TMI Tax Updates - e-Newsletter
November 15, 2017

Case Laws in this Newsletter:

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

Articles

• GST COUNCIL GIVES MAJOR RELIEF TO BUSINESS ENTITIES
• Recommendations made by the GST Council in the 23rd meeting at Guwahati on 10th November, 2017
• GST Update on ITC passed on by Input Service Distributor through GSTR-6

News

• GST has reduced barriers between states, says Kovind

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• The Government of India launched today the BHARAT-22 Exchange Traded Fund (ETF) managed by ICICI Prudential Mutual Fund targeting an initial amount of about ₹ 8,000 Crore; This New Fund Offer is open till November 17, 2017 The Fund is expected to benefit long term and retail investors by providing an opportunity of participation in equity stocks of the Government run companies and earn stable returns

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• RBI Reference Rate for US $

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• The Union Finance Minister Shri Arun Jaitley to leave on a two day official visit to Singapore tonight; Scheduled to meet the Singapore Prime Minister, Deputy Finance Minister and Finance Minister during his visit; To meet the Senior Fund Managers and key Financial Institutional Investors for making investment in the country

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• Auction for Sale (Re-issue) of per cent Government Stock

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Notifications

Customs

• 108/2017 - dated 14-11-2017 - Cus (NT)
  Amendment in Notification No. 107/2017-CUSTOMS (N.T.), dated 9th November, 2017

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GST - States

• 45/2017 - dated 9-11-2017 - Delhi SGST
  Delhi Goods and Services Tax (Ninth Amendment) Rules, 2017

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• 33/2017 - dated 8-11-2017 - Delhi SGST
  Lt. Governor of National Capital Territory of Delhi appoints the 18th day of September, 2017 as the date on which the provisions of sub-section (1) of Section 51 of the said Act shall come into force

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• 32/2017 - dated 8-11-2017 - Delhi SGST
  NCT Delhi, recommendations of the Council, specifies the casual taxable persons making taxable supplies of handicraft goods as the category of persons exempted from obtaining registration

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• 28/2017- State Tax (Rate) - dated 6-11-2017 - Delhi SGST
  Amendment in Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017

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• 27/2017-State Tax (Rate) - dated 6-11-2017 - Delhi SGST
  Amendment in Notification No. 1/2017- State Tax (Rate), dated the 30th June, 2017

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• 51/2017-State Tax - dated 1-11-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Eleventh Amendment) Rules, 2017.

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• 54/2017-State Tax - dated 30-10-2017 - Maharashtra SGST
  Extension of due date for the month of july-2017 for submission of GSTR-2 and GSTR-3 upto 30.11.2017 and 11.12.2017, respectively.

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• 53/2017-State Tax - dated 28-10-2017 - Maharashtra SGST
  Extension of due date for submission of details in FORM-GST-ITC-04 till 30.11.2017.

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• 52/2017-State Tax - dated 28-10-2017 - Maharashtra SGST
  Amendments in the Notification Number 44/2017-State Tax, dated the 13th October 2017 - Extension of due date for submission of details in FORM-GST-ITC-01 till 30.11.2017.

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• 08/2017-MGST - dated 28-10-2017 - Maharashtra SGST
  Extension of time limit for submitting declaration in FORM GST TRAN-1 under rule 120A of Maharashtra Goods and Services Tax Rules, 2017.

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• MGST-1017/CR 193/Taxation-1 - dated 24-10-2017 - Maharashtra SGST
  Constitution of Advance Ruling Authority under MGST Act.

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• 50/2017-State Tax - dated 24-10-2017 - Maharashtra SGST
  Waiver of late fee for all the Registered persons who have not filed GSTR-3B within due date for the month of August and September 2017.

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• 40/2017-State Tax (Rate) - dated 23-10-2017 - Maharashtra SGST
  Prescribe the State Tax rate of 0.05 percent for intra-state supply of taxable goods by a registered supplier to a registered recipient for export.

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• 49/2017-State Tax - dated 18-10-2017 - Maharashtra SGST
  Evidences required to be produced by the supplier of deemed exports.

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• 48/2017-State Tax - dated 18-10-2017 - Maharashtra SGST
  List of supplier of Goods treated as deemed exports.

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• 47/2017-State Tax - dated 18-10-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Tenth Amendment) Rules, 2017.

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• 39/2017-State Tax (Rate) - dated 18-10-2017 - Maharashtra SGST
  Reduction of tax rate from 12 percent to 5 percent in respect of Pushtaahar supplied to economically weaker section

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• 46/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Amendment to Notification No. 8-2017 dated 29th June 2017 Composition TO increased from ₹ 75 Lakh to ₹ 1Cr.

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• 45/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Ninth Amendment) Rules, 2017.

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• 44/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Extension of time limit for filing of FORM GST ITC-01.

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• 43/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Extension of time limit for filing the return by an Input Service Distributor FORM GSTR-6.

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• 42/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Extension of time limit for filing of FORM GSTR-5A.

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• 41/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Extension of time limit for filing of FORM GSTR-4.

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• 40/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Time for supply in case of goods below ₹ 1.5 Cr (1)

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• 39/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Cross-empowerment of CGST officers

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• 38/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendment to Notification No. 8-2017 dated 29th June 2017 No liability to pay tax on RCM under section 8(4) till 31st March 2018.

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• 38/2017-State Tax - dated 13-10-2017 - Maharashtra SGST
  Amendment in the Notification No. MGST-1017/C.R.165(2)/Taxation-1 (No.32/2017-State Tax) dated the 18th September 2017 - Addition to notified handicraft goods.

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• 37/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  State Tax Rate in respect of Leasing of Motor Vehicles

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• 36/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendment in the Notification No. MGST-1017/C.R.103(3)/Taxation-1 [No.4/2017-State Tax (Rate)] dated the 29th June 2017.

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• 35/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendment in the Notification No. MGST. 1017/C.R. 103(1)/Taxation-1 [No. 2/2017- State Tax (Rate)], dated the 29th June 2017.

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• 34/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendment in the Notification No. MGST-1017/C.R. 104/Taxation-1, [No.1/2017-State Tax (Rate)], dated the 29th June 2017.

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• 33/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendments in the No. MGST-1017/C.R.103(12)/Taxation-1 [No.13/2017-State Tax (Rate)], dated the 29th June 2017.

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• 32/2017-State Tax (Rate) - dated 13-10-2017 - Maharashtra SGST
  Amendments in the Notification No. MGST-1017/C.R.103(11)/Taxation-1 [No.12/2017-State Tax (Rate)] dated the 29th June 2017.

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Circulars / Instructions / Orders

GST - States

• 05/2017-MGST - dated 28-10-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03
• 06/2017-MGST - dated 28-10-2017
  Extension of time limit for submitting application in FORM GST REG-26.
• 07/2017-MGST - dated 28-10-2017
  Extension of time limit for submitting declaration in FORM GST TRAN-1 under rule 117 of Maharashtra Goods and Services Tax Rules,-2017.
• 01/2017-State Tax - dated 13-10-2017
  THE MAHARASHTRA GOODS AND SERVICES TAX ACT, 2017 (REMOVAL OF DIFFICULTIES) ORDER, 2017.
• Order No. 04/2017-MGST - dated 29-9-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03.

Customs

• F. No. 390/Misc/69/2017-JC - dated 9-11-2017
  Procedure regarding appeal at a higher fora after Department has lost in two previous stages- reg.

Highlights / Catch Notes

Income Tax

• Taxability of income - the off–shore supply of equipments having been effected from outside the territory of India and the sale having been completed outside territory of India - no additions - AT
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• Income recognition - the assessee was entrusted with the money for discharging of various legal obligations on behalf of its clients and held the money in fiduciary capacity and the money was recognised as client’s money in its accounts - No additions - AT
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• Claim of Higher depreciation on DVR - The view of the AO in its order for treating DVR as a part of Plant and machinery and not computer peripherals and allowing depreciation accordingly sustained - AT
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• The mere irregularities in the documents as pointed by the ld DR can not be the basis to draw conclusion as to genuineness of the transaction - the order of AO treating the purchase of interest in the land from OM and WW as sham is incorrect and can not be sustained. - AT
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• Requirement of AADHAAR number in filing return of income - revenue directed to permit the petitioner to file her income tax returns for the assessment year 2017-18 either manually or through appropriate e-filing facility without insisting for the aadhar number and/or enrollment ID - HC
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• The late filing of the TDS return/statements is regularized upon payment of the fee as set out in section 234E. This is nothing but a privilege and a special service to the deductor allowing him to file the TDS return/statements beyond the time prescribed by the Act and/or the Rules - AT
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Corporate Law

• Filing of financial statements with Registrar in e-form AOC-4 XBRL - Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015 - Rule 3 as amended
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• Valuation by registered valuers - who can act as registered valuer - Section 247 as amended by Companies (Removal of Difficulties) Second Order, 2017
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• Refunds to claimants from Fund. - Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 - Rule 7 as amended
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• Manner of transfer of shares under sub-section (6) of section 124 to the Fund. - Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 - Rule 6 as amended
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Central Excise

• Classification - Fibre Glass Pressure Vessels - components for industrial water treatment plants - Since the product in question is classifiable under Chapter 70, even though it is a part used with the goods of Chapter 84. It will not cover under Chapter 84, if it is made out of glass. - AT
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• EPCG License - N/N. 110/95-Cus - Concessional Rate of Duty - the authorities below cannot stand by the Board circular that the period of warehousing has already expired. - HC
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Case Laws:

• GST

• 2017 (11) TMI 731
  Interpretation of statute - requirement of furnishing of Bond with bank guarantee or filing of LUT- Rule 96A of the Central Goods and Services Tax Rules, 2017 - Circular No. 4/4/2017 - Held that: - Respondent Nos. 2 and 4, has produced before the Court, Notification No. 37/2017-Central Tax, dated 4th October 2017, issued by the Central Board of Excise and Customs, whereby the grievance of the Petitioner in the present petition no longer survives - petition disposed off.

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• Income Tax

• 2017 (11) TMI 743
  Recovery of income tax with interest recoverable from the judgment debtor - seized amount appropriation towards tax demand in terms of Section 132B on determination of the tax liability of the Judgment Debtor pursuant to the assessment of its undisclosed income determined on completion of the assessment proceeding - Held that:- As refer to Section 226 of the Income Tax Act, 1961 which relate to other modes of recovery. Under Section 226 Rule 4 the assessing officer may apply to the Court in whose custody there is money belonging to the assessee for payment to it of the entire amount of such money or if it is more than the tax amount, an amount sufficient to discharge the tax. The section rather clarifies the money which belong to the assessee shall only be available for payment as tax to the Income Tax Department, but what if money found in possession of the assessee does not belong to him or he is holding such money in trust/constructive or otherwise. To my mind such money can’t be adjusted against tax liability of the assessee. Further the plea of revenue that the decree holder ought to have applied u/s 132(11) per Rakesh Kumar Aggarwal (2013 (9) TMI 1194 - DELHI HIGH COURT) is also not sustainable, per Section 132(11) stands omitted by the Finance Act of 2002 w.e.f. 01.06.2002 and hence decree holder could not have availed of such provision in any case. Lastly the plea of the Income Tax Department that it being a secured creditor, would not be of any benefit to the revenue in view of the fact the money seized to the extent of decree does not belong to assessee being obtained by fraud as discussed above. The assessee though was in possession of it but at best can said to have held it only in constructive trust. Application is thus dismissed for reasons aforesaid.

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• 2017 (11) TMI 742
  Demand of interest u/s 234-A and 234-B - failure to pay advance tax and file the return in time - Held that:- In the present case, the assessee admittedly failed to furnish the return as also not deposited the advance tax as required under the law, therefore, the appellant/assessee is liable to pay interest under Sections 234A and section 234B. Both the appellate authorities after considering the judgments which are relied upon by the learned counsel for the assessee correctly arrived at the conclusion to hold that the assessee/appellant is liable to pay interest under section 234A and under section 234B of the Act. The Tribunal has held that no infirmity is noticed in levy of interest in the present case. - Decided against assessee.

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• 2017 (11) TMI 740
  Addition under Section 68 - proof of creditworthiness and the genuineness of the transaction - Held that:- We find that in the present case, the appellant assessee has not proved any of the aforesaid conditions of Section 68 of Act. It is noticed by the Tribunal that though the confirmation letters from the creditors are placed but no supportive evidence to prove the identity of the creditors or their creditworthiness and genuineness of the transaction is placed. The Tribunal therefore, has held that since the assessee has failed to prove the primary condition of provisions of Section 68 merely confirmation letters can not substantiate the genuineness and creditworthiness as well as the identity of the creditors. The decisions which are cited by the appellant before the Tribunal are duly considered and the Tribunal has found that the cited decisions are not applicable to the facts of the case of the appellant. It is further noticed by us that neither before the CIT (Appeals) nor before the Tribunal the appellant has furnished any evidence to prove the identity of the creditors, their creditworthiness and the genuineness of the transaction in the matter. In our opinion, the Tribunal had taken all the relevant facts into consideration and the conclusion arrived by the Tribunal that the loans represented the assessee's income from undisclosed sources was not perverse or unreasonable. - Decided against assessee.

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• 2017 (11) TMI 738
  Allowance of marked to market loss as business expenditure u/s 37(1) - Held that:- As perused the said decision of this Court in the case of Commissioner of Income Tax 16, Mumbai Vs. M/s. D. Chetan & Co [2016 (10) TMI 629 - BOMBAY HIGH COURT]. The same question was considered by the Division Bench and answered against the Appellant – Revenue. As of today, the said decision has attained finality. - Decided against revenue

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• 2017 (11) TMI 737
  Requirement of AADHAAR number in filing return of income - W.P. praying for a direction to the third respondent to allow her to file income tax returns for the assessment year 2017-18 either manually or through e-filing facility without insisting for production of an aadhar number/card or enrollment identity as defined under Section 139AA - Held that:- It is seen that in identical circumstances, one of the assessee's by name Prasanth Sugathan moved the High Court of Kerala by filing petition wherein a similar relief was sought and the High Court of Kerala, by an order dated 04.8.2017, issued a direction to the third respondent therein to allow the petitioner therein to file income tax returns manually without insisting upon the aadhar number or card or enrollment number pending disposal of the writ petition. As inclined to grant a similar relief, since today being the last date for filing the income tax returns. If the income tax returns are filed belatedly and if, ultimately, the matter is decided by the Constitution Bench of the Hon'ble Supreme Court against the petitioner, then she may be liable for payment of interest for belated payment of tax. The balance of convenience is in favour of the petitioner for the grant of appropriate interim order. Accordingly, there will be an interim direction to the third respondent to permit the petitioner to file her income tax returns for the assessment year 2017-18 either manually or through appropriate e-filing facility without insisting for the aadhar number and/or enrollment ID. Notice to the respondents is accepted by Mr.Navin Durai Babu, learned Standing Counsel for the Revenue. He seeks time to get instructions and file counter.

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• 2017 (11) TMI 735
  Correctness of order passed by the Settlement Commission - entire amount of additional income, except the additional income, offered in the two applications before the Commission, should be held as assessable in the regular assessment for the assessment years covered in the first application - Held that:- This issue has now become academic as in the assessee's own case, the revenue viz., the petitioner herein, filed Special Leave to appeal challenging the order dated 30.01.1996, passed under Section 245 D(1) of the Income Tax Act, 1961, by entertaining the application for settlement of the cases arising out of the assessment for the years 1987-88 to 1996-97 and 1990-91 to 1996-97 respectively. The petitioner/revenue cannot once again re-agitate the very same issue before this Court as the matter has attained finality. It is not in dispute that the revenue has not questioned the order of the Settlement Commission, so far as the settlement of the cases of the assessees in respect of the block assessment ending 06.11.1996. In such circumstances, this Court has no hesitation to hold that the challenge to the impugned proceedings has become academic and unnecessary.

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• 2017 (11) TMI 734
  Trading addition u/s 145(3) - non-maintenance of stock register and decline in GP rate despite Sales constant - ITAT and CIT-A deleted the addition - Held that:- Whatever defects pointed out by the Assessing Officer is not justified, the rejection of books of account U/s 145(3) of the Act. The assessee's manufacturing processes are so complexed that at every stage, the size, length and width of products changed and also the number of process in the manufacturing of handmade papers but the assessee has maintained proper purchase, sale and other expenses on the basis of bill/vouchers. Therefore, we uphold the order of the ld CIT(A) - Decided in favour of the assessee.

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• 2017 (11) TMI 727
  Penalty u/s 271(1)(c) - stock valuation - addition made towards the valuation of closing stock of Emerald Cut Stock, on the agreed basis, u/s. 145(3) - Held that:- From the order of AO, it seems that because of the pressure, the appellant has surrendered the amount. It is a case of consent and the CIT(A) while considering the decision of Supreme Court in case of Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Ltd., (2010 (3) TMI 80 - SUPREME COURT) and other decisions the Tribunal was not justified in holding that correct statement of the valuation of the closing stock was not filed alongwith the return. - Decided in favour of assessee.

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• 2017 (11) TMI 726
  Entitlement to benefit of deduction u/s. 10B - ITAT justification in allowing the benefit of deduction u/s. 10B even to the acquired unit of M/S. Anjali Exports despite of the facts the same was not having certificate of Export Oriented Unit which was mandatory requirement - agreement of assignment of business - Held that:- In our considered opinion, MOU was entered on 24.03.2007 in that view of the matter any benefit will be taken from the date of MOU and the effect will be given in the relevant year. There is no case of department that by an act of entering into MOU the company is extending the period of deduction Rather the facts are reversed as M/s. Anjali Exports who started its operation from assessment year 05-06 was entitled for deduction for 10 years. However, the business of M/s. Anjali exports was taken over by assessee firm, therefore, Ms. Anjali Export lost its deduction for remaining years i.e about 7 years, as the deduction can be allowed only for 10 years i.e. in case of M/s. Veto Electric Powers or in case of M/s. Veto Electric Power Pvt. Ltd. The view taken by the Tribunal is required to be confirmed. The issue is answered in favour of assessee

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• 2017 (11) TMI 724
  Addition made on account of bogus loss - loss claimed on transactions not routed through stock exchange - assessee failed to discharge its onus of proving the same as genuine transactions? - Held that:- We were of the opinion that the issue is covered by the decision of Supreme Court in the case of Jiyajeerao Cotton Mills. Ltd. vs. Commissioner of Income tax and Excess Profits Tax Bombay [1958 (5) TMI 3 - SUPREME Court] as held the obvious intention behind this order, read as a whole, was that persons connected with the several links in the chain of contracts and series of payments concerned in these transactions should be examined with a view to elucidate the true position, and the managing director was mentioned as the person who was likely to have entered into these transactions. Durgaprasad Mandalia was the manager of the appellant company, and he gave evidence that he put the present transactions through the brokers, and that has been considered. If Birlas wanted themselves to give evidence, there was nothing to prevent them from doing so, and indeed, no complaint was made in the court below that their evidence had not been taken. There is no substance in this contention. We have considered all the contentions urged on behalf of the appellant at some length. We would like to make it clear that we are not sitting here as a court of appeal on facts. We have examined the record only with a view to see whether there is any misdirection or non-direction, such as is likely to have affected the result, and we have come to the conclusion that there is none, and that the finding of the Tribunal is not therefore open to attack. - Decided in favour of the assessee and against the department.

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• 2017 (11) TMI 719
  Re-opening of assessment u/s 147 - reasons of believe - Held that:- There was failure on the part of assessee to disclose fully and truly all material facts for completion of assessment during the assessment proceedings. The case laws relied upon by the assessee are not applicable to the facts of the case as the necessary agreements qua joint venture, relinquishing the interest in the said land were not furnished before the AO in the course of assessment proceedings and there is a failure on the part of the assessee to disclose the material facts during the course of assessment and hence in our opinion the re-opening is validly done under 1st proviso to section 147 of the Act. We are, therefore, inclined to hold that re-opening of assessment u/s 147 of the Act is valid and accordingly the ground raised by the assessee is dismissed. Non genuine and sham transaction - whether transaction of purchase of interest in 50 acres of land from two companies OM and WW was sham and non genuine and thereby upholding the reduction of 100.80 Cr from the inventories of the assessee? - Held that:- The chronology of events clearly shows that the application was made in the joint names of the assessee, OM and WW. The land was also allotted by MIDC on the said application made by the three joint venture partners. Thereafter MIDC on an application made by the JV partners approved the relinquishment of interest in the said land by two JB partners OM and WW in favour of the assessee on payment of specified premium. It is relevant to note that records of MIDC proved that the assessee, OM and WW were the joint owners of the plot of land till the relinquishment of rights by OM and WW was approved by MIDC which showed the transaction being genuine and out of business consideration. A business decision was taken by the assessee to purchase the interest from two JV partners to which two partners also agreed to sell their interest to the assessee which is also a business decision taken by them in the best interest of the business. Moreover all the three parties are unrelated parties and not related to each other. Therefore the transaction can not be said to be non genuine and sham. Further we failed to understand as to how a transaction which is assessed to tax in the hands of two JV partners by the revenue treating the same as genuine was treated as sham in the hands of assessee. In our considered view the assessee has entered into the transaction of purchasing the interest in the land from the said two parties and after purchase, became the exclusive owner of the said land and therefore the said expenditure is wholly and exclusively incurred for the purpose of business and should be allowed to the assessee. Beside, the involvement of multiple agencies including Govt authorities like MIDC and AOs of OM and WW, professional consultants and escrow agents specially when none of them were related to each other further lends credence to the contention of the ld AR. The mere irregularities in the documents as pointed by the ld DR can not be the basis to draw conclusion as to genuineness of the transaction. So far as the reasonableness of the transaction is concerned, the valuation by the registered valuer and the DVO were largely same and can not be ignored and lost sight of while deciding reasonableness of the transaction. After considering the rival contentions, records, written submissions and case laws filed by both the parties we are of the view that the order of PCIT upholding the order of AO treating the purchase of interest in the land from OM and WW as sham is incorrect and can not be sustained. Thus we set aside the order of PCIT on this issue and accordingly appeal of the assessee is allowed.

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• 2017 (11) TMI 718
  Penalty under section 271(1)(c) - charge for which penalty was initiated - Held that:- We are of the view that the AO has initiated penalty proceedings for furnishing of inaccurate particulars of income, whereas, the penalty was levied for both the charges is as evident from the penalty order. AO has mixed up both the limbs whereas as per settled legal pronouncements of superior court, the two limbs of Section 271(1)(c) viz. furnishing of inaccurate particulars of income and concealment of income carry different meaning / connotations. Therefore, Ld. AO himself was not sure about the charge for which penalty was initiated and finally levied on the assessee. Hence, the issue, as rightly pointed out by Ld. AR, stood covered in assessee’s favor by Hon’ble Jurisdictional High Court in the case of Samson Perincherry (2017 (1) TMI 1292 - BOMBAY HIGH COURT). Respectfully following the Hon’ble High Court decision, we delete the penalty and reverse the order of the lower authorities - Decided in favour of assessee.

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• 2017 (11) TMI 717
  Disallowance of expenditure - amounts were never used for its business activities - Estimation of income at 8% in the case of main contractor and 5% in the case of a sub-contractor - Held that:- In the case of MAA Highways (2016 (5) TMI 344 - ITAT HYDERABAD) we have already held that where the income is estimated after rejection of books of account, no further disallowance of business expenditure can be made. In the case before us also, the AO has made the estimation on the ground that the assessee had not incurred any expenditure and the amounts were never used for its business activities and were returned back to the main contractor. Since the facts and circumstances are the same before us as in the case of Maa Highways and since we have confirmed the estimation of income by the AO at 8% in the case of main contractor and 5% in the case of a sub-contractor, we see no reason to interfere with the order of the CIT (A). - Decided against revenue

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• 2017 (11) TMI 716
  TPA - selection of comparable - Held that:- Exercise of selection of comparables has to be done specifically keeping in mind the special nature of assessee’s business in developing gaming software. The AO is directed to keep the detailed orders of the Coordinate Bench in AYs. 2008-09 & 2010-11 and can reexamine the issue of TP adjustment afresh after giving due opportunity to assessee. For these reasons, the issues on merits are considered allowed and the order of the TPO/AO with reference to TP adjustment is set aside with a direction to re-do it afresh as directed above.

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• 2017 (11) TMI 715
  Determination of ALP of the international transaction of AMP expenses - Held that:- Since the orders of the authorities below are not in conformity with the ratio laid down in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT) as discussed above and further necessary details for doing this exercise at our end are also not available, we set aside the impugned order and send the matter back to the file of the TPO/AO for determining the ALP of the international transaction of AMP spend afresh in accordance with the manner laid down by the Hon’ble High Court in Sony Ericson Mobile (supra). International transaction of ‘Receipt of I.T. Support Services’ is required to be separately benchmarked, distinct from the international transactions of purchase etc. - Held that:- Since the view of the TPO as regards the receipt of no services etc. has been set aside by us, we remit the matter to the AO/TPO for determining the ALP of this international transaction afresh as per law after allowing a reasonable opportunity of being heard to the assessee. International transactions of ‘Procurement support’ and ‘Training services' - Held that:- On going through the nature of services given in this Annexure, it is manifested that the assessee was supposed to procure the goods from India and export it to the global production network of the BMW Group. For doing this, the assessee was carrying out supplier assessments to identify the most suitable supplier. The assessee was receiving proposal from the supplier and forwarding it to BMW AG for final assessment and approval. On such approval, the International Purchase Office (IPO) was working with the supplier to ensure compliance of BMW AG requirements. In so far as ‘Training services’ are concerned, a copy of the relevant agreement between the assessee and BMW AG is available on page 599 of the paper book. Preamble of the agreement provides that BMW AG entered into a contract with Satyam Venture Engineering Services for the provision of design and simulation services. Because Satyam was unfamiliar with BMW processes and tools, the assessee was assigned a duty to impart training to the employees of the Satyam for their utilization in complying with design and simulation services for BMW AG. It is overt from the two Agreements that the nature of ‘Procurement’ and ‘Training’ services is entirely different and bear no functional similarity with each other. Whereas the Procurement services were rendered by IPO of the assessee, the Training services were rendered by its technical staff. In view of there being functional differences between the two and use of separate work force for their rendition, we are not inclined to accept the view point of the TPO for aggregating these two distinct services into one and thereafter determine their ALP in a combined manner. We, therefore, set aside the impugned order and remit the matter to the file of the AO/TPO for a fresh determination of ALP for these two services independently, after allowing a reasonable opportunity of being heard to the assessee. Higher depreciation on DVR - Held that:- It is noticed that the DRP followed its order for the A.Y. 2009-10 for negating the assessee’s claim of higher depreciation on DVR. Such issue came up consideration before the Tribunal in assessee’s case for the A.Y. 2009-10. The Tribunal has held in its order that higher rate of depreciation is applicable to switches. Thus the departmental view was upheld on others. Since DVR is not a switch, respectfully following the precedent, we approve the view taken by the AO in its order for treating DVR as a part of Plant and machinery and not computer peripherals and allowing depreciation accordingly.

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• 2017 (11) TMI 711
  Disallowance u/s 14A - no exempt income earned - Held that:- As no exempt income was earned by the assessee, therefore, considering the decision from Hon’ble jurisdictional High Court in the case of Holcim India Pvt. Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT], Hon’ble Punjab & Haryana High Court in CIT vs Lakhani Marketing [2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT] and CIT vs Shivam Motors [2014 (5) TMI 592 - ALLAHABAD HIGH COURT], we are of the view when no exempt income is earned by the assessee during the relevant year, no disallowance can be made u/s 14A of the Act r.w.r. 8D of the Rules, therefore, we find no infirmity in the conclusion of the Ld. First Appellate Authority. - Decided in favour of assessee.

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• 2017 (11) TMI 710
  Income recognition - Addition in respect of “Current Liabilities” in computation of taxable profits - Held that:- The amounts, which are appearing under the head “current liabilities”, cannot be taxed as income in this year, as the advance money cannot partake the character of an income, because the assessee was entrusted with the money for discharging of various legal obligations on behalf of its clients and held the money in fiduciary capacity and the money was recognised as client’s money in its accounts. Accordingly, the addition is deleted. Disallowance under section 14A - the assessee has earned dividend income and income from mutual funds which were claimed as exempt from tax under section 10(34) and 10(35) - Held that:- In view of the principle laid down in the case of H.T. Media Ltd. Vs. Pr. CIT reported in (2017 (8) TMI 962 - DELHI HIGH COURT), AO cannot proceed to make disallowance under section 14A. The Hon'ble Jurisdictional High Court has once again reiterated that it is mandatory and incumbent upon the Assessing Officer to record such satisfaction and in the absence of such ‘satisfaction’ no disallowance can be made under section 14A. The Hon'ble High Court concluded that; firstly, where there was a failure by Assessing Officer to comply with mandatory requirement of section 14A(2) read with rule 8D(1)(a) to record his satisfaction as required thereunder, then question of applying rule 8D(2)(iii) does not arise; and secondly, where Assessing Officer had failed to establish any direct nexus between investments made by assessee and interest expenditure incurred, then it not correct to remand the matter concerning deletion of disallowance of interest under clause (ii) of rule 8D(2) to Assessing Officer for fresh determination.

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• 2017 (11) TMI 709
  Taxability of income - accrual of income in India - Direction of the DRP to exclude the income received from off–shore supplies of equipments from taxation - Held that:- Material brought on record clearly reveal that the P.E. has no role to play as far as it relates to off–shore supply of equipments and materials which is evident from the fact that not only the goods were supplied from Sweden and other countries on CIF/CIP basis but payments have been made directly to the assessee outside India in foreign currency and in the bank account of the assessee in Sweden. Therefore, the P.E. has no connection with the off–shore supply of goods. Therefore, only because the contracts entered into by the assessee are single composite contracts it cannot be said they are indivisible. The reading of contract as a whole clearly demonstrates that the scope of work as per the contract is divisible in nature and has been segregated to supply portion and erection and commissioning portion. Therefore, the off–shore supply of equipments having been effected from outside the territory of India and the sale having been completed outside territory of India, the ratio laid down by the Hon'ble Supreme Court in Ishikawajma-Harima Heavy Industries Ltd. (2007 (1) TMI 91 - SUPREME COURT ) squarely applies to the facts of the present case. Thus the income received from off–shore supply of equipments in case of a divisible contract is not taxable in India - Decided against revenue

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• 2017 (11) TMI 708
  Capital gain on alleged transfer of two immovable property owned by the appellant - as per assessee he has received mere advance against the development agreement whereas no possession has been handed over by him since consent of the respective owners could not be obtained till date and suits in this regard and pending before appropriate courts - Held that:- Transfer of possession is one of the primary condition so as to attract the provisions of Section 53A and consequently being covered u/s 2(47)(v). The assessee has all along contended that the possession of the properties was never handed over to the developer which has been reiterated before us also. The Ld. AR has placed certain additional evidences in the form of Letter from the Developer and copies of suits filed by the developer before appropriate court. We find that the fact that whether the assessee has handed over the possession to the developer or not has nowhere been examined by any of the lower authorities. Hence, on the fact of the case, we remit the matter back to the file of Ld. AO for adjudication. If the transaction is found chargeable to tax, the computation thereof shall be computed in terms of Section 48 and other provisions, as applicable. Needless to say, adequate opportunity of being heard shall be granted to the assessee, who in turn, is directed to substantiate his stand in this regard. Resultantly, assessee’s appeal stands partly allowed for statistical purposes

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• Customs

• 2017 (11) TMI 729
  Penalty - second proviso to Section 129A of the Customs Act, 1962 - Whether the CESTAT erred in rejecting the appeal of the Appellant under clause (iii) to the second proviso of Section 129A of the Customs Act, 1962? - Held that: - In the present case, the appeal before the CESTAT was appealable under Section 129 (1) (a) of the Act and not under Section 129A (1) (b), (c) or (d) of the Act. Therefore, the second proviso to Section 129A of the Act did not apply as far as the appeal of the Appellant herein was concerned. This is clearly an error apparent on the face of the impugned order of the CESTAT. The Court sets aside the impugned order of the CESTAT and restores the appeal of the Appellant to the file of the CESTAT for a fresh consideration on merits - appeal allowed - decided in favor of appellant-assessee.

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• 2017 (11) TMI 704
  Smuggling - Cigarettes of Foreign origin - confiscation - penalty - Held that: - I did not come across any evidence brought forward by Revenue to establish that the appellant had knowledge that the goods booked through their transport agency or carrier agency were liable for confiscation - penalties set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 703
  Refund claim - Relinquishment of title of goods - prohibited goods - Held that: - as provided under Sub-section 2 of Section 23 of the Customs Act, 1962, the law did not allow respondent to relinquish his title to said goods since the said goods were found to be mis-declared. Further, the goods brought into were prohibited, since they did not have environmental clearance for importation of the same and, therefore, the goods had violated the provisions of Section 11 of Customs Act, 1962 - In view of 2nd proviso to Sub-section (1) of Section 26-A of the Customs Act, 1962, the said refund was not admissible to the respondent - appeal allowed - decided in favor of Revenue.

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• 2017 (11) TMI 687
  Project import - benefit of concessional rate of duty - The benefit stands denied by the Customs authorities only on a technical reason that the contract for supply with the foreign supplier has not been executed by the present importer - Held that: - The benefit of concessional rate of duty under project import classifiable under Heading 98.01 of the Customs Tariff, is extended to those projects which are duly certified by the sponsoring authority - In the present case, the Jaipur Metro is being executed by DMRC and the sponsoring authority i.e. Ministry of Urban Development has certified the list of goods which are required to be imported for the Jaipur Metro Project. The goods being imported are meant for supply ultimately for the Jaipur Metro Project. The annexure containing the detailed bill of materials also stands recommended by the Ministry of Urban Development. We find that the Revenue has not made any allegation to the effect that the goods are not related to the Metro Rail Project and are not covered by the project import regulation. Consequently, there is no reason to deny the benefit of concessional rate of duty under Project Import Regulations. Appeal allowed - decided in favor of appellant-importer.

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• Corporate Laws

• 2017 (11) TMI 723
  Initial Public Officer (IPO) or Stock Market Launch - Non adherence to ASBA process - allotment of shares - Held that:- On an examination of the contents of the statement filed on behalf of the fourth respondent, it become indisputable that the equity shares applied for by the petitioners under the Rights Issue and the additional shares applied for by them have not been yet alloted and that the amounts expended by the petitioners for application of such shares through demand drafts are also still with the fourth respondent. As also notice that this Court had, while admitting the writ petition on 26.02.2015, directed that the acceptance or non-acceptance of the applications of the petitioners, as per Exhibits PI to P4, shall be subject to the result of the writ petition. Since the petitioners have supported their applications for shares honestly and bona fide through valid demand drafts, it would be unfair and unjust to subject them to a detriment merely because they have not applied under the ASBA process. As already shown above, the ASBA process is intended to the benefit of the petitioners and merely because’ they had not made payment under that process, it would be a paradox that they are refused allotment of shares. This is more so because the petitioners’ action in not applying through ASBA process would not and has not in any manner prejudiced any of the respondents, including respondents 4 and 5. In such view of the matter, it is of the firm opinion that W.P. deserve to be ordered and that the petitioners be allotted the shares applied for by them through Exhibits PI to P4, utilising the amounts paid by them through the demand drafts, which is now stated to be in the refund account maintained by the fourth respondent. Action of the company in transferring such high percentage to the reserves of the company, while not declaring a higher dividend, is in violation of the Companies (Transfer of Profits to Reserves) Rules, 1975 - Held that:- Even though the petitioners may have a case, going strictly by the terms of the relevant provisions, that the company ought not to have transferred such large percentage of its profits to general reserves without enhancing the rate of dividend, such action has only helped the financial condition of the company and has contributed to increase the value of its shares rather exponentially. The petitioners, being the investors, cannot he said to be prejudiced because even though the dividend was not enhanced, the value of their share holding had certainly moved up, even much beyond their expectations. When made this view of mine known to Sri.P.I.Davis, the learned counsel for the petitioners, during the hearing of the writ petitions, he took some time to consult his client and submitted that she is also in affirmation of the fact that the action of the Board of Directors in transferring higher reserves has only helped the company. The learned counsel for the petitioner was therefore, fair in submitting that the petitioner does not intend to continue with the challenge against such action and that this writ petition can thus be closed without any further orders. I think this is a very fair stand taken by the petitioner and I, therefore, close W.P.(C)No. 32874/2009 without any further orders. Direct respondents 4 and 5 to allot to the petitioners the shares applied for by them under the Rights Issue as also the additional shares by accepting the amounts for such purpose provided by them through demand drafts, which is now stated to be in deposit in the current account maintained by the bank as its refund account. The petitioners’ applications, namely Exhibits PI to P4, will, therefore, be taken up and considered by the fourth respondent and eligible shares be alloted in the manner applied for by them, without any further delay and as expeditiously as possible.

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• 2017 (11) TMI 699
  Adjudicating Authority appointing any 'Interim Resolution Professional' or declaring moratorium, freezing the account - condonation of delay - Held that:- Order(s), if any, passed by learned Adjudicating Authority appointing any 'Interim Resolution Professional' or declaring moratorium, freezing the account and all other order(s) passed by Adjudicating Authority pursuant to impugned order dated 28th April, 2017 and action, if any, taken by the 'Interim Resolution Professional', including the advertisement, if any, published in the newspaper calling for applications etc. and all such orders and actions are declared illegal and are set aside. The application preferred by the respondent under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the proceeding. The appellant company is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed, and the appellant will pay the fees of the 'Interim Resolution Professional', for the period he has functioned as per their settlements. The appeal is allowed with the aforesaid observations and directions.

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• 2017 (11) TMI 698
  Corporate Insolvency Resolution Process -proof of existence of proof - period of limitation - Held that:- Even though the provisions of Limitation Act, 1963 may not be applicable to IBC, 2016 yet the petition suffers from doctrine of delay and laches as the silence on the part of the petitioner to enforce its claim for a period of more than 5 years without approaching any judicial Forum defeats the claim and the petitioner cannot take recourse or umbrage to the provisions of IBC, 2016 with a view to initiate CIRP to recover the amounts alleged to be due to it from the respondent Company. Perusal of the Certificate dated 11.9.2017 which was also produced beyond the mandatory period has not satisfied the requirement in relation to unpaid liability as the same has not been reflected therein as claimed by the petitioner in its application. Also it is pertinent to note that the Hon’ble NCLAT has held in Uttam Galva Steels Ltd. (2017 (8) TMI 1198 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ) wherein at Paragraph 32 of the said judgment, it has been held that demand notice under Section 8 on behalf of the Operational Creditor cannot be issued by any person in the absence of any authority of the Board of Directors, and holding no position with or in relation to the Operational Creditor. However, in the present instance, no such authorization to issue such a notice by the legal Counsel on behalf of the Operational Creditor has been produced before this Tribunal by the petitioner. Thus no merit in the application as filed by the petitioner Company.

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• 2017 (11) TMI 689
  Corporate Insolvency Resolution Process - Held that:- We order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. We appoint Mr. Pathukasahasram Raghunathan Raman, as IRP, who has been proposed by the Operational Creditor. There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in IBBI website. The IRP is directed to take charge of the Corporate Debtor’s management immediately. IRP is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed. We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. The IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of the Code. The Directors of the Corporate Debtor, its Promoters or any person associated with the management of the Corporate Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the I&B Code, 2016. Accordingly, the application is disposed of.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 705
  Corporate insolvency process - whether the Axis Bank Ltd.-applicant is entitled to make a claim by invoking the corporate guarantee after the date of commencement of the insolvency process - Held that:- A claim would mean a right to payment whether reduced to any judgment etc. It also includes right to remedy for breach of contract under any law for the time being in force. The ‘Corporate Debtor’ has been defined to mean a corporate person, who owes a debt to any person and ‘creditor’ has been defined to whom a debt is owed and includes all types of creditors, like a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder. The emphasis appears to be on the expression ‘payment and the debt, claim and the debt which is due from any person and includes financial debt and operational debt. Going by the aforesaid provisions, debt has not become due from the Corporate Debtor on the insolvency commencement date, i.e. 27.06.2017. It became due only when the corporate guarantee was invoked by the Axis Bank Ltd.-the Corporate Debtor-applicant on 21.07.2017. Therefore, we are unable to persuade ourselves to accept the submissions made by the applicant-Axis Bank Ltd. A careful perusal of Regulation 12 read with Regulation 13 would show that the Resolution Professional has to verify every claim as on the insolvency commencement date and maintain a list of creditors containing names of all such creditors alongwith the amount claimed. Therefore, the applicant- Axis Bank Ltd. would not qualify to the consideration of its claim as it has become due and payable after the insolvency commencement date. The provisions of Regulations 12 and 13 would not come to the rescue of the applicant-Axis Bank Ltd. An ancillary submission is that there was no intention to conceal the claim made in the CIRP initiated against the Educomp Solutions Ltd.-principal borrower would also not require any detailed consideration as we are not proceeding to decide the application on the aforesaid issue. An ancillary argument is that in any case there is no provision in the Code declaring the insolvency commencement date as the date to determine the claims of the parties. A perusal of Section 22(3) of the SIC Act would reveal that it is not different in sum and substance than the provision of Section 14 of the Code. In our view, Section 14 would clearly cover the invocation of guarantee after the insolvency commencement date. There would be moratorium prohibiting any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property. It appears to us that invocation of corporate guarantee against the Corporate Debtor-respondent would result in enforcing of security interest and it would thus be in violation of the moratorium provision of Section 14(l)(c) of the Code, Therefore, we do not find any substance in the submission.

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• Service Tax

• 2017 (11) TMI 721
  Restoration of Rectification of mistake application - Held that: - this Court finds that no reasons are recorded in the order of Commissioner (Appeals) for coming to the conclusion that no rectifiable mistake has occurred. It is settled principle of law that the reasons are the soul of an order and in its absence, the order itself is rendered lifeless - rectification application stands restored.

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• 2017 (11) TMI 714
  Levy of service tax - Management, Maintenance or Repair service - Cleaning services - Commercial and industrial construction service - Construction service provided to MAHAGENCO - Construction of residential complex - Held that: - the said service was provided to Government Medical College, Nagpur, Visvesvaraya National Institute of Technology, Nagpur and Central Railway. Since the service provided in relation to Government building which is not for commercial purpose the service of management, maintenance or repair of non-commercial Government buildings is exempted for the period from 16.6.2005 to 1.7.2012 in terms of Section 98 of the Finance Act, 1994 - From the reading of the above Section 98 of the Act, it can be seen that the management, maintenance or repair service of non-commercial Government building during the period 16.6.2005 to 1.7.2012 is exempted - demand set aside. Cleaning services - Held that: - it is observed that the cleaning service was provided by the appellant for the Government building i.e. Ravi Bhavan (Chief Minister Secretariat), Hyderabad House (Dy. Chief Minister Office) and cleaning of MLA Hostel rooms, hall and passage. Since all these buildings for which cleaning service was provided are of Government, therefore it is not taxable under cleaning service - demand set aside. Commercial and industrial construction service - Held that: - this service was provided in respect of guest house and canteen of Visvesvaraya National Institute of Technology, Nagpur which is an activity of non-commercial in nature. Therefore being a construction of non-commercial building will not fall under the category of commercial and industrial construction service, hence the same is not taxable - demand set aside. Construction service provided to MAHAGENCO - Held that: - in respect of construction of Podium, Wall Panel etc. for Maharashtra State Power Generation Company Limited (MAHAGENCO) this MAHAGENCO is a independent company which is engaged in generation of power which is a commercial activity therefore construction service provided to MAHAGENCO cannot be said to be a service of construction of non-commercial Government building, therefore in our view the construction service provided for MAHAGENCO is taxable - demand upheld. Construction of residential complex - Held that: - construction of residential complex of 14 flats was provided for company M/s. Karamchand Thapar & Brothers Ltd. for residence of Directors/Officers of the Company. Even though it is a residential building but it belongs to a company and the building is used in relation to overall business of the company. Therefore it cannot be said that it is non-commercial building, therefore the construction of residential complex for M/s. Karamchand Thapar & Brothers Ltd. is liable for service tax - demand upheld. Penalty - Held that: - majority of the demand have been set aside and the issue involved is of interpretation of law, a part of the demand was paid by the appellant along with interest - penalty set aside. Appeal allowed in part.

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• 2017 (11) TMI 713
  Non-payment of service tax - architect services - construction of complex service - time limitation - penalty - Held that: - the appellant were collecting the service tax and were not depositing to the Government account. They have also not declared the receipt of the service charges in their ST.3 Return. They have also not declared the correct receipt of the service charges in their Income Tax Return, therefore the malafide intention of the appellant is clearly established, accordingly the demand cannot be set aside on the ground of time bar. Penalties u/s 76, 77 & 78 - Held that: - penalties u/s 76 set aside - penalties u/s 77 and 78 upheld. Appeal allowed in part.

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• 2017 (11) TMI 696
  Valuation - reimbursement discount - includibility - Held that: - the finding of Original Authority in respect of discount dealt with in Para 12.9 of the impugned Order-in-Original and amounts written back dealt with in Para 17 of the impugned Order-in-Original are presumptive in nature and on the basis of presumptions the demand cannot be confirmed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 695
  Refund claim - unjust enrichment - Held that: - even if the parties to a contract agreed not to pay service tax, but if the tax is chargeable under the provisions of the Act, it has to be paid. Under the facts and circumstances of this case it is admitted fact that the appellant have paid the tax out of its own pocket and not collected the same from the principal-Dishnet Wireless Ltd - the doctrine of unjust-enrichment does not apply - appeal allowed.

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• 2017 (11) TMI 694
  GTA Service - demand is assessed on the premise that the appellant(s) received transport of goods by road service, defined in Section 65(50a) and (50b) read with Section 65(105) (zzp) - Held that: - The definition of “Goods Transport Agency” in Section 65(50b) clearly specifies that Goods Transport Agency means any person who provides services in relation to transport of goods by road and issues a “consignment note’ by whatever name called. The Explanation under Rule 4B of the Service Tax Rules, 1994 clarifies that “consignment note” is a document, issued by a Goods Transport Agency against the receipt of goods for the purpose of transport of goods in a goods carriage and contains other specified details - Clearly, as no consignment note, as generally understood or delineated in Rule 4B was issued by the transporters to the appellant, in the transactions in issue, the classification by the impugned order that appellant received transportation of goods by road service, is unsustainable - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 690
  Short payment of service tax - Coaching services - Running pre-school classes - Coaching for pre-engineering and pre-medical students - Sale of books to the students who are engaged in preparation of medical and engineering exams - Examination and evaluation of students through test series - Section 67 of the Finance Act - scope of the word 'Commercial' - penalties - Held that: - so far the activity of running pre-school classes is concerned the same is not taxable under the definition as contained in Section 65(27) - demand set aside. Conducting of test series Held that: - the same is not taxable as there is no finding by the learned Commissioner that the appellant have held any classroom guidance either before the test or after the test. The tax has been demanded only on presumption that such tests also improve the skills of the prospective examinees - demand set aside. Sale of books - Held that: - it is an admitted fact by the Department that the appellant have separately recorded the receipts on account of sale of books in their books of accounts maintained on tally software in the regular course of business. Further, there is no finding to the contrary by the Commissioner that the appellant have not done the activity of purchase and sale of books or have bifurcated their coaching receipts under the head of ‘sale of books’ - demand set aside. The demand of ₹ 5,60,607/- based on imprest account is an mere assumptions and presumptions and hence liable to be set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (11) TMI 736
  Correctness of Tribunal's decision in remitting the matters to the authority for reconsideration of the same - Held that: - In view of the observation made by the Tribunal, more particularly instructions issued by the Textile Commissioner that each year they will give 50% cotton yarn which has not been verified or cross-checked by the authority. The Tribunal has not committed error in remitting back the matter to the authority. Therefore, no case is made out - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 733
  Classification of goods - product Lobain - Respondent has held that articles contained less than 135 mg Dextropropoxyphene to be correctly taxable under the Medicinal and Toilet Preparations - Held that: - the substances contained less than 135 mg of Dextropropoxyphene is not taxable under the M & TP Act. The impugned order has erroneously held that preparations containing Dextropropoxyphene in such minimal quantity although not being a narcotic drug or narcotic by itself, but does not cease to be a preparation containing a narcotic drug or narcotic - from a plain reading of the Notification dated 14th November 1985, wherein the subject preparation viz. Dextropropoxyphene has been referred, it is clear that only where the preparation contains in excess of 135 Mgs of Dextropropoxyphene would be considered to be a narcotic drug. It is thus clear from the said entry in the Notification that the formulation of Dextropropoxyphene containing less than 135 mgs viz. 65 mg. would stand exempted and not classified as narcotic drug or narcotic under the M & TP Act - In the present case admittedly the subject formulations contained less than 135 mgs, i.e. 65 mg of Dextropropoxyphene and hence cannot be classified as a narcotic drug or narcotic in view of the said notification. This issue is squarely covered by the decision in the case of Macleods Pharmaceuticals Ltd, Govind Ruia Versus The Union of India, The Commissioner of Central Excise, The State of Maharashtra, The Commissioner of State Excise [2017 (9) TMI 877 - BOMBAY HIGH COURT], where it was held that the subject formulations containing less than 135 mgs would by the Notification itself be not included as a narcotic drug or narcotic. Petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 730
  100% EOU - Sale of goods to DTA - interpretation of statute - Whether in the facts and circumstances of the case the CESTAT being the last fact finding body was justified in drawing conclusion that appellant has taken no permission to sell the goods in DTA, when there was no need of permission as per EXIM Policy para 9.9 for the period 1997-2002? Held that: - Taking into consideration the very object of 100% export oriented and exemption of excise duty is to have earning of foreign exchange, if without prior permission of the authority, local sale is allowed then it will lead to loss of excise duty and if the prior permission is not taken, without permission, the export will not be done and locally goods will be disposed of. Clause 9.9 is to be read as intimation subject to proviso they have to take permission of the competent authority. Appeal dismissed - decided against assessee.

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• 2017 (11) TMI 725
  EPCG License - N/N. 110/95-Cus - Concessional Rate of Duty - Held that: - From the first order, the direction which has been issued to the authority was very clear that the authorities below cannot stand by the Board circular that the period of warehousing has already expired. In these circumstances, we find it to be a fit case for reconsideration in the light of Board circular. Hence, the order impugned is set aside and the matter is remanded to the adjudicating authority to decide afresh after affording opportunity of hearing to the appellant - Hence, the appeal of the assessee is liable to be allowed. When the Tribunal in first order passed has make it clear that in view of the circular if EPCG Scheme is licenced under EOU it be considered. In that view of the matter, we are of the opinion that both the authorities namely Customs Appeals and the Tribunal has seriously committed an error in not observing the order passed by the earlier authority namely Tribunal in Customs Appeals dt. 23/1/2003 - the appellant is entitled to the benefit of circular. The same will be given to him and the goods will be released in the export 100% export oriented unit subject to the fulfilment of the condition. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 722
  Recovery of Central Excise Dues - auction of secured assets - Held that: - the two Companies are distinct entities and it is not a case where the name of M/s. Unipex Electrochem Private Limited was changed to M/s. Unipex Bio-Chem Private Limited - the demand has to be set aside for the reason Excise dues of M/s. Unipex Electrochem Private Limited cannot be fastened on M/s. Unipex Bio-Chem Private Limited. A proviso was inserted to Section 11 of the Central Excise Act, 1944 on 10th September, 2004 - A bare reading of the proviso shows that it is applicable to a transfer inter vivos and not where a secured creditor enforces the right under a statute. Petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 720
  Goods destroyed in fire - Whether the Tribunal was justified in rejecting the appellants’ claim on the basis of the report of the surveyor ignoring the report of the Inspector of the department itself? - Held that: - The Tribunal has, in such facts and evidence recorded a finding of fact to confine the claim made by the assessee to the extent of value of goods destroyed as per the insurance claim. In the absence of any other finding of further loss of any other goods, there is no error in the findings recorded by the Tribunal - appeal allowed - decided in favor of assessee.

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• 2017 (11) TMI 712
  Classification of goods - Fibre Glass Pressure Vessels - components for industrial water treatment plants - The department has contended that as per Chapter Note 1 (c) of Chapter 84, the product Components for Industrial Water Treatment Plants are excluded from Chapter No.84 and taking into consideration the manufacturing process, raw materials used and end use the products are correctly classifiable under CSH No.7014.00 as Article of Glass Fibres coated/covered with Plastics attracting duty @ 18% advalorem. Held that: - the respondent is admittedly manufacturing glass fibre vessel wherein the ingredients of glass fibre is predominant, i.e. in case of FRP vessel content of fibre glass is of 57% and in respect of the product composite vessel is 63% and in respect of the composite vessel, the fibre glass present is 38% but remaining 62% is of all other materials used. Therefore in all the three products, the predominent part of material used is fibre glass. According to the predominate principle, the products should be classified under chapter 70.14 - there is no dispute that the product in question in the present case is FRP glass fibre vessel wherein the predominent material is glass fibre. Therefore, it will be preferably classifiable under Chapter 70.14. Since the product in question is classifiable under Chapter 70, even though it is a part used with the goods of Chapter 84. It will not cover under Chapter 84, if it is made out of glass. This chapter note 1 (c) absolutely clear that the product FRP glass fibre vessel correctly classifiable under Chapter 70.14 and will not cover under Chapter 84. The Tribunal while remanding the matter in the first round given a categorical finding that the classification has to be decided on the basis of predominance of the material used in the product. Therefore, it was not open for the Commissioner to go into any other aspects except the principles of predominance of material contained in the finished goods. For this reason also the impugned order is not sustainable. The goods glass fibre vessels are correctly classifiable under 70.14 - appeal allowed - decided in favor of Revenue.

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• 2017 (11) TMI 707
  Penalty - Liability of interest - relevant date - interest chargeable prior to 11/05/2001, i.e. before the amendment of Section 11AB - whether in case of short payment of duty demand due to difference in calculation of value under the Valuation Rules, 2000, the appellants are liable for payment of interest and penalty? - Held that: - identical issue decided in the appellant own case NRB Bearings Ltd. Versus CCE, Mumbai-III [2017 (11) TMI 335 - CESTAT MUMBAI], where it was held that the interest u/s 11AB is inevitable wherever there is a delay in payment of duty. As regards the demand of interest, the interest before 11/05/2001 was chargeable only when the non-payment of duty is due to the reason of suppression of fact mis-declaration, fraud, collision, etc. In the present case admittedly there is no such charge on the appellant, therefore the interest for the period prior to 11/05/2001 is not chargeable. The adjudicating authority should re-calculate the interest and recover the same only for the period from 11/05/2001 till the date of payment of the differential duty - appeal allowed in part and part matter allowed by way of remand.

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• 2017 (11) TMI 706
  SSI exemption - clubbing of units - mutuality of interest - the proposal to club the units are based upon allegations that both the companies were owned by family members of Shri B.N. Khurana and Shri B.N. Khurana was the over-all authority - Trade Notice dt 24.9.1992 and Board Circular 213/15/92-CX.6 dt 29.5.1992 - Held that: - The adjudicating authorities has viewed the transfer of funds for few days from one concern to the other to save themselves from crossing the bank overdraft limit or to meet the short-term financial needs as indicator of both the units being one. However we are of the view that such short terms transfer of amount for few days from one unit to another and which has been properly accounted for cannot lead to the conclusion that there is mutuality of business interest or has common funding. The interest free loan for a short period cannot be held as a ground to club both the units as a single entity. In case of M/s Rollatainers Limited [2004 (7) TMI 92 - SUPREME COURT OF INDIA] the Hon’ble Supreme Court held that two factories located within the same premises, owned by same owner, common boundaries and common balance sheet, but having separate staff, separate management, separate passage, separate entrance with separate central excise registration and producing different end products, cannot be treated as one and the same factory and, hence, are two factories separately eligible to exemption. In present case we do not find any factor to club the units such as common procurement of raw materials or common stock of raw material. Neither there is any inter-dependence in manufacturing operations, common use of machinery or free flow of finance between two units. Thus in absence of such factors we do not find any reason to club the clearances of the Appellant Units. The value of clearances of independent and separate units and that too of limited companies cannot be clubbed only for the reason that the units belong to same family, controlled by same family members or use of certain common amenities or interest free loans when both have separate set ups. It is pertinent to note that the persons/share holders of the company are different from company which is an artificial legal person. Hence even same family members are looking after affairs of two companies, both companies have independent legal entities - M/s NCPL and M/s NEPL cannot be considered as single entity and their clearances cannot be clubbed. We, thus, set aside the demands and penalties imposed upon M/s NCPL and M/s NEPL. Time limitation - Held that: - the demands are also time barred as there is no suppression facts or mala-fide intention. Penalties - Held that: - since no case for demand of duty is made out, consequentially there is no reason to impose penalty upon him. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 702
  Clandestine removal - shortage of ingots - determination of weight by eye estimation and not by actual weightment - burden of prove - Held that: - invoices with same numbers such are Invoice No.26 was issued on various dated such as 01.11.2011, 02.11.2011, 03.11.2011, 04.11.2011, 05.11.2011 and 06.11.2011 indicating various quantities of ingots cleared and similar situation was in Invoice No.27 or Invoice No.28 etc. Further, in the invoice book mentioned at Serial No.8 of Annexure A, Invoice No.3 was issued several times - No convincing defence was put forth against issue of number of invoices with the same number on various occasion to different purchases containing different information about the quantity of ingots cleared - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 701
  Valuation - Compounded Levy Scheme - second machine which was closed from time to time - Department is asking the duty for the full months under the compound levy scheme. The claim of the appellant is that duty is not payable on the second machine for the period when it was sealed by the department till reopened by the department - Held that: - The assessee deposited the duty amount for the month of July in advance vide e-receipt - As per the composite scheme, for production of pan masala and gutka, duty is payable. When there is no production due to sealing of the machine (as in the instant case), the factory cannot be considered closed completely as one machine was continuously working. So, Rule 10 is not applicable to the present case. The appellant will have to pay the duty on the second machine only for the period when it was working. The appellant is not suppose to pay any duty for the period when machine was sealed - the adjudicating authority directed to compute the period when the machine was working and raise the demand of duty and alongwith interest - appeal allowed by way of remand.

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• 2017 (11) TMI 700
  Clandestine removal - shortage of goods - M.S. Ingots - method of stock-taking - Held that: - for fair adjudication of the case, and to ascertain how the stock taking was done, the cross examination of the punch witnesses was required. Moreover, as per the show cause notice as stated by the Ld. Counsel for the appellants that 10 PCS of each size has been weighted and on the basis of that, the average weight has been drawn. This fact is to be ascertained from the panch witnesses whether the stock taking was done physically or on eye estimation basis - Denial of cross-examination of panch witnesses is a gross violation of principle of natural justice - appeal allowed by way of remand.

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• 2017 (11) TMI 697
  Clandestine removal - Revenue in the present appeals has argued that M/s Jindal had the capacity to manufacture S.S. Ingots much more what has been certified by the Chartered Engineer - It is the case of Revenue that Sh. S. K. Sahu was an employee of M/s Jindal and the confidante of Sh. Vinod Jindal, Director of M/s Jindal Nickel & Alloys Limited and was being paid remuneration to maintain the accounts of clandestine clearances in his computer. Held that: - we have perused the invoice issued by M/s Inductotherm (India) Pvt. Ltd., for the induction furnace as well as the clarification issued by the manufacturer wherein it has been clearly stated that only one crucible can be used for production at a time and not both. This clearly proves that the Revenue’s projection of the production capacity is hugely inflated. The claim of M/s Jindal is reasonable inasmuch as they are not liable for payment of excise duty on the quantity of S.S. Flats cleared by the job workers, over and above the quantity manufactured making use of the ingots received from the appellant on job work basis. In this regard, we sustain the findings of the adjudicating authority. Computer print outs were retrieved from the residence of Sh. S. K. Sahu during the search. M/s Jindal has claimed that such documents are not admissible as evidence since the conditions specified in Section 36B have not been satisfied. The conditions specified therein are that the CPU was under the control of M/s Jindal and the data was entered in the same regularly over the earlier period when the computer was regularly used to store the information. The adjudicating authority has rightly held that there is no evidence to the effect that these conditions have been satisfied. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 693
  N/N. 67/1995-CE - intermediate goods - captive consumption - sugar syrup - Held that: - Co-ordinate Bench in the case of Rishi Bakers Pvt. Ltd., Kanpur [2015 (4) TMI 893 - CESTAT NEW DELHI] held that there was no evidence to prove that ‘sugar syrup’ captively consumed is classifiable under Tariff Item No.17029090, nor there is any evidence to prove that the goods in question, in the form in which they come into existence in the appellants’ factory, are marketable. Sugar syrup coming into existence during manufacture of biscuits and captively consumed, does not attract Central Excise duty for the reason that there is no evidence that the same is marketable. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 692
  N/N. 67/1995-CE - intermediate goods - captive consumption - sugar syrup - Held that: - Co-ordinate Bench in the case of Rishi Bakers Pvt. Ltd., Kanpur [2015 (4) TMI 893 - CESTAT NEW DELHI] held that there was no evidence to prove that ‘sugar syrup’ captively consumed is classifiable under Tariff Item No.17029090, nor there is any evidence to prove that the goods in question, in the form in which they come into existence in the appellants’ factory, are marketable. Sugar syrup coming into existence during manufacture of biscuits and captively consumed, does not attract Central Excise duty for the reason that there is no evidence that the same is marketable. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 691
  Valuation - annual capacity based production - Section 3A of the Central Excise Act - N/N. 30/97-CE(NT), as amended by N/N. 43/97-CE(NT) - Held that: - Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills and others Vs Commissioner of Central Excise [2015 (11) TMI 1172 - SUPREME COURT] wherein after considering the issue of repeal and/or omission of Rules 96Z0, 96ZP and 96ZQ with effect from 11th May, 2001, it was held that although the levy of the duty is saved but the levy of penalty and interest cannot be enforced - there can be no demand of interest and penalty under Rule 96-ZO - appeal allowed in part.

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• 2017 (11) TMI 688
  Short payment of duty - suppression of facts - Held that: - During the period prior to 11.05.2001, the levy of interest under section 11AB was linked with the short levy, non-payment or erroneous refund being on account of fraud, wilful misstatement suppression of facts etc. Since these elements are not present in this case and since for this reason only, the Commissioner (Appeals) has set aside the penalty under section 11AC, there would not be any interest liability in this case, as the alleged short payment is in respect of the clearances made prior to 11.05.2001. Time limitation - Held that: - Since the elements for invoking longer limitation period under proviso to Section 11A (1) are not there, in any case, the interest demand made after expiry of one year from the relevant date is time barred. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 739
  Validity of assessment order - reversal of input tax credit - Effect of substitution of a provision in the Statute - Held that: - this contention cannot be raised before this Court for the first time, as the petitioner failed to raise the same before the Assessing Officer. In an assessment proceedings, it is always open to the petitioner to raise all the issues, both factual and legal. The petitioner failed to do so. Taking note of the fact that the petitioner is a small dealer, this Court is inclined to give one more opportunity to the petitioner, however, subject to a condition that petitioner is directed to pay 15% of the disputed tax within a period of three weeks from the date of receipt of a copy of this order - petition allowed by way of remand.

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• 2017 (11) TMI 732
  Validity of assessment order - natural justice - Held that: - On a perusal of the impugned Assessment Order it is evidently clear that that the same has been completed without an opportunity of personal hearing to the petitioner and it is in violation of principles of natural justice - the matters are remanded to the respondent for fresh consideration - appeal allowed by way of remand.

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• 2017 (11) TMI 728
  Condonation of delay in filing appeal - recovery of tax - Held that: - it is true that the appeal could not have been entertained as the appellate authority had no power to condone such delay of 752 days. However, as pointed out and taking note of the other factual circumstances and also the fact that the third respondent has not enforced the recovery of tax dues, pursuant to impugned assessment proceedings, one indulgence can be granted to the petitioner, simultaneously protecting the interest by the revenue - there will be a direction to the petitioner to pay 25% of the disputed tax for each of the assessment years within a period of eight weeks from the date of receipt of a copy of this order - petition disposed off.

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• Indian Laws

• 2017 (11) TMI 741
  Grant of Regular Bail under Sections 21 (c), 23(c) read with Section 50-A of the NDPS Act - Held that:- From the perusal of the record it transpires that the petitioner was apprehended from the spot by the raiding team after he took the delivery of the alleged parcel which contained 185 grams of cocaine. At the time of the search, the respondents have complied with the provisions envisaged under the statue and served him notice under Section 50 of the NDPS Act and also conducted the search in presence of independent witnesses and from 24.06.2013 he is in custody. The case is at the stage of prosecution evidence and the prosecution has already examined 19 witnesses out of 21 witnesses and trial is on its last legs. Further the charged offence is serious in nature which is punishable with imprisonment which may extend to twenty years. Moreover, the possibility of the petitioner fleeing from justice being a foreign national cannot be ruled out. Taking into consideration the gravity of the offences alleged, this court does not deem it a fit case to grant bail to the petitioner.

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