TMI Tax Updates - e-Newsletter
November 5, 2018

Case Laws in this Newsletter:

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

Articles

1. Employees contributions- S. 2.24.x , 36.1.va and 43B addition challenged in WP and considered by Madras High Court – improper course and actions by all

   By: DEVKUMAR KOTHARI

2. QUANTITATIVE RESTRICTIONS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST – CONCEPT & STATUS (Updated as on 01st November 2018)

2. Some Thoughts on Credit Risk and Bank Capital Regulation (Shri N.S. Vishwanathan, Deputy Governor, Reserve Bank of India - October 29, 2018 - Delivered at XLRI, Jamshedpur)

3. Sovereign Gold Bond Scheme 2018-19 (Series III) – Issue Price

4. India and Japan signs a Loan Agreement worth ₹ 1817 crore for the ‘Project for the Construction of Turga Pumped Storage (I)’contributing to the Industrial Development and Living Standard Improvement in the State of West Bengal

Circulars / Instructions / Orders

Customs

1. 42/2018 - dated 2-11-2018

Procedure for a Pilot on Transhipment of Export Cargo from Bangladesh to third countries through Land Customs Stations (LCSs) to Kolkata Port / Airport, in containers or closed bodied trucks – Reg.

Highlights / Catch Notes

GST

• Market Fee Valid Post-GST Implementation Under State Law; Supported by Entry 66, List-II, VIIth Schedule.

  Case-Laws - HC : Levy of market fee - Validity of levy after promulgation of Goods and services tax (GST) - the market fee is leviable under a separate enactment under the State’s power to legislate under Entry 66 of the List-II of the VIIth Schedule.
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Income Tax

• Exclusion of Payments to Unauthorized Occupants in Long-Term Capital Gain Calculation for Ancestral Property Sale Accepted.

  Case-Laws - AT : Computation of long term capital gain - Sale of ancestral property - Exclusion of the amount paid to the unauthorized occupants directly by the purchase of the property - LTCG offered by the assessee accepted.
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• Adjudicating Authority u/s 6(1) of PMLA 2002 to Oversee Benami Transactions for Streamlined Enforcement.

  Notifications : Benami Property - the Adjudicating Authority appointed u/s 6(1) of the Prevention of Money-laundering Act, 2002 shall discharge the functions of the Adjudicating Authority under the Benami Act.
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• Assessees can change their stance on receipt taxability at Tribunal if all facts are documented.

  Case-Laws - AT : The assessee can change its stand at any point of time if it seems to him that the receipts are not taxable in his hand as per the provisions of law. - Assessee may raise that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item.
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• RDCA Receipts Not Taxable as 'Royalty' Under Article 12(4) of India-Netherlands DTAA; Classified as Cost-Sharing Reimbursement.

  Case-Laws - AT : Taxability of receipts under Research and Development Co-operation Agreement - receipts under RDCA are not taxable as the same is not ‘Royalty’ under Article 12(4) of the India-Netherlands DTAA, and it is a cost sharing agreement, in nature of reimbursement - additions deleted.
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• Director Admits to Accommodation Entries; Section 68 Additions Confirmed as CIT(A) Fails to Verify Beneficiaries' Identities.

  Case-Laws - AT : Additions u/s 68 - As assessee’s director has confessed that assessee company is providing accommodation entries, then, CIT(A) even did not care to verify that who are the beneficiaries and what is the amount of commission received by assessee from the beneficiaries from providing accommodation entries - Additions confirmed.
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• Efficiency Gain from Electricity Charges Must Be Reduced in Profit and Loss Account Per Income Tax Regulations.

  Case-Laws - AT : Accrual of income - efficiency gain - excess receipt towards electricity charges / tariff - the assessee is not free to use this efficiency gain amount the way it likes - they have rightly reduced the efficiency gain amount in their profit and loss account.
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• Income from Mutual Funds Held 72-186 Days Taxed as Capital Gains, Not Business Income.

  Case-Laws - AT : Income earned profit on sale of mutual funds - capital gain OR business income - Holding period of the assessee is minimum of 72 days and maximum of 186 days - profit of sale of mutual fund earned by the assessee as chargeable to tax under the head capital gain and not as business income
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• Assessee penalized u/s 271B for not auditing accounts as per Section 44AB(a); no reasonable cause provided.

  Case-Laws - AT : Levy of penalty u/s 271B - assessee failed to get the accounts audited as per Section 44AB(a) - The assessee did not make out any case of reasonable cause so as to claim immunity from the penalty.
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Customs

• Madras High Court temporarily lifts yellow peas import restrictions, but restrictions reinstated swiftly, denying import clearance claims.

  Case-Laws - HC : Restriction on import of yellow peas - The notification was withdrawn only in view of the interim order passed by the Madras High Court and presumably to cure a technical defect. Very next day, the same set of restrictions were reimposed. The petitioner cannot argue that in this window of one day, the petitioner's imports should have been cleared.
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Corporate Law

• Section 451: Repeat Offenders Face Double Fines; Imprisonment Optional Under Act Provisions.

  Case-Laws - AT : Section 451 only provides with ‘fine’ in case of any repeated defaults shall be ‘twice the amount of fine’, in addition to any imprisonment for such default under the relevant provisions of the Act, if prescribed and it does not make the ‘imprisonment mandatory’.
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• Court Dismisses Shareholder's Winding Up Petition; Motives Questioned as Intent to Liquidate for Share Sale Suspected.

  Case-Laws - HC : Winding up petition - petitioner (minor shareholder) contended that the respondent company is unable to fulfil the objects for which it was incorporated - the bonafide of the petitioner is in doubt - he seems to be only interested in liquidating the company so that he liquidate his shares - petition dismissed.
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Service Tax

• Power Plant Operations Not Subject to Service Tax Under "Management, Maintenance and Repair Services" Category.

  Case-Laws - AT : Whether the amounts received as consideration by the appellant for operating power plant on behalf of his client would be liable for the discharge of service tax under the heading “management, maintenance and repair services? - Held No
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• Revenue Cannot Partially Deny CENVAT Credit for Services Benefiting Others Incidentally - No Rule Supports This.

  Case-Laws - AT : CENVAT Credit - There is no rule under which the Revenue can vivisect and partly deny the credit on these services simply because somebody else also incidentally benefited from them
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• Spot Billing and Account Maintenance for APCPDCL Not Taxable as Business Auxiliary Service Under Service Tax Rules.

  Case-Laws - AT : Classification of services - Business auxiliary service or not? - activity of spot billing of electricity consumption charges and maintenance of customers’ accounts for APCPDCL - Not taxable as BAS.
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• Centralized Registration Holds Head Office Accountable for Service Matters, Including Show Cause Notices Issued to Appellant.

  Case-Laws - AT : Jurisdiction for issuance of Show cause notice (SCN) - Having opted for centralized registration the appellant cannot now argue that their head office has no role in providing the services and hence cannot be issued a show cause notice.
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• Service Tax Not Applicable on Commissions for Tax Collection u/s 65(9), Not Classified as Business Auxiliary Service.

  Case-Laws - AT : Levy of service tax - commission received against collection of taxes for the Government - by no stretch of imagination can collection of taxes be called a business auxiliary service within the definition as per Sec. 65 (9)
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• Coal Transport Services Correctly Classified Under Goods Transportation Agency for Tax Purposes.

  Case-Laws - AT : Classification of services - loading, transport and unloading of coal from mining - The service provided by the appellants have rightly been classified in the Goods Transportation Agency service.
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• CBEC Circular Validates Examining Freight Forwarders' Accounts for Tax Liabilities Due to Dual Business Nature.

  Case-Laws - HC : Validity of circular iissued by CBEC - The circular requires the authorities to look into the accounts of a freight forwarder in the light of the two nature of businesses noted therein and arrive at the tax incidence - the impugned circular cannot be held to be bad in law
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• Court Finds No Jurisdictional Error in Issuing Two Overlapping Show-Cause Notices; Declines to Interfere.

  Case-Laws - HC : Two SCN on the same issue for overlapping period - A Writ Court need not interfere when the view taken is plausible - There is no lack of jurisdiction in issuing any of the two show-cause notices
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Central Excise

• Absorbent Cotton Wool and Cotton Rolls Classified Under Chapter 5601, 5203, and 58 for Central Excise Purposes.

  Case-Laws - AT : Classification of goods - Absorbent Cotton Wool IP - Cotton Rolls - goods would fall under Chapter Sub-heading No.5601, 5203 & Chapter 58
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• Appellants Granted CENVAT Credit on Service Tax; Railway Authorities Provide Necessary Certification Details.

  Case-Laws - AT : CENVAT Credit - duty paying invoices - all the particulars of service tax paid by the appellants for available and same has been certified by the concerned Railway Authorities, therefore, it will be travesty of the judgment if the Cenvat credit is denied to them only on such a flimsy ground.
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VAT

• Petitioner's Non-Compliance with Tribunal Orders Results in No Relief for VAT and Sales Tax Pre-Deposit Demand.

  Case-Laws - HC : Demand of pre-deposit - petitioner failed to provide any explanation, as to why the petitioner did not comply with the earlier orders of the Tribunal in respect of stay of the assessment order passed by the Tribunal - no relief.
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• Auction Buyer Retains Property Rights Despite Bank's Petition; Tax Dues Attachment Doesn't Affect Use and Enjoyment.

  Case-Laws - HC : Attachment of property - recovery of tax dues - Whatever be the outcome of the petition filed by the bank, the purchaser of the property through such auction sale conducted under the interim order of the Court, cannot be deprived full use and enjoyment of the property, that too after paying sizable sum to the tune of ₹ 13.30 crores.
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Case Laws:

• GST

• 2018 (11) TMI 213
  Detention of goods with vehicle - ground for detention is that in the e-way bill the distance between Kerala and the destination at Uttarakhand was shown as 280 Kms, instead of 2800 Kms - typographical error - Held that:- Indeed, the Central Board of Indirect Taxes and Customs has come across many minor discrepancies in the e-way bills, resulting in summary detention of the goods. Then, it has issued this circular: I reckon the distance between Kerala and Uttarakhand is a matter of record and thus verifiable. As I have already noted, the eway bill showed the distance as 280 Kms, instead of 2800 Kms-one zero missing. This cannot be anything other than a typographical error, and a minor at that. The 11th respondent will consider the petitioner s request for release in terms of the circular - petition disposed off.

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• 2018 (11) TMI 212
  Levy of market fee - power of respondent-State to charge tax/cess payable under the provisions of Rajasthan Agriculture Produce Marketing Act, 1961 - Validity of levy after promulgation of Goods and services tax (GST) - whether timber (Imarti Lakadi) is an agricultural produce - their shops and godowns etc. outside the Mandi yard and they do not avail any of the facilities or services provided by the respondent - Mandi. Held that:- It is a settled proposition of law that the State can levy market fee under the relevant provisions of a statute, enacted in exercise of powers available to it under Entry 66 of the second list of the VIIth Schedule. It has also been settled by Hon ble the Supreme Court in the case of Sreenivasa General Traders Ors. vs. State of Andhra Pradesh Ors., [1983 (9) TMI 315 - SUPREME COURT] that irrespective of the fact, whether a dealer carries on business or trade in the market yard or not, the agriculture produce brought by such dealer in the notified area is exigible to market fee, leviable under the Act. Levy of cess/fee on timber - Held that:- Suffice it to observe that this stand too is totally contrary to the provisions contained in the Act of 1961. Section 2 (i) of the Act of 1961, unequivocally provides that items mentioned in the Schedule shall be treated to be an agricultural produce. Product timber has been specifically enumerated at Serial No.9 of Schedule appended with the Act of 1961. This being the fact situation, the timber or Imarti Lakadi is unquestionably an agricultural produce, exigible to Mandi fee under the Act of 1961. Moving on to the last point of the petitioner that after promulgation of Goods and Service Tax, the levy of cess under the Act of 1961 cannot continue; we are constrained to observe that even this argument is misconceived. - By a combined effect of Section 174 of CGST Act and RGST Act, the levy governed by only those enactments have been abolished, which have been enlisted in said sections. The market fee leviable under the Act of 1961 neither finds mention in any of the repeal and saving provisions, nor can it be so done, as the market fee is leviable under a separate enactment under the State s power to legislate under Entry 66 of the List-II of the VIIth Schedule. Petition dismissed.

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• 2018 (11) TMI 144
  Permission to withdraw Special Leave Petitions, without prejudice to the liberty available to the petitioner(s) to take recourse to appropriate remedy before an appropriate forum - Held that:- Permission is granted - SLP dismissed as withdrawn.

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• Income Tax

• 2018 (11) TMI 211
  Levy of penalty u/s 271B - assessee failed to get the accounts audited as per Section 44AB(a) - Held that:- The assessee did not declare correct income in the return of income and that the assessee had not only income from plying of the six trucks but was also doing business of hiring trucks from which the assessee also earned business commission income and that is why the gross receipts of the assessee has exceeded Rs. 1 crore. Since the gross receipts of the assessee have admittedly exceed Rs. 1 crore, therefore, provisions of Section 44AB(a) clearly apply in the case of the assessee. The other provisions contained u/s 44AB(b,c,d) would not apply in the case of the assessee. Since the assessee failed to get the accounts audited as per Section 44AB(a) of the Act, therefore, assessee is liable for penalty u/s 271B of the Act. The assessee did not make out any case of reasonable cause so as to claim immunity from the penalty. - Decided against assessee.

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• 2018 (11) TMI 210
  Entitlement to deduction u/s. 80P(2)(a)(i) - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - denying the claim of deduction u/s. 80P was that the assessee was primarily engaged in the business of banking - Held that:- Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. In the case of Chirakkal Service Co-op Bank Ltd. (2016 (4) TMI 826 - KERALA HIGH COURT) had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). The assessee-society is entitled to the benefit of deduction u/s. 80P of the Act. - Decided in favour of assessee.

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• 2018 (11) TMI 209
  Determination of profits of the assessee company under s.10B - AO artificially computing the non-existent interest costs - whether an ‘arrangement’ of business transacted between the assessee and its Directors/shareholders can be inferred whereby the assessee earned more than ordinary profits as contemplated under s. 10B(7) r.w.s. 80IA(10)? - Held that:- A mere diversion of funds in the form of interest free lending by shareholders to its company do not partake the character of a business transaction. We are alive to the fact that while alleging ‘arrangement’, the AO has narrated circumstances like withdrawal of interest free funds immediately on the completion of eligible period for availing benefit under s.10B of the Act. No doubt, such circumstances bring some disquiet. However, such circumstances cannot be regarded as overwhelming for the purposes of grave allegation of arrangement contemplated under s. 80IA(10) of the Act. Revenue has mis-directed itself in law as well as on facts in artificially computing the non-existent interest costs and thus denying the deduction under s.10B eligible to the assessee. The action of the Revenue is wholly unsustainable in law and deserves to be set aside and cancelled. While doing so, we also note that similar issue had cropped up in the case of Gilvert Ispat [2011 (5) TMI 962 - ITAT CHANDIGARH] also which was answered in favour of the assessee. Consequently, the order of the CIT(A) on the aforesaid issue is set aside and the AO is directed to exclude the aforesaid adjustment for the purposes of determination of profits of the assessee company under s.10B of the Act. Disallowance on account of reduction in profit eligible for deduction under s.10B - AO has excluded an amount towards freight and insurance expenses from the ‘export turnover’ but was not made from ‘total turnover’ - Held that:- Apart from the several judicial precedents, the controversy is settled in favour of the assessee also by CBDT Circular No.4/2018 dated 14.08.2018. As per the CBDT circular, the expenditure incurred of such nature are required to be excluded from both ‘export turnover’ as well as ‘total turnover’ while computing deduction admissible under s.10A of the Act. In parity, we do not see any error in the order of the CIT(A). Currency Conversion Income - Reduction in profit eligible for deduction u/s 10B in respect of currency rate difference income due to foreign currency rate fluctuation - Held that:- As decided in M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] interest income earned from inter-corporate loans and deposits lying in EEFC Accounts are eligible for deduction u/s.10B for the reason that as per the amended section 10B(4), the profit derived from export means profit of the business of the undertaking and not just the profits and gains from export of articles. Since the export profits kept in the EEFC account relate to the business of the undertaking on which the appellant is claiming exemption u/s.10B we hereby direct the A.O to delete the reduction of deduction u/s.10B. Disallowance u/s 14A r.w.r. 8D - disallowance towards proportionate Rule 8D(2)(ii) and towards administrative expenditure presumed to be attributable for earning tax free income under s.8D(2)(iii) - Held that:- Disallowance computed by the AO under Rule8D is partly justified to the extent of proportionate interest amounting to Rs. 1,23,435/- in view of availability of interest free funds in excess of corresponding investments yielding tax free income. Therefore, the action of the CIT(A) to this extent is approved. However, the disallowance of Rs. 1,88,372/- in terms of Rule 8D(2)(iii) could not have been assailed by the CIT(A) in view of the statutory presumption available to the AO under the Rule. In the absence of any assertion made on behalf of the assessee to controvert the disallowance, we reverse the action of the CIT(A) to this extent and endorse the action of the AO. Therefore, the disallowance made by the AO to the extent of Rs. 1,88,372/- is sustained. - Decided in favour of assessee in part.

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• 2018 (11) TMI 208
  Revision u/s 263 - scope of revision - sale consideration disclosure - Held that:- Section 263 of the Act shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a different view could be taken, were not enough to say that the order of the AO was erroneous or prejudicial to the interest of the Revenue. The jurisdiction could be exercised if the CIT was satisfied that the basis for exercise of jurisdiction existed. No rigid rule could be laid down about the situation when the jurisdiction can be exercised. Whether satisfaction of the CIT for exercising jurisdiction was called for or not, has to be decided having regard to a given fact situation. In the present case, the Tribunal has held that the assessee had disclosed that out of sale consideration, a sum of Rs. 1 lac was to be received for sale of permit. If that is so, there was no error in the view taken by the AO and no case was made out for invoking jurisdiction under Section 263 of the Act. Decided in favour of the assessee

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• 2018 (11) TMI 207
  Rectification of mistake - computation of capital gain - Tribunal while passing the impugned order, did not consider the ITAT’s order in the case of the purchaser viz. , St. Antony’s Timber Depot, wherein the Tribunal confirmed the purchase price of the impugned property at Rs. 99. 90 lakh instead of 18. 30 lakh is disclosed in the sale deed dated 24. 04. 2007 - Held that:- The Tribunal, u/s 254(2) of the I. T. Act, does not have the power to review its own order. It has only power to rectify the mistake apparent on record. A power of review has to be statutorily conferred. It cannot be inferred. As this power has not been conferred on the Tribunal, under the Act, it does not have the power of review. As mentioned earlier, the power that has been given under section 254 is right of rectification of mistakes. As a power to rectify a mistake does not include a power to review, all that the Tribunal can do is to amend its order with a view to rectify any error apparent from the record. Unless there are manifest errors which are obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to rewrite it. Under the garb of rectification, the Tribunal cannot exercise the power of recall and review its earlier order. In the instant case, the Miscellaneous Petition of the Department is prima-facie seeking to review the order of the Tribunal dated 19. 12. 2017, which unfortunately the Tribunal does not have the power under the statute. The Hon’ble Delhi High Court in the case of CIT v. Vichitra Construction (P.) Ltd. [2004 (2) TMI 36 - DELHI HIGH COURT] had held the power u/s 254(2) is to correct any apparent mistake and not to recall its entire order and review the same. Miscellaneous Application filed by the Revenue is dismissed.

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• 2018 (11) TMI 206
  Income earned profit on sale of mutual funds - capital gain OR business income - Holding period - Magnitude of the investment - Held that:- Holding period of the assessee is minimum of 72 days and maximum of 186 days in the four schemes. As the assessee contended before the CIT(A) that these are the only four transactions during the year. Magnitude of the investment coupled with the volume is also not much. CIT(A) relying on the decision of the BS Raju Vs. Addll. CIT [2010 (10) TMI 1041 - ITAT HYDERABAD] held that same is capital gain. He further held that in case of mutual fund the assessee does not have any control on the manner in which further investment have been made. Further, in case of the assessee, in earlier years the revenue has accepted the claim of the assessee as capital gain or loss. There is no change shown to us in the facts of the case this year. In this year only there is a change in the stand of the revenue. CIT(A) has also followed the principle of consistency. On reading of the order of the CIT(A) we do not find any infirmity in holding profit of sale of mutual fund earned by the assessee as chargeable to tax under the head capital gain and not as business income. - decided against revenue.

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• 2018 (11) TMI 205
  Accrual of income - Reduction of efficiency gain amount in their profit and loss account - revenue model determined by the DERC - excess receipt to be accounted for while determining the tariff for the next year and not available to the assessee to spend in the way they desire - Held that:- The assessee is under a statutory obligation to set apart 50% of the excess amount generated due to the overreaching of the targets, for the purpose of the consideration of the DERC to fix the future tariffs either to give relief to the consumers or otherwise. A reading of the statute, notification and the orders of the DERC clearly indicates that the assessee is not free to use this efficiency gain amount the way it likes. Whether or not a separate account is opened, when this amount is separately shown under this head in the books, it makes little difference in so far as the application of the ratio of Puna Electricity Supply Co. Ltd. (1965 (4) TMI 20 - SUPREME COURT) is concerned. Crux of the matter is that the assessee in both the cases has no right to appropriate the ‘efficiency gain’ amount and such amount is at the disposal of the DERC though not physically but in respect of utilization thereof. We, therefore, are convinced that the ratio of Puna Electricity Supply Co. Ltd (supra) is squarely applicable to the case of the assessee before us and on that score, we allow the contention of the assessee that they have rightly reduced the efficiency gain amount in their profit and loss account. Addition u/s 14A r.w.r. 8D - Held that:- AO recorded reasons for not accepting the statement of the assessee that no expenditure was incurred to earn the exempt income. AO also examined the cash flow statement furnished by the assessee. The reasons recorded by the assessing officer are in sufficient compliance with the requirement of 14A (2) of the act. Coming to the argument that Rule 8D is only prospective in its operation and has no application to the assessment year 2006-07, the Hon’ble Apex Court in CIT vs. Essar Teleholdings Ltd (2018 (2) TMI 115 - SUPREME COURT OF INDIA) held that Rule 8D is prospective and applies only from the assessment year 2008-09. Inasmuch as Rule 8D has no application to the assessment year 2006-07, the disallowance under section 14A has to be computed on some reasonable basis as has been held in several decisions of the jurisdictional High Court including the one in Maxopp Investments Ltd vs. CIT [2011 (11) TMI 267 - DELHI HIGH COURT]. We, therefore, set aside the impugned order and restore the matter to the file of the learned assessing officer for computing the fresh amount of disallowance under section 14A on a reasonable basis, after affording a reasonable opportunity of being heard to the assessee. Disallowance of depreciation on UPS - @60% OR 15% - Held that:- As relying on ORIENT CERAMICS & INDUSTRIES LTD. [2011 (1) TMI 908 - DELHI HIGH COURT] and BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] UPS is also an integral part of computer periphery system on which depreciation at 60% is allowable. We accordingly allow this ground. MAT - enhancement of profit under section 115 JB - Held that:- As assessee is a company engaged in the business of distribution of electricity and in view of the decision reported in Kerala State Electricity Board vs. DCIT [2010 (11) TMI 127 - KERALA HIGH COURT], the provisions under section 115 JB have no application to the assessee. There is no dispute as to the nature of business conducted by the assessee

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• 2018 (11) TMI 204
  Denial of claim of deduction u/s 80P(2)(a)(i) - interest income earned as “income from other sources” u/s 56 - Revenue contented that while deciding the assessee’s appeal for A.Y. 2008-09, the amendment made to the Section w.e.f. A.Y. 2007-08 has not been considered by the Tribunal - Held that:- Before us, no material has been placed by Revenue to demonstrate that Revenue has preferred appeal against the order of Tribunal for A.Y. 2008-09 and that the higher Judicial Forum has set aside / stayed the order for A.Y. 2008-09. Further, Revenue has neither pointed out any distinguishing feature in the facts of the present case and that of earlier year. Therefore, relying on the decision of the Tribunal in assessee’s own case for A.Y. 2008-09 and for similar reasons hold that assessee is entitled to deduction u/s 80P(2)(a)(i) of the Act on the interest income on fixed deposits kept with nationalized banks and private sector banks. - Decided in favour of assessee.

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• 2018 (11) TMI 203
  Reopening of the assessment - unexplained deposits - unexplained liabilities - assessee company is part of one of the companies operated for providing accommodation entries - CIT(A) deleted the additions - Held that:- There is no evidence that assessee has submitted confirmation of those parties. Even before the ld CIT(A) it was not rebutted that assessee is not an accommodation entry provider. Further, in absence of preliminary discharge of initial onus by the assessee of the sums credited in the books, of the assessee, the ld AO is not duty bound to issue any summons u/s 131 of the Act. When assessee has not provided the complete details of the persons from whom the sums were received, it is not correct to say that the AO should have issued summons to those parties. The ld CIT(A) has deleted the addition for the reason that assessee filed details of credit and debit entries of the bank account and also the loans paid. CIT(A) has blind foldedly accepted the explanation of the assessee without giving any credence to the fact of the case that assessee company is an accommodation entry provider and unless the real beneficiaries are named by it, it cannot escape the taxation of the sum credited in its books of account. As assessee’s director has confessed that assessee company is providing accommodation entries, then, CIT(A) even did not care to verify that who are the beneficiaries and what is the amount of commission received by assessee from the beneficiaries from providing accommodation entries. Without even calling for all these details, the ld CIT(A) has deleted the addition. In view of this, we reverse the finding of the ld CIT(A) and confirm the order of the ld Assessing Officer with respect to the addition - Decided in favour of revenue. Current liabilities unexplained - Held that:- The assessee submitted before the ld CIT(A) that it received sum of Rs. 14 lakhs from Shreys Infradevelopers Pvt. Ltd and San Portfolio Pvt Ltd of Rs. 135000/-, however, no confirmation was provided of these parties. In view of this the addition has been made by the ld AO. The ld CIT(A) deleted the addition without even asking for the confirmation. We find that unless the assessee submits the confirmation of these parties the addition cannot be deleted. In view of this we reverse the finding of the ld CIT(A) and restore the order of the ld AO - Decided in favour of revenue.

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• 2018 (11) TMI 202
  Assessment against non-existent entity/dead person - procedural irregularity and a jurisdictional defect - Held that:- Similar facts and circumstances, ITAT, New Delhi Bench-F in the case of assessee itself [2018 (5) TMI 740 - ITAT DELHI] as assessment has been framed on a non-existing entity and, therefore, the assessment order has to be quashed. We order accordingly and set aside the findings of the CIT(A) by quashing the assessment order. - Decided in favour of assessee.

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• 2018 (11) TMI 201
  Taxability of receipts under Research and Development Co-operation Agreement - Income taxable under the head ‘Royalty’ - income deemed to accrue or arise in India - assessee is a tax resident of the Netherlands entered into Research and Development Cooperation agreement (RDCA) with Philips India (PEIL) - India-Netherlands DTAA - Held that:- So far as the transaction between the assessee and PEIL India is concerned, it is simply in the nature of reimbursement of expenses incurred by KPENV, on behalf of the group companies and it is not an income for the KPENV. During the course of hearing before us, when we put this position to the ld. DR, he did not have much to say beyond placing reliance on the stand of the Assessing Officer. Hence, the payment received by the assessee company from various group companies are in the nature of reimbursement as evident from the details taken from various terms and conditions of RDCA agreement. The RDCA agreement has no income element, hence a cost sharing agreement cannot be converted into the terminology of ‘royalty’. Article 5 of the RDCA clearly shows that all the assistance, information and advice given under the RDCA are for the exclusive use only by all participating Philips Group entities and the only reason for restriction on sharing with the third parties is to protect the interests of the Philips Group as a whole. Therefore, we are of the view that the receipts under RDCA are not taxable as the same is not ‘Royalty’ under Article 12(4) of the India-Netherlands DTAA, and it is a cost sharing agreement, in nature of reimbursement, hence we delete the addition. Taxability of receipts under Management Support Services Agreement (MSSA) received by Koninklijke Philips Electronics N.V (Assessee), as per MSSA agreement between assessee and Philips Electronics India Limited (‘PEIL’) - Held that:- As per sub section 2 of section 90 of the Act DTAA entered into with the foreign company is a statutory document recognized under the Income Tax Act and by sub section 2, the provisions of the Income Act would apply only to the extent that they are more beneficial to the assessee. We note that as per Article 12 of India-Netherland DTAA these receipts do not fall in the definition of ‘Royalty’ or ‘Fees for technical services therefore, the assessee is not liable to pay tax on these receipts in India and this way, the DTAA provisions will prevail. Hence, assessee can change its stand at any point of time if it seems to him that the receipts are not taxable in his hand as per the provisions of law. Therefore, we do not agree with ld DR for the Revenue, so far this issue is concerned. Entitlement of TDS credit - Held that:- We note that assessee is entitled to take the credit of TDS certificate submitted by it during the assessment proceedings. Therefore, we direct the Assessing Officer to provide credit for tax deducted at source after verification of the TDS certificate filed by the assessee, as per the provisions of law. Therefore, we allow this ground of appeal raised by the assessee for statistical purposes.

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• 2018 (11) TMI 200
  P.E. in India - fixed place of business in India - India-Mauritius DTAA - assessee as acting as a sub contractor with HHI and valentine Consortium for certain specialized job on ONGC Mumbai Uran terminal water projects - attribution of income - Held that:- The assessee was acting as a sub contractor with HHI and valentine Consortium for certain specialized job on ONGC Mumbai Uran terminal water projects. CIT (A) has held that work of the assessee is of transporting the already mined product to the uban plant for further processing. While deciding the issue of taxability of receipts u/s 44BB of the act, CIT (A) has held that the activities of the assessee are post mining and processes involving already mined products. Further while holding that assessee has a PE under article 5 (2) (f) of the DTAA, the CIT (A) has not at all examined that whether oil well or gas was the fixed place available to the assessee for carrying on its business. Without first giving that finding, the d CIT (A) has incorrectly assumed that assessee has a PE under that article. That oil well should have been proved that it is under the disposal of the assessee in the sense of having some right to use the premises for the purposes of its business and not solely for the purposes of the project undertaken on behalf of the owner of the premises. Here it is apparent that assessee even if has the above place it is for the purposes of the above project undertaken as subs contractor. Even otherwise the CIT (A) has not given any finding that such oil well is at the disposal of the assessee. We rest at that and state that unless that is proved first by revenue, the income cannot be charged under that article. - decided in favour of assessee.

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• 2018 (11) TMI 199
  Computation of long term capital gain - Sale of ancestral property - Exclusion of the amount paid to the unauthorized occupants directly by the purchase of the property - valuation taking into account the stamp duty value U/s 50-C as deemed full value of consideration - said property was sold by virtue of a tripartite agreement entered into by the assessee, three co-owners of the property and the persons who had pre-occupied the property, known as, ‘unauthorised occupants’ illegally with the developer - allegation of AO is that nothing found in the deed of sale that payment of Rs. 41 lacs to the unauthorized occupants, were agreed upon by the assessee. Held that:- We note that the sale deed was entered into among three parties, the first party being the assessee and other family members, the second party being the purchaser and the third party being the unauthorized occupants. The entire sale consideration was received by the assessee and other family members and the unauthorized occupants, and as such the allegation has no leg to stand and hence we do not agree with the assessing officer. The second allegation of the AO is that the vendor has no role in determining the quantum of payment to the unauthorized occupants (confirming parties). We note that since it was a tripartite agreement entered into among the assessee, purchaser and the unauthorized occupants(confirming parties), the quantum of the compensation was agreed upon jointly. The compensation was agreed upon by the parties and the same was directly paid by the purchaser to the unauthorized occupants (confirming parties). The assessing officer has failed to bring any cogent evidence on record to show that amount of Rs. 41,00,000/- has not been paid by purchaser to these unauthorized occupants. We do not find any force in the stand taken by the assessing officer as well as CIT(A), therefore, we delete the addition made by the assessing officer to the tune of Rs. 21,35,057/-. No infirmity in the computation of long term capital gain made by the assessee hence we accept the long term capital gain computed by the assessee to the tune of Rs. 1,82,577/-, and we direct the assessing officer to consider Rs. 1,82,577/- as long term capital gain declared by the assessee. - Decided in favour of assessee.

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• 2018 (11) TMI 198
  Claim of deduction u/s 54F - assets in question were commercial assets - assessee is a Doctor by profession and has earned income from Salaries, Profits and Gains of Business or Profession and Income from other Sources - Held that:- We are of the considered view that the assessee will be entitled for deduction u/s. 54F on the capital gains arising on the sale of depreciable assets being commercial flats situated at unit no. 24-26, Pearl Center, Dadar, Mumbai computed in the manner laid down in Section 50 of the 1961 Act r.w.s. 48, 49 and 45 of the 1961 Act as these assets which were sold by the assessee during the year under consideration were held for a period of more than thirty six months, on the reinvestment made by the assessee in new residential property being flat at Beau Monde. Appellant sold commercial property which is held for more than 3 years and from the consideration received from sale of the property he purchased new property. Hence appellant is eligible for exemption u/s 54F of the Act. AO's addition of Short Term Capital Gain for Rs. 6.50 Crs. is deleted. - Decided in favour of assessee. Difference in the capital account balance of the assessee who is partner in partnership firm in the books of accounts of the assessee vis-a-vis balance of capital account of the assessee in the Balance Sheet of the partnership firm - Held that:- The said partnership firm namely M/s. Pregnancy Advice & Services is also assessed to income-tax within Indian tax Jurisdiction and all the information/ data’s of the said firm was already on record with Revenue in its data base as it filed its return of income on 12-03-2013 while assessment is framed on 30-03-2015 and Revenue could have easily cross verified and reconciled the said differential from its own data base to verify the veracity and validity of the contentions of the assessee more so Revenue is now well equipped with advanced technological platforms available at its disposal. Coming back to issue in hand, CIT(A) has passed well reasoned order granting relief to the assessee with which we fully concur which is re-produced by us in preceding para’s of this order and the same is not reproduced again. We have carefully gone through the entire material on record as well appellate order passed by Ld. CIT(A) and we affirm/concur with the view of learned CIT(A) that differential in capital account balance of the assessee in its books of accounts vis-a-vis books of accounts of the partnership firm M/s. Pregnancy Advice & Services stood duly and fully explained and reconciled backed with bonafide reasons/evidences and we have no hesitation in confirming/affirming the well reasoned appellate order passed by learned CIT(A). The Revenue fails on this ground also.

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• Customs

• 2018 (11) TMI 194
  Restriction on import of yellow peas - Validity of notification dated 25.04.2018, a trade notice dated 18.05.2018 and a further notification dated 30.08.2018 - It appears that the petitioner applied for registration but, such registration was not granted - vide notification No. 4 of 20152000 the category of peas changed from existing free category to the restricted category - petitioner contends that through the trade notice dated 18.05.2018, the Government of India could not have made amendments or changes in the notification dated 25.04.2018. Accordingly in case of those importers like the present petitioner who has already made advance payment in part for the imports, policy change brought about by virtue of notification dated 25.04.2018 would have no application. Held that:- In case of Kinshuk Overseas Pvt Ltd versus Union of India [2018 (10) TMI 1424 - GUJARAT HIGH COURT], we had occasion to examine these policy changes in the background of facts where the petitioners therein were the importers had not only placed import orders coupled with advance part payment before 25.04.2018, but were also granted registration for import which registrations were sought to be cancelled. Subsequent to issuance of the trade notice dated 18.05.2018, the Court had granted interim relief protecting their imports. Substantial imports were made - In case of the present petitioners even registration was not granted. The petitioner s first contention therefore must be rejected. The petitioner s second grievance is that the restrictions were withdrawn by notification dated 29.08.2018. Though the same may have been reimposed on 30.08.2018, at least for one day, no restrictions were prevailed. The case of the petitioner should have been cleared on such date - Held that:- The notification was withdrawn only in view of the interim order passed by the Madras High Court and presumably to cure a technical defect. Very next day, the same set of restrictions were reimposed. The petitioner cannot argue that in this window of one day, the petitioner s imports should have been cleared. The petitioner had not made the imports during the period when even if we accept the petitioner s contention to be true, such restrictions did not apply - The insistence of verification of full advance payment therefore is confined to any claim of importer that he falls within the description of import already made. This contention of the petitioners is therefore rejected. Petition disposed off.

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• 2018 (11) TMI 193
  Imposition of redemption fine and penalty - Confiscation of imported frozen Cuttlefish - confiscation on the ground that the appellant has failed to produce the required certificate from the Department of Animal Husbandry and Dairying, Govt. of India and also failed to produce NOC from competent Quarantine / Veterinary officer before clearance - permission is granted for re-export of goods - whether redemption fine and penalty imposable? Held that:- Larger Bench decision in the case of Hemant Bhai R. Patel is squarely applicable in the facts and circumstances of the present case. The Larger Bench of the Tribunal in the said case has held that Section 111 of the Customs Act gives power to customs officer to confiscate the goods imported, if any, all the provisions contained in sub-clauses is specific and Section 112 authorises the imposition of penalty. The Larger Bench has categorically held that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods. The adjudicating authority has the power to impose redemption fine and penalty - however, imposition of fine of Rs. 10 lakhs and penalty of Rs. 1 lakh, appears to be on the higher side and same is reduced - appeal allowed in part.

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• 2018 (11) TMI 192
  Refund of SAD - N/N. 102/2007-Customs dt.14.9.2007 as amended by N/N. 93/2008 dt.1.8.2008 - rejection on the ground that the claim was beyond the time limit of one year from the date of payment of duty - Held that:- The issue is decided in the case of M/s. Goyal Impex & Industries Ltd. Vs. Commissioner of Customs (Chennai-IV) [2018 (9) TMI 95 - CESTAT CHENNAI], where it was held that the purpose of imposing SAD is to protect and ensure collection of appropriate sales tax or VAT that is payable on imported goods, which is paid upfront at the time of imports. SAD is not credited and set off from the sales tax or VAT, which is refundable to an importer after ascertaining the appellant to appropriate Sales Tax / VAT. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 191
  Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - rejection on the ground that the same has been filed after the prescribed time limit of one year from the date of payment and as such is rejected as being barred by time - Whether there is any time limit prescribed by law for filing the refund claim of additional duty of Customs as stands exempted vide the Notification No. 102/2007? Held that:- No doubt, the said Notification is silent about any time period for filing the said claim. But the Notification exempts the goods in first schedule of Customs Tariff Act from being leviable to the additional duty of Customs. However, the Notification itself mandates the deposit of the said additional duty at the time of importation of the goods and thereafter to get the refund. From this perusal, one thing becomes abundantly clear that the importer has the knowledge of his entitlement to file the refund of additional duty of Customs at the time of the payment of said duty itself i.e. at the time, the product being in first schedule (under the exempted category) is imported. Also, the amending Notification No. 93/2008 is arising out of the statute, i.e. Section 25(2A) of the Customs Act, 1962 hence, the findings of the Commissioner(Appeals) that the amendment introducing one year from the date of payment of additional duty as a time to claim the refund thereof is without statutory amendment, is not sustainable rather is opined to be legally erroneous. The refund claim of additional duty due to the exemption flowing out of Notification No. 102/2007 has to be filed within one year in view of the subsequent Notification No. 93/2008-Cus which still holds good and also in view of Section 27 of the Customs Act, 1962 - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 190
  Import of prohibited goods - Used Vehicle RHD, Hummer H3, Petrol, 3700CC - vehicle was not imported from the country of manufacture i.e. South Africa but it was imported from Dubai, UAE - absolute confiscation - penalty - Held that:- The import of car is not prohibited. Therefore, the Adjudicating Authority ordering for absolute confiscation has not given justified findings for absolute confiscation - It is found from several Tribunal’s decisions and Hon’ble High Court’s decisions where the goods are not prohibited, absolute confiscation is not warranted. The Adjudicating authority in the present case ordering for absolute confiscation is not justified - the order of absolute confiscation is modified to confiscation with an option to redeem the vehicle on payment of appropriate redemption fine and customs duty and uphold the penalty imposed on the appellants under Section 112 (a) of the Customs Act. Matter remanded to the adjudicating Authority only of the purpose of determining the redemption fine under Section 125 - appeal allowed by way of remand.

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• 2018 (11) TMI 189
  Refund of Export Duty paid - rejection of refund on the ground of the let-export order was given on 03.12.2008, the benefit of Notification No 129/2008-Cus is not applicable and also on the ground that the assessments were not challenged - Held that:- The documents enclosed herein also do not indicate whether the goods were cleared for shipment on 03.12.2008 or 08.12.2008. On a specific query from the Bench both sides were unable to state as to whether the said shipping bill was finalised by the proper officer or otherwise - the said shipping bill with the endorsement of the remarks as herein reproduced would indicate that the said shipping bill is still provisional. As long as the same is not finalised, the question of refund or otherwise may not arise. Matter needs to be reconsidered by adjudicating authority - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (11) TMI 197
  Scheme of compromise compromise and arrangement between the respondent Company and its members and creditors - meeting with the stakeholders - quorum of meeting - what would be the best interest of the respondent Company and its creditors and allottees - Held that:- For the purpose of computing the quorum, the valid proxies received from the total applicants herein shall also be considered, if the proxy in the prescribed form duly signed by the person entitled to attend and vote at the respective meetings is filed. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings, along with copies of the proposed Scheme and the statement under Section 393 of the Act along with the proxy form, shall be sent to all the applicants herein by speed post at their registered or last known addresses at least 21 (twenty one) days before the date appointed for the respective meetings, in their presence or in the presence of their authorized representatives. Notice of the meetings shall also be published in Delhi and Haryana editions of the newspaper, namely, ‘Business Standard , (both in English and Hindi) in terms of the Companies (Court) Rules, 1959, at least 21 (twenty one) days before the date appointed for the respective meetings. The Chairpersons and Alternate Chairpersons will be at liberty to issue suitable directions to the applicant in order to ensure that the aforesaid respective meetings are conducted in a just, free and fair manner. The fee of the Chairpersons and the Alternate Chairpersons for all the meetings shall be Rs. 1,00,000/- each, in addition to meeting their incidental expenses, to be borne by the applicants in advance. The Chairpersons shall file their reports within 2 (two) weeks from the date of holding of the aforesaid respective meetings.

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• 2018 (11) TMI 196
  Winding up petition - petitioner (minor shareholder) contended that the respondent company is unable to fulfil the objects for which it was incorporated. - grievance of mismanagement or oppression - Held that:- the bonafide of the petitioner is in doubt. He is a minority share holder and seems to be only interested in liquidating the company so that he liquidate his shares. - Winding up is a discretionary relief and cannot be used for a collateral purpose. In case the petitioner has a grievance of mismanagement or oppression of minority share holders he has a remedy to approach NCLT under the appropriate provisions of law. In opinion, thereof no grounds are made out for this court to pass a winding up order against the respondent company. The substratum of the company has not gone. The company is making a profit. The petition is without merit.

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• 2018 (11) TMI 195
  Repetitive default - scope of section 451 of the companies act - Compounding of certain offence u/s 441 - Application for compounding the same offence committed by defaulting Company along with its Officers in default - Offence punishable with ‘fine or imprisonment’ or ‘only with fine’ or ‘fine and imprisonment’ on repeated defaults committed within three years - Held that:- Company cannot be imprisoned. The officer of the company who is in default shall be punishable with imprisonment or fine or with both as prescribed under Section 86. Whether such officer is to be imposed punishment of fine or imprisonment or both will dependent on the basis of gravity of offence which can be decided only by the Court of Competent Jurisdiction (Special Court). Such power having been delegated to the Court of Competent Jurisdiction, it cannot be held that in view of Section 451 for committing the same offence for the second or subsequent occasions within a period of three years, the officer is liable to be imprisoned. If such interpretation is given, then it will amount to taking away the power of the Competent Court (Special Court) to decide whether in the fact and circumstances of the case and on the basis of gravity of offence, the officer will be liable for punished of imprisonment or fine or both. Therefore, we hold that the Tribunal is wrong in holding that if Section 451 is read along with Section 441(6) for offence punishable with ‘fine or imprisonment’ or ‘only with fine’ or ‘fine and imprisonment’ on repeated defaults committed within three years, the Tribunal does not have jurisdiction to compound the offence. A bare perusal of the provision makes it evident that Section 451 only provides that ‘fine’ in case of any repeated defaults shall be ‘twice the amount of fine’ in addition or in alternative to any imprisonment for such default if prescribed under the relevant provisions of Act, 2013. It does not make the imprisonment mandatory. Secondly, use of word ‘any’ in Section 451 in the phrase ‘in addition to any imprisonment for that offence’ leaves discretion with the prosecuting authority/court to punish the defaulter with imprisonment. Had the intention of the legislature been to make the imprisonment mandatory, it would not have used the word ‘any’. If the interpretation adopted by the Tribunal is accepted then it will amount to substituting words in a penal provision, which is impermissible in the law. Tribunal failed to appreciate Section 451 of the Companies Act, 2013. We further hold that Section 451 only provides with ‘fine’ in case of any repeated defaults shall be ‘twice the amount of fine’, in addition to any imprisonment for such default under the relevant provisions of the Act, if prescribed and it does not make the ‘imprisonment mandatory’. In view of the aforesaid findings, we set aside the impugned order dated 16th February, 2018 and remit the respective Company Petitions to the Tribunal for decision on its merit taking into consideration the offence committed by the Company and its Officers and the Report of the Registrar of Companies. We make it clear that we have not decided individual claim of one or other Applicants/Petitioner which is to be determined by the Tribunal. The appeals are allowed with aforesaid observations and directions. However, in the facts and circumstances of the case, there shall be no order as to cost.

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• FEMA

• 2018 (11) TMI 188
  Contravention of Section 8 of the Foreign Exchange Management Act, 1999 read with Section 42(1) thereof along with Regulation 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 - Appeal to Appellate Tribunal - Held that:- The Tribunal prescribed a condition of deposit of 20% of the penalty amount as a precondition for hearing the Appeals on merits. Such a pre-condition is imminently fair, just and reasonable. It does not deny the appellant a right of appeal as is now projected before us. It ensures that justice would be done as well. Thus, the right of appeal has not been defeated and frustrated and as is now complained. In fact from 14th July, 2009, we have travelled upto 31st October, 2018. Despite this enormous passage of time, the appellants have not complied with this order and the conditions imposed therein. We were prepared to give further time to the appellant to comply with this order, but their counsel argued that they do not have any money. Given their precarious financial position and undue hardship, we must set aside this condition altogether or reduce the amount to a paltry sum of approximately two lakhs. Tribunal was ready and willing to hear the restoration application provided a fair stand was taken by the appellants. On such occasions, when the restoration applications of the appellants were placed before the Tribunal, they chose to remain absent. They did not cooperate with the Tribunal. The Tribunal was not obliged to wait for them. Its the appellants who desire another opportunity to have an adjudication on merits. However, their conduct is not consistent and justice cannot be rendered to those who have failed to show their bona fides in the instant case. We find that the bona fides are totally lacking. The Tribunal has indulged the appellants enough and we do not see the discretion exercised by the Tribunal to be arbitrary or capacious enabling us to entertain these Appeals.

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• PMLA

• 2018 (11) TMI 187
  Offence under PMLA - Provisional Attachment Order - release of attached property - property acquired from the proceeds of crime - Held that:- There is no denial on behalf of respondent that the Appellant Bank being a mortgagee of the Subject Property mentioned is not required to approach the trial court for getting released the Subject Property that was mortgaged to the Appellant Bank. The Proceedings under section 5 & section 8 of the PMLA, Act, 2002 are civil in nature and therefore the Adjudicating Authority has the power to release the Subject Property In the present case, it is admitted by the respondent that the bank is not involved in any crime. The mortgaged property is not purchased from proceed of crime. The respondent agrees that the bank is entitled to recover the amount and end of the day, it is a public money. The respondent is taking the frivolous defence as the bank is also involved in money laundering. Thus the respondent is mis-reading many provisions of PMLA, 2002. The situation in the present case is entirely different. Those provisions referred by the respondent are only applicable in those cases if the subject matter of property is acquired from proceed of crime. It is an admitted fact that the properties herein are mortgaged with the appellant Bank. It is also a fact that the mortgaged properties are not acquired out of any proceeds of crime. It has come on record that the properties mortgaged were acquired prior to the alleged commission of crime. The relevant sale deed of the mortgaged properties are of 2003 so the date of acquisition is much prior to the date of alleged commission of crime in the present case. The property of the Bank cannot be attached or confiscated if there is no illegality in the title of the appellant and there is no charge of money laundering against the appellant. The mortgaged of property is the transfer under the Transfer of Property Act. Even the respondent is not denying the fact that the Bank is a victim party who is also innocent and is entitled to recover the loan amount. It is also not disputed by the respondent that the properties in dispute are mortgaged with Bank and it has to go to Bank ultimately. There is no nexus whatsoever between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against Bank who has sanctioned the amount which is untainted and pure money. The bank has the priority right to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The Adjudicating Authority has not appreciated the facts and law involved in the matter and the primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contentions raised by Mr. Rajiv Awasthi, Advocate has no substance. The provisional attachment in the present matter is bad and against the law. In the circumstances available in the present case, the allegation of money laundering, so far as present appellant Bank & properties involved in this appeal are not acquired from the proceeds of crime. The proceedings under PML Act before the Adjudicating Authority are civil in nature and not criminal. The provisions of Section 11 and Section 42 of the PML Act specifically confirms the said position and therefore the reliance placed by ED on the judgment passed by NCLT, Ahmedabad to contend non-applicability of moratorium on the proceedings before Adjudicating Authority is wholly misplaced. Rather the said judgment reinforces the correct position. We set aside the Impugned Order dated 20.12.2017 and the Provisional Attachment Order dated 29.06.2017. The mortgaged properties attached under the PAO 05/2017, so far as, properties concern in this appeal are released from attachment forthwith.” Even the arguments of the respondent no. 1 that the PMLA will override the proceeding under the Insolvency and Bankruptcy Act of 2006 are wholly without any merit because of the reasons as explained earlier even otherwise the SARFAESI Act after the amendment is over-ride proceedings of PMLA because of the reasons that the properties in question is mortgaged property with the bank. If the provisional attachment order, impugned order as well as the pleadings of ED are read, one is failed to understand, why is ED is opposing the move to recover the debts. The trial against the borrowers would take number of years. Thus, the impugned order passed is totally contrary to law and is not sustainable. The same is set-aside pertaining to subject matter of mortgaged property. The provisional attachment is also quashed. The attached property is released forthwith. The time spent from the date of provisional attachment order till today shall be deducted if the chosen to continue the proceedings against the borrowers under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).

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• Service Tax

• 2018 (11) TMI 183
  Refund of service tax - export of service - basis of claiming the refund of service tax was that the respondents' services being Business Auxiliary Services (BAS) and not repairs and maintenance which services had been exported - Export of Services Rules 2005. Held that:- Issue stands decided in the case of THE COMMISSIONER OF SERVICE TAX VERSUS M/S. RELIANCE MONEY EXPRESS LTD. [2017 (10) TMI 853 - BOMBAY HIGH COURT], where it was held that "Export of Service" has been clearly held to be applicable where the benefit of service has accrued outside India. Appeal dismissed - decided against Revenue.

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• 2018 (11) TMI 182
  Jurisdiction to issue SCN - two SCN on the same issue for overlapping period - SCN invoking extended period of limitation - CBEC Circular dated August 12, 2016 - Rule 10 of the Place of Provision of Service Rules, 2012. Is any of the two impugned show-cause notices without jurisdiction? - Held that:- Both the impugned notices give adequate reasons for invoking the provisions for extended period of limitation. In light of the evidence coming to the authorities, on the basis of the statement of the petitioner and otherwise, the petitioner is obliged to face the proceedings emanating on the basis of the two show-cause notices. The reasons are a plausible view on the subject matter. A Writ Court need not interfere when the view taken is plausible - There is no lack of jurisdiction in issuing any of the two show-cause notices - issue is answered in the negative and against the petitioner. Is the impugned circular dated August 12, 2016 of CBEC bad in law? - Held that:- The impugned circular puts the authorities on notice that, there can be two kinds of freight forwarders as noted therein and for the reasons given, the tax incidence for each of them would be different. By the impugned circular, an authority is required, after considering the individual case on merits, to identify the category in which the freight forwarder falls and then calculate the tax incidence accordingly - The impugned circular cannot be read to have imposed any restrictions or any authority or to be contrary to the provisions of any statute or to have whittled down any provision of any Rule or being contrary to any Rule or to determine any show-cause notice in any particular way. The impugned circular requires the authorities to look into the accounts of a freight forwarder in the light of the two nature of businesses noted therein and arrive at the tax incidence - the impugned circular dated August 12, 2016 cannot be held to be bad in law - issue is answered in the negative and against the petitioner. To what relief or reliefs are the parties entitled to? - Held that:- In view of the first two issues being answered against the petitioner, no relief can be granted to the petitioner. Petition dismissed - decided against petitioner.

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• 2018 (11) TMI 181
  Correction of errors in the TRAN-1 declarations - migration to GST Regime - transitional provisions - Held that:- Identical question came to be considered by this Court in JAY CHEMICAL INDUSTRIES LIMITED VERSUS UNION OF INDIA [2018 (10) TMI 876 - GUJARAT HIGH COURT] where the Division Bench of this Court by a speaking order, quashed and set aside the similar order and remanded the matters to the learned CESTAT by observing that There is no scope for directing the respondents to allow the petitioner to correct the TRAN1 declaration already made.

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• 2018 (11) TMI 180
  Liability of Service tax - amount of unpaid bill adjusted from the security deposit by the BSNL - extended period of limitation - demand of interest and penalty - Held that:- a bland allegation of willful suppression has been raised against BSNL. The department has not brought on record any single positive act on the part of BSNL for suppressing any material fact. The show cause notice has been issued on the basis of the scrutiny of relevant documents maintained by BSNL. BSNL being a public sector company, the statutorily maintained records were open for scrutiny to the proper officer at all material times and that hence there can be no allegation of suppression of material fact by the appellant. Suo moto adjustments between the excess paid service tax in certain months with the service tax payable in subsequent months - Held that:- There is no infirmity in the dropping of such demand in as much as the alleged violations of Rule 6(4)B are merely procedural infractions - this ground raised by the revenue is rejected. Extended period of limitation - Held that:- The demand is to be restricted to the normal time limit - the adjudicating authority is directed to requantify the demand falling within the normal time limit and at the same time extend cum tax benefit. Penalty set aside by invoking section 80. Appeal allowed in part.

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• 2018 (11) TMI 179
  CENVAT Credit - Scope of SCN - main contention put forward by the ld. counsel for the appellant is that the show cause notice itself cannot sustain for the reason that it invokes Rule 3 of CENVAT Credit Rules, 2004 to disallow the credit whereas the demand is made under Rule 14 of the said Rules disallowing credit attributable to trading as envisaged under Rule 6. Held that:- It is correct that show cause notice does not invoke Rule 6 of CCR, 2004. But it is to be noted that the provision for availing credit is envisaged in Rule 3 of CCR, 2004. The show cause notice proposes to deny the credit availed on trading as per Rule 3 of CCR, 2004. Rule 3 does not allow credit to be allowed on trading activity. The show cause notice invokes Rule 3 to disallow the credit for the reason that no credit can be availed on trading as per this provision. Undisputedly, the appellants have availed credit on trading activities. Therefore, the demand raised disallowing the credit on trading is legal and proper. Appeal dismissed - decided against appellant.

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• 2018 (11) TMI 178
  Condonation of delay of 85 days in filing appeal - power of Commissioner (A) to condone delay - Held that:- Since the delay in the present case was beyond the condonable limit, therefore, the Commissioner (A) has rightly dismissed the appeal as time bar by relying upon the decision of the apex court rendered in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT OF INDIA], where it was held that there was no power to condone the delay after the expiry of 30 days period - delay cannot be condoned - appeal dismissed - decided against appellant.

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• 2018 (11) TMI 177
  Penalty u/s 77 and 78 of FA - service tax on GTA Service paid alongwith interest - Held that:- The levy of service tax on GTA was notified from 1.1.2005 and there was a doubt whether an individual truck owners are liable to pay the service tax or not. But in the present case, the appellants paid the service tax along with interest before the issuance of show-cause notice and the same have been appropriated in the impugned order by the Original Authority. Once the service tax and the interest has been paid prior to the issuance of show-cause notice, the department should not have issued the show-cause notice and the proceedings are deemed to be concluded under Section 73(3) of the Finance Act - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 176
  Condonation of delay of 41 days in filing appeal - power of Commissioner (A) to condone delay beyond 30 days - Held that:- In the present case, the delay was beyond the condonable limit - issue decided in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [2007 (12) TMI 11 - SUPREME COURT OF INDIA], where it was held that there was no power to condone the delay after the expiry of 30 days period - delay cannot be condoned - appeal dismissed - decided against appellant.

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• 2018 (11) TMI 175
  Classification of Services - Site Formation and Clearance, Excavation and Earthmoving and Demolition Services or not? - removal of Carbonaceous Shale and Hard Shale from the mining area upto the railways siding as per the terms of the contract - demand of Interest and penalties. Held that:- In terms of the contract awarded by M/s North Eastern Coal Fields, Coal India Ltd., Assam, the activities carried out by appellant were for production of Carbonaceous Shale (CS) as well as transportation of Hard Shale (HS) from the mining area upto the railways siding - The service tax was not initially paid by the assessee, but what amount they received from M/s North Eastern Coal Fields, Coal India Ltd., Assam, the same has been paid to the Government Account. In the present case, the appellants were no doubt under bonafide belief that the activity may not be liable for payment of service tax as the activity of mining was included as a separate service tax w.e.f. 01.06.2007 only. Keeping in view the disputed nature of service tax and bonafide belief of the assessee, we are of the view that this is a fit case to waive penalties under Section 80 of the Finance Act, 1994 - demand of interest upheld. The issue is decided in the case of NATIONAL MINING CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DIBRUGARH [2007 (10) TMI 227 - CESTAT, KOLKATA], where the Kolkata Bench of the Tribunal, while upholding the payment of service tax, has sustained the order for payment of interest, but waived penalty. Interest upheld - penalty waived - appeal allowed in part.

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• 2018 (11) TMI 174
  Classification of services - loading, transport and unloading of coal from mining - whether classified under GTA Service or under the head Cargo Handling Services? - Held that:- It can be seen from a plain reading of 65A (2)(b) that the classification in the case of combined service is to be decided by analyzing the fact as to which service gives essential character to the service being performed - in the present case the essential character of the service for which contract has been entered by the service provider is that the service received are for transportation of coal for mining area to the railway siding and the activity of loading/ unloading mechanically or otherwise is in our view, is only incidental to the activity of transportation of the cargo in these cases. The service provided by the appellants have rightly been classified in the Goods Transportation Agency service. This issue has already been examined by the Hon’ble Supreme Court in their decision in the case of CCE & ST Raipur Vs Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] wherein the Hon’ble Supreme Court has held that activity undertaken by the assessee of transporting of coal from the pithead of the mines to railway siding is more appropriately classifiable under service head of Transport of Goods by road services. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 173
  Levy of service tax - Collection of taxes for the Central Government and the Government of State and the commission received for such collection from those Governments - Held that:- The services are neither sale or marketing of goods nor promoting or marketing of services or any customer care services. In fact, collection of tax is neither a sale of good nor rendering of service. It is a compulsory payment which is collected by law from everyone by the State and the tax payer is not the customer or the client of the Government. It is in this compulsory collection of money in the form of tax, the appellant is assisting the Government of India and the State Government and is getting paid for the same - by no stretch of imagination can collection of taxes be called a business auxiliary service within the definition as per Sec. 65 (9) - demand set aside. Levy of service tax - Sale of Government of India Bonds and commission received from RBI for such sale - Held that:- The service of sale of Government of India bonds is not a service and there is no tax liability - As far as the sale of mutual funds is concerned, same has been covered by exemption notification 13/2003-ST as the commission received on sale of goods was exempted - demand not sustainable. Levy of service tax - Sale of credit cards of SBI (Issuing Bank) and the commission received from SBI for such sale; d. Sale of mutual funds of SBI and the commission received for such sale from SBI - Held that:- The credit card services rendered by the appellant by selling and promoting the credit card issued by their parent company viz., SBI and the commission received by them for this service fall under the definition of credit card services w.e.f. 01.05.2006. Prior to the introduction of this definition the credit card services would have been chargeable to service tax to the extent applicable and as “banking and other financial services” - the demand made on sale of credit cards under the head of ‘business auxiliary services’ does not sustain. Whether the appellant has been issued show cause notice without jurisdiction as the head office of the appellant banking company had not rendered the services but their branches did? - Held that:- The assessee opted for centralized registration for some other services and has been discharging service tax accordingly. As far as the alleged four taxable services are considered, they have not paid any service tax. Having opted for centralized registration the appellant cannot now argue that their head office has no role in providing the services and hence cannot be issued a show cause notice. It is not the case of the appellant that their branch offices are separately registered with the department for the alleged services rendered - there is no force in the arguments of the appellant that the show cause notice was issued without jurisdiction. Extended period of limitation - Whether interest is recoverable and penalty is imposable under Sec. 76, 77 & 78 of the Finance Act, 1994? - Held that:- The demands raised in the impugned order are not sustainable on merits and therefore, the same needs to be set aside - the interest and penalties also need to be set aside - as demand do not sustain on merits, it is not necessary to go into the question of limitation. Appeal allowed.

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• 2018 (11) TMI 172
  GTA Service - transportation/freight charges to individual transporters during the period 01.05.2008 to 30.11.2008 - taxability - Held that:- This Bench in the case of Sai Sudhir Infrastructures Limited [2018 (5) TMI 1678 - CESTAT HYDERABAD] on similar issue has held that service tax liability under reverse charge mechanism does not arise for the freight charges paid to individual truck owners - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 171
  Classification of services - Business auxiliary service or not? - activity of spot billing of electricity consumption charges and maintenance of customers’ accounts for Andhra Pradesh Central Power Distribution Company Limited (APCPDCL) - Held that:- The facts are in large and the entire payment is received on the amount received as consideration for spot billing and maintenance of accounts by the appellant under an agreement with APCPDCL. The issue is no more res-integra and is decided by the Bench in the case of Karvy & Co., Sneha Consultants Pvt. LTd. vs. CCE, C&ST, Hyderabad-II [2017 (10) TMI 26 - CESTAT HYDERABAD], where it was held that the said services would not fall under the category of business auxiliary services. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 170
  Taxability - amount paid by the respondent to the agents appointed abroad - reverse charge mechanism - Held that:- The respondent assessee had given justifiable reason for not discharging the service tax liability during the period 18.04.2006 to 31.03.2008 - there is no reason to interfere in such a reasonable order passed by the 1st appellate authority in setting aside the penalties imposed by the adjudicating authority under Sections 76, 77 & 78 - appeal dismissed - decided against appellant.

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• 2018 (11) TMI 169
  CENVAT Credit - period October 2011 and March 2015 - input services - security services for the security guards hired by them - lift maintenance service - service tax paid by the appellant under reverse charge mechanism from the services of chartered accountant filed by them. Service tax paid by the appellant under reverse charge mechanism from the services of chartered accountant filed by them - Held that:- There is no legal provision under which such an amount could be paid as service tax or credit of the same would have availed by them - the credit of service tax availed by the appellant on the services of chartered accountant paid wrongly by them under reverse charge mechanism needs to be disallowed. CENVAT Credit - Lift maintenance service - security services - Held that:- The appellant hired these services and paid for them along with service tax. Given the nature of these services running their business from others the same complex would have also benefited from them. This enjoyment is like the enjoyment of one’s porch light by passers by. It does not dilute the utility of these services by the appellant or their nexus with their output services - There is no rule under which the Revenue can vivisect and partly deny the credit on these services simply because somebody else also incidentally benefited from them - Credit allowed on these two services. Appeal allowed in part.

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• 2018 (11) TMI 168
  Classification of services - construction of cottges and industrial buildings - Commercial or Industrial Construction Service or works contract service? - Held that:- The contracts which were awarded to the appellant herein with Andhra Pradesh Tourism Development Corporation Limited and the Ministry of Defence, categorically indicates that the said construction of cottages and industrial buildings were in fact works contract and there was element of supply of material and service. The issue is now squarely settled by the judgment of Hon’ble Apex Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 167
  Management, maintenance and repair services - generation of power by the appellant - whether excisable product or not - whether the amounts received as consideration by the appellant for operating power plant on behalf of his client would be liable for the discharge of service tax under the heading “management, maintenance and repair services? Held that:- The appellant is getting separate consideration for operation of the power plant and for maintenance and repair of the power plant. Appellant discharges the tax liability on the portion received as maintenance and repair services but has claimed that no tax is payable on operating part of the contract. The issue is no more res integra. The Tribunal in the case of GVK power and infrastructure Ltd. [2018 (2) TMI 1027 - CESTAT HYDERABAD], where it was held that this maintenance under taken by the appellant is in order to keep the power plant in the working conditions; there is no interruption in power generation and transmission to the power grid. - operation of power plant is not taxable under maintenance and repair services. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 166
  CENVAT Credit - It appeared that since UEPL who merged in parts with 3 companies including the appellants, the appellants would have been entitled to a part of the CENVAT credit available in the books of UEPL - Held that:- The entire issue has been gone in great details by the First Appellate Authority in the impugned order. He has clearly recorded that the respondent herein is part of the demerger plan approved by Hon’ble High Court. The appellant’s legal right to credit of Rs. 20,55,937/- as successor to the related business of UEPL taken over by them cannot be denied on the ground of procedural infirmity of non-filing of application under Rule 10(3) of CCR 2004 and the credit taken, therefore, has to be held to be validly accrued and taken by the appellants. Appeal dismissed - decided against Revenue.

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• 2018 (11) TMI 165
  Business Auxiliary services - commission received from the RBI by the banks - appellant carried out various Government transactions on behalf of the Central and the State Governments and have received commission - taxability - N/N. 22/2006-ST dated 31.05.2006 - Held that:- The Notification exempts taxable services provided or to be provided by any person to the Reserve Bank of India when the service tax for the service is liable to be paid by the Reserve Bank of India under Sub-Section (2) of Section 68 of the Finance Act, 1994 read with Rule 2 of the Service Tax Rules, 1994 - It further exempts taxable services provided or to be provided to any person by the Reserve Bank of India. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 164
  Construction of residential complex Service - non-discharge of Service tax - abatement in terms of N/N. 01/2006-ST dated 01.03.2006 - Whether construction activity by a builder prior to 01.07.2010 is liable to service tax - Demand of interest and penalty. Held that:- It is evident from the record that the relevant period was April, 2008 to September, 2008 which is prior to 01.07.2010 and the service provided was construction of residential complex by the builder which, as clarified by the CBEC in their circular dated 10.02.2012 was not taxable during the relevant period. The legal position is settled and the appellant was not required to pay service tax on the services allegedly rendered by them during the relevant period - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 163
  Business Auxiliary services - commission received from the RBI by the banks - appellant carried out various Government transactions on behalf of the Central and the State Governments and have received commission - taxability - N/N. 22/2006-ST dated 31.05.2006 - Held that:- The Notification exempts taxable services provided or to be provided by any person to the Reserve Bank of India when the service tax for the service is liable to be paid by the Reserve Bank of India under Sub-Section (2) of Section 68 of the Finance Act, 1994 read with Rule 2 of the Service Tax Rules, 1994 - It further exempts taxable services provided or to be provided to any person by the Reserve Bank of India. Demand set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (11) TMI 162
  Attachment of bank account and property - duty demand of Rs. 88 lakhs - Held that:- Today there is an amount of Rs. 88 lakhs due and payable by the Petitioner to the Revenue and the same needs to be secured. Therefore, we do not interfere with the order of the Respondents attaching the Petitioner's residential flat till such time as the Tribunal takes a final view on the Appeal filed by the Petitioner. However, the attachment of the bank account in these facts is not justified. The attachment of the residential flat is not to be interfered with at this stage - Respondents have already vacated attachment of the bank accounts - petition disposed off.

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• 2018 (11) TMI 161
  CENVAT Credit - transfer of credit by EOU - both units merged subsequently - revenue neutrality - Held that:- As seen from the show cause notice, later both the units have merged to one unit, pursuant to debonding of the EOU. Taking note of these facts, it is very much clear that the situation is a revenue neutral one, even if the demand is confirmed, both the units which has been now merged into one unit of the same assessee, shall be availing the credit - demand requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 160
  Demand of interest and penalty - appellant has reversed the credit even before issuance of the SCN - Held that:- The appellant has reversed the credit even before issuance of the show cause notice. It is also not the case of the department that they have utilized the credit - the demand of interest and penalty cannot sustain - duty demand upheld - appeal allowed in part.

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• 2018 (11) TMI 159
  Provisional release of trucks - Section 110A of the Customs Act read with Section 12F of the Central Excise Act, 1944 and Rule 24 of the Central Excise Rules, 2002 - transfer of vehicles on the ground that the appellant being resident of Bangalore and the vehicles are not complied with the Bharath Stage-IV Emission norms as per the order of NGT / Supreme Court - Held that:- When the respondent refused to release the vehicles, the appellant approached the Hon ble High Court of Karnataka and the Hon ble High Court directed the appellant to produce affidavit of the original owner before the authorities for provisional release of the vehicles. But in spite of the affidavit of the original owner filed by the appellant, the respondent did not provisionally release the vehicles simply on the ground that the appellant has not become its owner so far. Having furnished all these documents which clearly show that though he becomes owner of the vehicles from the day he has made the payment and taken the possession of the vehicles, there is no reason for the respondent not to release the said vehicles on provisional basis till the investigation is completed. The seized trucks, seized during the investigation, are directed to be released to the appellant on appellant furnishing the security bond of Rs. 10 lakhs (Rupees ten lakhs only) each for each of the trucks - appeal disposed off.

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• 2018 (11) TMI 158
  CENVAT Credit - inputs - M.S. Bars, Angles, Plates, HR Sheets, Beams, Coils and Channels falling under Chapter 72 of CETA, 1985 used for repairs and maintenance of machinery in the factory - Held that:- The impugned goods were used in the factory for maintenance and repair of the plant and machinery which is essential for manufacture of the final product - the appellant has also produced on record the certificate of Chartered Engineer who has certified that the impugned goods have been used for maintenance of plant and equipment - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 157
  Demand of Interest - CENVAT Credit availed wrongly but reversed subsequently without actually utilizing the same - Held that:- In the peculiar facts of this case as to the availability of credit balance as on September, 2011 and the non-utilization as pleaded by the Ld. Advocate vis-à-vis the tabular statement filed in the Appeal Memo, the same requires factual verification by the adjudicating authority and hence, the impugned Order set aside and case remanded back to the file of the adjudicating authority to ascertain these factual aspects - appeal allowed by way of remand.

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• 2018 (11) TMI 156
  100% EOU - The appellant applied to the Development Commissioner for clearance of the goods up to the extent of value of Rs. 204.66 lakhs. It seems that the letter of permission granted by the Development Commissioner allowed the appellant to clear the goods to the extent of Rs. 240.66 lakhs - Held that:- The subsequent detection of mistake at the end of the Development Commissioner, on account of an audit objection raised, resulting in amendment of the certificate by him will have no bearing to the goods already cleared in terms of a proper, correct and legitimate certificate issued by the Development Commissioner issued initially. As such, it cannot be said that when the goods were cleared, the appellant was not having any valid certificate and the same were cleared against them against an invalid certificate - the said excess clearances stand adjusted against the clearances for the future period, in which case no loss to the Revenue has occurred and as such no demand would be sustainable against the assessee. Extended period of limitation - Held that:- The demand raised after a period of around 8 years is hopelessly barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 155
  CENVAT Credit - input/input service/capital goods - Department entertained a view that appellants are not eligible to avail credit in respect of the said outdoor catering services - Held that:- In view of the conflicting decisions during the relevant time, it was finally settled by the Larger Bench of this Tribunal in the case of M/s. Wipro Ltd. vs. CCE [2018 (4) TMI 149 - CESTAT BANGALORE]. As per the Larger Bench, the appellant is not entitled to CENVAT credit on outdoor catering services - there is no infirmity in the impugned order, which is upheld by dismissing the appeal of the appellant - appeal dismissed - decided against appellant.

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• 2018 (11) TMI 154
  Validity of SCN - imposition of penalty - Entire demand with interest was paid prior to the issue of show-cause notice - applicability of Section 11(A)(1)(b) read with Section 11A(2) of Central Excise Act, 1944 - Held that:- Once the appellant has paid the duty along with interest before the issue of show-cause notice, then show-cause notice should not be issued - penalty set aside, while confirming demand with interest - appeal allowed in part.

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• 2018 (11) TMI 153
  CENVAT Credit - duty paying invoices - appellant have availed Cenvat credit of service tax paid on railway freights on the basis of photocopies of railway receipt and a certificate of payment of service tax issued by the railway authorities - Rule 9 of Cenvat Credit Rules, 2004 - Held that:- The legislative has recognised the validity of the certificates which are being issued by the Railway Authorities certifying the payment of service tax by the appellants. Thus, there has been no contravention of Rule 9 of Cenvat Credit Rules and the appellants have rightly availed the Cenvat credit of the service tax paid by them on the freight amount paid to the Railway Authorities. The substantial benefit cannot be denied to the appellant only because certain procedural requirements as prescribed by the rules have not been followed in toto - all the particulars of service tax paid by the appellants for available and same has been certified by the concerned Railway Authorities, therefore, it will be travesty of the judgment if the Cenvat credit is denied to them only on such a flimsy ground. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 152
  Classification of goods - Absorbent Cotton Wool IP - Cotton Rolls - whether classified under Chapter sub-heading 56012110 or otherwise? - Benefit of N/N. 30/2004-CE - Held that:- An identical issue has come up for consideration before the Tribunal in the case of M/s Shanti Surgical Pvt. Ltd. & Ors. vs CCE, Kanpur & Anr. [2017 (7) TMI 50 - CESTAT ALLAHABAD], where it was held that the impugned goods would fall under Chapter Sub-heading No.5601, 5203 & Chapter 58 - appeal dismissed - decided against Revenue.

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• 2018 (11) TMI 151
  Valuation - parts cleared from the Unit-I to Unit-2 - For the period prior to 01/02/2000, case of Revenue is that the goods be valued on the basis of cost of production by adding the element of profit - For the period w.e.f.01/07/2000, Revenue was of the view that the valuation was required to be done in terms of Rule 8 of the Central Excise Valuation Goods, 2000, which provides for determination of value @ 115% of the cost of production. Held that:- The Large Benches of Tribunal in the case of Jay Yushin Ltd. vs. Commissioner of Central Excise, New Delhi [2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI] has held that when the goods are cleared from one unit to another belonging the same manufacturer, the situation is one of revenue neutrality, inasmuchas any differential duty paid by the first Unit will be available to the second Unit as credit. It has been held that the demand itself is unjustified under such circumstances. Revenue has raised serious objection for allowing the benefit of Revenue neutrality - Revenue neutrality can be considered for only those cases where the clearance is made from one unit to another both belonging to the same manufacturer - the present appeal may be allowed on the argument of Revenue neutrality. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 150
  SSI Exemption - valuation - price escalation clause - Revenue was of the view that the escalation amounts are required to be added to the turnover of the respective years and the benefit of SSI exemption re-worked out - demand of differential duty alongwith Interest - Held that:- The issue is settled in the case of C.C.E. DELHI-III VERSUS M/S HITKARI FIBRES LTD. [2015 (10) TMI 357 - SUPREME COURT OF INDIA], where it was held that it is difficult to hold that the aforesaid additional amount received at a subsequent stage was to be added for the purpose of arriving at the transaction value - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 149
  Clearance of capital goods as Waste & Scrap - demand of excise duty - Department was of the view that such Waste & Scrap of capital goods will be liable to payment of duty at the time of its clearance since such Waste & Scrap has been generated during the course of manufacture of the final product - Held that:- The identical question was considered by the Apex Court in the case of Grasim Industries [2011 (10) TMI 2 - SUPREME COURT OF INDIA] in which the Apex Court examined the precise question of Waste & Scrap arising from the repair & maintenance of the capital goods. The Apex Court held that Waste & Scrap arising from repair & maintenance cannot be covered within the Note 8 (a) ibid. The dutiability Waste & Scrap arising out of old and used capital goods has also been considered by the Tribunal in various decisions and it has been decided that such scrap will be not dutiable. Waste & Scrap cleared by the appellant is not dutiable - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (11) TMI 148
  VAT department's charge and that of the Provident Fund Commissioner - petitioner's grievances are that despite clear position of facts and law, the charge of the State VAT department and the alleged outstanding dues of the Provident Fund Commissioner from the Revenue records is not being removed. Whether the bank as a secured creditor would have a priority charge over the secured assets or whether the VAT department can claim preferential recoveries as a crown debt? Held that:- Since the resolution of this issue was likely to take some time, the Court permitted the bank with the active involvement of the Government authorities to dispose of the property by auction sale. This would ensure that there is no further deterioration of the property and the incurring cost of security would also come to an end. Essentially therefore, the intention of the Court was to decide the internal dispute of secured creditor and the Government at a later point of time and not to withheld the disposal of the property till such disputes are resolved - Whatever be the outcome of the petition filed by the bank, the purchaser of the property through such auction sale conducted under the interim order of the Court, cannot be deprived full use and enjoyment of the property, that too after paying sizable sum to the tune of Rs. 13.30 crores. The Revenue authorities shall delete the charge of the VAT department as well as that of the Provident Fund Commissioner - petition disposed off.

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• 2018 (11) TMI 147
  Pre-deposit - stay of order - Maharashtra Tax on Entry of Goods into Local Areas Act, 2002 - Jurisdiction of assessing authority viz. The Asst. Commissioner of Sales Tax (Investigation) to pass the order - applicability of Section 3 of the Act - goods have entered the local area from Thane - financial hardship of petitioner. Jurisdiction of assessing authority viz. The Asst. Commissioner of Sales Tax (Investigation) to pass the order - applicability of Section 3 of the Act - goods have entered the local area from Thane - Held that:- he Tribunal has noted that it would require deeper consideration at final hearing and had factored in the above while holding that the payment of Rs. 12.69 crores out of a confirmed demand of Rs. 90.82 crores was reasonable. Thus, there is no merit in the submission of the petitioners that the submission was not considered by the Tribunal leading to the impugned order being bad in law. Financial hardship to make pre-deposit - Held that:- The appellant had already deposited an amount of Rs. 2.69 crores out of Rs. 12.69 crores as directed by the first appellate authority but was finding it impossible to pay the balance amount of Rs. 10 crores for the subject assessment year - the financial hardship urged by the petitioners is not at all considered by the impugned order of the Tribunal. Petition disposed off.

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• 2018 (11) TMI 146
  Demand of pre-deposit - stay of order dated 15th March, 2017 - denial of appellant claim of input tax credit - Held that:- The petitioner did not comply with the directions of the Tribunal nor did the petitioner challenge it. Thereafter on 15th March, 2017 an order was passed by the First Appellate Authority confirming the assessment order dated 30th March, 2013. The same has now been challenged before the Tribunal and the stay of the First Appellate order (which upheld the order in original) is sought by the petitioner. This without any explanation, as to why the petitioner did not comply with the earlier orders of the Tribunal in respect of stay of the assessment order passed by the Tribunal. The conduct of the petitioner disentitles it to any relief under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner.

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• 2018 (11) TMI 145
  Reopening of assessment - grievance of the petitioner is that the opinion of the Audit Party cannot constitute information, on the basis of which the Assessing Officer could reopen the assessment - principles of natural justice - Held that:- The Assessing Officer could not reopen the assessment based on the opinion of Audit Party alone. The Assessing Officer has to independently record his view for such reopening, if he proposes to reopen and thereafter, notice has to be issued to the parties regarding such reopening and after considering their objections/representations in this regard, order has to be passed. Principles of natural justice - Held that:- It is crystal clear that the representation of the petitioner dated 14.09.2009 was not at all considered by the respondent, before passing the impugned demand notice dated 12.01.2010 - the impugned demand notice cannot be sustained, since it is a clear violation of principles of natural justice. The matter is remitted back to the respondent for fresh consideration - petition allowed by way of remand.

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• Indian Laws

• 2018 (11) TMI 186
  Appointment of Arbitrator u/s 11(5) of the Arbitration & Conciliation Act, 1996 - resolution of disputes arising between the parties - Held that:- The Arbitrator would mediate between the parties and submit his report by the next date of hearing on the disputes as to whether the parties have amicably settled the same or not, and if so, on what grounds - petitioner shall not be arrested in connection with the offences in question till the next date of hearing - List on 16.11.2018.

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• 2018 (11) TMI 185
  Dishonor of cheque - Section 138 of the NI Act - Opportunity to cross-examine the witnesses - Held that:- This Court finds that the Complainant/respondent herein had repeatedly introduced new witnesses. The petitioner was not even aware of these witnesses or their depositions; in advance; at the stage of prosecution evidence. Therefore, in the end of the process; and at the stage of defense evidence, if the petitioner has gathered that something relevant for the defence is yet to be put to the complainant, then it can not be said that such a prayer by the petitioner made to the Court under Section 311 Cr.P.C. is unjustified. Resultantly, it has to be held that; in the facts and circumstances of the present case, it was not legally sustainable or justified on the part of the Trial Court to dismiss the application moved by the petitioner, and thereby to deny him the opportunity to further cross-examine the complainant(CW- 1) and witness Bhupinder Singh(CW-2). Opportunity to crossexamine these witnesses - Held that:- This Court finds that it is not entirely within the discretion and authority of the petitioner to cross-examine a particular witness. Controller of the process of evidence is the Trial Court. Opportunity is to be granted by the Court to the accused to cross-examine a witness through specific order. The records, produced before the Court, does not show that after examination of these additional witnesses the petitioner was ever granted any opportunity to cross-examine the complainant. Therefore, the testimony of Complainant; with reference, subsequently examined witness of the Complainant himself, has remained totally un-cross-examined and unconfronted to the Complainant. The petitioner is granted one effective opportunity to cross-examine the Complainant(CW-1) and Bhupinder Singh (CW-2) - petition allowed by way of remand.

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• 2018 (11) TMI 184
  Dishonor of Cheque due to insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - Held that:- Since the evidence which has come on record does show the complicity of the second respondent in the crime, the cheques in question having been issued against its account, it having received the notice of demand and not having made any payment in response thereto satisfying the claim of the complainant arising out of the said cheques, the exercise of jurisdiction by the Metropolitan Magistrate under Section 319 Cr. PC could and should not have been interfered with by the revisional court. Petition allowed - decided in favor of petitioner.

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