TMI Tax Updates - e-Newsletter
December 6, 2018

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Benami transactions - Transaction where cash is paid to person in lieu of a future promise cannot be a Benami as there is no lending of name

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Articles

1. Credit eligibility – cases where no payment liability exists

   By: Shilpi Jain

2. AN UPDATER ON RECENT CHANGES IN GST

   By: Dr. Sanjiv Agarwal

3. CIRCULARS- WHY THEY ARE NOT FOLLOWED EVEN BEFORE THE SUPREME COURT AND LITIGATION IS CONTINUED? BRAIN DRAIN IN UN-NECESSARY LITIGATION MUST COME TO AN END

   By: DEVKUMAR KOTHARI

News

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

2. Examination for Confirmation of Enrollment of GST Practitioners

3. Three day 80th Session of the Policy Commission Meeting of the World Customs Organization (WCO) concludes in Mumbai today; Member countries exchanged their experiences and best practices in different areas of cross border trade;

4. Government of India and Republic of Peru signs Co-operation and Mutual Assistance in Customs Matters

5. Fifth Bi-monthly Monetary Policy Statement, 2018-19 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India

Notifications

Customs

1. 56/2018 - dated 4-12-2018 - ADD

Seeks to levy definitive anti-dumping duty on the imports of "Uncoated Copier Paper" originating in or exported from Indonesia, Thailand and Singapore

GST - States

2. 19721-309-21/2018 - dated 26-11-2018 - Madhya Pradesh SGST

THE MADHYA PRADESH GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2018

3. 66/2018-State Tax - dated 29-11-2018 - Maharashtra SGST

Extension of the due date for filing of FORM GSTR –7 for the months of October, 2018 to December, 2018.

4. L.A. BILL No. LXXI OF 2018 - dated 22-11-2018 - Maharashtra SGST

Amendments to MGST Act, 2017 [L. A. BILL No. LXXI OF 2018. Dt. 22-11-2018]

5. 36072-FIN-CT1-TAX-0034/2017-S.R.O. No. 448/2018 - dated 19-11-2018 - Orissa SGST

CORRIGENDUM - Notification No.34124-FIN-CT1-TAX-0034-2017/FIN., dated the 30th October, 2018, S.R.O. No 434/2018.

6. G.O. Ms. No. 57 - dated 8-11-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Thirteenth Amendment) Rules, 2018.

7. G.O. Ms. No. 56 - dated 7-11-2018 - Puducherry SGST

Seeks to provide taxpayers whose registration has been cancelled on or before the 30th September, 2018 time to furnish final return in FORM GSTR-10 till 31st December, 2018.

8. G.O. Ms. No. 55 - dated 7-11-2018 - Puducherry SGST

Seeks to exempt post audit authorities under MoD from TDS compliance.

9. G.O. Ms. No. 54 - dated 23-10-2018 - Puducherry SGST

Seeks to supersede Notification No. G.O. Ms. No.34/CT/2017-18 dt. 20.09.2017.

10. F.No. 3240/CTD/GST/2018/12 - dated 23-10-2018 - Puducherry SGST

Seeks to extend the last date for filing of FORM GSTR-3B for the month of September, 2018 till 25.10.2018 for all taxpayers.

11. G.O. Ms. No. 53 - dated 19-10-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Twelfth Amendment) Rules, 2018.

12. G.O. Ms. No. 52 - dated 19-10-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Eleventh Amendment) Rules, 2018.

13. G.O. Ms. No. 49 - dated 28-9-2018 - Puducherry SGST

Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies.

14. G.O. Ms. No. 46 - dated 25-9-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Tenth Amendment) Rules, 2018.

15. G.O. Ms. No. 45 - dated 21-9-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Ninth Amendment) Rules, 2018.

16. G.O. Ms. No. 44 - dated 21-9-2018 - Puducherry SGST

Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores.

17. G.O. Ms. No. 43 - dated 12-9-2018 - Puducherry SGST

Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6

18. G.O. Ms. No. 42 - dated 12-9-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Eighth Amendment) Rules, 2018.

19. F. No. 3240/CTD/GST/2018/11 - dated 12-9-2018 - Puducherry SGST

Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. F.No. 3240/CTD/GST/2017/6, dated the 10th August, 2018.

20. F. No. 3240/CTD/GST/2018/10 - dated 12-9-2018 - Puducherry SGST

Amendments in the Notification issued in F.No. 3240/CTD/GST/2017/4, dated the 19th September, 2017 and Notification issued in F.No. 3240/CTD/GST/2018/l, dated the 29th March, 2018.

21. F. No. 3240/CTD/GST/2018/09 - dated 12-9-2018 - Puducherry SGST

Amendments in the Notification No. F.No. 3240/CTD/GST/2017, dated the 08th August, 2017; and F.No. 3240/CTD/GST/2017/7, dated the 17th November, 2017.

Circulars / Instructions / Orders

SEZ

1. Instruction No. 91 - dated 28-11-2018

Applicability of Notification No. 43/2015-20 dated 05.11.2018 to SEZ units-reg.

GST - States

2. 36T of 2018 - dated 3-12-2018

Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Trade Circular Nos.14T of 2018 dated 23.04.2018 and 35T of 2018 dated 3rd December 2018.

3. 35T of 2018 - dated 3-12-2018

Modifications to the procedure for interception of conveyances for inspection of goods in and detention, release movement, and confiscation of such goods and conveyances, as clarified in Circular No. 14T of 2018 dated 23.04.2018.

4. 02/2018-Puducherry GST - dated 25-9-2018

Extension of time-limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Puducherry Goods and Services Tax Rules, 2017 in certain cases.

DGFT

5. 56/2015-2020 - dated 5-12-2018

Change in Appendix 1A of Foreign Trade Policy, 2015-20 — reg.

Highlights / Catch Notes

Income Tax

• Section 263 Revision: Capital Gain from Share Sale Excluded from Book Profit Tax, AO's Inquiry Found Inadequate.

  Case-Laws - AT : Revision u/s 263 - capital gain earned by the assessee on sale of the shares has not been offered for the Book Profit tax under section 115JB - since no proper inquiry was conducted by the AO, the order is erroneous so far as it is prejudicial to the interest of the revenue.
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• Income Tax Exemption u/s 10(22) Requires Institution to Be Educational and Based in India, Foreign Ties Irrelevant.

  Case-Laws - AT : Exemption u/s. 10(22) - The recipient of the income must have the character of an educational institute in India and its character outside India or it being a part of university existing outside India is not relevant for deciding whether its income would be exempt u/s. 10(22) of the Act or not.
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• AO and CIT(A) Overlook Compliance Check; AO Ordered to Re-evaluate Assessee's Accounts Under Companies Act.

  Case-Laws - AT : MAT - Minimum Alternate Tax - Both the lower authorities, AO as well as CIT(A), have not considered whether, after examination by Registrar of Companies, whether Registrar of Companies was satisfied that the accounts of the assessee are maintained in accordance with the requirements of the Companies Act - AO directed to decide the issue afresh.
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• SEZ Income Must Be Included in MAT Calculations u/s 115JB Despite Legal Challenges in High Court.

  Case-Laws - AT : MAT computation - book profit as determined u/s. 115JB - Consideration of SEZ Income while computing book profit for the purpose of MAT - Merely because assessee has challenged the amendment in the High Court, additions made by AO cannot be deleted.
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• Court Rejects Transfer Pricing Adjustment on AMP Expenses Due to Misapplication of Bright Line Test by TPO.

  Case-Laws - AT : TPA on AMP computed by the TPO using BLT - Comparison of the AMP over sales ratio of the assessee with the AMP ratio of Pepsi Co Group on a worldwide basis was nothing but a distorted version of the BLT - Cannot sustain.
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• Court Upholds Addition of "Cash Credit" u/s 68 for Unexplained Funds in 1992 Investment Case.

  Case-Laws - HC : Addition of “cash credit” u/s 68 - It is very unlikely that a person carrying on small chitty and financing business could raise ₹ 2, 00, 000/- as advance for investment in a Company in the year 1992. - Additions confirmed.
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• Assessing Officer Cannot Use Section 69 for Unaccounted Turnover; Only Embedded Profit Can Be Taxed.

  Case-Laws - AT : In case of unaccounted turnover, only addition of profit embedded therein can be made - in such circumstances Assessing Officer cannot take resort to Section 69 of the Act.
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• Income from Leasing a Closed Business Unit Treated as House Property; No Business Expense Claims Allowed.

  Case-Laws - AT : When there is a complete stoppage of the business and the assessee is offering income from leasing from the unit as income from house property, there is no question of allowance of expenses or depreciation in this regard.
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• Proving a "Benami" Transaction Requires Evidence; Cash for Future Promises Isn't Enough Due to Lack of Name Lending.

  Case-Laws - AT : Benami transactions - The existence of the “benami” transaction has to be proved by the authorities i.e. the person who alleges the transaction - The transaction where cash is paid to person in lieu of a future promise cannot be a “benami” transaction as there is no lending of name.
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• Document Management Charges Taxed u/s 194C, Not 194J, Due to Non-Technical Nature of Work.

  Case-Laws - AT : TDS u/s 194C OR 194J - document management charges - the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and accordingly subject to tax u/s 194C.
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• Tax Deduction u/s 194C Confirmed Appropriate for Payments to Installation Service Providers with Basic Training.

  Case-Laws - AT : TDS u/s 194C OR 194J - TDS on payment made to installation service provider - the installation services providers were given basic training to make them understand the process of Installation - assessee had correctly deducted tax u/s 194C
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Customs

• Anti-Dumping Duty Proposed on Uncoated Copier Paper Imports from Indonesia, Thailand, and Singapore to Protect Local Industries.

  Notifications : Seeks to levy definitive anti-dumping duty on the imports of "Uncoated Copier Paper" originating in or exported from Indonesia, Thailand and Singapore
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SEZ

• Notification on SEZ Units: Compliance & Operational Guidelines for Regulatory Alignment and Tax Adherence.

  Circulars : Applicability of Notification No. 43/2015-20 dated 05.11.2018 to SEZ units-reg.
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State GST

• GST Interception Procedures Updated: Streamlined Process for Inspection, Detention, and Confiscation of Goods as per Circular No. 14T.

  Circulars : Modifications to the procedure for interception of conveyances for inspection of goods in and detention, release movement, and confiscation of such goods and conveyances, as clarified in Circular No. 14T of 2018 dated 23.04.2018.
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• GST Updates: New Procedures for Detention and Confiscation of Goods in Transit Streamlined per 2018 Trade Circulars.

  Circulars : Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Trade Circular Nos.14T of 2018 dated 23.04.2018 and 35T of 2018 dated 3rd December 2018.
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Service Tax

• Voluntary Compliance Encouragement Scheme Time Limit Applies Only If Assessee Is Eligible u/s 101.

  Case-Laws - AT : Rejection of Voluntary Compliance Encouragement Scheme (VCES) - The time limit for issuing notice u/s 101 of VCES will be applicable if and only if the assesse is entitled to file the VCES.
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• Court Overturns Penalties Due to Lack of Suppression Evidence in Service Tax Case Involving Reverse Charge Mechanism.

  Case-Laws - AT : Extended period of limitation - Levy of penalty - Partial RCM - It cannot be said that only because audit party had found non-observance of partial reverse charge mechanism procedure in respect of certain services, without any reference to the categorising of service provider, appellant is to be tested for suppression etc. - Demand set aside.
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• Best Judgment Assessment: Fair, Data-Driven Estimations, Not Punitive Actions by Adjudicating Authorities. Avoid Arbitrary Calculations.

  Case-Laws - AT : A best judgment assessment should be based on material and data on record. It is not a tool in the hands of the Adjudicating Authority to punish the assessee. The estimation should be fair and reasonable, and not a wild guess work.
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• Service tax exemption for services in Jammu and Kashmir, including local flights, u/s 64 of the Finance Act, 1994.

  Case-Laws - AT : Demand in respect of the service provided in Jammu and Kashmir - POPOS Rules - the flights originated and terminated in J&K - Service Tax is not chargeable on the value of services provided in J&K as per Section 64 of the Finance Act, 1994
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• Service Tax Reverse Charge Mechanism Creates Revenue-Neutral Situation; No Mala Fide Intent Found, Demands Unsustainable.

  Case-Laws - AT : Reverse charge mechanism (RCM) - non-payment of service tax - the service tax on all the above services was available as credit to the appellant, thus leading to a Revenue neutral situation in which case again no mala fide can be attributed and demands cannot be sustained.
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• Service Tax Demand on RBI Cleaning Services Overturned Due to Contradictory Show Cause Notice, Extended Limitation Period Invoked.

  Case-Laws - AT : Validity and scope of of SCN - Service Rendered to RBI - Cleaning Service - demand raised by invoking extended period of limitation - there is contradiction in the said show cause notice - Demand set aside.
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• Bundled Charges for Residential Complex Construction Must Emphasize Construction as Core Service Component.

  Case-Laws - AT : Bundled service - construction of residential complex service is the service which gives essential character to the package of the service and, therefore, the charges are essentially required to be bundled with the single service namely construction of residential complex service
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• Sewer Pipe Laying Not Classified as Erection, Commissioning, and Installation Service; Falls Under Works Contract Service Category.

  Case-Laws - AT : Classification of service - Works contract service or Erection Commissioning and Installation service - laying sewer pipe/sewerage system - From no stretch of imagination such an activity can be called as Erection Commissioning and Installation Service.
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• Reversal of CENVAT Credit Allows Abatement Benefit Under Notification No. 1/2006-ST.

  Case-Laws - AT : Benefit of abatement - benefit of abatement denied on the ground that CENVAT Credit availed - reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST ibid.
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Central Excise

• Tribunal Lacked Authority to Dismiss PSU Appeal for Missing COD Clearance, Jurisdiction Questioned in Dismissal Case.

  Case-Laws - HC : Appeal by PSU - Even when there was no COD clearance granted, the Tribunal had no jurisdiction and authority under the law to dismiss the appeal for want of COD and then to require the parties to apply restoration upon obtaining clearance.
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• Job Worker Not Liable for Duty on Processed Goods; Demand Set Aside Due to Limitation Period u/r 4(5)(a).

  Case-Laws - AT : Extended period of limitation - Liability to discharge duty by the job worker - the issue of liability to discharge duty on the processed goods by the job worker when the raw materials were received under Rule 4(5)(a) of the Cenvat Credit Rules, 2002, marred with conflicting views of this Tribunal resulting into the present reference to Larger Bench - Demand set aside on the ground of limitation.
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• Cenvat Credit Cannot Be Denied Solely on Input-Output Ratio Without Substantial Evidence, Court Rules.

  Case-Laws - AT : Cenvat Credit - Clandestine removal - excess use of inputs - there are no justifiable reasons to deny the credit to the appellant merely on the basis of the input output ratio
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VAT

• Mumbai Jurisdiction Confirmed for Central Sales Tax Due to Goods Appropriation Location in Contract.

  Case-Laws - HC : Jurisdiction - Scope of Inter-state sales - the incidence of Central Sales Tax or even sale of goods, occurs where the goods are appropriated to the contract. In this case, the place where the appropriation took place, is undoubtedly Mumbai.
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• Courts Should Interpret Broad Terms Literally to Uphold Legislative Intent in Preventing Tax Evasion Through Illegal Goods Transport.

  Case-Laws - HC : Levy of penalty - illegal transportation of goods - Trite it is that in construing provisions designed to prevent tax evasion, if the legislature uses words of comprehensive import, the Courts cannot proceed on an assumption that the words were used in a restricted sense so as to defeat the avowed object of the legislature.
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Case Laws:

• GST

• 2018 (12) TMI 295
  Release of Goods - goods seized on account of improper invoice in respect of some of the builites - Held that:- Since the petitioner is the selling dealer and the sale transaction has not attained finality, he continues to be the owner of the goods and is therefore entitle for the release the same in accordance with the provisions of Section 129 (1) (a) of the Act. Penalty - Held that:- The penalty order has nothing to do with the order of the release and it can be challenged in the appropriate forum independently. Petition disposed off.

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• Income Tax

• 2018 (12) TMI 294
  Addition u/s 68 - Initially burden cast upon the assessee had been adequately discharged by sufficient evidence - Held that:- Special Leave Petition dismissed.

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• 2018 (12) TMI 293
  Penalty u/s 271D - failure to comply with Section 269SS - reasonable cause u/s 273B for entering into such transactions through journal entries - Tribunal holds that the failure to comply with Section 269SS was on account of reasonable cause on the part of the respondents - Held that:- We find no reason to entertain these special leave petitions, which are, accordingly, dismissed. Pending application (s), if any, shall stand disposed of.

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• 2018 (12) TMI 292
  Assessment u/s 153A - absence of satisfaction - statutory mandate to record “reasons to believe” - Held that:- “Reasons to suspect” and not “reasons to believe” were sufficient to conduct a search of the lockers in question. The need and requirement to record “reasons to believe”, which is the statutory mandate was required and necessary in the present case, in the absence of the satisfaction of the condition and requirements of clause (i) to Section 132(1) of the Act in the satisfaction note. The contention of the respondents that jewellery was found in locker No.7325-A and Nagina Judge has taken contradictory stands is of no avail. Validity or invalidity of search is not to be judged and decided on the basis whether or not anything was found in the locker including locker Nos. 7712-D and 7637-A, which were empty. Validity of search has to be decided and adjudicated on the basis of satisfaction note; whether satisfaction note satisfies the statutory requirements and the respondents have acted in accordance with law. In fact, there is contradiction in the plea raised by the respondents for nothing was found in locker Nos.7712-D and 7637-A. An irregularity in exercise of search and seizure would not affect the authorization or search. It could in a given case vitiate the action taken when the officer executing the search and seizure has acted malafidely. Clearly, therefore, legal validity of issue of warrant of authorization is distinguished from the manner and method in which it has been executed. The respondents have also placed reliance on Section 292CC of the Act. The said section is of no relevance to the present case. It was inserted by Finance Act, 2012 with retrospective effect from 1st April, 1996 in view of some judgments holding that authorization for search must be separately issued in the name of each person and when warrant of authorization is issued in the name of more than one person, the assessment is to be made against all of them as Association of Persons and not as separate individuals. We fail to understand relevance of the said provision in the factual matrix of the present case. Supplementary or secondary contentions raised by the respondents have to be rejected. Authority and power to conduct search and seizure operations is strident and caustic power authorized by law to be taken recourse to when the conditions mentioned under different clauses of Section 132 (1) of the Act are satisfied. Constitutional validity of the said provision has been upheld due to the safeguards provided by the section itself, to prevent and check cases of abuse and misuse. Investigation and detection of economic offences is onerous and a difficult task, for often evidence and material is concealed and subterfuge is adopted to prevent and deflect detection. This, however, does not give liberty to the authorities to disregard and authorize search and seizure operations without formation of requisite belief. Power and authority given to the authorities must be exercised in terms of the statute and not contrary to and in violation of jurisdictional requirements. Power, as given, also imposes an obligation on the authorities to satisfy jurisdictional pre-conditions for the exercise of power to be held to be valid and not bad and contrary to law. We find merit in the present writ petitions and hold that the warrants of authorization for search and seizure operations in respect of the three lockers in the case of three petitioners are vitiated and illegal. Warrants of authorization against the petitioners are quashed and set aside. Consequently, proceedings under Section 153A of the Act are also set aside and quashed. We, however, clarify that we have not commented on evidence, if any, collected during the course of search and whether the said evidence or material can be used in any proceedings initiated by the income-tax authorities in accordance with law. - Decided in favour of assessee.

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• 2018 (12) TMI 291
  Estimation of bus income - Held that:- Pertaining to the assessee's son both as an HUF and as an individual. The Tribunal has taken note of the age of the bus as well as the reasons given by the Assessing Officer for the assessment year 1984-85 and fixed the expenditure at Rs. 14,100/- per month for all the three assessment years, which were under consideration in the assessee's son's case. In our considered view, the reasons assigned by the Tribunal are just and fair and that there is a clear method followed by the Tribunal for computing the expenses per bus per month. Thus, the Tribunal ought to have adopted the same method in the assessee's case also and there is no reason given by the Tribunal to take a different view. Accordingly, we answer substantial question of law No.1 in all the appeals in favour of the assessee and against the Revenue. We direct the Assessing Officer to first compute the expenditure by adopting the computation done in the assessee's son's case. Telescoping of the credits - Held that:- The Tribunal found that the plea of the assessee for telescoping of the credits to the extent of income added in the business account is reasonable and accordingly, restricted the income to the extent it could not be telescoped with the addition made on account of income from business. We find that the Revenue has not been able to point out before us as to why a similar relief should not be granted in the assessee's case also. Share income/loss from transport business in the bigger HUF and from the business of provisions stores in the name and style of Dhanapal Maligai (smaller HUF) - assessee offered the income in the HUF. However, the Assessing Officer held that it should be assessed in the hands of the individual - Held that:- We find that the Assessing Officer has actually recorded a finding that the assessee became a partner of Dhanapal Maligai, that the capital was Rs. 30,000/- as on 30.6.1986 and Rs. 3.5 lakhs as on 30.6.1987 and that the investment in the firm has not been made out of the HUF funds and there had been no detriment of HUF funds. He further held that the share from Dhanapal Maligai would arise for consideration only in the hands of the individual. With regard to the share income from the transport business, which was brought by the assessee in the bigger HUF, the AO held that the income derived from the bus said to be belonging to HUF is assessable in the hands of the individual and completed the assessment. The factual findings rendered by the Assessing Officer as confirmed by the CIT (A) as well as the Tribunal do not call for interference, as we find that there is no perversity in the same - Decided in favour of revenue

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• 2018 (12) TMI 290
  Addition of “cash credit” u/s 68 - “advance” towards allotment of shares - Held that:- By the time the assessment was taken up, the investor died. The daughter-in-law of the deceased submitted that her mother-in-law would have made such investment out of cash in hand. In fact, the specific submission made by the daughter-in-law before the AO was that her husband, the son of the investor, died in the year 1965 and her father-in-law died in 1975. The mother-in-law is said to have been carrying on small chitty and financing business. It is very unlikely that a person carrying on small chitty and financing business could raise Rs. 2, 00, 000/- as advance for investment in a Company in the year 1992. We, hence, find that the essential question raised is on facts as to the satisfactory nature of the explanation offered. We do not think that the reliance placed on the decision of the Delhi High Court can be sustained especially in view of the fact that Section 68 was not noticed by the STELLAR INVESTMENT LIMITED [1991 (4) TMI 100 - DELHI HIGH COURT]. We, hence, refuse to answer the questions of law, on the ground that there was no positive evidence tendered by the assessee as to the source of the amounts shown in the accounts and the explanation offered was also found to be not satisfactory.

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• 2018 (12) TMI 289
  Reopening of assessment u/s 148 - addition on account of cash deposited in the bank account - Held that:- A.O. in this case recorded in the assessment order that as per information available on record, assessee has made cash deposit of Rs. 39 lakhs in his bank account and on that basis, A.O. recorded reasons for reopening of the assessment reproduced above. Further, in the reasons, A.O. has recorded about information available with him of cash deposit of Rs. 10 lakhs only. Thus, there is a contradiction in the statement recorded in the assessment order as well as in the reasons above. The A.O. without verifying the information has recorded the reasons for reopening of the assessment. A.O. has not applied his independent mind to the information received in this regard. The deposit in the bank account per se cannot be income of the assessee. It is mere suspicion of the A.O. based on an incorrect fact that income chargeable to tax has escaped assessment. - decided in favour of assessee. Levy of penalty under section 271(1)(c) - A.O. levied the penalty on account of addition made of unexplained cash deposit - Held that:- Since the re-assessment have been quashed and addition have been deleted, therefore, penalty proceedings would not survive. Accordingly, set aside the Orders of the authorities below and cancel the penalty.

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• 2018 (12) TMI 288
  Levying penalty u/s.271(1)(c) - Recording of valid/ proper satisfaction by the AO - default of furnishing of inaccurate particulars of income - Held that:- At the time of initiation of penalty proceedings in the assessment, AO did not mention any of the limbs of clause (c) of section 271(1) in the order of assessment. The penalty order suggests the levy of penalty for the default of furnishing of inaccurate particulars of income. This manner of recording of satisfaction suggests the existence of ambiguity with reference to applicability of specific limb of the clause. The same falls short of the legal requirement. Considering the binding judgments such penalty order is unsustainable in law legally. AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. Penalty order is liable to be quashed on this legal issue. Thus, the order of CIT(A) is set-aside and direct the AO to delete the penalty. Accordingly, the grounds of appeal raised by the assessee are allowed.

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• 2018 (12) TMI 287
  Disallowance of Foreign Travelling expenditure and Domestic Travel expenses - AO rejected the contentions of the assessee as the assessee failed to discharge its onus to prove that the expenses were incurred wholly and exclusively for the purposes of its business and only bald statements were made without any evidences being placed on record - Held that:- Disallowance of Foreign Travelling Expenses and Domestic Travelling Expenses is to be restored back to the file of AO for fresh adjudication on merits in accordance with law and we restore this issue back to file of AO for fresh adjudication after considering the submissions of the assessee, as while passing appellate order, CIT(A) has followed the appellate order passed by his predecessor for AY 2005-06 which itself was set aside by the tribunal. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. The relevant explanations/evidences submitted by the assessee in its defence shall be admitted by the AO and adjudicated on merits in accordance with law. This ground of appeal number 1 filed by the assessee is allowed for statistical purposes. Penalties and fines disallowance - Held that:- The detail of said penalties are placed in paper book at page no. 106 to 118. On Perusal of these details which are placed in paper book filed with tribunal, we have observed that these expenses are toward traffic challan, interest, tax etc and in all fairness to both the parties, the matter need to be set aside and restored to file of the AO who shall analysis each and every claim of these expenses as claimed by the assessee. The onus is on the assessee to place all details before the AO and If these expenses are found to be penal in nature and hit by explanation 1 to section 37(1), the same shall be disallowed by the AO in set aside proceedings but if the same are found to be compensatory in nature the same shall be allowed by the AO. The complete details are not furnished by the assessee and the assessee is directed to provide details with respect to each of these expenses claimed by the assessee with cogent evidences to substantiate that these payments are not penal in nature. Thus, we are restoring this issue back to the file of AO for fresh adjudication after considering the submissions of the assessee. Disallowance of Vehicle Expenses - Held that:- Ihas to be restored back to the file of AO for fresh adjudication on merits in accordance with law and we restore this issue back to file of AO for fresh adjudication after considering the submissions of the assessee, as while passing appellate order, the learned CIT(A) has followed the appellate order passed by his predecessor for AY 2005-06 which itself was set aside by the tribunal. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Expenses incurred for Pali Hill Bungalow owned by the assessee disallowed - part of the said Bungalow was used for residence of Directors and also perquisite value in the hands of the Directors as well expenses incurred by the assessee on behalf of the Directors was not yet determined - Held that:- Issue has to be restored back to the file of AO for fresh adjudication on merits in accordance with law and we restore this issue back to file of AO for fresh adjudication after considering the submissions of the assessee, as the learned CIT(A) followed the decision of his predecessor for AY 2005-06 which itself was set aside by the tribunal. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Disallowance of deduction u/s. 80IA - Deduction not to be allowed unless return furnished - return filed beyond the time stipulated u/s 139(4) - Held that:- doctrine of supervening impossibility has to be pressed and proved by the assessee for which onus is on the assessee. If in every situation of dispute/litigation interse between tax-payer and/or between promoters, the claim of deduction u/s 80IA of the 1961 Act is allowed despite return of income being filed beyond time as stipulated u/s 139(1), then Section 80AC will become otiose. The said Section 80AC was a newly inserted section which was inserted by Finance Act, 2006 w. e. f. 01. 04. 2006 which has been specifically brought in by Parliament to grant exemption to those tax-payers who file their return within due date as prescribed u/s 139(1) and this is the first year when the said section is applicable. With the aforesaid observations, we are restoring this issue back to the file of the AO for fresh adjudication of the issue on merits in accordance with law. Claim of deduction u/s 80HHD - reserve has been utilized for purchase of fixed assets - Held that:- The onus is on the assessee to prove that the assessee is entitled for deduction u/s 80HHD of the 1961 Act and that it had met all the requirements of provisions of Section 80HHD and its case comes strictly within the four corners and parameters of the conditions as are stipulated under Section 80HHD of the 1961 Act. The onus is on the assessee to prove that the AO while framing assessment erred in adding back reserves to the tune of Rs. 1, 27, 79, 045/- during the impugned assessment year which reserved were created by the assessee in the financial year ended 31. 03. 2000 within provisions of Section 80HHD of the 1961 Act and the said reserve amount was utilised within time period as mandated u/s 80HHD for the purposes as are stipulated u/s 80HHD. With the aforesaid observations, we are restoring this issue back to the file of the AO for fresh adjudication of the issue on merits in accordance with law. Disallowance u/s. 43B - payment of additional property tax(Chennai) - Held that:- The assessee is entitled for this deduction toward additional property tax paid towards Hotel Pallava, Chennai as payment has been undisputedly made on 10. 12. 2008 and keeping in view provision of section 43B(a) this expenditure is to be allowed as deduction for AY 2009-10 as the payment is actually made by the assessee for this additional property tax by the assessee on 10. 12. 2008, as per facts emerging from records. We order accordingly.

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• 2018 (12) TMI 286
  Levy of interest under Sec. 201(1A) - amount of TDS was deposited on 12.07.2007 i.e beyond the stipulated ‘due date of 07.07.2007 - A.O. rightly levied interest for the delay involved under Sec. 201(1A) - Held that:- We are of the considered view that as the assessee had admittedly tendered the cheque with the bank i.e. State Bank of India, Branch: Bandra Kurla Complex, Mumbai well within the stipulated ‘due date , therefore, it cannot be held as being in default for the delay on the part of the bank or the clearing house in making the remittance of the said amount to the Government Account. We thus in the backdrop of our aforesaid deliberations, not being able to persuade ourselves to subscribe to the view taken by the lower authorities that the assessee was to be treated as being in default for delay in deposit of the amount of TDS, thus set aside the order of the CIT(A) and delete the interest levied by the A.O under Sec. 201(1A) of the Act. Whether CIT(A) is right in law and the facts of the case in treating the assessee as being in default for delay in deposit of TDS, though the cheques towards the amount of TDS were tendered by the assessee with the government bank within the stipulated time period, had been deliberated upon and adjudicated by us while disposing off the appeal of the assessee for the ‘first quarter for the year under consideration therefore, our order therein passed shall apply mutatis mutandis for disposing off the present appeal of the assessee for the ‘first quarter . Before parting, we may herein observe that as we have quashed the interest levied by the A.O under Sec. 201(1A), therefore, the consequential demand raised by the A.O towards additional late payment interest and Interest under Sec. 220(2) shall also stand vacated.

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• 2018 (12) TMI 285
  Exemption u/s 80IA - mere work contractor or a developed of the road - Held that:- We find that in the case of the assessee itself the issue has been decided by the Tribunal it cannot be said that the assessee company was mere a contractor and not a developer. Therefore, on issue No. 3, we find no infirmity in the order of CIT(A). This issue is decided in favour of the assessee. Disallowance of depreciation on shuttering material purchased from Shyam Steel Industries - Held that:- From the copy of remand report dated 23/08/2016, we find that no such query regarding additions to shuttering material was made. The learned CIT(A) has further held that the detail of purchases of shuttering material has been examined and during examination he had found an amount of Rs. 57,91,665/- having been purchased after 30/09/2011 and rest of the purchases were from 01/04/2011 to 30/09/2011 whereas the assessee had claimed depreciation @100% on the total purchases. The learned CIT(A), after having observed the purchase of shuttering material by the assessee, did not allow claim of the assessee as he held that assessee had not produced the relevant material before the Assessing Officer during the remand proceedings also. However, we feel that one more opportunity should be given to the assessee to produce the purchase bills which has been used for making claim for depreciation. Advance made to NCC-VEE (JV) - Held that:- We find that as per the additional evidence the assessee was bound to pay an amount of 4% to NCC-VEE (JV). The said additional evidence could not be filed before the authorities below. However, we find that the additional evidence goes to the root of the matter and, therefore, we have admitted the same and we remand this issue also back to the file of the Assessing Officer who should readjudicate the above in view of the additional evidence. Addition on account of non confirmation of sundry creditors - AO during remand proceedings again issued notice u/s 133(6) to such creditors and part of the creditors responded and therefore, learned CIT(A) allowed part relief to the assessee - Held that:- CIT(A) has held that during remand proceedings the assessee had not co-operated and he has confirmed the addition by holding that the notices issued to creditors had returned back unserved. However, while confirming the addition he has ignored the fact that the assessee had claimed to have made payments to these creditors through banking channels and assessee was having confirmation from these creditors. Therefore, we deem it appropriate to remand this issue also back to the file of the AO to adjudicate the issue afresh. These grounds are allowed for statistical purposes. Deduction under Chapter VI-A allowable be allowed on the income finally assessed - Held that:- In this respect our attention was invited to a copy of CBDT Circular also, a copy of which is placed at pages 193 and 194 of the paper book which says that if the expenditure is disallowed and such expenditure is related to the business activity against which the Chapter VI-A deduction has been claimed, the deduction needs to be allowed on the enhanced profits. Since we have remanded the entire issue raised by the assessee to the Assessing Officer for readjudication, the Assessing Officer will look into this aspect of additional ground also. The additional ground raised by the assessee is also remitted back to the Assessing Officer for adjudication. Accordingly, this ground is also allowed for statistical purposes.

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• 2018 (12) TMI 284
  Rejecting the application u/s 80G - whether conditions laid down under clause (i) to (v) of section 80G(5) are fulfilled or not? - Registration u/s 12AA allowed - Held that:- CIT (Exemptions) has not made any observation regarding violation of any condition laid down under clause (i) to (v) of section 80G(5) of the Act. Further we find that on a reply filed by the assessee on 16/01/2018, without giving any opportunity to the assessee for rebuttal, the learned CIT (Exemptions) has passed order against the assessee which is against the rules of natural justice also. Therefore, we deem it appropriate to remit the issue back to the file of learned CIT (Exemptions) who should consider the application of the assessee u/s 80G afresh keeping in view the decision of various Benches of the Tribunal and also keeping in view the spirit of conditions laid down in clauses (i) to (v) of section 80G of the Act. Needless to say, the assessee will be afforded reasonable and sufficient opportunity of being heard.

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• 2018 (12) TMI 283
  Undisclosed cash expenses - addition based on incriminating evidence in the form of seized document - Held that:- CIT(A) with reference to the seized materials coectly concluded that there is no evidence on record nor any investigation was carried to establish the contentions of the Assessing Officer that these payments were made to authorities for registration of the land and it is only a presumption drawn by the Assessing Officer that these payments were made to the registration authorities. He also held that even if the presumption of the Assessing Officer is considered to be true, the assessee is entitled to set off the above expenses totaling to Rs..57,22,000/- as against the admission of undisclosed income of Rs..1,43,00,000/-. Undisclosed brokerage expenses in cash based on incriminating evidence in the form of seized document - Held that:- CIT(A) in the present assessee’s case correctly concluded that the explanation of the assessee shows that Rs..10 lakhs was received by the assessee from Shri Ravi Bhushan and since the entire sum was offered to tax for the Assessment year 2009-10 as per the Assessment Order at Para. 6.2, 6.3 and 6.4, the Ld. CIT(A) concluded that the addition should not be made. Besides the above explanation even if it is presumed that the sum of Rs. 10 lacs is the undisclosed payment by the appellant company to Shri Ravi Bhushan, the same is required to be set off against the undisclosed income of Rs. 1,43,00,000/- offered by the appellant vide para no. 6.4 of the assessment order. The appellant also offered Rs. 7,00,000/- to cover up various discrepancies and totally offered a sum of Rs. 1,50,00,000/-as referred in para no. 1 of the assessment order. In view of the above, the addition of Rs. 10 lacs is not sustained - decided in favour of assessee Addition made on account of sundry expenses - Held that:- We find that the Assessing Officer observed that almost all the expenses were incurred towards government bodies. However, the Assessing Officer has not given a finding that the entire expenses incurred were only towards government bodies. Therefore, in the absence of specific finding that entire expenses were incurred only for the government bodies entire expenditure cannot be disallowed. Therefore, keeping in view the totality of the facts and circumstances, we direct the Assessing Officer to restrict the disallowance to 75% of the expenses and allow only 25% of the said expenses as deduction. Advance payments during this assessment year and therefore not allowable as expenses - Held that:- This expenditure should be taken in the Financial Year 2010-11 relevant to the Assessment Year 2011-12 as the work was commenced, completed and final bill was made during the A.Y.2011-12. Thus, the Assessing Officer shall consider these expenses for allowing in the assessment year 2011-12. Unproved purchases - AO made 100% disallowance as the supplier did not respond to the notice issued u/s.133(6) - Held that:- The sales were accepted and the assessee produced copies of invoices, bank statements, copies of delivery challans etc., entire purchases cannot be treated as bogus. Keeping in view the nature of business conducted by the assessee we direct the Assessing Officer to restrict the disallowance to 8% of the expenses. This ground is partly allowed. Disallowance of expenses being regularization fee paid Slum Rehabilitation Authority - allowable deduction u/s 37 - Held that:- We find that the issue as to whether regulation fee paid to Slum Rehabilitation Authority is in the nature of penalty for violation or prohibition of any law under Explanation to 37(1) of the Act has been considered by the Tribunal in assessee’s own case for the Assessment year 2011-12 and it has been held that such payment is not in the nature of penalty.

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• 2018 (12) TMI 282
  GP of unaccounted sale - separate addition was made for the source of unaccounted sale - Held that:- AO wrongly observed the unaccounted turnover as unaccounted stock. The CIT(A) has correctly taken the actual facts and taken into account the unaccounted turnover. The decision in case of Balchand Ajit Kumar [2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] and President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] are applicable in the present case and thus in case of unaccounted turnover, only addition of profit embedded therein can be made. AR also relied upon the case of S. M. Omer [1990 (1) TMI 3 - CALCUTTA HIGH COURT] wherein it is held that in such circumstances Assessing Officer cannot take resort to Section 69 of the Act and only net profit rate has to be applied which has been correctly done by the CIT(A). As regards to the rejection of books of accounts and estimation of GP rate is concerned, the Ld. AR submitted that complete books of accounts were already available with the Assessing Officer in the soft copy as the same were seized in the form of two CDs as per Annexure-N to the Panchnama. From the records it appears that complete books of accounts were produced before the Assessing Officer in 143(3) assessment wherein the GP rate as shown by the assessee was accepted. Thus, we are not inclined to interfere with the findings of the CIT(A). - Decided in favour of assessee.

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• 2018 (12) TMI 281
  Revision u/s 263 - capital gain earned by the assessee on sale of the shares has not been offered for the Book Profit tax under section 115JB - assessment order passed u/s 143 (3) by AO is erroneous and prejudicial to the interests of the revenue - Held that:- In the present case, the learned assessing officer has not even examined the computation of the Book Profit under section 115 JB. No Form No. 29B has been filed by the assessee before the assessing officer or before the principal Commissioner of income tax, which itself speaks that the learned assessing officer has not conducted any enquiry with respect to the computation of Book Profit u/s 115 JB. Also AR could not show what is the extensive enquiry the learned assessing officer has conducted with respect to the computation of the Book Profit under section 115 JB of the Act. Even before us form No. 29B was not filed. In presence of these peculiar facts and circumstances of the case in hand, the decisions relied by the assessee do not render any help to it and the same are distinguishable on facts. Therefore, we concur with the views of the learned principal Commissioner of income tax that according to the explanation (2) of section 263 of the Income 56 Tax Act, 1961, the order passed by the learned assessing officer is erroneous so far as it is prejudicial to the interest of the revenue. We confirm the finding of CIT-A in holding that the order passed by the learned assessing officer under section 143 (3) on 2/1/2016 is erroneous in so far as prejudicial to the interest of the revenue to the extent that the learned assessing officer has not examined the computation of the Book Profit under section 115 JB - decided against assessee.

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• 2018 (12) TMI 280
  Exemption u/s. 10(22) - assessee is to be treated educational institute existed purely for education or not - different status in India and Outside India - Held that:- We are of the view that unlike the present Section 10(23C)(vi) of the Act, there are no conditions in relation to obtaining approval, audit of accounts, application of income etc. The provisions of Section 10(22) for claiming exemption, the requirement is that the university or the educational institute must exist solely for educational purposes in India. The recipient of the income must have the character of an educational institute in India and its character outside India or it being a part of university existing outside India is not relevant for deciding whether its income would be exempt u/s. 10(22) of the Act or not. In the present case, there is no charge by AO or now by CIT-DR that the assessee does not exist solely for the purpose of education, hence we find no infirmity in the order of CIT(A), allowing the claim of exemption to assessee-institution u/s. 10(22). Accordingly, we dismiss the appeal of Revenue.

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• 2018 (12) TMI 279
  MAT (Minimum Alternate Tax) - increase in liability - Addition on account of adjustment due to change in the depreciation rate - accounting standards application - Held that:- Provisions under paragraphs 11 and 13 of Accounting Standard-6 (AS-6) have been noted by CIT(A) and relevant portions of the order of CIT(A) have already been reproduced earlier in this order. Vide paragraph 11 of AS-6, Management of the company is vested with power to exercise judgment in the light of technical, commercial, accounting and legal requirements and it permits Management to periodically review the original estimate of useful life of an asset. Further, under paragraph 13 of AS-6, it is permitted for the company to apply the higher rate of depreciation where the management estimates of the useful life of an asset is shorter than that envisaged under the provision of the relevant statutes (here, The companies Act, 1956). As under AS-6, higher rates of depreciation for assets have to be based on bona fide technological evaluation of the useful life of the depreciable assets. For a bonafide technical evaluation, it is necessary that the evaluation should be made by a competent person or body having the requisite technical knowledge and expertise. Such an evaluation leading to higher rate of depreciation is a bona fide evaluation, especially when such an evaluation results in tax benefit for the company. A self serving evaluation, which is not bonafide, leading to claim of reduced tax burden for the Assessee will be a colourable device within the meaning of the landmark decision of Hon’ble Supreme Court in the case of McDowell and Co. Ltd. vs. Commercial Tax Officer [1985 (4) TMI 64 - SUPREME COURT]. A colourable device to evade tax has to be rejected. For the purpose of determination of book profits, the statutory role of Registrar of Companies to examine and satisfy that the accounts of the assessee are maintained in accordance with the requirements of the Companies Act, has the mandate of the Supreme Court; and further, that report(s)/opinion(s) of statutory auditor(s) and the reports / opinions / recommendations as a result of Supplementary Audit are not final : these are not only subject to approval by the company in its general meeting, but also subject to examination by Registrar of Companies and his satisfaction that the accounts of the assessee are maintained in accordance with the requirements of the Companies Act. Both the lower authorities, AO as well as CIT(A), have not considered whether, after examination by Registrar of Companies, whether Registrar of Companies was satisfied that the accounts of the assessee are maintained in accordance with the requirements of the Companies Act - As relevant information, whether, after examination by Registrar of Companies, whether Registrar of Companies was satisfied that the accounts of the assessee are maintained in accordance with the requirements of the Companies Act; is not available on our records. Since the relevant information is not on our records, we restore the matter to the file of the AO with the direction to pass fresh order on this issue. Thus, the order of the CIT(A) is set aside on this limited issue and the matter in dispute in the present appeal before us is restored to the file of the AO for fresh order on this limited issue. In the result, appeal of the Revenue is partly allowed for statistical purposes.

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• 2018 (12) TMI 278
  Assessment u/s 153A - validity of search raised in A. Ys. 2008-09 to 2013-14 - Disclosure of reason to believe or reason to suspect - Held that:- Hon’ble apex court rendered in the case of N. K. Jewellers vs. CIT [2017 (9) TMI 1299 - SUPREME COURT] as held that in view of the amendments made in section 132 by Finance Act, 2017, the reason to believe or reason to suspect as the case may be, shall not be disclosed to any person or authority or Appellate Tribunal as recorded by the Income Tax Authority u/s 132. Reliance was also placed on a judgment of Hon’ble Karnataka High Court rendered in the case of Pratibha Jewellery House vs. CIT [2017 (11) TMI 1744 - KARNATAKA HIGH COURT] and the retrospective amendment in section 132 w,r.e.f. 01.04.1962 was taken note of and it was held that even the appellate authorities are prohibited from going into the reasons recorded by the concerned income tax authority against the assessee or tax payer. Learned AR of the assessee was also heard. - decided against the assessee. Notice issued by the AO u/s 153A is bad in law - Held that:- as per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and whether after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. In this view of the matter, we find no merit in this technical objection raised by the assessee and the same is rejected. Additions made in these assessment orders passed u/s 153A are not arising from the seized material - Held that:- In this case incriminating material was found as noted in Para 2 of this judgment. This was held in this case that once the assessment is validly reopened, the AO has to take into account three types of income to complete the assessment or reassessment as the case may be. These three types of income are 1) income disclosed in the return of income, 2) Undisclosed income found during the search and 3) any other income which is not disclosed in the earlier return and not unearthed during the search. In our considered opinion, if incriminating material is found in course of search, in the assessment u/s 153A, all three types of income noted above has to be assessed by the AO and therefore, we find no merit in this third technical objection also. We reject the same. Accrual of income - Addition in respect of interest accrued on ICDs - Revenue recognition - Held that:- he case of the assessee is this that the interest income is not receivable at all and therefore, the assessee has passed entries in memorandum books by debiting the debtor and crediting the interest account and before the year end, such entries were reversed and as a result, at the year end, no debit remains in the accounts of the debtors and no credit remains in any account being interest receipt account or interest suspense account or any other account by whatever name. But this claim of the assessee was not examined by the lower authorities that the income has not accrued or arisen and it is irrecoverable since very beginning - matter should go back to the file of the AO for a fresh decision - we set aside the order of CIT (A) on this issue and restore this issue back to the AO for a fresh decision with the direction that the AO should first examine this aspect as to whether the interest income has arisen/accrued or not in the facts of the present case. Calculation of exemption u/s. 10AA - Held that:- The assessee’s claim for exemption u/s. 10AA of IT Act is to be reworked in the light of this relief allowed by CIT(A) in these four years. Hence on this issue, we set aside the order of CIT(A) and restore the matter back to the file of AO for fresh decision. The AO should provide reasonable opportunity of being heard to assessee and recompute the amount of deduction / exemption allowable to assessee u/s. 10AA of IT Act in the light of the relief allowed by CIT(A) in these four years. This issue is also decided in favour of the assessee for statistical purposes. Loss of gold - this issue is only in one year i.e. Assessment Year 2011-12 - submission of assessee that the inventory of 99.055 Kgs. of gold which was untraceable was about 0.047% of the total gold transacted during the year and the loss could have been due to various reasons like loss in manufacturing, excess delivery made to clients, short delivery received from clients, regular pilferage or due to any other reason - Held that:- There was a search conducted in the case of the assessee and in spite of that, the revenue could not find out any material to show that the assessee is having any excess gold stock or that there was any evidence found in respect of any unaccounted sale of gold or gold items. Regarding this that the loss of gold could not be substantiated by bringing evidence on record, in our considered opinion, if the assessee is having any evidence in respect of loss of gold, the assessee will not allow such loss to happen. In our considered opinion, in the facts of present case, this loss of 0.047% of the loss of gold in only one year should be allowed in the facts and circumstances of the present case. We order accordingly. This issue on merit is decided in favour of the assessee. MAT computation - book profit as determined u/s. 115JB - Consideration of SEZ Income while computing book profit for the purpose of MAT - Held that:- the recomputation of book profit u/s. 115JB has been done by the AO in view of proviso to sub-section(6) of section 115JB which has been inserted in the statute book by Finance Act, 2011 w.e.f. 01.04.2012. On this issue, this is the only submission of the assessee that the assessee has challenged the amendment and the matter is pending in Writ Appeal before the Honorable Division Bench of the High Court of Karnataka but this is not the case of the assessee that any stay has been granted by Hon'ble Karnataka High Court in this regard. Hence in our considered opinion, action taken by the AO in this regard is perfectly in order and in case, the assessee gets any relief from Hon'ble Karnataka High Court, then only, the assessee can get some benefit in this regard. At present, there is no merit in this claim of the assessee. Hence this issue on merit is decided against the assessee. Levy of interest u/s. 234A, 234B and 234C - Held that:- This issue is consequential. This is the only request of the assessee before us that the AO should be directed to correctly calculate the interest after considering the relief granted by CIT(A) and by the Tribunal - no specific direction is required for this because this is admitted legal position that the issue of interest is consequential and if any relief is allowed by CIT(A) and/or Tribunal, while calculating the interest u/s. 234A, 234B and 234C, consequential relief has to be allowed by AO to assessee.

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• 2018 (12) TMI 277
  TPA on AMP computed by the TPO using BLT - whether at all by incurring of higher AMP expenses, a conclusion can be reached that it is an international transaction which warrants determination of Arm’s Length Price? - Held that:- The onus is on the Revenue to show that the twin requirement of Section 92B exists, that is, firstly, the transaction involved was between the AE, one of which is resident and other a non-resident was involved; and secondly, the transaction of AMP expenses has taken place between the two AEs Here in this case this is not in dispute that no transfer of any unique intangibles has been made accept for license to use trademark which too was royalty free. According to the Rule, under the PSM, combined net profit of the AEs arising from the international transaction has to be determined and thereafter, if incurrence of AMP expenses is to be considered from the value of such international transaction then the combined profit has to be determined from the value of such international transaction. No FAR analysis of AE has been carried out or even demonstrated that any kind of profit has been derived by the AE from the AMP expenses incurred in India. Otherwise also, the profit earned on account of AMP expenses incurred by the assessee by way of economic exploitation of the trademark/brand in India already stands captured in the profit and loss account for the assessee company and the same has duly offered to tax and hence there was no logic to compute or make any Transfer Pricing Adjustment on this score. TPO has followed the same reasoning in the Assessment Year 2013-14 also, but the DRP did not find any substance in the TPO’s approach and directed the application of ‘Other Method’ as prescribed under Rules as against the application of PSM. By applying ‘Other Method’, adjustment had been made by comparing the AMP/sales ratio of the US parent AE with that of the assessee company and thereafter the DRP has considered the excessive AMP spent by the assessee company as a Transfer Pricing Adjustment. The only difference between the earlier approach of the TPO and the approach adopted by the DRP is that, earlier TPO compared the AMP/sales of the party, i.e., the assessee with that of the third party and now the DRP compares the AMP/sales of the assessee company with that of the parent AE. In our opinion, even the ‘Other Method’ has been incorrectly implied for the sake of ready reference Rule 10AB which provides that that “Other Method” shall be any method which takes into account the price which had been charged or paid for the same or similar uncontrolled transaction with or between non-associated enterprises under similar circumstances. Comparison of the AMP over sales ratio of the assessee with the AMP ratio of Pepsi Co Group on a worldwide basis was nothing but a distorted version of the BLT. We hold that in none of the years impugned before us, the AMP adjustment made by the TPO/Assessing Officer can be sustained and accordingly, same is directed to be deleted. Transfer Pricing Adjustment pertaining to the IT support services segment - AO/TPO have made a Transfer Pricing Adjustment in the IT Support Services Segment by recharacterizing the assessee, who is back-end service provider, as a software developer - Held that:- In view of the above, grounds pertaining to incorrect characterization of the functional profile of the assessee, do not require adjudication at this stage, hence same is dismissed. Transfer Pricing Adjustment on account of receivables - Held that:- Once, no interest has been charged on receivables from unrelated parties, then to allege that assessee is conforming any benefit to its AE by not charging the interest on its outstanding receivable would not be correct under the Arm’s Length scenario, because here in this case in a comparability analysis of both control and uncontrol transaction, no benefit has arisen from delay in trade receivables from the AE. Now it is quite well settled proposition in the wake of various judicial pronouncements as has been relied upon by the learned counsel that, when there is a complete uniformity in the act of the assessee in not charging interest from both AEs and non AEs debtors for delay in realization of export proceeds then Assessing Officer/TPO cannot make addition on account of notional interest on delay receivables, because similar credit period of given to both related and unrelated parties. Hence, no adjustment should be called for. Accordingly, we hold that no adjustment on account of notional interest is warranted. Disallowance of Price Support given to Bottlers - Held that:- Assessing Officer concededly adopted the same characteristic to all parties related and unrelated as to the prevailing and local market conditions. There may be several reasons why an Assessee or a commercial venture might be compelled to provide discounts/price support etc. for ensuring the marketability of its product at the price that they proposes. Having regard to these, the method of averaging, to say the least, is illegal Respectfully following the binding precedence on the same issue rendered in the earlier years in assessee’s own case which has been upheld by the Hon'ble Delhi High Court also as incorporated above, we decide this issue in favour of the assessee. Disallowance of sponsorship fees paid by the assessee to ICC - whether the decision taken by the assessee for paying sponsorship fees was for the purpose of business or not? - Held that:- Here in this case, the commercial expediency has not been doubted but rather it has been held by the AO that in all the years transfer pricing adjustments has been made on this score and benefit is arising to the other AEs also. What is relevant for an expense to be allowable as revenue expense is that, whether it has been incurred during the course of business and is for the purpose of business. Benefit factor to other related parties is relevant under transfer pricing provision and not while allowability of business expense u/s 37(1). It is well known fact that companies use sports event as a platform to advertise their range of products as it has a very high viewership. Any such incurring of expenditure is ostensibly for promotion of business only and hence, no disallowance is called for. Disallowance under section 14A - Held that:- It is only when the assessee is able to substantiate its claim from the nature of exempt income from the investments made and having regard to accounts maintained and the nature of expenditure debited that nothing is attributable for the earning of exempt income, the onus stands discharged. If assessee is able to demonstrate its claim, then onus shifts upon the Assessing Officer, who has to then examine the nature of accounts and having regard to such accounts maintained, he has to record his satisfaction that assessee’s claim is not correct before proceeding to make the disallowance u/s.14A. Thus, contention of the learned counsel cannot be accepted under the facts and circumstances of the case. Accordingly, Assessing Officer is directed to compute the disallowance in view of the aforesaid direction. Subsidy received by the assessee from the subsidy received under the West Bengal Incentive Scheme of 2004 - capital or revenue receipt - Held that:- Merely because here in this case the quantification of subsidy was based on reimbursement of sales tax, it does not meant that it is a revenue receipt. This view now is well supported by the various decisions as noted above that character of subsidy in the hands of the assessee is the determinative factor having regard to the purpose for which subsidy was given. Accordingly, we hold that the subsidy received by the assessee from the subsidy received under the West Bengal Incentive Scheme of 2004 is capital in nature and cannot be taxed as revenue receipts. Thus, this issue is decided in favour of the assessee. Levy of interest under section 234A and 234B - Held that:- In the instant case, the assessee had deposited advance tax amounting to Rs. 64,20,00,000/-. The assessee had filed an application before the AO for rectification of mistakes apparent from his order and pursuant to his order on such, the amount of assessed tax stood at INR 70,97,80,046. Since, the amount of advance tax deposited was greater than 90% of the assessed tax, no interest under Section 234B of the Act could have been levied. In view of the aforesaid facts submitted by the assessee, we direct the AO to verify the claim of the assessee and re-compute the interest leviable under section 234A/ 234B of the Act in as per law. Credit of tax deduction at source (TDS), advance tax and self-assessment tax not given - Now as a result of the amalgamation order by the Hon’ble High Court, the group companies ceased to exist from 01.04.2010 onwards and could not be regarded as a legal entity for F.Y. 2010-11 and onwards - Held that:- We direct the AO to verify the claim of the assessee and allow the credit of taxes in accordance with the directions contained herein and as per law.

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• 2018 (12) TMI 276
  Transfer pricing adjustment on account of corporate support services received from AE - allocation of intra group services to be borne by the assessee from its AE in 16 worldwide localities - assessee’s allocation is based upon a global agreement between the AEs in this regard. Various allocation keys, i.e., asset, revenue, number of employee, depending upon the nature has been used with allocation is supported by a CPA certificate - Revenue’s contented that necessary evidence in this regard for the veracity of allocation and incurring of expenditure has not been submitted and CPA certificate is not credible in absence of supporting documents on the basis of which the said certificate was issued with several errors in the global agreement Held that:- A reading of this OECD guidelines makes it abundantly clear that contrary to the Revenue’s argument, the using of allocation keys for allocation of intra group services is not alien to international tax jurisprudence. Further, the allocation of concerned group expenses to different accounting units is a duly accepted accounting procedure. Furthermore, the assessee has used a CPA certificate for the allocation of intra group services from the AE. The authorities below have rejected the CPA certificate on the ground that underlying documents on the basis of which the CPA certificate has been issued has not been produced before them. In this regard, we note that the CPA certificate is quite specific and has been duly authenticated. We find that in Rule 10D, containing information and documents to be kept and maintained u/s.92D it has been duly mentioned that the information’s required under Rule 10D(2)(A) shall be supported by authentic documents which may include inter alia public accounts and the financial statements relating to the business of the associated enterprises. Hence, the evidence for international transaction can be duly supported by public accounts and financial statements relating to business affairs of the AE. With such mandate of law, in our considered opinion, the action of the authorities below in rejecting the CPA certificate is not sustainable. The various other proposition mentioned by the ld. Counsel of the assessee and case laws in support thereof as noted in para 22 hereinabove are germane and duly support the case of the assessee. As regards the estimation and allocation of IT cost is concerned, the same has been duly accepted for the Dispute Resolution Panel for A.Y. 2013-14 and the Revenue has accepted the same. In the background of the aforesaid discussion and precedent, we set aside the order of the authorities below and decide the issue in favour of the assessee. Hence, the transfer pricing adjustment stands deleted. Disallowance of expense rather, the assessee is in the process of disposing of the capital goods imported by them for the initial period. The assessee is leasing out part of premises and offering the income therefrom as income from house property. The assessee itself has disallowed expenses of Rs. 1,39,92,000/- pertaining to repair and maintenance and claims the balance expenditure of Rs. 3,14,07,000/-. Hence, we find ourselves in agreement with the finding of the DRP that this is a clear case that it is not a temporary discontinuation of the business, rather, the business has been completely stopped at this unit. In these circumstances, when there is a complete stoppage of the business and the assessee is offering income from leasing from the unit as income from house property, there is no question of allowance of expenses or depreciation in this regard. In our considered opinion, the orders of the authorities below do not have any infirmity in this regard. Accordingly, this order of the A.O. is affirmed. Appeals of the assessee are partly allowed.

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• 2018 (12) TMI 275
  Addition on account of disallowance u/s 14A - Held that:- Since there was no exempt income earned by the assessee, therefore, the disallowance was not warranted at all. We also noted that this contention of the assessee is correct as the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and Hon'ble Allahabad High Court in the case of CIT vs. Shivam Motors (P.) Ltd. [2014 (5) TMI 592 - ALLAHABAD HIGH COURT] has made similar findings and has held that in the absence of tax free income earned by the assessee, disallowance u/s 14A cannot be made. Addition u/s 36(1)(va) for delay in deposit of employees contribution to PF /ESIC - Held that:- We find that before the due date of filing of income tax return, the assessee had duly deposited the dues and in the case of Sagun Foundry Private Limited vs. CIT [2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] has held that where such deposits are made before the due date of filing of income tax return, no disallowance u/s 36(1)(va) are required to be made. - Decided in favour of assessee.

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• 2018 (12) TMI 274
  Sale of land - nature of land - exemption from income-tax on the gains arising from the sale of aforesaid land claiming the same to be agricultural land used for agricultural purposes - Onus on the assessee to prove that its case strictly falls under exemption provisions as are contained in the 1961 Act - Held that:- As established rule of evidence as enshrined in Section 114(g) of the Indian Evidence Act, 1872 that the evidences which could be and is not produced would , if produced , be unfavourable to the person who withholds it. It is incumbent on the assessee to produce all cogent evidences to substantiate and prove its case that gains arising from sale of land are exempt from income-tax. Further, we are also reminded at this stage of landmark decision of Hon ble Supreme Court decision in the case of CIT v. Raja Benoy Kumar Sahas Roy [1957 (5) TMI 6 - SUPREME COURT] as the forest is more than 150 years old, the areas which had thus become denuded and replanted cannot be considered to be negligible. The position therefore is that the whole of the income derived from the forest cannot be treated as non-agricultural income. If the enquiry had been directed on proper lines, it would have been possible for the Income-tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors. The assessee has fairly pleaded that one more opportunity be provided to the assessee and the assessee will appear before the authorities below and file all necessary cogent evidences to prove that the said land was an agricultural land used by the assessee for agricultural purposes and the assessee is entitled for exemption from income-tax on the gains which arose on sale of the said land - we are setting aside and restoring this matter back to the file of AO for denovo framing of an assessment by afresh determination of the issue on merits - Decided in favour of assessee for statistical purposes.

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• 2018 (12) TMI 272
  Addition u/s 69 - unexplained investment in the bank account - Held that:- We have noted that Barclays Bank, vide letter dated 8th April 2014, has confirmed that “a remittance of GBP 90,000 was sent by wire transfer to your NRE account no. 0341010007438 with Bank of Baroda, SP Colony Branch, Ahmedabad, which was routed through Bank of Baroda Mumbai branch on 5th April 2007”, and that “we further wish to confirm that the remittance represented a distribution made to you as a beneficiary of the Kanisa Family Trust settled by your father late Dr Chaturbhai Ashabhai Patel on 18th October 1974”. A copy of this letter was placed before us and the Assessing Officer has duly been confronted with this letter. Here is thus a case in which there is a credit in the bank account of the assessee, which is on account of a remittance from a foreign bank, on account of disbursements from a family trust, and there is no dispute about these factual aspect. The investment is thus reasonably explained and the application of Section 69 is out of question. We, therefore, approve the conclusions arrived at by the CIT(A) for this short reason alone. - decided against revenue

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• 2018 (12) TMI 271
  TDS u/s 194H - discount sale of Set Top Boxes (STBs) and recharge vouchers (RCVs) - non deduction of tds - Held that:- The assessee in this case is engaged in business of providing direct to home (DTH) services. The assessee enters into agreement with the distributor for sale of Set Top Box (STB) and recharge coupon vouchers. As per agreement products are sold to distributor at discounted price, as agreed. The distributor/dealer sells these items to customers/subscribers at a price not exceeding MRP on the product. As per the agreement payment of each order for the above items is to be made by distributor either at the time of placing the order or at the time of delivery. Apart from the above assessee also provides festival/seasonal discounts to the distributors. For these discounts assessee does not make any payment rather it issues credit notes and same is subsequently adjusted from the payment due from the distributor. The expenditure of discount is recognized in books of account. But the same is netted from sale, so in the financial statements the discount amount is not reflected. In the case of Jt. CIT (TDS) vs. Bharat Business Channels Ltd. [2018 (5) TMI 229 - ITAT MUMBAI] the ITAT, Mumbai on similar issue following the decision in the case of Bharti Airtel Ltd. [2014 (12) TMI 642 - KARNATAKA HIGH COURT] had decided the same issue in favour of the assessee. Thus we hold that the assessee was not liable to deduct the tax at source on the impugned amounts in this case. - Decided in favour of assessee. TDS u/s 194C OR 194J - TDS on payment made to installation service provider - Held that:- This case is squarely covered by the decision of the Tribunal in the case of M/s. Bharat Business Channels Ltd. (2018 (5) TMI 229 - ITAT MUMBAI) wherein as a DTH operator, same as the Assessee had also obtained services of Installation Service Providers to install Dish Antenna, Set-Top Box, etc. at the subscriber's premises similar to Tata Sky. That the Hon'ble Tribunal observed that the installation work does not require any special technical expertise and can be done by any sound person on reading through the installation manual. That the Hon'ble Tribunal also noted that the installation services providers were given basic training to make them understand the process of Installation. That having regard to the facts, the Hon'ble Tribunal held that the assessee had correctly deducted tax under section 194C of the Act and tax was not required to be deducted under section 194J. TDS u/s 194C OR 194J - TDS on payment of document management charges - Held that:- In this case, the assessee was engaged in the life insurance business. That it had obtained document management services which inter alia included document management services, document delivery and collection services and document storage, etc. That the assessee had deducted tax under section 194C while making payment for these services and the Income-tax Authorities alleged that these are technical / managerial services and should be subject to TDS under section 194J. That on appeal, the CIT(A) had held in favour of the assessee. That on appeal by the Income tax Authorities to the Tribunal, the Hon'ble Tribunal noted that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and accordingly subject to tax under section 194C of the Act. No liability on deductor to pay tax when tax is already paid by deductee - Held that:- CIT(A) has granted some relief to the assessee on the issue of TDS deduction u/s. 194H on discount and incentive on sale of STBs and RCVs on the ground that the recipients would have paid the applicable tax on the respective taxable income. Hence, in view of the decision of the Hon'ble Apex Court decision in the case of Coca Cola Expt. Corpn. Vs. ITO [1998 (3) TMI 7 - SUPREME COURT] the taxes cannot be recovered from the assessee. In view of our adjudication in assessee’s appeal that the assessee is not liable for tax deduction at source under section 194 H, adjudication of this ground is now only of academic interest, hence we are not engaging into the same.

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• 2018 (12) TMI 270
  Disallowance on account of education sponsorship expenses - allowable business expenditure - Held that:- We concur with the submissions of the Sr.DR namely that all educational expenses of the children or grand children of the Directors of the companies who ultimately may also join the family business by itself, cannot be said to be an expenditure which can be said to have been incurred wholly or exclusively for the business purposes of the assessee as the expenses for educating the children and grand children of the Directors can very well be personal expenses of the parents etc. We are conscious of the decisions wherein serving employees of the assessee companies who even if related have been sponsored for higher education on the undertaking that on their return, they shall join the said concern. Similarly there are decisions wherein loans may have been advanced to the children of the employees/Directors, sent for higher education with an undertaking to return and rejoin the assessee company etc. where the loan advanced is deducted from the salary paid etc., thus there can be no blanket decision that the higher education expenses of the Director’s children necessarily are business expenses. The argument that similar expenditure has been allowed for the very same relative in the earlier year which though not demonstrated on facts but even if it is correct that no disallowance was made in the earlier year by itself cannot lay down a precedent to be followed that the expenses allowed by oversight necessarily be allowed in the subsequent years. Accordingly, the impugned order is set aside back to the file of the CIT(A) with a direction to address the correct facts and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided in favour of assessee for statistical purposes.

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• Benami Property

• 2018 (12) TMI 273
  Benami transactions - cash is transferred from one person to another, with an object to defeat demonetization - cash paid to person in lieu of a future promise - Held that:- The property was never held by the appellants. The amount received by them have returned/adjusted towards salaries. Even the question of any arrangement in the present case does not arise as the appellants have received only advance salary from the employer under oral contract at the asking of the respondent, the same was immediately returned. The said factual position has not been denied by the respondent. This is also not a case where the person providing the consideration was not traceable or fictitious. The admitted position is that the management/employer was very much traceable, his statement was recorded, the money returned by the appellants was dealt by the department. The existence of the benami transaction has to be proved by the authorities i.e. the person who alleges the transaction (Sitaram Agarwal v. Subrata Chandra [2008 (5) TMI 718 - SUPREME COURT). The authorities have failed to discharge the burden of proof. The authority has purely gone on the premise that cash is transferred from one person to another, with an object to defeat ,demonetization. This is insufficient to establish a benami transaction. The transaction where cash is paid to person in lieu of a future promise cannot be a benami transaction as there is no lending of name. There can be no benami transaction if the future benefit is due from the person who is also the holder of property. The impugned order is not sustainable as it punishes the appellants for wanting to defeat the purpose of demonetization, which has no direct nexus with the Act and is beyond the purview of the Act. Impugned order dated 27.3.2018 in all three appeals is set-aside. The attached properties are released forthwith.

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• Customs

• 2018 (12) TMI 268
  Provisional release of goods - perfumes / deodorants - Section 110A of Customs Act, 1962 - Held that:- The petitioner would inform the respondents about the correct addresses where summons could be served. The petitioner's director would make himself available to the Customs Department by appearing before the assessing officer on Monday, 3rd December, 2018 and thereafter whenever called for by the respondents. We are satisfied with the explanation given by the petitioner's director in his affidavit-in-rejoinder dated 29.11.2018 for not responding to the summons. This coupled with the assurance given to us that the petitioner's director would cooperate with the investigation and make himself available before the Adjudicating Authority on 3.12.2018 and thereafter whenever called, would not warrant dismissal o the peritonitis on account of the petitioner's conduct as canvassed by the Revenue. Both the proceedings i.e investigation and provisional release application can proceed at the same time. The respondents are directed under Section 110A of the Act to deal with the application for provisional release of goods seized, pending investigation. The Respondents must perform their statutory duties and dispose of the application dated 30.9.2018 in accordance with law - Petition disposed off.

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• 2018 (12) TMI 267
  Import of polished marble slabs - restricted item or not - notification dated 30th June, 2008 - Confiscation - quantum of redemption fine and penalty - Held that:- When the assessee imported marble slabs, the commodity was placed in a list of free import only as long as the CIF value was above 50 USD per square meter. Admittedly, the marble imported by the assessee was valued substantially below the said figure. The assessee's offer to pay customs duty on higher valuation was only for the purpose of bypassing the requirement of the notification. The Tribunal considering overall facts and circumstances of the case and has already given substantial relief to the assessee in the form of reduced redemption fine and penalty - No further discretionary relief would be justified - appeal allowed in part.

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• 2018 (12) TMI 266
  Maintainability of appeal - Section 128 of the Customs Act, 1962 - appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law - principles of natural justice - Held that:- The reasons given by the appellant appears to be bona fide as the part of the unit of the appellant was taken over by the Metro Rails and there were disruptions in the business activities of the appellant - In view of these facts, it is deemed appropriate to set aside the orders and remand the matter back to the original authority to pass a fresh order after affording a reasonable opportunity of hearing and after complying with the principles of natural justice - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (12) TMI 269
  Dissolution of the company in liquidation seeked by OL - winding up process itself is completed by the Official Liquidator long ago - Held that: This Court is of the considered opinion that these series of Company Applications is nothing but a sheer abuse of process of law and these applications are absolutely not maintainable and these frivolous applications are filed for wasting public time and Court time. It is too late in the day for these applicants to make such applications when long ago the winding up process itself is completed by the Official Liquidator duly appointed by the Company Court. The property of the company itself was acquired by the KIADB and even compensation was received from the KIADB and the funds so received have been distributed among the stakeholders of the said company in accordance with the provisions of the Act and remaining amount transferred to Public Fund of Government of India. This Court is at loss to understand this kind of series of applications, when majority of them came to be disposed of and dismissed for lack of any bonafides on the part of such applicants. Still either the same lawyer or the different lawyer with the same tenor of applications has kept on filing such applications with obviously the lack of particulars, the draft of Scheme or any good reason for moving such application at this belated stage or any measure taken to show their bonafide in the matter. The Official Liquidator prays before the Court that it is needed to finally dissolve the company in question as nothing more remains to be done. The learned counsels for Applicants still press for these kind of Applications. Therefore, this Court is left with no other option but, with sense of remorse and pain, to dismiss these Applications with exemplary costs and order that filing of such Applications is strongly discouraged and put to an end.

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• Service Tax

• 2018 (12) TMI 264
  Time limitation - Tour operator/business auxiliary service - amount received towards luggage collection, driver batta and casual contract and also received commission towards hotel booking, luggage collection hotel booking, luggage collection, driver batta and casual contract during the period 2004-05 - non-payment of service tax - Held that:- The appellant is a State Government undertaking which is engaged in providing various taxable services and after the audit, the appellant themselves computed the tax liability and paid the Service Tax of Rs. 1,46,390/- on 25th March 2006 whereas the SCN was issued on 16th January 2008 much beyond the period of one year - the appellants have not suppressed any material fact with intent to evade payment of tax. Revenue has wrongly invoked the extended period of 5 years which is only applicable in the case of fraud, collusion, wilful mis-statement, suppression of facts or contravention of provision with intent to evade payment of Service Tax whereas in the present case, there is no material to hold that there was an intention on the part of the appellant to evade the payment of Service Tax. On merits also, the appellant has a good case but since we are allowing the appeal on limitation itself, we need not go to the merits of the case - the entire demand is barred by limitation - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 263
  Rejection of Voluntary Compliance Encouragement Scheme (VCES) - the tax dues declared by the appellant were for the subsequent period on the same issue for which a show Cause Notice dated 04.01.2011 for the period w.e.f. 01.01.2009 to 31.03.2010 had already been issued - time limitation - Held that:- Vide the impugned VCES-I, the appellant has declared his tax dues of Rs. 4,50,756 against the renting of immovable property services for the period w.e.f. 01.10.2008 to 31.03.2010. This perusal makes it clear that it is not merely that the category of service rendered is same but the allegation of not discharging the tax liability for rendering the said service and that the period for the alleged default is also same. Thus it becomes clear that a notice has already been issued to the appellant in respect of the same issue for the same period for which the appellant made the declaration under VCES-I - The said declaration is prohibited under proviso 2 to Section 106(1) of VCES 2013 - Adjudicating Authority below are held to have committed no error while rejecting the said VCES Scheme. Time Limitation - Held that:- The time limit for issuing notice u/s 101 of VCES will be applicable if and only if the assesse is entitled to file the VCES - Once it is apparent on record that rejection of VCES of appellant is correct due to a wrong declaration and non compliance of statutory provision, there is no need to look into the issue of limitation. Appeal dismissed - decided against appellant.

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• 2018 (12) TMI 262
  Extended period of limitation - Levy of penalty - Partial RCM - non-payment of service tax under partial reverse charge mechanism - there was a gap of six months between date of receipt of show-cause on 03.12.2015 and date of personal hearing given in May 2016 and appellant had not availed the gap period to obtain copy of audit report - principles of natural justice - Held that:- The appellant had failed to discharge the service tax liability. It is not understood as to why a person who failed to discharge the same cannot be equated with his ignorance to follow the new rule of partial reverse charge mechanism introduced by Notification no. 30/2012 w.e.f. 01.07.2012 and why the same shall be equated with suppression of fact and mis-declaration through ST-3. More importantly, neither the show-cause notice nor any documents relied in Order-in-Appeal and order-in-original, any reference is available as to whether the entire 100% tax component was realised by the service provider and deposited in the government to establish that there was occasion of revenue loss to the government. Partial reverse charge mechanism has been introduced by way of Notification 30/2012 dated 20.06.2012. In the said Notification, w.e.f. 01.07.2012 in case of supply of manpower for any purpose or service in execution of work contract by an individual, HUF or partnership firm whether registered or not including association of persons are required to pay 25% of service tax and the service receiver is required to pay 75% of the said tax - Going by the backdrop of bringing such provision into the statute book, if various literatures are referred, it can be found that this Notification 30/12 has brought a new legislation of taxation to existing system of “reverse charge mechanism” by including “partial reverse charge mechanism” as a new system in respect of specified services provided for certain category of services fixing liability of payment of service tax partially on the service provider and partially on the service recipient. It cannot be said that only because audit party had found non-observance of partial reverse charge mechanism procedure in respect of certain services, without any reference to the categorising of service provider, appellant is to be tested for suppression etc. - there is no hesitation to say that respondent has not brought forth any cogent evidence on record to establish the charge of wilful suppression by the appellant company to invoke extended period of service so as to justify penalty. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 261
  Benefit of reduced penalty - Renting of Immovable Property Service - are collecting rent amount but they did not pay service tax on the said rent collected and also not filed ST-3 returns - Held that:- It is a fact that the appellant had recovered the service tax from the lessee/tenant but did not deposit the same in the Government exchequer and kept it with themselves. Further, the appellant have not filed the requisite returns in time, therefore, the department could not ascertain the tax liability of the appellant. Further, the appellant have not complied with the order of the adjudicating authority in toto and has paid only the tax and the 25% penalty but subsequently, after some delay, paid the interest also. Therefore, they are not entitled to the benefit of reduced penalty under Section 78 of the Finance Act, 1994 - appeal dismissed - decided against appellant.

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• 2018 (12) TMI 260
  Supply of Tangible Goods Services - non-payment of Service Tax - appellant had been collecting Service Tax from its customers since 2008, but had not deposited the same with the Government Exchequer - demand alongwith interest and penalty - extended period of limitation - Best Judgment method as prescribed under Section 72 of Finance Act, 1994 - Held that:- The Learned Commissioner while confirming the demand in respect of the service provided in J K has held that the appellant has not been able provide the details, supported by documents whereas the said amounts were reflected in the Balance Sheets, perused by the department. The learned Commissioner has taken total receipts from 01.04.2008 to 31.03.2014 for calculating the Service Tax. Service Tax on Supply of Tangible Goods Service came w.e.f 16.05.2008 therefore receipts before 16.5.2008 were not taxable - Further first Show Cause Notice was issued on 21.10.2013, thus the demand for the period from 16.05.2008 to 20.10.2013 is held beyond the extended period of limitation. Further, it is admitted in the impugned order that the appellant was registered with the Department vide Service Tax Registration No. AACCD1501GST001 for providing Supply of Tangible Goods Services , therefore it cannot be alleged that the appellant had suppressed anything from the department. Best Judgement assessment - Held that:- It is admitted in the impugned order that the department obtained total receipt value for the preceding years from the appellant. There is no reason that the department could not get the actual receipts details for the year 2013-14 also - This Tribunal in the case of Shubham Electricals Vs Commissioner of C.Ex. S.T., Rohatak [2015 (6) TMI 786 - CESTAT NEW DELHI] has held that a best judgment assessment should be based on material and data on record. It is not a tool in the hands of the Adjudicating Authority to punish the assessee. The estimation should be fair and reasonable, and not a wild guess work. The appellant has submitted all calculations of admitted tax liabilities, and deposit of Tax, duly certified by a Chartered Account with the appeal - the impugned order suffers from infirmities as explained and is not sustainable under the law. Appeal allowed.

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• 2018 (12) TMI 259
  Classification of services - Supply of Tangible Goods Service or not - Held that:- Since the appellant in view of the majority judgment of the Larger Bench judgment of the CESTAT in the case of Global Vectra Helicopter Ltd Vs Commissioner of S.T Mumbai-II [2015 (2) TMI 974 - CESTAT MUMBAI (LB)], did not contest the issue of re-classification of the service provided by the appellant under the category of “supply of tangible goods for use service”, taxable w.e.f. 16-5-2008, we refrain from deciding the issue of classification of Service provided by the appellant. Demand in respect of the service provided in J&K - POPOS Rules - Held that:- The Place of Provision of Service Rules, 2012 were introduced vide Notification No. 28/2012 dated 20.06.2012 and were made effective from 01.07.2012. There is nothing in the said notification that these Rules will be applied retrospectively. Therefore, the said rules cannot be applied for the period prior to 01.07.2012. The appellant had all the supporting documents like invoices, names of the passengers and the passenger manifest to support their claim, that the flights originated and terminated in J&K - Service Tax is not chargeable on the value of services provided in J&K as per Section 64 of the Finance Act, 1994 and demand of Rs. 6,44,66,914/- is held not sustainable under the law and is set aside. Demand of Service Tax - total value of parts and spares used for maintenance and repairs - Held that:- The appellant has provided as above, the total value of parts and spares used for maintenance and repairs was Rs. 10,37,49,243/- This amount is not chargeable to Service Tax and the demand of Rs. 1,12,46,921/- in respect of value of parts and spares is not sustainable under the law and therefore is set aside. CENVAT Credit - service of pilot hiring - service component under Maintenance and Repair Service - Held that:- The appellant has paid Service tax of Rs. 31,45,915.01 under Reverse Charge Mechanism, in respect of service of pilot hiring and service component under Maintenance and Repair Service - the CENVAT Credit of the same is admissible to the appellant. Adjustment of unutilised Cenvat credit of Rs. 4,01,847/- against the Service tax liability - Held that:- The input credit on these input services is admissible under the law.But the Appellant did not utilize available CENVAT Credit of Rs. 4,01,847/- for the payment of Service tax liability of the concerned period. Thus, the available CENVAT credit should have been adjusted against Service tax liability, if any, for the period 2008-09 and 2011-12. CENVAT Credit - input services - nexus with input services - Held that:- The input services are relatable to output services - The Learned Commissioner though admitted in the impugned order that the appellant had claimed the Cenvat Credit on above said inputs, but has not returned any finding that the said inputs were not relatable to the service provided by the appellant. The learned Commissioner could have ascertained the details from the copy of the RG-23 Register submitted by the appellant - CENVAT credit for the input services availed can be utilized for the payment of Service tax liability on or after the date on which payment for input services has been made by the assessee. Therefore we hold that the CENVAT Credit of Rs Rs. 4,01,847/- is admissible to the appellant. Extended period of limitation - Held that:- The show cause notice is dated 20,10.2013. Thus the demand from 01.04.2008 to 23.10.2008 is beyond the scope of the SCN. Further two SCN dated 20.05.2014 and dated 29.05.2015 were issued covering the period up to 31.03.2014 invoking the extended period of limitation which is contrary to the law - the allegation of suppression or fraud with intention to evade payment of Service Tax cannot be sustained - The invocation of extended period of limitation is set aside. Imposition of penalty - issue involved legal interpretation of law - re-classification of the service provided by the appellant under the category of “supply of tangible goods for use service” - no suppression of facts - Held that:- The appellant did not pay service tax under the category of Supply of Tangible Goods Service but suo moto paid the tax under the category of ‘Passenger Travel by Air’ and contested the issue from the beginning of the investigation and did not suppress any information from the department - penalty under section 76 for non-payment of tax, u/s 77 for failure to file ST-3 in a proper manner and u/s 78 for deliberately suppressing the facts, is held not leviable under the Finance Act, 1994. In Tecumseh Products India Ltd. V. CCE, [2004 (5) TMI 76 - SUPREME COURT OF INDIA], the Hon’ble Supreme Court held that in the circumstances where there was bona fide dispute between the parties in regard to the legal interpretation of law, penalty cannot be imposed on Appellant-assessee. Appeal allowed in part.

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• 2018 (12) TMI 258
  Valuation - Maintenance and repair service - repairing/reshelling the old and worn out rollers of sugar mills - whether the cost of the scrap generated during the course of repair of their customer’s, sugar rollers would form part of the service so as to discharge the service tax on the same or not? - Held that:- It is not a case where particular activity is being adjudged as a manufacturing activity or service activity, in which case the payment of Excise Duty on the scrap so arisen is the relevant consideration for holding the activity as not amounting to manufacture. In the present case the dispute relates to the value of the admitted service, which is leviable to service tax. The appellants are being paid for the said service by their service recipient, in cash as also in kind. The payment in kind is equivalent to value of the scrap which the appellant has been allowed to retain. The payment made in cash to the extent of Rs. 100/- and in kind to the extent of Rs. 50/-, being the value of scrap is required to be considered as the value of the service. The fact of clearance of said scrap on payment of duty of Excise has no relation for arriving at the value of the service - thus the value of the scrap is required to be added in the value of the services. Time Limitation - Held that:- The charge of suppression cannot be maintained, the Lower Authorities have not adverted to the said fact and as such we deem it fit to remand the matter to the Original Adjudicating Authority for deciding the issue of limitation afresh, based upon the documentary evidence on record. Appeal is rejected on merits and remanded on limitation.

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• 2018 (12) TMI 257
  Reverse charge mechanism - non-payment of service tax - Business Auxiliary Service - Business Exhibition Service - Technical Inspection and Certification Services - Transport of Goods by Road Service - demand alongwith penalty - extended period of limitation - Revenue Neutral situation. Business auxiliary service - Reverse Charge Basis in respect of Commission Agent Services received by the appellant from the Foreign Service Providers - Held that:- Admittedly there is an exemption available in terms of N/N. 18/2009-ST dated 07.07.2009. The same does not stand extended by the Adjudicating Authority on the ground of late filing of EXP-1 and EXP-2 forms/returns - an identical issue was considered by the Tribunal in the case of Coromandel Stampings & Stoned Ltd. vs. C.C.E. & S.T., Hyderabad-II [2016 (7) TMI 780 - CESTAT HYDERABAD]. It was observed that non filing of EXP-1 and EXP-2 as required under exemption N/N. 18/2009-ST is only a procedural lapse and will not result in denial of substantive benefit, otherwise available in terms of notification - demand set aside. Business Exhibition Services - Held that:- The same were admittedly held in Foreign Land and in terms of the Board’s Circular cannot be considered to be taxable in India. It is well settled that the authorities cannot act against the Board’s Circular. Otherwise also no service having been provided in India, the leviability of an tax of the same cannot be upheld - demand set aside. Technical Inspection and Certification Services provided from Abroad - period from April, 2008 to March, 2012 - Held that:- Demand not sustainable inasmuch as no inspection or certification has taken place in the hands of the Foreign Service Provider - demand set aside. GTA services - Held that:- The appellant have taken a categorical stand that such services were being provided by the individual truck owners and wherever they have availed the services of GTA, the service tax stands paid by them. The said plea of the appellant has not been rebutted by the Adjudicating Authority by any evidence to the contrary - demand set aside. Extended period of limitation - revenue neutrality - Held that:- The period of demand is from October, 2007 to March, 2012 whereas the show cause notice has been issued on 23.04.2013 i.e., beyond the normal period of limitation. All the services were being received by them by duly reflecting the same in their records, in which case it cannot be said that there was any suppression or mis-statement on the part of the assessee with any mala fide intention, thus justifying the invocation of longer period of limitation - the service tax on all the above services was available as credit to the appellant, thus leading to a Revenue neutral situation in which case again no mala fide can be attributed and demands cannot be sustained. Appeal allowed in toto.

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• 2018 (12) TMI 256
  Valuation - inclusion of notional interest of the security deposit in assessable value - Renting of Immovable Property Service - Held that:- The agreement between the appellant and M/s Granada Services Pvt. Ltd. was entered into in the month of November, 2004 much before the activity was covered by levy of service tax, therefore, it cannot be held that to evade service tax the parties have entered into an agreement to have low rent and high security deposit. Whether security deposit was with appellant or not the rent remained the same which was Rs. 5,000/- per month during the period when security deposit was with the appellant and subsequently even when security deposit was refunded and even when the entry of taxable service was yet to be entered into the Statute - thus the security deposit did not influence monthly rental. Tribunal in the case of K. Raheja Corporation Pvt. Ltd. [2015 (2) TMI 886 - CESTAT MUMBAI] has held that notional interest on security deposit cannot be added to rent agreed upon between the parties for the purpose of levy of service tax for renting of immovable property. There was no reason to add notional interest in the monthly rent for the purpose of assessment of service tax - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 255
  Validity and scope of of SCN - Service Rendered to RBI - Cleaning Service - demand raised by invoking extended period of limitation - the examination of points raised in SCN not carried out - principles of natural justice - Held that:- It is stated in the said SCN that the appellant were paying service tax in respect of Manpower and Recruitment and Supply Agency Service whereas it was also stated in the said show cause notice that the service rendered by appellant as Para Medical Services were nothing but Manpower Supply Services and appellant did not pay service tax - there is contradiction in the said show cause notice. Various agreements that must have been entered into by the appellant with the service recipient were not examined by Revenue. Further the invoices raised by the appellant were not examined by Revenue. It was essential to scrutinize the agreements and the invoices to come to a conclusion about exact nature of activity by the appellant so as to examine whether such activity was covered by definition of any service and whether any abatement from assessable value was available - without undertaking any examination of the activity rendered by the appellant, on the basis of income statement demand was raised. Since there was no scrutiny of the receipt by the appellant for issue of said SCN, the impugned SCN is not sustainable law - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 254
  Time limitation - suppression of facts or not - demand of service tax on cleaning services - Held that:- The Revenue was having full knowledge of the activities of the appellant as early as 13.08.2007, however, by invoking extended period of limitation with allegation of suppression show cause notice was issued on 28.10.2009 and the said show cause notice was issued for the period from November, 2005 to January, 2008 - the said SCN is hit by limitation and, therefore, not sustainable - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 253
  Valuation - bundled service - construction of residential complex service - inclusion of charges on account of External Development Charges, Club Building Charges, Fire Fighting Charges, Electrification Fitting Charges, Park Facing Preferential Location Charges, Electrical Sub Station Charges and such other charges in assessable value - bundling of services - Held that:- provisions under sub Section (3) of Section 66F has provided that whenever in ordinary course of business some service is naturally associated with a single service which gives essential character to the entire package of service then such naturally associated service is treated as bundled service and the said bundled service is to be treated as single service which gives the entire package its essential character. In the present case construction of residential complex service is the service which gives essential character to the package of the service and, therefore, the charges are essentially required to be bundled with the single service namely construction of residential complex service - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 252
  Classification of service - Scientific and Technical Consultancy service or not - appellant had entered into Technology Transfer agreement with M/s Vijai Electricals Ltd. - Held that:- The appellants are neither a scientist nor a technocrat nor they are science and technology institution nor organization. Therefore, they are not satisfying the requirement of definition of Scientific or Technical Consultancy Service. The said show cause notice is not sustainable as the appellants are not satisfying definition of Scientific or Technical Consultancy Service - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 251
  Classification of service - Works contract service or Erection Commissioning and Installation service - non-payment of service tax - amount collected from the Uttar Pradesh Jal Nigam qua the work contract for laying sewer pipe/sewerage system - Held that:- This is a work of civil construction in nature because the activities not merely includes the transmission of water in the laid pipelines but includes the construction also of the space where these pipelines were to be laid down. From no stretch of imagination such an activity can be called as Erection Commissioning and Installation Service. Since the said activity, in the present case, has not been provided to a commercial undertaking but to a state owned Authority i.e., Uttar Pradesh Jal Nigam the question of any taxability to it has legislatively being excluded - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 250
  Extended period of limitation - Rent-a-cab service - demand of service tax - penalty - Held that:- In view of the N/N. 6/2014, for the period from 11.07.2014 the demand is sustainable - in view of litigation going-on, on the issue, there is no element of suppression involved and therefore, the demand for the extended period of limitation up to 24.03.2014 is set aside. Also, from the period from 25.03.2014 to 11.07.2014 levy was exempted under the said Mega Notification. Penalty - Held that:- Since the demand during the extended period of limitation is not sustainable, the penalty imposed under Section 78 of the Finance Act, 1994 is set aside. Appeal allowed.

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• 2018 (12) TMI 249
  Benefit of abatement - Mandap Keeper, Beauty Parlor, Internet Cafe, Business Auxiliary Service and Restaurant Service etc. - CENVAT Credit also availed by appellant but later reversed - benefit of abatement denied on the ground that CENVAT Credit availed - Held that:- The factual position that the assessee reversed the proportionate credit has not been rebutted by the Revenue by any evidence to the contrary. Legal issue i.e. as to whether such reversal would amount to non-availment of Cenvat credit so as to fulfill the condition of the Notification stand considered by the Tribunal in the case of M/s The Oberoi Rajvilas vs. CCE, Jaipur-I [2018 (5) TMI 1715 - CESTAT NEW DELHI], where it was held that the reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST ibid. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (12) TMI 248
  Restoration of appeal - appeal was dismissed for want of COD clearance - Held that:- An obligation was placed on every Court and Tribunal where such a dispute is raised, to demand a clearance from the COD and in case it has not been so pleaded and in the absence of the clearance, not to proceed with the case - Later on, a clarification was also issued on 7.1.1994 which abundantly clear that requirement of obtaining clearance from COD was not treated as bar to the lodgment of an appeal or petition either by the Union of India or Public Sector Undertakings before any Court or Tribunal so as to save limitation. The only consequence of not obtaining clearance from COD was that the proceedings were not to be proceeded with. That means a proceeding was required to be kept as it is without progress till the clearance was given. There was nothing in the aforesaid two directions to empower the Tribunal to dismiss the appeal for want of COD clearance - it was not at all permissible by the Tribunal to dismiss appellant's appeal filed in year 2006 against the order passed by the jurisdictional Commissioner only for want of clearance from COD. Even when there was no COD clearance granted, the Tribunal had no jurisdiction and authority under the law to dismiss the appeal for want of COD and then to require the parties to apply restoration upon obtaining clearance. The only permissible course of action was to keep the appeals pending without further proceedings, awaiting submission of COD clearance which was required to be granted once the attempts to resolve the dispute failed. The learned Tribunal has dismissed the applications for restoration on the ground that the applications for restoration were filed after a long delay. The Tribunal was not correct in doing so. Present is not a case where the appeals were dismissed for want of prosecution or for want of mandatory pre-deposit. It is also not a case where the appellant did not file any appeal and the appeal itself was filed after a long delay. Once it is held that the Tribunal had no jurisdiction to dismiss the appeal on the ground of want of clearance from COD, it was the duty of the Tribunal to restore the appeals to undo the injustice caused to the appellant who is entitled to hearing of appeal on its own merits, having suffered demand of crores of rupees as excise duty in denial of its claim of cenvat credit - appeals filed by the appellant before the Tribunal shall stand restored to its original number for being heard on its on merits and in accordance with law - appeal allowed.

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• 2018 (12) TMI 247
  Clandestine removal - MS ingots - case of appellant is that the Central Excise Department has not conducted any search recovery or even any fresh investigation in the present matter - Held that:- The Order is clear that there is no other evidence falsifying the confirmed demand. No additional evidence could be produced by the appellant even before the Central Excise Department. Apparently and admittedly no Appeal has been preferred by the appellant against the Order of the Sales Tax Department, confirming the partial demand. As a result, it stands to have attained finality that the appellant have indulged into transaction of sales of their finished goods without any entry of those transactions in the account books as to the extent of the value of Rs. 39,72,275/-. Demand confirmed alongwith penalty - appeal dismissed - decided against appellant.

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• 2018 (12) TMI 246
  CENVAT Credit - renting of immovable property - substantial portion of the said premises is being used as a factory by the Appellant and only a small portion of the same is being used as depot - Held that:- It is not in dispute that out of the total leased area of 33,000 sq. ft., the appellant has used 30,990 sq. ft. (93.91%) for manufacturing activity and the remaining area of 2010 sq. ft. (6.09%) only was used for depot activity. To support their claim, the Appellant have also produced the certificate issued by M/s. Parag Mutha, Chartered Accountant before the Adjudicating Authority. It is not the case of Revenue at any point of time that the entire premises has been used for trading activity or for depot purpose only. The ratio of depot sale to manufacturing sale is applicable when the credit has been held to be inadmissible for the entire premise which was the case of the department in the show cause notice. Since the Appellant has availed a total amount of Rs. 10,38,070/- as input service tax credit for this renting of immovable property service, therefore 6.09% of the said amount i.e. Rs. 63,219/- is only ineligible for credit since that was used for trading activity and not for the manufacturing purpose - the matter needs correct quantification of demand to be recovered from the appellant. Appeal disposed off by way of remand.

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• 2018 (12) TMI 245
  Refund of excess duty paid - provisional assessment was done - applicability of principles of unjust enrichment - Held that:- This issue is no more res integra and has been settled by various decisions of the Tribunal wherein it has been consistently held that in a case of provisional assessment, doctrine of unjust enrichment is not applicable - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 244
  CENVAT Credit - common input services like security service, GTA service and Manpower Service which were used in the manufacture of excisable goods as well as in the provision of exempted service viz., job work and also sales - Rule 6(3) of the CENVAT Credit Rules, 2004 - compliance of provisions of Rule 6(3A) - Held that:- The appellant has already reversed proportionate CENVAT credit on 13.5.2015 whereas the show-cause notice was issued on 22.1.2016 - once the appellant has made the reversal of proportionate credit then it is sufficient compliance of the provision of Rue 6(3A). Division Bench of this Tribunal in the case of Cranes & Structural Engineers [2016 (8) TMI 387 - CESTAT BANGALORE] has held that the condition in Rule 6(3A) to intimate the Department is only a procedural one and that such procedural lapse is condonable and denial of substantive right on such procedural failure is unjustified. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 243
  Method of Valuation - Sabeena detergent scouring bars - appellant have assessed “Sabeena detergent scouring bars on MRP based assessment and are paying duty adopting valuation under Section 4A of Central Excise Act, 1944, whereas ‘Kite’ detergent bar 75 gms were assessed under Section 4 of Central Excise Act, 1944 - N/N. 13/2002-CE dated 01.03.2002 - Held that:- The definition of “Retail Sale Price” in both Section 4A and Rule 2 of the PC Rules, 1977 make it clear that it is the price at which the goods are sold to the “ultimate consumer” whereas in the present case, there is no sale of detergent cake to the ultimate consumer therefore the valuation based on MRP will not apply. The appellants have disclosed the valuation method in their return from where the Department discovered the valuation method followed by the appellant. Further, the appellant paid the differential duty on the ground that the same would be available to their sister concern as CENVAT credit. Also, it is found that against the buyer which is a sister concern, separate proceedings were commenced for denying the CENVAT credit on duty paid by the appellant but the same was resolved in favor of the purchaser. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 242
  Refund claim - provisional assessment - unjust enrichment - applicability of precedent decisions - Held that:- The adjudicating authority has ventured into the merits of the matter, to hold that the refund claim is hit by unjust enrichment, without considering the fact that the Tribunal’s order is binding on him unless set aside by higher judicial forum. Since the refund claim filed by the respondent in this case has arisen out of the consequential relief granted by the Tribunal by order dated 04.05.2016, and that the said order holding the field are not set aside, and that appeals were filed were withdrawn would mean that the Tribunal’s order holds good and the adjudicating authority is required to follow the judicial discipline and should sanction the refund claim to the respondent and not to credit to consumer welfare fund. Appeal dismissed - decided against Revenue.

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• 2018 (12) TMI 241
  Extended period of limitation - Liability to discharge duty by the job worker - Rule 4(5)(a) of the Cenvat Credit Rules, 2002 - The Larger Bench of this Tribunal has held that the job worker who received the goods for job work from their principal is required to discharge duty on the same. - Held that:- Firstly, all the movements of inputs/raw materials from the principal manufacturer to the appellant’s factory were in accordance with Rule 4(5)(a) of the Cenvat Credit Rules, 2002; also, the issue of liability to discharge duty on the processed goods by the job worker when the raw materials were received under Rule 4(5)(a) of the Cenvat Credit Rules, 2002, marred with conflicting views of this Tribunal resulting into the present reference to Larger Bench - the extended period of limitation cannot be invoked in the present case - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 240
  CENVAT Credit - Supply of goods to the Ministry of Defence for official purposes - N/N. 63/95-CE dated 16.03.1995 - time limitation - Held that:- Rule 4 of CCR, 2004 was amended w.e.f. 01.09.2014/01.03.2015 and time limitation was prescribed for claiming the CENVAT credit but this amendment cannot be applied retrospectively for the period from June 2009 to January 2010 which is a period of dispute in this case. During the period of dispute, there was no time limitation prescribed under Rule 4 for claiming the CENVAT credit on inputs used in the manufacture of final product. Therefore, rejection of CENVAT credit on the ground of limitation is not sustainable in law. Case remanded back to the Original Authority to decide the claim of the appellant regarding CENVAT credit on inputs on the basis of documents which may be produced by the appellant in support of their claim - appeal allowed by way of remand.

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• 2018 (12) TMI 239
  CENVAT Credit - inputs/capital goods - angles, channels, HR plates, MS rounds, joist, sections, wire rope, wire mesh, etc - Held that:- The Hon’ble Supreme Court has earlier dealt with the issue in the case C.C.E., Jaipur Vs. Rajasthan Spinning and Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] wherein the Hon’ble Apex Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules. The articles on which the appellant herein has availed the cenvat credit clearly falls within the definition of capital goods as defined under Rule 2(k) of the Cenvat Credit Rules 2004 - also, applying to a over ruled decision while rejecting the Appeal is held to be an act of committing a judicial indiscipline on the part of the Commissioner(Appeals). Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 238
  Clandestine removal - parallel invoices - Revenue entertained a view that the appellant was indulging in clandestine activities and the scribblings made in the loose paper related to clearances of their finished product without payment of duty - Held that:- We really fail to understand that if the names of the parties, who according to the Revenue are recipients of the goods, were present in these loose sheets, why the buyers were not approached and their statements recorded. Similarly the number of tempos or trucks was available in the said sheets but no further investigations stand made by the Revenue from the said vehicle owners, for the reasons best known to them. Not only that the Revenue has not made any efforts to identify the scribe of these documents, no evidence of procurement of raw material and conversion of the same into final product in the assessee’s factory, and clearances of the same or identification of the buyers has been established by the Revenue. The law on the clandestine manufacture is well established. Admittedly the burden of proving clandestine removal is on the Revenue and is required to be discharged by production of positive and affirmative evidences - It is well established that the charge of clandestine removal is in the nature of quasi criminal adjudication, which also results in criminal liabilities by way of prosecution of the concerned persons. As such the same requires stronger prove by production of positive evidence and cannot be made on the basis of some scribblings in the loose papers recovered from the factory. In the present case, the Revenue has not investigated the matter further and has based his entire case on the basis of entries in loose papers only, the scribe of which is also not identified. Further reference to the so called inculpatory statement of Shri Harmeet Singh who is a co-appellant, even if considered to be confessional in nature, cannot be made the sole basis for arriving at the finding of clandestine removal unless the same is corroborated by independent evidences. The deponent of statement, Shri Harmeet Singh have assailed the free and correct nature of the same by referring to the fact that they were made to deposit certain amounts at the stage of investigations itself to establish that the appellant was under pressure from the visiting officers and the statement cannot be considered to be a free and correct statement - there is no evidence, corroborating the Revenue’s stand - there are no merits in the impugned order. The part of the demand is based upon the nine parallel invoices recovered and seized by the officers from the appellant’s factory. Shri Sanjeev Kumar as also Shri Harmeet Singh have accepted the fact that they cleared their final product under the cover of the said nine invoices, without payment of duty - the duty in respect of the said nine invoices is required to be confirmed against them along with confirmation of interest and imposition of penalty to that extent in terms of the provisions of Section 11 AC. Penalty on Shri Harmeet Singh - Held that:- Inasmuch as the main demand against the manufacturing unit has been set aside, there is no justification in imposing penalty on him, especially, when no specific role stands attributed to him so as to show his involvement - penalty set aside. Appeal disposed off.

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• 2018 (12) TMI 237
  Clandestine removal - excess use of inputs - entire case of the Revenue as regards the excess use of inputs and the consequent availment of Cenvat credit is based upon the comparison of input consumption figures for the two financial year 2006-07, 2007-08 - Held that:- It is well settled law that the quantum of final product manufactured by an assessee cannot be arrived at on the basis of the input output ratio. The appellants have explained that 2006-07 was the first year of their manufacture and as such having started the commercial production in that year only, there was huge loss of inputs during the course of manufacture. Further it stands contended by them that they are in the manufacture of high precision products to be used for luxury cars, which require 100% sophistication and no manufacturing defects are accepted by the customers - In such a scenario to arrive at a conclusion that the appellant has used more inputs and has availed excess credit, which requires to be reversed by them cannot be upheld. In the absence of any evidence to the contrary that the appellant cleared their inputs “as such” after availing the Cenvat credit of duty and in fact in the absence of any allegation to that effect, there are no justifiable reasons to deny the credit to the appellant merely on the basis of the input output ratio - demand alongwith penalty set aside. CENVAT Credit - rejected products - Rule 16(1) of Cenvat Credit Rules - penalty - Held that:- The appellant during the course of adjudication before the Commissioner admitted to pay the said duty and did not contest the same inasmuch as the rejected goods were not processed by them. Inasmuch as the same were accepted by the appellant as payable, the same is confirmed - inasmuch as there is no mala fide on their part and everything was being reflected in the records, the invocation of penal provision against them on the said demand would not be justified. Demand set aside with penalty - appeal disposed off.

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• 2018 (12) TMI 236
  CENVAT Credit - HR Coils was being received through Rail and Railways were charging service tax for transportation of the same, which were shown in the Railway Receipt (RR) - Held that:- The facts are undisputed in the present case the appellant had admittedly availed credit on the basis of RRs and subsequently produced the STTG certificate, which was relatable to the same RRs on the basis of which credit was availed. In such a scenario, the RRs get replaced with the STTG certificate thus fulfilling the requirement of law. The bare fact that the said certificate was not available at the relevant period when the law was changed, cannot be held to be a ground for denial of the credit in the absence of any allegation to the effect that the goods were not received by Railways or Railways have not paid the service tax or the appellant have not utilized the said goods in the manufacture of their final product. Raising of such a hyper technical ground by the Revenue is nothing but denial of justifiable claim of the assessee. In the present case M/s SAIL has given a certificate to the effect that they had not availed the credit in question. Further the Revenue’s objection that the circular was issued in 2016 and as such would not be applicable for the period prior to that can also not be appreciated inasmuch as the circular is nothing but clarification of the law by the Board. Such clarifications, even though issued subsequently, would relate back to the law as was on the statute book even prior to the issuance of the circular. As such the objections raised by Revenue are unsustainable. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 235
  Vires of Rule 8(3A) of Central Excise Rules, 2002 - Default in payment of duty in terms of Rule 8 of Central Excise Rules, 2002 - confirmation of demands, required to be paid in cash - imposition of penalties - Held that:- The Hon’ble Gujarat High Court in the case of M/s Indsur Global Ltd. vs. UOI [2014 (12) TMI 585 - GUJARAT HIGH COURT] has declared the provisions of Rule 8(3A) of Central Excise Rules, 2002 as unconstitutional. The said decision of the Hon’ble Gujarat High Court stands followed by the Tribunal in number of cases - Subsequently the said decision of the Hon’ble Gujarat High Court in the case of Indsur Global Ltd. stands considered and followed by the Hon’ble Madras High Court in the case of M/s A. R. Metallurgicals Pvt. Ltd. vs. CESTAT, Chennai [2015 (5) TMI 661 - MADRAS HIGH COURT]. It is noticed that though the issue has been held in favour of the assessee by the above referred decisions of various High Courts but Revenue has challenged the Hon’ble Gujarat and Madras High Court’s decision by filing a Special Leave Petition against the said judgment before the Hon’ble Supreme Court. The SLP stands admitted by the Hon’ble Supreme Court alongwith grant of stay of proceedings - Tribunal in the case of Principal Commissioner of Central Excise, Delhi vs. Space Telelink Ltd. [2017 (3) TMI 1599 - DELHI HIGH COURT] has taken note of the said development of staying the proceedings by the Hon’ble Supreme Court. However it stands observed that the said submission of the Revenue is fallacious because the Hon’ble Supreme Court in the case of Shree Chamundi Mopeds Ltd. vs. Church of South India Trust Association [1992 (4) TMI 183 - SUPREME COURT OF INDIA] has observed that an order keeping in abeyance the judgment of a Lower Court or Authority does not deface the underlying basis of the judgment itself i.e. its reasoning. Inasmuch as the issue stands decided by various decisions, the impugned orders set aside - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 234
  CENVAT Credit - common cenvat credit availed inputs had been used in respect of manufacture and clearance of the goods without payment of duty to SEZ - export or not - non-maintenance of separate records - Rule 6(3)(b) of Cenvat Credit Rules, 2004 - Held that:- The issue is no more res integra and stands settled by the Tribunal in the case of Sujana Metal Products Ltd. v. C.C.E., Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE], wherein, after taking into account the provisions of SEZ Act, 2009 has held that the amendment made with effect from 31.12.2008 has to be treated as retrospective and that even prior to 31.12.2008 supplies to SEZ were covered by the provisions of sub-rule (6) of Rule 6 of Cenvat Credit Rules as the same are covered by the term definition of ‘Export’ as defined in SEZ Act. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 233
  CENVAT Credit - inputs - structural steel items used for fabricating and/or laying foundation to support the capital goods - Held that:- Similar case has been decided by this Bench in the case of Neo Metaliks Ltd. Vs. CCE, Bolpur [2018 (8) TMI 399 - CESTAT KOLKATA], where it was held that Board Circular vide Circular F.No.B-4/7/2000-TRU, dated 03.04.2000 laying down that credit can be taken as and when capital goods are received in the factory but not yet installed. The structurals such as M.S. Channel and Joints etc. are eligible for CENVAT Credit as capital goods under Rule 2 (K) ibid - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 232
  CENVAT Credit - capital goods/inputs - structural items and cement used for fabricating structure/laying foundation to support the capital goods - Held that:- The Supreme Court in the case of Commissioner of Central Excise, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] had applied the user test by following the Jawahar Mill's case and held that the steel plates and M.S. Channels falls within the ambit of capital goods. It is not in dispute that the impugned goods were used for fabrication of structurals to support various machines and that without these structurals, the machineries could not be erected and could not function. This fact has further been certified by the Chartered Engineer. Credit allowed - Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (12) TMI 231
  Jurisdiction to initiate or impose penalty - Whether SCN having been issued; goods having been seized and penalty having been first imposed solely on the seller (Ex-U.P. dealer) vide order dated 08.11.2013 and no liability having been fixed on the assessee in those proceedings, there survived any jurisdiction to initiate or impose penalty on the assessee there after under Section 54(1) (14) of U.P. VAT Act, 2008? - Held that:- It emerges from a plain reading of statute that the penalty under Section 54(1)(5) may be imposed if the Assessing Officer 'is satisfied' that 'any dealer or other person' had committed the wrong described under various clauses of subsection (1) of Section 54. Therefore, in the first place, for a valid penalty to arise, the Assessing Officer must record his satisfaction in that regard. Then the satisfaction must arise with respect to a person who may be a dealer or any other person as well. With reference to clause (5) of sub-section (1) of Section 54, it is seen that the penal event arises if the person being subjected to penalty imports or attempts to import or abets to import any goods in contravention of Section 50, 51 of the Act, with a view to evade payment of tax. Admittedly, besides the fact that the penalty order was made at the hands of the ex-U.P. selling dealer, to the exclusion of the assessee, the Assessing Officer first drew up penalty proceedings and passed penalty order on 08.11.2013 solely against that selling dealer. In that order, copy of which has been brought on record by means of a supplementary affidavit, the satisfaction is seen to exist solely against that dealer to the exclusion of any allegation or suspicion of infringement of law committed by the assessee. Thus, the satisfaction contemplated under Section 54(1) of the Act was recorded by the Assessing Officer on 08.11.2013 against the selling dealer only - That having been done, there survived no occasion or jurisdiction for the Assessing Officer to draw up any other or further proceedings. The power to impose penalty stood exhausted. Once the Assessing Officer recorded his satisfaction of infringement having been made with respect to the present transaction, solely by the selling dealer, it did not survive on him to record a contrary or another satisfaction as to infringement made by the assessee with respect to that transaction - However, if the Assessing Officer intends to draw a finding contrary to that recorded during the seizure proceedings so as to rope in another person (who had not been visited with the seizure order), such intent must get expressed at the first instance, i.e. while issuing penalty notice or at least before passing penalty order. However, no final opinion is being expressed in this regard, in view of the fact, in the instant case no notice was issued to the assessee during pendency of the penalty proceedings against the seller. Penalty stands deleted - revision allowed.

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• 2018 (12) TMI 230
  Jurisdiction - Scope of Inter-state sales - supply of the goods from Mumbai to Delhi to execute the works contract - CST Act, 1956 - applicability of Delhi Sales Tax Act, 1975 - Held that:- This Court is of the opinion that the appreciation of the law by the Tribunal in this case is sound and unexceptionable. The placement of an order by the agent for procurement of the lifts in this case was merely an offer. It is only upon its acceptance and further steps taken by the supplier that an offer crystallizes into a binding promise or contract. That took place in Mumbai. It is now too far well settled that the incidence of Central Sales Tax or even sale of goods, occurs where the goods are appropriated to the contract. In this case, the place where the appropriation took place, is undoubtedly Mumbai. Appeal dismissed.

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• 2018 (12) TMI 229
  Confiscation of goods - scope of transporter - illegal transportation of goods - confiscation of vehicle when the offence was compounded by the transporter and the goods which were being transported in the vehicle were released - Section 57 of 2002 Act - compounding of offence - Held that:- Explanation (ii) under Section 57 of 2002 Act defines expression “transporter” which includes “the owner of the vehicle carrying the goods, whether an individual, a firm, association, society or company, and the Manager, if any, of such owner.” In the present case as evident from the facts adverted at, with the admission of guilt and having paid twice the amount of penalty, the collusion with the dealer involved in avoidance or evasion of tax stood established beyond any iota of doubt. The contention that with the compounding of offence the illegality gets validated and that an action under sub-section (9) of Section 57 of 2002 Act is not attracted is taken note of and rejected at the outset. The depositing of penalty which is twice the amount of tax establishes the factum that the transporter in possession or in control of goods has colluded with the dealer who evades the tax, which attracts action under sub-section (9) of Section 57 of 2002 Act. Trite it is that in construing provisions designed to prevent tax evasion, if the legislature uses words of comprehensive import, the Courts cannot proceed on an assumption that the words were used in a restricted sense so as to defeat the avowed object of the legislature. A penalty provision in a taxing statute, as held in Gujarat Travancore Agency, Cochin Vs. Commissioner of Income Tax, Kerala, Ernakulam [1989 (5) TMI 1 - SUPREME COURT], is not to be equated to a criminal statute requiring impliedly the element of mens rea and unless there is something in the language of the Act indicating needs to establish mens rea. There is no substantial question of law, as proposed, arises for consideration - appeal dismissed.

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• Indian Laws

• 2018 (12) TMI 265
  Applications for suspension of sentence - Release of respondents on bail - bulk possession of manufactured drugs without any valid authorization - N.D.P.S Act - Drugs and Cosmetics Act, 1940 - Held that:- The Drugs and Cosmetics Act, 1940 was enacted to specifically prevent substandard drugs and to maintain high standards of medical treatment - The Drugs and Cosmetics Act, 1940 was mainly intended to curtail the menace of adulteration of drugs and also of production, manufacture, distribution and sale of spurious and substandard drugs. On the other hand, the N.D.P.S Act is a special law enacted by the Parliament with an object to control and regulate the operations relating to narcotic drugs and psychotropic substances. While the Drugs and Cosmetics Act deals with drugs which are intended to be used for therapeutic or medicinal usage, on the other hand the N.D.P.S Act intends to curb and penalize the usage of drugs which are usedfor intoxication or for getting a stimulant effect. In the present case, the accused respondents were found in bulk possession of manufactured drugs without any valid authorization. The counsel on behalf of the appellant State has extensively stressed that the actions of the accused Respondents amounts to clear violation of Section 8 of the N.D.P.S Act as it clearly prohibits possession of narcotic substances except for medicinal or scientific purposes - the trial courts after analyzing the evidence placed before them, held the accused Respondents guilty beyond reasonable doubt and convicted them for offences committed under Section 21 and Section 22 of the N.D.P.S Act. Section 80 of the N.D.P.S Act, clearly lays down that application of the Drugs and Cosmetics Act is not barred, and provisions of N.D.P.S. Act can be applicable in addition to that of the provisions of the Drugs and Cosmetics Act. The statute further clarifies that the provisions of the N.D.P.S Act are not in derogation of the Drugs and Cosmetics Act, 1940. In the present case, the accused-respondents had approached the High Court seeking suspension of sentence. However, in granting the aforesaid relief, the High Court erroneously made observations on the merits of the case while the appeals were still pending before it - the gravity of offence alleged against the accused respondents, the order of the High Court directing suspension of sentence and grant of bail is clearly unsustainable in law and the same is liable to be set aside. The impugned order passed by the High Court is hereby set aside - appeal allowed - decided in favor of appellant.

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