TMI Tax Updates - e-Newsletter
November 6, 2017

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

News

• PM hints at more measures for businesses on GST

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• GST – Frequently Asked Question

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• GST to improve India's biz ranking further: PM

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• Text of PM’s address at the Ease of Doing Business event 4th November, 2017

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• The Government of India floats Series-III of Sovereign Gold Bonds 2017-18 for the period from October 09, 2017 to December 27, 2017 ; For the next subscription period i.e. November 7-9, 2017, the issue price shall be ₹ 2,934 per gram with Settlement on November 16, 2017

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Notifications

GST - States

• F.2 (3)/Policy-GST/2017/998-1009 - dated 31-10-2017 - Delhi SGST
  Facility of LUT extended to all exporters / registered persons subject to conditions

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• 01-V/2017 - dated 30-10-2017 - Karnataka SGST
  Amendment of Notification No. (1-I/2017) No. KGST.CR.01/17-18 dated 11/09/2017 so as to extend the time limit for filing of GSTR-2 and GSTR-3 for the month of July 2017.

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• 01-Q/2017 - dated 28-10-2017 - Karnataka SGST
  Seeks to extend the due date for submission of details in FORM GST-ITC-04

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• 01-P/2017 - dated 28-10-2017 - Karnataka SGST
  Amendments in the Notification (1-O/2017), No KGST.CR.01/17-18 dated the 13th October, 2017 - Seeks to extend the due date for submission of details in FORM GST-ITC-01

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• 23-B/2017 - dated 24-10-2017 - Karnataka SGST
  Notification for Waiver of Late fee for the month of August & September 2017.

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• 18/2017 - dated 19-10-2017 - Karnataka SGST
  Seeks to notify the evidences required to be produced by the supplier of deemed export supplies for claiming refund under rule 89(2)(g) of the KGST rules, 2017.

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• 17/2017 - dated 19-10-2017 - Karnataka SGST
  Seeks to notify certain supplies as deemed exports under section 147 of the KGST Act, 2017.

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• 04-F/2017 - dated 17-10-2017 - Karnataka SGST
  The Karnataka Goods and Services Tax (Sixth Amendment) Rules, 2017.

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• 33/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No. (13/2017) FD 48 CSL 2017, dated the 29th June, 2017.

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• 32/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification, No.(12/2017)FD 48 CSL 2017, dated the 29th June, 2017.

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• 31/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No.(11/2017)FD 48 CSL 2017, dated the 29th June, 2017.

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• 15/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to make payment of tax on issuance of invoice by registered persons having aggregate turnover less than ₹ 1.5 crores

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• 14/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to cross-empower State Tax officers for processing and grant of refund.

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• 06-A/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to amend notification No.(6/2017)FD 47 CSL 2017-dated 15.09.2017 so as to add certain items to the list of “handicrafts goods”

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• 03-A/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No. (3) FD 47 CSL 2017, dated the 28th June, 2017,

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• 01-O/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to extend the time limit for submission of FORM GST ITC-01.

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• 01-N/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to extend the time limit for filing of Input Service Distributor FORM GSTR-6.

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• 01-M/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to extend the time limit for furnishing the return by a composition supplier filing of FORM GSTR-4.

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• 04-E/2017 - dated 4-10-2017 - Karnataka SGST
  The Karnataka Goods and Services Tax (Fifth Amendment) Rules, 2017.

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• 30/2017 - dated 28-9-2017 - Karnataka SGST
  Amendments in the Notification No FD 48 CSL 2017 (12/2017) dated the 29th June, 2017, - Exempting supply of services associated with transit cargo to Nepal and Bhutan.

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• FD 48 CSL 2017 - dated 25-9-2017 - Karnataka SGST
  CORRIGENDUM - Notification No. FD 48 CSL 2017 (13/2017) dated 29th June, 2017

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• 29/2017 - dated 22-9-2017 - Karnataka SGST
  Seeks to amend notification no. 5/2017- State Tax(rate) dated 29.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics.

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• 28/2017 - dated 22-9-2017 - Karnataka SGST
  Seeks to amend notification no. 2/2017- State Tax(rate) dated 29.06.2017 to give effect to gst council decisions regarding gst exemptions.

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• 27/2017 - dated 22-9-2017 - Karnataka SGST
  Seeks to amend notification no. 1/2017- State Tax(rate) dated 29.06.2017 to give effect to gst council decisions regarding gst rates.

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• 26/2017 - dated 21-9-2017 - Karnataka SGST
  Exemption intra state supply of heavy water and nuclear fuels by the Department of Atomic Energy to the Nuclear Power Corporation of India Ltd.

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• 25/2017 - dated 21-9-2017 - Karnataka SGST
  Seeks to amend notification No. 12/2017-CT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017.

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• 24/2017 - dated 21-9-2017 - Karnataka SGST
  Seeks to amend notification No. 11/2017-CT(R) to reduce KGST rate on specified supplies of Works Contract Services.

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• 07/2017 - dated 15-9-2017 - Karnataka SGST
  Notifying section 51 of the KGST Act, 2017 for TDS.

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• 06/2017 - dated 15-9-2017 - Karnataka SGST
  Seeks to granting exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration.

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• 01-K/2017 - dated 15-9-2017 - Karnataka SGST
  Seeks to extend the last date for filing the returns in FORM GSTR-3B for the Months of August to December 2017.

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• 01-J/2017 - dated 11-9-2017 - Karnataka SGST
  Seeks to extend the time limit for filing of GSTR-6.

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• 01-I/2017 - dated 11-9-2017 - Karnataka SGST
  Seeks to extend the time limit for filing of GSTR-1, GSTR-2 and GSTR-3.

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• 23-A/2017 - dated 6-9-2017 - Karnataka SGST
  Seeks to waive the late fee for late filing of form GSTR-3B for the month of July,2017.

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• 01-H/2017 - dated 5-9-2017 - Karnataka SGST
  Seeks to extend due dates for furnishing details / Returns for the months of July,2017 and August, 2017

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• 01-G/2017 - dated 4-9-2017 - Karnataka SGST
  Seeks to extend time period for filing of details in FORM GSTR-6 for the months of July,2017 & August,2017.

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Income Tax

• 93/2017 - dated 2-11-2017 - IT
  Agreement between the Government of the Republic of India and the Government of the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes

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Highlights / Catch Notes

Income Tax

• Stay of demand - assessee in default - Petitioner's application under Section 220(2A) rejected - unreasonableness would be in not providing an adequate opportunity to the petitioner - The petitioner cannot be blamed for the delay caused at the Departmental level - HC
  Visit to Get Source

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• Even though the assessee had suo-moto offered for disallowance, but once this issue has been challenged before the appellate proceedings and same has been decided in accordance with the law, then relief cannot be denied to the assessee solely on the ground that assessee had offered for disallowance.
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Central Excise

• Classification of goods - The name of the medicament, i.e. Acetyl Salicylic Acid Tablets IP 50 MG (ASA) is not a brand name and it is a generic name therefore, it does not fall under the definition of P & P medicament - to be classified under CTH 3003.20
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Case Laws:

• Income Tax

• 2017 (11) TMI 270
  Initiation of reassessment proceedings - disallowance of interest on customer deposit accounts - Held that:- When the AO passed original order for the current year allowing deduction of interest on customers deposit accounts, he was fully aware of the similar expenditure having been disallowed for the preceding year. Still allowing deduction in the instant year was a conscious and considered decision on the point. Thus it is manifest that there is absence of any tangible material coming into the possession of the Assessing Officer after the passing of the original assessment order u/s 143(3) for the year under consideration indicating escapement of income. As evident that the Assessing Officer initiated reassessment proceedings on a mere change of opinion without there being any tangible material. Respectfully following the judgment in the case of Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) and other numerous judgments on the point, we set aside the initiation of reassessment proceedings and the consequential order passed by the Assessing Officer. In view of our decision on the invalid initiation of reassessment proceedings, there is no need to dispose of the grounds raised by both the sides on merits. - Decided in favour of assessee.

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• 2017 (11) TMI 269
  Allowability of remuneration paid to the Executive Director - ITAT set aside the addition made on re-assessment of the fair market value under Section 37 as to the remuneration paid to the assessee’s Executive Director Shri Abhinav Kumar under Section 40A(2)(b) - Held that:- Hive Communication Pvt. Ltd. (2011 (7) TMI 82 - DELHI HIGH COUR ) has broadly indicated the correct approach to be adopted in such cases i.e. one of commercial expediency and the arms length to be adopted by the AO in evaluating claims by the assessee. This Court also notices that the Supreme Court ruling in Commissioner of Income Tax, West Bengal v. Edward Keventer Pvt. Ltd., [1978 (8) TMI 1 - SUPREME Court] is the primary judgment applicable in these cases. The direction of the AO’s enquiry appeared to have been to seek quantified justification as to the contribution of the individual in this case. The Court recollects the warning of the Supreme Court in S.A. Builders v. Commissioner of Income Tax, (2006 (12) TMI 82 - SUPREME COURT) that the AO’s rulings in such matters including commercial expenditure under Section 37 should not place matters in the arm chair of the assessee, or judge the merits or otherwise of a commercial transaction. In this case, the Court has no doubt that the AO did precisely that. No substantial question of law.

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• 2017 (11) TMI 268
  Deduction of business expenditure - Absence of actual business activity - as contented by petitioner that a vital aspect is ignored by the Court below namely, the petitioner herein had filed the return for the Assessment Year 2008-09, for which the assessment was also made, which clearly proves that the business had commenced during the Assessment Year 2008-09 - Held that:- Before considering this statement further, we would like the petitioner to place on record that income tax return along with the balance sheet, etc. for the Assessment Year 2008-09. Ref HC case [2017 (1) TMI 252 - BOMBAY HIGH COURT]

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• 2017 (11) TMI 266
  TPA - comparables selection criteria - Held that:- The assessee was engaged in software development services which were provided to its AE, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2017 (11) TMI 263
  Seeking of stay of the entire demand - Held that:- As the petitioner had agreed to comply with the payment of disputed tax at the rate of ₹ 50 lakhs per month, they are bound to comply with such an undertaking. Now arguing before this Court pleading their financial incapacity or requesting this Court to examine the merits of the assessment is unsustainable, as this Court finds that there is no error in the impugned order.

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• 2017 (11) TMI 262
  Stay of demand - assessee in default - Petitioner's application under Section 220(2A) rejected - petitioner did not comply with the orders regarding payment of tax by way of instalment schedule granted, which indicates lack of reciprocity and cooperation on the part of the petitioner and Assessee possessed necessary means to make payment of tax, but failed to do so. Held that:- The twin reasons, which have been referred to in the impugned order, are not reasons by themselves to reject the petitioner's application seeking waiver. The officer, who has given parawise comments to the learned Standing Counsel for the Revenue, has taken a strong exception to the use of the expression 'unreasonable' in the affidavit filed in support of the writ petition. The expression 'unreasonable' denotes anything, which is not reasonable and which will not stand to reason. In the instant case, unreasonableness would be in not providing an adequate opportunity to the petitioner to put forth her stand especially when the application for waiver was taken up for hearing nearly after 6 1/2 years. The petitioner cannot be blamed for the delay caused at the Departmental level. Therefore, any opportunity to be given to the petitioner should be adequate, real and sufficient. If these factors are not fulfilled, then it would undoubtedly mean that the petitioner did not have reasonable opportunity, resultantly terming the impugned order to be unreasonable. This Court deems it appropriate to observe that the petitioner, being the legal heir of the original assessee, had complied with the directions issued by the Settlement Commission and since the properties of the assessee having been attached by the Income Tax Officer, prima facie, it appears that this is a fit case where the respondent can exercise his powers under Section 220(2A) of the Act. For all the above reasons, the writ petition is allowed, the impugned order is set aside and the matter is remitted back to the respondent for a fresh consideration.

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• 2017 (11) TMI 260
  Revision u/s 263 - record to substantiate that the order passed by the assessing officer is erroneous or prejudicial to the interest of revenue - Held that:- In the instant case in the order of the Commissioner of Income Tax, it is noticed that nowhere the Commissioner of Income Tax has recorded his satisfaction, rather the satisfaction was of the Income Tax Officer (Technical) who is not competent to revise the order under Section 263 of the Act. Admittedly, the show cause notice has been issued by the ITO(Technical) which also establishes that without examining the assessment order passed by the assessing officer, the show cause notice has been issued. Furthermore, nothing was brought on record to substantiate that the order passed by the assessing officer is erroneous or prejudicial to the interest of revenue. In the instant case neither the Commissioner of Income Tax has applied his mind nor he has brought on record that the assessment order was erroneous or prejudicial to the interest of revenue. Admittedly, the original order has been passed under Section 143(3) of the Act was an order passed by the assessing authority who is not below in rank of the Income Tax Officer (Technical), who has initiated the proceedings under Section 263 in the instant case. An order cannot be revised by the equally situated or equally ranked authority or by any authority who is not authorised under the law. In the instant case the authorised authority is none else but the Commissioner of Income Tax or Principal Commissioner of Income Tax. - Decided against revenue

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• 2017 (11) TMI 254
  Reopening of assessment - addition u/s.40(a)(i) - Held that:- The ground relating to disallowance of the expenditure by holding it as not incurred wholly and exclusively for the purpose of the business was already before the ld CIT-A, but the same was not adjudicated by him. Hence, following the Tribunal in assessee's own case, we remit the adjudication of this aspect to the file of CIT-A. CIT-A is directed to complete the appellate order by considering the issue whether the disallowance on account of expenditure being not fully and exclusively for the purpose of business as raised in ground number two before him is justified or not. Needless to add, the assessee should be granted adequate opportunity of being heard. We make it clear that we have not considered the issue of reopening and the disallowance u/s.40(i)(a) i.e., in any manner whatsoever. Both the parties are free to take up necessary issues as deemed necessary after the order of the Ld. CIT-A is completed in terms of our remitting as above. Both the counsel fairly agreed to the above proposition.

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• 2017 (11) TMI 253
  Addition on bogus purchases - Information received in office of DGIT (Inv.), Mumbai and subsequently, from the Sales Tax Department, Mumbai, regarding suspicious parties who are only providing accommodation entries without doing any actual business - Held that:- In this case the sales have not been doubted. It is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT]. In this case, the Hon’ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, in our considered opinion, on the facts and circumstances of the case, 12.5% disallowance out of the bogus purchases meets the end of justice. Accordingly we direct disallowance of 12.% of the bogus purchases. - Decided partly in favour of assessee.

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• 2017 (11) TMI 251
  Bogus purchases addition - notices u/s 133(6) issued to the purchase parties returned unserved and that the assessee failed to produce these parties for verification - addition made on the basis of information received from Maharashtra Sales-tax department which informed that the parties are involved in providing accommodation entries without any business activity - Held that:- Addition cannot be made towards alleged bogus purchases only on the basis of information received from Maharashtra Sales-tax department. At the same time, it is also an undisputed fact that the notices issued u/s 133(6) were returned unserved with remark, “not known” or “unclaimed”. The assessee has failed to furnish correct addresses of the parties. Under these circumstances, it is very difficult to accept that the purchases from those parties are explained to the satisfaction of the AO. Considering the facts and circumstances of the case and also being consistent with the view taken by the co-ordinate bench, we are of the view that only profit element embedded in purchases needs to be taxed. Hence, we direct the AO to estimate net profit of 12.5% on total purchases made from the above parties. Appeal filed by the assessee is partly allowed.

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• 2017 (11) TMI 247
  Disallowance made on account of foreign exchange loss - Held that:- Tribunal in the appeal for the A.Y. 2003-04, has allowed the assessee’s claim and upheld the order of the Learned CIT(Appeals) in deleting the disallowance of foreign exchange fluctuations after observing foreign exchange loss that has arisen is on account of revenue expenditure and not on account of capital expenditure. Hence we do not Find any infirmity in the order of the Ld CIT(A)in deleting the disallowance. Disallowance of depreciation on unutilized assets - AO disallowed the same on the ground that the asset in questions were not used by the assessee - CIT( Appeals) following the earlier years appellate order deleted the said depreciation and also held that it is a settled proposition of law that even if the asset is kept for ready for use, then same should be deemed to have been used for the purpose of business - Held that:- We find that this issue had come for consideration in the earlier years before the Tribunal; wherein Tribunal has allowed the similar claim depreciation in A.Y. 2003-04, vide para no. 30. Once depreciation has been allowed on the same asset in the earlier years, then in this year depreciation cannot be disallowed on WDV and accordingly, the order of the Learned CIT (Appeals) is confirmed. Disallowance of deduction u/s 10A - assessee not filed approval/extension of approval of the 3 units and so far as the STPI unit of Bangalore is concerned, he held approval has to be provided by the Inter-Ministerial Standing Committee - Held that:- As following the judicial precedent of the earlier year and also taking into account the categorical finding given by the Learned CIT (Appeals) that already Green Card has been issued by Inter Ministerial Standing Committee on Software Technology Parks of India scheme and assessee has filed letter confirming the extension of the STPI facilities, hold that the deduction u/s 10A cannot be denied to the assessee on the grounds raised by the Assessing Officer. Accordingly, the order of the Learned CIT (Appeals) is confirmed. Disallowance of payment made to approved gratuity fund - Held that:- Tribunal in assessee’s own case for the A.Y. 2002-03 has deleted the similar disallowance on the ground that the said gratuity trust has been duly approved. In view of the aforesaid facts and following the earlier year’s precedence, we find no reason to deviate from the findings recorded by the Ld. CIT(A) that the disallowance u/s 40A(7) cannot be made because clause (a) of the section restricts the deduction in respect of any provision made in the books of accounts for payment of future gratuity liability, however clause (b) clearly provides exception where the provision was made by the assessee for the purpose of payment of a sum by way any contribution towards an approved gratuity fund which here in this case is not in dispute. Thus, the said disallowance has rightly been deleted by the Learned CIT (Appeals). Addition on account of advances written off - Held that:- As in the assessment year 2003-04, this matter has been remanded back to the file of the Assessing Officer by the Tribunal observing that the details furnished did not show that whether these are debts arising out of sales and services and conditions of section 36(2) have been fulfilled by the assessee applicable bad debts written off by the assessee. Further some advances were also written off for which complete details were not available with the assessing officer and from the order of cit (A) the addition has been deleted without complete examination of the items. Therefore in the interest of justice we set aside this issue to the file of AO to verify the claim. Therefore, following the aforesaid order of the Tribunal, we also set aside this issue to the file of the Assessing Officer with similar direction. TDS u/s 195 - withholding of tax - TDS liability on payment made to Keystone Industries Ltd., USA (Keystone) - nature of payment - assessee suo-moto offering such disallowance - Held that:- The services rendered by Keystone were inspection services simplicitor and cannot be reckoned as technical services by any stretch of imagination especially within the scope of “Fees for included services” having make available clause under Article 12(4)(b). The aforesaid activities are not made available so that the person acquiring the service is able to apply the technology. Here providing for certificate/ report on rusting of goods and re-working on goods mainly fall in the category of inspection services leave alone make available of technical knowledge. Accordingly, income of Keystone Industries Ltd. amounting to ₹ 16,348,728/- on account of the said services is not taxable in India under the DTAA and thus, no withholding of tax on the same is warranted under Chapter XVII of the Act and consequently there could not be any disallowance u/s 40(a)(i). So far as the assessee suo-moto offering such disallowance cannot be a estoppel upon the assessee for challenging this issue in the appellate proceedings, because if any payment or receipt is not taxable in India or cannot be reckoned to be income of the payee under the provisions of the DTAA, then the Assessing Officer cannot make the addition on mere acquiescence made by the assessee under misconception of law or treaty provision. The addition/disallowance has to be made strictly in accordance with law. Accordingly we hold that even though the assessee had suo-moto offered for disallowance, but once this issue has been challenged before the appellate proceedings and same has been decided in accordance with the law, then relief cannot be denied to the assessee solely on the ground that assessee had offered for disallowance.

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• 2017 (11) TMI 244
  Addition on account of bogus purchase - CIT(A) in sustaining the disallowance at 25% of the bogus purchases by estimating the profit element in such purchases - Held that:- Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT). Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [2013 (1) TMI 88 - BOMBAY HIGH COURT]. Thus, following the above decision of the Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd (supra), We direct the Assessing Officer to restrict the disallowance to 12.5% of the purchases treated as non-genuine by estimating profit element in such bogus purchases. - Decided partly in favour of assessee.

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• 2017 (11) TMI 243
  Validity of reopening of assessment - absence of issue and service of notice u/s. 143(2) - Held that:- Since the Revenue could not produce before us any evidence to show that notice u/s. 143(2) has been issued or served to the assessee the re-assessment made u/s. 143(3) r.w.s. 147 is void ab-initio in view of the above decisions of ACIT v. Greater Noida Industrial Development Authority (2015 (8) TMI 620 - ALLAHABAD HIGH COURT) and ACIT v. Geno Pharmaceuticals (2013 (10) TMI 218 - BOMBAY HIGH COURT). Thus, respectfully following the said decisions we hold that the re-assessment made u/s. 143(3) r.w.s. 147 of the Act is legally unsustainable. - Decided in favour of assessee.

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• 2017 (11) TMI 242
  Disallowance of deduction u/s. 80IA - Held that:- We find that the assessing officer, in this case has passed an order for the impugned Assessment Year, seven days after passing the assessment order for the Assessment Year 2005-06. AO had allowed the claim for deduction of the assessee on 9 projects in that year. A similar disallowance was not made for the Assessment Year 2005-06. No fault was found by the Assessing Officer on any of the projects while noting down the details of each of the seven projects undertaken by the assessee during the year. No adverse inference has been drawn on any of these seven projects that they do not qualify to be infrastructural facilities in terms of section 80 IA(4) of the Act. Under these circumstances, we are of the considered opinion that the submissions of the ld. DR, that the issue should be restored to the file of the assessing officer for examining the eligibility of each project is devoid of merit. Hence we reject the same

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• 2017 (11) TMI 219
  STCL on sale of shares - AO holding ST Capital Loss and Loss on F&O as speculative invoking explanation to Section 73 - Held that:- Loss suffered by the assessee on sale of shares held by it as investments is to be treated as speculation loss, and the assessee was to be deemed to have been carrying on speculation business, to the extent of business of purchase and sale of shares of other companies within the meaning of Explanation to Sec.73 of the 'Act'. Thus, the loss so suffered by the assessee would be eligible to be set off against the speculation profit, as per provisions contained in s. 73 of the 'Act'. We thus uphold the order of the CIT (A) on this aspect of the matter, which as observed by us hereinabove is clearly supported by the judgment of the Hon'ble High Court of Calcutta in the case of Arvind Investments Ltd. (1990 (3) TMI 5 - CALCUTTA High Court). The Ground of appeal No. 1, to the extent the same is relatable to the issue of loss suffered by the assessee on sale of shares held by it as investment, is dismissed in terms of our aforesaid observations. Whether the loss suffered by the assessee on the sale of shares held by it as 'stock in trade' would fall within the realm of the 'Speculative loss'? - Held that:- As the adjudication on the issue as to whether the loss suffered by the assessee on the sale of shares held by it as 'stock in trade' would fall within the realm of the 'Speculative loss', or not, had been set aside by us to the file of the CIT (A) for fresh adjudication for verifying the fulfillment by the assessee of the requisite conditions contemplated u/s 43(5)(d) r.w. Explanation 1, therefore, the issue as regards the disallowance of any part of expenses relatable to such transactions would be dependent on the adjudication by the CIT (A) of the aforesaid issue. We thus restore the issue as regards the disallowance of expenses relatable to transactions pertaining to sale of shares held by the assessee in 'stock in trade' to the file of the CIT (A). The assessee shall be at liberty to raise fresh submissions in context of the expenses relatable to the transactions pertaining to sale of shares held by it as 'stock in trade' before the CIT (A), in case the need so arise. The CIT (A) is directed to pass a fresh order as regards the disallowance of the expenses to the extent relatable to the transactions pertaining to the sale of shares held by the assessee as stock in trade, in case if the assessee is found to have failed to satisfy the requisite conditions contemplated u/s 43(5)(d) pertaining to the sale transactions of the shares held by it as 'stock in trade'. The Ground of appeal No. 2 is thus partly allowed in terms of our aforesaid observations.

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• Customs

• 2017 (11) TMI 261
  Refund claim - excess customs duty paid under protest - interest on delayed refunds - unjust enrichment - In compliance with the directions of this Court to show cause as to why contempt action should not be initiated against the respondent official for apparently not complying with the judgment of the Hon’ble Supreme Court in the case of SRF LIMITED Vs COMMISSIONER OF CUSTOMS [2015 (4) TMI 561 - SUPREME COURT]. Held that: - this Court is not inclined to take a lenient and casual approach in the matter, as the respondent officials cannot be allowed to go around and bypass the binding precedent of the Hon’ble Supreme Court in such matters and since the amount in question was paid by the petitioner clearly ‘under protest’, from their own resources awaiting the decision of the Hon’ble Supreme Court at that point of time, there was no question of allowing any further enquiry at the end of said Deputy Commissioner and refuse the refund on that ground. The amount actually was refunded after the order dated 14.12.2016 was passed by the respondent Deputy Commissioner, Mr. Ravindra Joshi but the tenor of the said order as well as the Affidavit filed in respect of the contempt notices issued by this Court, do not fully satisfy and in inspire any confidence that the respondents, in letter and spirit abide by the judgment of the Hon’ble Supreme Court and still seek a refuge from this Court to keep open for them to hold an enquiry in the matter, which cannot be permitted. In view of the refund actually made now to the petitioner upon the considered order passed by the respondent himself holding the petitioner company entitled to the refund and refund having been made, no further enquiry in the matter at the end of Deputy Commissioner is justified - decided in favor of petitioner.

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• 2017 (11) TMI 259
  Maintainability of petition - efficacious remedy of an appeal under Section 128 of the Customs Act - Principles of Natural Justice - ex-parte assessment order - The contention of the Petitioner is that the act of unilateral loading on invoices value is contrary to the law and in particular, the Circular dated 8 April 2011. It is contended that the assessment of duty made payable by the Petitioner is in gross breach of the principles of natural justice - Held that: - the decision in the case of Zuari Agro Chemicals Limited Versus Union of India And Others [2014 (2) TMI 552 - BOMBAY HIGH COURT], referred, where it was held that the final assessment of the goods which have been provisionally assessed has to be in terms of Section 17 of the Act. This is so as Section 18(2) of the Act itself does not provide for finalization of assessment but merely states the action to be taken by the Assessing Officer consequent to the finalization of provisionally assessed bill of entry under Section 17 of the Act. The final assessment made on the Bills of Entry (copies of which are annexed at Exh.A to the Petition) and in particular, Bills of Entry specified in paragraph 2 of the Petition set aside - A fresh order of finalization of the assessment of the Bills of Entry be made by the appropriate officer of the Department of Customs after following the principles of natural justice in the light of the directions issued in paragraph 16 of the decision of this Court in the case of Zuari Agro Chemicals Ltd. is directed - appeal allowed in part.

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• 2017 (11) TMI 258
  Revocation of CHA License - Jurisdiction - power of Commissioner of Customs (General), Mumbai to revoke license - order of revocation of license was earlier passed by the Commissioner of Customs (General), Mumbai was set aside by the Appellate Tribunal on 18th June, 2012 on the ground that the Commissioner of Customs, Mumbai lacks jurisdiction as the license was issued by the Commissioner of Customs, Pune - Whether the Appellate Tribunal ought to have given an opportunity to the Appellant to issue a fresh show cause notice to the Respondent - principles of Natural Justice. Held that: - It is true that in the first show cause notice, violation of clauses (a), (d) and (e) of Regulation 13 was alleged. But when the said show cause notice was issued, the Enquiry Report was not available which is referred to in the second show cause notice which holds that the allegation of breach of clauses (a) and (d) of Regulation 13 has not been proved. Therefore, by no stretch of imagination, it can be held that the Appellant was put to notice that the Commissioner intended to disagree with the findings on the allegations recorded by the Enquiry Officer as far as clauses (a) and (d) of the Regulation 13 are concerned - the part of the impugned order which proceeds to set aside the order of revocation is legal and valid and no interference is called for. The Appellate Tribunal ought to have granted an opportunity to the Commissioner of Customs to issue a fresh or supplementary show cause notice putting the Respondent to the notice that while deciding the first show cause notice, the Commissioner intends to disagree with the findings recorded by the Enquiry Officer. Appeal allowed in part.

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• 2017 (11) TMI 252
  Smuggling - red sanders - penalty - Held that: - the department has not been able to adduce any evidence with regard to the direct or indirect involvement of the appellant - The goods exported by appellant, viz. Activated Carbon was loaded in the presence of officers and sealed and the seals were intact on the container as per report of authorities dt.31.7.2013. These being the facts, there is no evidence to establish,the involvement of the appellant in the attempt to smuggle Red Sanders. Penalty unjustified - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 234
  Penalty - Exemption of SAD - N/N. 20/2006/Custom dated 01.03.2006 and N/N. 21/12/Custom dated 17.03.2012 - Held that: - the Bill of Entry in this case was filed on 31.03.2011 and the appellant was not aware of the withdrawal of the exemption at that time, and therefore I am of the opinion that there was no intention to evade as he has paid the duty along with interest - imposition of penalty is not warranted - appeal allowed.

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• 2017 (11) TMI 222
  Penalty u/s 112(a) of the CA, 1962 - case of appellant is that he was never a Director of the company nor was he involved in the company as an Officer-in-charge of the affairs of the company - Held that: - the Department has not been able to bring any evidence against the present appellant regarding the involvement of the appellant in the affairs of the company - as per Form No.32 filed with the Registrar of Companies, appellant was allegedly made Director on 14/08/1997 much after of the import of the goods. In view of lack of evidence against the appellant, the impugned order imposing penalty of ₹ 1 lakh on the appellant is not sustainable - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 240
  Corporate Insolvency Resolution Process - proof of default committed by the Corporate Debtor namely DCM International Ltd. in a sum of ₹ 1.00 crore plus interest at 12% p.a - non refund of security deposit amount given by the Operational Creditor to the Corporate Debtor under lease deed - Held that:- Any amount claimed as due by a person representing as 'Operational Creditor' should demonstrate firstly that the said amount in default falls within the definition of 'claim' as defined in section 3(6). Such a claim, secondly should be capable of being treated as a 'debt' as defined under section 3(11) of IBC,2016 and finally the 'debt' should fall within the confines of Section 5(21) of IBC,2016 (i.e.) it should be capable of being treated as an 'Operational Debt' and such an operational debt must be owed by the Corporate Debtor to a creditor who can then be considered as an Operational Creditor as defined under Section 5(20) of IBC,2016. Further, as recently in the matter of Divine Infracon (P.) Ltd. [2017 (11) TMI 194 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI] has held after a detailed discussion that in relation to transaction of immovable property the same cannot be considered as a transaction falling under the term 'operation' and 'Operational Debt' unless such a transaction having a correlation of direct input to the output produced or supplied by the Corporate Debtor and hence we do not have any hesitation looking at any way in holding that the petitioner will not fall under the definition of Operational Creditor and the claim which is sought to be made can not be considered as an Operational Debt. Further, from the records it is also seen that by sending the notice of dispute dated 3.5.2017 by the Corporate Debtor in relation to the notice of demand dated 31.3.2017 as sent by the Petitioner, a dispute has been projected on the ground that a portion of the properties leased to the Operational Creditor was not given in time by it even after its termination which has occasioned loss of use of the property by the Corporate Debtor giving rise to financial loss to it. As held by the Hon'ble Supreme Court of India in Mobilox Innovations Private Limited v. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT OF INDIA] it is not necessary that a claim of dispute as raised by the Corporate Debtor will ultimately succeed is not required to be established before this Tribunal in order to bring it within the meaning of dispute. A pre-existence of dispute which has plausible chance of success is sufficient and that the ground of dispute which is taken should not be mere sham or elusive. From the perusal of the notice of dispute dated 3.5.2017 we are satisfied that a plausible dispute has been raised by the Corporate Debtor vis-a-vis the Operational Creditor. Taking all the above into consideration we are not inclined to admit the Petition and the Petition is hence dismissed but without costs.

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• 2017 (11) TMI 231
  Corporate insolvency resolution process - Held that:- As total amount of default in respect of Financial Creditor is ₹ 18,28,06,681.30 and for the unsecured loan the amount in default is ₹ 5,49,78,143/-. The amount in default towards Operational Creditors is ₹ 46,55,411/-. The company has not accepted any public deposits. In view of the above discussion, the instant petition deserves to be admitted. It is, however, observed that the Applicant Company save some sketchy particulars has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which ‘the Code’ has been brought into force and to balance the interest of all stakeholders, we are satisfied that the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the petitioner-Corporate Debtor.The petition is, therefore, admitted and the moratorium is declared in terms of Section 14 of Code.

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• 2017 (11) TMI 225
  Corporate Insolvency Resolution Process - existence of default in payment of debt - Held that:- The material on record clearly go to show that in order to finance the project of ‘Aura Mall’, Respondent- Corporate Debtor borrowed monies from HUDCO and Dena Bank and furnished Securities, Guarantee Agreements and Corporate Guarantee, as well as Pledge of Shares. The Registered Assignment Agreements executed by HUDCO and Dena Bank in favour of the Applicant clearly show that the monies borrowed from them along with the Securities were assigned to the Applicant. Since the monies were borrowed by the Corporate Debtor from the HUDCO and Dena Bank on interest basis, it is a ‘financial debt’. Such ‘financial debt’ has been assigned to the Applicant. Moreover, the Applicant has also granted Additional Financial Assistance of ₹ 12 Crores and ₹ 5 Crores to the Respondent on interest basis. Therefore, it is also a ‘financial debt’. The documents on record, including the Notice under SARFAESI Act, clearly show that a default has been committed by the Respondent in repayment of the financial debt. Therefore, Applicant is a ‘Financial Creditor’ and Respondent is a ‘Corporate Debtor’. A default has been committed by the Corporate Debtor in repayment of the financial debt. The Applicant proposed the name of Mr. Devendra Padamchand Jain as ‘Interim Insolvency Resolution Professional’ and also filed his Written Communication. In view of the above discussion, this Application deserves to be admitted and it is accordingly admitted under Section 7(5) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of the initiation of ‘Corporate Insolvency Resolution Process’ and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The other Secured and Unsecured Creditors and Operational Creditors are also entitled to file their claims before the Interim Insolvency Resolution Professional. Also order moratorium under Section 13(1)(a) of the IB Code accordingly.

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• Service Tax

• 2017 (11) TMI 256
  CENVAT credit - excess cenvat credit, over and above the prescribed limit of 20% utilized by the appellant - Held that: - a perusal of Rule 6(3)(c) indicates that there is no such restriction that 20% credit earned should be utilized within a particular period - the decision in the case of M/s. C.L. Educate Versus Commissioner of Service Tax, Delhi [2015 (10) TMI 2544 - CESTAT NEW DELHI], relied upon, where it was held that There are no specific restrictions or prohibitions contained in Rule 6 of the Cenvat Rules, providing for reversal of cenvat credit on monthly/periodic basis - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 246
  Penalty u/s 70 of Finance Act, 1994 read with Rule 73 of STR 2004 - failure in filing the service tax return in time - Held that: - perusal of provisions of section 70 of the Finance Act, 1994, prior to its amendment and after the amendment effective from 08.04.2011, I find that with regard to six returns the appellant is liable to pay ₹ 12,000/- penalty at the rate of ₹ 2,000/- per return - the two returns pertaining to the period April 2009 to Sept. 2009 and April 2010 and Sept. 2010 were nil return and therefore, he is not liable to pay any penalty for the nil return. In all maximum penalty which can imposed on the appellant is ₹ 18,000/- and therefore the impugned order imposing the penalty of ₹ 1,80,000/- is wrong and illegal and infact the appellant is liable to pay only ₹ 18,000/- as penalty - appeal allowed in part.

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• 2017 (11) TMI 245
  Non-payment/short-payment of service tax - security services to telecom towers - imposition of penalty - Held that: - reliance placed in the case of Ashok Hotel Versus Commissioner of Central Excise [2012 (6) TMI 162 - CESTAT, NEW DELHI], where it was held that sufficient cause has been shown for invoking the provisions of Section 80 of Finance Act, 1994 - penalty cannot be imposed when there is a reasonable cause for short payment of tax, relying in the decision in the case of CCE Vs. Sai Sabareesh Agencies [2017 (9) TMI 1262-CESTAT Bangalore] - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 226
  100% EOU - refund of CENVAT credit - denial on the ground that the appellant is not able to show that these services are used for export of services; and also that one refund claim of July 2006 was filed beyond the period of limitation - Held that: - the services availed by the appellant are eligible for refund keeping in view of various decisions cited by the appellant - refund allowed. Time limitation - Held that: - the law on this point is also settled by the Hon’ble High Court of Andhra Pradesh in the case of Hyundai Motor India Engineering (P) Ltd. [2016 (7) TMI 1346 - ANDHRA PRADESH HIGH COURT], where it was held that if a refund claim is filed within one year from the date of realization of consideration, should be accepted and allowed - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 213
  Demand of CENVAT credit wrongly availed with interest - extended period of limitation - suppression of facts - case of appellant is that they are Public Sector Undertaking and suppression cannot be alleged against the Public Sector Undertaking - Held that: - as far as suppression is concerned, the Commissioner (Appeals) has categorically held that there is no suppression in this case and therefore he has given the benefit of Section 80 of the Finance Act to the appellant and it is also a fact that the appellant is a PSU and suppression cannot be alleged against a PSU - once suppression cannot be alleged then extended period of limitation cannot be invoked - demand being time barred is set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (11) TMI 267
  Clandestine removal - fake invoices - Principles of natural justice - Whether the Hon'ble Tribunal was justified in rejecting the appeal without considering the contention of the appellants? - non-deduction of the quantity of cement from the alleged quantity of surreptitious removal on which duty has already been paid - penalty (quantum of penalty more than duty evaded) - Held that: - the appellant company was trying to evade the payment of duty by issuing the forged invoices which are being admittedly prepared by the cashier of the appellant company through a parallel set of invoice book - Admittedly, the appellant company was found committing irregularity and under the garb of parallel set of invoice book as such issuing the fake invoices, the company was trying to evade the payment of duty. There is no error in any of the orders of the authorities below, as neither there is any irregularity in calculating the demand nor any material has been placed by the learned counsel for the appellant to substantiate his submission - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 257
  Clandestine manufacture and removal - auto parts for two wheelers and three wheelers - scope of SCN - parties to the SCN - corroborative evidences. Held that: - the documents were recovered from the custody of Shri Naveen Sharma of M/s.Lakhanpal Auto who is also dealer of auto parts and no statement of Shri Naveen Sharma was recorded which shows that the department was having some interest in Shri Naveen Sharma. As he was not the party to the show cause notice. Further Shri Sanjay Sharma, authorized representative of M/s.Vira has admitted that he had prepared all the documents. Interestingly, Shri Sanjay Sharma was not the party to the show cause notice as he was involved in the activity of clandestine removal of the goods on the basis of investigation. Further, M/s.Shanu whose invoices were recovered for the live consignments was not made party to the show cause notice. The department was having lenient view towards M/s.Shanu which shows that the whole of the investigation was conducted by the Revenue was to drag M/s.Vira in litigation to allege clandestine removal of the goods. There is positive observations of the adjudicating authority in favour of the appellants have not been controverted by the Revenue have not been challenged the same in the appeal before us. But the appellant have heavily relied on the observations made by the adjudicating authority in the impugned order and controvered the observations of the adjudicating authority in para 3.16 in the impugned order that the appellants were given many opportunities but never explained the sources of large amount of cash that was recovered in the house. The explanation is coming at a late stage, therefore the same is afterthought - the adjudicating authority has made observations on the basis of documentary evidence, the documentary evidence cannot be denied by merely saying that it is an afterthought. Therefore, the said finding of the adjudicating authority is not tenable. Reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. Although the adjudicating authority has touched certain points for consideration of charge of clandestine removal and held that the Revenue has failed to prove the sources of procurement of raw materials, consumption of raw material, consumption of consumables, production capacity and transportation of the goods, etc. Therefore, the charge of clandestine removal of the goods is not sustainable against M/s.Vira and co-noticees. No documents have been recovered from M/s.Vira and a case has been made out on the basis of the statement of Shri Sanjay Sharma and the documents recovered from him and there is inculpatory statement of Shri Ravinder Jain, in the absence of any positive evidence, the charge clandestine removal is not sustainable on the basis of the third party evidence. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 255
  CENVAT credit - manufacture of dutiable as well as exempt goods - non-maintenance of separate set of books - Held that: - though the appellant is not maintaining the separate records with regard to clearance of PVC pipes on payment of duty and PVC scrap cleared at nil rate of duty but they have been clearly showing both type of clearances in their ER-1 returns which has been regularly filed with the Department - the appellants have been filing periodical returns in which they have clearly declared the clearances of their dutiable and non-dutiable products. Extended period of limitation - Held that: - the Department has not brought any positive act on the part of the appellant which shows suppression of material facts on his part - extended period not invokable - demand for normal period upheld. Matter remanded to the original authority to find out whether the appellants have paid the duty for the normal period in accordance with law or not - appeal allowed by way of remand.

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• 2017 (11) TMI 250
  CENVAT credit - input services - place of removal - outwards transportation services - Department was of the view that the said services would not qualify as input service since the buyer's premises cannot be considered a place of removal - whether the appellants are eligible for cenvat credit of outward transportation charges beyond the factory gate and upto the place of removal? - Board Circular No.97/8/2007-ST dt. 23.8.2007 - Held that: - from the clarifications issued by the Board, it is seen that in cases where the ownership of the goods remains with the seller, till it is delivered to the buyer's premises, assessee would be eligible for taking cenvat credit on outward transportation services - also, reliance placed in the decision in the case of M/s Madras Cements Ltd Versus The Additional Commissioner of Central Excise, The Commissioner of Central Excise (Appeals-I) [2015 (7) TMI 1001 - KARNATAKA HIGH COURT], where it was held that Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case assessee would be entitled to the benefit of CENVAT credit on Service Tax paid on outward transportation of goods by the assessee even after 01.04.2008 - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 248
  CENVAT credit - PVC resins - fake invoices - non-receipt of inputs in the factory - case of the appellant is that the appellant has availed CENVAT credit on the actual inputs received in the factory and that has been entirely accounted by them and also the department has not been able to establish that the appellant has availed credit on inputs which are not been used in the factory basing upon the input-output ratio. Held that: - The Director Shri S. Nainar has deposed and admitted that the appellants have issued two sets of invoices for clandestine clearance of finished goods. Further, he has also admitted that though 54 MTs of PVC resins was shown in the invoices by Sree Mahavir Impex, only 10 MTs was received in the factory and appellant has availed credit on entire 54 MTs of inputs. These facts stand undisputed by the appellant. On such score, the claim of the appellant basing upon certain calculations with regard to input output ratio, adopting ISI norms cannot be considered as cogent evidence so as to hold that the appellants have not availed wrongful credit. Extended period of limitation - Held that: - on the background of admission of issuance of double set of invoices, the suppression of facts, willful mis-statement with intent to evade duty is also established, for which reason I find that the invocation of extended period is also justified. It may be true that the allegation of clandestine clearance cannot be proved with mathematical precision, however, on totality of facts and evidences placed before me, I am of the view that the department has been able to prove the case of wrongful availment of credit as well as clandestine clearance of goods on the basis of balance of probabilities. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 239
  Classification of goods - medicaments - classified under CTH 3003.20 or otherwise? - whether the medicament of the appellants sold under the name Acetyl Salicylic Acid Tablets IP 50 MG (ASA) is a P & P medicament or a medicament other than P & P medicament? - Held that: - ASA is used as an abbreviation for "Acetyl Salicylic Acid", and the same is commonly used, in such case the appellant has no proprietary right on the word ASA, which stands for Acetyl Salicylic Acid - On reading of the definition of P & P medicament, to qualify medicament as P & P, either name of the medicament should be other than the name specified in a monogram pharmacopoeia such as IP, BP, USP, etc. or the name should be a trade name on which the person using should have the right as proprietor or otherwise to use such name or mark with or without any indication of the identity of that person. Since the name ASA is nothing but an abbreviation of Acetyl Salicylic Acid and commonly used by anybody for referring the name Acetyl Salicylic Acid, the same cannot be considered as a brand name of the appellant. Moreover, as per the labels of various other manufacturers submitted by the appellant, it is observed that abbreviation ASA is being used by various other manufacturers for the reason that any individual person has sole right on such name, i.e. ASA. The name of the medicament, i.e. Acetyl Salicylic Acid Tablets IP 50 MG (ASA) is not a brand name and it is a generic name therefore, it does not fall under the definition of P & P medicament. Accordingly, classification claimed by the appellant as medicament other than P & P under Chapter Heading 3003.20 is held to be correct. Extended period of limitation - Held that: - it cannot be said that there is a suppression of fact on the part of the appellant - extended period not invoked. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 238
  CENVAT credit - duty paying invoices - invoices were addressed to the wrong address which was subsequently corrected by the supplier - Held that: - if the documents issued by the assessee suffer from some mistake due to inadvertence the same can be corrected subsequently as the author of the invoices has liberty to correct the documents for any mistake as occurred inadvertently subject to condition the correction is not contrary to the fact. In the present case there is no charge of the department that correction made in the invoices is contrary to the fact - There is no prohibition in the law to correct the mistake in the invoice which has occurred inadvertently - CENVAT credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 236
  Shortages of finished goods - validity of submissions made by respondent - principles of Natural Justice - Held that: - all the submissions made by the appellant is not based on the assumption or presumption but it is based on the documents such as RT-12 returns/ER-1 returns, RG 1 register and stock verification conducted by the department, therefore records which is basis for explanation of the respondent cannot be said it is afterthought and no new material was brought by the respondent - The explanation is based on the existing record, which was there at the time of recording panchanama, in such a situation the rejection of all the submissions and documents by the adjudicating authority contending that it is afterthought is absolutely incorrect and it is in clear violation of natural justice. I uphold the dropping of penalty of ₹ 1 Lac by Ld. Commissioner(Appeals) of Shri. P.K. Dasgupta. As regard the appeal against company, matter remanded to the adjudicating authority for passing a fresh order after affording personal hearing to the respondent - appeal allowed by way of remand.

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• 2017 (11) TMI 235
  CENVAT credit - manufacture of exempt as well as taxable goods - non-maintenance of separate set of books - whether in terms of Rule 6(3)(b) the assessee is required to deduct 8% from the sale price of the exempted goods for payment of 8% or otherwise? - Held that: - the issue involved in the present case has been decided by the Larger Bench in the case of Kriti Industries (I) Ltd. [2017 (5) TMI 603 - CESTAT NEW DELHI (LB)]. Accordingly, it was held that for the purpose of payment of 8% the same is not liable to be deducted from the sale price of the exempted goods - demand upheld. Penalty - Held that: - there is absolutely no suppression of fact on the part of the appellant. The issue involved is of interpretation and is debatable - appellant was not liable to penalty under Rule 13 of Cenvat Credit Rules, 2004. Appeal allowed in part.

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• 2017 (11) TMI 233
  Penalty - suppression of facts - Held that: - the contentions raised by the Appellant that the Audit Party unearthed undervaluation of finished goods from their own records, cannot be considered as suppression of facts and intent to evade duty, is an incorrect propositions from the appellants, in as much on the issue regarding under-valuation, only the Appellant would know as to what is the correct value that needs to be applied for the discharge of excise liability. Having accepted the fact that during the relevant question, there was under valuation, the claim of the Appellants that equivalent penalty imposed is not in consonance with the law by the Appellant, is not sustainable - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 232
  Penalty u/s 11AC and Rule 26 - SCN has alleged that the duty liability for the period in question was not discharged due to suppression of facts and mis-statement in the form of not informing the revenue authorities about the developmental activities undertaken by the appellant - Held that: - the judgment of apex court in the case of UOI vs. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], would apply in the case, where it was held that Once the conditions specified u/s 11AC of the Central Excise Act are satisfied, penalty becomes mandatory and there is no scope of discretionary power. Payment of differential duty, whether before or after the show cause notice is issued, can not alter the liability for penalty - penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 230
  Valuation - captive consumption - clearance of goods to sister units - the transfer price so adopted was much less than the price adopted for clearances of identical goods to other customers, case of Department is that when the sale price of component for dealers is available, the same should have been adopted for captive consumption also - Held that: - in the case of USV Ltd. Vs. CCE, Pune-II [2001 (8) TMI 833 - CEGAT, MUMBAI], the Division Bench of this Tribunal has held that the selling price for outside customer to be adopted for valuation of identical goods captively consumed as per Rule 6 of Central Excise (Valuation) Rules, 1975 - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 229
  CENVAT credit - input/input services - case of Revenue is that bagasse being a manufactured product and being removed on non-payment of duty, Appellants are required to reverse a particular percentage of credit availed by them on the inputs and input services as per the provisions of Rule 6 (3) of the CCR - Held that: - the Apex Court in the case of UoI vs. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] was considering an identical issue of coming to the existence of bagasse and subsequent use of them for further activity and held that bagasse is not a manufactured product and hence in Cenvat credit availed on the inputs or input services need not be reversed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 228
  Penalty u/r 25 of CER and u/s 11AC of CEA - revenue neutrality on short payment - Held that: - the valuation of the products cleared to their sister concern at Goa was incorrect and there was under valuation. The under valuation is one of the contraventions of the provisions of Central Excise Act, 1944 and the Rules made thereunder. Hence, the penalty imposed by the first appellate authority seems to be appropriate - clearance to sister concern needs to be considered from the applicability of mens-rea and revenue neutrality while seeking the imposition penalty under section 11AC of Central Excise Act, 1944. In this case appellant may have succeeded on merits if revenue neutrality was agitated - appeal of Revenue as well as Assessee dismissed.

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• 2017 (11) TMI 224
  CENVAT credit - inputs - welding electrodes - Held that: - the assessee is entitled to cenvat credit on welding electrodes as an 'input' - reliance placed in the case of Steel Authority of India Ltd. Vs. CCE & ST, Raipur [2016 (8) TMI 1110 - CESTAT NEW DELHI], where it was held that denial of credit on these welding electrodes not sustainable - credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 223
  Benefit of N/N. 15/2002-CE dated 1.3.2002 - whether the blankets falling under Chapter 63 were being manufactured out of yarn, which has been used in the manufacturer of fabrics and further being used in the manufacture of blankets, the benefit can be extended to them or not? - Explanation added in the said notification vide amending notification No.37/02-CE dated 3.7.2002 - Held that: - where the goods are manufactured alongwith processing of fabrics and weaving or knitting or crocheting of fabrics within the same factory, the conditions of the notification have to held as having been satisfied if the said goods are manufactured from textile yarns on which the duty has been paid - It also stands clarified in the said notification that explanation was added shall have retrospective effect - denial of benefit unjustified - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 220
  Valuation - includibility - cylinder making charges/engraving charges - Held that: - the relevant finding of the Commissioner (Appeals) was that the cost of the cylinders used for printing is to be included in the value of the P.E. Films - the issue has already been considered by the Tribunal in the case of Flex Industries Ltd., [1997 (1) TMI 173 - CEGAT, NEW DELHI] wherein it is held that cost of cylinders is to be added to the value of printed pouches - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 218
  Penalty equal to amount of duty - sub-section (5) of section 11A of the CEA, 1944 - Held that: - Section 11AC of the Act has made provision to impose penalty equal to the amount of duty where duty evasion is made intentionally for any of the reasons stated in proviso to section 11A of the Central Excise Act, 1944. But Section 11A(5) shows that where no ingredients of sub-section (4) of section 11A of the said Act is present and details relating to the transactions are available on the record, in such case only, no notice shall be issued to an assessee within 5 years from the relevant date for recovery of duty and penalty equal to the amount of duty as well as interest. There are several reasons brought out by learned adjudicating authority as to unaccountal of finished goods resulting in clearance thereof without payment of duty. Burning loss was found to be abnormal; the input/output ratio was not established; the diameter of the tools and machineries were questioned; shortages of finished goods were noticed by the investigation. Present case being case of deliberate evasion, there shall be no concession in penalty. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 215
  Clandestine removal - SSI Exemption - imposition of penalty on Shri Pritpal Singh, Director - Held that: - in view of the difference of opinion the matter placed before the Hon ble President for nominating the third Member.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 264
  Levy of penalty u/s 15A(1)(q) - allegation was that two consignment of paper which entered the State of U.P. on 20 and 23 July 1992, although accompanied with the appropriate declarations as envisaged under Section 28B, the requisite forms were not surrendered at the exit check post - Held that: - the receipt of the goods at the Delhi office was not disputed. The respondents have sought to draw adverse inference from the circumstance that although the challan was dated 20 July 1992, the goods were received by the Delhi office only on 23 July 1992. Based on this singular circumstance the respondents have proceeded to levy penalty upon the assessee. Section 28B only puts in place a rebuttable presumption - in case an assessee is able to produce evidence which tends to indicate and establish that what is presumed is not correct, the purpose of the rebuttable presumption is over and the burden then shifts upon the Department. Once the burden shifts, it is in light of the evidence which may be led by the respective parties that the issue must be decided - This aspect of the matter has clearly been ignored by both the assessing authority as well as the Tribunal which appears to have proceeded on the misconceived assumption that the entire onus lay or stood placed upon the assessee. Once the receipt of the goods at the Delhi office was established by the assessee, the purpose of the rebuttal presumption raised by the provision was over. It was then for the respondents to establish that the goods had in fact not exited the State of U.P. Revision allowed - decided in favor of revisionist.

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• Wealth tax

• 2017 (11) TMI 249
  Addition in return wealth of the assessee by treating unapproved/agriculture plots/lands as taxable assets - Held that:- The asset is exempt in view of the provisions of Section 2(ea)(iv) of Wealth tax Act. As on this land the construction is not permissible. Secondly, the assessee has disputed the valuation adopted by the Assessing Officer. We have given our thoughtful consideration to the contention of the assessee. We find that the Assessing Officer has not made any enquiry from the concerned authorities i.e. Jaipur Development Authority whether the construction of building is permissible on the land further no effort is made as to ascertain what is the fair market value of the assets. Under these facts, we therefore set aside the order of the authorities below and restore this issue to the file of the Assessing Officer to decide afresh. The AO would make enquiry in respect of the claim of the assessee that no building is permissible on the land and also would refer the issue of valuation of the cost of assets to the DVO to ascertain the fair market value for the purpose of computing the wealth tax, if he is not satisfied qua the claim of the assessee that asset is exempt. Hence, Ground no. 1, is allowed for statistical purpose. Non-allowing deduction of debts - Held that:- This Tribunal in assessee’s own case pertaining to the Assessment Year 2006-07 held as no material on record to support the contentions raised by the ld AR which satisfies the above requirement of establishing the necessary nexus between the debt and the assets in question. Since we have set-aside the matter relating to determination of pieces of land/plot as eligible to wealth tax and the applicability of the exclusion clause, this issue is also set-aside to the file of the AO to examine the same afresh as per law

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• 2017 (11) TMI 241
  Initiation of reassessment proceedings under section 17 of the Wealth Tax Act - non supply of reasons to believe - Held that:- Copy of the reasons for reopening of the assessment under Wealth Tax have not been supplied to the assessee within the period of limitation. The submissions of the assessee made before the A.O. and Ld. CWT(A) have not been rebutted by the department through any evidence or material on record. It, therefore, stands proved that the copy of the reasons for reopening of the assessment under Wealth Tax Act have not been supplied to the assessee within time. Therefore, the re-assessment is liable to be quashed - Decided in favour of assessee.

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• 2017 (11) TMI 237
  Additions of cash in hand held and recorded in regular books of accounts and shown in the business balance sheet of the appellant - meaning of assets as defined in Section 2(ea) of the Wealth Tax Act - Held that:- Having carefully examined the orders of lower authorities in the light of rival submissions, we find that the assessee is an individual and filed its return of income in the capacity of individual, though he has been doing his own business. Provisions of section 2(ea)(vi) of the Act clearly states that cash in hand in excess of ₹ 50,000 of individuals & HUF is an asset and in the case of others, any amount not recorded in the books of account is an asset. Provision in the Act which says that cash in hand recorded in the books of account of individual’s business is not an asset. In the Act, a classification is made between the individual, HUF and other persons. Admittedly, the assessee is an individual, therefore, the provisions laid down for an individual would apply. According to the provisions of section 2(ea)(vi) of the Act, any cash in hand in excess of ₹ 50,000 is an asset. It is irrelevant whether the individual is doing business or not. The argument of the assessee that cash in hand is recorded in the books of account of the business of assessee is a productive asset, therefore it cannot be chargeable to wealth-tax, has been examined by the Hon’ble Kerala High Court in the case of CWT v. Smt K.R. Ushasree (2009 (7) TMI 834 - Kerala High Court) in which held that there is nothing that stops the assessee from utilizing the cash in hand which may be the business asset on the valuation date for any non-productive purpose on the next day. Therefore the argument of assessee that cash in hand of businessmen should be treated as productive asset also is meaningless. - Decided against assessee.

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• 2017 (11) TMI 227
  Chargeability of wealth-tax on certain parcels of land - whether parcels of land being agricultural land are excluded from definition of ‘Urban Land’ given under s.2(ea) of the Wealth Tax Act, 1957? - Held that:- We notice from the purchase-deed dated 09/09/2005 with reference to agricultural land at Suratas referred to at the course of hearing on behalf of the assessee that aforesaid agricultural land was held as agricultural land and cultivated for agricultural purposes. Likewise, reference was made to the purchasedeed dated 23/10/2008 for acquisition of the land at Vadaj in the course of hearing. From specific assertions in the sale-deed, we note that the aforesaid land was claimed to be acquired as agricultural land. However, it is not clear whether the aforesaid land was actually used for agricultural purposes as contemplated in the definition of ‘Urban Land’. The assessee shall be entitled to relief subject to production of evidence towards agricultural use of the aforesaid land at Vadaj to the satisfaction of the AO. For this limited purpose, the matter is remanded back to the file of AO for necessary verification.

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• 2017 (11) TMI 221
  Maintainability of appeal filed by the Revenue on account of tax effect - Held that:- The present appeal filed by the Revenue is not maintainable, hence the same is dismissed for low tax effect. We are not adjudicating the issue on merits in this regard. The grounds of appeal raised by the Revenue are thus, dismissed.

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• 2017 (11) TMI 217
  Addition treating unapproved/agriculture plots/lands as taxable assets - whether the assessee’s having various pieces of land/plots falls under the exclusion clause of section 2(ea)(v) read with explanation (b) so as to not fall within the definition of urban land which is otherwise exigible for wealth tax? - Held that:- We are presently not going into the debate of prohibition vs permission for carrying out construction on these assets as sought by both the parties and various decisions cited in support thereof. There are number of pieces of land/plots which are under consideration. However, there is no material on record to support these contentions in respect of any of these pieces of land/plots. In absence of that, we are constrained to set aside the matter to the file of the AO to examine the same a fresh in accordance with law. The assessee is directed to file necessary information/documents specifying the correct position in respect of each of the pieces of land/plots in the land revenue records, and basis that, let the AO verify with the JDA the status of these land assets and the position regarding possibility of construction on these land assets as on the valuation date in terms of either total prohibition or permitted after following prescribed rules and regulations as per the JDA Act and related regulations in force and taking the same into consideration, decide as per law. In the result, the matter is set-aside to the file of AO and the ground of the assessee is allowed for statistical purposes. Disallowing the benefit of debt claimed to be utilised for acquiring the exempted assets - Held that:- The requirement of law to determine the net wealth is to reduce the value of all the debts owed by the assessee on the valuation date which have been incurred in relation to the said assets which are exigible to wealth tax. The emphasis is therefore on “debt in relation to the said assets”. The assessee would therefore be required to substantiate with demonstrable evidence that the debt has been incurred in relation to such assets. The proximity or connection with the asset is sine qua non for the purposes of claiming the deduction of debt. Having said that, there is again no material on record to support the contentions raised by the ld AR which satisfies the above requirement of establishing the necessary nexus between the debt and the assets in question. This issue is also set-aside to the file of the AO to examine the same afresh as per law.

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• 2017 (11) TMI 216
  Valuation of asset for the purpose of Wealth Tax - valuation at value as per Govt Approved Valuer's report filed for obtaining loan from bank or the value shown by the appellant in the returns of wealth on the basis of value of the property for stamp duty purpose - Held that:- The perusal of Form No.E filed before the CWT(A) reflects that the issue raised by the assessee was against the order of WTO in making addition of ₹ 27,62,680/- to the net wealth of assessee and further in not giving exemption under section 5(1)(vi) of the Act. However, the CWT(A) decided the issue on a ground which was not raised before him i.e. in holding that the value of loan against assets pledged with bank for obtaining loan was deductible under section 2(m) of the Act. No such issue was raised before the CWT(A). The issue which needs to be adjudicated by the CWT(A) was the valuation of property. We direct the CWT(A) to decide the issue raised before him i.e. the valuation of asset in accordance with the law. The issue of deduction under section 2(m) of the Act was never pleaded or raised by the assessee and hence, there is no merit in the order of CWT(A) in this regard. Accordingly, allowing the claim of assessee raised by way of an application under Rule 27 of the ITAT Tribunal Rules, we remit this issue back to the file of CWT(A). The grounds of appeal raised by the Revenue are allowed for statistical purposes.

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• 2017 (11) TMI 214
  Assessment of advances paid for purchase of plots - whether the advances made for purchase of plots constitute an asset or not within the meaning of section 2(ea) of the Act for the purpose of wealth tax act? - Held that:- From the plain reading of section 2(ea) of the W.T. Act, the taxable assets are the building or land appurtenant thereto, motor cars, jewellery, bullion and furniture or any other article made of gold, silver, platinum or any other precious metal, yatch, boats and air crafts, urban land and cash in hand etc.. but the advances made for purchase of plots are not included in the meaning of assets. Unless the Act provide for the assessment of advances for purchase of plots within the meaning of assets, the same cannot be treated as net wealth for the purpose of wealth tax act. In the absence of specific provision for making the advance for purchase of asset to wealth tax, we are unable to uphold the action of the lower authorities. - Decided in favour of assessee.

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• Indian Laws

• 2017 (11) TMI 265
  Offence under SAFEMA - validity of detention orders - Held that:- In this case, the entire basis of the notice appears to be a detention, the challenge to which was declined. Here, it is important to remember that the detenue’s access to Article 226 of the Constitution of India was doubted; nine High Courts held that access existed. The Supreme Court, however overturned their rulings in ADM Jabalpur v Shivakant Shukla [1976 (4) TMI 211 - SUPREME COURT], in its majority judgment. This meant that even petitions challenging validity of detention orders, on the ground that no valid rationale for detention existed under the COFEPOSA could not be entertained. The internal emergency that existed at the time, was lifted; liberties that were taken away or suspended, were restored. And yet, late Piare Lal’s troubles were far from over. The wheels of bureaucracy grind- inexorably. For Piare Lal (the father of two petitioners and husband of the third and their common predecessor in interest) there appeared to be no respite or exit, from the black hole which he entered into, on account of the notices issued under SAFEMA. The rationale for that notice was a valid COFEPOSA detention (in his case, its legality was undisputable, because he was denied the liberty of challenging it). The other rationale was suspicion, based on rejection of the income tax authorities’ orders. The importance of establishing a link- howsoever rudimentary, but real nevertheless, between an individual and some smuggling activities, can be the only basis of a valid “reason to believe” under Section 6(1) of the Act. Otherwise, there is a danger of SAFEMA or any other authority concluding that since the subject is unable to establish the legitimacy of his source of income, it must be on account of smuggling. In other words, suspicion is elevated into certainty or a finding. Clearly, that occurred in the facts of this case. The court is therefore of the opinion that the notices initiating the proceedings, in these cases were vitiated and unsustainable. The Union’s argument regarding Kamla Vati’s acquisition of property is unpersuasive. The Benami Properties (Prohibition) Act, 1988 was not in existence, when the notice was issued; in any case, even if it were assumed that the properties were acquired with Piare Lal’s funds, nevertheless, the same infirmity, i.e absence of any link with smuggling activities, applies to those properties too. The argument therefore, fails. It is held that in view of the above conclusions, the appeals are to fail.

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