TMI Tax Updates - e-Newsletter
December 25, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Income Tax - time barring assessments - all the Income Tax Offices in Delhi shall remain open from 23.12.2017 to 31.12.2017

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• The foreign associated company involved in all aspects of the deputation of its own ‘suspended’ employee - service tax is rightly levied

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Articles

1. EXPORT AND IMPORT OF GOODS UNDER GST

   By: Srikanth Rao

2. CONDONATION OF DELAY SCHEME, 2018

   By: DR.MARIAPPAN GOVINDARAJAN

3. SCRUTINY UNDER GST

   By: Dr. Sanjiv Agarwal

News

1. Frequently Asked Questions - GST

2. 70 complaints filed with Anti-Profiteering Authority: Govt

3. Corporate Affairs Ministry is actively making investors aware about fraudulent companies

4. Properties of struck off companies from RoC can’t be used, operated, transferred or alienated in any manner

5. Listed companies must comply on appointing women board directors; total 142 listed companies fined

6. 96 foreign companies registered in India in 2017-18 with almost ₹ 10 crore revenue from them; Govt. carries out many programmes to spread awareness in investors

7. Auction for Sale (Re-Issue) of Government Stocks

8. Vice-President of India Shri M. Venkaiah Naidu unveils plaques to mark the laying of the foundation stones of the International Exhibition-cum-Convention Centre (IECC) & Integrated Transit Corridor Development Project

Notifications

GST - States

1. G.O.MS.No. 552 - dated 16-11-2017 - Andhra Pradesh SGST

Amendments to the rates of Tax of certain services notified in G.O.Ms.No.259, Revenue (Commercial Taxes-II), 29th June, 2017.

2. G.O.MS.No. 493 - dated 3-11-2017 - Andhra Pradesh SGST

Changes to rates of tax applicable to motor vehicles.

3. G.O.MS.No. 491 - dated 3-11-2017 - Andhra Pradesh SGST

Amendments in the Notification No. G.O.Ms.No.258, Revenue (Commercial Taxes-II), 29th June, 2017 - Changes to rates of tax of certain Goods

4. 41/2017-State Tax (Rate) - dated 15-11-2017 - Gujarat SGST

Seek to amend Notification No. Notification No.1/2017-State Tax (Rate), dated the 30th June, 2017

5. 21/2017 – State Tax - dated 23-11-2017 - Kerala SGST

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 and 120A of the Kerala State Goods and Service Tax Rules, 2017

6. 20/2017 - State Tax - dated 23-11-2017 - Kerala SGST

Seeks to extend the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6 for the month of July, 2017 till 31.12.2017.

7. 19/2017 – State Tax - dated 23-11-2017 - Kerala SGST

Extends the time limit for furnishing the return by a non-resident taxable person, in FORM GSTR-5

8. 18/2017 - State Tax - dated 23-11-2017 - Kerala SGST

Seeks to amend Notification No. 12/2017 State Tax, dtd 24/10/2017

9. G. O. (P) No. 147/2017/TD - dated 15-11-2017 - Kerala SGST

Notifying exemption to the intra-State supply of services associated with transit cargo to Nepal and Bhutan

10. G. O. (P) No. 146/2017/TAXES - dated 15-11-2017 - Kerala SGST

Notifying the commodity “Corduroy fabrics”, in respect of which no refund of unutilized input tax credit shall be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies

11. G. O. (P) No. 144/2017/TAXES - dated 15-11-2017 - Kerala SGST

Notifying reduction of tax rate for certain commodities

12. G. O. (P) No. 143/2017/TAXES - dated 14-11-2017 - Kerala SGST

Notifying reduction in state tax on certain types of construction services provided to Central Government, State Government, Union Territory, a local authority or a Governmental authority from 9% to 6%

13. G. O. (P) No. 142/2017/TAXES - dated 14-11-2017 - Kerala SGST

Notifying exemption of state tax to intra-State supply of services by way of right to admission to the events organised under FIFA U-17 World Cup 2017

14. G. O. (P) No. 138/2017/TAXES - dated 9-11-2017 - Kerala SGST

Corrigendum - Notification G.O. (P) No. 63/2017/TAXES dated 30th June, 2017

Circulars / Instructions / Orders

Income Tax

1. F. No. 27/Pr. CCIT/(W&S)/ Office Order/2017-18/524 - dated 22-12-2017

All the non working days/holidays from 23.12.2017 to 31.12.2017 will be treated as working days and all the Income Tax Offices in Delhi shall remain open for normal office hours till 31st December, 2017

Customs

2. 159/2017 - dated 18-12-2017

SUB : Forwarding of samples for testing to the Outside Laboratories- reg.

3. 44 /2017 - dated 15-12-2017

Subject: Refund/Claim of Countervailing duty as Duty Drawback –reg

4. 43/2017 - dated 12-12-2017

Subject: Import of ‘Raw Cashew Nuts’ – Need to declare the specifications affecting its value in the Bills of Entry – reg.

Highlights / Catch Notes

Income Tax

• Income Tax Offices in Delhi Open During Holidays for Time-Barred Assessments, December 23-31, 2017, per CCIT Directive.

  Circulars : Income Tax - Time barring assessments - All the non working days/holidays from 23.12.2017 to 31.12.2017 will be treated as working days and all the Income Tax Offices in Delhi shall remain open - Delhi CCIT
  Visit to Get Source

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• Company Granted Deduction u/s 80IA for Rail Systems as Infrastructure Facility, Expanding "Public Facility" Definition.

  Case-Laws - AT : Claim of deduction u/s.80IA in respect of profit of rail systems - to be treated as the infrastructure facility or not - scope of the term public facility - The operation of rail is not merely hauling of wagons but comprises of various activities all of which is carried on by the assessee Company - benefit of exemption allowed - AT
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• Higher Depreciation Rate of 30% Allowed for Customized Security Vans Used for Cash and Valuables Transport.

  Case-Laws - AT : Allowance of depreciation @ 30% on written down value of motor cars - The security vans are customized, used for transportation of cash and valuables on hire - depreciation is allowable at higher rate - AT
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• Interest on Delayed TDS/TCS Payment Not Disallowable Expense u/s 40(a)(ii) of Income Tax Act.

  Case-Laws - AT : Addition on account of interest paid on delayed payment of TDS/TCS - the interest on delayed payment of TDS/TCS cannot be considered to be a payment towards any rate or tax levied on the profit or gains of any business or profession as provided u/s. 40 (a)(ii) of the Act. - AT
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• High Court: Expenses for Building on Leased Land Not Capital Expenditure; Taxpayer to Register Documents with Sub-Registrar.

  Case-Laws - HC : Disallowance of expenses incurred for construction of buildings in leased out lands as capital expenditure - Lands taken on lease and constructions made thereon - HC directed the assessee to approach the Si-registrar for registration of documents.
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Customs

• Importers Must Declare Key Details in Bills of Entry for Cashew Nuts to Ensure Accurate Customs Valuation.

  Circulars : Subject: Import of ‘Raw Cashew Nuts’ – Need to declare the specifications affecting its value in the Bills of Entry – reg. - Trade Notice
  Visit to Get Source

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• Customs Authorities Entitled to Collect Duties on Misdeclared Imported Waste Paper; Emphasizes No Duty Loss on Kraft Paper.

  Case-Laws - AT : Misdeclaration of imported goods - waste paper - Customs should not suffer the loss of duty made at the time of import on the sold waste kraft paper - basic customs duty, and additional customs duty as is prescribed by law shall be leviable - AT
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Indian Laws

• Defunct Company Assets Cannot Be Used, Transferred, or Alienated After Removal From Registrar of Companies.

  News : Properties of struck off companies from RoC can’t be used, operated, transferred or alienated in any manner
  Visit to Get Source

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Service Tax

• Foreign Company Faces Service Tax for Employee Deputation Under Manpower Recruitment and Supply Services Category.

  Case-Laws - AT : Manpower Recruitment and Supply Agency service - employees on deputation - The foreign associated company has totally involved in all aspects of the deputation of its own ‘suspended’ employee - service tax is rightly levied. - AT
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• Court to Re-Verify if Staff Deputation to Group Companies is Taxable Under Doctrine of Mutuality.

  Case-Laws - AT : Taxability - deputation of staff to group companies - appellant claimed that service by deputing staff to their group companies does not amount to provision of service, therefore it is not taxable - Doctrine of Mutuality - adjudicating authority directed to re-verify the facts - AT
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• Panaji Municipal Garden beautification classified as "Commercial Construction Services," not "Maintenance or Repair." Reflects core construction nature.

  Case-Laws - AT : Classification of service - Beautification and Landscaping of Panaji Municipal Garden - The essential character of this composite work is reflected as that of construction service - instead of "Management, Maintenance or Repair Service, this service is appropriately classifiable under 'Commercial or Industrial Construction Services'. - AT
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VAT

• Court Denies Concessional Tax on C-Form Sales Using Photostat Copy; Fails Rule 12(3) Compliance.

  Case-Laws - HC : Concessional tax on C-Form sales, cannot be allowed on production of photostat copy of the counterfoil. It cannot be said to be strict or even substantial compliance of Rule 12(3) - HC
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Case Laws:

• Income Tax

• 2017 (12) TMI 1171
  Capital gains - sale agreement between the vendor and the vendee and applied the provisions of Section 2(47)(v) - Held that:- After considering the provisions of Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act and the decision of this Court in the case of D.Kasthuri Vs. CIT [2010 (2) TMI 153 - HIGH COURT of MADRAS] it was held that the capital gains arose to the assessees on the basis of the sale agreement between the vendor and the vendee and applied the provisions of Section 2(47)(v) of the Income Tax Act and the transfer is complete in all aspects. The Tribunal noted the findings rendered by the Commissioner of Income Tax (Appeals) held that the observation of the Commissioner of Income Tax (Appeals) that the assessee had complied with the provisions in the financial year 2008-09 and paid capital gains and that there were no long term capital gains taxable in the assessment year 2010-11 to be just and proper. The above finding rendered by the Tribunal is on re-appreciation of the factual position as recorded by the Commissioner of Income Tax (Appeals). In respect of other co-owners, similar orders were passed by the Commissioner of Income Tax (Appeals) and they had attained finality, as the Revenue did not prefer appeals against those orders. We are of the considered view that the above questions framed by the Revenue stating to be the substantial questions of law would not arise for consideration in these appeals, as the entire matter is fully factual. There is no error of law committed by the Tribunal warranting interference by this Court. - Decided against revenue.

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• 2017 (12) TMI 1170
  Disallowance u/s 37 - benefit of presumption under Section 132 (4A) - documents seized at the time of search - Held that:- No hesitation to hold that the presumption under Section 132(4A) of the Act applies in favour of the assesses insofar as the expenditure being supported by the documents seized at the time of search. There is no need for a further proof under Section 37, since as we have found, the Assessing Officer did not endeavor to carry out an enquiry and investigation into the source of investment or the genuineness of the expenditure made. However, the presumption can have effect only to the extent of the documents seized and nothing further. - Decided in favour of assessee

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• 2017 (12) TMI 1169
  Addition on account of jewellery holding that the same belonged to the 3 wives of the assessee - returns filed by the 3 wives under the presumptive Tax Scheme - We find that the Tribunal in dealing with this issue had accepted the explanation of the assessee that the amounts mentioned in the receipts found, which were in the name of the assessee, related to the disclosed income of his wives. The view taken by the Tribunal, on the facts and circumstances before it, we find, is a plausible view. Hence, we answer question (a) in the affirmative in favour of the assessee. Block assessment - addition of unexplained expenditure - cash payments during financial year 1995-96 and also from 1st April, 1996 to 7th August, 1996 as per seized document - Held that:- The Tribunal was of the view, inter alia, that if the recordings of the regular books of accounts be not up to date, that does not mean the entries, which can be verified from other primary books, would relate to undisclosed income of the assessee for the purpose of block assessment. The transactions, it appeared to the Tribunal, pertained to the regular business process of the assessee which stood disclosed before the department. It held that simply because some transactions were recorded in some of the seized documents, per se, they do not become undisclosed transactions. The assessee had explained the expenditure as out of huge cash withdrawals made by him. On that basis the Tribunal was of the opinion the transactions under consideration formed part of the regular books of accounts of the assessee and therefore this addition was deleted. Revenue was unable to demonstrate before us that this opinion of the Tribunal, on the facts noted by it, was perverse. We accordingly answer this question and all others related to it in favour of the assessee.

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• 2017 (12) TMI 1168
  Nature of expenditure - expenses incurred for repairs, refurbishing and making improvements on the buildings taken on lease - revenue v/s capital expenditure - Held that:- Decision of the Division Bench in Joy Alukkas [2014 (6) TMI 80 - KERALA HIGH COURT] binds us inexorably with respect to the question raised on expenses incurred for refurbishing and making improvements of a leasehold building. The questions of law raised by the Division Bench admitting the instant appeals as also the reference order indicates that the additions made were on two counts: (i) the expenditure incurred on refurbishment, repairs and improvements and (ii) the superstructures constructed on leased out immovable property. The revenue expenditure made on leased out buildings has to be allowed as a revenue expenditure and not as a capital expenditure. We answer the first question in favour of the assessee and against the Department. Disallowance of expenses incurred for construction of buildings in leased out lands as capital expenditure - Lands taken on lease and constructions made thereon - Held that:- The assessee shall produce the lease deeds of period one year or above before the concerned Sub-Registrars, who shall calculate the duty payable under Article 33 of the Stamp Act and levy penalty of Rs. 10,000/- each. If the assessee pays up the amounts then the procedure as prescribed in Section 37(1) shall be complied with. The Sub-Registrar shall also register the document de-hors Sections 23 and 25 of the Registration Act, but levying registration fees as applicable and an amount of Rs. 5,000/- each as penalty. The assessee then shall produce the registered documents before the respondent A.O, who shall finalise the assessment on the principles herein above stated, determining whether the expenditure made by the assessee can be treated as a capital expenditure or revenue expenditure. If the assessee does not comply with the above directions then the respondent shall impound the documents and send it for stamping under the provisions of Section 33 of the Stamp Act to the respective District Registrars who shall pass orders at their discretion under powers conferred by Section 39 of the Stamp Act, in which event the determination of penalty will be left to the District Registrar. The assessment will also then be without looking into the documents, since the Registration Act does not provide for registration beyond eight months from the execution.

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• 2017 (12) TMI 1167
  Capital gain - applicability of section 50C and the valuation by DVO/FMV - Held that:- We are of the considered opinion that in order to calculate exact capital gain, applicability of section 50C and the valuation by DVO/FMV, the matter needs further application of mind at the level of assessing officer on all counts and position of law with regard to the computation of capital gain as per the provisions of section 45 to 55A of the Act. We find that the FAA has directed the First Assessing Authority to take the sale consideration at Rs. 1,89,98,000/- as determined by DVO which is wrong and also contrary to the provisions of section 50C of the Act, as the provisions of this section provides for taking the value equal to stamp valuation in the event to sale consideration being lower to the value as per the stamp valuation authority. This matter requires fresh application of mind at the level of AO. Accordingly we set aside the order of the FAA and restore this matter to the file of AO with a direction to consider all the evidences as may be filed by the assessee in the set aside proceedings and compute the capital gain after considering the cost of acquisition as per law in terms our discussion above and taking sale consideration equal to the value of stamp valuation authority for the purpose of capital gain. Accordingly, we restore the matter back to the file of the AO to assess the capital gain denovo as per facts and law. Resultantly, the issue is allowed for statistical purposes.

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• 2017 (12) TMI 1165
  Registration of the society u/s 12AA denied - proof of charitable activities - Held that:- The Assessing Officer in Assessment Year 2013-14 vide order dated 9/12/2015 has also admitted the same fact & had allowed exemption u/s u/s10 (23C) (iiiad) of the Act. By accepting the claim of Assessee the genuineness of its activities has also been accepted. Therefore, the factum of carrying charitable activities as also the genuineness of activities is established. Therefore, both conditions for getting satisfaction u/s 12AA are met with and therefore assessee is eligible for registration u/s 12AA of the Act Also in the present case there is no allegation of utilizing the land for commercial purposes and also there is no allotment of land at concessional rates. It is an admitted fact that the assessee was engaged in charitable activities. In view of the above facts and circumstances of the case, the Ld. CIT(E) is directed to grant registration to the assessee u/s 12AA of the Act . - Decided in favour of assessee.

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• 2017 (12) TMI 1164
  Revision u/s 263 - Held that:- As per the provisions of IT Act, the CIT(A) is not vested with the powers to adjudicate the orders of the CIT. Since it is specific remand to the AO, the AO is bound to follow the direction and the Ld.CIT (A) cannot adjudicate the merits of the directions of the CIT. Since the AO has given effect to the order of the CIT u/s 263 correctly by making addition which was confirmed by the Ld.CIT(A), we do not find any reason to interfere with the order of the Ld.CIT(A), hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this issue. Addition interest received on which the income is estimated - Held that:- In this case, the AO has not made out a case for making the addition of interest as income from other sources separably. As per the judicial precedents, once the income is estimated no income required to be brought to tax separately. During the appeal hearing, the Ld.AR did not make out case that the impugned interest is business receipt and the Ld.DR also failed to produce any other evidence to establish that there is a case for making the addition of interest income separately. Therefore, we are of the considered opinion the issue needs further verification to hold whether the interest is a separate source of receipt other than from the source of business or not. Therefore we set aside the order of the CIT(A) and remit the matter back to the file of the AO to examine the correctness of assessee’s claim that the interest forms part of business income or not and decide the issue afresh on merits. Assessee’s appeal on this ground is allowed for statistical purposes.

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• 2017 (12) TMI 1163
  Addition on account of interest paid on delayed payment of TDS/TCS - Held that:- As far as the nature of payment is concerned, there cannot be any doubt that the interest on delayed payment of TDS/TCS is not penal in character but it is compensatory in nature. This view has been expressed in the case of CIT vs. Oriental Insurance Co. Ltd. [2008 (10) TMI 230 - KARNATAKA HIGH COURT]. Further in our considered view the interest on delayed payment of TDS/TCS cannot be considered to be a payment towards any rate or tax levied on the profit or gains of any business or profession as provided u/s. 40 (a)(ii) of the Act. That being the case, we do not find any infirmity in the order of the first appellate authority in deleting the addition. Disallowance of provision for warranty expenses - Held that:- The assessee has demonstrated before us that out of the provisions created in the financial year relevant to the assessment year under dispute the assessee has utilized an amount of Rs. 2,14,73,380/-. It is also a fact on record that in assessee s own case for the preceding Assessment Year the CIT(A) has held that the provision on account of warranty and maintenance have been created on scientific basis cannot be treated as unascertained liability. We have also noted in case of other group companies similar disallowance made by the AO was deleted by the CIT(A) and while deciding the appeal of the department the Tribunal following the decision of Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd has upheld the decision of the CIT(A). Even in the facts of the present case also the AO has agreed in principle that provision for warranty and maintenance is allowable as per the methodology laid down by the Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA). In view of the aforesaid, we uphold the order of the CIT(A) by dismissing the ground raised. Disallowance u/s. 14A - Held that:- The factual finding of the first appellate authority that the assessee has sufficient interest free funds available with it has not been controverted by the department therefore, no disallowance of interest expenditure under Rule 8D(2)(ii) can be made. Further the claim of the assessee that all investments are in group companies hence, are in the nature of strategic investment therefore should be excluded from the average value of investment for computing disallowance u/s. 14A deserves to be accepted. It is further relevant to observe from the assessment order it appears that the AO has proceeded to make disallowance u/s. 14A read with Rule 8D only because investments made by the assessee would give rise to exempt income. There is nothing on record to indicate that in the relevant previous year assessee has earned any exempt income by way of dividend. That being the case no disallowance u/s. 14A can be made in view of the decision of Hon ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT]

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• 2017 (12) TMI 1161
  Income tax on fringe benefits - fringe benefit tax being 20% of the medical expenses incurred by appellant - whether CIT (A) failed to appreciate that reimbursement of medical expenses to employees falls within the meaning of salary and does not fall within the purview of fringe benefit tax - Held that:- See Grindwell Norton Ltd. vs ACIT [2014 (4) TMI 1203 - ITAT MUMBAI] wherein while dealing with identical issue, it was held that medical expenses were directly attributable to each employee distinctly and were not in the nature of collective benefit enjoyed by the employees. The Hon'ble ITAT observed that medical reimbursement was to be treated as a perquisite u/s 17(2) of Income tax Act, 1961 though a threshold limit of exemption was provided under clause (v) at Rs. 15,000. Accordingly, the ITAT correctly held that reimbursement of medical expenditure did not constitute Fringe Benefit as defined in Sec. 115WB of the Act - Decided in favour of assessee Attributing additional 10% of the composite participation fees as expenditure liable to fringe benefit tax - Held that:- The CBDT Circular No.8/2005 in answer to Q.NO.11 has clarified that one has to go by the primary purpose of the expenditure. In the case of composite fee, it is difficult to apportion the component of expenditure on food and lodging and a proportionate expenditure for participation in conference by the employee. Keeping in mind the spirit of FBT as explained in the CBDT Circular, we are of the view that in the case of composite fee paid for participation of employee in a conference, the same should not be considered as fringe benefit and there is no question of resorting to apportionment of those expenses. In our view in the given facts and circumstances apportionment of the total expenditure as done by the assessee was just and proper. There is no basis for the Assessee/AO or the CIT(A) in concluding that a percentage of composite fee is attributable to food and lodging. Since we have concluded that in the case of composite fee paid with no bifurcation, the expenditure on fee paid for participation of an employee in a conference or seminar will have to be not regarded as fringe benefit, we accept the contention of the assessee and hold that 10% of the composite participation fee be treated as expenditure liable to fringe benefit tax. Liability to FBT - whether the appellant being in the business of plantation and manufacturing of tea, was liable to pay fringe benefit tax only on 40% of the value of fringe benefit arrived at on application of Rule 8 ? - Held that:- As in the case of Apeejay Tea Ltd. (2014 (7) TMI 1118 - CALCUTTA HIGH COURT) wherein took a view that Rule 8 of the IT Rules, 1962, which has to be applied for determining income of a company engaged in the business of growing and manufacturing of tea and in which only 40% of the composite income from the business of growth and manufacture of tea is considered as taxable is also applicable while valuing the fringe benefit for the purpose of levy of FBT in the case of such companies. Addition u/s 14A - Held that:- Referring to the plea of the assessee that the majority of the investment were made by the assessee in the past years and have been carried forward year after year. It was also pleaded by the assessee that major investments are strategic investments in group companies for the purpose of expansion of the business and the assessee does not trade in these investments with the purpose of earning capital gains or dividend. The assessee has also explained that considering that the some managerial time has been spent on portfolio related work, a sum of Rs. 19,82,000/- was offered as expenses incurred in earning exempt dividend income. These submissions of the assessee have neither been dealt with by the revenue authorities in our view, found to be not correct. In these circumstance, we are of the view that the disallowance made by the AO and confirmed by the CIT(A) cannot be sustained. The same is directed to be deleted and ground of appeal are allowed.

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• 2017 (12) TMI 1157
  Allowance of depreciation @ 30% on written down value of motor cars - Held that:- We find that the assessee is engaged in the business of transportation of cash and valuables belonging to the third parties, for which it uses motor lorries customized as armoured vehicles. The security vans are customized, used for transportation of cash and valuables on hire and, therefore, we find the ratio of the decision of Calcutta High Court in the case of Agarwal Finance [2009 (1) TMI 504 - Calcutta High Court ] is applicable and the depreciation is allowable at higher rate. The CIT-A was justified in directing the AO and in allowing @ 30 depreciation as claimed by the assessee - Decided against revenue Addition u/s. 2(24) r.w.s 36(1)(va) towards employees’ contribution to PF belatedly - Held that:- In the present case, the CIT-A found satisfied with the submissions of the assessee that the impugned amounts were paid before filing return of income. Therefore, respectfully following the decision of the Hon’ble High Court of Calcutta in the case of Vijay Shree Ltd [2011 (9) TMI 30 - CALCUTTA HIGH COURT], we hold that the Assessee is entitled to claim deduction as per 1st proviso to Section 43B of the Act and the order of the CIT-A is justified and needs no interference. Therefore, the employees’ contribution to PF can be paid before the due date of filing of return of income. We find no infirmity in the impugned order of the CIT-A and it was justified. - Decided against revenue

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• 2017 (12) TMI 1156
  Deduction of commission paid to the various brokers - Held that:- As rightly submitted by the assessee, the said parties in reply to enquiry made by the Assessing Officer had confirmed the receipt of commission from the assessee and there was nothing found in the enquiry made by the Assessing Officer to draw adverse inference against the assessee in the matter of allowability of the assessee’s claim for deduction on account of commission paid. AO in the remand report initially submitted to the CIT(Appeals) as well as the ld. D.R. at the time of hearing before me have doubted the genuineness of the claim of the assessee for commission payment on the ground that supporting bills raised on the assessee for commission were not produced by the concerned parties. It is, however, observed from the remand reports submitted by the Assessing Officer to the ld. CIT(Appeals) subsequently, the relevant portion of which is reproduced in the impugned order of the ld. CIT(Appeals), that some of the parties did furnish the copies of bills for commission raised on the assessee, which, in my opinion, was sufficient to establish the services rendered by them to the assessee in order to justify the payment of commission. Having regard to all these facts of the case, find myself in agreement with the ld. CIT(Appeals) that the disallowance of commission made by the Assessing Officer was not justified and the same was liable to be deleted. - Decided against revenue.

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• 2017 (12) TMI 1137
  Addition on account of alleged excess cash declared by assessee at the time of search but not offered to tax in his return of income - Held that:- It is an undisputed fact that during the course of search Rs. 5,79,410/- were recovered from residential premises of assessee. It is relevant to note here that search action at the premises of the firm took place on 11.04.2011 and search at the residential premises of the assessee was carried on 27.04.2011 i.e almost after two weeks. The statement of assessee u/s. 132(4) was recorded on 28.04.2011. The assessee sought time to reconcile the books to explain the source of cash. The recording of assessee’s statement was resumed on 30.04.2011. On the said date, assessee admitted that Rs. 5,00,000/- is his unaccounted income for the assessment year 2012-13 on account of unexplained cash. Thus, assessee had ample time at least to make out whether this amount of Rs. 5,00,000/- belongs to the firm or on his personal account. CIT(Appeals) rightly pointed that the assessee never claimed while recording statement that cash belongs to the firm. We concur with the view of lower authorities that attributing Rs. 5,00,000/- as cash of the firm is an afterthought. - Decided against assessee.

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• 2017 (12) TMI 1136
  Addition made on account of cash found deposited in the bank which remained unexplained - Held that:- The cash deposited in the bank having been explained as being made out of various sources as held above in the earlier part of our order and out of the receipt from the property dealing business, the cash deposited in the bank stands completely explained. There is no reason, therefore, to make any other addition in the case of the assessee that the investment made in the property dealing business can be attributed to the withdrawals made in cash or by cheque as reflected in the bank account of the assessee. In view of the same, we delete the addition made by estimating the undisclosed investment in the business @ 10% of the turnover. In effect we uphold the order of the CIT(A) to the extent that the cash deposited in the same is attributable to the business of property dealing of the assessee and therefore dismiss the Revenues appeal challenging this action of the CIT(A). But at the same time we restrict the quantum of deposits attributable to the business to Rs. 83,17,700/- as against Rs. 89,57,700/- held by the CIT(A) and as a consequence thereof restrict the addition on account of Net profit earned thereon to Rs. 12,47,655/- as against Rs. 13,49,566/- held by the CIT(A). Further we direct that the addition made on account of undisclosed investment in the business of Rs. 8,99,700/- be deleted. Appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed.

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• 2017 (12) TMI 1134
  Claim of deduction u/s.80IA in respect of profit of rail systems - to be treated as the infrastructure facility or not - scope of the term public facility - Held that:- Contention of revenue authorities that Railways had constructed the rail system is not factually correct. In fact, M/s L& T had entered into agreement with the appropriate rail authorities to Develop its rail systems. M/s. L&T had constructed the rail system by awarding contract to the private parties for construction of rail sidings (including upto the nearest rail head) under the supervision of Indian Railways approved agency, and the entire cost for construction/ development paid to the aforesaid agency and supervision charges paid to Indian Railways approved agency have been borne by the assessee, apart from all costs incurred for all the materials and incidental expenses. Public facility or not - Held that:- the railway siding from the point of interchange till factory gate of the assessee has immense potential, with enabling powers to the Railway Administration (which itself is a public department), to be developed into a facility that will ensure to the public at large. The railway sidings are always constructed for captive consumption. Thus, the provisions of section 80IA(4) cannot be read in the manner to make it redundant, when the legislature in all its wisdom intended to give benefit of tax holiday for construction of infrastructure facility in the form of railway which is meant for captive consumption. The operation of rail is not merely hauling of wagons but comprises of various activities all of which is carried on by the assessee Company. Section 80IA(2) provides that the deduction is available at the option of the assessee for any ten consecutive assessment years out of twenty years beginning from the year in which the undertaking or enterprise develop and operate any infrastructure facility. UTCL has started to claim deduction within the prescribed period of twenty years. The claim is thus legitimately made by assessee complying the requirements mentioned under section 801A. In view of the above discussion and respectfully following the order of the Tribunal in assessee’s own case for the A.Y.2004-05 to 2008-09, we do not find any merit in the action of the Revenue authorities declining the claim of deduction u/s.80IA(4). Accordingly AO is directed to allow the deduction as claimed by the assessee with respect to its rail system. We direct accordingly. Addition of exemption of sales tax benefit received by the assessee by treating the same as revenue receipt - Held that:- As considered rival contentions and carefully gone through the orders of the authorities below as well as the order passed by the Tribunal in assessee’s own case in the A.Y.2004-05 to 2006-07. We found that exactly similar issue was considered in detail by the Tribunal and after discussing various judicial pronouncements held that subsidiary so received by the assessee was capital in nature, therefore not liable to tax as revenue receipt. Disallowance of interest expenditure on exempt income u/s.14A - Held that:- no disallowance is warranted on account of interest as the assessee has sufficient interest free funds available with it. Learned AR has also invited our attention to the cash flow statement placed in the paper book to indicate that cash surplus was much more than the fund invested for earning exempt income, therefore, with a limited issue of verifying the cash surplus available vis-à-vis amount invested in tax free securities, we restore the matter back to the file of the AO. If the AO finds that cash surplus so generated is more than the amount of investment in tax free securities / units of mutual funds, no disallowance on account of interest is warranted under Rule 8D 2(ii). Disallowance of expenditure other than interest alleged to be incurred on exempt income u/s.14A - Held that:- During the year under consideration, we found that assessee has offered expenses on Cost to Company basis of employees, executives and staff those were looking after the profit on investment in the mutual funds amounting to Rs. 43,31,541/-. Assessee has also offered expenditure indirectly attributable to these employees amounting to Rs. 12,09,391/- thus, total disallowance offered by the assessee amounts to Rs. 55,40,932/- which appears to be reasonable looking to the nature of the exempt income vis-à-vis nature of expenses so incurred for earning the same. Respectfully following the decision of the Tribunal in assessee’s own case, we restrict the disallowance under Rule 8D(2)(iii) to the extent of Rs. 55,40,932/-. Following the same reasoning, we direct AO to restrict disallowance under Rule 8D(2)(iii) to the extent of Rs. 64,30,155/- as offered by assessee in the A.Y 2010-11. Disallowance made u/s.14A on account of interest and administrative expenses - Held that:- We restore this issue back to the file of the AO to verify the availability of cash surplus of Rs. 1571.93 crores generated during the year and which was invested in the units of mutual funds. If the AO found that assessee has generated cash surplus of 1571.93 crores, no disallowance on account of interest expenditure should be made in so far as cash surplus is much more than the investment so made in the units of mutual funds

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• Customs

• 2017 (12) TMI 1162
  Demand the duty that had not been paid at the time of import - Non-compliance with import procedure - case of Revenue is that the goods were not ship stores and, covered by transhipment provisions in the Customs Act, 1962, are liable to the customs duties that had not been discharged at the time of clearance - the case of the appellants is that the goods, having been placed on board a vessel and not intended for home consumption, was not required to follow any procedure other than that of transhipment and was not liable to duties of customs. Held that: - Description in the airway bill is of no statutory relevance under the Customs Act, 1962 which bases liability to import duty on the entry made under section 46 of Customs Act, 1962. The airway bill is of relevance in the filing of the import general manifest under section 30 which enables shifting of the responsibility for due discharge of duty liability from the person-in-charge of conveyance to the importer acknowledging the latter as possessor of right to clear the goods. The manifest will clearly indicate the destination of the goods for home consumption at port of discharge or for transhipment to another customs station or on transit to another customs station or place outside India. Needless to say, goods that are described as spares/stores in the airway bill may well be destined to other customs stations or locations outside India with the liability to duty also deferred accordingly till due arrival at such destination. In the absence of such details, goods that have been found to be excluded from stores cannot be subject to duty liability unless it has been destined for home consumption in India. The impugned order has proceeded to recover duty and visit the appellants with detrimental consequences after considering the nature of the goods and holding that these are not ship spares ; however, there is a marked lack of material pertaining to the goods or any finding on the ultimate disposal of the goods. Taking note of the submission of the appellants that the vessel is a research vessel for which research equipment are 'ship stores', the adjudicating authority finds that the vessel, even if under a foreign flag, does not become a foreign going vessel merely for that reason and, more so, as research vessels are excluded from scope of engagement in foreign trade. Rejecting the claim of the appellants that these are ship stores covered by the inclusive portion - other articles of equipment. With the contractor having absented itself from proceedings, the adjudicating authority, placing reliance on section 147 of Customs Act, 1962, transferred the duty liability to M/s JM Baxi & Co as deemed agent of the contractor inferred from the inclusion of their name in the commercial invoice and in the airway bill, the filing of application for transhipment permit and the execution of transhipment bond on behalf of the Master of MV Mezen - all of which, according to her, would bring them under the ambit of agent. The correspondence and electronic mail are cited by the adjudicating authority to conclude that the appellants were all aware that they were circumventing the provisions of Customs Act, 1962 and, hence, by acts that rendered the goods liable to confiscation, they were subject to the penalties under section 112 of Customs Act, 1962. Matter remitted back for fresh determination.

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• 2017 (12) TMI 1150
  Misdeclaration of imported goods - Revenue came to a conclusion that the waste paper imported by appellant for use in manufacture of Newsprint Paper consisted waste paper as well as Kraft paper - Appellant’s plea is that sorting out of waste kraft paper from the imported lot was “manufacture” - Held that: - There is no difference in the quantity and value of the waste kraft paper sold to different buyers without use thereof in manufacture of news print. It is also an admitted fact that waste kraft paper is not generation of manufacturing process carried out by appellant. Appellant’s plea that sorting out of waste kraft paper from the imported lot was “manufacture” is inconceivable. There is no doubt that the goods imported by appellant was declaring that as waste paper for use in manufacture of newsprint. But appellant’s awareness that waste kraft paper were unusable in such manufacture cannot be ignored in view of the appellant’s experience for some times past. Those were sold and appellant was benefited out of the sale of such goods. Customs should not suffer the loss of duty made at the time of import on the sold waste kraft paper - basic customs duty, and additional customs duty as is prescribed by law shall be leviable - Central Excise duty if any paid is whether adjustable shall be examined by the learned adjudicating authority and appropriate order passed thereon. Interest - penalty - Held that: - In view of interpretational difficulty, there shall be no penalty against the quantum of demand on the appellant - Interest flow against the unpaid demand. Appeal allowed in part, part matter on remand.

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• Corporate Laws

• 2017 (12) TMI 1141
  Corporate insolvency process - petitioner owning the status of operational creditor - proof of eligible debt - Held that:- On reading the definition of operational creditor as envisaged in section 5(20), it is evident that the operational debt directly owed to a person or the operational debt assigned or transferred to a person alone will become operational creditor, not others. It is not the case of the petitioner that any of the creditors assigned or transferred their claim to the petitioner, therefore it cannot claim to itself that it is an operational creditor entitled to make claim for the dues purportedly payable by Crystal were paid by it. As long as debt has not been assigned or transferred to a person, such person cannot be called itself as Operational Creditor by voluntarily making payment of somebody else. Since the right of payment has not been assigned or transferred to this person (Petitioner), this Bench cannot read payments made by this Petitioner would become claim claimable against Crystal by the petitioner owning the status of operational creditor. On reading the provisions of law of this Code in semblance with facts of this case, it is hereby held that the claim made by the petitioner is not a debt, much less an operational debt owed to the petitioner by corporate debtor for want of existence of jural relationship of corporate debtor and operational creditor between them under this Code, henceforth this Petition is hereby dismissed with liberty to the Petitioner to approach before appropriate Forum.

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• 2017 (12) TMI 1140
  False information through a fictitious AOC-4 and MGT-7 - Held that:- The Tribunal on hearing the parties, noticed that the Appellant/1st Petitioner Company is holding 50% of the shares in the 1st Respondent Company and shares were duly transferred. It further noticed the stand taken by the respondents that in terms and conditions of the Memorandum of Understanding between some of the appellants (Petitioners Nos. 2 and 3), the appellants (Petitioners Nos. 2 and 3) ceased to be the Directors. For the said reason, their appointment were not confirmed in the EOGM. Taking into consideration the aforesaid fact, the Tribunal refused to grant any interim relief in favour of the appellants/petitioners. Having heard the learned counsel for the appellants/petitioners, while we are not inclined to express any opinion with regard to the claim of the parties, including the appellants herein or the respondents, we are of the view that the original Company Petition should be decided expeditiously in the light of Section 422 of the Companies Act, 2013. In such case, the Tribunal will decide the case on merit after hearing the parties uninfluenced by the impugned order dated 14th September, 2017.

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• 2017 (12) TMI 1139
  Corporate insolvency process - prior existing dispute - Held that:- Looking to the record, we find substance in the arguments of learned counsel for Appellant that indeed there was a prior existing dispute and the application under Section 9 should not have been admitted. In view of the above, the appeal is allowed. The impugned order admitting the Insolvency Resolution Process is quashed and set aside. The further proceedings in view of the impugned order are stopped.

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• 2017 (12) TMI 1138
  Succession Certificate annulled by the Court - Held that:- In the facts and circumstances of the case and in view of the subsequent development while we are not inclined to interfere with the impugned order, at present on the ground that the Succession Certificate has been stayed by the High Court grant liberty to the appellant, to file appropriate petition before the appropriate forum/court of law, if Succession Certificate is annulled by the Court. In such case, the court of competent jurisdiction will consider the application, if preferred by the appellant uninfluenced by the impugned order

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• Insolvency & Bankruptcy

• 2017 (12) TMI 1148
  Corporate Insolvency Resolution Process - proof of eligible debt - Held that:- While the petition was pending we granted numerous opportunities to the Financial Debtor for settlement with the Financial Creditor. In that regard reference may be made to the interlocutory order dated 23.08.2017. According to the aforesaid order the parties were given opportunity to reconcile all the loan accounts with each other and explore the possibility of settlement of the accounts and the matter was to be disposed of on merits if such a settlement is not reached. On 07.09.2017 the hearing was deferred to facilitate the settlement. Even we delayed the dictation of this order as the Financial Debtor has been asking for time up to 15.10.2017 and the order was reserved on 09.10.2017. There is no settlement insight despite the expiry of about six weeks, therefore, the efforts of the Financial Debtor to enter into a settlement has not born any fruit and we are not in a position to further delay the admission of the present petition. All this has been done in order to avoid the triggering of Insolvency process so that the Financial Debtor may continue with his enterprise and there is no demoralising effect. Alas! all these efforts are in vain. We find that there is admission with regard to loan and its default. The Financial Creditor has also named the Interim Resolution Professional and it satisfies all the requirements of Section 7 of the Code. Therefore, the petition warrants admission and the same is hereby admitted.

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• Service Tax

• 2017 (12) TMI 1166
  Refund of service tax paid - duty paid under protest - construction of complex services - the appellant claimed that no Service Tax liability can be fixed on the appellant again as they have not provided any construction services - Held that: - If the construction activity is in effect carried out by the contractors in terms of an agreement with the appellants, it will be the contractors who will be considered as service providers. The appellant will be service recipient. The appellants monitor the construction and managed the allotment and sale of these constructed houses. In our opinion, this by itself does not make the appellant as a provider of construction service. This aspect has not been examined by the lower authorities - matter placed on remand for re-examination. Unjust enrichment - Held that: - if the appellant collected the cash and kept with them, the bar of unjust enrichment will apply - As stipulated in the legal provisions of section 11B of the Central Excise Act 1944 made applicable to Service Tax, the question of unjust enrichment may also be examined afresh by the original authority. Appeal allowed by way of remand.

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• 2017 (12) TMI 1158
  Constitutional validity of levy of service tax - construction of residential complex - Held that: - Honble Mumbai High Court in case of Maharshtra Chamber of Housing Industry [2012 (1) TMI 98 - BOMBAY HIGH COURT] held the levy to be constitutional. Thus following the judgment of Honble High Court, the Appellant is liable to pay service tax alongwith interest. In the instant case the service tax demand alongwith interest is payable by the Appellant and the same stands paid before issue of SCN - penalty set aside - appeal allowed in part.

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• 2017 (12) TMI 1152
  Classification of service - contract with Corporation City of Panaji for Beautification and Landscaping of Panaji Municipal Garden - whether the activity would fall under the head Management, Maintenance and Repair Service or construction service? - Held that: - From the contract, it is found that the appellant undertook construction and extension of Garden of Panaji City of Caranzalem, which involved land Development and construction of drainage, construction of compound wall, developing symmetrical garden, pathways, promenade, function lawn, etc. These activities predominate civil construction work and also comprise of activity akin to clearing and excavation and site formation. However, the majority of work relate to civil work in the nature of either fresh construction of a civil structure within the park like drainage system, pipes/conduits or renovation of civil structure (where old structure are reinforced and retained). The essential character of this composite work is reflected as that of construction service - instead of "Management, Maintenance or Repair Service, this service is appropriately classifiable under 'Commercial or Industrial Construction Services'. Further, since this service is being provided to Corporation of the City of Panaji, which is a local government body, it cannot be said that the construction work is of commercial nature. It is a settled law that construction service provided to government and government bodies are outside the purview of the 'Commercial or Industrial Construction Services'. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1147
  Refund claim - taxable service used/utilised for export of the goods - denial on the ground of time limitation - Held that: - It is apparent from the records that the refund claim applications were not filed within the prescribed time limit of one year provided under the N/N. 41/2012 dated 29.6.2012. Since, the said notification is conditional and the benefit contained therein are available, subject to fulfilment of the conditions itemised therein, the assessee has to strictly comply with the requirement contained therein for availing the benefit of refund of service tax. Thus, the time limit prescribed in the notification cannot be considered as procedural in nature - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1146
  Taxability - deputation of staff to group companies - appellant claimed that service by deputing staff to their group companies does not amount to provision of service, therefore it is not taxable - Doctrine of Mutuality - Held that: - the fact whether the so called group companies are related companies or otherwise need to be ascertained. It is necessary to ascertain the constitution of each so called group company on the basis of share holding pattern. It is observed that the adjudicating authority has not verified such facts - we remand the matter related to the above issue to the adjudicating authority to pass a fresh order. Health and fitness centre service - Held that: - appellant have been paying service tax under the category of club or association since 2005. It is the submission of the appellant that since this service was considered under the club or association, the same cannot be taxed under different category for the period prior to 16-6-2005, when services of club and association was brought under the tax net - adjudicating authority also directed to reconsider this issue on submission made by the appellant in this regard. Appeal allowed by way of remand.

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• 2017 (12) TMI 1144
  Calculation of Refund of accumulated CENVAT credit - N/N/. 5/2006-CE(NT) dated 14/03/2006 - Held that: - the adjudicating authority wrongly calculated the refund amount taking the Cenvat Credit amount after deduction of the utilized Cenvat Credit, which is not in conformation of the formula provided under N/N. 05/2006 - the appellant’s claim of the refund of Rs. 10,01,451/- appears to be correct. The adjudicating authority directed to reprocess the balance refund - appeal allowed.

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• 2017 (12) TMI 1143
  Manpower Recruitment and Supply Agency service - employees on deputation - the personnel on the pay roll of Schaeffler Group company located abroad have been put on assignments with the appellants. On these assignments, the personnel were expected to work under overall supervision of the appellant - Held that: - The employees deputed to appellant continues to be an employee of the foreign associated company, though suspended for this duration - It is also seen that the duration of such deputation is decided in consultation with the foreign associated company and the employee is not free to decide on his own. It can be seen that there are regulations in the foreign assignment guideline for the Schaeffler Group of companies and they apply to such assignments. It is apparent that the said foreign associated companies are engaged in the regular practice of supplying manpower and have also evolved guidelines to regulate such foreign assignments in the shape of version 4/2008. The foreign associated company has totally involved in all aspects of the deputation of its own ‘suspended’ employee - service tax is rightly levied. Extended period of limitation - revenue neutrality - Held that: - If the situation is revenue neutral, in the sense the tax paid by appellant themselves, in full, on reverse charge basis then the intention to evade cannot be alleged. The fact regarding the revenue neutrality needs verification. Appeal dismissed on the point of merits - the matter is remanded to original adjudicating authority to give findings on the issue of revenue neutrality and it’s impact on limitation and penalties.

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• 2017 (12) TMI 1142
  Condonation of delay in filing appeal - applicant claim that provisions of Section 14 of the Limitation Act, would apply to the facts of the present case and hence the period during which the writ/appeal pending before Hon’ble Bombay High Court should be excluded for calculating the period of limitation for filing the appeal of the cross-objection - Section 35B (3), (4) & (5) of CEA. Held that: - Tribunal has been granted the power to condone the delay if it is satisfied that there was sufficient cause for not presenting the appeal within the period prescribed under Sub-Section 3 of Section 35B of Central Excise Act. It is also seen that no upper limit has been prescribed for condoning the delay in filing the appeal provided sufficient cause is shown for not presenting the appeal within the prescribed period. Hon’ble Apex Court in the case of Ketan V. Parekh Versus Special Director, Directorate of Enforcement and another. [2011 (11) TMI 62 - SUPREME COURT OF INDIA], has interpreted Section 29(2) of the Limitation Act, by observing that wherever the law prescribed a complete code prescribing time limit as well as power of condonation like an upper limit for condonation of delay or grounds of condonation, the law of limitation cannot be invoked to by-pass the same. In the instant case, laws of limitation cannot be invoked as we are dealing with a complete code prescribed under Central Excise Act, where not only the period of limitation is prescribed but also the grounds on which condonation can be granted are prescribed. However it is seen that, as against the provisions examined in para 4 above, there is no upper limit for period of condonation in the instant case. Thus there is no necessity to invoke the provisions of the Limitation Act, so long as the reasons of delay are covered by the provisions of law. Whether there was reasonable cause for delay? - Held that: - when various High Courts had taken a clear stand on the issue the appellants approach to Hon’ble High Court on the same issue of pre-deposit was not with clean hands. Even after the decision of Hon’ble High Court was received the appellants delayed the filing of appeal for a long time. This shows the callous approach. Application for COD dismissed.

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• 2017 (12) TMI 1135
  Valuation - inclusion of reimbursement of expenses - Clearing and forwarding agency service - Circular F. No. B. 43/7/1997-TRU dated 11/07/1997 - Held that: - the issue covered by the decision in the case of M/s BALMER LAWRIE & CO LTD Versus CCE, RAIGAD [2013 (11) TMI 712 - CESTAT MUMBAI], where it was held that In case where the Cargo Handling Service and transportation services are rendered, and if in the bills raised for the services rendered, transportation is shown separately (on actual basis, verifiable by documentary evidence), the tax would be leviable only on the Cargo Handling Charges - the appellant have rightly discharged the service tax and we take notice of the fact that on the GTA service, the recipient or the principal of the appellant have discharged service tax on reverse charge basis. Demand of service tax, again on the same transaction from the appellant is bad in spite of the Department accepting the service tax paid by the recipient of service on reverse charge basis. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (12) TMI 1160
  Refund of unutilized CENVAT credit - rejection on the ground that the refund of credit is admissible only in case where the goods has been exported and that such refund claim has to be filed alongwith proof of due exportation and relevant extract of the records maintained under the said rule or deemed credit register maintained in respect of the textile fabrics - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., NASIK Versus JAIN VANGUARD POLYBUTLENE LTD. [2010 (6) TMI 171 - BOMBAY HIGH COURT], where it was held that High Court in present case cannot take different view from the Union of India v. Slovak India Trading Co. Pvt. Ltd. [2006 -TMI - 606 - HIGH COURT OF KARNATAKA (BANGALORE)], as approved by the Supreme Court, where The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. Appellants are eligible to the refund claim filed by them - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1159
  Mis-decaration of inputs - main allegation is that the appellants mis-declared the stock of inputs for availing transitional credit and thus availed excess credit - It is the consistent case of the appellant that the stock cleared by them is correct and although they had stopped making entries in old stock book noted II/2 and started a new book indicated as II/1, the quantity of stock noted in these two books tallies and can be reconciled - Held that: - the contention of the appellant that the quantity of stock can be arrived by backward calculation is not to be accepted - The note attached to Schedule J merely states that the exact quantity of sales is unascertainable. It does not mean that it is not possible to ascertain at all. From such statement, what can be reasonably inferred is that it may not be possible to ascertain the figures (quantity of sales) with arithmetical precision. Definitely when the department does not dispute the quantity of inputs purchased, the duty paid on such inputs and the quantity of finished products cleared by appellants during the period, especially March 2001, the quantity of stock held by appellants for the period 7.3.2001/10.03.2001 can be safely arrived at basing on such details - the appellants should be given a further chance to establish their case by reconciliation of the figures in the stock books/statements - matter remanded. Time limitation - Held that: - Since the matter is remanded, the said issue also can be considered by the adjudicating authority. Appeal allowed by way of remand.

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• 2017 (12) TMI 1155
  CENVAT credit - outdoor catering service - whether appellant is entitled to Cenvat credit in respect of “outdoor catering service” particularly when such service was excluded from the definition of input service w.e.f. 1st April, 2011? - Held that: - outdoor catering service was mainly provided to outsider business guests. Firstly outdoor catering service is in relation to overall function of the manufacturer related to business, therefore it cannot be said that this service is for personal use of the employees. Secondly, it is primarily used not for the employees but for other than the employees which are business guests of the appellant. In the present case outdoor catering service is not provided primarily for personal use and consumption of the employees therefore does not fall under the exclusion category. I also find that even if the exclusion of certain service is provided from the definition of input service, this Tribunal has allowed the credit on the identical services. Extended period of limitation - Held that: - on the identical issue auditors have raised objection by issuing show cause notice dated 24-4-2015 for the almost same period - reliance placed in the case of Nizam Sugar Factory Vs. Collector of Central Excise, A.P. [2006 (4) TMI 127 - SUPREME COURT OF INDIA] that once the SCN for a particular period was issued, for the same period, another SCN cannot invoked extended period - demand is clearly time barred for the extended period. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1154
  Clandestine manufacture and removal - revenue neutrality - Held that: - the Tribunal had upheld the charges of removal of goods but remanded only on limited aspect of reworking of demand and the above findings of the Tribunal was not challenged before higher forum by the assessee. Thus the demand on merits cannot be challenged now as the Tribunal’s findings has become final and only reworking of demand can be looked into. The re-quantification of demand cannot be undertaken at this stage since it involves the detail inspection of the records and documents. Further the modvat aspect for the purpose of quantification has also to be looked into. We thus find it appropriate to remand the case back to the adjudication authority for limited purpose of quantification. Appeal allowed by way of remand.

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• 2017 (12) TMI 1153
  Penalty - Wrong availment of CENVAT credit twice - Held that: - It is seen that the respondents had wrongly availed cenvat credit of Rs. 17,56,363/-. When the same was detected instead of reversing the credit, they once again took credit resulting in second wrong availment of credit. Rs. 17,56,363/- is not a small amount that the respondents could not have noticed. When instead of reversing the credit, they took it once again, it clearly points to the intention to evade duty as Rs. 35,12,729/- is not a small amount which they could not have noticed - penalty justified. Penalty on the Managing Director of the respondents firm - Rule 26 (2)(ii) of Central Excise Rules read with Cenvat Credit Rules 2004 - Held that: - The Order-in-Original points out that the Managing Director had by his statement dated 21.01.2014 stated that ER1 return filed by them indicate that certain amount was reversed in October 2009 on account of wrong credit taken a year back. The said statement was incorrect, and thus his involvement cannot be ruled out - penalty rightly imposed. Refund in respect of duty paid twice - unjust enrichment - Held that: - there is no provision under Central Excise Act and Rules allowing suo moto taking of credit or refund without sanction by the proper officer. The appellant’s contention that refund in respect of duty paid twice cannot be considered as refund of duty and is only the accounting error does not appeal to us as the debit entry made in the accounts is towards payment of duty only and therefore refund of these amounts has to be considered as refund of duty only - It is seen that at the material time, the respondents were selling the goods on the basis of MRP. In these circumstances, the MRP includes the duty and thus it cannot be held that the respondents had not recovered the duty from the ultimate customer - the adjustment of Rs. 11,59,902/- and Rs. 171,432/- cannot be allowed. The impugned order is set aside and the order in original is restored.

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• 2017 (12) TMI 1151
  CENVAT credit - inputs used by their sub-contractor in their factory for making various equipments - denial on the ground that the goods have been used by job workers and not by the appellant - Held that: - Rule 2 of the said Rules permits a manufacturer to take credit of specified duties paid on such capital goods received by the factory. It is apparent from the above Rules that there is no requirement for the manufacturer to purchase the said capital goods to avail cenvat credit. The only requirement is that he should receive the goods falling under the definition of capital goods in his factory. It is seen that the entire case is built on the assertion that the goods on which credit has been availed, whether invoice to job worker or the appellant, are used by the job worker for the erection of the plant/machinery/equipment specified in the show cause notice. It is apparent that there is no requirement under the Cenvat Credit Rules, 2002 for the manufacturer availing credit to himself purchase the goods. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1149
  CENVAT credit - whether the appellant is entitled for the cenvat credit on angles, channels, beams, nut-bolts, guides etc. used by them for fabrication of vertical storage structure, racks for storage of raw material and finished goods? - Held that: - This rack is used for storage of raw material and finished goods. The storage of goods in a manufacturing unit is very vital part for manufacture. Without storage system, material management is impossible and consequently it will adversely affect the entire manufacturing chain in the factory - since the steel items viz, angles, channels, beams etc used for making storage rack are used in or in relation to manufacture of final product, hence clearly eligible for cenvat credit. The material used for storage system is eligible for cenvat credit - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1145
  Valuation - includibility - transportation/ freight charges - Held that: - even though it is not shown in the excise invoice but by raising the commercial invoice the freight amount has been separated from the total sale value, therefore irrespective of the fact that whether it is shown separately in the excise invoice or it is charged separately in the commercial invoice, it is one and the same thing - only due to non-inclusion of freight amount in the excise invoice the same cannot be included in the assessable value - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 1172
  Revision of assessment of assessment - absence of F-forms - benefits of stock transfer after the amendment made to Section 6A of the Central Sales Tax Act, 1956 - Held that: - relaince placed on the decision of the Honourable Supreme Court in India Agencies (Regd.) v. Additional Commissioner of Commercial Taxes, [2004 (12) TMI 372 - SUPREME COURT OF INDIA] which categorically found that concessional tax on C-Form sales, cannot be allowed on production of photostat copy of the counterfoil. It cannot be said to be strict or even substantial compliance of Rule 12(3) - there is no reason to entertain the revision since no question of law arises from the impugned order - revision dismissed.

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