TMI Tax Updates - e-Newsletter
November 9, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Levy of service tax on renting - scope of agreement - who is liable to bear the burden - lessor or lassee - SC decided the question of law

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• Refund of IGST paid on export of goods - an analysis by the CBEC of the common errors that are hindering the disbursal of IGST refund

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Articles

1. Section 79 – carry forward of loss- information in ITR – Schedule CFL is only informative and does not amount to a claim

   By: DEVKUMAR KOTHARI

2. GST Update on waiver of penalty in respect of GSTR 3B

   By: Pradeep Jain

3. GST OF RECENT PRONOUNCEMENTS ON GST

   By: Dr. Sanjiv Agarwal

News

1. India’s Second Technology and Innovation Support Center (TISC) Established at Anna University, Chennai

2. Third Protocol to the Convention between Government of India and New Zealand notified.

3. Insolvency and Bankruptcy Board of India (IBBI) strengthens its Due Diligence Framework under the Insolvency and Bankruptcy Code, 2016

Notifications

Companies Law

1. G.S.R. 1371(E) - dated 7-11-2017 - Co. Law

Companies (Accounts) Amendment Rules, 2017.

GST - States

2. G.O. (P) No. 124/2017/TAXES - dated 21-10-2017 - Kerala SGST

Constitute the Kerala Appellate Authority for Advance Ruling for Goods and Services Tax.

3. G.O. (P) No. 123/2017/TAXES - dated 21-10-2017 - Kerala SGST

Constitute the Kerala Authority for Advance Ruling.

4. 11/2017-State Tax - dated 4-10-2017 - Kerala SGST

Extends the time limit for furnishing the details or return, GSTR 1, GSTR 2, GSTR 3.

5. 10/2017-State Tax - dated 4-10-2017 - Kerala SGST

Extends the time limit for furnishing the return by an Input Service Distributor.

6. 09/2017-State Tax - dated 4-10-2017 - Kerala SGST

Last date for filing of return in FORM GSTR-3B.

7. G.O. (P) No. 102/2017/TAXES - dated 26-8-2017 - Kerala SGST

ERRATA - Notification No. G.O. (P) No. 62/2017/TAXES dated 30th June, 2017 S.R.O. No. 360/2017

8. FA-3-79/2017-1-V-(142) - dated 28-10-2017 - Madhya Pradesh SGST

Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017

Circulars / Instructions / Orders

Income Tax

1. 28/2017 - dated 7-11-2017

Clarification on Indirect Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961

Customs

2. 42/2017 - dated 7-11-2017

Refund of IGST paid on export of goods under rule 96 of CGST Rules,2017

Highlights / Catch Notes

Income Tax

• High Court Invalidates CBDT's Income Standards as Ultra Vires, Affecting Tax Assessment Rules.

  Case-Laws - HC : Validity and applicability of 'income computation and disclosure standards' (“ICDS”) issued by CBDT - scope of validation laws - Specific ICDS have been struck down as ultra vires the Act - HC
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• Retractions in Survey Statements Cannot Justify Unaccounted Income Additions Without Valid Justification.

  Case-Laws - HC : Unaccounted income - no addition can be made solely on the basis of a retracted statement made during the survey operation, particularly, when proper justification for retraction was also offered. - HC
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• Tribunal's Use of Comparables in Transfer Pricing: Legal Issue Only If Relevant Factors Are Misjudged or Omitted.

  Case-Laws - HC : TPA - Any inclusion or exclusion of comparables perse cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly - HC
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• Company Can Claim Depreciation on Car as Beneficial Owner, Despite Lack of Legal Ownership.

  Case-Laws - AT : Depreciation on motor car - though the assessee company was not vested with the legal ownership of the vehicle, but then, it remained the beneficial owner of the same - assessee was duly entitled towards the claim of depreciation - AT
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• Income Tax Returns Accepted Without PAN-Aadhar Linkage, Processing Not Guaranteed.

  Case-Laws - HC : The department may accept the income tax retur (ITR) without the petitioner linking his PAN card with Aadhar card or having to make a declaration that he has applied for one. It would not be obligatory for the department to process such return - HC
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• AO's Addition u/s 40A(2)(b) Fails Due to Lack of Evidence on Favoritism Towards Nimbus Communication.

  Case-Laws - AT : Payment to sister concerns - Addition u/s 40A(2)(b) - license fee, programme amortization-payment - AO has failed to substantiate the allegation that the assessee has extended unreasonable favour to its sister concern Nimbus Communication. - AT
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• India-Germany DTAA Article 8 Applies to Revenue from Feeder Vessels via Slot Hire Arrangements for Assessee.

  Case-Laws - AT : The benefit of Article 8 of the India–Germany DTAA would also be available to the assessee in respect of the revenue earned by it from the feeder vessels obtained on slot hire arrangements - AT
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Customs

• CBEC Identifies Common Errors in IGST Refunds for Exports u/r 96, Stresses Accurate Documentation and Procedures.

  Circulars : Refund of IGST paid on export of goods under rule 96 of CGST Rules,2017 - an analysis by the CBEC of the common errors that are hindering the disbursal of IGST refund
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• Appellant Granted Duty-Free Import of Apple Juice Concentrate Under DFIA Authorization.

  Case-Laws - AT : The appellant is entitled for duty free import of the goods Apple Juice Concentrate under the Transferable DFIA presented by it.
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Service Tax

• Who Bears Service Tax on Lease Rentals: Lessor or Lessee? Legal Win, Factual Loss for Appellant.

  Case-Laws - SC : Renting of immovable property - levy of service tax - lease rentals - who is liable to bear the burden of tax i.e. the provider of services (lessor) or the recipient of services (the lassee) - scope of agreement - lease (rent) deed does not refer to service tax - the the case is in favor of appellant on law, but is against the appellant on facts - SC
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Central Excise

• Aluminum Casting Classified Under CTH 7601.90 According to Rule 2(a) of General Interpretative Rules.

  Case-Laws - AT : Classification of Aluminium casting - whether classified under CTH 8511.00 or under CTH 7601.90? - Rule 2(a) of the General Interpretative Rules - When rough aluminium casting was manufactured and supplied by the appellant without any machining, the same will be classifiable under 7601.90
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• Denial of Cross-Examination Valid if Based on Sound Logic in Central Excise Cases: Upholding Adjudication Integrity.

  Case-Laws - HC : Principles of Natural Justice - If there are factual grounds to show that the denial of cross-examination was based upon the sound logic, then the order of adjudication cannot be interfered with. - HC
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Case Laws:

• Income Tax

• 2017 (11) TMI 465
  Validity and applicability of 'income computation and disclosure standards' (“ICDS”) issued by CBDT - scope of validation laws whereby the Parliament seeks to rectify the defects pointed by the judiciary - Excessive delegation of legislative powers - Held that:- it is only a competent legislature that can make a validation law to override judicial precedents and that too by actually removing the defect pointed out by such precedent. Such a power is not available to the executive. In other words, where there is a binding judicial precedent, by virtue of Articles 141 and 144 of the Constitution, it is not open to the executive to override it unless there is an amendment to the Act by way of a validation law. To that extent, Section 145 (2), as amended, has to be read down to restrict power of the Central Government to notify ICDS that do not seek to override binding judicial precedents or provisions of the Act. The power to enact a validation law is an essential legislative power that can be exercised, in the context of the Act, only by the Parliament and not by the executive. If Section 145 (2) of the Act as amended is not so read down it would be ultra vires the Act and Article 141 read with Article 144 and 265 of the Constitution. The ICDS is not meant to overrule the provisions of the Act, the Rules thereunder and the judicial precedents applicable to the provisions of the Act as they stand. As noted hereinbefore, the challenge in the present case is to a few clauses of the various ICDSs notified on 29th September, 2016 by the Central Board of Direct Taxes (“CBDT”), Department of Revenue, Ministry of Finance. ICDS-I, ICDS-II, Paragraph 10(a) & 12 of ICDS-III, para 5, para 6 & para 8(1) of ICDS-IV, ICDS-VI, ICDS-VII and Part-A of the ICDS-VIII failed to pass the test of judicial scrutiny. Specific ICDS as noted have been struck down as ultra vires the Act, the impugned notification Nos. 87 and 88 dated 29th September 2016 and Circular No. 10 of 2017 issued by the CBDT are also held to be ultra vires the Act and struck down as such.

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• 2017 (11) TMI 464
  TPA - selection of comparable - selection criteria - Held that:- This Court is of the opinion that the rationale that Ashok Leyland was deriving major part of its revenue from wind energy segment and that there was an extraordinary event of merger and likewise M/s Kitco Ltd. deriving income from government entity and Mitcon Consultancy & Engineering Services Ltd, is deriving less than 75% revenue from consultancy services, is a reasonable basis for their exclusion. Any inclusion or exclusion of comparables perse cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly. Consequently, the appeal is without merits and is, therefore, dismissed.

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• 2017 (11) TMI 463
  Addition u/s 68 - discharge the onus cast upon of proving identity and creditworthiness of the creditors and genuineness of transaction - ITAT deleted the addition - Held that:- Tribunal correctly held that Primary burden lies on the assessee has been discharged by filing the requisite evidences before the Assessing Officer and shifted on the Assessing Officer to disprove the cash creditors’ transactions are not genuine or bogus. The share application money was received by the appellant and subsequently returned though banking channel. In case of 7 companies, the notices were served on it on given addresses. There is no evidence directly or indirectly with the Assessing Officer that the assessee had routed undisclosed money in the guise of share application money or loan. DR’sargument have also not convinced us that these parties were in accommodation entries in form of loan and share application money after charging certain commission as such no survey/search has been carried out on the creditors to prove that these companies are habitual to provide loan/share application money even there is no evidence with the ld DR for making such allegation during the course of written submissions. - Decided in favour of assessee.

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• 2017 (11) TMI 462
  Addition on account of under valuation of stock - identification of defective stock and justification to its valuation at reduced rate - Held that:- CIT(A) has allowed the valuation on the basis of last years which was accepted by the assessee and the same was confirmed. In that view of the matter, the stock valuation method was used for the closing stock and we are of the opinion that no error has been committed by the CIT(A) and Tribunal. - Decided in favour of the assessee.

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• 2017 (11) TMI 461
  Addition u/s 40A(3) - Held that:- The second proviso to s. 40A(3) refers to “the nature and extent of banking facilities available, considerations of business expediency and other relevant factors,” which means that the object of the legislature is not to make disallowance of such cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of payment. In the present case, even if it assumed that the payment was made at the District headquarter, the admitted position is that the sellers did not have any bank accounts at such town and they did not reside or carry on any business or farming activity at such town. It would be too much to expect that the appellant-company would be able to compel the villagers to open bank accounts at the town which ultimately they will not be able to operate as they do not reside at such town. If such a myopic view is taken regarding the interpretation of r.6DD(h), the very object of the legislature would be frustrated. There is no dispute regarding the identity of the payees and the genuineness of the land transactions in respect of which payments have been made. It is notable that r.6DD(k) provides an exception in respect of cash payment which is made on a day on which the banks were closed. This proves that the object of the legislature is to provide exception in respect of such payment which is required to be made in cash or absence of banking facilities. Rule 6DD(h) must be interpreted keeping in view this object and purpose. Therefore, the cash payments recovered under section proviso to s. 40A(3) and r.6DD(h). The AO is directed to delete the addition - Decided in favour of assessee.

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• 2017 (11) TMI 460
  Unaccounted income - addition on the basis of statement of the partner of the assessee firm during survey proceedings - statement was retracted later - Held that:- From the documents on record, it emerges that in a statement of the partner of the assessee firm during survey proceedings disclosure of unaccounted income of Rs. 2.35 crores was made. This statement was, however, retracted to the extent of unaccounted income of Rs. 1.59 crores. Rest of the disclosure was maintained. The reasons were also cited for retraction. The assessee firm filed the return admitting an income of Rs. 89.13 lacs, which included unaccounted income of Rs. 76.10 lacs. The Assessing Officer, despite such developments proceeded to make addition of the entire sum of Rs. 2.35 crores admitted by the partner in a survey statement, which was later on retracted. In appeal, the CIT(A) deleted the addition primarily on the ground that no addition can be made solely on the basis of a retracted statement made during the survey operation, particularly, when proper justification for retraction was also offered. It is this view, which the Tribunal confirmed in the impugned judgement. We see no error. No question of law arises

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• 2017 (11) TMI 459
  Nature of income - addition on account of interest on borrowed for acquiring immovable property and issuing directions to adjust the same against the income from other sources - house property of income from other sources - Held that:- CIT(A) has rightly held that this is not house property income as contemplated by the Assessing Officer and there is investment in land in the commercial property on which the assessee is getting assured return/interest for his investment of Rs. 6 crores with Omaxe Ltd. Hence, this income has to be treated as income from other sources and the interest paid by him to Reliance Capital should be allowed as expenditure incurred for earning the income u/s 57(3) of the Income Tax Act, 1961. There is no need to interfere with findings given by the CIT(A). Therefore, the present appeal of revenue needs to be dismissed.

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• 2017 (11) TMI 458
  Gain arising on the sale of building - whether gain will be assessable under the head “Long term capital Gains” as claimed by the assessee or will be assessable as per the provisions of section 50 of the Income tax Act - assessment of income of the predecessor company [ demerged company] - Held that:- We noted that the Assessing Officer has applied the provisions of section 50 on the basis of the statement of deprecation as on 01.10.2010, which according to the assessee represent the depreciation claimed under the Companies Act. We, therefore, in the interest of justice and fair play to both the parties set aside this issue and restore the matter to the file of the Assessing Officer with the direction that the Assessing Officer shall re-decide the issue after going through the facts of the case i.e. whether M/s. Super Leasing Ltd. has claimed depreciation under the Income tax Act in respect of the said property sold by the assessee or not. In case, it is found that M/s. Super Leasing Ltd. has claimed depreciation under the Income tax Act, the provisions of section 50 would apply and the gain arising from the said property will be assessed under the head Short term capital gain. In case it is found that the said company has not clamed any depreciation under the Income tax Act, the gain so arising shall be assessed under the head Long term capital gain. Eligibility of cost of indexation as per the provisions of section 48 - Held that:- The assessment of the said income shall be made on the assessee in the like manner and the same extent as it would have been made on the predecessor i.e. M/s. Super Leasing Ltd, the demerger company. Now the question arises if the return has to be filed by M/s. Super Leasing Ltd, naturally it would have been entitled to claim indexation in view of the provisions of section 48 from the financial year in which it had purchased the said property. The reliance on Explanation 3 to section 48 by the Revenue, in our view, will not assist the Revenue. It is case where the said property has not been sold by the assessee but, in fact, it has been sold by M/s. Super Leasing Ltd. vide sale deed executed on 16.07.2010 i.e. date prior to the order passed by the Hon’ble Bombay High Court. It is a fact that Bombay High Court has approved the scheme of demerger by order dated 23.12.2010. In view of the provisions of section 170, the assessee shall be liable on the said income as would be M/s. Super Leasing Ltd. It is not denied that the said property is held by M/s. Super Leasing Ltd from the F Y 1997-98. We accordingly, direct the Assessing Officer to allow the benefit of cost of indexation to the assessee from the F Y 1997-98, in case it is found that M/s. Super Leasing Ltd has not claimed any depreciation in income tax proceedings. MAT computation - Held that:- Restore the issue to the file of the Assessing Officer with the direction that that he shall recalculate the tax levied u/s.115JB and, consequently, interest shall also be recalculated in accordance with law. The assessee is also directed to submit the correct calculation before the Assessing Officer

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• 2017 (11) TMI 457
  Revision u/s 263 - Commissioner observed that the Mark to Market loss booked by the assessee company is broadly a Notional loss and is, at the best, a contingent liability which can neither be claimed in the book profit nor in the computation of income - Held that:- The case of the assessee is on better footing, the assessee has not claimed loss on forward derivative contracts but claimed loss on the existing loan liability for Wind Mill at Gujarat. Thus, the treatment of charging of exchange loss on account of ECB loan availed for Wind Mill for Rs. 3,19,30,000/- to profit and loss account is in accordance with the accepted accounting principles as mandated under Accounting Standard (AS-11) as revised up to date (revised in 2003) and at such the book profit should be computed in accordance with the order dated final accounts and provisions of section 115JB of the Act. The perusal of Circular No. 3 issued by CBDT dated 23 March 2010 relied by learned CIT relates to Foreign Exchange Derivative transaction only. Further, we have seen that the assessing officer during the seeking explanation from the assessee along with the details submitted, the assessing officer taken one of the possible views and accepted the contention of the assessee while passing the assessment order regarding Forex Loss. The Hon’ble Bombay High Court in case of Gabriel India Ltd (1993 (4) TMI 55 - BOMBAY High Court) has held that Commissioner cannot initiate proceeding with a view to starting fishing and roving enquiries in matters or orders which are already concluded. There must be material on record to show that tax which was lawfully exigible has not been imposed if claim was allowed by the Income tax officer. On being satisfied with the explanation of the assessee, such decision of the Income tax Officer cannot be held to be ‘erroneous’ simply because in his order he did not make an elaborate decision in that record. The Hon’ble High Court further held that when Commissioner himself, even after initiating proceeding for revision and hearing of the case, could not say that the disallowance of the claim of the assessee was erroneous and simply ask the assessing officer to re-examine the matter, which was not permissible. Exercising the power under section 263 the learned Commissioner should be able to demonstrate that the decision taken by the assessing officer was not possible being legally unsustainable and incorrect and this finding must be recorded. Mere conclusion of learned Commissioner that order of assessing officer is erroneous and direction to the assessing officer to recompute the income by is not correct. Even in cases where there is inadequate enquiry but not lake of enquiry, the learned Commissioner must give and record finding that order/enquiry made by assessing officer is erroneous. This can happen if any enquiry and verification is conducted by the learned Commissioner and his able to establish and show the error or mistake make by assessing officer making the order unsustainable in law. The matter cannot be remitted for fresh decision to the assessing officer to conduct further enquiries without a finding that order is erroneous and the learned Commissioner further must also satisfied the second limb of provision that the order is also prejudicial to the interest of revenue. The Hon’ble Apex Court in case of Malabar Industrial Co. (2000 (2) TMI 10 - SUPREME Court) relied by learned AR of the assessee held that where two views are possible and the AO adopts one of the view possible in law, then the order cannot be treated as erroneous or prejudicial to the interest of revenue, unless the view taken by assessing officer is unsustainable and in law. In view of the above discussion, the assessing officer in the course of assessment proceeding has taken one of the possible view thus the revision proceeding initiated by learned Commissioner under section 263 is invalid. Thus the ground of appeal raised by assessee is allowed.

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• 2017 (11) TMI 456
  Penalty under section 271AAA - additional income offered by the assessee during assessment proceedings - Held that:- It is not the case of the revenue that the income belonging to the assessee was more than what is surrendered by him. The assessee has modified the surrender made during the course of search on 17.03.2009 and as such it cannot be that it is a case of retraction because the income declared by the assessee which is assessed by the AO. The letter dated 17.03.2009 was filed before the Director of Income Tax (Investigations) I New Delhi who was the in charge of the search and it is also stated in the said letter this surrender is for the whole group and the taxes shall be paid in respective hands/ persons after going through the seized material. It is clear that when this letter was filed the seized material was not with the assessee. The subsequent letters modifying the surrendered amount are based on the income belonging to the assessee on seized material. DR has pointed out that the manner of earning of the surrendered income has not been disclosed by the assessee whereas the assessee by letter dated 21.01.2010 has disclosed the manner of earning the said income by way of trading in commodities and real estate and also stated this fact is substantiated from the seized material. Moreover this factual position is not denied by the AO and this is not the basis for imposing the penalty. In that view of the matter and in view of such facts and circumstances of the case, the CIT(A) is not justified in confirming the action of the AO and accordingly, we direct the AO to delete the penalty imposed under section 271AAA of the Act. - Decided in favour of assessee.

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• 2017 (11) TMI 455
  Bogus purchases - assessee was failed to produce GRN / Lorry receipt to prove the actual purchaser of the goods - Held that:- As per learned AR the assessee has placed oral order for the purchase of the goods from the Seller and the same were delivered at the site by the seller as mentioned in the Delivery Challans. Since the transport related cost was borne by the seller, the assessee does not have GR or Lorry receipt. It was further submitted that the details of purchase, invoice, challans, quantity details, payment evidence, etc were filed during the course of assessment proceedings. It was also submitted that assessee had filed a stock/inventory/consumption summary mentioning the details of purchases made (including the purchases made from the seller) from the beginning of the project till 31 March 2010. The learned AO had not disregarded the said quantity details of purchases and made the additions. Considering all we restore this addition back to the file of the AO for deciding afresh after giving due opportunity to the assessee. We direct accordingly. As the addition has been made in the A.Y.2010-11 and corresponding closing stock for the A.Y.2010-11 which is opening stock for A.Y.2011-12 has already been given effect, the addition so made in the A.Y.2011-12, appears to consequential in nature. AO is directed to verify the same and pass order afresh as per law. We direct accordingly.

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• 2017 (11) TMI 454
  Validity of consolidated order - Held that:- In this case, admittedly, the A.O had issued separate notice u/s 153A for all the years and it was only for the sake of brevity and consolidation of the fact that one single order was passed though manifestly additions for all the assessment years have been made separately and computation of income of each year in the block period has been done separately. There is no error in the order of the CIT(A). Therefore, we are inclined to uphold the findings of the CIT(A) and dismiss the grounds raised by the assessee. Assessment of income - assessee is a hawala operator involved in providing accommodation entries - issue of activity of the assessee and computation of income from such activity - Held that:- The assessee has floated various dummy companies / firms to facilitate issuing of bogus purchase bills and operated bank accounts by fabricating documents. The assessee has not been able to rebut any of the findings recorded by the AO, though he claims that he is a registered broker in the steel market. Therefore, we are of the considered view that the lower authorities were right in concluding that the assessee is engaged in the activity of providing accommodation entries. Hence, we are inclined to uphold the findings of CIT(A) and dismiss the ground raised by the assessee. Additions made towards estimation of commission @2% on total sale bills - Held that:- AO was right in estimating commission @2% on total sale bills issued in the name of M/s Varun Industries Ltd. The CIT(A) after considering the facts has rightly upheld the order of the AO. We do not find any infirmity in the order of the CIT(A). Hence, we are inclined to uphold the order of the CIT(A) and dismiss the ground raised by the assessee. Addition made towards total sale bills issued in the name of M/s Varun Industries Ltd on protective basis - Held that:- We do not find any merits in the arguments of the assessee for the reason that though substantial addition has been made in the hands of M/s Varun Industries Ltd, the outcome of addition made by the revenue authorities will only be clear once it has been decided in appellate forums. The assessee has not been able to furnish any evidences with regard to additions made in the hands of M/s Varun Industries Ltd except furnishing an assessment order copy. The fact with regard to nature of dispute and the stages of outcome in appellate forums is not ascertainable at present. Therefore, we are of the considered view that though the Act, does not provide for protective assessments, in the interest of revenue, the AO can make protective additions to protect the interest of the revenue. Therefore, we are of the view that the AO was right in making protective additions Addition made on account of deposits in the bank account of the persons other than the assessee - Held that:- the provisions of section 68 of the Act, is clear inasmuch that where any sum is found credited in the books of account of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the AO, is not satisfactory. The assessee could not prove credits found in the bank accounts. Therefore, we are of the view that the CIT(A) has rightly upheld the additions made by the AO towards total credits found in the bank account amounting to Rs. 1388.09 crores as unexplained credits in the hands of the assessee. We do not find any error in the order of the CIT(A). Hence, we are inclined to uphold the findings of the CIT(A) and reject the ground raised by the assessee. Addition towards cash deposits to the bank accounts - Held that:- AO made additions towards commission on one hand and addition towards cash deposit on the other hand without telescoping the source available in the form of estimation of income towards commission. Therefore, we are of the view that there is a merit in the claim of the assessee that telescoping has to be allowed towards cash deposits to the income estimated for the relevant assessment years. Hence, we are of the view that the issue needs to be examined by the AO in the light of the explanation of the assessee and hence, we set aside the issue to the file of the AO for the limited purpose of examining whether the income estimated for the year is in excess of cash deposits found in the bank accounts. If the income is more than the cash deposit, then the AO is directed to telescope the sources available in the form of income to the cash deposits and allow relief accordingly towards addition to cash deposits. Additions towards cash found at the time of search - assessee claims that the AO has made addition towards income on estimation basis and also made addition towards cash found without allowing telescoping the sources available in the form of income - Held that:- We find force in the arguments of the assessee for the reason that if the source available in the form of income, the AO is bound to telescope the sources with cash found at the time of search. Therefore, we are of the view that the issue needs to be examined by the AO in the light of the claim of the assessee and hence, we set aside the issue for the limited purpose of verification of sources available in the form of estimation of income with cash found at the time of search. If the source is in excess of cash found during the course of search and if it is not floated to any other assets or not expended elsewhere, then the AO is directed to allow telescoping towards income to the cash found at the time of search and allow relief accordingly.

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• 2017 (11) TMI 453
  Allowable business expenditure - Disallowing the contribution to Primary Agricultural Credit Cooperative Society Development Fund being non business expenditure - Held that:- Before proceeding, it will not be out of place to mention that respondent is statutory authority registered under the Rajasthan Cooperative Society Act and they are required to follow the rules which are mandatory in nature and if incur disqualification either they will be superseded or they will incur disqualification. In that view of the matter, while interpreting local act, the court has very guarded under the Income Tax Act whether the deduction or the expenses which are incurred are admissible under Section 37 or not. Looking to the provisions of the Rule 2003 referred hereinabove, the expenses are mandatory in nature, thus, they are required to be deducted to be kept in reserve fund and they are expenses as stated under Rule 28. In that view of the matter, it is to be kept reserve fund and the view taken by the AO is very conservative and considering the opinion neither the Tribunal nor the CIT(A) has committed any error. Hence, the first issue is required to be answered in favour of the assessee against the department.

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• 2017 (11) TMI 452
  Benefit of Article 8 of DTAA between India and Germany - present assessee is a Foreign company engaged in the business of operation of ships internationally - whether the portion of freight income earned by the assessee in the course of its business of transportation of cargo to ports outside India and vice versa, to the extent the same is attributable to feeder vessels which were neither owned, chartered or leased by the assessee, would also fall within the sweep of Article 8 of DTAA - PE in India - Held that:- We have perused the orders and find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid preceding years in the case of the assessee. We thus, finding no reason to take a different view, thus, are of the considered view that the benefits of Article 8 of the DTAA between India and Germany would also be available to the assessee in respect of the revenue earned from the feeder vessels obtained by the assessee by slot hire arrangements. The Grounds of appeal No. 2 to 4 raised by the assessee before us are allowed. As we have concluded that the benefit of Article 8 of the India Germany DTAA would also be available to the assessee in respect of the revenue earned by it from the feeder vessels obtained on slot hire arrangements, therefore, the Grounds of appeal Nos. 5 to 7 pertaining to the validity of the order of the A.O as regards including the service tax in the freight income for computing the income of the assessee under Sec. 44B would be rendered infructuous. We thus in terms of our aforesaid observations dismiss the Grounds of appeal No. 5 to 7 raised by the assessee before us. We are further of the view that as we have held that the the benefit of Article 8 of the India Germany DTAA would also be available to the assessee in respect of the revenue earned by it from the feeder vessels obtained on slot hire arrangements, therefore, the Grounds of appeal Nos. 8 to 10 as to whether the assessee had an agency PE in India are also rendered academic and we thus refrain from adjudicating the same. The Grounds of appeal No. 8 to 10 are dismissed in terms of our aforesaid observations. Interest levied on the assessee under Sec. 234B - Held that:- We find that the issue is covered in favour of the assessee by the decision of the Hon ble High Court of Bombay in the case of DDIT(IT) Vs. NGC Network Asia LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT), wherein it has been held that interest under Sec. 234B would not be applicable to a non-resident assessee

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• 2017 (11) TMI 451
  Addition on account of delay payment of employees contribution to PF u/s 36(1)(va), read with section 2(24) (x) - Held that:- The appellant has made payment of employee’s contribution and other funds before the due date of filing return of income. In Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT ), the Hon’ble Supreme Court has held that the amendment to section 43B by the Finance Act, 2003 applicable w.e.f. 01/04/2004 was retrospective in nature and would operate from 01/04/1988. The Hon’ble Bombay High Court in CIT vs. Ghatge Patil Transport Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) following Alom Extrusions Ltd (supra) held that if the payment is made before the due date of filing of return no addition can be made. - Decided in favour of assessee. Addition of transponder charges paid to Panamsat International System Inc. - Held that:- CIT(A) has pointed out that transponder charges are recurring in nature and the assessee has to pay the same every year. In our considered view the findings of Ld. CIT (A) is based on the decision of Hon’ble Delhi High Court rendered in Asia Satellite Communications Co. Ltd. vs. DIT (2011 (1) TMI 47 - DELHI HIGH COURT) wherein discussed the nature of the similar payment and held that payment received towards transponder charges is business income and not Royalty in the hands of the recipient. Also see Empire Jute Company vs. CIT (1980 (5) TMI 1 - SUPREME Court )- Decided in favour of assessee. Payment to sister concerns - Addition u/s 40A(2)(b) license fee, programme amortization-payment to Nimbus Communication Ltd. for matches of BCCI - Held that:- Supplementary agreements between Nimbus and BCCI and between assessee and Nimbus were entered into and Nimbus transferred all the benefits to the assessee, which it received from BCCI. As per the terms of agreement the assessee was required to pay 10% over and above the license fees which was being paid by Nimbus to BCCI. CIT(A) has rightly held that the appellant has not given any amount to its sister concern by making adjustment in license fees in respect of cancelled match as alleged by the AO. Further the Ld. CIT(A) has rightly pointed that the AO has not brought any evidence on record to substantiate the allegation that the assessee has extended unreasonable favour to its sister concern Nimbus Communication. Hence, do not find any infirmity in the order of the Ld, CIT(A) to interfere with. We therefore, uphold the findings of the Ld. CIT(A) and dismiss ground of the appeal of the revenue. Non deduction of tds - claim of deduction of payment made to Bangladesh Cricket Control Board towards broadcasting rights - Held that:- AO has not doubted the existence of mutual understanding between the assessee and BCCB which gave the assessee the right to telecast live matches. AO has not doubted the existence of agreement between the assessee and BCCB for live telecast of matches during the year 2006 to 2009. The AO has not made any addition for non-direction of TDS under section 40 (a) of the Act, but, held that the expenses in question are not allowable because the same have been made in the absence of any expressed agreement between the parties. In our considered view, the Ld. CIT(A) has rightly allowed the appeal of the assessee. Allowability of expenditure on dealers conference held in Malaysia - Held that:- Hon’ble Delhi High Court in the case of CIT vs. Salora International Ltd. (2008 (8) TMI 138 - DELHI HIGH COURT) upheld the findings of the Tribunal that the assessee had to incur expenditure for launching of its products to meet the competition in the market, therefore, the entire expenditure is allowable as revenue expenditure. The Ld. CIT (A) is of the considered view that in the present case the expenditure incurred by the assessee is for advertisement and other related expenses, which constitute part of the sale promotion expenses. Since, we do not find any reason to interfere with the order of the Ld. CIT (A), we uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.

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• 2017 (11) TMI 450
  Validity of section 139AA - petitioner does not possess the Aadhar card - filing of return of income with PAN which is neither linked with an Aadhar card nor where the assessee has applied for Aadhar and such application is pending, would be invalid - whether adherence to section 139AA violates Article 21 of the Constitution? - Held that:- On one hand, minus the angle of right to privacy, the Supreme Court in case of Binoy Viswam (2017 (6) TMI 478 - SUPREME COURT OF INDIA ) has upheld the validity of section 139AA of the Act. The question of validity of section 139AA of the Act on the anvil of breach of right to privacy would now have to be tested. The question whether Aadhar card regime breaches such a right is at large before the Supreme Court. In the meantime, the last date for filing return for the petitioner-assessee would be 31.10.2017. If, by that time, no return is filed, the petitioner would expose himself to certain penal liabilities. On the other hand, if the department is directed to accept the petitioner's return without any further obligation on its part, no prejudice would be caused to the respondents. Thus by way of interim directions, the petitioner is allowed to file the return of income for the assessment year 2017-18 before the department in hard copy. The department may accept the same without the petitioner linking his PAN card with Aadhar card or having to make a declaration that he has applied for one. It would not be obligatory for the department to process such return.

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• 2017 (11) TMI 449
  Eligibility for deduction u/s. 80P - Held that:- It is clear that the ld. CIT(A) has omitted to peruse the assessee’s stated stand before him, i.e., by way of ‘statement of facts’, filed along with the memo of appeal before him, and which corresponds with the material on record. It is therefore the assessee who has taken an inconsistent and ambivalent stand in the matter, with the ld. CIT(A) in fact issuing a finding contradictory to the assessee’s own stated decision. So however, it could also be that its’ principal business is restricted to providing financial accommodation to it’s members for agricultural and related purposes. We say so as the said activity also is a sub set of activity of lending, a business the assessee is definitely engaged in. The matter would therefore require being examined on facts. And the assessee allowed deduction if its principal business found to be so, so that it is a primary agricultural credit society, even as held by the ld. CIT(A), even though in contradiction to the assessee’s claim before him. This is as the matter is principally of fact, on which no examination has taken place; the Assessing Officer (AO) also resting content on finding, and not incorrectly, that the assessee is a primary co-operative bank, i.e., save for it being a primary agricultural credit society, which stands excepted in the definition of the former and, in any case, is excepted u/s. 80-P(4) and, therefore, is entitled to deduction u/s. 80-P(1). Where so, and which would only be on the basis of a positive finding to that effect, the assesseee, irrespective of its’ name, which is apposite, is eligible for deduction u/s. 80-P. The matter is accordingly restored to the file of the AO, who shall decide per a speaking order TDS u/s 194A - non deduction of tds on the interest allowed on the time deposits maintained with it by it’s depositors, members or nonmembers - Interest other than “Interest on securities” - Held that:- The word ‘principal’, a word of common usage, is well understood both in law and in common parlance. Its use, in conjunction with the words ‘primary object’, as explained in Madras Autorickshaw Driver’s Cooperative Society Ltd. (1982 (10) TMI 28 - MADRAS High Court) is to ascertain the character of the business being actually carried out by the society in terms of its’ objects. The maintainability of section 194A(3)(viia), on the basis of which relief stands allowed to the assessee by the ld. CIT(A) in the Revenue’s second appeal, is consequential, though the assessee, a co-operative society in the business of banking, is at liberty to advance its’ case, i.e., as to the non-application of section 194A(1), alternatively, on any other ground/basis in the set-aside proceedings. The AO shall decide per a speaking order, allowing the assessee a reasonable opportunity to state and present its’ case before him

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• 2017 (11) TMI 448
  Penalty u/s 271(1)(c) - claim of depreciation on the co-generation plant by the assessee at a rate of 100% - Held that:- In the case of the present assessee the revenue in itself appreciating that the raising of a claim of depreciation on the co-generation plant by the assessee at a rate of 100% as against the rate 80% to which it stood statutorily entitled was a bonafide mistake, had thus on the said count not even initiated any such penalty proceedings in the hands of the assessee for the immediate preceding year, viz. A.Y. 2003-04. Still further, we find that the assessee had during the course of the assessment proceedings on realizing its mistake had revised the depreciation rate on the co-generation plant from 100% to 80%. We thus are of the considered view that the raising of the wrong claim of depreciation by the assessee in the present case safely falls beyond the sweep of a ‘False claim’, as a result whereof the aforesaid judicial pronouncements relied upon by the ld. D.R are clearly found to be distinguishable on facts, as against those involved in the case of the present assessee. We thus after deliberating at length on the well reasoned order of the CIT(A), find to be in agreement with the view taken by him. - Decided against revenue.

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• 2017 (11) TMI 447
  Addition u/s 14A r.w.r. 8D - nexus of certain expenses incurred by the assessee with the earning of the exempt income - Held that:- In the case of the present assessee the A.O had carried out the disallowance under Sec. 14A, in terms of the methodology provided in Rule 8D(2)(iii), only on the basis of a general observation that a plausible nexus of certain expenses incurred by the assessee with the earning of the exempt income could not be ruled out. We are of the considered view that the aforesaid general observation of the A.O can by no means partake the color and character as that of a satisfaction, which as per the mandate of law is required to be arrived at by him with regard to the correctness of the claim of the assessee in respect of the expenses claimed to have been incurred in respect of income which did not form part of the total income of the assessee, having regard to the accounts of the assessee, as were placed before the A.O. We thus being of the considered view that as the A.O had summarily carried out the disallowance contemplated under Sec. 14A, as per the methodology provided in Rule 8D(2)(iii), without satisfying the statutory requirement of first arriving at a satisfaction as required by the mandate of law, having regard to the accounts of the assessee as placed before him, therefore, we are unable to persuade ourselves to uphold the disallowance of Rs. 10,00,000/- which had been sustained by the CIT(A). The order of the CIT(A) sustaining the disallowance of Rs. 10,0,000/- under Sec. 14A is thus set aside. - Decided in favour of assessee.

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• 2017 (11) TMI 446
  Disallowance of depreciation on motor car - beneficial ownership - addition on the ground that the motor car was registered in the name of the individual Director and not the appellant-company - Held that:- Though the vehicle was registered in the name of the director of the assessee company, but however, the other material facts which were brought to the notice of the lower authorities by the assessee, viz. (i). that the payment towards the purchase consideration for the motor car was made by the assessee company from its bank accounts; (ii). the motor car was reflected as an asset in the balance sheet of the assessee; and (iii). the day to day running expenses of the motor car were incurred by the assessee, duly established that the assessee company was the defacto owner of the motor car. We are of the considered view that the lower authorities had failed to appreciate the said material facts which have a strong bearing on the adjudication of the issue under consideration. We are of the considered view that in the backdrop of the aforesaid facts, it can safely be concluded that though the assessee company was not vested with the legal ownership of the vehicle, but then, it remained the beneficial owner of the same. We thus being of the considered view that the assessee was duly entitled towards the claim of depreciation on the aforesaid motor car, set aside the order of the CIT(A) and delete the disallowance - Decided in favour of assessee.

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• 2017 (11) TMI 445
  Non service of notice u/s 143(2) upon assessee within the period of limitation - validity of assessment - Held that:- Revenue failed to produce any evidence of service of the notice under section 143(2) of the I.T. Act upon assessee within the period of limitation. Therefore, the assessment order so passed is without jurisdiction and void abinitio and is liable to be quashed. - Decided in favour of assessee.

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• Customs

• 2017 (11) TMI 438
  Maintainability of appeal - claim of benefit under DFIA scheme - import of Apple Juice Concentrate - Held that: - the appeal is maintainable as per the ratio laid down in the case of Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla [2013 (11) TMI 1232 - CESTAT AHMEDABAD], where it was held that there is no reason to justify rejection of request made by the appellant to the adjudicating authority in light of section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice. DFIA Benefits - duty free import - benefit of N/N. 98/2009-Cus dated 11.09.2009 - Apple Juice Concentrate - usability of Apple Juice Concentrate in the export product - Held that: - There is no reason given as to why Apple Juice Concentrate is not covered under the description Relevant Fruit Juice/Pulp/Puree permitted in the DFIA. Ld. DR could not justify as to how Apple Juice Concentrate would not be covered under the description Relevant Fruit Juice/Pulp/Puree, when the fact that Apple Juice Concentrate can inter alia be used in the manufacturing of export product in DFIA Assorted Confectionary and Biscuits, is not in dispute, and the Ld. Advocate has produced evidence to show that the imported product can be used in manufacturing of various products which includes candies and confectionary applications and pies and bakery goods - There is no dispute that the quantity and value of goods Apple Juice Concentrate is within the maximum permitted quantity of Relevant Fruit Juice/Pulp/Puree and CIF value endorsed on the Transferrable DFIA. The issue before the Adjudicating Authority was whether documentary evidence is required to show that imported Apple juice concentrate is actually used in the exported product, and further whether to extend DFIA benefit apart from actual use, the quantity actually used is also required to be established in terms of DGFT N/N. 31 dated 01.08.2013. Fulfillment of conditions of DFIA exemption N/N. 98/2009-Cus dated 11.09.2009 - the said notification provides exemption subject to the condition namely that the description, value and quantity of materials imported are covered by the said authorisation and the said authorisation is produced before the proper officer of customs at the time of clearance of debit - Held that: - in the instant case imported goods described as Apple Juice Concentrate and value &quantity thereof, is covered under the description, value and quantity of inputs permitted in the DFIA - We do not find any condition in the N/N. 98/2009-Cus dated 11.09.2009 (as amended) to the extent that only those inputs and to the extent of their quantity actually used shall be available for claiming the exemption benefits. The impugned decision to the extent it denies exemption is erroneous. The appellant is entitled for duty free import of the goods Apple Juice Concentrate under the Transferable DFIA presented by it - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 434
  Revocation of CHA license - forfeiture of security deposit - penalty - it was alleged that the appellant - Held that: - the whole controversy has emanated out of a cat fight between the appellant and their ex-employee, who has admittedly made the complaint. From the submissions and facts on record, it emerges that in his statement recorded under Section 108, the complainant and ex-employee Shri V. Sivaraman, admitted that even after he had left the services of the appellant, he received compensation from them for the period 17.09.2012 to 01.02.2013 on mutual understanding, evidently to use the blank forms which were signed by him. In reply to a question No. (5) Shri Sivaraman himself accepted the usage of signed blank forms by his employer. The appellant has pointed out that they had paid compensation of Rs. 2,00,000/- by way of cheque dated 13.03.2013 to Shri V. Sivaraman. It then appears that the complaint by Shri V. Sivaraman is the resultant of a mutual understanding gone sour. While the appellant has definitely not complied with the obligation caused on him under Regulation 11 B of CBLR 2013, to transact business either personally or duly approved employee, there is no allegation that the blank bills of entry wherein the signature of the ex-employee which were improperly used, were forged by them - There is also no allegation that the goods imported through these bills of entry were found having violated any customs laws in force - the revocation of license of the customs broker for this particular infraction, in our view, is an overkill, not commensurate with the gravity of the offence and will required to be set aside - the penalty of Rs. 50,000/- imposed on the appellant would be sufficient. Appeal allowed in part.

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• 2017 (11) TMI 430
  Conversion of shipping bills - free shipping bills into drawback shipping bills - All Industry Rates of drawback - Held that: - Hon’ble Apex Court in the case of Cargill India Private Limited Versus Commissioner of Customs And Central Excise, Visakhapatnam-II [2015 (11) TMI 378 - SUPREME COURT] held that the provisions of Circular No. 4/2004 dated 16.01.2004 is applicable to the facts of this case and matter needs examination at the end of the adjudicating authority to consider the conversion of free shipping bill into drawback shipping bill in terms of Circular No. 4/2004 ibid. I remand the matter back to the adjudicating authority to consider the issue - appeal allowed by way of remand.

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• 2017 (11) TMI 429
  Refund claim - unjust enrichment - finalisation of provisional assessment - case of assessee is that the question of passing the duty to anyone else does not arise in the present case as there is no buyer and seller and entire consumption was captive consumption - Held that: - identical issue decided in the case of CC, Kandla Vs. Ambica Maritime Ltd. [2007 (8) TMI 518 - CESTAT, AHMEDABAD], where it was held that the same was a notional amount and the quantity for which the duty was paid was not consumed entirely in India and as such I am of the view that Commissioner (Appeals) has rightly held that the doctrine of unjust enrichment will not be applicable - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 421
  Misdeclaration of imported goods - confiscation - redemption fine - penalty - Held that: - When the goods failed to be proved as waste but was found to be pipes and misdeclaration thereof, there was misdeclaration of description and value of goods. There is no material on record in defence of appellant to disturb the adjudication finding. Accordingly that is maintained - redemption fine and penalty also does not call for any reduction since reasonable dose of such fine and penalty has been imposed - appeal dismissed in toto.

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• 2017 (11) TMI 415
  Classification of imported goods - goods meant for telecommunication system and from part of computer system - revenue claimed classification under CTH 8543.89, whereas appellant claimed classification under CTH 84.71 - whether the software came in the media separately was the same as that was inbuilt in the hardware described in the Table herein before stated or that is a separate software which is sought to be included by Revenue in the value of the hardware? - Held that: - In order to determine the controversy, it is necessary that both sides are expected to demonstrate with tangible evidence whether the hardware contained the same software that came to India through the media as per page 17 of the appeal folder - Appellant was informed that unless the Bench is satisfied as to the character of the software contained in the hardware and also in the media, it is impracticable to conclude the matter. It is very clearly noticed today that insofar as classification of both the goods are concerned, that is not in dispute. So also there is no dispute that the software brought into India was classifiable under CTH 8534 and also enjoys the exemption under N/N. 21/2002-Cus. as herein before stated. In view of paucity of time, the matter could not proceed for which both sides agree to satisfy on the above aspect to the Bench on 15th November 2017 - Call on 15th November 2017.

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• 2017 (11) TMI 410
  Served from India Scheme - N/N. 92/04 Cus dated 10.09.2004 - SAD - Held that: - the only condition for exemption for SAD in N/N. 20/2006 Cus. is that the goods should be exempted from payment of basis Customs duty and countervailing duty - any of exemption notification nowhere states that the exemption should be unconditional. It is a fact that vide N/N. 92/2004 BCD is exempted subject to certain conditions. Further vide N/N. 6/2006 CVD is exempted. Further vide N/N. 20/2006 even the SAD leviable under Section 3(5) of the Customs Tariff Act was also exempted. During the relevant period, the impugned goods were fully exempted from basic customs duty as well as CVD (leviable under Section 3(1) of the Customs Tariff Act, 1975 and consequently the impugned goods were entitled to the benefit of N/N. 20/2006-Cus. Further in the case of Gujarat Ambuja Exports Ltd. Vs. UOI [2013 (6) TMI 536 - GUJARAT HIGH COURT] wherein the Hon’ble Gujarat High Court held that the imported goods were entitled to the benefit of N/N. 20/2006 Cus. when they (imported goods) were exempted from duty under Notification 45/2002-Cus. when imported under DEPB scheme where the duty is debited to the duty entitlement passbook. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 407
  Refund of excess duty paid - whether the First Appellate Authority was correct in sanctioning the refund of the excess amount of export duty paid by the respondent or otherwise? - Held that: - the Revenue has not contested the applicability of Section 27(2) of the Customs Act, 1962 in respect of the duties of export. In my view, provisions of Section 27(2) will not apply to the export duty - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (11) TMI 443
  Action process - Held that:- The respondent-contemnor could not have entered into correspondence with the Superintendent of Police when this Court had directed for auction of Aamby Valley. As submitted by Mr. Datar that as a consequence of the communication, the police has taken custody of the property. If it is so, we direct the Director General of Police, Maharashtra, to see to it that the property is handed over to the Official Liquidator within forty-eight hours. The Official Liquidator shall proceed with the auction under the direct supervision of the Company Judge. That apart, the Official Liquidator shall also take guidance from Justice A.S. Oka, a sitting Judge of the Bombay High Court. The Company Judge and Justice A.S. Oka shall make joint endeavour so that the auction process which is to commence from a particular stage, shall continue and be over. If any impediment is created by anyone, he shall be liable for contempt of this Court and may be sent to jail. The concerned police shall render requisite assistance in the holding of auction as and when directed by the learned Company Judge in consultation with Justice A.S. Oka.

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• 2017 (11) TMI 423
  Grant of 'waiver' under proviso to sub-section (1) of Section 244 of the Companies Act, 2013 - Oppression and mismanagement - Held that:- Apart from the fact that both the impugned orders have been passed in a mechanical manner by the Tribunal without considering any exceptional circumstances to allow the application for 'waiver' under proviso to sub-section (1) of Section 244, the Tribunal has not applied its mind as to whether (proposed) application under section 241 merits consideration and whether it relates to 'oppression and mismanagement'. The question of grant of 'waiver' under proviso to sub-section (1) of Section 244 fell for consideration before this Appellate Tribunal in “Cyrus Investments Pvt. Ltd. & AJqR. Vs. Tata Sons Ltd. & Ors. - [2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] As the impugned order(s) are a nonspeaking order, we have no option but to set aside the impugned orders both are set aside.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 424
  Extension of time for completion of the Insolvency Resolution Process - Whether the Applicant, being Promoter/Director of the Corporate Debtor Company is entitled to file this Application under Section 60(5)(c) read with Section 12 of the IB Code and Rule 11 of the NCLT Rules and Whether time can be extended for completion of the Corporate Insolvency Resolution Process? - Held that:- Sub-section (2) of Section 12 of the Code clearly lays down that it is only the Resolution Professional who can file an Application to the Adjudicating Authority to extend the duration of Corporate Insolvency Resolution Process beyond 180 days on the basis of Resolution passed at a meeting of the Committee of Creditors by a vote of 75 per cent of the voting shares. As we efer to the Fourth Meeting of the Committee of Creditors of Gujarat Oleo Chem Limited held on 19th day of September, 2017. In Agenda No.4 of the said Resolution, it is mentioned that the Resolution which has been proposed by the Promoter was discussed in the Meeting and resolved not to accept the Resolution Plan put forward by the Promoter/Director and asked the Promoter/Director to propose an improved Plan within 30 days. On Agenda No.3, the Committee of Creditors resolved that Mr. Anil Goel, Resolution Professional is instructed to file an Application before the National Company Law Tribunal, Ahmedabad under Section 12(2) of the IB Code for approval of extension of the duration of Corporate Insolvency Resolution Process. But, no such Application is filed by the Resolution Professional, Mr. Anil Goel so far. This Application filed by the Promoter/Director is not in accordance Section 12(2) of the Code and not in accordance with the Resolution on Agenda No.3 of the 4th Meeting of the Committee of Creditors held on 19th September, 2017. Thus as Applicant is not qualified under Section 12 of the Code, the jurisdictional function of this Adjudicating Authority under Section 60(5)(c) of the Code cannot be invoked by the Applicant Promoter/Director.

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• 2017 (11) TMI 420
  Corporate Insolvency Resolution Process - proof of outstanding debt - Held that:- We are of the opinion that any decision made by the Joint Lenders Forum is not binding on the Financial Creditor, as the members have not disbursed any financial assistance. The Corporate Debtor therefore cannot seek to take refuge under their resolutions in order to avoid an Insolvency Resolution process, nor can they resist the Financial Creditor’s entitlement for recovery under the Code on the basis of some underlying motive, supposedly resulting in some economic detriment or prejudice to national interests, as perceived by them. The correct recognition of National Interest is adherence to the rule of law impartially applicable without exceptions to one and all. The factum of an outstanding amount is admitted by the Corporate Debtor. Their inability to pay mandates Corporate Insolvency Resolution Process. This petition is, therefore, Admitted. The moratorium envisaged under Section 14 of the Code come into immediate effect.

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• 2017 (11) TMI 412
  Corporate insolvency procedure - proof of outstanding procedure - Held that:- In the Instant case, facts specific to the case, where the case is filed either under section 7 or 9 would not have much difference since the Petitioner Company has already demanded Respondent to pay the outstanding dues and the Respondent also agreed for the same and to clear the outstanding dues within the stipulated period i.e. end of December 2016, vide letter dated 07-11-2016. Moreover, an IRP is also suggested by the Petitioner. Considering the fact that a huge amount is outstanding since 2015, inspite of various Affidavits filed/adjournments granted to Respondent not even a single rupee is paid so far even though petition was submitted under IBC on 22-03-2017. Moreover, the petitioner being a Government of India Enterprise taken steps for recovery of its dues from 2015 and considerable time had already lapsed therefore in the interest of time/both the parties, we have considered the present petition under section 9 of IBC, the petition filed is maintainable and petition is also complete in all respects as per provisions of section 9 of IBC and thus it is a fit case for admission. Therefore we have no hesitation to consider this petition under section 9 of IBC. Heard, Counsels for both the sides. Considering the facts and circumstances of the matter as discussed supra and we are also satisfied that there is no disciplinary proceedings pending against the proposed IRP. In the result, the Company Petition is admitted by exercising the powers conferred under section 9 of IBC, 2016.

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• Service Tax

• 2017 (11) TMI 444
  Renting of immovable property - levy of service tax - lease rentals - who is liable to bear the burden of tax i.e. the provider of services (lessor) or the recipient of services (the lassee) - scope of agreement - lease (rent) deed does not refer to service tax. Held that: - It is clear, on a conspectus of the authorities of this Court, that service tax is an indirect tax, meaning thereby that the said tax can be passed on by the service provider to the recipient of the service. Being a tax on service, it is not a direct tax on the service provider but is a value added tax in the nature of a consumption tax on the activity which is by way of service. It is settled by various judgments of this Court that, in order to have conceptual clarity, the taxable event and the taxable person are distinct concepts. In Babu Ram Jagdish Kumar Co. v. State of Punjab, [1979 (5) TMI 135 - SUPREME COURT OF INDIA], this Court made it clear that, in the case of a purchase tax, the taxable event is the purchase of paddy, whereas the taxable person , who is the person liable to pay the tax, is the purchaser - In the present case, therefore, the taxable event is the provision of the service of renting out immovable property, and the taxable person , that is the person liable to pay tax, is the service provider, namely the lessor. The fact that service tax may not, in given circumstances, be passed on by the service provider to the recipient of the service would not, therefore, make such tax any the less a service tax. It is important to bear this in mind, as the main prop of Shri Jaideep Gupta s argument is that service tax being an indirect tax which must be passed on by virtue of the judgments of this Court, would make the recipient of the service the person on whom the tax is primarily leviable. Though in law and under clause 6 of the lease deed the Appellant is not required to pay service tax, we are loathe to upset the finding of the learned single Judge based upon a letter by the Appellant to the Respondent in which the Appellant has expressly stated that it was liable to pay service charges - the the case is in favor of appellant on law, but is against the appellant on facts - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 442
  Tax liability - Alleged that appellant had provided various services as per agreement they had entered into with the owner and accordingly demand were made along with interest and penalty - the decision in the case of CMS (I) OPERATIONS & MAINTENANCE CO. P. LTD. Versus C. CE, PONDICHERRY [2007 (5) TMI 74 - CESTAT, CHENNAI] contested, where it was held that allegation was not correct and demand, interest and penalty set aside - Held that: - the decision in the above case upheld - there are no legal and valid ground for interference - appeal dismissed.

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• 2017 (11) TMI 435
  Business Auxiliary Service - Video Tape Production Services - export of service - Held that: - we are not able to fathom how the adjudicating authority, having stated that the appellants are not engaged in the recording of any programme etc. has concluded that services or restoration, giving special effects etc. on the old films would be a "Video Tape Production". Ostensibly, the department and the adjudicating authority have been influenced by the second limb of the definition of "Video Tape Production" in Section 65 (120) of the Act. The definitions have to be read in totality and part thereof cannot be picked up to justify that the activities performed in the instant case will come under "Video Tape Production Services". The appellants will certainly not fall under the ambit of "Video Tape Production Services" - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 427
  CENVAT credit - duty paying documents - denial on the ground that the bills raised by the service provider are in the name of the Project Manager and not directly in their name - Held that: - the said plea of the appellant cannot be entertained at this stage and in as much as the appellant has not addressed any other argument in respect of the said amount and has not produced any evidence, the said amount has to be confirmed. As regards the Cenvat credit of Rs. 4,18,122/-, the sole ground of rejection of assessees claim is non-rectification of the bills. In terms of the earlier order the authorities were required to look into the parallel evidence to find out whether the services have been received by the appellant or not and have been consumed by them or not. The appellants have placed on record sufficient evidence to show that such payments for the services were made by them and the job order etc. Such evidences are required to be examined - appeal allowed by way of remand.

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• 2017 (11) TMI 426
  Short payment of service tax - time limitation - proviso to Section 73 of the Act - Held that: - the demand in the present case is hopelessly barred by limitation as the SCN was issued on 31.12.2007 for the period February 2006 and there is no allegation of suppression of information with intent to evade payment of duty - the fact that M/s. MSIL made excess payment to the appellant on account of certain irregular billing was made known to the appellant only in the month of June 2005 and more particularly from the letters dated 10.06.2005 and 27.06.2005 of MSIL. These excess payments made to the appellants were deducted by the said MSIL during the period May 2005 to February 2006 and therefore the question of reporting this excess payment or discrepancy by the appellants in their return filed for half year ending March, 2005 does not arise and therefore invoking the extended period on the ground that till the audit objection the appellants have not brought out the discrepancy in their return filed for the half year ending March, 2005 is not sustainable. Appeal of the appellant allowed both on merit as well as on limitation.

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• 2017 (11) TMI 425
  Refund claim - export of services - Event Management Service - denial on account of nexus - Held that: - in the impugned order there is no discussion with regard to Event Management Service and its nexus with the output service and further there is no discussion regarding inconsistency in computation of the amount eligible for refund - Event Management Service in the present case is an input service as is covered by various decisions relied upon by the appellant. For the purpose of removing the inconsistency in the computation, I remand the case back to the original authority to pass a reasoned order after correcting the inconsistency as has been done by the original authority - appeal allowed by way of remand.

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• 2017 (11) TMI 422
  Condonation of delay - delay of 101 days in filing the cross objection - Held that: - the said delay is solely for the reason of pure negligence. In the grounds of condonation of delay application no date chart has been given to explain a delay of over 100 days. The period during which they had gone out of India has also not been explained and confirmed - No evidence of late receipt has been produced by the applicant. If the date of receipt of the appeal by the appellant is accepted as 23.11.2016 as claimed by them in their COD application, the appeal was filed by Revenue on 8.7.2016 and it is unlikely that the order was received by the applicant almost five and half months after the appeal was filed by Revenue. In these circumstances, the applicants have failed to show reasonable cause for condonation of delay. Delay cannot be condoned - application for COD dismissed.

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• 2017 (11) TMI 419
  Penalty u/s 78 - non-payment of service tax - malafide intent - Held that: - Hon’ble Madras High Court judgment in the case of Vikash J. Shah Vs. Commissioner (Appeals), Coimbatore [2016 (2) TMI 442 - MADRAS HIGH COURT], wherein the Hon’ble High Court has held that there cannot be any liability to pay service tax when the tax is already available in the form of Cenvat. This Tribunal has taken view that when the cenvat credit is available, the non-payment of service tax/duty only creates revenue neutral situation. In this case admittedly there was cenvat of Rs. 19 lakhs available with the appellant therefore to that extent appellant was not required to pay service tax in cash and it was only adjustable against the said cenvat credit. Therefore the penalty of Rs. 19 lakhs i.e. equal to the Cenvat Credit under Section 78 of the Finance Act, is not sustainable - demand of service tax, interest and payment thereof made by the appellant is maintained - appeal allowed in part.

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• 2017 (11) TMI 418
  Value based exemption - N/N. 4/07 dated 1-3-2007 - case of appellant is that during the period 2007-08, 2008-09 and 2009-10 exemption of threshold limit of Rs. 8 Lacs/10 Lacs was not considered by the Commissioner(Appeals) under the N/N. 6/05-ST dated 1-3-2005, 04/07-ST dated 1-3-2007 and 08/2008-ST dated 1-3-2008 - Held that: - the Ld. Commissioner denied exemption upto threshold limit of Rs. 10 Lacs during the year 2008-09 on the ground that the appellant have exceeded the limit of Rs. 8 Lacs in the preceding financial year i.e. 2007-08. However, as per the amendment N/N. 8/2008-ST dated 1-3-2008, the value of the preceding financial year i.e in 2007-08 should not exceed Rs. 10 Lacs. This is not under dispute that the appellant have not exceeded Rs. 10 Lacs in 2007-08, hence they are entitle for exemption upto Rs. 10 Lacs in the year 2008-09. The appellant in their chart claimed that cum tax value on total value i.e. Rs. 8,06,224/- in year 2007-08 and Rs. 15,05,984 in 2008-09, which is not correct. For the exempted value i.e. Rs. 8 Lacs and Rs. 10 Lacs respectively cum tax benefit not available being the said amount is not liable for service tax. The adjudicating authority is directed to re-quantify the demand - appeal allowed by way of remand.

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• 2017 (11) TMI 417
  Taxability - services received from foreign entity in relation to External Commercial Borrowings from abroad - appellant argued that since the service tax payable is available as Cenvat credit, entire activity is revenue neutral - Held that: - issue of revenue neutrality can be decided only after verification of certain facts - matter to be remanded for verification of the facts and to decide the revenue neutrality, limitation and penalty etc. - appeal allowed by way of remand.

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• 2017 (11) TMI 416
  Refund of unutilized CENVAT credit - claim was made on the ground that they have used various input services in providing the output service of works contract service which was exported out of India - Held that: - even though the illustration regarding the maximum refund permissible stands deleted vide Finance Act, 2010, the restriction of refund to the extent of the ratio of export turn over to the total turnover still remains in the condition. It is an admitted fact on record that the appellant has rendered output services which are exported as well as exempted services for which no service tax is payable. Consequently, in terms of the above condition 5 of the said notification, the restriction applied on the refund claim is justified. Imposition of restriction - claim of appellant is that cannot be imposed on the refund claim for the reason that the appellant is already maintaining separate books of account for taxable and exempted services and, therefore, Cenvat credit taken by them as per Rule 6(2) pertains to export of services only - Held that: - As per the provisions of Rule 6 ibid, the appellants exercised their option of maintaining separate accounts for taxable and exempted services. The right of the appellants to exercise this option has not been challenged by the adjudicating authority. But the said rule is independent of the applicability of the conditions of both of Rule 5 of CCR, 2004 and of N/N. 5/2006-CE(NT) dated 14.3.2006. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 409
  Refund claim - service tax paid erroneously - export of services - time limitation - Section 11B of the CEA, 1944 - Held that: - The Department instead of asking the appellant to file fresh application seeing refund should have refunded the amount - the second application which was filed by the appellant was not required to be filed and therefore the question of time-bar does not arise in this case and therefore the impugned order dismissing the refund claim of the appellant on time-bar is not sustainable in law. Entitlement to interest - Section 11BB of the CEA - Held that: - reliance placed in the decision of the Allahabad High Court in the case of Siddhant Chemicals Vs. Union of India [2014 (5) TMI 59 - ALLAHABAD HIGH COURT] wherein it has been held that interest has to be paid automatically under Section 11BB of the CEA and the payment of interest is not dependent on claim by the party instead authority is statutorily obligated to pay the interest - interest allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 405
  Scope of SCN - Taxability - amount received from their clients under the category of “V-SAT Charges” - whether taxable under the head “lease circuit service” or otherwise? - Held that: - the Original Authority proceeded to levy the tax on the said income under “Stock Broker Service” - such proceedings are beyond the scope of the show cause notice as no reference regarding Service Tax liability of the appellant in respect of V-SAT charges was sought to be levied under “Stock Broker Service” - proceedings fails - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 404
  CENVAT credit - Refund claim - N/N. 41/2007-S.T., dated 6-10-2007 - Technical Inspection and Certification Agency services - Clearing and Forwarding Agent services - Held that: - the appellant is seeking to avail Cenvat credit on these services, on which initially they sought refund and refund has not been granted to the appellant - As it is not disputed that these services are input services for the appellant, Cenvat credit on these services are allowed. Service provided by the Commission Agent located outside India - refund claim - Held that: - the said service has been availed by the appellant for export of goods and Service Tax has been paid thereon, which has not been disputed - appellant is entitled to take refund. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 403
  Rectification of mistake - applicability of N/N. 13/2003-S.T., dated 20-6-2003 - issue involved in the present appeal was of exemption N/N. 13/2003-S.T., dated 20-6-2003 which can only be decided by a Division Bench and not by Single Member Bench - Held that: - there is no error apparent on the record which needs to be corrected and the said decision need not be recalled as the appellant has participated in the proceedings and has not raised the said objection till the disposal of the case - ROM application dismissed.

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• 2017 (11) TMI 402
  Consulting Engineering Service - Assessee’s grievance is that it was a mere supervisor and not a “Consulting Engineer” who supervised the erection and commissioning of the mills - Held that: - When any service is provided to a client by Consulting Engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering, the service provider shall be called as “Consulting Engineer” - There is no material on record to show that there was any erection work carried out by appellant. Documents placed depicts that appellant was supervisor to provide technical assistance for the purpose of erection and installation - demand upheld. Penalty - Held that: - there was nothing suppression of any fact made by appellant and it was only an interpretational error which should not press the appellant to suffer penalty - penalty set aside. Appeal allowed in part.

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• 2017 (11) TMI 401
  Benefit of N/N. 34/2004-S.T. - GTA services - denial of exemption on the ground that the freight payable by the appellants are intentionally split-up into small consignment in order to show that they did not exceed Rs. 750/- per consignment - Held that: - the proceedings by the lower authorities are mainly based on allegations and presumptions, without any categorical evidence - Based on the illustrative documents submitted by the appellant, we find no evidence of deliberate split-up or manipulation, to claim the benefit of the said Notification. In order to sustain such allegation, the Revenue should have brought out clear evidence, which is lacking in the present proceedings - benefit of notification allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 400
  CENVAT credit - input services - sales commission paid for sale of their goods - Held that: - Clause 2 of the Memorandum of Understanding is very clear and clearly shows that what is undertaken by the IOCL is in reality a sales promotion activity and therefore the appellants are entitled to take Cenvat credit of the input service i.e. sales promotion activity - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 399
  CENVAT credit - duty paying documents - allegation against the appellant is that they availed irregular credit on the invoices in which the service tax was not shown separately - Held that: - It is brought out from records that M/s. Sree Venkateswara Enterprises and others to whom the appellant had paid rent filed ST-3 returns reflecting the service tax portion of the rent paid by appellant. Later M/s. Sree Venkateswara Enterprises has issued invoices showing the service tax separately. On these invoices the appellant has taken credit to discharge their service tax liability on output services of subletting of immovable property - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 398
  Benefit of N/N. 12/2003-S.T., dated 20-6-2003 - taxability of value of the goods and materials sold by the service provider to the recipient of service - Held that: - The appellant has pointed out that there has been study of the data based on which it was concluded that for their service contracts the percentage value of the goods and material is 50% - further, there has not been any substantial reasons and evidences to counter the contents of the documentary proof submitted in terms of the N/N. 12/2003-S.T. giving necessary abatement benefit to the appellant - appellant is entitled to the benefit of notification - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 397
  GTA service - freight including payment through an agent for transportation - scope of Rule 2(1)(d) of the Service Tax Rules, 1994 - Held that: - the agreement with the transporter is entered by the appellant themselves and not by the dealer. In these circumstances, it appears to be a mechanism has been devised to mislead the Service Tax authorities and to avoid payment of Service Tax. So long as liability to pay transporter is of appellant, the physical payment through dealers for connivance or for practical reasons, does not change the liability to tax - appeal dismissed - decided against appellant.

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• Central Excise

• 2017 (11) TMI 440
  Principles of Natural Justice - CENVAT credit - S.S. Sheet/S.S. Coils without actually using the same in or in relation to the manufacture of dutiable finished goods - job-work - non-furnishing of documents - non-accountal of procured materials - cross-examination of persons. Held that: - We have already tabulated the details of the persons whom the petitioner wanted to cross-examine and the reasons for the petitioner making such a request. The first witness whom the petitioner wanted to cross-examine, was their own General Manager (Production). Admittedly he was an employee of the petitioner. The petitioner has made an allegation that though he was fully aware of the nature of the activities in the factory and especially the manufacturing process, he deliberately kept quiet and failed in his duty to portray the correct position in the factory - Insofar as the remaining three witnesses whom the petitioner wanted to summon for cross-examination are concerned, the Adjudicating Authority has recorded categorically that their statements were supported by records maintained by their firms/companies and that the details of such records were also indicated in Annexures C-16, C-18 and C-21 to the show cause notice - the factual grounds on which the Adjudicating Authority rejected the request for cross-examination, are cogent and convincing. The statements of third party witnesses were in fact shown to one of the Directors of the petitioner/Company by name Babulal Doshi and he is stated to have confirmed those statements. In Surjeet Singh Chhabra v. Union of India [1996 (10) TMI 106 - SUPREME COURT OF INDIA], the Supreme Court was concerned with a case arising under the Foreign Exchange Regulation Act and the Customs Act. Though the decision in Surjeet Singh Chhabra was a very brief order, the Supreme Court rejected the contention that the denial of cross-examination tantamounted to the violation of the principles of natural justice. The right to cross-examine is not absolute at least insofar as the cases of this nature are concerned. If there are factual grounds to show that the denial of cross-examination was based upon the sound logic, then the order of adjudication cannot be interfered with. We are not convinced that the impugned order could be set aside solely on the ground of denial of permission to cross-examine the witnesses - petition dismissed - decided against petitioner.

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• 2017 (11) TMI 439
  Condonation of delay in filing appeal - whether an appeal which was filed on 2nd September, 2008 was not moved for almost 9 years therefore, condonation of delay application where the notice was not issued by the department for almost 8 years, the delay should be considered from the date of judgment or from date of receipt of the order or from the date of dismissal by Delhi High Court judgment or from the knowledge of judgment to the respondent? - The ground which has been given for condonation of delay was that the counsel for Delhi was not well and the party’s main partner of Director of the company was busy with the sickness of the family on personal affidavit which he has said in the rejoinder. Held that: - It is true that the original record was not available and application was moved after we have passed an order on 1st May, 2017 to reconstruct the matter - From the record, it is very clear that the matter was not admitted and even on delay condonation application notice was not issued and the application was moved in 2008 - While going through the tax matter it is always the great concern from the court in excise department when it is a question of refund of Cenvat Credit, the court has to be very gracious in the matter. If the litigation is really genuine, the matter requires immediate attention and moving the matter in 2004 and order filed in 2008 not moving for 8 years, the court has to be very slow and has no choice in the proceedings on the matter of delay condonation application. In our considered opinion, 2004 order even if we take from the Delhi High Court judgment, there is a delay of one year one month seven days which is very serious in nature when for explanation for the same is not there and application was moved after 9 years which further added fuel to the fire. The condonation of delay application though Mr. Ranka has submitted that the gross delay of more than 10 years is required to be accepted, we are not inclined to grant the delay condonation application looking to the bona fides the same requires to be rejected - In that view of the matter, since the file was reconstituted after order of 1st May, 2017, we are not inclined to grant the application u/s 5 of the Limitation Act. We are not considering the matter on merits only on the ground of lethargic approach of the parties and negligence in the matter and throwing everything on the office of the High Court is not proper. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 437
  CENVAT credit - manufacture of dutiable as well as exempt goods - non-maintenance of separate records - Held that: - the appellant has reversed the amount before issuance of SCN - in considering the explanation of the electricity used for sale to the Karnataka State Grid the unit produced was considered whereas it should be the value of sale and not the unit in question which should have been considered - the entire issue hinges on an error made on calculation and therefore appears to be a computation mistake which needs to be re-computed. This case needs to be remanded back to the original authority which will determine the amount which is required to be reversed - appeal allowed by way of remand.

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• 2017 (11) TMI 436
  Classification of goods - Aluminium casting - whether classified under CTH 8511.00 or under CTH 7601.90? - Rule 2(a) of the General Interpretative Rules - Held that: - The appellant have manufactured and cleared the rough aluminium casting of stator plates. The same is not capable of being used as such. For use of the same aluminium castings in the manufacture of Magneto Assembly, the recipient of the goods has to undertake various process on this rough casting such as machining, outer dimension turning, back facing, hole drilling, hole tapping etc, thereafter it becomes finished stator plates and the same is capable of being used in the Magneto Assembly. The goods supplied by the appellant i.e. rough aluminium casting is correctly classifiable under Chapter sub heading 7601.90. Similar issue decided in the case of Commissioner of Central Excise, Mumbai-II Vs. Mukund Ltd [2004 (2) TMI 107 - CESTAT, MUMBAI], where it was held that the casting before machining has to be classified under the heading of respective metal and not as machine parts. When rough aluminium casting was manufactured and supplied by the appellant without any machining, the same will be classifiable under 7601.90 and cannot be classified as part of Magneto Assembly under Chapter 85 - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 433
  Valuation - includibility - value of the customized software - Held that: - We note that the appellants have placed a lot of correspondences before us which needs verification in the hands of the original adjudicating authority. Ld. Advocate has also placed decisions before us laying down that when the matter stands referred to the LB, the same reflects upon the facts of law not being clear and in a fluid state. If that be so, the assessees bonafides cannot be questioned - the issue of penalty also needs examination - appeal allowed by way of remand.

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• 2017 (11) TMI 432
  CENVAT credit - MS angles, plates, channels, joists etc. used for fabrication and erection of structures, fabrication of bunkers, fabrication of columns to support two or more MS beams etc - denial on the ground that the appellant has failed to prove the actual usage of the material for fabrication of various components - Held that: - in the case of Suguna Metals Pvt. Ltd. [2016 (1) TMI 1167 - CESTAT HYDERABAD], the Tribunal in similar circumstances has allowed the CENVAT credit - further, the Chartered Engineer certificate produced on record has not been properly considered by both the authorities because on the basis of the certificate, substantial benefit has already been given to the assessee and therefore the certificate issued by the Chartered Engineer certifying the usage of the impugned goods for fabrication of various components is established - the appellants are entitled for the CENVAT credit - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 431
  CENVAT credit - HR plates, MS angles, GC sheets, joists etc. used for fabrication of workshop shed and erection of structural items - denial on the ground that these are neither inputs nor capital goods - Held that: - in the SCN, the Department has recorded the statement of Managing Director of the appellant who has stated that MS angles, HR plates, GC sheets, joists etc. are used for fabrication of various components namely Furnace shell, electrodes mantle, pressure rings, conveyor galleries / supports, raw material hoppers etc. by treating as components. In view of the statement of the Managing Director and finding in the impugned order that appellant has failed to establish usage of the items in the factory - this case needs to be remanded back to the original authority to verify the actual usage of the impugned goods in the fabrication of various items as alleged by the appellant - appeal allowed by way of remand.

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• 2017 (11) TMI 428
  Shortage of finished goods and material - irregular availment of CENVAT credit - Held that: - appellant has failed to produce the closing stock for physical verification. I am not convinced by the explanation given by the appellant for short recovery of scrap. Therefore, I do not find any infirmity in the impugned order upholding the Order-in-Original by the Commissioner (Appeals) - demands under the provisions of CCR 2004 read with proviso to Section 11A(1) of the CEA along with demand of interest and also imposed equal penalty u/s 11AC of the CEA 1944 read with Rule 25 of the CER upheld. Penalty on accounts officer of assessee - Held that: - the Revenue has not been able to bring any evidence on record that he knew or he had reason to believe that the excisable goods in question were liable for confiscation under Central Excise Rules which is the only factor relevant for imposition of penalty under Rule 26 of the CER, 2002 - penalty on the Accounts Officer set aside. Appeal allowed in part.

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• 2017 (11) TMI 414
  CENVAT credit - input service - commission paid to Foreign Commission Agent - Rule 2(l) of CCR, 2004 - Held that: - the appellant have submitted certificate from the service provider who have certified that they involved in various activity such as to promote the product, visiting the buyer, taking part in exhibition and advertisement. As per this activity, it is clear that service provided by the foreign service provider is of sales promotion. The sales promotion service is clearly mentioned in the inclusion part of the input service definition under Rule 2(l) - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 413
  Clandestine manufacture and removal - contravention of provisions of Rules 173C, 173F & 173G (I) read with Rule 53 and Rule 226 of Central Excise Rules 1944 - intent to evade duty - suppression of facts - invalid excise transport documents viz GPI - pre-deposit - seizure of documents and raw materials. Held that: - there are sufficient evidences available against the appellant company to sustain the charges of unaccounted manufacturing and clandestine removal of the finished goods, where the duty of Central Excise was not paid - The demand of duty of Rs. 65,89,432.67 has been confirmed by the impugned order based not only on the documentary evidences but also substantiated by various statements of the concerned persons working or associated with the appellant-company recorded before the Superintendent of Central Excise. The activities and the transactions perpetrated by the appellants which are part of the present proceedings are in the nature of unaccounted manufacture and clandestine clearances to evade payment of Central Excise duty and these are definitely in the nature of white collar crimes like smuggling, evasion of taxes/duties of State etc. - the observations of the Hon’ble Supreme Court in the case of Collector of Customs, Madras and Others Vs. D. Bhoormull [1974 (4) TMI 33 - SUPREME COURT OF INDIA] are rightly applicable to the present facts. Therefore, the appellants cannot be allowed to argue that for all the transactions, there is requirement of making 100% proof available - Revenue has made its case of unaccounted manufacture and clandestine removal to sufficient degree of certainty as discussed above as well as in the impugned order. It is not always required that Revenue must establish unaccounted production and clandestine clearances without payment of Central Excise duty on the part of the appellant with mathematical precision. If there are enough evidences on record as well as the statements of the concerned persons to indicate and infer the existence of facts of unaccounted production and clandestine clearance on the yardstick of preponderance of probability of happening such fact and which comes to the realm of proved fact beyond reasonable doubt there is no need to look for a fact happening with mathematical precision. The appellants have not been able to counter any of the evidences against them available on record and discussed earlier above. When it is so, we sustain the confirmation of the demand of duty of Central Excise of Rs. 65,89,432.67 as done in the impugned order along with the reasons given therein - the quantum of redemption fine and penalties imposed, are reduced. Appeal allowed in part.

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• 2017 (11) TMI 411
  CENVAT credit - Courier services - period post 01/04/2011 - Held that: - the findings of the learned Commissioner (Appeals) are cryptic, as on one hand, he found expenditure of courier for clearance of the goods by the appellant as allowable upto 31/03/2011 and on the same facts, he observes that the appellant have not lead evidence, is erroneous and non-speaking - in view of the fact that the Department have not appealed against those Order-in-Original, I hold that the appellant is entitled to CENVAT credit also for the period subsequent to 01/04/2011, as regards courier expenses - penalty also set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 408
  Penalty u/s 11AC read with Rule 25 - the Commissioner(Appeals) in one Order-in-Appeal has partially allowed and held that the appellant is eligible for CENVAT credit availed on Bill of Entry No.27/2009 dt. 21/01/2009 whereas in another impugned order dt. 25/11/2013, he rejected the appeal of the appellant - Held that: - there is no suppression on the part of the appellant. In fact, the appellant himself voluntarily gave intimation to the Range Officer regarding the purchase of the vessel vide letter dt. 18/03/2009 on which the Department has started the enquiry and thereafter issued SCN. Thereafter the appellant paid the duty of Rs. 1,37,295/- on 22/01/2011 and paid Rs. 1,65,464/- from CENVAT credit - non-payment of duty, non-obtaining of Central Excise registration, not following Central Excise registration procedures etc. cannot be considered as fraud, collusion or suppression of facts unless there is a conscious or deliberate withholding the information on the part of the assessee - penalty u/s 11AC read with Rule 25 set aside. The second impugned order dt. 25/11/2013 passed by the Commissioner(Appeals) is not sustainable in law as the earlier Commissioner(Appeals) has already allowed the CENVAT credit of Rs. 14,74,189/- on the Bill of Entry dt. 27/01/2009 and there was no need to issue the fresh SCN and denial of CENVAT credit. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 406
  Refund of unutilized CENVAT credit - various input services - denial on account of nexus - Held that: - all the impugned services fall in the definition of input services as the same have been availed in relation to the manufacture of the product or the business of the appellant - Therefore appeal allowed by setting aside the impugned order but remand the case back to the original authority for computation after examining various documents - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 441
  Refund claim - despite the finality of the Court directions, the respondent/VAT Department is continuing to harass the petitioner with several queries and has, in fact, passed further orders rejecting the refund claims - Held that: - taking note of the interpretation of Section 10(5) and interpretation of Rule 6A, Court is of the opinion that direction to the respondent to refund the entire amount is not expedient in the circumstances - so far as the exercise of verification of refund claim for the years 2009-10 are concerned, the assessing officer should conduct it fully and a direction is, therefore, issued to the assessing officer to verify the sales/purchases of the goods towards the credit which was claimed by the petitioner and after taking into account the selling price of the said goods, pass a speaking order - penalty order issued, to be quashed - petition allowed by way of remand.

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