TMI Tax Updates - e-Newsletter
December 14, 2019

Case Laws in this Newsletter:

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

Articles

1. THE INDIAN STAMP (COLLECTION OF STAMP DUTY THROUGH STOCK EXCHANGES, CLEARING CORPORATIONS AND DEPOSITORIES) RULES, 2019 – AN OVERVIEW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Predatory Pricing by e-COMMERCE Companies

2. Impact of Withdrawal of GSP

3. Tariff Notification No. 90/2019-CUSTOMS (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

4. India’s Foreign Trade: November 2019

5. CCI approves acquisition of shares in SBI General Insurance by Napean Opportunities LLP

6. CCI approves acquisition of shares in SBI General Insurance by Honey Wheat

7. Presentation made by Dr. A.B. Pandey, Revenue Secretary, on major initiatives taken on taxation

8. Presentation made by Chief Economic Adviser K. Subramanian on measures taken to boost Indian Economy

9. Winter Session of Parliament concludes

10. Citizenship (Amendment) Act, 2019

11. Taxation Laws (Amendment) Act, 2019

12. National Financial Reporting Authority issues Audit Quality Review report of the statutory audit for 2017-18 of IL & FS Financial Services Limited

Notifications

Customs

1. 65/2019-Customs (N.T./CAA/EXTENSION/DRI) - dated 11-12-2019 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

GST

2. 67/2019 - dated 12-12-2019 - CGST

Seeks to extend the due date for furnishing of return in FORM GSTR-3B for registered persons in Jammu and Kashmir for the month of October, 2019

3. 66/2019 - dated 12-12-2019 - CGST

Seeks to extend the due date for furnishing of return in FORM GSTR-3B for registered persons in Jammu and Kashmir for the months of July, 2019 to September, 2019

4. 65/2019 - dated 12-12-2019 - CGST

Seeks to extend the due date for furnishing of return in FORM GSTR-7 for registered persons in Jammu and Kashmir for the months of July, 2019 to October, 2019.

5. 64/2019 - dated 12-12-2019 - CGST

Seeks to extend the due date for furnishing of return in FORM GSTR-1 for registered persons in Jammu and Kashmir having aggregate turnover more than 1.5 crore rupees for the month of October, 2019.

6. 63/2019 - dated 12-12-2019 - CGST

Seeks to extend the due date for furnishing of return in FORM GSTR-1 for registered persons in Jammu and Kashmir having aggregate turnover more than 1.5 crore rupees for the months of July, 2019 to September, 2019

GST - States

7. D.C. (A&R)-2/GST/PWR/Sections/2017-18/ADM-8 - dated 4-12-2019 - Maharashtra SGST

Delegation of Powers to S.T.O. for certain Sections under MGST Act

8. 1956-F.T. - dated 6-12-2019 - West Bengal SGST

Amendment of notification No. 1639-F.T. dated 14.09.2019 regarding State representative of Appellate Authority for Advance Ruling

Circulars / Instructions / Orders

Central Excise

1. 1074/07/2019 - dated 12-12-2019

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Highlights / Catch Notes

Income Tax

• Tax Exemption Withdrawn: Section 54B Breach Due to Early Sale of Urban Agricultural Land.

  Case-Laws - HC : LTCG - withdrawal of exemption u/s 54B - sale of new land within lock in period - In the case on hand, we are concerned with the capital gains with respect to the first transaction, i.e. the sale of urban agricultural land. We are not concerned with the second transaction of the sale of the rural agricultural land. - the assessee would be required to pay tax on the exemption claimed earlier.
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• Company Switching from EPZ to SEZ Eligible for Extra 5-Year Tax Deduction u/s 10AA After 10-Year Exemption.

  Case-Laws - AT : SEZ unit - Deduction u/s 10AA - conversion of EPZ unit to SEZ unit - eligibility for additional 5 years after availing benefit of exemption u/s 10A for 10 years - assessee is entitled for deduction u/s 10AA(1)(ii) of the 1961 Act for the impugned assessment year, subject to fulfilment of other conditions.
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• Income from Offshore Equipment Supply Taxed Only for Indian Operations Under India-Japan DTAA.

  Case-Laws - AAR : Accrual of income - offshore supply of equipments and materials etc. including supply of spares - DTAA between India and Japan - where all the operations are not carried out in India, only that part of income which can be reasonably attributed to the operations in India, would be deemed to accrue or arise in India.
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• Prosecution Upheld: Sanction by Principal Director of Income Tax u/s 279 Valid, Petition Dismissed for Irregularity.

  Case-Laws - HC : Prosecution proceedings - validity of sanction has been granted by Principal Director of Income Tax (PDIT) u/s 279 - Though Section 279 of the Act starts with non-obstante clause, the said error or omission is not considered to be a illegality, but it will be only irregularity - it will not amounts to failure of justice - Petition dismissed.
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• Property for Staff Housing Not Taxable u/s 22: No Rent Charged for Security and Driver Accommodation.

  Case-Laws - AT : Addition of income - notional and estimated rent - once the property in question is shown by the assessee as part of its fixed assets and it was used only for the stay of the security guard and driver of the assessee without charging any rent then said property cannot be assessed to income tax u/s 22
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• Interest and Partner Remuneration Deductions Overturned by Section 184(5); Revision Proceedings u/s 263 Validated.

  Case-Laws - AT : Revision u/s 263 - AO allowed the deduction of interest and remuneration to partners while passing order u/s 144 ignoring the provisions of section 184(5) - once the assessment is completed under section 144 of the Act, the provision of section 184(5) of the Act gets triggered automatically and it will override all other provisions of the Act. - Revision proceedings are valid.
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• Penalty Deleted: Officer Imposed Section 271(1)(c) Without Specifying Charges, Overlooked Section 271AAB for Search Cases.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income - There is separate provision for penalty in search cases given u/s 271AAB which was totally ignored by the Assessing Officer - Penalty deleted.
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Customs

• Tribunals Can't Dismiss Appeals for Non-Prosecution; Must Address Merits, May Impose Costs for Delays.

  Case-Laws - HC : Tribunals are not Constitutional Courts - if repeated adjournments were sought, the learned Tribunal could impose some costs on the appellant, but the appeals could not have been dismissed for want of prosecution or without deciding the merits of the case even though ex-parte, if it becomes necessary.
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IBC

• Sales Tax Department Challenges Resolution Plan in Insolvency Case, Argues Claims Differ from ESIC and Provident Fund Contributions.

  Case-Laws - AT : Validity of Resolution plan - the Appellant - 'Sales Tax Department' claim an Operational Creditor cannot equated with the ESIC Employees Contribution; ESIC Employers Contribution; Provident Fund Employees and Provident Fund Employers and no discrimination can be alleged.
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Service Tax

• Tax Authority Must Justify Service Tax Levy; Burden Not on Appellant to Prove Exemption.

  Case-Laws - AT : Demand of service tax - there must be a ‘levy of Tax’ for anyone to claim the benefit of exemption from such ‘levy of Tax’. The Department could have come up with sufficient cause to inflict the levy of Tax on the activities undertaken by the Appellant- rather than seeking the Appellant to prove the cause of non-levy of Service tax.
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Central Excise

• Government Launches Sabka Vishwas Scheme 2019 to Resolve Central Excise and Service Tax Disputes, Easing Compliance

  Circulars : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
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• Beneficiale Liquid and DSN Capsules Classified Under Tariff Heading 3004, Eligible for Area-Based Exemption Benefits.

  Case-Laws - AT : Classification of goods - Beneficiale Liquid - DSN capsules - There is no justification of classification of the two products in question under heading 2106, but they are appropriately classifiable under Tariff Heading 3004 of Central Excise Tariff Act - Benefit of area based exemption allowed.
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• Company Wins Right to CENVAT Credit for Goods Purchased 'As Such' from Supplier u/r 3(5.

  Case-Laws - AT : CENVAT Credit - the appellant company receiving input from the supplier who has removed the said goods ‘as such’ (being bought out goods) is legally entitled to credit even if the said goods have not been manufactured by the supplier.
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• CENVAT Credit Valid for Capital Goods Used in Generating Electricity for Dutiable Products, Despite Exempt Intermediate Products.

  Case-Laws - AT : CENVAT Credit - capital goods - electricity generated from such capital goods was captively consumed for the manufacture of dutiable final products - even if such intermediate product is exempt from excise duty, Cenvat credit on the capital goods cannot be denied in terms of para 3 of the Board Circular
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• CENVAT Credit Exemption: Refund Limited to Duty Paid in Cash, Goods Must Not Be Exempted for Credit Eligibility.

  Case-Laws - AT : CENVAT Credit - the exemption benefit was only to the extent of refund of duty paid in cash and hence there is no reason to label the goods as exempted goods. The units availing the exemption in question were very much eligible to avail credit - Credit allowed.
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• Penalty Imposed for Wrong Availment of CENVAT Credit Reversed Before Show Cause Notice; Max Fine Rs. 5,000 u/r 26.

  Case-Laws - HC : Imposition of penalty u/r 26(2) of CER, 2002 - CENVAT Credit - Wrong availment of credit and reversal thereof on being pointed out before the issue of SCN - maximum penalty which can be imposed is only ₹ 5000/- under Rule 26 of the Central Excise Rules, 2002 r.w.s. 37(3)
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Case Laws:

• Income Tax

• 2019 (12) TMI 537
  LTCG - withdrawal of exemption u/s 54B - lock in period - sale of agriculture land - purchased a new agriculture land (not being a capital asset) - sale of new land within one year after purchase - Held that:- After acquiring the new agricultural land (be it a rural agricultural land), if the new rural agricultural land is transferred within a period of three years from the date of purchase, then the tax exemption allowed earlier would be liable to be withdrawn. In such a case, the assessee is required to pay tax on the exemption claimed earlier. We fail to understand why lot of emphasis has been put on the fact that as the rural agricultural land does not constitute a capital asset, the capital gain tax is not levied on the sale of such rural agricultural land. There need not be any debate on this issue. No capital gains will arise on the sale of the agricultural land situated in a rural area as it is specifically excluded from the definition of the term capital asset . However, the capital gains will arise on the sale of the agricultural land situated in a non-rural area. In the case on hand, we are concerned with the capital gains with respect to the first transaction, i.e. the sale of urban agricultural land. We are not concerned with the second transaction of the sale of the rural agricultural land. In such circumstances, after acquiring the new agricultural land (rural or urban), if the new agricultural land is transferred within a period of three years from the date of the purchase, then the tax exemption allowed earlier (i.e. with respect to the first transaction of sale or urban agricultural land) would be withdrawn. In such a case, the assessee would be required to pay tax on the exemption claimed earlier. Decided against the assessee.

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• 2019 (12) TMI 536
  SEZ unit - Deduction u/s 10AA - conversion of EPZ unit to SEZ unit - eligibility for additional 5 years after availing benefit of exemption u/s 10A for 10 years - Additions u/s 40(a)(i) for non deduction of TDS - validity of assessment order passed u/s 143(3) - assessee is in business of manufacturing and export of pillows and cushions. - The assessee unit got itself converted into an SEZ unit during previous year relevant to ay: 2003-04 but can it be said that it begins to manufacture or produce goods or articles in SEZ in previous year relevant to ay: 2003-04. Held that:- The answer is emphatic no , the assessee unit begins to manufacture or produce pillows or cushions in previous year relevant to ay: 2001-02 in MEPZ and once the unit begins to manufacture or produce articles in previous year relevant to ay: 2001-02 , then it cannot be said that it again begins to manufacture or produce articles in SEZ when it got converted itself from EPZ unit to SEZ unit. - It is merely a conversion of EPZ unit into an SEZ unit but the fact remains that unit was already in operation since previous year relevant to ay: 2001-02 onwards and it could not be said the unit of the assessee begins to manufacture or produce articles or things or computer software in the previous year relevant to assessment year 2003-04 in SEZ as it is a clear case of mere conversion of EPZ into an SEZ and not setting up of new unit in SEZ. The assessee was entitled for deduction u/s 10A for a period of a ten consecutive assessment years commencing from ay: 2001-02 onwards and provisions of Section 10A(1) will continue to apply to it even after being converted into an SEZ unit effective from 01.01.2003 keeping in view second proviso to Section 10A(1) of the 1961 Act. The intention of law makers is manifestly clear that they intent to apply Section 10A(1A) to newly set up units in SEZ during previous year relevant to ay: 2003-04 onwards as terminology used in begins to manufacture and the word begun is conspicuously missing in Section 10A(1A) and by no stretch of imagination provisions of Section 10A(1A) can be made applicable to existing EPZ/FTZ units which got themselves converted into an SEZ unit which shall continue to be governed by provisions of Section 10A(1) of the 1961 Act. Careful perusal of sub-section 7B of the 1961 Act which was inserted in Section 10A of the 1961 Act by SEZ Act, 2005 w.e.f. 10.02.2006, clearly reveals that it excludes applicability of entire Section 10A to any undertaking , being a Unit referred to in clause (zc) of Section 2 of the SEZ Act, 2005 which has begun to manufacture or produce articles or things or computer software in SEZ or begins to manufacture or produce articles or things or computer software commencing on or after the 1st day of April 2006. Thus , the objective of using the word begun is to exclude applicability of Section 10A to all the units in SEZ effective from insertion of Section 10AA of the 1961 Act and henceforth provisions of Section 10AA shall be applicable to units in SEZ, even if these units are existing units in SEZ on or before commencement of SEZ Act, 2005. These SEZ units shall be entitled for deduction for further period of 5 years beyond period of ten consecutive assessment years owing to newly inserted Section 10AA of the 1961 Act keeping in view provisions of Section 10AA(1)(ii) of the 1961 Act. Thus, vide our detailed discussions above, we hold that the assessee is entitled for deduction u/s 10AA(1)(ii) of the 1961 Act for the impugned assessment year, subject to fulfilment of other conditions for grant of deduction u/s 10AA of the 1961 Act. We order accordingly. Addition u/s 40(a)(i) r.w.s 9(1)(vii) - TDS u/s 195 - payment to foreign agents for procuring sales orders - Held that:- Be that it may be but learned CIT(A) has not adjudicated this issue in its appellate order on merits for impugned assessment year under consideration and has simply dismissed appeal of the assessee at threshold on the ground that no written submissions are filed by assessee on this issue and in the interest of substantial justice, this issue need to be restored to the file of learned CIT(A) for fresh adjudication on merits in accordance with law.

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• 2019 (12) TMI 535
  Carry forward and set of the unabsorbed depreciation u/s 32(2) of the Act Effect of amendment under Finance Act 2001 w.e.f. 01.04.02 - ITAT decided the issue against the revenue - Held that:- Considering the submission made and keeping in view the observations made by the learned Tribunal as quoted above, we are in complete agreement with the view taken by the learned Tribunal in the impugned order and find no case is made out to interfere with the same.

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• 2019 (12) TMI 534
  Accrual of income - offshore supply of equipments and materials etc. including supply of spares - DTAA between India and Japan - Scope of the term a transaction u/s 245N for advance ruling - the property in the goods and the title had passed outside India and the payment was also received in foreign currency outside India. - The Bill of Lading named JSW as the consignee of the goods and the commercial invoice was drawn by the applicant on JSW. Further, the Marine Insurance Policy was taken by the purchaser on its own for all the equipments supplied by the applicant under the contract for any loss/damage during transit after FOB delivery on the basis of INCOTERMS 2000. Held that:- In view of the above interpretation of a singular word as given by the various Courts under Income Tax Act as well as other Acts, it is crystal clear that a transaction appearing in Section 245N(a) of the Act would include more than one transaction. The provisions of the Income Tax Rules, the Notes to Form No, 34C and the clarification issued by the CBDT vide 0M dated 28-08-2019 fortify this interpretation. However, a question may arise whether an applicant can file one application in respect of two unrelated set of transactions. In our opinion as the advance ruling is in respect of a transaction , an applicant can file one application in respect of related set of transactions. If the facts and circumstances of the two transactions are not identical and totally different, then such transactions may not be clubbed in one application. The facts clearly establish that the supply of equipment and material was made outside India and thus the transfer of title to the equipment and materials also took place while the goods were outside the territory of India. The payment for the offshore supply of equipments was also made outside the country in foreign currency as per the terms of contract. The revenue has relied upon the enquiries made from JSW in respect of the contention that all the seven contracts were not independent but part of the composite contract. This admission of JSW that the seven contracts were not evaluated separately and the evaluation was done from the entire package, does not prove that the contract was composite. It was further submitted that JSW had confirmed that the contract was split at the request of Nippon Steel. This submission is not found to be correct. The revenue has alleged a lop-sided attribution of cost to the contract for offshore supply of materials and equipments without any concrete evidence. The revenue has neither placed any material in support of such suspicion nor has any transfer pricing adjustment made in the case of the payee been brought on record to substantiate the same. The principle of apportionment of income on the basis of territorial nexus is now well accepted. Explanation I(a) to section 9(l)(i) of the Act stipulates that where all the operations are not carried out in India, only that part of income which can be reasonably attributed to the operations in India, would be deemed to accrue or arise in India. It, therefore, follows that in a composite contract where only a part of the operations is to be carried out in India, the assessee would not be liable for part of income that arises from operations conducted outside India. Existence of PE in India - The applicant does not have any fixed place of business through which its business was wholly or partly carried on to be considered as PE under Article 5.1. As per Alticle 5.3 of India-Japan DTAA, a building site or construction, installation or assembly project constitutes PE, only if it had lasted for more than six months. Similarly as per Article 5.4, for the supervisory activities to constitute a PE, such activity should be carried on for more than six months. No such evidence has been brought on record by the revenue in respect of offshore supply contracts. There is no dispute to the fact that the applicant had a supervisory PE which was in respect of contract for supervision services and the income in respect of this supervisory PE had already been offered to tax in India. The revenue has alleged that the supervisory PE was also involved in offshore supply contract for equipments, for which no evidence has been brought on record. Further, from th terms of the contract as already discussed earlier, there is no element of Fee for Technical Services (FTS) involved in the contracts for offshore supply of equipments. The amounts received/receivable by Nippon Steel Engineering Co., Ltd. under contracts for offshore supply of Coke Dry Quenching (CDQ) Units for CO 3 AND CO # 4 vide Contract # JSWPL/VJNR/CDQ/OOI for Japan portion and Contract # JSWPL/VJNR/CDQ/002 for China portion dated 30 September 2010 awarded by JSW Projects Ltd., are not chargeable to tax in India under the provisions of Income-Tax Act 1961 and Double Taxation avoidance agreement between India and Japan

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• 2019 (12) TMI 533
  Prosecution proceedings - validity of sanction has been granted by Principal Director of Income Tax (PDIT) u/s 279 - Petition contended that, sanction has to be given only by Principal Commissioner who is heading the assessment wing - intent of the legislation - offence punishable under Sections 276 (C)(1), 277, 278 - escapement of the income tax in the middle of the financial year - The moot question which arise for consideration of the Court is that whether the proceedings initiated are going to vitiate the entire proceedings without concluding the adjudicatory proceedings under the Act. Held that:- No provision of the Income Tax Act provides that a prosecution for the offence cannot be launched until reassessment proceedings are initiated against the assessee and are completed. They are two different proceedings and it has also been the law laid down by the Hon ble Apex Court that the finding in the adjudication proceedings are not binding in the Criminal Court or if adjudication proceedings are decided on merits without contravention to the criminal proceedings and on the similar proceedings if a criminal proceedings have been launched, then under such circumstances it can be said to be abuse of process of the Court. - the contention raised by the learned Senior counsels appearing for the petitioners is not having any force, the same is liable to be rejected. Under Article 13 of the Constitution of India, there also the interpretation of unless the context otherwise has been interpreted. Law has been defined and it includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India, the force of Law. When the said Notification has been challenged and not yet finalized with regard to legality or otherwise, in that light, Notification dated 13.11.2014 as per Article 13 of the Constitution of India is having a force of law and by virtue of the said authority, if the sanction has been issued by the Principal Director of Commissioner, then under such circumstances, it cannot be held that he is not having any authority to issue the sanction order. While seeing the intention and otherwise of the enactment, subsequent notification, amendments, ordinance and other aspects have to be seen conjointly. They cannot be read independently. In that light, the contention taken up by the petitioners is not having any force. If the sanction is invalid on any of the grounds, then under such circumstances, sine-qua-non taking the cognizance of the offence itself is going to vitiate the entire proceedings. When the sanction order has been challenged on any other grounds and the only ground raised is that it has been issued by a non-competent authority and if by virtue of Notification any authority has been given, then under such circumstances it cannot be held that the sanction has not been granted by a proper and a competent authority. Though Section 279 of the Act starts with non-obstante clause, the said error or omission is not considered to be a illegality, but it will be only irregularity. If it is irregularity, then it will not amounts to failure of justice and even it has been observed by the Hon ble Apex Court, subsequently the sanction can also be obtained for prosecuting the accused. Taking into consideration the above facts and circumstances as discussed above in detail, the petitioners-accused have been found escaping huge tax which is going to affect the economy of the country. Under such circumstances prima facie petitioners-accused have not made out any grounds so as to interfere with the order of the trial Court. The petitions are devoid of merits and the same are liable to be dismissed and accordingly they are dismissed.

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• 2019 (12) TMI 521
  Levy of penalty u/s 271(1)(c) - concealment of income or furnishing of inaccurate particulars of income? - the CIT(A) levied penalty u/s 271(1)(c) of the Act but under which limb of Section 271(1)(c), the penalty is levied was not mentioned in the notice issued under Section 271(1)(c) read with Section 274 of the Act - case of assessee is that the penalty provision being quasi judicial, unless there is specific charge there cannot be levy of penalty - HELD THAT:- In the notice issued u/s 274 r.w.s 271(1)(c) of the Income Tax Act, 1961, there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income - From the notice dated 27/3/2015 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee s case. There is separate provision for penalty in search cases given under the statute after 01.07.2012 that of Section 271AAB of the Act which was totally ignored by the Assessing Officer. While dealing with this contention, the CIT(A) has taken the due date that of filing of return of income i.e. 31.08.2007 which is contrary to Section 271AAB of the Income Tax Act, 1961. Thus, the penalty itself is based on incorrect Section. Therefore we are taking up the contention of the assessee that there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. The penalty levied u/s 271(1)(c) is not sustainable and has to be deleted - notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law - appeal of the assessee is allowed.

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• 2019 (12) TMI 518
  Reopening/revision of assessment - various expenses incurred/claimed by the assessee to arrive at net figure not correctly examined by AO - case of assessee is that the observations made by learned PCIT is of general nature without revealing any specific instance of lapse or non enquiry by the Assessing Officer, and, the order passed under section 263 of the Act deserves to be quashed. HELD THAT:- On a perusal of the impugned assessment order, it is seen that the Assessing Officer has specifically stated that the requisite details called for as per the questionnaire were not only placed on record but were duly verified by him. He has also referred to assessee s explanation and reconciliation of the AIR information/Form no.26A. Thus, as could be seen from the facts on record, the Assessing Officer in the course of assessment proceedings, has examined and enquired into the income shown by the assessee in the Profit Loss Account and has also verified the details of expenditures claimed. The allegation of learned PCIT that the Assessing Officer has not made any enquiry on the issues referred to by him is without any basis and contrary to the facts and materials on record - Also, on a perusal of the impugned order of learned PCIT, it is noticed that he has not pointed out even a single defect or deficiency in the evidences filed by the assessee. Even, he has not dealt with a single item of expenditure, which according to him, is either non genuine or unreasonable - Thus, prima facie, it appears that learned PCIT has exercised his power under section 263 of the Act to initiate a roving and fishing enquiry without pointing out any specific error in the assessment order which made it erroneous and prejudicial to the interests of Revenue. The basic conditions of section 263 of the Act in the present case are not fulfilled - the order passed under section 263 of the Act is quashed - appeal allowed.

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• 2019 (12) TMI 517
  Revision u/s 263 - AO allowed the deduction of interest and remuneration to partners while passing order u/s 144 ignoring the provisions of section 184 - Hawala Transactions - allegation that the assessee is a beneficiary of accommodation entries provided by some entities identified as hawala operators - in spite of the statutory notice issued under section 143(2) of the Act, the assessee neither appeared nor made any compliance - AO has completed the assessment invoking the provisions of section 144 of the Act, to the best of his judgment. Whether the assessment order passed is erroneous and prejudicial to the interests of Revenue due to non application of the provision contained under section 184(5) of the Act while allowing interest / remuneration paid to the partners? HELD THAT:- In the facts of the present case, admittedly, the Assessing Officer has completed the assessment under section 144 of the Act to the best of his judgment alleging non compliance to the statutory notices issued under section 142(1) and 143(2) of the Act. Provisions of section 184 of the Act lay down the procedure for the assessment in case of a partnership firm. Sub section (5) of section 184 of the Act, which begins with a non obstante clause, makes it clear that in a case where the assessment is completed under section 144 of the Act for any such failure on the part of the firm as mentioned in the said provision, assessment has to be made without allowing any deduction by way of payment of interest, salary, bonus, commission or remuneration, etc., to any partner. Thus, once the assessment is completed under section 144 of the Act, the provision of section 184(5) of the Act gets triggered automatically and it will override all other provisions of the Act. In the facts of the present case, by the very reason of the Assessing Officer completing assessment under section 144 of the Act, the provision of section 184(5) would automatically come into play. However, while completing the assessment, the Assessing Officer completely overlooking the provisions of section 184(5) of the Act has allowed deduction on account of interest / remuneration paid to partners - In the facts of the present case, the failure on the part of the Assessing Officer to apply or at least even examine the applicability of section 184(5) of the Act, certainly makes the assessment order erroneous and prejudicial to the interests of Revenue. Therefore, the exercise of power under section 263 of the Act to revise the assessment order is valid. Appeal dismissed.

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• 2019 (12) TMI 516
  Addition of income - interest from savings bank a/c, Interest on FDR, Interest from parties and rent of land - AO in the assessment order passed u/s 143(3) of the Act disallowed the deduction of interest u/s 57(iii) of the Act on the ground that the assessee failed to establish that the expenditure was incurred for earning interest income - HELD THAT:- There is no dispute that in the return of income the assessee has shown entire income as income from other sources which includes interest from saving bank a/c, interest from FDR and interest from parties. It is pertinent to note that an identical issue was also arisen for the Assessment Year 2013-14 and the AO had allowed the claim of interest expenditure to the extent of interest income received from various parties. Thus it appears that interest received by the assessee against these parties for the Assessment Year 2013-14 was accepted by the AO and corresponding interest was also allowed by the AO - The assessee challenged the said action of the AO restricting the claim of deduction on account of interest expenditure to the interest income. However, the ld. CIT(A) while passing the order dated 19-12-2017 for the Assessment Year 2013-14 has confirmed the action of the AO. The claim of interest expenditure of the assessee to the interest income of Rs. 3.57 lacs is allowed - the appeal of the assessee is partly allowed.

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• 2019 (12) TMI 515
  Addition of income - notional and estimated rent - deduction u/s 24(1) - HELD THAT:- As per books of account, this property was shown as a part of the fixed assets which means that the property was shown in the books of account as business assets of the assessee. Since the property was under construction, therefore, the same cannot be considered house property for the purpose of section 22 of the Act until and unless the construction of the house is completed in all respects - The AO has not considered the state of the building in question whether it is a bare structure without having all the basic amenities/ facilities and compared the same with another property which was let out on rent. Therefore, once the property in question is shown by the assessee as part of its fixed assets and it was used only for the stay of the security guard and driver of the assessee without charging any rent then said property cannot be assessed to income tax u/s 22 of the Act - the addition made by the AO on account of income from house is not justified and the same is deleted - in favor of assessee. Disallowance of expenses - repair and maintenance expenses - HELD THAT:- As regards the repairs and maintenance expenses incurred in respect of property bearing No. 125, Mahaveer Nagar-1, Kota, the AO determined the annual rental value and allowed deduction u/s 24 of the Act, however the said addition made by the AO to the income from house property is deleted and consequently the repairs and maintenance expenses to the extent of said property shall be capitalized as assessee has claimed that construction was not completed during the year under consideration - There are no reason to interfere with the order of the authorities below in disallowing the said of expenditure on account repairs and maintenance - decided against assessee. Appeal of the assessee allowed in part.

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• Customs

• 2019 (12) TMI 531
  Maintainability of appeal - appeal was dismissed for want of prosecution - only grievance in the present appeal is that CESTAT could not have dismissed the appeals for want of prosecution, contrary to the decision of the Hon ble Supreme Court in the case of Balaji Steel Re-rolling Mills v. Commissioner of Central Excise Customs [2014 (11) TMI 531 - SUPREME COURT] . HELD THAT:- The learned Tribunal has erred, with great respect, in unnecessarily finding ways to distinguish the ratio and applicability of the said judgment of the Hon ble Supreme Court in the case of Balaji Steel Re-rolling Mills, which was binding on all the lower Courts and the Tribunals without exception and, therefore, the learned Tribunal was bound to decide the appeals on merits. Being the final fact finding body, a duty is cast on the learned Tribunal to decide the appeals on merits. Tribunals are not Constitutional Courts. At the same time, if repeated adjournments were sought, the learned Tribunal could impose some costs on the appellant, but the appeals could not have been dismissed for want of prosecution or without deciding the merits of the case even though ex-parte, if it becomes necessary. Appeal allowed - appeals restored.

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• 2019 (12) TMI 529
  Revocation of CB / CHA License - forfeiture of security deposit - mis-declaration of imported goods - alleged violation of Regulation No. 11(a), (d), (e), (f) and (l) of CBLR, 2013 - HELD THAT:- There is no independent appreciation of the facts, neither appreciation of the conduct of the appellant CB over the last several years. The impugned order is more or less repetition of the show cause notice. The learned Commissioner failed to appreciate that in the facts and circumstances, the appellant have no role in obtaining IEC of M/s Apollo Enterprises or misdeclaration of the goods. The appellant was under bonafide belief that the importer is genuine and goods were declared as per the import documents. Hence, the revocation of the CB licence without any serious fault on their part, is not warranted and wrong - Further, it is evident from the statement recorded of Shri Samir Shah, Shri Ashok Purohit and Shri Shantaram Kajrekar that the appellant was not aware about the illicit procurement and use of the IEC of M/s Apollo Enterprises by Shri Ashok Purohit. Thus, the impugned order holding violation of provisions of Regulation 11(a), 11(d), 11(e), 11(f) and 11(n) of CBLR, 2013 is perverse and none of these provisions are attracted in the facts and circumstances of the case. There is no allegation of filing the bill of entry, knowingly the same to be misdeclared. There is no case of connivance of the appellant CHA with the actual importer of the goods namely Shri Ashok Purohit. There is no allegation by the Revenue that the appellant CHA received any extra remuneration, than the normal remuneration for filing the bill of entry under dispute. The appellant CB /CHA have erred in not receiving the KYC documents directly from the hands of the IEC holder - Shri Shantaram Kajrekar. Further, as the documents were received through Shri Samir Shah relative of partner, there was an element of trust. Thus, there is some element of inadvertance on the part of the appellant-CHA. There is no case of malafidely filing the bill of entry under collusion and /or connivance, with the said Shri Ashok Purohit or Shri Samir Shah. In this view of the matter, the punishment of revocation is too harsh and disproportionate. Accordingly, this appeal in part and the order of revocation is set aside - So far as the forfeiture of security deposit is concerned, the same is reduced to Rs. 1,00,000/- - appeal llowed inpart.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 514
  Approval of Resolution plan - Section 30 (6) of Insolvency Bankruptcy Code, 2016 - qualification of Resolution Professional - HELD THAT:- Resolution Plan submitted by Resolution Applicant Consortium of Sri City Private Limited and KCR Enterprise LLP ( Resolution Applicant ) along with the addendum which is approved by members of CoC having 75.91% voting share stands approved as per Section 31(l) of the Code. In other words we are satisfied with the Resolution Plan as approved by Committee of Creditors under Section 30(4) of the Code and it meets the requirement as referred to in Section 30(2) of IBC, 2016. Accordingly, the Resolution Plan stands approved and the same is binding on Corporate Debtor, its employees, Members, Creditors including the Central Government, any State Government or any Local Authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, Guarantors and Stakeholders involved in the Resolution Plan in terms of Section 31(l) of the Code. The moratorium order passed under Section 14 shall cease to have effect from today.

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• 2019 (12) TMI 513
  Validity of Resolution plan - grievance of the Appellant is that the Resolution Plan is discriminatory as it reduced the claim of the appellant to Rs. 1,375,000/- in place of admitted claim of Rs. 2,21,92,393/- - HELD THAT:- The amounts towards ESIC Employees Contribution ; ESIC Employers Contribution ; Provident Fund Employees and Provident Fund Employer do not come within the meaning of the Operational Debt . Therefore, the Appellant - Sales Tax Department claim an Operational Creditor cannot equated with the ESIC Employees Contribution; ESIC Employers Contribution; Provident Fund Employees and Provident Fund Employers and no discrimination can be alleged. In absence of any infirmity in the impugned order, this appeal is dismissed.

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• Service Tax

• 2019 (12) TMI 526
  Erection and Commissioning Services - Burden to prove that the activity is taxable before considering the benefit of exemption notification - Site formation, Clearance, Excavation Earthmoving activities - Demand of service tax - proviso to Section 73(1) of the Finance Act, 1994 - N/N. 17/2005-ST dated 07-06-2005 - extended period of limitation - HELD THAT:- On perusal of the Contract executed with M/s.Adhunik Infrastructures Pvt. Ltd (refer Annexure-11 of the Appeal Memorandum), it is found that the work order issued is principally for the construction of Road. Thus, we agree with the contention of the Appellant that the activities of construction of Road gets covered under the statutory definition of Commercial Construction Service given under Section 65(105)(zzq) of the Finance Act, 1994 and is subjected to the levy of Service tax at appropriate rate. Based on the above, we hold the interpretation of the Original Authority in classifying the activities undertaken by the Appellant for M/s.Adhunik Infrastructures Pvt. Ltd. to be the taxable services under Section 65(105)(k) and 65(105)(zzzzj), to be erroneous and incorrect. Appellant has also drawn our attention to the provisions of 65(25b) of the Act wherein, the activity/service of Commercial or Industrial Construction purposefully, excludes the services provided in respect of construction of roads from the very definition of taxable service given under section 65(105) of the Act ibid - We are in total agreement with the Appellant s contention that the taxable services defined under Section 65(25b) has categorically excluded the activities of construction of road from the scope of levy of Service Tax. Even otherwise also, we find that the Activities relating to the construction of road has been placed under the exemption notification No.17/2005-ST dated 07-06-2005 so as to grant benefit to the service providers from being taxed. Thus, the Appellant qualifies in its claim for the non-levy of Service Tax on such activity of construction of Road, rendered to M/s.Adhunik Infrastructures Pvt. Ltd. and accordingly, the SCN fails on this aspect. In the instant case, it is relevant to place here that first of all, there must be a levy of Tax for anyone to claim the benefit of exemption from such levy of Tax . The Department could have come up with sufficient cause to inflict the levy of Tax on the activities undertaken by the Appellant- rather than seeking the Appellant to prove the cause of non-levy of Service tax. Moreover, the cause placed by the Department for the imposition of levy of Service tax cannot be a mere assertion based on the assumptions or presumptions envisaged in the SCN and instead, such assertions should be beyond reasonable doubt to inflict the levy of Tax upon the Appellant herein - In the present case, the tax imposed on the activities undertaken by the Appellant ceases to have the essence of a Taxable Service, and therefore the rational connection between the Tax imposed and the person on whom it is imposed, ceases to exist. Extended period of limitation - HELD THAT:- The Revenue Department alleging the Appellant of the act of Non-disclosure of the events/affairs of their business and income made there from, is not acceptable. The Original Authority holding the Act of the Appellant as a Suppression of Fact with an intention to evade the payment of Service Tax sounds hollow and is not admissible - The Proviso to the Section 73(1) of the Act attracting the extended period of limitation of 5 years is inapplicable and the demand of Service Tax in toto, proposed in the SCN and upheld in the Original Order is barred by limitation of time. As the entire demand of tax confirmed in the Original order being quashed on merits as well as the SCN being construed as barred by limitation of time, the imposition of penalty of Rs. 1,00,000/- on Shri Mahendra Kumar Gupta, Managing Director of the Appellant-Assessee under Section 78A of the Act, bears no strength to stand on its own and is thus, quashed herewith. Appeal disposed off.

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• 2019 (12) TMI 524
  CENVAT Credit - trading activity - common input services - transportation of vehicles upto the premises of appellant - demand on the ground that the credit availed on services on the ground that trading activities are exempted services for the purpose of Credit Rules - HELD THAT:- The Credit Rules specifically provided that trading activities have to be considered as exempted service and therefore the assessee cannot claim the benefit of CENVAT credit to the extent the input service attributable to trading activities. The Tribunal s decision in the case of Shariff Motors [ 2009 (3) TMI 155 - CESTAT, BANGALORE ] relied by the appellant pertained to the period prior to the date of amendment in the Credit Rules whereby the trading activity has been deemed to be exempted service and therefore, the said decision has no application in the present case - thus, the appellant is not entitled to credit pertaining to trading activities. Penalty - HELD THAT:- The appellant has deposited the service tax amount with interest which is duly recorded in the adjudication order - there was a reasonable cause for non-payment of service tax prior to initiation of proceedings and therefore, the appellant is entitled to the benefit of Section 80 of the Finance Act, 1994 for waiver of penalty - penalty set aside. Appeal allowed in part.

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• Central Excise

• 2019 (12) TMI 530
  Imposition of penalty u/r 26(2) of CER, 2002 - CENVAT Credit - the buyers had or were likely avail such credit of such duty under the provisions of the CENVAT Credit Rules, 2004 - the appellant had not only reversed the credit at the time of removal of the goods and again before the issue of SCN on the mistake being pointed out - It is contention of the revenue that having purchased the goods from the second stage dealer, the appellant ought not to have passed on input credit on the strength of a CENVATABLE excise invoice and therefore the appellant was liable to pay the penalty equivalent to the benefit that was available to the buyers on account of the invoice issued by the appellant. HELD THAT:- The power to impose penalty under the provisions of the Central Excise Rules, 2002 is traceable to Section 37 of the Central Excise Act, 1944. As per Section 37 (3) of the said Act the central government can make rules to impose penalty of Rs. 5000 where no other penalties is provided under the Act - Under 37 (4) of the Central Excise Act, 1944, which is an exception to sub-clause (3), any manufacturer, producer or licensee of a warehouse can be made liable to a penalty not exceeding the duty leviable on such goods or ten thousand rupees, whichever is greater. It specifies specific instances for which Rules can be framed. From a reading of the above Sub-Sections to Section 37, it is evident that penalty under Rule 26 of Central Excise Rules, 2002 is traceable to power vested with the Rule making authority under Sub-clause (3) and not under Sub clause (4) of Section 37 of the Central Excise Act, 1944. Therefore, maximum penalty which can be imposed is only Rs. 5000/- under Rule 26 of the Central Excise Rules, 2002 - Even otherwise, the language adopted in Clause (ii) to Sub- Rule (2) to Rule 26 is clear. Any person, who issues any excise duty invoice without delivery of goods specified therein or abets making such invoice; or any other document or abets in making such document, on the basis of which the user of the said invoice or document is likely to take or has taken any in-eligible benefit under the Act or the rules made their under like claiming of Cenvat Credit under the Cenvat Credit Rules, 2004 or refund, such person shall be liable to a penalty not exceeding the amount of such benefit passed on or Five Thousand Rupees, which ever is greater. Section 7(5) of the said Act cannot be regarded as confiscatory. For the present case, it will suffice to state that the penalty under Rule 26(2)(ii), is relatable only to penalty under Section 37(3) of the Central Excise Act, 1944 and therefore, there is no scope to levy penalty above Rs. 5000 under Rule 26(2)(ii) of the Central Excise Rules, 2002 when read in harmony with Section 37(3) of the Central Excise Act, 1944 - the appellant has not committed any fraud. The appellant has also compensated the revenue for any perceived loss to the revenue. Rule 26(2) is intended only to target those manufacturers and dealers who create fictitious invoice/documents to enable a buyers to wrongly avail ineligible of Cenvat Credit without actual supply by them or removal of goods. The intention of the rule making authority under Rule 26 of Cenvat Credit Rules, 2004 is not to recover the amount more than once, ie. once from the person like the appellant who has purportedly passed on such ineligible credit wrongly and again from the buyer. Rule 14 can be pressed into service only against buyer who wrongly avails such ineligible credit. The power to recover the amount under Rule 14 of Cenvat Credit Rules, 2004 is not contemplated against persons like the appellant. It is also no where stated that the appellant had wrongly availed credit - Since the appellant has paid the duty/ Cenvat Credit twice, first at the time of removal of goods by issuing Central Excise invoice by debiting the Cenvat Credit Account and thereafter once again for the second time before issue of show cause notice together with interest, the imposition of penalty under Rule 26 of the Central Excise Rules, 2002, will have to be construed as excessive. The penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 be reduced to a token penalty of Rs. 5,000/- in consonance with Section 37(3) of the Central Excise Act, 1944 - appeal allowed in part.

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• 2019 (12) TMI 528
  CENVAT Credit - unit is availing benefit of refund of excise duty in terms of N/N. 39/2001-CE availed by the grinding unit where duty is paid through PLA (Cash) - input service distribution - credit of clinker unit denied on the ground that the invoices were billed in name of Grinding unit - HELD THAT:- The analogy cannot be agreed upon that credit is not available as the goods during the material time were cleared under the exemption Notification No. 39/2001 CE dt.31.07.2001. Once the exemption benefit stands surrendered by the Appellant they are eligible for the benefits available to them. Even otherwise we find that there is no bar to avail cenvat credit on input and input services if the goods are being cleared under the exemption supra. Further the exemption benefit was only to the extent of refund of duty paid in cash and hence there is no reason to label the goods as exempted goods. The units availing the exemption in question were very much eligible to avail credit - Credit allowed. CENVAT Credit - port services - denial on the ground that the Appellant has not explained whether the said input service is in respect of ship or goods - HELD THAT:- The registration requirement was only procedural and could not be made ground to deny credit distribution. Even otherwise also the Appellant unit has taken registration for input service distribution w.e.f 21.02.2008 - even for the subsequent period the Appellant unit was allowed credit by the revenue in adjudication proceedings and the revenue did not challenged said findings. Further when the grinding unit has surrendered the benefit under Notification No. 39/2001 - CE, there is no reason to deny credit to the Appellant unit in terms of Rule 7 of Cenvat Credit rules, 2004 - credit allowed. CENVAT Credit - input services - port service, wharfage - dredging services - Misc. services - nature of service not known - manpower service in respect of Jetty - denial of manpower service on the ground that not available as it has got no connection with the manufacture of final product - telephone and mobile services - denial on the ground that it cannot be established that the mobile phone are used for manufacturing operations conducted by clinker unit and the landline phones installed in head office and other places are used in manufacture and clearance of final products of clinker unit - repair and maintenance services - HELD THAT:- The issue in no more res-integra in the light of Hon ble Apex Court judgment in case of Maruti Suzuki Ltd. M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2009 (8) TMI 14 - SUPREME COURT] and Hon ble High Court judgment in case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] and M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] wherein it has been held that all activity related to business are covered under the definition of Input Service. There is no dispute about the fact that all the impugned services has been used for business activity of Appellant and hence, we do not find any reason to deny credit - credit allowed. CENVAT Credit - input services - GTA services received for transportation of clinker from clinker unit to grinding unit - outward transportation - benefit of abatement under N/N. 32/2004 ST dt. 31.12.2004 - HELD THAT:- Credit allowed relying on the decision in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] - credit allowed. CENVAT Credit - input services - dredging service - denial on the ground that it has no connection with manufacture of final products - HELD THAT:- The same was in respec of jetty in the factory premises and is used for transportation as well as import and export of goods. Since the services are related with the business of the company, the Appellant are eligible to avail credit of the same - Credit allowed. CENVAT Credit - manpower services - operation and maintenance services received for Power Plant - denial on the ground that power plant is situated outside the factory premises and the power so produced is supplied not only to clinker unit but also to grinding unit and residential colonies of Appellant and office - HELD THAT:- Credit is allowed placing reliance in the case of COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VERSUS ENDURANCE TECHNOLOGY PVT LTD [ 2015 (6) TMI 82 - BOMBAY HIGH COURT] - credit allowed. CENVAT Credit - input services - Inspection of cement, sampling and analysis work for cement, clinker cement testing, cement packing loading work, cement stevedoring and cargo handling work, cement vessel operation at Kandla and wharfage and DLB Charges, Advertisement of cement in print media are related to grinding unit - HELD THAT:- Credit allowed placing reliance in the case of C.C.E. INDORE VERSUS M/S. KRITI INDUSTRIES (I) LTD. [ 2017 (1) TMI 382 - CESTAT NEW DELHI] - credit allowed. CENVAT Credit - credit denied in respect of service tax paid by the service provider which is more than prescribed 10.2% - HELD THAT:- The assessment at the end of the service provider has not been challenged. The Appellant has paid the amount of service tax charged to them. In such case, the credit cannot be denied to them - Credit allowed. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 527
  CENVAT Credit - capital goods installed within the CPP - electricity generated from such capital goods was captively consumed for the manufacture of dutiable final products - applicability of Rule 6 of the CCR - Circular dt. 23 December 2013 - HELD THAT:- The electricity generated using the capital goods, in that case, acquires the nature of an intermediate product and even if such intermediate product is exempt from excise duty, Cenvat credit on the capital goods cannot be denied in terms of para 3 of the Board Circular dated 25 September 2002 - credit allowed. CENVAT Credit - input services used in the Captive Power Plant - Rule 6(5) of the CCR - CBEC Circular Nos. 137/203/2007 dt. 1 October 2007 and 868/6/2008-CX dt. 9 May 2008 - HELD THAT:- The Board at para 2 of its Circular dated 1 October 2017 has clarified that the purpose of identifying the 17 specified services for special dispensation is these services are similar in nature to capital goods, that cannot be apportioned for maintaining separate records. Since these input services were undisputedly used in the manufacture of electricity further used, inter alia, in the manufacture of dutiable goods within the factory premises, it cannot be said that such services were exclusively used in the manufacture of exempted goods - the treatment to these services in so far as credit is concerned can be no different than capital goods - credit allowed. CENVAT Credit - iron and steel articles used for repair and maintenance of capital Goods - time limitation - HELD THAT:- Having audited the records for the relevant period earlier and accepted the orders dropping the demand raised during the said period, full facts were within the knowledge of the department and Revenue now cannot claim suppression on the part of the Appellant while issuing the subsequent Notice dated 30 April 2014, with which we are concerned in the present proceedings, to justify invocation of extended period of limitation. The Commissioner misdirected himself in negating the challenge to invocation of extended period on the ground that the same set of invoices were not covered by the earlier proceedings - the demand on this count is set aside being barred by limitation. Scope of SCN - CENVAT Credit - clearance/Sale of scrap and waste - Rule 3(5) of the CCR - HELD THAT:- The Commissioner has clearly travelled beyond the Notice in so far as he holds that even if it is assumed that sold waste and scrap were not capital goods and the provision of Rule 3(5A) was not applicable still the Appellant was liable to pay duty under Section 11A of the Central Excise Act. In the absence of any allegation in the Notice that such waste and scrap was the result of the manufacturing process, the demand for central excise duty could not sustain - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 525
  CENVAT Credit - inputs were cleared as such by the supplier - credit denied for the reason that the subject goods has not been manufactured by the supplier - Rule 3(5) of the CENVAT Credit Rules, 2004 - HELD THAT:- As per Rule 3(5) of the CENVAT Credit Rules, 2004, which deals with the bought out goods, states that when inputs or capital goods are removed as such from the factory of the manufacturer, the manufacturer shall pay an amount equal to the credit availed in respect of such input or capital goods and such removal shall be made under the cover of central excise invoice in the manner prescribed in Rule 9 of the said Credit Rules. Further, as per Rule 3(6) of the Credit Rules, the amount paid under aforesaid Rule 3(5) shall be eligible as CENVAT credit as if it was a duty paid by the person who removed such goods - Therefore, in view of the specific provisions contained in Rule 3(5) and 3(6) aforesaid, the appellant company receiving input from the supplier who has removed the said goods as such (being bought out goods) is legally entitled to credit even if the said goods have not been manufactured by the supplier. Thus, the appellant is legally entitled to avail credit on inputs which though not manufactured by the supplier, has been removed by the supplier on the strength of duty paid excise invoice particularly in the fact of the case that goods have been physically received by the appellant for use in manufacture. The entire proceedings against the appellant for denial of credit, there is no allegation or finding that the appellant has intentionally availed irregular credit with ulterior motive or that the credit has been availed wrongly in collusion with the supplier. In absence thereof, denial of credit would be harsh and highly unwarranted - credit is legally eligible and therefore the impugned demand is set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 523
  CENVAT Credit - duty paying invoices - fake invoices - it was alleged that M/s. Star Delta Exim P. Ltd. was issuing invoices without supply of goods - denial of cross-examination - HELD THAT:- The foremost argument put forward by the ld. counsel is that though the investigation is initiated from M/s. Star Delta Exim P. Ltd., the supplier of the goods, he has not been made a party to the present proceedings. The evidence gathered by the department in the investigation done at the end of M/s. Star Delta Exim P. Ltd. has been used to issue a Show Cause Notice to the appellant herein. The appellant cannot have any knowledge of the accounts or the activity of the supplier and would not be in a position to challenge the allegations if the said supplier is not a party to the proceedings initiated against the appellant. The department does not have a case that during the said dates the appellant did not manufacture finished goods. In the statement of Shri Pawan Kumar, director of M/s. Star Delta Exim P. Ltd. relied by the department, it is clearly stated that he was issuing fictitious invoices on commission basis to Chandra Proteco Ltd. - The Show Cause Notice has even then been issued merely relying upon the statement of the proprietor of Happy Transport. When the department has relied strongly on the statement of the proprietor of Happy Transport as well as that of Pawan Kumar, Director of M/s. Star Delta Exim P. Ltd., they ought to have given an opportunity for cross-examination of these witnesses. There are no plausible explanation put forward by the adjudicating authority for denying the cross-examination. The Hon ble High Court of Punjab Haryana in the case of G-Tech Industries Vs. Union of India [ 2016 (6) TMI 957 - PUNJAB HARYANA HIGH COURT ] has emphasized the need for cross-examination of the witnesses when the statements are relied by the department. The credit availed by the appellant is in order. There is no evidence put forward by the department to establish that appellant has availed credit on fictitious invoice. The department has failed to prove the allegations alleged in the Show Cause Notice - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 522
  Classification of goods - Beneficiale Liquid - DSN capsules - whether classifiable under CETH 2106 or under 3004? - Area Based exemption - N/N. 49/2003-CE dated 10.6.2003 HELD THAT:- From the perusal of the two entries, it is clear that the goods will be classified under the heading 2106, only if the products are not covered under Chapter heading 3004 of the Central Excise Tariff. It is the contention of the Appellant that their product is covered under the definition of medicament on the ground that these products are used for cure/treatment of diseases and being regularly prescribed by the medical practitioners. The Appellant has also produced the affidavit on this behalf, from the various medical practitioners along with the prescriptions. The prescription indicates that two products in question, namely DSN capsules and Liquid Beneficiale, are being prescribed by the medical practitioners in treatment of diseases to booster immune system. The products are prescribed by the doctors for removal of condition of weakness and also to boost immunity of the patients along with other medicines. The entry that is Chapter 2106, which is relied upon by the Revenue is only residuary entry. The product which is more appropriately classified under the specific headings has to be preferred before resorting to classification of goods in the residuary entry. It is also a fact that merely because the product can be used otherwise it will not be become the foods supplement. The adjudicating authority in the impugned order has held that the Appellant was not having the drug licence during the impugned period. However, the same is found to be incorrect, in view of submissions made by the learned Advocate and also by the production of copies of Drug Licence which proves the fact of having the valid licence for the manufacture, of the products namely DSN Capsules and Liquid Beneficiale - We are in agreement with the contention raised by the learned Advocate that the drug licence is issued under generic name and not in the trade name of the drugs manufactured. This fact is evident from the Drug Licence and also the composition of the products of the two drug licences. There is no justification of classification of the two products in question under heading 2106, but they are appropriately classifiable under Tariff Heading 3004 of Central Excise Tariff Act - As we held the goods are classified under Heading 3004 of CETA, the Appellant would be entitled for the benefit exemption from central excise duty under Notification No. 49/2003 - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 520
  CENVAT Credit - By-product/exempt goods - Bagasse - non-maintenance of separate account for inputs and input services for manufacture of dutiable and exempted products - Rule 6(3) of CENVAT Credit Rules, 2004 - HELD THAT:- The issue has already been settled by the Hon ble High Court of Allahabad in Balrampur Chini Mills Ltd v. Union of India [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT ] wherein the Hon ble High Court observed that provisions of Rule 6 of CENVAT Credit Rules, 2004 are not applicable to the facts of the case. The appellant is not liable to pay 6% of the value of bagasse cleared by them - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 519
  Reversal of Cenvat Credit - electricity generated during the course of manufacture of sugar and molasses - non-maintenance of separate account for usage of the inputs and input services used for manufacture of electricity - Rule 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT:- The same issue came up before the Tribunal in the case of Jakarya Sugars Ltd v. Commissioner of Central Excise, Pune II [2018 (5) TMI 1665 - CESTAT MUMBAI] wherein it was held that provisions of Rule 6 of CENVAT Credit Rules, 2004 are not applicable to the facts of the case. Tribunal held that Rule 6 (3) (i) is applicable only when a common input, on which cannot availed is used in the manufacture of exempted and dutiable goods - For the generation of electricity, except the use of bagasee no any cenvatable input is used. Therefore, the Rule 6 does not come into play. The provisions of Rule 6(3) of CENVAT Credit Rules, 2004 are not applicable to the facts of the case - demand of 6% of the value of electricity on the appellant is not sustainable - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 532
  Levy of sales tax - sale made by the revisionist to its authorised dealers who are registered dealers under the U.P. Trade Tax Act, 1948 - Section 3-AAA of the U.P. Trade Tax Act,1948 - Transfer of right to use - additional evidence u/s 12-B of Indian Evidence Act - HELD THAT:- On perusal of the orders passed by the Tribunal as well as lower authorities, it would reveal that only the factual averments have been made therein. None of the clauses of the agreement has been referred to or looked into and merely on the basis of the leasing rent amount being received, the liability under section 3-F of the Act has been confirmed - Since the fact of the case has not been looked into by the Tribunal, being a last Court of fact, with regard to clauses of the agreement and case-laws on the subject, it will be appropriate that the matter should be remanded back to the Tribunal for reconsideration of the issue afresh. Levy of tax under section 3AAA of the Act - HELD THAT:- The assessment orders of the two parties, namely, M/s Automobiles Sterling and M/s Unique Motor, which are on record, show that tax has been levied and the tabulation, at the bottom of the assessment orders, itself reveals that the tax was deposited, which includes the tax levied on motor vehicle - the learned counsel for the revisionist has submitted that the assessment order were on record, but the Tribunal as well as the lower authorities have failed to get it verified from the respective Assessing Authorities. The matter is remanded to the Tribunal for reconsideration of the issues - revision allowed by way of remand.

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