TMI Tax Updates - e-Newsletter
November 29, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Monetary limit for filing appeal - the Instruction of 2011 may be applied for pending cases subject to two caveats - SC

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• Punishment for Wilful attempt to evade tax - False claim of depreciation on land - it cannot be considered as a mere accounting mistake - HC

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Articles

• Registration in case of renting of immovable property – A curious case

News

• Government appoints Shri B.N. Sharma (IAS:1985) as Chairman of the National Anti-profiteering Authority under GST

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• Rs 83,346 crores collected under GST for the month of October 2017, received in November (upto 27th Nov 2017)

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• RBI Reference Rate for US $

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• Demo: IT dept to launch assessment of defaulters from Jan

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• Constitution of Fifteenth Finance Commission Notified

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• Former DEA Secretary Shaktikanta Das appointed as India’s G 20 Sherpa

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Notifications

Customs

• 90/2017 - dated 27-11-2017 - Cus
  Amendment in Notification No. 56/2000-Customs, dated the 5th May, 2000

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GST - States

• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/057 - dated 26-10-2017 - Nagaland SGST
  The Nagaland Goods and Services Tax (Tenth Amendment) Rules, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/056 - dated 26-10-2017 - Nagaland SGST
  The Nagaland Goods and Services Tax (Ninth Amendment) Rules, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/043 - dated 26-10-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “E” dated the 30th June, 2017

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/042 - dated 26-10-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “D” dated the 30th June, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/040 - dated 26-10-2017 - Nagaland SGST
  Amendment in Notification No F.NO.FIN/REV3/GST/1/(Pt-1) “N” ,30th June,2017 - Exempt supply of Services.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/037 - dated 26-10-2017 - Nagaland SGST
  The Nagaland Goods and Services Tax (Eighth Amendment) Rules, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/036 - dated 26-10-2017 - Nagaland SGST
  Amendment in Notification No F.NO.FIN/REV3/GST/1/(Pt-1) “N”,30th June,2017 - Exempting supply of services associated with transit cargo to Nepal and Bhutan.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/480 - dated 27-9-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “N” dated the 30th June, 2017, and F.NO.FIN/REV-3/GST/1/08 (Pt-1)/426 dated 22nd August, 2017

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/477 - dated 27-9-2017 - Nagaland SGST
  The Nagaland Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/476 - dated 27-9-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “E”, dated the 30th June, 2017

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/474 - dated 27-9-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “D” dated the 30th June, 2017.

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Indian Laws

• No. 10(1)-B(S)/2016 - S.O. 3755(E) - dated 27-11-2017 - Indian Law
  Constitute Fifteenth Finance Commission

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Circulars / Instructions / Orders

Customs

• 47/2017 - dated 27-11-2017
  Drawing of samples for the purpose of grant of drawback

Central Excise

• 1060/9/2017 - dated 27-11-2017
  Procedure for manual disbursal of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim - reg.

Highlights / Catch Notes

Income Tax

• Monetary limit for filing appeal - retrospective implementation of Instruction No.3 of 2011 dated 9.2.2011 - SC reiterate its earlier order - circular may be applied for pending cases subject to two caveats.
  Visit to Get Source

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• Penalty u/s 271B - determination of turnover - reasonable cause for not getting its accounts audited u/s 44AB - the belief of the assessee about the non applicability of provisions of section 44AB based on such method of disclosure as adopted by it following guidelines of ICAI was a bona fide belief. - AT
  Visit to Get Source

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• Wilful attempt to evade tax, etc. - Punishable offence - False claim of depreciation on land - the same is scrutinized, firstly, by the auditors of the company. Secondly, by the directors of the company before endorsing their signatures on the final Balance Sheet. Therefore, it cannot be considered as a mere accounting mistake - HC
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Customs

• Violation of conditions for import of goods against EPCG licnece - failure to intimate the department after installation - since the importer submitted the proof of installation, benefit of notification cannot be denied. - AT
  Visit to Get Source

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• Proceedings to levy Anti-dumping duty - Exclusion of the party from the proceedings - the rules are clear, especially Rule 12 of the Customs Tariff Rules and there is no necessity for this Court to issue any direction to the first respondent to decide the matter in a particular manner nor it would be right in doing so - HC
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Case Laws:

• Income Tax

• 2017 (11) TMI 1500
  Addition u/s. 68 - amount received from Sh. Kripa Shankar as advance for sale of property - assessee has not filed any evidence regarding ownership of the aforesaid property; genuineness of the transaction not proved and Sh. Kripa Ram not appeared in response to summons u/s. 131 - Held that:- The aforesaid property is inherited by the assessee from his father, who was died on 10.8.2008 and after his death, assessee becomes the owner of this property. The house tax receipt shows that the property belongs to the father of assessee (Sh. Deep Chand). Also to prove the genuineness of the transaction the assessee has filed the copy of the agreement to sell and purchase dated 06.5.2009; acknowledgement receipt issued by the assessee to Kripa Ram; Ration card of Kripa Ram; DL of Kripa Ram; Copy of relevant OBC Bank statement of assessee showing cash deposit of ₹ 10 lacs on 8.5.2009; copy of relevant OBC bank statement of assessee showing return of ₹ 10 lacs clearing cheque on 13.3.2013; copy of relevant SBI Bank statement of Kripa Ram showing credit of ₹ 10 lacs on 13.3.201 and copy of confirmation dated 12.3.2013 from Kripa Ram furnished to AO. AS we further note that Sh. Kripa Ram did not comply with the summon issued to him u/s. 131 of the Act by the AO and assessee did not have any control on Sh. Kripa Ram. In view of the above, assessee has proved his burden and as per settled position of law, the assessee need not to be proved the source of source, hence, the addition made on the assessee is not sustainable in the yes of law, therefore, delete the addition in dispute and allow the appeal of the assessee.

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• 2017 (11) TMI 1498
  Taxability in India - Sales made by the non-resident Canadian assessee on FOB basis under a contract sale - Held that:- Laying our hands on the decisions of Hon’ble Allahabad High Court [2016 (11) TMI 1496 - ALLAHABAD HIGH COURT], we hold that on sale of offshore supplies made on FOB basis outside India, no profit is chargeable to tax in India. Since the facts and issue involved in all the three appeals of the assessee are identical, therefore, the above decision will equally apply to all these three appeals of assessee for A.Yrs. 2004-05, 2005-06 and 2007-08. Accordingly, the appeals of the assessee deserve to be allowed. Penalty levied u/s. 271(1)(c) - Held that:- The assessee cannot be deemed to have concealed the particulars of income with respect to profit on FOB supplies during the Assessment Year 2007-08. Besides, the department did not initiate any penalty on the similar addition made in A.Y. 2002-03, and the penalty imposed for A.Y. 2004-05, stood cancelled by ld. CIT(A) vide order dated 27th April 2009, which has been accepted by the Department and no further appeal against the order of CIT (Appeals) was filed by Revenue. In presence of all these facts, the penalty imposed by the AO has rightly been deleted by the ld. CIT(A). Accordingly, the appeal of the Revenue, being devoid of merit

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• 2017 (11) TMI 1494
  Monetary limit for filing appeal - implementation of Instruction No.3 of 2011 dated 9.2.2011, providing for appeals not to be filed before the High Court(s) where the tax impact was less than ₹ 10 lakh - retrospectivity of circular - Held that:- In our view the matter has been squarely put to rest taking further care of the interest of the Revenue by the order passed by the three Judges Bench of this Court in Surya Herbal Ltd. case [2011 (8) TMI 137 - Supreme Court of India], which had put two caveats even to the retrospective application of the Circular. The subsequent orders have been passed by the two Judges Bench without those orders being brought to the notice of the Court, a duty which was cast on the Department to have done so to avoid the ambiguity which has arisen. Thus, the said view of the three Judges Bench would hold water and the Circular would apply even to pending matters but subject to the two caveats provided in Surya Herbal Ltd. case (supra). Liberty is given to the Department to move the High Court pointing out that the Circular dated 9th February, 2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income Tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the circular ipso facto.

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• 2017 (11) TMI 1493
  Penalty u/s 271B - reasonable cause for not getting its accounts audited u/s 44AB - purchase and sale of the security exceeded to 40 Lacs rupees - bonafide belief on the basis of Accounting standards issues by ICAI - Held that:- the said method was followed by the assessee as per the relevant guidelines laid down by the ICAI and we find merit in the contention of the learned counsel for the assessee that the belief of the assessee about the non applicability of provisions of section 44AB based on such method of disclosure as adopted by it following guidelines of ICAI was a bona fide belief. In the case of Sachinam Trust [2009 (3) TMI 186 - HIGH COURT OF GUJARAT] cited by the learned counsel for the assessee, The assessee carrying on the business of financing had believed that gross receipts of interest and not gross amount of advances would constitute the basis for ascertaining the limit of ₹ 40,00,000/- so as to attract u/s 44AB and since the said belief was based on the legal opinion of eminent counsel contained in tax audit manual published by the Bombay Chartered Accountant Society, the assessee was held to have a bona fide belief which constituted the reasonable cause for not getting its accounts audited u/s 44AB. Hon’ble Gujarat High Curt accordingly held that no penalty u/s 271B could be imposed on the assessee. In our opinion, the ratio of the said decision is squarely applicable to the facts involved in the present case and respectfully following the same, we cancelled the penalty imposed by the AO u/s 271B - Appeal of the assessee is allowed.

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• 2017 (11) TMI 1492
  Wilful attempt to evade tax, etc. - Punishable offence under the Income Tax Act - Excessive / false claim of depreciation on land - Held that:- only after the order sheet entry made by the Department of Income Tax, that the correction was made by the petitioner in the subsequent Assessment year - the contention of the learned counsel for the petitioner that the mistake in the balance sheet was suo moto rectified in the balance sheet of the subsequent year much before it was scrutinised by the Assessment Officers cannot be accepted. The another contention of the counsel for the petitioner that the alleged mistake was mere clerical in nature, not deliberate and no element of mens rea is present, also, does not hold any ground as it has been rightly held by the learned ACMM that no sincere efforts were put in by the petitioner after detection of the alleged mistake by filing the revised return immediately thereafter. It is a manifest procedure that before filing of the Income Tax return for the assessment year 2007-2008 by the petitioner, the same is scrutinized, firstly, by the auditors of the company. Secondly, by the directors of the company before endorsing their signatures on the final Balance Sheet. Therefore, it cannot be considered as a mere accounting mistake. Order of ACMM imposing sentence of fine confirmed.

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• 2017 (11) TMI 1485
  Challenging order passed under Section 264 - since the petitioner was still contesting the additions in the earlier years, they cannot delete those incomes in the assessment years 2003-2004 - petition under Section 154 to rectify the assessment by deleting these amounts with an assurance that in case, they succeed in the Tax Case Appeal pending before this Court for the year 2000-2001 - Held that:- In so far as the relevant assessment year is concerned, viz., 2003-2004, Hon'ble Division Bench, by common Judgment in Rohini Holdings (P) Ltd., V. Commissioner of Income Tax [2011 (8) TMI 700 - MADRAS HIGH COURT], allowed the said appeal and the operative portion of the Judgment reads as follows: “28.In the light of the abovesaid fact, the Tribunal's order as regards the assessment for the asst. yr. 2003-04 in respect of the appeal in Tax Case No.704 of 2009 is set aside and the same is allowed in part, with a direction to the AO to redo the same, taking note that the interest income at ₹ 52.50 lakhs has to be assessed under each of the assessment year starting from 2000-01 onwards.” Thus, the Assessing Officer has to implement the Judgment rendered and the impugned order in this writ petition will not come in the way of the Assessing Officer implementing the direction issued by the Division Bench. Thus, the challenge to the impugned proceedings has become academic

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• 2017 (11) TMI 1483
  Period of limitation under Section 158 BD - start of limitation period - Held that:- The limitation will start from 03.01.1997 and assessment is beyond one year. In that view of the matter, the contention that the appeal is required to be preferred before the Tribunal and such contention was not raised before the third member and limitation issue is a mixed question of law and facts can be raised any time.

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• 2017 (11) TMI 1480
  Disallowance of deduction u/s 80IA - For generation of cooling power restricted the claim of rate of conversion of 1 Tonne of refrigeration equal to 3.52KW of electric power to 1.02 KW of electric power and for generation of steam power he directed an ad-hoc reduction of 25% of the notion receipts from the sale of steam power - Held that:- That the assessee has generated steam power from bio-gas,(ii) Generation of cooling power from cooling towers and (ii) Cooling Power from Ammonia Absorption Refrigeration Plant These are entitled for deduction under section 80IA of the Act at their plants at Sandila and Chiplun for the AY 2005-06 to 2008-09. We agree with the findings of CIT(A) on the above reasoning recorded. Even, the assessee’s power unit is established as part of existing industrial establishment and the newly established unit itself is an integrated independent unit in which new plant and machinery is put up and that why these is capable of production are classified as newly established undertaking in the given facts and circumstances of the case. Quantum of deduction, the assessee has to take the electricity rate of Maharashtra State Electricity Board and U.P. State Electricity Board as a base for computing the rates. The notional sale value is to be converted from TR to KW, the conversion of the Tons of Refrigeration to Kilowatts being the unit of measurement for electric power, it should be taken at 1 Refrigeration Tonne =3.5168525 KW (rounded off to 3.51 KW). However the details can be verified by the AO at the time of giving effect to this order. Accordingly, this inter-connected issue for claim of deduction under section 80IA of the Act is allowed in favour of assessee. This issue of assessee’s appeals is allowed and that of the Revenue’s is dismissed. Disallowance of distribution expenses - Held that:- As noticed that the issue is common in all the years of the assessee’s appeals and the facts are exactly identical. as concluding that these expenses are incurred wholly and exclusively for the purpose of business. Further, this disallowance is bad in law and must be quashed because no incriminating material was found during the search.- Decided in favour of assessee.

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• 2017 (11) TMI 1476
  Reopening of assessment - Disallowance u/s. 40A(3) - whether the site was not purchased by the assessee and that no cash payment made to a single party has exceeded ₹ 20000/ - per day, towards purchase of materials? - Held that:- It is a fact that survey operations were conducted during the financial year itself and the AO came to know that the AOP was doing business from 01-01-2005 and returns were yet to be filed. It is on record that the members purchased the site from their own sources in their individual capacity and formed the AOP to do business. How the payments are to be considered in the hands of the AOP is not explained by the AO, while considering the same for violation of Section 40A(3). Moreover, regarding the so called cash payments under the head construction etc., the same were verified by the AO in the earlier scrutiny assessment and disallowed the entire amount of vouchers which were defective. How the same also can be considered for disallowance u/s. 40A(3) is also not explainable. The earlier assessment order of AO indicates that he has considered the facts and made assessment disallowing certain defective vouchers. Thus, the contentions of present AO while reopening assessment is devoid of merit. The basis of reopening is the record only and there is no failure on the part of assessee. Moreover, not only during survey but also in the course of assessment, the books of account were examined by the AO. So, the argument of AO is that 3CD report is misleading cannot be accepted. In fact, when entries are passed in AOP Books about the capital contribution, the same cannot be considered as payment by AOP for purchase of property, which happened in individual hands of members. Thus, the reopening per se is on wrong appreciation of facts and comes within the purview of change of opinion - Decided in favour of assessee.

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• 2017 (11) TMI 1475
  Reopening of assessment - whether reopening u/s. 147 is correct when the time to issue a notice u/s. 143(2) is open? - Held that:- As seen from the satisfaction recorded, the case was reopened by the AO on the reason that there was a difference of ₹ 3,30,017/- in the gross receipts reflected in the Form No:26AS and in the Computation of income with regard to Gross Receipts received from Commissioner, Tirupati Municipality and therefore the AO was of the opinion that there was reason to believe that income, chargeable to tax has escaped assessment. Once the difference in the gross receipts from Commissioner, Tirupati Municipality was duly reconciled by furnishing the rectified Form No.26AS downloaded from the Income Tax Dept. website, the reason to reopen ceased to exist. Further, the reasons recorded for reopening of assessment laid more stress on reconciliation of gross receipts and but not on escapement of any income and therefore there was no belief that there was any escapement of any income and hence the entire order passed u/s. 143(3) r.w.s 147 of the Act is without jurisdiction. Another contention was that the AO did not dispose off the objections. Without passing a separate order by considering the objections of assessee, the AO has simply mentioned in the assessment order that as per the Explanation 3 of the Provisions of the section 147 of the Act are attracted. AO continued the reassessment proceedings, without of disposing the objections raised by assessee by way of a speaking order. For the reasons stated above, both initiation of proceedings and continuation of assessment proceedings are ab initio void. Consequently, the order of AO/ CIT(A) stands set aside. Ld.CIT(A) should have examined the facts and arguments and should have followed the principles of law on the issue, as interpreted by higher judicial authorities. Appeal of assessee is treated allowed.

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• 2017 (11) TMI 1474
  Denying the benefit of Article-8 of the India- Malaysia DTAA - freight income earned by the assessee from shippers for transporting cargo loaded on feeder vessels for onward transportation by vessels owned, leased or chartered by the assessee - Held that:- As decided in the immediately preceding Assessment Years 2004-05 to 2007-08. we hold that the entire profits derived from the transportation of goods carried on by the assessee is to be treated as profits from operation of ships and therefore the benefit of Article-8 cannot be denied to the assessee on the part of the freight from voyage by the feeder vessels. Thus Ground No.1 raised by the assessee is allowed. Since the benefit of Article-8 has been given to the assessee on the freight income earned by it, we are not adjudicating upon the plea for the benefit under Article-8(3). Similarly, the issue of permanent establishment Article-5 is also not adjudicated upon as the same will come into question once the benefit under Article-8 is denied and income is to be computed as per Article-7. Thus the rest of the grounds of appeal are treated as academic in nature.

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• 2017 (11) TMI 1473
  TPO - comparable selection - Held that:- Referring to assessee's transaction qua provision of contract content / online courseware development services, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2017 (11) TMI 1472
  Payment on account of royalty for technical collaboration as per agreement to its AE - Held that:- When the issue as to payment or royalty and technical fee by the taxpayer to its AE has already been decided in its favour in AYs 2002-03 and 2004-05 by the Tribunal, an appeal preferred by the Revenue before the Hon’ble Delhi High Court has already been dismissed, we are of the considered view that the ld. TPO is to decide the issue qua payment of royalty and technical fees qua AY 2009-10 in accordance with the decision taken in earlier years in taxpayer’s own case. So, we remit the case to the TPO to decide afresh after providing an opportunity of being heard to the taxpayer. So grounds no.2 to 2.6 are determined in favour of the taxpayer for statistical purposes. Payment of royalty and technical fees - AO treating as intangible assets and capital expenditure and made disallowance- Held that:- When the agreement between the taxpayer and its AE is to grant indivisible and non-transferable nonexclusive right and licence to manufacture and assemble sale land distribute the product within the specified territory, it falls in the category of technical support and is not of enduring benefit of any kind to the taxpayer, so the addition made on account of royalty and technical fee is not sustainable, hence Grounds No.3 & 3.1 ordered to be determined in favour of the assessee. Addition u/s 14A - Held that:- When the entire working has been brought on record by the taxpayer during assessment proceedings as to availability of the surplus funds with the taxpayer and there has always been a credit balance in the bank of the taxpayer on every day, it goes to prove that taxpayer has used its own funds to purchase the mutual funds to earn interest free income and the taxpayer has not used loan or overdraft funds to make investment. Aforesaid facts have not been controverted by the AO by recording objective satisfaction that the taxpayer has used borrowed funds to purchase mutual funds. In these circumstances, contention of ld. DR that, “in case of huge circulatory fund, some disallowance should be there as there must be some expenditure” is not tenable. This contention is also not tenable in the face of the fact that AO has not invoked Rule 8D of the Act. So, we are of the considered view that disallowance made by the AO to the tune of ₹ 52,16,745/- is not sustainable in the eyes of law, hence ordered to be deleted. Ground No.4 is determined in favour of the assessee.

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• 2017 (11) TMI 1471
  Margin calculation - inclusion of payment of arbitral award on behalf of the AE - rule of consistency - Held that:- Payment on account of arbitration award cannot form part of the cost base for purpose of margin calculation. Ld. TPO is to examine the issue on factual basis by following the rule of consistency in the light of its order passed in AY 2012-13. So, grounds no.3 & 12 are determined in favour of the taxpayer for statistical purposes. Risk adjustment claim - Held that:- The taxpayer in this case is entitled for risk adjustment to the net margin of comparables for bringing them at par with the taxpayer - Decided in favour of assessee.

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• 2017 (11) TMI 1470
  Rejection of books of accounts - non maintenance of day to day Stock Register - trading addition - Held that:- It is a factual aspect that the assessee was not maintaining day to day stock register, therefore, it was not possible to verify the closing stock vis a vis quantity of purchase and sale of sugar. Therefore, sustain the rejection of books of account. The ld. CIT(A) records that the G.P. declared by the assessee was .46% while it was .64% in comparison to .71% of preceding year. Therefore, the addition sustained by the ld. CIT(A) is higher side. In view of this fact, sustain the addition only of ₹ 50,000/- - Decided in favour of assessee partly. Addition treating the agricultural income declared by the appellant as being income from undisclosed sources - Held that:- The assessee was not able to submit necessary documents in support of the contention that the assessee was having agricultural income of ₹ 22,900/- during the year under consideration. Therefore, in absence of any supporting document, sustain the order of the ld. CIT(A) on this issue.- Decided against assessee.

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• 2017 (11) TMI 1459
  Reopening of assessment - approval sought by the AO for initiating proceedings u/s. 147 - Held that:- This noting of the Addl. DIT, in our considered opinion, does constitute the approval of the competent authority in the instant case. Merely on the basis that Addl. DIT after recording his satisfaction sent the file to the DIT instead of sending it back to the AO and the DIT having given second approval in the matter, it cannot be said, in the peculiar circumstances of the case, that the competent authority, i.e., Addl. DIT did not accord its approval for initiating proceedings u/s. 147 against the assessee nor does the second approval given by DIT go to mitigate the authenticity of approval given by ld. Addl. DIT, as noted above. In fact, the first approval was given by the competent authority in the instant case. Such facts do not exist in the reported case relied by the ld. CIT(A). Therefore, the decision reached by the ld. CIT(A) on this count cannot be supported. Regarding variance between the proposal sent for approval and the reasons recorded as supplied to the assessee, which led the ld. CIT(A) to hold the re-assessment proceedings as invalid, we find that none of the parties before us have submitted the copy of reasons supplied to the assessee. The reasons recorded, as supplied to the assessee, are also not reproduced in any of the orders of authorities below. The contention of the ld. DR is that there is no variance in the reasons supplied to assessee and those proposed for approval. The substance of both is one and the same. In absence of copy of reasons supplied to the assessee before us, it is not possible to verify the alleged variance and to decide this issue at this stage. We, therefore, restore this issue to the file of ld. CIT(A) to examine whether the pith and substance of the reasons recorded as supplied to the assessee and the reasons contained in the proposal for approval is same or not. Appeal of the Revenue is allowed for statistical purposes.

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• 2017 (11) TMI 1451
  Addition of interest on loan from Govt. of West Bengal - Held that:- In the assessee`s case under consideration, the rate of interest, on the loan, is yet to be decided by the Government of West Bengal.We note that the Interest expenditure claimed on estimate basis is not an allowable expenditure under the provisions of lncome Tax Act. It is the claim of interest on account of being unascertained liability. We also note that in the audit conducted by C & AG, a comment was made that interest in respect of the unsecured loan from the Government was short provision resulting in understatement of loss, and therefore based on this comment, it was contended by the assesseethat the interest provided by the assessee was rather on lower side and should be allowed. We do not agree with this contention of the assessee because there is no any cogent evidence available on record from the Lender( Govt. of West Bengal) of the said loan about interest to be charged or not to be charged. Assessee has prayed the Bench that assessee company will get the sanction letter/confirmation from the Government of West Bengal about the rate of interest to be charged, or not to be charged, on such loan. Therefore, the Counsel prayed the Bench that the assessee has already applied to the Govt. of West Bengal,for confirmation letter and will get it very soon. Therefore, we direct the Assessing Officer to take into account the sanction letter/confirmation letter of the Government of West Bengal in respect of the rate of interest which is to be charged on such loan and adjudicate the issue as per the provisions of the Income Tax Act. Therefore, we allow this appeal for statistical purposes. Excess depreciation - Held that:- AO had not disputed that the claim made by the assessee was in accordance with the order of tribunal for Assessment Year 2002-03. However, he has not allowed the claim on ground that the order of tribunal has not become final as the department has filed appeal before High Court. We are of the view that further appeal has been filed, in no way, means that the tribunal’s order under consideration is not operational and effective. Unless and until the order of tribunal is reversed by High Court, the same has to be given due effect. Judicial discipline demands that once an order has been passed in the assessee’s own case, lower authorities are duty bound to act in accordance with the same. Moreover, as stated earlier, CIT(A) and ITAT have taken same view in Assessment Year 2004-05 and 2005-06 also. Thus the assessee is entitled to claim depreciation on the basis of W.D.V. - Decided against revenue

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• 2017 (11) TMI 1443
  International transaction of investment in equity shares of an AE - whether it would not fall within the purview of Sec.92 because no income arises out of such international transactions? - Held that:- Computation of ALP will arise income arises from an International transaction between AEs. It does not warrant determination or re-computation of a consideration received / given on capital account. Thus, going by the above, the transaction of investment in shares being payment on capital account falls outside the purview As case relied upon by DR of First Blue Home Finance Ltd. Vs. DCIT [2015 (9) TMI 1041 - ITAT DELHI] wherein held that in a case of issue of shares by Indian resident company to its AE Nonresident, there is no provision in Chapter X mandating addition on account of less share premium received also consequential interest on resultant deemed loan. The decision cited by the learned DR in fact supports the case of the Assessee. We however agree with the learned DR that the transaction of investment in shares of AE per se is an international transaction but the condition that income does not arise out of a capital account is the basis on which Courts have held that . To tHis submission is correct but the principle laid down is that the transaction of investment in shares being payment on capital account falls outside the purview of Chapter X of the Act. In that view of the matter, we hold that the determination of ALP in the present case cannot be sustained as the transaction in question is on capital account and determination of ALP in respect of such transactions is outside the purview of Chapter X of the Act. Consequently, the addition made by the AO in this regard is directed to be deleted. Transaction of providing guarantee by the Assessee in respect of a loan taken by its AE - whether it can be said to be an international transaction? - Held that:- the addition made by the AO ought to have been deleted by the CIT(A) as the Guarantee Commission charged by the Assessee has to be regarded as at Arm s Length. We therefore direct the addition made in this regard be deleted. Further, it is worthwhile to mention that the recent Safe Harbour Rules notified by the Central Board of Direct Taxes (Notification No. 46/2017 dated 7 June 2017) the guarantee commission / fee declared in relation to the eligible international transaction is at the rate not less than 1% per annum on the amount guaranteed. Thus, based on the above, it is evident that the guarantee fees charged by the Assessee is at arm's length. We therefore direct that the adjustment proposed by the Ld. TPO/AO be deleted. Nature of expenditure - expenses made on account of preparation of offer document for IPO - Held that:- We are of the view that the expenditure in question was rightly directed to be allowed by CIT(A). It is not disputed that the expenditure was incurred as part of the restructuring exercise. The assessee wanted to raise moneys from the public through the issue of shares. The IPO was postponed due to poor market conditions. The IPO proposed to meet the capital cost of business restructuring. Because of the poor market conditions the IPO was abandoned so also the proposal for restructuring the business of the assessee was also abandoned. The expenditure incurred in this regard were in the nature of advertising expenses, legal expenses, crediting analysis research fees, payment to Company Secretaries and other professional organizations in connection with the proposed IPO. The restructuring exercise was abandoned and the expenses incurred were written off in the books of account during the previous year relevant to A.Y.2010-11. In the light of the decision in the case of Binani Cement Ltd.(2015 (3) TMI 849 - CALCUTTA HIGH COURT) as well as Graphite India ltd.(1996 (6) TMI 73 - CALCUTTA High Court), we are of the view that the expenditure incurred on the abandoned project development should be treated as a revenue expenditure and allowed as a deduction. Restricting the interest in loan advanced to AE @ LlBOR+350 bps - not considering the cost of funds of the lender-assessee and creditworthiness of borrower using data on public domain relied upon by the TPO, for determining the ALP of interest on loan advanced - Held that:- Since it has already been held that there was no loan transaction at all, the question of computation of ALP interest on such loan transactions does not arise for consideration. Therefore grounds no.3 and 4 raised by the revenue are infructuous and are accordingly dismissed. Revenue appeal dismissed.

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• Customs

• 2017 (11) TMI 1496
  Violation of conditions for import of goods against EPCG licnece - failure to intimate the department after installation - allegation of installation of capital goods at non-approved premises - Benefit of N/N. 55/2003-Cus. dated 1.4.2003 - Held that: - From the facts on record, we do not find any allegation that the goods imported, though not installed at approved premises were otherwise not used for the intended purposes or for that matter were otherwise sold or disposed of in a clandestine manner. In this circumstance, what is therefore required to be adjudged is only whether the acts and omissions on which the proceedings have been initiated by the department or such that they constitute non-adherence or violation of mandatory or substantial procedural requirements, the breach of which would justify the action initiated against the appellants. Prima facie it is found that the firm has not violated any condition of the licence excepting the fact the licence holder has not intimated us about the installation of the machinery in the premises of the supporting manufacturer i.e. M/s.Regency Glazes Ltd. According to para 5.3.2 of Hand Book, the licencee can install the machinery in the premises of the supporting manufacturer and such a facility is allowed under Foreign Trade Policy / Hand Book. Although they have submitted the Chartered Engineer Certificate regarding installation of the machinery, the same may be taken as a supporting document but not the relevant document because Installation Certificate has to be obtained from the Central Excise Authorities and the Chartered Engineer as the case may be. The appellants have produced sufficient certification not only from the Chartered Engineer but also from the jurisdictional Assistant Commissioner of Central Excise that the capital goods imported by them against the concerned EPCG license had very much been installed and put in use initially at their own manufacturing premises as required. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1495
  Proceedings to levy Anti-dumping duty - Exclusion of the party from the proceedings - power to initiate proceedings under Rule 5 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping duty on dumped articles and for determination of injury) Rules 1995 - whether the direction as sought for by the petitioner/Association to direct the first respondent to proceed to determine his jurisdiction to initiate proceedings under Rule 5 of the Anti-Dumping Rules as sought for in their representation/application should be issued? Held that: - The apprehension of the petitioner/Association appears to be without any basis. This is so because of the manner in which Rule 12 of the Customs Tariff Rules is worded. In terms of Sub-rule (1) of Rule 12 of the Customs Tariff Rules, the Designated Authority shall proceed with the conduct of the investigation and in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping. To determine these three factors, essentially the first respondent has to go into the aspect as to who are the domestic industry and whether any of them are related to the exporters or importers. If at the inception of an enquiry by a Tribunal or an authority, a challenge has been made to the jurisdiction, the Tribunal/authority has to take a decision as to whether or not to act and give a ruling on the preliminary or collateral issue, but such ruling is not a conclusion. Above all, the rules are clear, especially Rule 12 of the Customs Tariff Rules and there is no necessity for this Court to issue any direction to the first respondent to decide the matter in a particular manner nor it would be right in doing so, as he is cast with a statutory duty to determine the injury based on relevant consideration, which undoubtedly would mean as to whether the fifth respondent has to be excluded from the proceedings or not. Petition disposed off.

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• 2017 (11) TMI 1490
  Stay of the reimbursement of the amount - the decision in the case of The Development Commissioner, MEPZ, Special Economic Zone & HEOUs, The Director General of Foreign Trade (DGFT) , The Secretary, Ministry of Commerce and Industry Versus M/s. Hospira Health Care India Pvt. Ltd. [2017 (7) TMI 786 - MADRAS HIGH COURT] contested - Held that: - The amount is not yet quantified - we are not inclined to stay the operation of the impugned order - decided against appellant.

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• 2017 (11) TMI 1452
  Valuation - Rule 8 - similar imports - Revenue entertained a view that the goods were undervalued for assessment by the importer–appellant - Held that: - It is an admitted fact that similar or identical items are not available with the authorities to compare the value or even to conduct the market enquiry to arrive at the value on computation - the methodology adopted by the Revenue by simply relying on the Chartered Engineer certificate who examined the raw material cost, cost of production etc. is not acceptable - matter is remanded to the original authority to re-determine the issue in all aspects after hearing the party - appeal allowed by way of remand.

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• 2017 (11) TMI 1450
  Refund of excess duty paid - SAFTA N/N. 10/2008-Customs dated 15.01.2008 - principles of natural justice - Held that: - the customs authorities have taken the application on record but did not decide the same by passing any speaking order - the AC passed the OIO rejecting the refund claim summarily without an opportunity of hearing to the appellant and similarly the Commissioner (Appeal) has also not considered any of the submissions of the appellant in the impugned order - case remanded back to the original authority with a direction to first decide the application of the appellant for reassessment of the BoE and thereafter decide the refund application after following the principles of natural justice - appeal allowed by way of remand.

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• 2017 (11) TMI 1444
  Misdeclaration of description of imported goods - redemption fine - quantum of penalty - Held that: - When the goods came from China and such goods were ‘opal glassware’, that remained uncontroverted. Similarly, the statement recorded from the above two persons also proved that they were aware of their ill will as well as pre-meditated design of the syndicate of above said persons to cause loss to Revenue - there shall be no redemption fine since imports were not under bond and no penalty can be simultaneously imposed on the proprietor Shri Rajesh Jain and Raj Agencies who are one and the same - demand of duty and interest upheld - appeal allowed in part.

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• 2017 (11) TMI 1440
  Valuation of imported goods - contemporaneous import of similar goods through other port - Held that: - In the present case, the reason being contemporaneous import of similar goods through other port, in such situation full particulars of other imports are to be examined and made available to the appellant also - In view of non-fulfilment of such requirement, reassessment order suffers from serious infirmity - it is a settled position of law that in terms of Section 14 of Customs Act, 1962, the transaction value is required to be accepted. The valuation relating to Valuation Rules can only be done when the transaction value is rejected for valid reasons. Relying on the decision of Hon'ble Supreme Court in Eicher Tractors Ltd. Vs CC Mumbai [2000 (11) TMI 139 - SUPREME COURT OF INDIA], the Tribunal held that transaction value cannot be rejected on the basis of availability of data value for contemporaneous import of similar goods. This may at best raises a suspicion on the transaction value but cannot form basis for refixing the value. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1439
  Classification of imported goods - Valuation - rejection of transaction value - Held that: - the impugned order records that appellant themselves imported similar items through Nhava Sheva three months before the present consignment. The authority reiterated that value difference of US$ 1.40 cannot be accepted and since goods are identical, applying Rule 5 of the Valuation Rules reassessed the same at unit price of US$ 14.63 - rejection of transaction value adequate and proper reason has to be adduced by the assessing officer. Considering that the imported goods are electronic items and price variation is in the range is only about 10%, there is no justification recorded in the original authority order for rejection and redetermination of assessable value. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1437
  Principles of natural justice - Benefit of N/N. 26/2000-Cus dated 01.03.2000 - denial on the ground that the process undertaken by Sri Lankan supplier does not confer the status of originating products - Held that: - It is indeed correct that the impugned order has been passed without hearing the appellant. The appellant was served with a show cause notice only on 21.10.2015 whereas within a week i.e. on 29.10.2015, the adjudicating authority has passed the order exparte - matter remanded to the adjudicating authority - appeal allowed by way of remand.

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• 2017 (11) TMI 1433
  Redemption fine - penalty - benefit of N/N. 21/2002-Cus. dated 1.3.2002 - the goods were examined and it was found that the goods contained copper scrap in wire forms, clippings and punchings which are Berry, Birch and Candy varieties - Held that: - the reply to the SCN in which the appellant has explained that the supplier on their own dispatched copper scrap, even though appellant placed orders for HMS scrap only. That the appellant had filed Bill of Entry on the basis of such documents and that they had no malafide intention to mis-declare or undervalue the goods. He submitted that the differential duty involved is only ₹ 5,53,736/- - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• Corporate Laws

• 2017 (11) TMI 1484
  Forensic examination of various documents to determine whether those documents were forged and/or bear forged signatures and for other reliefs - Held that:- A perusal of the record indicates that the appellant had filed a Company Application No.429 of 2007 on 29th September 2007, interalia praying that the sur-rejoinder filed by the respondent nos.1 to 5 be rejected on the ground that new documents cannot be permitted to be filed, after more than five years from filing of the said documents. The appellant, however, did not pursue the said company application in the year 2007 and belatedly chose to file an application in the year 2012 to refer some of the documents annexed to the sur-rejoinder for forensic examination. The application filed by the appellant for referring some of the documents for forensic examination in the year 2012 was after thought and was filed with an intention to delay the outcome of the Company Petition No.70 of 2006 filed by the appellant. In view, there is no infirmity with the impugned order passed by the Company Law Board. Appeal is devoid of merit.

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• PMLA

• 2017 (11) TMI 1499
  PMLA proceedings against banks - bonafide conduct of banks - attached property was purchased much prior to the period when the facility of offending loans were sanctioned to the borrowers - Held that:- As decided in State Bank of India and Ors. Vs. The Joint Director, Directorate of Enforcement, Kolkata [2017 (8) TMI 754 - ATPMLA] at somewhat similar situation held that in the conduct of the banks are always bonafide. Both banks are innocent parties. There is no nexus whatsoever between the alleged crime and the two bank who are mortgagee of all the properties which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority to the secured creditors to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The said Judgment passed by us has not been considered and followed by the Adjudicating Authority. It is a very serious matter. The Authority is supposed to give due respect to the judgment of the higher Authority and Courts.

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• Service Tax

• 2017 (11) TMI 1497
  Consultancy Engineering service - sub-consultancy, whether exempt or not? - extended period of limitation - Held that: - the appellant were engaged in providing consulting engineer service and claimed sub-consultancy work as exempted service - if such is the situation, the case of mis-representation etc. to invoke extended period is not tenable. Even otherwise, the appellants did declare all the considerations received by them in their statutory returns filed with the Department - demand for extended period cannot be sustained - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1491
  Business Auxiliary services - discount (commission) - 1% additional discount is over and above the normal trade discount - the decision in the case of M/s. IRIS Computers Ltd. Versus Commissioner of Service Tax, Jaipur [2017 (9) TMI 233 - CESTAT NEW DELHI] contested - Held that: - delay condoned - appeal admitted.

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• 2017 (11) TMI 1482
  Refund of service tax paid - appellant was of the view that it is not providing the management consultancy service and accordingly, is not liable to pay Service Tax under that category of such taxable service - denial of claim on the ground of time limitation - Section 11B of the Central Excise Act, 1944 - Held that: - It is an admitted fact on record that the appellant got itself registered with the Service Tax Department and deposited the Service Tax for providing the management consultancy service. Since the refund application was filed by the appellant and entertained by the Department under the provisions of Section 11B ibid, the time limit provided there-under are strictly applicable for consideration of such application. In this case, the refund application was filed on 18.05.2009, claiming refund of Service Tax paid during the period July 2008 to December, 2008 - Section 11B in unambiguous terms provides that refund claim has to be filed within one year from the date of payment of duty (Service Tax). The refund application was filed and decided under Section 11B ibid, the time limit prescribed therein should be strictly followed in entertaining the refund application. Since the adjudicating /appellate authorities are created under the statute, are duty bound to obey the provisions contained therein - rejection of refund application by the authorities below is in conformity with the statutory provisions. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1468
  Abatement - N/N. 15/2004-ST or 01/2006-ST dated 01.03.2006 - denial on the ground that appellant availed CENVAT credit - Held that: - Admittedly, the appellants availed credit on input services. That will bar them from availing said abatement. However, reversal of credit already availed will amount to non-availment of credit - abatement allowed. Reversal of credit - whether or not the appellants are covered by the said ratio of the decision in the case of CHANDRAPUR MAGNET WIRES (P) LTD. Versus COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT OF INDIA], with regard to the reversal of credit - Held that: - The proportionate calculation of the input service credit attributable to the taxable output service of “commercial or industrial construction” can be categorically established from such records - in case of reversal of such proportionate credit attributable to commercial or industrial construction service then the appellants eligibility to the abatement is to be upheld - the appellant is covered by the ratio of the above case. Whether or not reversal of proportionate credit will satisfy the ratio with reference to non-availment of credit which is a condition for abatement? - Held that: - It is clear that reversal of credit even to a proportionate extent attributable to a particular output service will satisfy the condition of Notification providing for exemption or abatement. The condition that no credit of tax paid on the input service will stand fulfilled if reversal of already taken credit is done. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1467
  CENVAT credit - input services - Warehouse Charges - Taxi Charges - Bank Guarantee - Insurance charges - Commission charges - period of dispute involved in this case is from 2006-07 to 2011-12 - Held that: - the services used by the provider of taxable service for providing the output service are considered as input service for the purpose of the benefit of cenvat credit. Further under the un-amended definition of input service (effective upto 28.02.2011), the phrase “activities relating to business” was specifically finding place in such definition clause - Since the appellant has availed the disputed services for accomplishing the business activities, the cenvat benefit under the inclusion part of the definition is available to the appellant for consideration as input service on the disputed services. Even under the amended definition of input service w.e.f 01.03.2011, the appellant will also be eligible for cenvat credit benefit on the disputed service, on the ground that the said services are not falling under the excluded category as provided under clause (A), (B) and (C) of the definition of input service. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1466
  Time Limitation - non-payment of service tax - cable operator service - Whether in this case, longer limitation period under proviso to Section 73 (1) of the Finance Act, 1994 is applicable for demand of service tax for the period from 10.09.2004 to 15.06.2005 raised by show cause notice dated 21.08.2007 and whether penalty is imposable on the Respondent under Section 78 of the Finance Act, 1994? - difference of opinion - majority order. Held that: - where there is no suppression, the pre-condition for applicability of proviso to Section 73 (1) ibid cannot be said to be met and hence, extended period of limitation contemplated therein cannot be invoked - Since, the demand against the appellant was confirmed under the proviso to Section 73 (1) ibid, which is not maintainable, there is no requirement of any further analysis with regard to the revenue neutrality situation - longer period of limitation cannot be invoked for confirmation of the adjudged demand - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1464
  Valuation - includibility - whether the value of diesel supplied free by the customer is required to be included for purposes of levy of service tax? - Held that: - the value of free supplies by the service receiver to the service provider is not includible in the „gross amount charged‟ by the service provider from the service receiver - there is no justification for adding the value of free supply diesel for purposes of levy of service tax. Site formation and excavation service - levy of service tax - assessee’s contract with M/s ACL for supply and deployment of earth moving equipments such as excavators, bulldozers etc for use in mining work - Held that: - the SCN has referred to the various contracts executed by the assessee with M/s ACL. The adjudicating authority has also recorded the nature of activities required to be carried out and concluded that the contract was composite but the essential character of the contract is that of supply of tangible goods service and not site formation service - the service rendered to M/s ACL will be liable for service tax under the category of supply of tangible goods, that too only w.e.f. 16.5.2008 - decided against Revenue. Cargo Handling Service - case of Revenue is that nature of activity carried out in the mining area of ACL was transportation of limestone and rejects with the help of dippers and dumpers - Held that: - The Tribunal in the case of Sainik Mining and Allied Services Vs. CCE [2007 (11) TMI 90 - CESTAT, KOLKATA] has held that Activity of mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area, does not come under the purview of cargo handing service - demand withheld - decided against Revenue. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1463
  Classification of services - Cargo Handling service or works contract? - respondent-assessee are engaged in providing a range of services to NMDC with reference to mining, transportation, loading of iron ore for NMDC in their mines - Held that: - it is clear that the respondent-assessee are engaged in mechanised excavation, loading and transportation of iron ore fines in tippers. The operation is mechanised and the nature of loading activities and the distance of transport has also been mentioned in the work orders - the Tribunal in the case of Kanak Khaniz Udyog vs. CCE, Jaipur-II [2017 (3) TMI 1365 - CESTAT NEW DELHI] and in Hazaribagh Mining & Engg. Pvt. Ltd. vs CCE.,C&ST, BBSR-I [2016 (12) TMI 1131 - CESTAT, KOLKATA] held that the tax liabilities in these type of activities will arise only from 01.06.2007 under mining services and cannot be taxed under Cargo Handling Services - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1462
  Excisability - sugar syrup - captive consumption - Whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty? - Held that: - identical issue has came up before the Tribunal in the case of Rishi Bakers Pvt. Ltd. vs. CCE, Kanpur [2015 (4) TMI 893 - CESTAT NEW DELHI], where it was held that Since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of N/N. 67/95-CE would not be available - sugar syrup is not subject to excise duty - demand set aside. Excisability/marketability - special cream - captive consumption in manufacture of biscuits - Held that: - test i.e. marketability has not been examined by the lower authority in the instant case. When it is so, then we set aside the impugned order regarding the cream and remand the matter back to the adjudicating authority to examine the test of marketability of the cream and decide the matter denovo - matter on remand. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 1448
  CENVAT credit - outdoor catering services after 01.04.2011 - Held that: - the Cenvat credit on outdoor catering services pertains to the period prior to 01.04.2011 but the appellant has availed the credit after 01.04.2011 - the Board circular dated 29.04.2011 clarifies that the credit on such services shall be available when the services have been completed before 01.04.2011. This means that where the services have been fully received prior to 01.04.2011, the credit of service tax paid on the services is available even though payment was made on or before 01.04.2011 - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1447
  Penalty u/s 77 and 78 - alleged non-payment of service tax - suppression of facts - Held that: - the department has not produced any evidence which shows that there is suppression of material fact by the assessee with intent to evade payment of service tax - penalty set aside - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1442
  Penalty u/s 78 of FA - Works contract service - composite contract - case of appellant is that they had disputes with the contractors regarding payments and they were in many arbitration proceedings, which created serious difficulty in discharging Service Tax liabilities in a timely manner - Held that: - this is a fit case for invoking provisions of Section 80 for waiving aside the penalty - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1441
  Maintainability of appeal - non-compliance with pre-deposit - Section 35F of the CEA, 1944 - Held that: - The Registry has not issued defect notice to the appellants before numbering the appeal to comply with the mandatory pre-deposit. Perhaps Registry was carried away by the wrong mention of figures in column 13 & 14 of the ST-5 Form. The appeal has been erroneously numbered by the Registry and come up for hearing on the petition for condonation of delay - it is fit to give time to the appellant to comply with the mandatory pre-deposit as the appellant was not put to notice about such non-compliance - appellant is directed to comply with the mandatory pre-deposit within two weeks from today and report compliance on 20.09.2017.

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• 2017 (11) TMI 1435
  Penalties - Non-payment of service tax - reverse charge mechanism - commission paid to foreign agent - Business Auxiliary Service - Held that: - the issue appellant is liable to pay service tax under reverse charge mechanism on the commission paid to foreign agent was under much dispute and the litigation had traveled upto the Hon’ble Supreme court when the decision of the Hon’ble Supreme Court has been passed in 2010 whereas the disputed period in this appeal is from 18.4.2006 to April 2007, which is much before the decision of the Hon’ble Apex Court - the penalties imposed are unwarranted and require to be set aside - penalties u/s 76 and 78 set aside - interest and penalty u/s 77 upheld - appeal allowed in part.

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• 2017 (11) TMI 1430
  Franchise service - reverse charge mechanism - whether the appellant satisfy the fourth condition stipulated in the definition of Franchise service as it stood at the relevant period or otherwise? - Held that: - the period involved is prior to 18.4.2006 on which date Section 66A came to be introduced in the Finance Act, 1994 - for the period from 01.-07.03 to 15.06.2005 the law laid down by the Indian Ship-owners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], will prevail, since the appellants have paid the franchisee fee to the foreign franchisor, hence no tax liability will arise for that period - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (11) TMI 1486
  Refund of duty paid under protest - time limitation - Section 11B of the Central Excise Act, 1944 - Held that: - In view of specific finding recorded by the Tribunal that the duty amount has been deposited under protest, limitation of one year to make the claim of refund under Section 11B would not apply at all to such a case and therefore the amount is liable to be refunded to the appellant along with interest excluding the period for which the petitioner had not applied that is upto 2009 from the date it became liable to be refunded - the principal amount is to be refunded but no interest be given from the date writ petition was allowed to the date when the appellant made an application for refund that is 2009 - appeal allowed in part.

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• 2017 (11) TMI 1481
  CENVAT Credit - input services - after sales service, such as repairs, during warranty period - Held that: - the service of after sales repair has been rendered not in the factory and not even used in the manufacture of goods up to the place of removal. Hence, the Cenvat credit is not allowable under the main clause - the activities in dispute also cannot be covered within the includes clause of definition of ‘input service’. The eligibility of a service as input service is required to be decided in relation to the definition of input service given in rule 2 (l) of the Cenvat Credit Rules. The fact that the value of certain services are included in the assessable value by itself will not entitle the Cenvat credit. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1479
  Clandestine removal - MS Ingots - entire case of the Revenue is based on the allegation that invoices were issued by M/s Lauls Limited in favor of certain assessees such as M/s JRM Steels and M/s Bhushan Steels for supply of M.S. Ingots - Held that: - The allegation of clandestine clearance is a very serious charge. The department is required to support such a charge with tangible evidence. In the present case, the allegations of clandestine clearance has not been supported by any tangible evidence. Without support of evidence, allegation remains only allegation and cannot be taken as established. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1478
  Area Based exemption - N/N. 56/2002-CE dated 14.11.2002 - substantial expansion - The department proceeded to deny the Cenvat credit availed by the appellant amounting to ₹ 2,19,69,001/- on goods procured from M/s Ritzy Polymers which were cleared availing the benefit of N/N. 1/2010 - Held that: - availment under N/N. 1/2010 is in dispute which is yet to be settled. However, the alternate plea that they would have been entitled to N/N. 56/2002 upto 05.09.2014 appears to have been considered and permitted by the jurisdictional Central Excise authorities. If that is so, then there will be no justification to deny the Cenvat credit availed by the appellant on goods received from M/s Ritzy Polymers - matter remanded for verifying whether M/s Ritzy Polymers have been permitted to avail benefit of N/N. 56/2002 during the period under dispute. Penalty - CENVAT credit in respect of goods found short at the time of stock verification - Held that: - the disputed amount stands paid by the appellant even before issue of SCN - there is no justification to impose penalty which is set-aside. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 1477
  CENVAT credit - Department was of the view that part of the imported scrap cleared has to be considered as clearance of impugned, as such and hence as per Rule 3 (5) of the CCR 2004, the appellant should reverse the credit availed on this portion of the scrap instead of paying duty on the transaction value on such segregated material - Held that: - there is no dispute regarding the receipt of goods at the appellant’s factory. To prove the point, the appellant has submitted detailed documentation through which they have attempted to establish that the part consignments belong to the original bills of entry - for verification, the matter may be remanded. CENVAT credit - Aluminum scrap - The view of the Revenue is that this amounts to clearance of inputs as such and will incur the mischief of rule 3 (5) of the Cenvat Credit Rules, 2004 and requires reversal of credit availed on this portion of the scrap - Held that: - a similar issue pertaining to segregation of copper scrap has arisen in the past and Circular No. 1029/17/2016 CX dated 10/05/2016 was issued by CBEC. The circular has clarified the treatment to be given to the clearance of segregated foreign material - It is not clear from the impugned order whether the Adjudicating Authority had the benefit of the clarification issued by the board at the time of passing the order - matter on remand. Appeal allowed by way of remand.

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• 2017 (11) TMI 1469
  Liability of interest and penalty - irregular availment of Cenvat Credit of Customs Education Cess paid against the Bills of Entry (but not utilised) - Held that: - the wrongly availed Cenvat Credit of ₹ 21,44,480/-, had never been utilized by the appellant for payment of duty on the finished goods removed by it from the factory. Since the appellant had all along maintained sufficient balance in between the period of taking of Cenvat Credit and its subsequent reversal, such entry in the Cenvat account will be considered as a mere book entry and in absence of its utilization, demand of interest and penalty cannot be confirmed against the appellant. Identical issue decided in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE Versus M/s BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1465
  100% EOU - valuation of malt manufactured by the assessee and cleared back to the principal manufacturer - job-work - captive consumption - clarification F. No. 6/15/2009-CX-I dated 31.03.2010 issued by CBEC - Held that: - the CBEC circular cannot be followed for determining the value of the malt cleared by the job worker to principal manufacturer - decided against Revenue. Valuation - job-work - Department was of the view that the value of sprout which emerges during the process of making malt and cleared out by the job worker (assessee) is required to be added to the value of the malt for payment of excise duty - Held that: - appellant has sold the sprouts outside to the third party and retained the sale proceeds, then the value is required to be added to that of the goods, the malt supplied to the principal manufacturer and it attracts excise duty - decided against Revenue. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1461
  Benefit of reduced penalty - Whether, appellant herein is to be extended the benefit of discharge of 25% of the amount of duty confirmed, as penalty under the provisions of section 11 AC of Central Excise Act 1944 or otherwise? Held that: - the entire amount of ₹ 67,46,191/- was deposited before the appellant was informed about the crystallization of the duty liability of 42,77,334/- by a letter dated 02/09/14 - If these facts are not denied and remain undisputed, the appellant needs to be extended the benefit of discharge of penalty of 25% of the amount of duty crystallized against them. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1460
  CENVAT credit - waste, by-product, refuse generated during the process of manufacture - Rule 6 of CCR - Held that: - identical issue has been decided by the order of Tribunal in Shivratna Udyog Ltd. & Ors. [2017 (9) TMI 985 - CESTAT MUMBAI], where In case of by product or waste the decision of Jurisdictional High Court of Bombay in the case of Rallies India Ltd. [2008 (12) TMI 46 - HIGH COURT BOMBAY] settled the issue that in case of by product or waste cenvat credit cannot be denied - in case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1458
  Penalties - CENVAT credit - fake documents - Held that: - the penalty equal to the credit allegedly wrongly taken has been imposed under three different provisions of law for the same offence - for single offence, multiple penalties need not be imposed. Penalty under Rule 15(1) of the Cenvat Credit Rules and penalty imposed under Rule 25(1)(a) of Central Excise Rules 2002 read with 11AC are set aside. Penalty imposed under Section 15(2) read with 11AC of Central Excise Act 1944 is upheld. Redemption fine - Held that: - there is no merit in such imposition of Redemption Fine when no goods were seized and no goods are available for confiscation. Redemption Fine imposed is therefore set aside. Appeal allowed in part.

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• 2017 (11) TMI 1457
  CENVAT credit - service of renting of immovable property received in respect of the premises of their job worker - denial on the ground that during said period M/s. Rupal Drugs Ltd. were manufacturing for themselves and therefore cenvat credit cannot be allowed - Held that: - appellants have claimed that during 2007-08 and 2008-09 M/s. Rupal Drugs Ltd. was doing their job work and not involved in manufacturing activity of their own. In support of same, he has produced the ER-1 return of the said period which he claimed to have produced before the lower authorities who did not notice on the same, but instead relied on the letter dated 17.02.2010 which was not related to M/s. Rupal Drugs Ltd. - there is contradiction in the impugned order - matter is remanded to the Commissioner (Appeals) to resolve the difference between the letter dated 17.02.2010 relied by him and the ER-1 submitted by the appellants - appeal allowed by way of remand.

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• 2017 (11) TMI 1456
  Valuation - includibility - cost incurred on account of packing material used for packing from bulk pack to retail pack at job-worker’s end - job work charges - Held that: - there is no dispute that the appellant while clearing the goods in bulk paid the duty on the value which is the sale value charged to the ultimate customer even after packing of the goods at the job-workers end - any cost before sale of the goods clearly stands included in the overall transaction value charged to the customers - even though there is a cost at the job-workers end in respect of packing material and packing activities, the same cannot be loaded further on the transaction value and cannot be demanded duty there upon. Further inclusion not required - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1455
  Refund claim - whether the appellant is entitled for refund of accumulated credit on the ground that the appellant was not in a position to utilize the credit on duty paid inputs in respect of final products exported under bond? Held that: - As per the facts of the case though the credit was accumulated when initially the appellant filed refund claim but after the aforesaid Tribunal order when the Assistant Commissioner considered the sanction of refund claim he noticed that the appellants have already utilized the claimed amount of ₹ 1,98,82,260/- and they have not maintained the balance of accumulated credit at least the amount of claim made by them in their RG-23A Part-II account and the balance was nil - since there was no accumulated Cenvat Credit available in the books of the appellant, there is no question of refund - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1454
  Valuation - short payment of duty - case of Revenue is that the duty payable was calculated on the assessable value of excisable goods on actual sales only and duty payable on stock transfers to their other depots was not calculated and paid - Held that: - the appellant voluntarily paid the duty along with interest before the issue of SCN - the appellant has disclosed all these facts in their ER 3 returns and the department has scrutinized the ER 3 returns and then alleged that there is suppression of facts on the part of the appellant - also, the appellant had a doubt as to whether the goods transferred to the depot are liable to duty or not. The department has not brought any evidence on record to prove suppression of facts on the part of the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1453
  Valuation - medicaments sold through consignment agents by the appellant - time limitation - penalty - Held that: - though the appellant have suo-moto paid the duty amount for ₹ 4,35,439/- and declared in their RT.12 return but for the past period they have neither paid the duty nor declared to the department. Department was unaware of the differential duty liability for the past period, therefore the appellants have suppressed the facts - extended period rightly invoked. As regard the payment of ₹ 4,35,439/- there is no suppression of fact, however the duty was admittedly paid which is covered by the proviso to Section 11A (2B). Therefore such demand stand maintained. In respect of this amount there is no suppression of fact, the penalty under Section 11AC of ₹ 4,35,439/- is not legal and proper hence the same is set aside. Personal penalty - Held that: - since the major amount was paid by the appellant suo-moto and considering the nature of the case, it cannot be said that the appellant. Shri S.N. Narkar has any malafide intention, therefore the aiding and abetting the evasion of duty is not proved against the appellant, hence he is not liable for penalty. Appeal allowed in part.

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• 2017 (11) TMI 1449
  CENVAT credit - Trading activities - Rule 3 and Rule 9(6) of Cenvat Credit Rules, 2004 - Held that: - legal fiction given in the Explanation in order to remove doubts was introduced on 1.4.2011. Even if it is considered that trading is not an exempted service, it is also a fact that it cannot be considered as a service within the scope of Finance Act, 1994 during the material time. Even in such situation, the appellants cannot take credit on input services, which are utilised for trading activity. As trading is neither a service nor an exempted service during the material time, the appellants are not covered by the Cenvat Credit Scheme with reference to such activity. Extended period of limitation - Held that: - The input services, on which credit was availed by the appellant, were consumed for trading activities and such credit could not have been availed or taken for discharging service tax on the services provided by the assessee - there is no scope for any interpretational misconceptional on this aspect - extended period rightly invoked. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1446
  CENVAT credit - demand of 10% of the exempted final product on the ground of improper availment of CENVAT credit - common input services used in dutiable as well as exempted final products - non-maintenance of separate records - Held that: - it is well settled law that full reversal of credit alongwith interest should be considered as if that the appellant did not avail any credit on such product - the decision in the case of Chandrapur Magnet Wires (P) Ltd. Vs. Collector [1995 (12) TMI 72 - SUPREME COURT OF INDIA] relied upon - full reversal of credit alongwith applicable interest will satisfy the compliance of Rule 6 and will not attract payment of 10% of the exempted final product - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1445
  CENVAT credit - high chrome grinding media balls, which were procured for further process - Revenue held a view that the grinding media balls procured by the appellants were as such cleared by them after some process and the credit of duty paid on inputs is not eligible to them - Held that: - the appellants cleared the final products on payment of central excise duty on a value added consideration which is much higher than the cenvat credit availed on the impugned inputs - Even if the process undertaken by the appellant is to be considered as not amounting to manufacture so at the time of clearance of the final products, the payment is much higher than the credit taken, the same will satisfy the legal provisions of reversal of credit on the inputs - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1438
  Maintainability of appeal - Monetary limit of amount involved in appeal - Held that: - Since in these appeals the amount involved is less than ₹ 5,00,000/-, the appeals have to be rejected. As regards appeals filed prior to issue of these instructions, the circular is applicable in respect of appeals filed prior to issue of instructions also - CBEC F.No.390/Misc/163/2010-JC dt. 01/01/2016 has clarified that the instructions will apply to appeals pending before High Court and CESTAT. Appeal dismissed being not maintainable.

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• 2017 (11) TMI 1436
  Valuation - abatement - provisional assessment - adjustment of excess paid duty with short paid duty - Held that: - the period is prior to 25.6.1999 when proviso to Rule 9B of erstwhile Central Excise Rules, 1944 was added - In the decision of Panasonic Battery India Co. [2013 (9) TMI 652 - CESTAT AHMEDABAD], the Larger Bench had analyzed the issues and held the issue in favor of the assessee. The excess/paid has to be adjusted towards short-payment of duty at the time of finalization of provisional assessment. Bar of unjust enrichment under Rule 9B(5) of Central Excise Rules, 1944 is not applicable to finalization of assessment for the period prior to 25.6.1999, even if the assessment is finalized after 25.6.1999. Demand withheld - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1434
  Manufacture - Department was of the view that such scraps having been generated during the fabrication of capital goods, which amounts to manufacture is liable to payment of duty - whether the respondent is liable to pay excise duty on the waste and scrap removed? - Held that: - Undisputedly, such waste and scrap has arisen out of repair, modernization of the plant or machinery - there is no allegation in the show cause notice that the respondent has availed credit, particularly on the capital goods - SCN is defective - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1432
  CENVAT credit - capital goods - simultaneous availment of credit and depreciation - case of Revenue is that the revised returns filed by the appellant after the due date would not regularize the credit wrongly taken by the appellant - Held that: - All the documents produced by the appellant would go to show that the appellant has taken steps to rectify the defect - since the appellant has rectified the mistake of taking CENVAT credit as well as depreciation under Income Tax Act, the demand is unsustainable - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1431
  Demand of interest and penalty - failure to pay duty as per Compounded Levy Scheme - Held that: - the issue in dispute stands covered by the judgment of the Hon’ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills [2015 (11) TMI 1172 - SUPREME COURT], wherein the Hon’ble Apex Court has struck down 96ZO, ZP and ZQ of the erstwhile Central Excise Rules, 1944 - interest and penalty set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 1488
  Condonation of delay in filing revision - delay of eight years, eight months and twenty five days - Held that: - the order of Tribunal was served upon the department on 09.07.2002 and it has been stated that the department has decided to file revision on 02.01.2003 i.e. after about six months from the date of service of order dated 09.07.2002. In the year 2009, the department came to know that no revision has been filed by the State Counsel. Therefore, the learned Chief Standing Counsel was requested to allot the files to some other State Counsel. However, no explanation from the year 2002 to 2009 has been given. In case files were allotted to the State Counsel in the year 2003, even then the revisionist must have contacted the State Counsel / office of the Chief Standing Counsel to know about the fate/ progress of the aforesaid revision, but nothing has been seriously done on the part of the revisionist with regard to filing of the revision. Therefore, the explanation given by the revisionist for condonation of delay cannot be said to be the sufficient reasons. Delay in filing instant revision cannot be condoned - application for condonation rejected - revision also dismissed being barred by the time.

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• Indian Laws

• 2017 (11) TMI 1489
  Misconduct by CA - Irregular allotment of shares of BFSL involving irregular subscription - Held that:- The most glaring fact that completely belies the case of the respondent is that the fixed deposits which were given as security for issuance of the stock invests belonged to the respondent. This is clear from both SEBI's investigation as also the statement recorded by the DC of the ICAI. The respondent admitted that the fixed deposits that were given as security for the issuance of stock invests. Thus there can be no doubt that the respondent was guilty of the misconduct and has failed in his professional duty of maintaining a distance between him and the promoter. His conduct leading upto the irregular allotment of shares is blameworthy and at fault.The conduct clearly constitutes `misconduct'. Allotment of 7,000 shares against applications accompanied by ante-dated stock invests issued by Sangli Bank - Held that:- It was none else but the respondent who was conducting all the dealings leading up to the issuance of the stock invests and allotment of the shares - though the applications for allotment of shares were allegedly withdrawn subsequently. Thus, it can be seen that both SEBI and ICAI have found him guilty after following due process. Statement of the respondent has been recorded before both the authorities. He has candidly admitted in his statement that he was to be paid 6% commission on these transactions and that he did not appeal against the order of SEBI, debarring him for 5 years after holding him guilty. Even the DC held him guilty and the ICAI Council of ICAI, in it its meeting on 2nd June, 2013, directed his removal from the register of members of ICAI for a period of one year. This recommendation of the ICAI having been made on 2nd June, 2013, this Court notes that events which relate to the case date back to 1995. More than 22 years have passed since the events have transpired. Though this Court may have been inclined to increase the nature of punishment to the respondent, owing to the long delay, it is directed that the respondent shall be debarred for a period of one year as recommended by the DC. This Court would like to observe that CAs ought to maintain the highest level of ethics and integrity, not only in the interest of their clients but also to ensure that probity and sanctity are not compromised in any manner as CAs are not merely professionals engaged by their clients, but are protectors and guardians of financial markets on which a nation depends. The respondent was well aware of the misconduct in which he had indulged and was praying for sympathy from the ICAI Council. The reference is accordingly accepted and in exercise of powers under Section 21(6) of the Act, it is directed that the respondent shall be suspended from the membership of the ICAI for a period of one year. During this period, the respondent is restrained from rendering any services as a CA as recognized by the Chartered Accountants Act, 1949.

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• 2017 (11) TMI 1487
  Recovery along with pendente lite and future interest @ 24% per annum - Held that:- This Court is of the view that the outstanding amount of ₹ 89,84,570/- payable by the defendant is clearly reflected in the ledger account maintained by the plaintiff. Further, the act of the defendant in issuing cheque dated 1st February, 2014 for a sum of ₹ 25,00,000/- in part payment of the aforesaid outstanding amount and the same being dishonoured vide return memo dated 26th April, 2014 with remarks “Funds Insufficient” are clearly indicative of the defendant’s malafide intent of attempting to evade the payments due and payable to the plaintiff-company. Also, despite issuance of a legal notice dated 9th May, 2014 by the plaintiff calling upon the defendant to clear the outstanding dues, the defendant has neither replied to the same nor cleared the outstanding dues till date. As the averments in the plaint have not been rebutted by the defendant in spite of ample opportunities given by this Court, they are deemed to have been admitted. Consequently, the present suit is decreed for ₹ 1,11,04,928/- in favour of the plaintiff company and against the defendant along with pendent lite and future interest @ 8% per annum on the outstanding amount along with costs incurred by the plaintiff.

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