service tax was analysed and discussed in the case of GREY WORLDWIDE (I) PVT LTD. Versus COMMISSIONER OF SERVICE TAX, MUMBAI [2014 (9) TMI 180 - CESTAT MUMBAI], where Tribunal has held that the incentives received are not liable to service tax - appeal allowed - decided in favor of appellant. 2017 (10) TMI 285 Refund of accumulated credit - denial on the ground that the credit was not available to the assessee inasmuch as, during the relevant period they were not registered with the service tax authorities - whether respondents were entitled to the refund of the Cenvat credit availed by them during non-registration period, in terms of Rule 5 of the CCR or not? - Held that: - the issue stand settled by the latest decision of the Hon’ble High Court of Madras in the case of Commissioner of Service Tax-III Vs SCIO inspire Consulting Services (India) Pvt. Ltd. [2016 (10) TMI 41 - CESTAT CHENNAI], where it was held that refund claim made by the assessee cannot be rejected on the ground that they were not registered with the concerned authorities during the period of dispute - refund allowed - appeal dismissed - decided against Revenue. 2017 (10) TMI 284 Classification of services - Commercial or Industrial Construction Services (CICS) or Completion & Finishing Services? - abatement under N/N. 15/2004-ST dated 10.09.2004 as amended by N/N. 19/2005-ST dated 07.06.2005 - Held that: - the period involved is prior to 01.06.2007 - The activity of finishing and completion services is a subcategory of main service which is CICS - appeal allowed - decided in favor of appellant. Central Excise 2017 (10) TMI 283 Restoration of appeal - appeal was dismissed for non-compliance of the pre-deposit order - Held that: - the Appellants have not made any effort to attend the hearings before the Appellate Tribunal and / or place the recommendation of the BIFR for winding up of the Appellants Company on 15th November 2006 before the Appellate Tribunal when the stay application came up for hearing on 12th January 2007 - It appears that the Appellants were only interested in prolonging the proceedings as also noticed by the Appellate Tribunal and the Appellate Tribunal had given ample opportunities to the Appellants for complying with their prior orders. The Appeal had been dismissed in March 2007 but the Appellants chose to file the Application for restoration of Appeal only in April 2013 i.e. over six years later and the Appellants have not been able to justify the delay in preferring the restoration application. It is not open for the Appellants to contend that they were not aware of the dismissal of their Appeal for non-compliance - appeal dismissed decided against appellant. 2017 (10) TMI 282 CENVAT credit - outward transportation of goods - time limitation - Held that: - Circular dated 23/08/2007 clearly prescribed that under certain circumstances, the appellants are entitled to credit of Cenvat on outward GTA service availed by them. Respondents have claimed that based on the bonafide belief on the said clarification. There is merit in the arguments of the respondents that they could have formed a bonafide belief on the basis of said circular and therefore, extended period of limitation cannot be invoked. Revenue has failed to point out as to which column of ER-1 return mandate declaration of service on which credit is taken. In the absence of that assertion made by the Revenue cannot be sustained. Appeal dismissed - decided against Revenue. 2017 (10) TMI 281 CENVAT credit - Catering/Meal Services - Vehicle Maintenance Service - Insurance Service of Vehicle - Garden Maintenance Service - Servicing of Windmill at the site at Satara - dispute is for the period 01/04/2011 - Held that: - the Hon’ble High Court of Mumbai in the case of Ultratech Cement [2010 (10) TMI 13 - BOMBAY HIGH COURT] has held that the Cenvat Credit on catering services received will be allowed to the extent that the burden of the said service is borne by the respondent. Following the decision of the Hon’ble High Court of Bombay, the credit of the said service is allowed to the extent that the cost of such service is borne by the respondent - credit allowed. CENVAT credit - Vehicle maintenance service - vehicle insurance service - garden maintenance services - Held that: - Vehicle maintenance service, vehicle insurance service and garden maintenance services are the activities related to the business of the respondent and for the period prior to 01/04/2011, the same would be admissible - demand set aside. CENVAT credit - repair and maintenance service of windmill - Held that: - In so far as the repair and maintenance service of windmill is concerned, the same is admissible to the appellants if the electricity generated by the said windmill is used for the process of the manufacture in the factory - matter on remand. Appeal allowed in part and part matter on remand. 2017 (10) TMI 280 CENVAT credit - place of removal - warehousing located in foreign country - Credit of tax paid under reverse charge for taking warehouse on rent abroad - Held that: - the ownership of the goods remain with the appellant, and some are sold to abroad from their warehouse. The appellants bore the risk of loss or damage to the goods during the transit to the warehouse and obviously the charges of freight are borne by the appellants. In these circumstances, it cannot be said that warehouse abroad is not the place of removal. Reliance placed in the case of SUNDARAM CLAYTON LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2014 (6) TMI 30 - CESTAT CHENNAI], where it was held that Since the warehouses were hired in the USA beyond the jurisdiction of the Indian authorities, no Service Tax can be levied and collected on such services rendered and received abroad. Since tax was not, in the first instance, payable and the appellants merely have taken credit of what was not payable by them, the impugned demand cannot be justified. Demand of credit not sustainable - appeal allowed - decided in favor of appellant. 2017 (10) TMI 279 CENVAT credit - duty paying invoices - Bogus invoices - it was alleged that the appellants have not received the inputs and the evidence for that is in the shape of vehicle numbers of which the goods have been claimed to have been received - Held that: - On perusal of the list of vehicles shown in Annexure-A to the SCN clearly shows that some of the vehicles are incapable of carrying such scraps. There are vehicles in the nature of two wheelers like, motor cycles, luna TFR or scooty. There are also tankers in which such scraps cannot be carried - Rule 9 (5) of the Cenvat Credit Rules puts the onus of establishing that the goods are received in the factory of the person taken credit - In these circumstances, when the revenue has clearly shown that the vehicles in which the goods are alleged to have been transported are incapable of carrying such material then the Revenue has discharged its liability and onus is on the person taking credit. The impugned orders wrongly puts onus of establishing non-receipt of inputs on the Revenue - the impugned order has failed to examine the said issue properly - matter is remanded to the Commissioner (Appeals) to decide the issue afresh. 2017 (10) TMI 278 Penalty - the goods could not be exported within the time limit of 6 months from the date of export - Held that: - appellant had desired to export the bus and the fact of failure to export was known to the appellants immediately after clearances of the bus from the factory, as the order was cancelled - The appellants paid the duty and part of interest before show-cause notice. However, it is apparent that it was not a voluntary effort. In these circumstances, when the fact of cancellation of order was known to the appellants, the failure to comply with the provisions of law and deposit differential duty clearly indicates to malafides - penalty upheld. Demand of interest - the demand of interest for the period from obtaining the said chassis and payment of duty on bus was confirmed - Rule 7 of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules - Held that: - The said rule clearly prescribes that in such circumstances, interest is recoverable - interest upheld. Appeal dismissed - decided against appellant. 2017 (10) TMI 277 Refund claim - denial on the ground that the appellants have not exported the goods under bond - Rule 5 of the Cenvat Credit Rules - Held that: - the goods manufactured by the appellants are totally exempted and therefore export of same under bond serves no purpose. Bond is a requirement in cases where the products are chargeable to duty and in case of failure to export, duty liability thereon can be enforced through bond against the exporter - In the instant case, it is not in dispute that the goods manufactured by the appellants were exempted and not chargeable to duty. It is also not in dispute the goods were being exported. The intention of Rule 5 of Cenvat Credit Rules is to ensure that the tax and duties are not exported. Keeping the spirit of the Rule in mind, the refund of cenvat credit should be allowed even in circumstances when exports were not made under bond, although it is a requirement of Rule 5 as well as Rule 6(6)(v) of CCR. This is more so for the reason that the goods exported by the appellants are fully exempt and export under bond would serve no purpose. Refund allowed - appeal dismissed - decided against Revenue. 2017 (10) TMI 276 Valuation - related party transaction or not? - whether the transaction between the respondents and two companies, M/s.Aquagel Chemicals Pvt. Ltd. Gujarat and M/s.Sree Rayalaseema Alkalis and Allied Chemicals Ltd. Andhra Pradesh are sale transactions or not? - Held that: - From the invoice of M/s.Aquagel Chemicals Pvt. Ltd. Gujarat, issued to respondent, M/s.Hindustan Lever Ltd., it is observed that it is a sale invoice wherein Central Sales Tax @ 4% was charged. From the aforesaid transaction, it is clear that in respect of noodles there is a transaction of sale from the respondent to M/s.Aquagel Chemicals Pvt. Ltd. Gujarat and M/s.Sree Rayalaseema Alkalis and Allied Chemicals Ltd. Andhra Pradesh and similarly in respect of soap, there is a sales transaction from M/s.Aquagel Chemicals Pvt. Ltd. Gujarat and M/s.Sree Rayalaseema Alkalis and Allied Chemicals Ltd. Andhra Pradesh to the respondents. Accordingly, it cannot be said that these transactions are not a sale transaction in the ordinary course of trade. This be so, the transaction value has to be taken for charging of Central Excise duty in terms of Section 4 (1) (a) of CEA, 1944. Rule 8 can be resorted to for valuation only when the transaction is not of sale. In the facts of the present case, the possession of the goods and ownership stands transferred from the respondents to M/s.Aquagel Chemicals Pvt. Ltd. Gujarat and M/s.Sree Rayalaseema Alkalis and Allied Chemicals Ltd. Andhra Pradesh, in respect of sale of soap noodles. The SCN only made a charge that transaction is not of a sale, which is absolutely incorrect on the face of the evidences. Appeal dismissed - decided against Revenue. 2017 (10) TMI 275 Classification of goods - news print - whether the news print supplied by the respondent falls under the definition of news print as provided under N/N. 23/98-CE dated 01/08/1998? - Held that: - On perusal of the order dated 20/09/1995 issued by Govt. of India, Ministry of Industry, Department of Industrial Policy and Promotion, the respondent's mill has been notified in pursuance of Item 3 of Schedue-1 read with sub-clause (e) of Clause 2 of the Newsprint Control Order, 1962, as a mill producing Newsprint. Therefore, the aforesaid criteria of mill being a manufacture of newsprint is not under dispute - As per the registration certificate of the buyers produced by the respondent, it is observed that the buyer is registered by the Registrar of newspaper for India as a newspaper. As per this certificate, the criteria of buyer to be registered as newspaper under the provisions of Press and Registration of Books Act, 1867 also stand fulfilled. It is not necessary that the buyer should be compulsorily print the newspaper and the news print supplied by the respondent should be used in printing of such newspapers. The criteria is limited to the buyer should be registered as newspaper, which is not under dispute. Therefore, the news print supplied by the to the various buyers are clearly covered under the definition of news print as provided under N/N. 23/98-CE dated 01/08/1998 - appeal dismissed - decided against Revenue. 2017 (10) TMI 274 CENVAT credit - sub-contract - denial on the ground that the main contractor has discharged the service tax liability - Held that: - it is seen from the records that the appellant has produced various documents regarding declaration from the contractor for not availing CENVAT credit, income statement to prove that remittances were made to the contactor directly, service tax payment of challans of sub-contractor, agreement between appellant and contractors, etc. for the first time before the Tribunal - if these documents would have been produced before the lower authorities they would have come to a conclusion depending upon the documents - matter on remand. CENVAT credit - various penal charges paid towards the purchase of land - Held that: - the documents indicate that the service provider has discharged the service tax liability on them. He was not supposed to do so. It is settled law that if the documents indicate discharge of tax/duty liability and there is no dispute as to the fact that the said services are rendered to the recipient - credit remains allowed. Appeal allowed in part and part matter on remand. 2017 (10) TMI 273 CENVAT credit - service tax paid on sales commission - input services - whether sales commission paid to agents fall under the scope of sales promotion? - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matters, with the liberty to approach the Tribunal after disposal of the case pending before the higher forum - Following the said judgment, the present appeal is also disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal - appeal disposed off. 2017 (10) TMI 272 CENVAT credit - service tax paid on sales commission - input services - whether sales commission paid to agents fall under the scope of sales promotion? - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matters, with the liberty to approach the Tribunal after disposal of the case pending before the higher forum - Following the said judgment, the present appeal is also disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal - appeal disposed off. 2017 (10) TMI 271 Penalty - CENVAT credit - input services common for manufacturing activity and for the trading activity - case of appellant is that the penalty imposed u/r 15 of the CCR, 2004 read with Section 11 AC of the CEA is erroneous as the penalty can be levied only by authority of statutory law and provisions of Section 37 expressively authorise levy of penalty - whether the appellant is eligible to avail the entire CENVAT credit of the common input services which are utilised for manufacturing and trading activity? - Held that: - the decision of the Hon’ble High Court of Madras in the case of M/s Ruchika Global Interlink [2017 (6) TMI 635 - MADRAS HIGH COURT] is directly on the point wherein it was held that Having regard to the rule position and given the admitted fact that no separate accounts were maintained by the appellant, with regard to the taxable and non taxable services, clause (c) of sub rule 3 of rules 6 of 2004 Rules would apply - reversal of credit upheld - penalty upheld - appeal dismissed - decided against appellant. 2017 (10) TMI 270 CENVAT credit - M.S. Angles, H.R. Plate & H.R. Coil, used in the fabrication of structures for support of the Capital goods installed within the factory premises - Held that: - the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd’s case [2016 (9) TMI 682 - CESTAT NEW DELHI] has held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. The Appellant should establish the said use by adducing evidences. In the result, the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items - appeal allowed by way of remand. 2017 (10) TMI 269 CENVAT credit - Plate, Pipes, Beam, etc. used for fabrication of supporting structure to various capital goods within the factory - Held that: - the issue is covered by the judgment of the Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant. 2017 (10) TMI 268 CENVAT credit - service tax paid on sales commission - input services - whether sales commission paid to agents fall under the scope of sales promotion? - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matters, with the liberty to approach the Tribunal after disposal of the case pending before the higher forum - Following the said judgment, the present appeal is also disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal - appeal disposed off. 2017 (10) TMI 267 Confiscation - excess stock of raw material, namely, Polyester Chips - whether the excess raw material namely, polyester chips of 11,701 Kgs found in the premises of the appellant are liable for confiscation, and personal penalty on the Director liable to be imposed? - Held that: - the said raw materials were procured from the open market and accordingly, CENVAT credit was not availed being not accompanied with duty paid excise invoices - There is no evidence brought on record by the Revenue that these raw materials had been procured to be used in the manufacture of finished goods later to be cleared without payment of duty. In these circumstances, therefore, confiscation of the excess goods found in the factory premises cannot be sustainable - personal penalty on the Director also cannot be sustained - appeal allowed - decided in favor of appellant. 2017 (10) TMI 266 Refund claim - unjust enrichment - duty was paid under protest - the appellants have returned the money to the customer through cheques - Held that: - the ruling relied upon by the learned Commissioner (Appeals) of the Apex Court in case of Grasim Industries Ltd. [2011 (8) TMI 689 - SUPREME COURT OF INDIA] is not applicable in the facts of the present case, as in Grasim case, the duty had not been paid under protest, as in this case. Secondly refund was claimed on 28th November, 1990 and subsequent to that, Grasim had issued credit notes on its another division or unit, to which they had cleared the goods. Subsequently on 07/08/1991 the refund claim was allowed vide Order-in-Original dated 22nd September, 1992. Under such facts and circumstances, the Apex Court was pleased to uphold the disallowance of refund. The transaction being between the two units of the same company. Such facts are not obtaining in the present appeal - the finding of the learned Commissioner (Appeals), as regards unjust enrichment is cryptic and nonspeaking, without there being an enquiry made by him - Order-in-Original restored. 2017 (10) TMI 265 Shortage of goods - Linear Alkyl Benzene (LAB) - Rule 20(4) of Central Excise Rules, 2002 - Held that: - This short receipt has been duly certified by the Range Superintendent of the consignee in the re-warehousing certificate issued - There is no dispute of the fat that in view of Rule 20(4) of the CER, 2002, the consignor is required to discharge the duty on the short quantity of the goods. However, since the re-warehousing certificate endorsed by the concerned range officers had been filed from time to time with the Department, the demand could be sustained only for the normal period of limitation - penalty also set aside. For the limited purpose of ascertaining the quantum of duty on the short quantity for the normal period of limitation, the matter is remanded to the adjudicating authority - appeal allowed in part as regards extended period and penalty and part matter as regards demand of normal period, is on remand. 2017 (10) TMI 264 Entitlement of Interest - delayed refund - whether the appellant are entitled to interest of the refund amount of ₹ 63,48,964/- and ₹ 19,38,750/- received by them pursuant to the Commissioner (Appeals) order dated 22.06.2007? - Held that: - the Ld. Commissioner(Appeals) in not examining the eligibility, mis-directed itself holding that the said issue attained finality being not raised by the Appellant. Needless to emphasize, no detailed reasoning was recorded on the merit of the claim for interest by the Ld. Commissioner(Appeals) in the impugned Order even though the earlier order was set aside by the Tribunal and the matter was remanded to for reconsideration of the issues - it is prudent to remand the matter to the Ld. Commissioner (Appeals) to consider the issue of eligibility of interest and record the detailed reasoning on the said aspect of eligibility of interest on the refund claims - appeal allowed by way of remand. 2017 (10) TMI 263 Transfer of the inputs / capital goods to the EOU - credit not reversed - Held that: - the appellant unit namely SFL-III has to reverse the credit. Soon after being pointed out, the appellants have reversed credit of ₹ 15,49,876/- only - since the situation is entirely a revenue neutral situation, being inter-unit transfers, the penalty imposed is unwarranted - the penalties imposed u/r 15(2) of CENVAT credit Rules, 2004 read with Section 11AC of the CEA, 1944 set aside - decided partly in favor of appellant. 2017 (10) TMI 262 CENVAT credit - capital goods transferred to other units without reversal of credit under invoices or without following any procedure for removal of the said goods - Held that: - The fact of reversal was noticed by the Dept on initiating investigation against the appellant - It is also not in dispute that before shifting the machinery in question to other unit, the appellant had never informed the Dept. - extended period and penalty justified - appeal dismissed - decided against appellant. 2017 (10) TMI 261 Refund of duty liability discharged on molasses in the month of February - the goods on which duty was discharged were not cleared and were destroyed by fire - Rule 4 of the Central Excise Rules, 2002 - Held that: - The provisions of Central Excise Act are for discharge of duty liability as soon as the manufacture is complete. In the case in hand, there is no dispute as to the fact that molasses are dutiable item. Provisions of Rule 4 as read by the learned counsel are not for discharging duty liability only when the goods are removed but the duty liability has been postponed/deferred from the manufacturing stage to the clearance activity. There was no necessity for discharging the duty liability by the appellant if the goods are still in the factory premises - appeal dismissed - decided against appellant. 2017 (10) TMI 260 100% EOU - refund of unutilized CENVAT credit - input services - AMC - calibration charges - freight outward - garden maintenance - Held that: - as far as inputs services viz., AMC, calibration charges, freight outward, garden maintenance are concerned, they fall in the definition of input service and the refund has been wrongly rejected - refund allowed. Refund claim - Erection, commissioning and installation service - labour charges - Held that: - this needs to be verified by the original authority on the basis of documents which may be submitted by the appellant Other services viz., Banking and Financial Service, Consultancy charges, manpower supply, rent charges, implementation charges, they also fall in the definition of input service, but they need to be verified by the original authority on the basis of the documents - matter on remand. CENVAT credit - basis of allocation of credit through ISD - Rule 7 of CCR, 2004 - The Corporate Office of the appellant has got the ISD registration on the basis of which they have transferred the credits to the respective plant in terms of Rule 7 of CCR which has not been appreciated by the authorities below. Therefore, this case needs to be remanded back to the original authority who will examine the entire case - appeal allowed by way of remand. CST, VAT & Sales Tax 2017 (10) TMI 259 Refund claim - rejection of the same without giving any opportunity of hearing or specific Proposition notice before passing of the said reassessment order - Held that: - When the very first notice was given to the petitioner vide Annexure-A dated 14.09.2016, not only called upon the petitioner to produce the Books of Accounts, but also to raise the objections about two specific proposals of the Respondent-Assessing Authority to deny Input Tax Credit of ₹ 1,52,462/- and also to estimate URD purchases at the rate of 25% of the total turnover, to which, apparently no specific objection was ever raised by the petitioner-assessee, this Court is of the considered view that the petitioner-assessee cannot raise any grievance about no specific Proposition notice was given to him - petitioner-assessee therefore cannot be heard to complain the breach of principles of natural justice by the Respondent-Assessing Authority and not giving him an opportunity to file objections - petition dismissed - decided against petitioner. 2017 (10) TMI 258 Scope of SCN - Inter-state Sale - validity of assessment order - the petitioner's case is that while the sale has taken place in the course of interstate trade, the quantities to be delivered on a given day are fixed online and delivered as per online confirmation in ALL web portal. However, the true intent and purport of the contract has not been appreciated by the respondent, which has resulted in issuance of revision notice dated 13.10.2016. Whether the respondent/assessing officer proceeded to travel beyond the scope of the proposal made in the show case notice? - Held that: - In the show cause notice dated 13.10.2016, as pointed out, the allegation was that the tyres which were manufactured by the petitioner in their Mysore plant were not directly supplied to the buyers, but supply is made as and when the buyers made request to supply the tyres - The respondent stated that the materials brought from the other States are being stored in the transporter's place and supplies are being made from their godown with a condition to supply the tyres just in time . This, according to the respondent, has to be construed as local sale and taxable at higher rate of tax at 14.5% under the TNVAT Act. Thus, in the show cause notice, the respondent did not dispute the fact that the tyres were manufactured outside the State of Tamil Nadu and dispatched from the place of manufacturer and retained in the transporter's godown. The crucial question would be, for the transaction to qualify as an interstate sale, the test would be as to where the appropriation of goods took place. In fact, the proposal in the show cause notice does not seriously dispute or contest the place of appropriation, as there is no clear indication as to what has passed in the minds of the assessing officer. The chain of events clearly show that the respondent obviously could not have appreciated the details placed by the petitioner, which he had called for vide notice dated 26.12.2016. Probably after all the details have been furnished, the assessing officer thought fit to summon the purchaser to understand the nature of transaction. While the move taken by the assessing officer is appreciable, but, the time at which he exercised such discretion is not the proper time as, by then, the respondent had already pre-concluded the matter. In other words, such exercise said to have been done by the respondent is much prior to forming any opinion on the nature of transaction between the parties. Nevertheless, the officials of the purchaser responded to the summon and have given statements. The assessment order appeares to have been completed in a very hasty manner, without analysing the nature of transaction as projected by the petitioner. As mentioned earlier, the respondent does not dispute the fact that the purchase order has been placed by the purchaser with the factory at Karnataka. The impugned proceedings are wholly unsustainable warranting interference at the hands of this Court - the impugned assessment orders dated 30.01.2017 are set aside and the matters are remanded to the respondent for fresh consideration - petition allowed by way of remand. 2017 (10) TMI 257 Reversal of ITC - interpretation of statute - proviso to Section 19 (2) (ii) of TNVAT Act - Held that: - it appears that the State is in the process of preferring Appeals, by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of the Appeal(s), without interim order(s), will not amount to the grant of stay of the order(s) passed by the Lower Court or Lower Forum - In the instant cases, it appears that the Appeals filed by the State are yet to be numbered - the decision in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) [2017 (3) TMI 279 - MADRAS HIGH COURT] apply, where it was held that the limitation provided in the proviso would apply only vis-a-vis the purpose specified in clause (v) and not qua other purposes set out in clause (i) to (iv) and (vi) of Section 19(2) of the 2006 Act. Writ Petitions are disposed of, by directing the respondent to consider the petitioner's petitions/letters/representations, dated 30.03.2017, taking note of the decision of the Court in M/s. Everest Industries Ltd.'s case - petition allowed by way of remand. 2017 (10) TMI 256 Validity of assessment order - consideration of Form-C and Form-F - Held that: - the tabulated statement enclosed along with the letter dated 18.02.2017 does not clearly show as to what are the stocks which were transferred from Madurantakam to Chennai branch. The petitioner has enclosed an extract of the Pay Book Register in Page-38 of the typed set of papers. However, it appears that no annexure has been annexed to the petitioner's letter dated 18.02.2017, for which the learned counsel for the petitioner submits that it has been enclosed. Thus, without standing on technicalities, this Court is of the view that the petitioner could be given an opportunity to go before the officer and produce the details - the petitioner is directed to file a petition under Section 84 of the TNVAT Act, 2006 - petition disposed off. Indian Laws 2017 (10) TMI 292 Impounding of passport - Held that:- It is evident from the impugned order that the learned Single Judge was alive to and in fact applied the rule in Suresh Nanda (2008 (1) TMI 876 - SUPREME COURT). However, it is at the same time facially apparent that instead of quashing the impounding order, the Court permitted retention of the passport and facilitated its onward transmission to the Regional Passport Officer which in effect itself amounts to impounding. This kind of impounding was frowned upon and held to be unauthorized in Suresh Nanda (supra) when it was declared that “even the Court cannot impound a passport. Though, no doubt, Section 104 Cr.P.C. states that the Court may, if it thinks fit, impound any document or thing produced before it, in our opinion, this provision will only enable the Court to impound any document or thing other than a passport.” Thus, the facilities or otherwise impounding, in our opinion, was not in order. Therefore, the directions in paragraph 6 requiring the forwarding of the passport to the Regional Passport Officer is hereby set aside. The passport shall be released forthwith to the appellant. This will, however, not preclude the Regional Passport Officer from initiating proceedings under Section 10 (1) of the Passport Act, 1967 in line with the Single Judge’s observations and declarations.
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