TMI Tax Updates - e-Newsletter
December 6, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Key highlight of Insolvency Rule 2019

   By: Sandeep Rawat

2. CLASSIFICATION AND RATE ON SUPPLY OF FOOD AT EVENTS

   By: Dr. Sanjiv Agarwal

3. REGULATION OF DEBT INSTRUMENTS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. RBI releases “Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector”

2. Framing of rules with respect of Fund Manager Regime under section 9A of the Income-tax Act, 1961-Draft notification for inputs from stakeholders and the general public

3. Fifth Bi-monthly Monetary Policy Statement for 2019-20

4. The Fifteenth Finance Commission submits its report for 2020-21 to the President of India

5. Piyush Goyal inaugurates 3rd Edition of National Public Procurement Conclave

6. Investor Education & Protection Fund Authority (IEPFA) signs MOU with Bank of Baroda for Investor Awareness

Notifications

Central Excise

1. 06/2019 - dated 4-12-2019 - CE (NT)

Central Government specifies enactments to which the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 shall be applicable

Customs

2. 88/2019 - dated 5-12-2019 - Cus (NT)

Exchange Rates Notification No.88/2019-Customs (NT) dated 5.12.2019

Circulars / Instructions / Orders

GST - States

1. Circular No. 37/2019(State) - dated 22-10-2019

Levy of GST on the service of display of name or placing of name plates of the donor in the premises of charitable organisations receiving donation or gifts from individual donors

2. Circular No. 38/2019 (State) - dated 22-10-2019

Clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India

3. Circular No. 40/2019 (State) - dated 22-10-2019

Clarification on the effective date of explanation inserted in notification issued in the G.O.Ms.No.259, Revenue (CT-II) Department, Dated 29.6.2017

4. Circular No. 36/2019 (State) - dated 22-10-2019

Clarification on issue of GST on Airport levies

5. Circular No. 39/2019 (State) - dated 22-10-2019

Clarification regarding determination of place of supply in case of software/design services related to Electronics Semiconductor and Design Manufacturing (ESDM) industry

6. Circular No. 35/2019(State) - dated 22-10-2019

Clarification regarding GST rates & classification (goods)

GST

7. 127/46/2019 - dated 4-12-2019

Withdrawal of Circular No. 107/26/2019-GST dt. 18.07.2019

FEMA

8. 11 - dated 5-12-2019

Exim Bank's Government of India supported Line of Credit (LOC) of USD 500 million to the Government of Bangladesh

Highlights / Catch Notes

GST

• Court Finds No Evidence of Profiteering in Construction Services; ITC Benefit Allegation Dismissed Due to Higher Pre-GST Ratio.

  Case-Laws - NAPA : Profiteering - supply of construction services related to purchase of Flat - the ratio of ITC in pre-GST period was higher than the post-GST period. - The allegation that the Respondent has not passed on the benefit of ITC in this case is not sustainable
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Income Tax

• Court Rules on Assessment Reopening: Objections Merged with Final Order, Not Separately Challenged Under Article 226 Jurisdiction.

  Case-Laws - HC : Reopening of assessment u/s 147 r.w.s. 148 - Participation in the assessment proceedings after rejection of objections by the AO, without challenging the order of rejection - the reasons for reopening and the consequential order rejecting the objections against those reasons now got merged with the subsequent order of assessment and therefore, it would not be proper for this Court to go into the question of reopening alone and decide about its validity by exercising the jurisdiction of this Court under Article 226 of the Constitution of India.
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• Tribunal Rules AOP Not Liable for Additional Tax; CBDT Circular Requirements Met, Members Already Taxed on Amount.

  Case-Laws - HC : Assessment of AOP - Addition adopting net profit ratio @ 11.59% of the gross receipts - Tribunal as a matter of fact has found that the requirements of CBDT circular referred to hereinabove are duly satisfied in the case of the assessee and hence, once the amount has been offered to tax by its members, the assessee could not be saddled with the liability to pay tax in respect of the same amount.
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• Interest on Diverted Funds Not Added Notionally to Income if No New Advances in Relevant Year.

  Case-Laws - AT : Interest attributed to the funds diverted to sister-concern - Since no fresh advances were given during the relevant assessment year to the sister concern and when no addition on this account was made in the earlier assessment years or in the subsequent assessment years no addition can be made on a notional basis to the interest income under the head `income from other sources’.
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• Claim Denied: Evidence Shows Bogus Bills and Cash Routing Scheme for Excessive Building Depreciation. Assessee's Involvement Confirmed.

  Case-Laws - AT : Claim of Excessive depreciation on building - the preponderance of the probability suggests that raising of bogus bills by the subcontractors to the contactors and then routing back of the money in the form of the cash definitely must have been done on the direction of the assessee as assessee is the ultimate beneficiary by way of excess deduction of depreciation on the capital asset in the form of building. - Claim not allowed.
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• TDS Required on Royalty Payments to Foreign Carriers Despite Favorable Ruling on Foreign Technical Services Aspect.

  Case-Laws - AT : TDS liability on UC/bandwidth Charges paid to foreign carriers - When on one aspect, the matter is decided against the assessee i.e. Royalty aspect in the present case, it cannot be held that no TDS is required to be deducted even if on some other aspect i.e. on FTS aspect in the present case, it is held that TDS is not required to be deducted on that aspect.
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• Refund Adjustment u/s 244A: Only Excess Interest Reclaimed, Not Entire Amount, Per Section 234D Income Tax Act Decision.

  Case-Laws - AT : Withdrawal of refund which was granted on refund u/s 244A - Reduction in interest due to order of CIT(A) - the excess claim of interest is required to be called back u/s.234D of the Act only, but not the withdrawal of entire interest.
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• Commission to HUFs Allowed When Individual is Both Partner and Karta, Says Income Tax Regulation.

  Case-Laws - AT : Commission paid by the Partnership firm to HUFs - contribution of an individual, who helps the firm in two capacities viz; first in the capacity of partner and secondly as Karta of HUF - the commission paid by the assessee firm to HUFs is allowable.
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Customs

• Show Cause Notice Validity Upheld; Writ Petition Challenging Extended Limitation Period Rejected as Premature per CBEC Circular.

  Case-Laws - HC : Extended period of limitation - Validity of SCN - The circular issued by the CBEC no doubt deals with the ingredients for extended period, but on the examination of the show cause notice impugned it cannot be held that such ingredients are not present - Writ petition is premature and deserves to be rejected.
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• High Seas Sale Case: Court Rules on Including Service Charges in Assessable Value of Imported Goods, Canalizing Agent Role Discussed.

  Case-Laws - AT : Valuation of imported goods - High Seas Sale - inclusion of service charges in the assessable value - canalizing agent or not - The mere fact that the bids for import were finalised by the respondent (MMTC) after approval of NTPC, would not change the nature of transaction.
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FEMA

• Exim Bank grants Bangladesh a $500 million credit line backed by Indian government support.

  Circulars : Exim Bank's Government of India supported Line of Credit (LOC) of USD 500 million to the Government of Bangladesh
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Corporate Law

• Official Liquidator Reluctant to Relinquish Control in Winding Up; Directions Issued to Address Conduct Issues.

  Case-Laws - HC : Winding up proceedings - conduct of Official Liquidator (OL) - The OL really should have no interest in seeking to retain its control over the company under liquidation since, supposedly, it has no pecuniary interest in the matter. - OL is not willing to let go of its control over the company under liquidation. - Direction issued.
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• Offences under the Companies Act can be pursued separately from SEBI Act violations, allowing for additional proceedings.

  Case-Laws - HC : Composition of offences under the provisions of the Companies Act, 1956 did not in any manner preclude the appellant from initiating any proceedings for alleged violations under the SEBI Act, 1992 or the regulations made.
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• Resolution Plan Approval Doesn't Halt Ongoing Legal Proceedings; Jurisdiction Lies with Competent Authorities for Orders.

  Case-Laws - Tri : The approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/ Corporate Debtor as those are the subject matter of the concerned Competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be.
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Indian Laws

• Employees' Dues Not Paramount Over All Debts; Prioritized Over Unsecured Claims Per Section 169(2) of Land Revenue Code.

  Case-Laws - SC : Recovery of dues from company - employees dues - priority claim on debts - - Section 529A of the Companies Act, which gives workers’ dues a priority over all other debts, cannot be applied to the instant case in view of Section 167 of the Societies Act - Merely by virtue of being recoverable as arrears of land revenue, the employees’ dues, in respect of which a recovery certificate had been issued by the Industrial Court, cannot be treated as a paramount charge in terms of Section 169(1) of the Land Revenue Code. Instead, under 169(2) of the Land Revenue Code, they would take precedence only over unsecured claims.
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• Court Clarifies: No Need to Provide Reasons for Recalling Witnesses u/s 145(2) Application. Witness Recall Mandatory.

  Case-Laws - HC : Dishonor of cheque - This court has specifically ruled that the second part of Section 145(2), nowhere talks about assigning reasons in the application for recall/re-examination of a witness, meaning thereby that it is obligatory for the court to recall complainant or its witnesses, if an application is made in that behalf
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IBC

• High Court's Role Under Article 226/227 in NCLT Orders: When Intervention is Justified Despite Appeal Options.

  Case-Laws - SC : Whether the High Court ought to interfere, under Article 226/227 of the Constitution, with an Order passed by the National Company Law Tribunal in a proceeding under the Insolvency and Bankruptcy Code, 2016, ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal and if so, under what circumstances? - NCLT and NCLAT would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act, 1957 - HC was justified to interfere.
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SEBI

• Day Trader Cleared: Lack of Evidence on Same-Day Trades for Fraudulent Practices Under PFUTP Leads to Acquittal.

  Case-Laws - AT : Multiple trades on the same day - fraudulent and unfair trade - Even though preponderance of probability is sufficient to prove PFUTP violations still fraudulent and unfair trade has to be established with some degree of confidence. Given the absence of such findings and given the undisputed fact that the appellant was a day trader we are constrained to give benefit of doubt to the appellant.
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Service Tax

• Service Tax Demand on IPR Application Under PPV Act Deemed Unsustainable; Rights Granted Post-Registration.

  Case-Laws - AT : Intellectual Property Service - Application for IPR was filed - As regards, the requirements of law, the governing statute is the PPV Act, according to which the Right flows from the moment the registration is granted. Once the application is filed, procedure follows, which is not just an empty formality. - demand is not sustainable.
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• Appellants in Software Development Exempt from Service Tax on OIDAR Services, Court Rules in Favor of Exporters.

  Case-Laws - AT : Classification of services - Online Information Database Access and Retrieval (OIDAR service) or not - developing and export of software - The appellants are not liable to pay any service tax regarding the OIDAR.
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Central Excise

• Central Government Clarifies Applicable Laws Under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 for Tax Dispute Settlement.

  Notifications : Central Government specifies enactments to which the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 shall be applicable
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• Rebate claim rejected due to time limits; Rule 18 and Section 11-B confirm no extension beyond prescribed period.

  Case-Laws - HC : Rebate claim - rejection on the ground of time limitation - It is contended that no time limit has been prescribed for filing a rebate claim under Rule 18 of Rules and Section 11-B of the Act is not applicable to the Notification No.19/2004/CE(NT) - The contention rejected - Period of limitation cannot be exceed beyond section 11-B
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VAT

• Agriculturists and raw rubber producers not classified as dealers for sales tax, court rules against Revenue.

  Case-Laws - HC : Levy of Sales Tax - agriculturist, producer of raw rubber could be treated as dealers or not - The questions raised for consideration has to be necessarily answered against the Revenue and in favour of the respondent .
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Case Laws:

• GST

• 2019 (12) TMI 219
  Scope of provisions of 171 of CGST Act - Profiteering - supply of construction services related to purchase of Flat - benefit of reduction in the rate of tax or ITC had not been passed on - contravention of provisions of 171 of CGST Act - whether there was any net benefit of ITC with the introduction of GST? - HELD THAT:- As per the report of DGAP, the ratio of ITC in pre-GST period was higher than the post-GST period. - DGAP has further Reported that the Respondent, vide his reply dated 14.06.2019, has only furnished his correspondence with his 11 home buyers before the DGAP and no account statement pertaining to these home buyers had been submitted by him before the DGAP to support his claim. DGAP has further reported that the Respondent had mentioned in the last para of his letter to 11 home buyers that this amount of profiteering was merely based on a provisional computation at his end. There are no reason to differ from the Report of DGAP and we therefore agree with his findings since there was no reduction in the rate of tax nor there was increased additional benefit on account of ITC. Hence, the provisions of Section 171 of CGST Act, 2017 are not liable to be invoked in this case, notwithstanding the contention of the Applicant No. 1 that the Respondent had issued a credit note to him which indicated that an amount of Rs. 1,12,080/- was being passed on to him. We take cognizance of the Report of DGAP dated 07.10.2019 that this issue had already been considered by him during the investigation and was found extraneous to the computation of profiteering since the communications regarding the credit note issued by the Respondent were based on a mere provisional computation of the amount of profiteering on his (Respondent) part. We also find that on his part, the Applicant No. 1 has also not substantiated his allegations during the course of the hearings. Therefore, there are no ground to differ from the Report of the DGAP in this regard as also in the computation of profiteering made in the DGAP s Report. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the Respondent has neither been benefited from additional ITC nor has there been a reduction in the tax rate in the post-GST period. The allegation that the Respondent has not passed on the benefit of ITC in this case is not sustainable - the application filed by the Applicant No. 1 requesting action against the Respondent for alleged violation of the provisions of the Section 171 of the CGST Act is not maintainable and hence the same is dismissed.

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• 2019 (12) TMI 168
  Territorial Jurisdiction - proposed location of various States and Area Benches of GSTAT has been finalised for 26 States and 5 Union Territories - HELD THAT:- The matter is engaging the attention of the Division Bench as also in view of the assurance given by Sri Shukla that the matter would be resolved by the appropriate authorities at the earliest, as prayed three weeks time is granted to him to obtain instructions and file aproper affidavit, if necessary, to bring on record the further action taken for constitution of appropriate Benches of GSTAT for the State of Uttar Pradesh. List on 13.11.2019.

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• Income Tax

• 2019 (12) TMI 218
  Assessment u/s 153C - HELD THAT:- As submitted that from the satisfaction note it is evident that the gold has been sent to the petitioner for job work. As submitted that the expression job work has not been defined in the Income Tax Act but has been defined under sub-section (68) of section 2 of the Central Goods and Services Tax Act, 2017, to mean any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. It was submitted that, therefore, from the definition of job work it is evident that the goods belong to another person and not the person to whom it is sent for job work. It was submitted that, therefore, the question of the seized gold belonging to the petitioner does not arise, and hence, the impugned notice under section 153C lacks validity. Advocate made an alternative submission that in this case the search was conducted on 27.10.2017, that is, in the financial year 2017-18 relatable to assessment year 2018-19. It was submitted that, therefore, if the gold seized is incriminating material against the petitioner, the same relates to assessment year 2018-19 in respect of which proceedings of scrutiny assessment have already been initiated. It was submitted that, therefore also, the impugned notices under section 153C are not sustainable. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable

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• 2019 (12) TMI 217
  Deduction u/s 80HHC - Tribunal upholding the action of the AO deducting 90% of the income from truck hire charges, barge hire charges, ore processing receipts, trans-shipper loader charges, machinery hire charges and launch hire charges while computing the profits of the business in accordance with Clause (baa) of the Explanation below Section 80HHC. Such deduction ought to have been made on the basis of net receipts and not gross receipts as held in the case of ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax [ 2012 (2) TMI 101 - SUPREME COURT] . The impugned orders are modified accordingly. Adding of losses from export of trading goods in respect of disclaimed turnover to the profit eligible for deduction u/s 80HHC - HELD THAT:- Issue covered in favour of the assessee and against the revenue in terms of our decision in the case of The Commissioner of Income Tax vs. V. M. Salgaonkar Brothers Ltd. anr. [ 2012 (4) TMI 344 - BOMBAY HIGH COURT] . Incidentally, all these appeals were in the case of the present assessee and the ITAT had in fact held in favour of the present assessee. The appeals instituted by the revenue were accordingly dismissed.

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• 2019 (12) TMI 216
  Reopening of assessment u/s 147 r.w.s. 148 - Participation in the assessment proceedings after rejection of objections by the AO, without challenging the order of rejection - change of opinion - time limitation - Before passing the assessment order, the petitioner was not issued with notice under Section 142(1) - principles of natural justice - it is the specific allegation of the Revenue that the return filed by the assessee with regard to the date of audit report is with false information and that the return so filed is invalid one. Whether the impugned proceedings viz., the notice under Section 148 and the consequential assessment order passed under Section 143(3) read with Section 147 need to be interfered with by going into the merits of the matter, when admittedly the petitioner has not questioned the order rejecting the objections filed by the petitioner against reopening? HELD THAT:- In this case, admittedly, the petitioner has not questioned the order dated 29.09.2017, rejecting the objections. It is pertinent to note at this juncture that even in this writ petition, the challenge made is against notice under Section 148 and the order of assessment. In between, the order rejecting the objection stares at the petitioner, which was not questioned. No doubt, the petitioner, while questioning the order of assessment, can also question the reopening. But the forum of such change is relevant to be noted at this juncture - The petitioner has chosen to challenge the notice under Section 148 and the consequential assessment order by filing the present writ petition. The assessee has not chosen to challenge the rejection order, on the other hand, they participated in the assessment proceedings - the reasons for reopening and the consequential order rejecting the objections against those reasons now got merged with the subsequent order of assessment and therefore, it would not be proper for this Court to go into the question of reopening alone and decide about its validity by exercising the jurisdiction of this Court under Article 226 of the Constitution of India. By going into such question, if it is found that the reopening is valid, this Court has to necessarily go into the merits of the assessment as well and find out as to whether the same can be sustained or not. It is well settled that in fiscal matters, invoking the jurisdiction of this Court under Article 226 of the Constitution of India, straight away to challenge the order of the Original Authority and not be encouraged and on the other hand, the parties must be directed to resort to the statutory appellate remedy under the relevant statute. The assessee has quoted a wrong date viz., 29.09.2010 as the date of audit report not only in the original return but also in the revised return before reopening and also in the return filed in response to the notice issued under Section 148 - The assessee claims that it is an inadvertent mistake or clerical mistake. Assuming that it is a mistake, committing the same mistake again and again, prima facie, does not appear to this Court as inadvertent, when the assessee was fully aware of the fact that the date of audit report is 12.01.2011 and not 29.09.2010, as claimed in the returns filed. In fact, while the original return was filed on 08.10.2010, admittedly the audit was not completed and a report was not available before the assessee. However they have chosen to indicate the date of audit report as 29.09.2010, while filing the original return on 08.10.2010. Therefore, it is evident that the date of audit report furnished in the original return is not a true information or disclosure of material facts and therefore, the reasons for reopening the assessment indicating that there is a failure on the part of the assessee to disclose truly and fully material facts, cannot be stated as a reason without any basis. Whether the wrong committed by the assessee in referring to the date of audit report will certainly have a live link to say that the income has escaped assessment or not, is to be considered by the next fact finding authority, as this Court is not expressing any view on the said issue raised by the petitioner, as it is fully convinced that this matter is to be agitated before the Appellate Authority not before this Court. Thus, all the issues raised by the petitioner in this writ petition need to be raised only before the next fact finding Authority viz., Appellate Authority by filing a regular appeal, which in turn, shall consider the same and pass orders on merits and in accordance with law. This writ petition is disposed of, by directing the petitioner to file regular appeal against the impugned order of assessment before the concerned Appellate Authority within a period of four weeks from the date of receipt of a copy of this order.

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• 2019 (12) TMI 215
  Interest u/s 234A - return of income was furnished in response to the notice issued under section 148 - HELD THAT:- Admit Following substantial question of law arises for consideration Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the assessee is not liable to pay interest under section 234A of the Income Tax Act, 1961 for the period during which, it could not have filed the valid return of income under sub-section (4) of section 139 of the Act?

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• 2019 (12) TMI 214
  Reopening of assessment u/s 147 - necessary sanction/approval had not been obtained in terms of section 151 - HELD THAT:- In view of the decision of this Court in Ghanshyam K. Khabrani v. Asst. CIT [ 2012 (3) TMI 266 - BOMBAY HIGH COURT] wherein, in identical circumstances, this Court held that where the Act provides for sanction by the Joint Commissioner of Income Tax in terms of section 151, then the sanction by the Commissioner of Income Tax would not meet the requirement of the Act and the reopening notice will be without jurisdiction. Question as proposed does not give rise to any substantial question of law as the said issue has already been concluded against the Revenue

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• 2019 (12) TMI 213
  Disallowance u/s 14A r.w.r 8D - business of running a stock exchange - interest on tax free bonds and dividend income - assessee made suo moto disallowance of expenses u/s 14A of the Act computed at 0.1% of exempted income as expenditure attributable to earning of tax free income - Held that:- the year under consideration is Asst Year 2007-08, for which year, the computation mechanism provided in Rule 8D(2) of the Rules cannot be made applicable as it was introduced only with effect from 24.3.2008 relevant to Asst Year 2008-09 and was held to be prospective in operation - AO directed to disallow 1% of exempt income and work out the disallowance u/s 14A of the Act accordingly after reducing the amount already disallowed by the assessee in the return of income. - Decided partly in favor of assessee. Disallowance of proportionate amortized amount of lease premium paid to Bombay Metropolitan Regional Development Authority in respect of leasehold land - Capital or Revenue nature - Held that:- Matter restored before the AO for deciding the issue in the light of decision of Hon ble Gujarat High Court in the case of Sun Pharmaceuticals India Ltd [ 2009 (3) TMI 587 - GUJARAT HIGH COURT ] Disallowance of lease premium being included in the maintenance expenses - Held that:- Since the issue of disallowance of lease amortization premium of Rs. 1,29,52,157/- has been restored back to the file of ld AO supra, we deem it fit and appropriate, in the interest of justice and fairplay, to restore this issue also to the file of ld AO for denovo adjudication in accordance with law. Treatment of maintenance charges recovered together with rental income - Held that:- As all these issues are interlinked with each other, we deem it fit and appropriate, in the interest of justice and fairplay, to restore this issue also to the file of ld AO for denovo adjudication in accordance with law. Rate of depreciation on computer software. - Held that:- Earlier, tribunal by placing reliance on the Special Bench decision in the case of Amway India Enterprises vs DCIT [ 2008 (2) TMI 454 - ITAT DELHI ] had allowed depreciation at the rate of 60% on computer software. - Decided in favor of assessee. Bad debts - amounts written off as irrecoverable as trading / business loss.- Held that:- the genuineness of the aforesaid deposits paid to the parties in the ordinary course of business of the assessee company was never disputed by the revenue. Hence we hold that the said write off of deposits paid in the ordinary course of business would be allowable as a trading / business loss u/s 28 of the Act.

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• 2019 (12) TMI 212
  Assessment of AOP - Addition adopting net profit ratio @ 11.59% of the gross receipts - distribution of business receipts directly among its constituents members - Whether the business receipt distributed by the assessee amongst its members is application of income or diversion of income by overriding title ? - Tribunal has concurred with the findings recorded by the Commissioner (Appeals) and has found that the association of persons was formed only to secure the work and after that there was no involvement of such association of persons in the execution of the work as the entire work was executed by the members of the joint venture as agreed between them. Accordingly, the fees from the execution of the project work were shared between the members as per their understanding - HELD THAT:- Both, the Commissioner (Appeals) as well as the Tribunal, have found that the members of the joint venture have duly shown the income in their returns of income and have paid the tax thereon. The joint venture and the members of the joint venture are being taxed at the maximum marginal rate, and hence, no loss has been caused to the revenue. Moreover, the Tribunal as a matter of fact has found that the requirements of CBDT circular referred to hereinabove are duly satisfied in the case of the assessee and hence, once the amount has been offered to tax by its members, the assessee could not be saddled with the liability to pay tax in respect of the same amount. Having regard to the concurrent findings recorded by the Tribunal after appreciating the material on record as referred to hereinabove, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to warrant interference. No question of law, much less, a substantial question of law can be said to arise out of the impugned order so as to warrant interference. The appeals, therefore, fail and are, accordingly, summarily dismissed.

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• 2019 (12) TMI 211
  Capital asset u/s 2(47) - sale of land by way of Development agreement - Commissioner (Appeals) on facts has found that the subject land was treated as stock in trade by the assessee - ITAT deleted the additions - HELD THAT:- In view of the categorical finding recorded by the Commissioner (Appeals) that the assessee in all the years has treated the subject land to be stock in trade, he was wholly justified in holding that the provisions of section 2(47) of the Act relating to capital asset would not apply. The Tribunal, therefore, did not commit any error in concurring with the findings recorded by the Commissioner (Appeals). This court does not find any legal infirmity in the view adopted by the Tribunal so as to give rise to any question of law, much less, a substantial question of law, warranting interference.

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• 2019 (12) TMI 210
  Disallowance of subvention expenditure - claim of the assessee that subvention expenses represent amounts given to customers by way of discount etc. as per the instruction of the suppliers - HELD THAT:- Ledger folio of the subvention expenses is enclosed in the paper book filed by the assessee from pages 8 to 19. The total expenses incurred is Rs. 11,63,682. The total turnover for the year is Rs. 24.86 crore and the turnover increased for the year by Rs. 1,67,37,327. We are of the view that if the assessee can prove by producing the sale invoices that these subvention expenses are discount given to the customers, necessarily, the disallowance is uncalled for. For examination of the said issue, the matter is restored to the Assessing Officer for fresh consideration. The assessee shall produce sample sales invoices for the above said period to prove that the discounts are given to the customers. Disallowance of expenditure incurred for setting up of Ape Four Wheeler Unit - HELD THAT:- The assessee had claimed as revenue expenditure a sum of Rs. 10,16,666. These are expenses incurred for setting up a dealership unit at Kannur. We have perused the details of the expenses, which are placed in the paper book filed by the assessee. Expenditure claimed are bank charges, bonus, commission paid, salary and wages, staff welfare expenses, etc. These expenses are clearly incurred for setting up a new unit and cannot be stated that it is an expenditure incurred for extension of existing unit. The new premises were taken on lease and new agreements were signed. The expenditure incurred is for setting up of a new business, cannot be allowed as a revenue expenditure. Interest attributed to the funds diverted to sister-concern - HELD THAT:- It is clear that no funds were diverted to sister concern during the relevant assessment year. No addition / disallowance was made on this account in the earlier assessment years or in the subsequent assessment years. Moreover, we find that M/s.Pothen Pothen Automobiles Private Limited (sister concern) is an authorized distributor for three wheeler spare parts from Trichur to Kasargode. Since the assessee is dealing in Ape three wheelers, it receives spare parts required from M/s.Pothen Pothen Automobiles Private Limited and procuring the spare parts, advances were given by the assessee-company. So there is element of commercial expediency of such advances to the sister concern. Since no fresh advances were given during the relevant assessment year to the sister concern and when no addition on this account was made in the earlier assessment years or in the subsequent assessment years, according to us, no addition can be made on a notional basis to the interest income under the head `income from other sources .

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• 2019 (12) TMI 209
  Deduction u/s 80P - HELD THAT:- Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P , we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. As regards the interest on the investments with Cooperative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Co- operative Bank Limited [ 2019 (3) TMI 1580 - KERALA HIGH COURT] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income.

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• 2019 (12) TMI 208
  Revision u/s 263 - proceedings before AO were in second round where the matter was remitted back to the file of the AO to make a denovo assessment as per the directions of the Tribunal in assessee s own case - dispute was with regard to computation of long term capital gains vis-a-vis the cost of acquisition as on 01.04.1981 - HELD THAT:- The assessee in the initial assessment proceedings had filed a valuer report of Registered Valuer in support of the fair market value as on 01.04.1981. In the second round of litigation, the assessee again filed a valuer report of Registered Valuer and had placed reliance on sale instance of another property in 1985 in the adjacent area and also instance of acquisition proceedings by the Income tax Department in another case. The Registered Valuer on the basis of the same had adopted the value of the property at Rs. 95,28,000/- i.e. by backward calculation from 1985 to 1981. On the other hand, the DVO had made backward calculation of the valuation of the property from the date of sale and had not relied on any sale instance during the corresponding period. The Tribunal had not accepted the DVO s report in the first round. The Commissioner was of the view that the Assessing Officer has failed to correctly determine the fair market value as on 01.04.1981. Whether the value has been correctly determined or not, we may refer to the decision of Hon ble Bombay High Court in CIT vs Puja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] wherein it has been laid down that the provisions of section 55A(a) of the Act cannot be applied and no reference is possible to be made to the DVO for determining the market value of the property at a figure less than that shown by the assessee. Accordingly, AO had no authority to make any such reference to the DVO to determine the value of the property i.e. cost of acquisition as on 01.04.1981, at any price less than the price shown by the assessee. AO has to accept the valuation shown by the assessee as on 01.04.1981. The said valuation is supported by a report of the Registered Valuer and other sales instance during the period. In such facts and circumstances, we find no merit in the exercise of the jurisdiction by the Commissioner u/s 263 - Decided in favour of assessee

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• 2019 (12) TMI 207
  Claim of Excessive depreciation on building - inflated cost of capital asset - revenue submitted that, contractors who had constructed the building for the assessee company inflated the cost of construction and thereby increased the value of capital assets which had resulted in excessive claim of depreciation. - Held that:- it is beyond doubt that the relevant capital asset in the form of the building of the assessee corresponding to the expenditure not incurred actually by those two contractors mentioned above, did not come into existence and thus the assessee cannot be entitled for depreciation in respect of the capital asset which has never come into existence. The bills raised by the contractors on the assessee are inflated one and not of actual amount of the work done for the assessee. Consequently, the cost debited by the assessee in respect of the building, which has been capitalized is inflated and not the actual cost. In facts and circumstances of the cases relied upon by the assessee being distinguishable, the ratio of those decisions cannot be applied in the case of the assessee. In the facts of the case the preponderance of the probability suggests that raising of bogus bills by the subcontractors to the contactors and then routing back of the money in the form of the cash definitely must have been done on the direction of the assessee as assessee is the ultimate beneficiary by way of excess deduction of depreciation on the capital asset in the form of building. Assessee is not entitled for the depreciation on the inflated portion of the cost of capital asset shown by the assessee as incurred through two contractors, namely, OSN and JDMS.

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• 2019 (12) TMI 206
  TDS liability on UC/bandwidth Charges paid to foreign carriers - Rectification of order u/s 154 by the AO - The department has held that these payments are taxable in the hands of the recipients both as Royalty as well as FTS and therefore, the assessee was liable to deduct TDS and since, the assessee has not done so, demand is raised u/s 201 (1) and 201 (1A). Held that:- as per the tribunal order of Delhi bench rendered in the case of Bharti Airtel Ltd. [ 2016 (3) TMI 680 - ITAT DELHI] , on both aspects i.e. Royalty and FTS, the issue was decided in favour of the assessee but on one aspect i.e. Royalty aspect, the tribunal order in assessee s own case is against the assessee and this tribunal order is challenged by the assessee before Hon ble Karnataka High Court and the appeal is pending there. It is apparent that the earlier tribunal order in assessee s own case for A. Ys. 2008 09 to 2012 13 was not brought to the notice of DRP because even in A. Y. 2012 13 for which tribunal order in assessee s own case in the proceedings u/s 201 (1) is against the assessee on one aspect i.e. Royalty aspect, DRP has decided the issue in favour of the assessee and held that no TDS was required to be deducted. When on one aspect, the matter is decided against the assessee i.e. Royalty aspect in the present case, it cannot be held that no TDS is required to be deducted even if on some other aspect i.e. on FTS aspect in the present case, it is held that TDS is not required to be deducted on that aspect. Moreover, the department has not accepted this proposition because the AO in the draft assessment order decided the issue against the assessee and because of that, objection was raised by the assessee before DRP and revenue cannot file appeal before the tribunal against DRP directions in these years. The consideration paid by the assessee as IUC/Bandwidth charges for alleged inter connect service falls within the ambit of process Royalty and element of income was involved and therefore, the assessee was bound to deduct the TDS on such payment. On the second aspect as to whether the consideration paid by the assessee as IUC/Bandwidth charges for alleged inter connect service falls within the ambit of FTS and element of income was involved or not, we find force in the submissions of the learned AR of the assessee that this issue is squarely covered in favour of the assessee by the tribunal order of Delhi Bench rendered in the case of Bharti Airtel Ltd. Vs. ITO (Supra) because on this aspect, no adverse order could be pointed out by the learned DR of the revenue. Decided partly in favor of assessee.

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• 2019 (12) TMI 205
  Revision u/s 263 - setting aside the order passed u/s 143(3) - A.O. failed to refer the specified domestic transactions to the TPO - HELD THAT:- Issue is squarely covered by the decision of this Tribunal rendered in the case of Swastik Coal Corporation Pvt. Ltd. Vs. Pr. CIT [ 2019 (7) TMI 1486 - ITAT INDORE] the order has been revised purely on the basis that the assessing officer has not referred to determine the arm s length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Pr. CIT, under these undisputed facts in the light of the Judgement in the case of General Finance Company [ 2002 (9) TMI 3 - SUPREME COURT] as well as the order of the coordinate bench rendered in the case of Texport Overseas Pvt. Ltd. [ 2017 (12) TMI 1719 - ITAT BANGALORE] the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed.

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• 2019 (12) TMI 204
  Condonation of delay in filing appeal - Addition of unexplained investment - Delay of 50 days - unexplained investment - It is submitted that property is belong to her, as GPA holder, it took 12 years to get the name registered in assessee s name - HELD THAT:- The matter requires reconsideration at the level of the A.O. In the case of Smt. Upma Shukla UPMA SHUKLA PROPRIETOR TROUBLESHOOTERS VERSUS ITO WARD 2 (2) , GURGAON. [ 2019 (10) TMI 628 - ITAT DELHI] also on the same reasoning delay in filing of the appeal for 50 days was condoned because the assessee Shri Vikas Shukla was suffering from cancer. The same reasoning is given in the present appeal. Therefore, following the same reasoning in the case of Smt. Upma Shukla, the delay in filing the appeal is condoned. Since in the case of Smt. Upma Shukla she has acted as GPA holder of the original owner Shri Umed Singh, it was, therefore, held that no long term capital gains is liable to be taxed in her hands. However, in the case of the deceased assessee Shri Vikas Shukla, he has purchased the property through the documents in the year 1996. Therefore, the issue shall have to be re-examined in the light of the Order in the case of Smt. Upma Shukla. The matter in issue is restored to the file of A.O. with a direction to re-decide the matter in issue as per Law - appeal of Assessee allowed for statistical purposes.

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• 2019 (12) TMI 203
  Withdrawal of refund which was granted on refund u/s 244A - Reduction in interest due to order of CIT(A) - AO was of the view that no interest shall be payable if the amount of refund is less than 10% of the tax as determined under sub section (1) of the section 115WE or sub section (1) of section 143(3) or on regular assessment. - CIT(A) allowed the claim of assessee - Held that :- In the instant case, the alleged refund including interest was neither issued under sub section (1) of 143 nor on regular assessment. Rather, the refund was issued after giving effect to the order of the CIT(A) - Accordingly, clause (b) of sub section (1) of Section 244A is applicable for giving interest on refund due to the assessee company after giving effect to the order of the CIT(A), and thus, proviso to clause (a) of sub section (1) of section 244A is not applicable. As per sub section (3) of the aforesaid section where as a result of an order u/s.250 of the Act, the amount on which the interest was payable under sub section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced. Accordingly, the AO has jurisdiction for rectifying the interest paid/payable on refund u/s. 154 of the I.T. Act and therefore, whatever the interest u/s.244A of the Act due to the assessee u/s.143(1) of the Act ought to be reduced from the interest on refund granted to the assessee company after determination of income by the appellate authorities. We find that on perusal of material available on record, the excess claim of interest to the extent of Rs. 1,15,74,341/- is required to be called back u/s.234D of the Act only, but not the withdrawal of entire interest of Rs. 3,71,78,138/- granted u/s.244A of the Act. - Decided against the Revenue. Disallowance of the expenditure incurred on reimbursement of LPG Cylinders to the employees - Held that:- as per the National Coal Wage Agreement the employees are entitled to get free issue of coal for domestic use only subject to some quantity limitation. - the assessee company has considered the reimbursement of LPG Cylinder as a perquisite in the hands of the employees and regular income tax is being deducted from such employees in accordance with law. - the AO s action is disallowing the above expenditure is not justified.

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• 2019 (12) TMI 202
  Addition on account of non genuine purchases - HELD THAT:- There is no dispute to the fact that the assessee was unable to prove with conclusive evidence, the source of the disputed purchases made from certain parties. However, it is evident from the order of Commissioner (Appeals), during the appeal proceedings the assessee had furnished quantitative details of purchases and sales with sample copies of bills to establish the nexus between the purchases and corresponding sales. The aforesaid facts establish that the assessee certainly had purchased the goods, though, may not be from the declared source. This leads to the logical conclusion that the assessee might have purchased the goods from some other sources to avoid payment of Sales Tax / VAT, thereby, generating extra profit not disclosed to the Department and to regularize such purchases has obtained the accommodation bills. Entire purchase cannot be treated as income of the assessee, but, the profit element embedded therein can be considered for addition - nature of business carried on by the assessee, in our view, the decision of learned Commissioner (Appeals) in restricting the addition to 12.5% of the non genuine purchases is good enough to take care of leakage of revenue on account of suppression of profit. The aforesaid decision of learned Commissioner (Appeals) is also in consonance with the view expressed by the higher judicial authorities including the Tribunal in similar nature of cases.

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• 2019 (12) TMI 201
  Penalty levied u/s 271B - non maintenance of accounts - HELD THAT:- In the instant case, when the books of account are not maintained, the AO did not initiate any proceedings for not maintaining the books of account. AO obviously satisfied that the books of account were not maintained for good and sufficient reasons. When the AO accepted the fact that the books of account are not maintained, there is no reason for him to levy penalty u/s 271B. In view of the above observations, we set aside the order of CIT(A) and delete the penalty levied u/s 271B of the Act Penalty u/s 271(1)(c) - assessee concealed his income by suppressing the gross receipts and hence, worked out the penalty on the amount of tax sought to be evaded u/s 271(1)(c) - additions on which the penalty was imposed was estimated after applying the net profit rate and that it was a settled law that penalty on ad hoc disallowance or addition made on estimate basis was not attracted - HELD THAT:- The Hon ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT] has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. Similar view has been taken in the case of Harigopal Singh vs. CIT [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] and CIT vs. Subhash Trading Company [ 1995 (11) TMI 37 - GUJARAT HIGH COURT] . In view of the foregoing precedents including the one from the Hon ble Jurisdictional High Court, it is apparent that when the bedrock of instant penalty is the estimate of net profit, the same cannot be sustained. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty.

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• 2019 (12) TMI 200
  Commission paid by the Partnership irm to HUFs - investment of HUF funds in the assessee partnership firm - segregation of rendering of services of contribution of an individual in his individual capacity as partner and as Karta of HUF - HELD THAT:- We agree with the contention of D.R. that the rendering of services of contribution of an individual cannot be segregated into two parts, one in the capacity of partner of the assessee firm and secondly in the capacity of Karta of HUF firm but in view of proposition rendered in the case of K.S.Subbiah Pillai [ 1999 (3) TMI 5 - SUPREME COURT] the claim of the assessee firm gets support in the facts and circumstances of the present case. This fact cannot be controverted that both HUF have provided unsecured loan to the assessee partnership firm, which substantiate that the family funds of HUF has been used by the assessee s partnership firm to financially support and enhance its business. When the contribution of an individual, who helps the firm in two capacities viz; first in the capacity of partner and secondly as Karta of HUF cannot be segregated satisfying and clearly establishing the factum of the services rendered towards payment of commission to the HUF but the factum of use of HUF funds by the partnership firm in the form of secured loan in the business of assessee firm, bring home the support of the proposition rendered by Hon ble Supreme Court in the case of K.S.Subbiah Pillai (supra). Therefore, we reached to a logical conclusion that the commission paid by the assessee firm to HUFs is allowable and thus, we direct the Assessing Officer to delete the addition of Rs. 3 lakhs each to both HUF and allow the grounds of appeal of the assessee.

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• 2019 (12) TMI 199
  Assessment u/s 153C - whether no incriminating material was found in respect of the assessee during the course of search - HELD THAT:- Incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of the assessee, leave alone the question of any incriminating material for the year under appeal. Therefore, in our considered opinion, the action of the AO is based upon conjectures and surmises and hence, the addition made is not sustainable in the eyes of law. The issue in dispute is now no longer res integra in view of the decision case of Commissioner of Income Tax vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] In the present appeal before us, it is not in dispute that the no incriminating material was found in respect of the assessee during the course of search as is evident from the Assessment Order itself. During the course of hearing before us also, the Department could not negate this factual finding of the Ld. CIT (A) - CIT (A) in deleting the addition in dispute and dismiss the Revenue s appeal

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• Customs

• 2019 (12) TMI 198
  Extended period of limitation - Validity of SCN - Section 28 of the Customs Act, 1962 - It is contended that the petitioner was paying Additional Duty of Customs (Countervailing Duty) under Section 3 of the Customs Tariff Act, 1975 on the transaction value of the petitioner s goods imported under the Apple Care brand of services - HELD THAT:- In the case of Uniworth Textiles, [ 2013 (1) TMI 616 - SUPREME COURT ] , the Hon ble Apex Court was construing whether mere non payment of duty would come within the ambit of three categories contemplated by the proviso for which the extended period under the proviso to section 28 (1) of the Act could be invoked. In the said case the matter was carried before the Appellate Authorities as well as the Tribunal. The Appellate Authorities and the Tribunal indeed had given a finding in the matter. In that context, the Hon ble Apex Court has observed that in the absence of specific averments find in the show cause notice which is a mandatory requirement for commencement of action under the said proviso, and that nothing on record disclose a willful default on the part of the assessee, invoking the extended period of limitation under the said provision is held to be unjustifiable. It is the contention of the Revenue that during the period from January 2010 to July 2012, the petitioner has paid the duty on MRP value in respect of warranty replacements but for the period July 2012 to November 2012 customs duty was paid on Transaction Value and were clearing the warranty replacement goods on provisional assessment basis paying customs duty on MRP of the finished goods for the period December 2012 onwards - It is asserted by the petitioner that in respect of the said periods, the petitioner has erroneously valued the products imported for replacements at the maximum retail price at the products sold in retail. These are all vexed questions which requires to be examined by the authorities. The reference made to the circular instructions issued by the Central Board of Excise and Customs inasmuch as clauses 3.2 and 3.6 no doubt deals with the ingredients for extended period, but on the examination of the show cause notice impugned it cannot be held that such ingredients are not present - In such circumstances, the show cause notice issued to submit a written explanation cannot be held to be ill founded - Writ petition is premature and deserves to be rejected.

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• 2019 (12) TMI 197
  Clearance of imported goods for home consumption - clearance for home consumption without CIB and RC Import Permit - HELD THAT:- The writ petitioner before this Court today need not file successive writ petitions merely because the consignment booked as an importer by the petitioner is being delivered or is to be delivered in lots or in partial consignments. Merely because the entire consignment is not delivered in one go or lot, but in the above manner, does not mean that successive writ petitions have to be brought. So long as the consignment of a certain, specified quantity of imported goods reaches the port, either in a single consignment or in multiple consignments, the clearance shall be permitted on the strength of this order passed in the present writ petition - We are not making any generalised order in regard to future imports, but only in regard to single or multiple consignments under the present Bills of Entry/purchases/purchase orders/invoices mentioned in this writ petition.

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• 2019 (12) TMI 196
  Valuation of imported goods - High Seas Sale - inclusion of service charges in the assessable value - canalizing agent or not - Revenue was of the opinion that the transaction in question amounts to high sea sales of coal between respondent and M/s NTPC and therefore the service charges of Rs. 34/- per MT received by the respondent should be included in the assessable value under Section 14 of the Customs Act, 1962 - HELD THAT:- From the facts of the case and the agreement entered into between the respondent and M/s NTPC, it is clear that M/s NTPC required coal and entered into an agreement with the respondent for its import and supply. Nowhere does the agreement mention that the respondent is a canalizing agent for import of coal. The agreement only states that the respondent carries on the business, amongst others, of importing and selling coal. It is true that the respondent has imported coal for supply to NTPC only but they have imported it on their account and in turn sold it to M/s NTPC. It is also true that the price at which coal was sold to NTPC has been agreed to as per the formula, viz., the cost of coal, taxes, expenses etc. plus Rs. 34.00 per MT towards service charges of the respondent - In terms of Section 14 of the Customs Act, 1962, as amended w.e.f. 2007, the transaction value of the goods i.e. the price actually paid or payable for the goods when sold for export to India shall form the assessable value. In this case, such transaction value is the price at which the overseas supplier has supplied the goods to the respondent - There is nothing on record to show that the respondent has passed on Rs. 34.00 per MT which they received as service charges for their services, either directly or indirectly, to the overseas suppliers. In fact, there is no such allegation at all in the order of the original authority - there is no evidence in the first place that the respondent had acted as a canalizing agent. In fact, coal is also imported routinely by various private parties also. The agreement only shows that it is a sale deed on principal to principal basis between NTPC and the respondent. There is nothing on record to show that any portion of the service charges have been passed on to the overseas supplier of coal - There is nothing in the submissions made by the revenue which would substantiate that service charges received by the respondent after importation for their services is includable in the assessable value under any provision of Section 14 of the Act or the Customs Valuation Rules. There are no evidence on record to show that MMTC is the canalising agency for import of coal as per the EXIM Policy during the relevant period or that the coal was sold in High Sea Sales basis. The agreement between the MMTC and NTPC is for supply of coal as NTPC requires it and MMTC imports and supplies it. The sale of goods was not a high sea sales which was affected after clearing from the Customs. Otherwise, NTPC, the buyer would have filed the Bill of Entry and cleared the goods - The mere fact that the bids for import were finalised by the respondent (MMTC) after approval of NTPC, would not change the nature of transaction. There is no evidence that there is any privity of contract between the overseas supplier of coal and M/s NTPC. It is true that the definition of Importer under Section 2 includes the owner of the goods or anyone who holds himself out to be the importer but in this case no evidence is brought out that M/s NTPC are either the owner or have held themselves out to be the importer. This contention of the Revenue is completely baseless. The service charges paid to the respondent by M/s NTPC cannot, therefore, be included in the assessable value - appeal dismissed.

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• 2019 (12) TMI 195
  Refund of SAD - N/N. 102/2007-Cus dated 14.9.2007 - rejection on the ground that the appellants have failed to establish correlation between the imported cars and the cars sold and also on the ground that the burden of 4% SAD had not passed on to others - principles of unjust enrichment - HELD THAT:- Learned Advocate for the appellant demonstrated on sample basis, referring to the Chasis/frame and engine no. of the imported cars and the ones shown in the respective sales documents indicating that the same cars (CBU) that were imported had been sold by them satisfying the condition of Notification No. 102/2007-Cus dated 14.9.2007. Also, in support of their argument that the burden of 4% SAD has been borne by them, the Ld. Adv. has demonstrated, besides the Chartered Accountant s Certificate certifying that the burden of duty has been borne by them, by comparing the value of the cars imported sold indicating that refund amount has not been collected from their customers; also the refund amount due to the Appellant has been reflected in the respective balance-sheet as receivable. To ascertain the eligibility of refund of 4% SAD paid at the time of import of CARS(CBU), all the relevant documents need to be scrutinized thoroughly in respect of each of the claim filed - Matter needs reconsideration - appeal allowed by way of remand.

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• Corporate Laws

• 2019 (12) TMI 194
  Winding up proceedings - conduct of Official Liquidator (OL) - rejection of application for impleadment and transfer moved by the appellant secured creditor herein - HELD THAT:- The OL really should have no interest in seeking to retain its control over the company under liquidation since, supposedly, it has no pecuniary interest in the matter. - OL is not willing to let go of its control over the company under liquidation. The working of the office of the OL has, in the past, left us with a sense of disappointment. In fact, if the office of the OL were to discharge its obligations and duties efficiently and completely transparently, may be, the need to evolve the NCLT with jurisdiction, inter alia, to liquidate a company may not have arisen. There are no merit in this submission for the reason, that the personal properties of the guarantors do not constitute the property of the company under liquidation. With those properties, the OL, in any event, would have no concern. In relation to the properties of the company under liquidation, possession whereof has been taken by the O.L., no irreversible steps have yet been undertaken. The impugned order passed by the learned Company Judge proceeded on the basis that the appointment of the IPR had been stayed by the NCLAT on 30.04.2019. The NCLAT stayed the appointment of the IRP on the ground that the Liquidator had already been appointed in the Company Petition. The learned Company Judge rejected the application for impleadment and transfer moved by the appellant secured creditor herein - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 193
  Maintainability of petition - petitioner has contended that the order impugned in this petition be quashed and set aside, not on merits, but only on the ground that it does not comply with the Rules - HELD THAT:- When the order is pronounced under this Rule 151, the Court Master shall make a note in the order sheet, that the order of the Bench consisting of President and Members was pronounced in open court on behalf of the Bench. The argument throughout was that there was no date of pronouncement notified. There was no board prepared of the proceedings and particularly, the pronouncement of the order in open Court. There was no intimation to the parties and that the petitioner s advocate was in the Court, but no pronouncement was done. Interestingly, according to Mr.Dwarkadas, there is an endorsement at pages 547A and 547B that the pronouncement was made after the board was prepared. However, there is no contemporaneous record of this board having been notified. In fact, the contra record is that this board is prepared later. Mr.Dwarkadas sought to tender an affidavit of the petitioner affirming these allegations. We had requested Mr.Govilkar to produce the original record. Until then, we had refused to take the affidavit of the petitioner on file - Today, this record is produced and it has been perused by this Bench. In that, we have not found any endorsement of the Court Master. If the order was pronounced under sub-rule (2) of Rule 151, which says that after pronouncement of order under Rule 151 by a Member of the Bench, on behalf of the Bench, the Court Master shall make a note in the order sheet that the order of the Bench consisting of President and Members was pronounced in open Court on behalf of the Bench, pertinently, there is no endorsement in the original file of this nature and Mr.Govilkar has conceded that there is no roznama also. Mr.Kadam says that his client be allowed to inspect the original record and thereafter to make submissions on the point - Stand over to 22nd November, 2019.

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• 2019 (12) TMI 192
  Allotment of sharers made by the respondent on preferential basis - Failure on the part of the respondent to comply with requirement of SEBI Act and Regulations - offences under Sections 81(1), 75 and 150 of the Companies Act, 1956 - Composition/Compounding of offences - Two orders have been passed by the SEBI are on account of certain violation under the Companies Act, 1956 and therefore, the respondents wanted to compound the offences by paying composition. HELD THAT:- The respondents have settled disputes under the Companies Act, 1956 alone. By settling the dispute under Section 621-A of the said Act, the machinery provided to the appellant under the SEBI Act, 1992 to prosecute respondents for any violation of the said Act and regulations made thereof has not been stifled in any manner. From the reading of the provisions of Section 621-A of the companies Act, 1956, it is clear that compounding of offence by payment of composition fee before the Company Law Board as it stood under the provisions of the erstwhile Companies Act, 1956 read with Section 629-A was confined to any offence punishable under the Companies Act, 1956. The power of compounding of offences by the Company Law Board under Section 621-A of the Companies Act, 1956 as it stood could be exercised only in relation to any offences punishable under the said Act either before or after the institution of any prosecution - Composition of offences under the provisions of the aforesaid Act did not in any manner preclude the appellant from initiating any proceedings for alleged violations under the SEBI Act, 1992 or the regulations made. Therefore, attempt of the respondents to settle the dispute qua the Companies Act, 1956 did not come in the legitimate way of the appellant from initiating any criminal proceedings against the respondents. There are no merits in the appeals - appeal dismissed.

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• 2019 (12) TMI 191
  CIRP - Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - compliance with the requirement of Section 31 r/ w Section 30(2) of the Code - HELD THAT:- On perusal of the Resolution Plan, it is found that Resolution Applicant viz. M/S. Fitcast Founders Engineers Private Limited, is a compan) engaged in the manufacturing and marketing of CI Castings and othel Castings which are having a direct relevance with the business of thc Corporate Debtor and accordingly, the promoters are to be considered from the same line of business having better understanding of thc manufacturing process, market as well as entire technical aspects whick shall definitely result into proper resolution of the Corporate Debtor. Thc RA along with its consortium member viz. Omkara Assets Reconstructior Private Limited is having adequate net worth and accordingly, thc commitment by the RA can be fulfilled without any hesitation. The I B Code defines Resolution Plan as a plan for insolvency resolution of the Corporate Debtor as a going concern. It does not spell out the shape, color and texture of Resolution Plan , which is left to imagination of stakeholders. Read with long title of the I B Code , functionally, the Resolution Plan must resolve insolvency (rescue a failing, but viable business); should maximize the value of assets of the Corporate Debtor , and should promote entrepreneurship availability of credit and balance the interests of all the stakeholders. On perusal of the records, it is found that the Resolution Plan confirms to the criteria as provided under clauses (a) to (f) in section 30(2) of the Code and the COC approved the Resolution Plan by 67.08 per cent majority of voting share. However, during the course of proceedings, the Bank of India submitted their acceptance to the Resolution Plan making the approval of the Resolution Plan by 83.89 per cent. The Resolution Plan also confirms to such other requirements as may be specified by the Board. The decisions of the COC are based on their commercial wisdoms, hence does not attract any interference - On perusal of the Resolution Plan, it is found that it meets the requirement of Section 31 r/ w Section 30(2) of the Code. The approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/ Corporate Debtor as those are the subject matter of the concerned Competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. The Resolution Applicant on approval of the Plan may approach those Competent Authorities/Courts/Lega1 Forums/Offices - Govt. or Semi Govt. / State or Central Govt. for appropriate relief(s) sought for in Clause No. 14 of the Resolution Plan. The Adjudicating Authority on being satisfied that the Resolution Plan as approved by the Committee of Creditors (COC) meets the requirements as referred to under section 30(2) of the Code . application allowed.

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• Securities / SEBI

• 2019 (12) TMI 190
  Ex-parte ad-interim order - preliminary report given by National Stock Exchange of India Limited, the Whole Time Member ( WTM ) issued an ex-parte ad interim order restraining the appellant from taking new clients in respect of its stock broking activities and also prevented the appellant from using the power of attorney given by its clients - HELD THAT:- Since a clarification has been sought by the appellant we deem it fit and proper that the WTM should look into this aspect and pass appropriate order after giving an opportunity of hearing to the appellant. We accordingly dispose of this appeal at this stage with a direction to the WTM to consider the request of the appellant which has been made vide letters dated November 24, 25 and 26, 2019 and pass an appropriate order after giving an opportunity of hearing by December 02, 2019.

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• 2019 (12) TMI 189
  Multiple trades on the same day - fraudulent and unfair trade - violation of PFUTP Regulations - Self trades or wash trades are trades without any change in beneficial ownership - HELD THAT:- On many of the days the appellant has bought and sold the shares and on some of those days the quantities bought and sold also matched. However, there were also several days on which there was only either a buy trade or a sell trade. Generally, only when trades placed by the same party are matched within a short period of time it can be categorized as self trades. Here, it is on record that the appellant did not do multiple trades on the same day. There are a few days when both buy and sell orders of the same quantity were placed. Even on those days when perfect matching is noticed there is nothing on record to show that those trades were entered within a short time interval. In the absence of which, we are constrained to accept the submission of the appellant that being a day trader, on some days, he was placing orders in both the directions with substantive time gap. It is also claimed by the appellant that on some of the days he actually did take delivery and therefore the beneficial ownership also got changed. The impugned order does not indicate the timing of the alleged trades nor it goes into change in beneficial ownership nor does it bring out any element relating to how it adversely affected the market. Even though preponderance of probability is sufficient to prove PFUTP violations still fraudulent and unfair trade has to be established with some degree of confidence. Given the absence of such findings and given the undisputed fact that the appellant was a day trader we are constrained to give benefit of doubt to the appellant. However, given the facts and circumstances of the matter, we do not find any reason to award cost to the appellant though the appellant has made a high pitched demand for exemplary costs.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 188
  Whether the High Court ought to interfere, under Article 226/227 of the Constitution, with an Order passed by the National Company Law Tribunal in a proceeding under the Insolvency and Bankruptcy Code, 2016, ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal and if so, under what circumstances? - HELD THAT:- A lot of stress was made on the effect of Section 14 of IBC, 2016 on the deemed extension of lease. But we do not think that the moratorium provided for in Section 14 could have any impact upon the right of the Government to refuse the extension of lease. The purpose of moratorium is only to preserve the status quo and not to create a new right. Therefore nothing turns on Section 14 of IBC, 2016. Even Section 14 (1) (d), of IBC, 2016, which prohibits, during the period of moratorium, the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, will not go to the rescue of the corporate debtor, since what is prohibited therein, is only the right not to be dispossessed, but not the right to have renewal of the lease of such property. In fact the right not to be dispossessed, found in Section 14 (1) (d), will have nothing to do with the rights conferred by a mining lease especially on a government land. What is granted under the deed of mining lease in ML 2293 dated 04.01.2001, by the Government of Karnataka, to the Corporate Debtor, was the right to mine, excavate and recover iron ore and red oxide for a specified period of time. The Deed of Lease contains a Schedule divided into several parts. Part-I of the Schedule describes the location and area of the lease. Part-II indicates the liberties and privileges of the lessee. The restrictions and conditions subject to which the grant can be enjoyed are found in Part-III of the Schedule. The liberties, powers and privileges reserved to the Government, despite the grant, are indicated in Part-IV. This Part-IV entitles the Government to work on other minerals (other than iron ore and red oxide) on the same land, even during the subsistence of the lease. Therefore, what was granted to the Corporate Debtor was not an exclusive possession of the area in question, so as to enable the Resolution Professional to invoke Section 14 (1) (d). Section 14 (1) (d) may have no application to situations of this nature. NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice. Whether questions of fraud can be inquired into by the NCLT/NCLAT in the proceedings initiated under the Insolvency and Bankruptcy Code, 2016? - HELD THAT:- The Government of Karnataka thought fit to invoke the jurisdiction of the High Court under Article 226 without taking recourse to the statutory alternative remedy of appeal before the NCLAT. But the contention of the appellants herein is that allegations of fraud and collusion can also be inquired into by NCLT and NCLAT and that therefore the Government could not have bypassed the statutory remedy. Though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act, 1957 and the rules issued thereunder, especially when the disputes revolve around decisions of statutory or quasijudicial authorities, which can be corrected only by way of judicial review of administrative action. Hence, the High Court was justified in entertaining the writ petition and we see no reason to interfere with the decision of the High Court - Appeal dismissed.

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• 2019 (12) TMI 187
  Time Limitation - initiation of CIRP against Corporate Debtor - whether the claim of the applicant/petitioner is within limitation or barred by limitation? - HELD THAT:- In the case in hand, the applicant claims the amount from September, 2014 to May, 2015, therefore, in view of Article 137 of Limitation Act, the person is required to file application within three years, when right accrues to file the claim, but the applicant has not claimed the amount within three years from 30.09.2015, i.e. the date of default and filed this petition on 15.05.2019, which is much after the three years from the date of default. In view of the provision of Article 137 of Limitation Act, this Adjudicating Authority is of the considered view, that the present claim of the applicant/petitioner is barred by Article 137 of Limitation Act - the present petition filed u/s 9 is barred by limitation, thus this petition is not liable to be admitted - the prayer to initiate proceedings under Section 9, read with Sections 13, 14 33 and other applicable provisions of the Insolvency Bankruptcy Code, 2016, against the Corporate Debtor company by the applicant, is hereby rejected - petition dismissed.

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• 2019 (12) TMI 167
  Maintainability of application - initiation of CIRP - absence of bar under Section 11 of the I B Code - Corporate Debtor failed to make repayment - existence of debt and dispute or not - Section 7 of the I B Code - HELD THAT:- Similar issue fell for consideration before the Hon ble Supreme Court in Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. [ 2019 (1) TMI 1442 - SUPREME COURT ]. In the said case, the Hon ble Supreme Court noticed that the winding up petition was filed against the Corporate Debtor (Company) against which application under Section 7 of the I B Code was filed subsequently and observed that This Section is of limited application and only bars a corporate debtor from initiating a petition under Section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this Section, it does not follow that until a liquidation order has been made against the corporate debtor, an Insolvency Petition may be filed under Section 7 or Section 9 as the case may be, as has been held by the Appellate Tribunal. The Hon ble Supreme Court further held that under Section 11 only the Corporate Debtor is not eligible to file petition under Chapter II of the I B Code . The application under Section 7 was maintainable and therefore, no interference is called for - Appeal dismissed.

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• PMLA

• 2019 (12) TMI 186
  Money Laundering - Grant of Regular Bail - concealmant of investment received - in INX Media (P) Ltd., M/s INX News (P) Ltd. - permission for the downstream investment sought - whether the further consideration made by the learned Judge of the High Court, despite holding the triple test in appellant s favour was justified and if consideration is permissible, whether the learned Judge was justified in his conclusion? HELD THAT:- The basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of grave offence and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. The underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial. Thus, even after concluding the triple test in favour of the appellant the learned Judge of the High Court was certainly justified in adverting to the issue relating to the gravity of the offence. However, we disapprove the manner in which the conclusions are recorded in paragraphs 57 to 62 wherein the observations are reflected to be in the nature of finding relating to the alleged offence. The appellant is ordered to be released on bail if he is not required in any other case, subject to executing bail bonds for a sum of Rs. 2 lakhs with two sureties of the like sum produced to the satisfaction of the learned Special Judge - appeal allowed.

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• Service Tax

• 2019 (12) TMI 185
  Refund of Service tax - rejection on the ground that the claim of the appellant was barred by limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- The appellant has placed on record the Minutes of Board Meeting of the appellant-corporation held on 28.09.2011 wherein the Board had resolved to pay the Service Tax amount under protest. There is nothing on record nor in the pleadings of the appellant that the same was furnished before the lower authorities. Also, the said document has not at all been discussed anywhere in the orders of both the lower authorities. This assumes importance especially in the light of the fact that the payment appears to have been made not during investigation, but post Order-in-Original but pending adjudication of the first appeal. Further, the Hon ble jurisdictional High Court in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) [ 2018 (7) TMI 276 - MADRAS HIGH COURT ] has categorically held that even when Service Tax was paid under mistake of law, the period of limitation cannot be invoked to deny the refund. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 184
  Intellectual Property Service - assessee-appellant is supplying parent seeds under limited Royalty bearing licence - Whether there is any liability to Service Tax under Intellectual Property Service on the consideration received as Royalty? - extended period of limitation - HELD THAT:- Section 23 of the Protection of Plant Varieties and Farmers Rights Act, 2001 prescribes the procedure for registration under the Act and the issuance of certificate of registration is prescribed under Section 24 ibid. Further, Section 28 mandates the conferring of Right. Section 23 prescribes the detailed procedure requiring the Registrar to first satisfy itself with the requirements and thereafter get the application examined and only thereafter he shall forward such application with relevant documents to the authority under the Act. Finally, it is the authority which issues directions to the Registrar or rejects such application under the Act. Once the application for registration of a variety is approved i.e., accepted, only then the same is registered and the certificate of registration is issued in terms of Section 24 and only when such certificate of registration is issued under the Act, it shall confer an exclusive right in terms of Section 28 ibid. Mere filing of application would not lead an applicant anywhere and such applicant would not automatically become owner/holder of Right under the Act unless such right is conferred in terms of Section 28 after due process as prescribed under the said Act. Hence, one of the objections of the Revenue that mere filing is sufficient cannot survive. Any agreement between two parties inter se is civil in nature, which only binds the parties thereto to the terms or contents therein. Such agreements could also be financial in nature whereby consideration is being passed on, however, subject to certain acts/omissions/conditions or terms in such agreements. So, any failure on the part of one of the parties to such an agreement would only lead to a civil dispute, maybe for specific performance or enforcement or recovery, etc. - Such agreements, therefore, are binding only on the parties who bind themselves with the terms and conditions therein and no outsider would ever have or be influenced by any of the terms therein. As regards, the requirements of law, the governing statute is the PPV Act, according to which the Right flows from the moment the registration is granted. Once the application is filed, procedure follows, which is not just an empty formality. The governing statute thus confers and recognizes an applicant s right, which thus satisfies the conditions in Section 65 (55a) read with Circular No. 80/10/2004, i.e., the applicant becomes holder/owner of Intellectual Property Right prescribed under the relevant Act i.e., the PPV Act, which for the time being is in force - thus, demand is not sustainable. Extended period of limitation - HELD THAT:- In the case on hand, admittedly, the appellant was not having the privileges of Right during most part of the disputed period and therefore, the requirements of charging Section read with the Board Circular No. 80/10/2004 remain largely unsatisfied. Hence, we do not entertain the Revenue s plea and have to hold that the demand cannot sustain beyond the normal period - also, Ld. Adjudicating Authority has observed at paragraph 10 of the impugned order that the consideration was shown as Royalty in the Books of Accounts of the appellant. So, this was not something that was suppressed or camouflaged so as to give the colour of fraud, suppression, mis-representation, etc., for invoking the larger period of limitation - extended period not invocable. The appeal is allowed both on merits as well as limitation.

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• 2019 (12) TMI 183
  100% EOU - Classification of services - Online Information Database Access and Retrieval (OIDAR service) or not - developing and export of software - agreements with their group companies in Netherlands to avail various services which in the nature of providing internet connection and communication - Rule 2(1)(d)(iv) of Service Tax Rules, 1994 - Notification 36/2004 dated 31/12/2004 - Section 66A of Finance Act 1994 w.e.f. 18/04/2006 - CBEC Circular 275/7/2010-CX 8A dated 30/06/2010 - Services availed with respect to maintenance of various software - Commercial Coaching or Training Services -d Management Consultancy Services - penalty. HELD THAT:- Regarding the OIDAR, Commissioner observes that there is a difference in the submissions of the appellant vide a written reply dated 03/11/2010 and 28/09/2010 and the submissions given during the personal hearing. However, learned Commissioner has not put forth any reasoning based on the facts of the case or the provisions under any contract. Therefore, it is to be held that the appellant s contentions were not countered with facts and therefore nothing has been brought on record to show that the appellant s contentions are factually incorrect - the appellants have a strong case in their favour. The appellants are not liable to pay any service tax regarding the OIDAR. Classification of services - Management, Maintenance or Repair Service or Information Technology Services - Services availed with respect to maintenance of various software - HELD THAT:- Learned Commissioner has failed to appreciate the fact that upgradation of software etc falls under Information Technology Services - contentions of appellant are accepted that these are availed with respect to maintenance of various software and therefore it falls under Information Technology Services levied w.e.f. 16/05/2008 as has been held by this Bench in the case of SAP India Pvt. Ltd. [2010 (9) TMI 289 - CESTAT, BANGALORE] . Commercial Coaching or Training Services - Management Consultancy Services - appellants have submitted that these services were mainly provided abroad and whenever they were performed in India they have discharged service tax - HELD THAT:- Learned Commissioner observed that they have not produced any sort of evidence to prove this contention. No data has been provided in the appeal papers so as to enable this Bench to come to a conclusion - the issue requires to go back to the authorities to ascertain the duty liability on the appellant vis- -vis their claims - matter on remand. Penalty - HELD THAT:- No service tax can be levied against the appellants in respect of OIDAR services and Management, Maintenance or Repair Services, the penalty levied to that extent under Section 76 Section 77 shall have to be set aside - the appellants are liable to pay service tax on Commercial Coaching Service and Management Consultancy Services rendered by the overseas agents availed in India. For the reason that the show-cause notice cannot invoke extended period, such liability will be restricted to normal period - Penalty under Section 76 77 will be levied by the original authority after re-quantifying the duty payable by the appellants in respect of Commercial Coaching Service and Management Consultancy Services for the normal period. The case remanded back to the original authority for the limited purpose of quantifying the service tax payable on Commercial Coaching Service and Management Consultancy Services for the normal period - appeal allowed in part by way of remand.

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• 2019 (12) TMI 182
  Security Services - SCN issued in continuation to earlier demand-cum show cause notice dated 23.12.2013 for the period 2011-12 since the grounds relied upon are the same - HELD THAT:- The proceedings initiated through show cause notice dated 23.12.2013 issued for the period 2011-12 ultimately reached this Tribunal and the same were considered along with two other proceedings initiated against the same appellant for the financial year 2006-07 to 2010-11 and all the three appeals were decided through a common Final Order in M/S. FEDERAL SECURITY PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LUCKNOW [ 2018 (9) TMI 1918 - CESTAT ALLAHABAD] - Both sides have agreed that the issue involved in the present proceedings which are for the financial year 2012-13 are squarely covered by the said case M/S. FEDERAL SECURITY PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LUCKNOW [ 2018 (9) TMI 1918 - CESTAT ALLAHABAD] where it was held that providing of cash van service with security guard is covered under cash van service and cannot be termed as security services as the dominant service is transportation of cash from one place to another through these cash vans. Therefore, the appellants are not liable to pay differential Service Tax under the category of security service . Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 181
  CENVAT Credit - input services - Group Medical Insurance Service - Transportation of employees - Staff Transportation facility service - Catering service/Lunch Banquet/Lunch Coupon - extended period of limitation - penalties. Group Medical Insurance - HELD THAT:- This Tribunal in the case of BHARAT FRITZ WERNER LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH WEST COMMISSIONERATE [2019 (6) TMI 67 - CESTAT BANGALORE] has held that cenvat credit is not permissible under the Group Medical Insurance Service. This Tribunal has come to the conclusion that the impugned service falls under the exclusion clause as provided in Clause (c) of Rule 2(l) - appellants are not entitled to cenvat credit of service tax paid on Group Medical Insurance Service. Catering Service - HELD THAT:- Reliance placed upon the Larger Bench decision of the Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [2018 (4) TMI 149 - CESTAT BANGALORE] wherein the Tribunal after considering the exclusion clause provided in Clause (c) w.e.f. 01.04.2011 has held that Outdoor Catering Service is not eligible for input service credit post amendment dated 01.04.2011. Therefore, credit on Catering Service rightly denied. Transportation of Employees - HELD THAT:- This falls under the definition of input service as it is directly related to the productivity of the employees working with the appellant and this facility is only from the factory to the residence of the employees and back which falls in the definition of input service and the exclusion clause is not applicable as far as this service is concerned - the appellants are entitled to cenvat credit of service tax on this service. Extended period of limitation - penalty - HELD THAT:- The issue involved in the present case relates to interpretation of the definition of input service and therefore extended period cannot be invoked and penalties cannot be imposed. The demand for the normal period of one year is upheld and invocation of extended period is not tenable in the present case - the penalties under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC (1)(c) of Central Excise Act, 1944 also set aside - the matter is remanded back to the original authority to re-quantify the demand for the normal period with regard to all the impugned services which the appellant is liable to pay - Appeal allowed in part by way of remand.

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• 2019 (12) TMI 180
  Classification of services - works contract service or construction of residential complex service? - development agreements for construction of residential complexes involving the land owner, developer and third parties - period prior to 01.07.2010 - HELD THAT:- The issue is no more res-integra and decided in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD ] where it was held that Such contracts are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65 (105) (ZZZh) w.e.f. 01/7/10, and therefore, it has to be held that such contracts were not covered by Section 65 (105) (ZZZh) during the period prior to 01/7/2010. As the present demand pertains entirely to period prior to 01.07.2010, the demands are not sustainable and need to be set aside - the demands of interest and imposition of penalties also need to be set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (12) TMI 179
  Permission for withdrawal of SLP - Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - HELD THAT:- Permission for withdrawal granted.

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• 2019 (12) TMI 178
  Refund of Cenvat Credit lying unutilized - closure of unit - Whether CESTAT was correct in holding that appellant, engaged in manufacture of chewing tobacco and operating under the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, was entitled to refund of Cenvat Credit lying unutilized on date of closure of unit? HELD THAT:- Admit. Registry is directed to list these two Central Excise Appeal Cases for final disposal on 9th January, 2020 in the category of After Notice Miscellaneous Matters .

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• 2019 (12) TMI 177
  Rebate claim - rejection on the ground of time limitation - It is contended that no time limit has been prescribed for filing a rebate claim under Rule 18 of Rules and Section 11-B of the Act is not applicable to the Notification No.19/2004/CE(NT) dated 6.9.2004 issued by the Central Government under Section 18 of the Rules - HELD THAT:- It is not in dispute that the Notification No.41 of 1994/CE holding the field for about 10 years did prescribe the time limit for availing the refund of duty - The omission of the time limit in the subsequent Notification 19/2004 was considered by the Hon ble High Court of Madras in the case of Dorcas Market Makers Pvt. Ltd., [ 2015 (4) TMI 118 - MADRAS HIGH COURT ], it was held that the rebate of duty under Rule 18 should be as per the Notification issued by the Central Government. Notification No.19/2004 did not contain the prescription regarding limitation, a conscious decision taken by the Central Government. The reference made by the learned counsel for the petitioners to the circular instructions issued by the Central Board of Excise and Customs, New Delhi, is of little assistance to the petitioners since there is no estoppel against a statute. It is well settled principle that the claim for rebate can be made only under section 11-B and it is not open to the subordinate legislation to dispense with the requirements of Section 11-B. Hence, the notification dated 01.03.2016 bringing amendment to the Notification No.19/2004 inasmuch as the applicability of Section 11-B is only clarificatory - It is not in dispute that the claims for rebate in the present cases were made beyond the period of one year prescribed under Section 11-B of the Act. Any Notification issued under Rule 18 has to be in conformity with section 11-B of the Act. The decision of Original Authority rejecting the claim of rebate made by the petitioners as time barred applying Section 11-B of the Act to the Notification No.19 of 2004 cannot be faulted with - petition dismissed.

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• 2019 (12) TMI 176
  CENVAT Credit - electronic parts and batteries - credit availed without actually receiving them and without using the same in their factory in the manufacture of their final product - recovery of CENVAT Credit in terms of Rule 14 of the Cenvat Credit Rules readwith Section 11A of the Act alongwith interest under Section 11AA of the Act and penalty. Whether the appellant M/s Avon Meters Pvt. Ltd. is entitled for cenvat credit which has been denied by the Ld. Commissioner alleging that it was mere a paper transaction or not? Whether the penalty under Rule 26 of Central Excise Rules can be imposed on the co-appellants or not? HELD THAT:- The appellant has placed on record, the opinion of Dr. K. Prakalathan (M. Tech. Ph.D.), Manager (Testing), CIPET Chennai, regarding feasibility of mixing of the Polycarbonate granules with granules of polymers of ethylene, in primary forms or with granules of polymers of propylene or of other olefins, in primary forms or with granules of polymers of styrene, in primary forms to mould Energy Meter parts i.e., meter base, meter cover, terminal base and terminal cover at an injection moulding machine. Further, it is states that the Polycarbonate is more polar then PE, PP, PS but do not say that PE, PP, PS are non-polar. It makes general statement that due to non-compatibility, mixing of polar polymers with non polar polymers results into incompatibility but does not mention, out of PC, PE, PP, PS which polymer is polar or non polar and there is no certain conclusive to say PC, PE, PP and PS cannot be mixed in any case. Polycarbonate is one of the engineering material and as per the tender document; the electric meter should be manufactured either of polycarbonate or engineering material. Admittedly, all the inputs in question do qualify as engineering materials as per the tender documents. The suppliers of the goods were not investigated. Merely on the basis of the test report, it has been concluded that the supplies of the other inputs except polycarbonate are not input to manufacturer the final product - in most of the cases, there is a entry at Information Collection Centre (ICC) of the state VAT, which show that the goods have been passed through ICC and reached to the factory of the appellant. Moreover, no cross examination of the persons whose statements have been relied upon were granted cross examination, neither their statements have been taken in compliance to the provisions of Section 9D of the Central Excise Act, 1944. Further, in the show cause notice although various discrepancies were found during the course of investigation in the records of the appellant, but, the main allegation made in the show cause notice is that the input in question on which cenvat credit sought to be denied are not input of the appellant as were not used in the manufacture of their final product, but, it is mere paper transaction. It means that if it is a paper transaction then no goods have been received in the factory premises of the appellant but the stock found during the course of investigation with the statutory records are showing all the inputs on which cenvat credit sought to be denied were in the stock. It is not the case of shortage of inputs by the revenue. Also, Revenue has not able to brought on record the evidence to show the diversion of the goods in question. No investigation was conducted with regard to the fund flow or the money has been received back in cash by the suppliers. The appellant has correctly taken the cenvat credit on the inputs in question, therefore, the impugned order is not sustainable - Penalty also set aside - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 175
  Recovery of excess availed CENVAT Credit - sister concern of the appellant unit had raised the invoice for clearance of 4950 kgs of the input viz., Desmodur-MDI as such out of the total quantity of 15750 kgs imported - proportionate credit was required to be availed - time limitation - revenue neutrality - HELD THAT:- Due to bona fide mistake appellant has availed entire credit of Rs. 8,63,199/- on the basis of invoices issued by the sister concern. Further, the sister concern has reversed the entire credit of Rs. 8,63,199/- and the same has been availed by the appellant and both the appellant and the sister concern are engaged in the production of identical goods and therefore, it is not the case of the Revenue that both the units have availed the CENVAT credit. It is a situation of revenue neutral because whatever credit has been passed on by the sister concern has been availed by the appellant and in such a situation, it is a settled law that when it is a revenue neutral situation, suppression of facts and mis-declaration cannot be alleged as there is no revenue loss to the Government and no unjust gain to the appellant. Time Limitation - HELD THAT:- Entire demand is also barred by limitation because the show-cause notice was issued in 2017 for the period of September 2013 and there is no willful suppression of facts with intention to evade payment of duty - the impugned order demanding reversal of CENVAT credit is not sustainable on merit as well as on limitation. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 174
  Imposition of penalty u/s 48 (5) of UP Value Added Tax Act - Whether the learned Commercial Tax Tribunal was justified in upholding the seizure of the goods i.e. yarn by the Assistant Commissioner Commercial Taxes, Mobile Squad IV Unit, Lucknow? - HELD THAT:- The stand taken by the revisionist that in pursuance of the order dated 14.8.2009, the goods were neither ready nor could be delivered on 14.8.2009 by UP State Spinning Co.Ltd., Barabanki due to unavoidable circumstances. As and when the goods were ready, same was dispatched. The said contention of the assessee is not based on any material or documentary evidence on record. The revisionist has neither filed any document nor any material to support his contention. On the contrary, along with the revision, a letter dated 15.4.2011 has been annexed but the said letter or any affidavit was neither filed at the time of interception of the goods nor prior to passing of seizure order nor passing the penalty order and nor before passing the order of the first appellate authority. The authorities were justified to draw the inference against the dealer that whatever stand is being taken by the revisionist at the time of passing of the penalty order is an afterthought - The record shows that the goods were dispatched from the factory of UP State Spinning Co. Ltd. on 20.8.2019. Revision dismissed.

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• 2019 (12) TMI 173
  Validity of reassessment order - disallowance of input tax credit - Section 39[1] of Karnataka VAT Act - contention of the petitioner is that input tax credit claimed by the petitioner has been denied by the respondent-Authority mainly on the ground that the selling dealer - HELD THAT:- The selling dealer M/s. Total Scaffolding Technologies was registered on 29.06.2013 and de-registered on 10.08.2015 i.e., during the tax periods in question, the said selling dealer was a registered dealer. It is well-settled that as long as the dealer is registered under the provisions of the Act, the transactions made by the purchasing dealer cannot be suspected. It is on the registration of the selling dealer, transaction has been effected and in such circumstances, the prescribed authority rejecting the claim of the input tax credit mainly on the ground that M/s. Total Scaffolding Technologies was a de-registered dealer during the relevant periods cannot be accepted. The petitioner placed certain documents on record to establish the factum of tax discharged by him through cheques qua the invoices. These aspects require to be examined by the prescribed authority while considering the claim of the petitioner regarding the input tax credit. The proceedings are restored to the file of the respondent-prescribed Authority to reconsider the matter in accordance with law, considering the relevant documents placed on record - Petition allowed by way of remand.

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• 2019 (12) TMI 172
  Levy of Sales Tax - agriculturist, producer of raw rubber could be treated as dealers or not - effect of Amendment brought to Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 - inter-state sale of the raw rubber latex / rubber sheets - assessment under CST Act. Whether the activities done by the respondent would fall within the definition of sale in terms of the provisions of the General Sales Tax Act? - HELD THAT:- This issue was considered by this Court in the case of Kanyakumari District Planter s Association Vs. Deputy Commercial Tax Officer, Nagercoil-Rural and others [2001 (7) TMI 1273 - MADRAS HIGH COURT] in the said decision it was held that the respondent carrying of business in selling his produce something more is necessary to be established than pointing out that he systematically raises the produce in his lands, converts it into a marketable commodity and then sells the commodity at a profit in the market. It was held that though there was an amendment to the definition of turnover in Section 2(r) of the GST Act, there was no corresponding amendment to the Central Sales Act, 1956 - Hence, it was held that the notice calling upon the members of the Kanyakumari District Planters Association to get themselves registered as dealers under the CST Act was without authority and liable to be quashed. The raw rubber is sold from the estate by raising estate bills. Apart from the same bill, the transport is also covered by Form N1 issued by the Rubber Board and the Village Administrative Officer s certificate to evidence the transport of agricultural produce and in their estate the respondent have sold only their produce and have not engaged in supplying and selling of any other produce of similar nature or otherwise. Further the First Appellate Authority concluded that the sale of the produce of the respondent is the culmination of their agricultural activity. The questions raised for consideration has to be necessarily answered against the Revenue and in favour of the respondent - Petition dismissed.

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• Indian Laws

• 2019 (12) TMI 171
  Recovery of dues from company - employees dues - charge of recovery - priority claim on debts - Whether, in the facts of this case, employees dues can take precedence over the claim of the secured creditor in respect of the proceeds from sale of secured assets of the Karkhana under the SARFAESI Act? - HELD THAT:- It is clear that Section 167 creates an express bar on the applicability of the Companies Act to societies registered under the Societies Act. Given that the Karkhana was a co-operative society registered under the said Act, we find that Section 167 is squarely applicable, and the High Court committed a grave error in relying upon Section 529A of the Companies Act. Thus, the employees cannot make use of Section 529A of the Companies Act to claim priority over all other debts of the Karkhana. Whether the employees dues can take priority over other claims by virtue of being recoverable as arrears of land revenue? - HELD THAT:- It is evident that dues of employees in respect of which an order has been made by a Court under Chapter VI of the MRTU PULP Act are recoverable in the same manner as arrears of land revenue - On a close reading of sub-sections (1) and (2) of Section 169 of the Land Revenue Code, it becomes clear that Section 169(1) deals with the former category of claims and makes them a paramount charge on the land over all other claims. On the other hand, Section 169(2) deals with the latter category and gives them priority only over unsecured claims. The recovery certificate issued under Section 50 of the MRTU PULP Act only makes employees dues recoverable as arrears of land revenue. Thus, in view of the foregoing discussion, it is clear that such employees dues would fall under the category of claims captured by Section 169(2), and can only take priority over unsecured claims - However, this does not mean that the Appellant-Bank automatically holds a paramount charge over the proceeds from the sale of the secured assets. Under the scheme of the SARFAESI Act, there is nothing to show that a priority is created in favour of banks, financial institutions, and other secured creditors as against a first charge specifically created under any other statute. Thus, in the absence of a paramount charge created in favour of the employees dues under the MRTU PULP Act, it cannot be said that the Appellant-Bank automatically gets a first charge under the SARFAESI Act. In terms of Section 13(7) of the SARFAESI Act, the distribution of money received by the Appellant-Bank should be done as per the sale contract with Respondent No. 5. In other words, the Appellant-Bank is liable to satisfy the employees dues as per its undertaking in the sale letter dated 08.03.2010. However, in view of the fact that all other liabilities, including statutory liabilities were agreed to be borne by the subsequent purchaser, statutory liabilities in respect of employees, such as provident fund, gratuity, bonus etc., would have to be borne by Respondent No. 5 herein. Section 529A of the Companies Act, which gives workers dues a priority over all other debts, cannot be applied to the instant case in view of Section 167 of the Societies Act - Merely by virtue of being recoverable as arrears of land revenue, the employees dues, in respect of which a recovery certificate had been issued by the Industrial Court, cannot be treated as a paramount charge in terms of Section 169(1) of the Land Revenue Code. Instead, under 169(2) of the Land Revenue Code, they would take precedence only over unsecured claims. Appeal disposed off.

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• 2019 (12) TMI 170
  Cross-examination of witnesses - Section 37 of the Arbitration and Conciliation Act, 1996 - whether the challenge is sustainable on the ground available in law, at the outset it is necessary to examine whether the procedural lapse if any is committed by the learned Arbitrator in unilaterally denying the opportunity to the parties so as to make the award invalid and to set aside the same exercising the power under Section 34 or in an appeal under Section 37 of the Act, 1996? HELD THAT:- The procedure to be followed in arbitration proceedings was settled by a separate order dated 28.11.2009 during the course of the proceedings before the learned Arbitrator. Thereafter the award was passed only on 13.01.2010. Though the respondent was represented by their learned counsel and the order dated 28.11.2009 was passed while recording the proceedings of that day, neither any application had been filed before the learned Arbitrator to recall the said order and provide opportunity to tender evidence or cross examine, nor was a challenge raised by initiating any other proceedings, before the award was passed. It is only subsequent to the award being passed such contention is being raised as an afterthought, which in such event cannot be accepted. From the photographs produced before us we have noticed that except raising some columns, there is no major construction that is put up. In so far as the expense as claimed by the respondent, as indicated by the learned Arbitrator as extracted above, there is no conclusive evidence to that effect. Though such columns are raised, admittedly construction activity has not taken place beyond March, 1999 and already two decades have elapsed. In view of the breach and the respondent herein failing in the present lis there would be no absolute right in their favour since the inevitable loss suffered by the appellants by not being able to enjoy the property for the last more than two decades also cannot be lost sight. The appellant herein who is the owner of the property will have to enter into a fresh contract and the need and manner of development may not be the same at this point and in such event the appellant herein also would be put to some loss to undertake the demolition process themselves or there would be reduction that would be made by the alternate developers who would undertake the project. The appellant is directed to pay the sum of Rs. 45,00,000/- in full quit of all claims, to the respondent within three months - the award dated 13.01.2010 passed by the learned Arbitrator is restored.

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• 2019 (12) TMI 169
  Dishonor of cheque - section 138 of NI Act - Permission to examine/cross-examine the complainant - whether in terms of Section 145(2) of the Act, it is mandatory for the applicant, seeking cross-examination of the complainant, to assign reason(s) for recalling/reexamination/ cross-examination of the complainant? HELD THAT:- This court has specifically ruled that the second part of Section 145(2), nowhere talks about assigning reasons in the application for recall/re-examination of a witness, meaning thereby that it is obligatory for the court to recall complainant or its witnesses, if an application is made in that behalf, as such, order passed by learned Court below, rejecting the application of the accused for examination/cross-examination of the complainant is against the provisions of Section 145(2) and deserves to be rectified by this Court. Moreover, no prejudice, whatsoever, would be caused to the complainant, in case complainant and/or his witnesses are examined/cross-examined, rather, this would enable court below to render proper adjudication of the controversy inter se parties. Petition allowed.

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