TMI Tax Updates - e-Newsletter
February 15, 2018

Case Laws in this Newsletter:

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

Articles

• TDS on withdrawn of EPF before 5 years & International Employees Exemption
• REJECTION OF APPLICATION OF INSOLVENCY RESOLUTION PROCESS BY OPERATIONAL CREDITOR FOR EXISTENCE OF DISPUTE

News

• Govt extends anti-narcotics scheme for 3 more years

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• RBI Reference Rate for US $

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• Government of India makes Amendments in Small Savings Act;

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Notifications

GST - States

• 4-L/2017 - dated 25-1-2018 - Karnataka SGST
  Karnataka Goods and Services Tax (Second Amendment) Rules, 2018

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• G.O. Ms. No. 024 - dated 3-2-2018 - Tamil Nadu SGST
  GST - Postponement of coming into force of the provisions relating to e-Way Bill under the TN GST Rules, 2017

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• G.O. (Ms) No. 021 - dated 25-1-2018 - Tamil Nadu SGST
  Seeks to amend Notification No. II(2)/CTR/917(e-5)/2017 dated 14th November, 2017

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• G.O. (Ms) No. 020 - dated 25-1-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Reduction in State tax on the margin of the supplier on the intra-State supplies of old and used motor vehicles

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• G.O. (Ms) No. 019 - dated 25-1-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Goods exempt from State tax - Amendments

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• G.O. (Ms) No. 018 - dated 25-1-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Rates of the State tax on goods - Amendments

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• G.O. (Ms) No. 016 - dated 25-1-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Exemption from levy of State tax on services - Central Government's share of profit petroleum

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• G.O. (Ms) No. 015 - dated 25-1-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Rate of State tax on services - Supply of development rights

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• G.O. (Ms) No. 014 - dated 25-1-2018 - Tamil Nadu SGST
  Seeks to amend Notification No. II(2)/CTR/532(d-16)/2017 dated the 29th June, 2017

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• G.O. Ms. No. 011 - dated 23-1-2018 - Tamil Nadu SGST
  Supersession of the Notification No. II(2) /CTR/532(b-2)/2017 dated the 28th June, 2017

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• G.O. Ms. No. 010 - dated 23-1-2018 - Tamil Nadu SGST
  Waives the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR-6

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• G.O. Ms. No. 009 - dated 23-1-2018 - Tamil Nadu SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-5A

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• G.O. Ms. No. 008 - dated 23-1-2018 - Tamil Nadu SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-5

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• G.O. Ms. No. 007 - dated 23-1-2018 - Tamil Nadu SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-1

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Highlights / Catch Notes

Income Tax

• Reopening of the assessment - sanction u/s 151 - When the Revenue Department is manned by highly qualified officers they are to evolve legally sustainable standard operating procedure for discharging quasijudicial function. - AT
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• AO was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - AT
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• Benefit of exemption u/s. 11 - The receipts from BCCI are not in the nature of trade, business or commerce and consequently the proviso to section 2(15) of the Act was not applicable - assessee is entitled for exemption u/s 11 and 12 - AT
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• Transfer pricing - the transaction in the instant case of sale of shares in ‘AB’ International will have to be benchmarked as per the transfer pricing provisions contained in Chapter X of the Act. Thus transfer pricing provisions contained in sections 92 to 92F of the Act would apply to the proposed transaction. - AAR
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Customs

• Drawback u/s 75 of the CA 1962 - exporter is entitled to claim that the whole of the copper content in its manufactured product should be treated as “deemed to be imported material”, for the purpose of sub-section (1) of Section 75 - Availing of the Cenvat credit also does not disentitle the respondent from claiming the above benefit - HC
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• Classification of import goods - The AEPC has declared the imported bales as fabrics and not as “quilt covers” as there was no individual weight and/or length - imported items cannot be covered as “quilt covers” as there was no reference to composition, nature, structure to be identified as „quilt cover‟. - AT
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Service Tax

• Renting to Immovable Property Service - parking facility - the owners of the shop/ and their employees are availing the parking facility for which monthly consideration is collected by the appellant along with the rent payable for the said shops and premises - the consideration attributable to such income is liable to be taxed. - AT
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• The existence of clause in the contract to the effect that it will include Service Tax by itself will not give any inference that such Service Tax has been collected from the client. The checklist for RA bills makes it clear that the recipient is also not recognizing any payment in any manner which can be attributed Service Tax - the demand in terms of Section 73A (2) will not survive. - AT
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• Validity of SCN - appellant has provided this service to the third parties on behalf of the main consultant - the services provided by the appellant should merit classification under “Business Auxiliary Service” - cannot taxed under “Management Consultancy Service” - Demand cannot sustain on the ground of wrong classification of the service - AT
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• Levy of service tax - Authorized Learning Centre (LCs) - The University is recognized by the Statute as well as by the UGC, DEC & AICTE. When, it is so, then the LCs have no control over the fee which is directly collected by the University who later shared with LCs. - Demand of service tax set aside - AT
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• Commercial or Industrial Construction Service - the building is a Government building which is used for creating a facility of training, testing etc. for industrial units, in consonance with the Board circular, the building cannot be said to be a commercial building. - AT
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Central Excise

• SSI Exemption - use of Brand name - The markings are by compulsion of law only in order that Governmental authorities involved in the PDS may identify and segregate the aforesaid jute bags. This being the case, it is obvious that there is no “brand name” involved in the facts of the present cases. - SC
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• CENVAT credit - supplementary invoices - The appellant is paying service tax on reverse charge basis in terms of Rule 2(1)(d) of Service Tax Rules, 1994 and therefore credit can be availed in terms of Rule 9(i)(e) of CCR - AT
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• Area Based Exemption - Benefit of N/N. 50/03-CE - The appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances and are manufacturing different products, therefore, all the three units cannot be considered as one unit. - AT
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• CENVAT credit - storage and warehousing services abroad, rendered to the appellant for storing the finished goods abroad - whether the appellant herein is eligible to avail CENVAT credit of service tax paid on warehousing services performed outside the country (post export services)? - Held Yes - AT
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• Classification of goods - carpets/floor coverings - car mats, made up of felt - predominance test - whether classified under Chapter Sub-heading No.5703.20 of the CETA or under under Chapter Sub-heading No.5703.90? - the mere fact that the surface of the carpet is polypropylene fibre, it does not cease to be jute carpets. - AT
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Case Laws:

• Income Tax

• 2018 (2) TMI 883
  Application for stay under Section 254(2A)- HC [2018 (1) TMI 750 - BOMBAY HIGH COURT] has held a petitioner seeking an extra ordinary relief from the Court is not only expected to come with clean hands but so keep it, till the disposal of the petition and the conduct of the petitioner during the pendency of the petition disentitles it to any relief under Article 226 of the Constitution of India. Therefore we dismiss the petition - Held that:- Exemption from filing certified copy of the impugned order is granted. We are not inclined to interfere but we leave the petitioner with the remedy of approaching the High Court to tender an unqualified apology and also to make the offer of payment/deposit as made before this Court. The High Court is free to pass such order/orders as may be considered appropriate

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• 2018 (2) TMI 882
  Income from sale of shares - busniss income or capital gain - Held that:- The decisions of the Court have emphasized five broad tests whether the income bears the character of business income or capital gain – firstly, whether the company or concern is authorized in its Memorandum of constituting documents to deal with shares; (2) whether the entity had shown the shares under the head “Investment”; (3) whether the assessee/entity utilized its own funds and had not borrowed funds for the purpose of acquiring shares; (4) whether the nature of infrastructure – whether it is small, represents investment activity rather than the trading activity that would require larger infrastcuture; and lastly, whether the behaviour of the assessee is such as to disclose income/earning has objective i.e. “obtaining dividend” rather than trading. This Court notes that all the tests and the relevant rulings were noticed by both the authorities below, who had applied their mind and held that the AO’s approach in singular fixing scrutiny to the shifting and regulations of some shares to treat as business income, was erroneous. Reporting of mercantile interest of doubtful debts - Held that:- The question is covered by the decision of this Court in Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. (2010 (11) TMI 88 - Delhi High Court). The Court had applied “real income” principle to uphold the assessee’s contention. Those observations are squarely applicable in the present case.

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• 2018 (2) TMI 881
  Rejection of books of accounts - G.P. Rate determination - Held that:- In the present case, it is quite evident that the Assessee had maintained the books of accounts. On that score, the ITAT is correct, however, the proceedings before the Assessing Officer and his order would reveal that there are gaps with respect to the materials sought but omitted to be produced. These related to various aspects of the Assesee’s road contract construction activity such as: (i) specific contracts entered into with sub-contractors/ labour contractors/suppliers; (ii) absence of any supporting primary materials such as invoices disclosing quantities purchased; (iii) the muster rolls or any other such materials or documentary evidence (including payment made to ESI, PPF on account of sub-contractors-even if by the contractors) to the workmen involved; (iv) any other proof of the quantities or materials utilized and their relative costs. The court also notices that the Assessing Officer’s order undoubtedly reflects that queries were made from various sub-contractors, however, as to what was stated by them or what material was produced by them has not been discussed at all. The court is of the considered view that the ITAT and the CIT(A) rather superficially examined the material and set aside the findings of the Assessing Officer. At the same time, the Assessing Officer’s order also is incomplete. In the peculiar circumstances, the matter is remitted to the CIT(A), who shall render fresh findings on the entire subject matter

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• 2018 (2) TMI 880
  Tribunal exercise of it’s power u/s 254(2A) - whether tribunal could not have directed the petitioner to make additional payments to furnish bank guarantees or to maintain balance in the bank account - Held that:- The Hon’ble Single Judge has recorded a finding that the Tribunal, while passing orders under Section 254 (2A) has followed this Court’s order [2017 (11) TMI 1609 - KARNATAKA HIGH COURT], wherein, petitioner was directed to retain 20% of the tax demand in the bank. Keeping in view the said order, the Hon’ble Single Judge has issued the directions extracted supra. Hon’ble Single Judge has directed the petitioner to furnish bank guarantee equivalent to 25% of the tax demand for the assessment years 2009-10 and 2010-11. For the assessment year 2011-12, the Hon’ble Single Judge has directed the petitioner to deposit 20% of tax demand, which would in all account for 50% of tax demand for the assessment year and to furnish a bank guarantee for 25% of the tax demand, in parity with orders made for assessment years 2009-10 and 2010-11. So far as the assessment year 2012-13 is concerned, the Hon’ble Single Judge has modified Tribunal’s order by directing the petitioner to furnish bank guarantee equivalent to 45% of the tax demand An order under Section 254 (2A) is a discretionary order. Therefore, in our considered view, both Tribunal’s order as well as Hon’ble Single Judge’s order cannot be classified as those which any reasonable person cannot pass. Therefore, we see no error in the discretion exercised by the Tribunal and the Hon’ble Single Judge in modifying Tribunal’s order. Therefore, we refrain to interfere with the order impugned.

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• 2018 (2) TMI 879
  Power of High court to grant interim relief to the appellant - Held that: It is an undisputed fact that the demands in relation to the above referred two assessment years are outstanding. The applicant, however, has shown willingness to deposit the entire amount on such terms and conditions as may be deemed fit by this court. Moreover, under the relevant provisions of the Act, the revenue is entitled to statutory rate of interest on any delay in making such payment. Therefore, some delay in making payment of the outstanding amount would not cause much prejudice to the revenue. The implementation, operation and execution of the common order passed by the Tribunal for assessment years 2011-12 and 2012-13 is hereby stayed subject to the following conditions: (a) The applicant shall pay the entire outstanding tax demand in relation to assessment years 2011-12 and 201213 in four equal monthly installments; (b) Insofar as the first installment is concerned, the applicant shall deposit a sum of ₹ 10,00,000 (Rupees ten lakh) within a period of one week from today and the balance amount shall be paid on or before 25th February, 2018; the second installment shall be paid on or before 25th March, 2018; the third installment shall be paid on or before 25th April, 2018 and the fourth and last installment shall be paid on or before 25th May, 2018. (c) A partner of the applicant shall file an undertaking before this court, undertaking to abide by the terms and conditions imposed by this court under this order; (d) Under no circumstances any extension shall be granted in payment of such installments; AND (e) In case there is any default in payment of any installment as stipulated hereinabove, the interim relief shall stand vacated.

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• 2018 (2) TMI 878
  Recovery of income tax dues - Priority of Charge - mortgage of property - Secured creditor priority over the dues payable to the Income Tax Department - attachments made by the Income Tax Department over the said property - Held that:- The issue is no longer res integra and has been considered in The Assistant Commissioner (CT) Versus The Indian Overseas Bank, M/s. Super Recording Co. Ltd. [2016 (12) TMI 373 - MADRAS HIGH COURT]. Question No.(i) was answered in favour of the financial institution which is a secured creditor having the benefit of the mortgaged property. Accordingly the question framed above has to be answered in favour of the petitioner Bank and against the 1st respondent and accordingly it is held that the petitioner Bank is entitled to priority of charge over the mortgaged property in question. Applicability of Section 281 (1) - void transfers - whether the mortgage created in favour of the petitioner's Bank could have been done only after obtaining approval from the Income Tax Department in terms of Section 281 (1)? - Held that:- This question was considered by the Division Bench of the High Court of Gujarat in the case of Tax Recovery Officer Vs. Industrial Finance Corporation of India [2012 (8) TMI 541 - Gujarat High Court ] as held that transfer of property which was for a valuable consideration and which was without notice of the pendency of the proceedings under the Sales-tax Act and therefore, the transfer falls under the exception created by the proviso to Section 33-A of the Madhyapradesh General Sales Tax Act, 1958. Thus, by applying the law laid down in the above mentioned documents question No.(ii) has to be answered in favour of the petitioner bank and against the respondents. Writ Petition is allowed and the attachment shall stand lifted and the 1st respondent shall intimate the Sub-Registrar, T. Nagar to delete the entries in the books maintained by him within a period of three weeks from the date of receipt of a copy of this order.

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• 2018 (2) TMI 877
  Reopening of assessment - Privilege fee paid by the petitioner/Corporation to the State Government to enjoy the exclusive privilege to sell liquor in the State of Tamil Nadu - allowable deduction in terms of Section 37 - change of opinion - Held that:- Impugned reopening proceedings and the consequential assessment orders pertain to the very same assessment years, which were subject matter of appeals before the Tribunal, in which the assessee has succeeded. Thus, for the above reason, hold that these writ petitions are maintainable. In terms of the decision in GKN Driveshafts (India) Ltd. vs. ITO reported in [2002 (11) TMI 7 - SUPREME Court] the respondent/assessing officer was expected to pass a speaking order and if aggrieved, the assessee is entitled to challenge the same. This procedure has been given a go-by. This defect committed by the assessing officer goes to the root of the matter thereby affecting the very validity of the impugned assessment order. Thus, when the Tribunal has held in favour of the petitioner in respect of the similar issue for the very same assessment year, would the present reassessment amount to a change of opinion is the question to be considered. Identical issue came up for consideration before the Hon'ble Division Bench of the Karnataka High Court in the case of Karnataka State Beverages Corporation Ltd. vs. Commissioner of Income Tax reported in [2016 (3) TMI 461 - KARNATAKA HIGH COURT] wherein the Court held that privilege fee payable by the petitioner therein viz., Karnataka State Beverages Corporation Ltd., which is some what similar to the petitioner/Corporation, to the State Government would be taxable with effect from 01.04.2004 and not prior thereto - Decided in favour of assessee

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• 2018 (2) TMI 876
  TDS u/s 194(A)(1) - non deuction of tds on interest payments exceeding ₹ 10,000/- - provisions under Section 40(a)(ia) invoked - assessee contended that the co-operative bank was not required to deduct tax at source from the payment of interest on time deposits of its members paid or credited before 01.06.2015 - Held that:- There has not been due application of mind to the stand taken by the petitioner in their reply dated 04.12.2017. The respondent has proceeded entirely on a different ground than what was mentioned in the show cause notice. The decision arrived at while completing the assessment is not on the ground on which the petitioner was required to show cause. This would be sufficient to set aside the impugned proceedings. That apart, the respondent has passed the impugned order by drawing a distinction between different types of Cooperative Societies and has stated that the petitioner is involved in banking business though it is a cooperative society and tax has to be deducted at source. In fact, this very issue was considered in M/s The Coimbatore District Central Co-operative Bank case [2016 (1) TMI 370 - MADRAS HIGH COURT] . Respondent has not gone through the decision, copy of which was filed by the petitioner along with their reply to the show cause notice. The Assessing Officer was bound by the decision rendered by the jurisdictional High Court. It is stated that as on date there is no appeal by the revenue as against the decision in the case of Coimbatore District Central Cooperative Bank Ltd. That apart, in the assessee's own case for the previous assessment years, the Tribunal has held in favour of the petitioner assessee. Thus the impugned order calls for interference. Accordingly, the writ petition is allowed, the impugned order is set aside and the matter is remanded to the respondent for passing fresh orders

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• 2018 (2) TMI 875
  Disallowing rebate u/s 54F - investment made in residential house prior to date of sale of house - Held that:- Sub-section 4 of section 54F prescribes appropriation of sale consideration of original asset towards provision of new asset made within one year before the date of transfer of original asset, two years from the date of transfer or construction of new in-house property, within three years from the date of transfer of original receipt but the Act does not prescribe any condition as to the date of commencement of construction of house property which may be commenced even before the date of transfer of original receipt - See Commissioner of Income-tax Versus Bharti Mishra [2014 (1) TMI 446 - DELHI HIGH COURT] Similarly in the case of Commissioner of Income Tax vs J.R. Subramanya Bhat reported in (1986 (6) TMI 7 - KARNATAKA High Court) had expressed similar view and had held that investment made towards construction of house property prior to the date of transfer should also be eligible as deduction for the purpose of section 54 of the Act. On the facts of this case, we find that the construction of house property had been completed within three years from the date of transfer and accordingly, we are of the view that the assessee is eligible for exemption u/s 54F in respect of the two disputed amounts viz. ₹ 12 lakh paid on 20.06.2008 and ₹ 14,91,697 paid on 22.08.2008 which were expended prior to the date of transfer of original asset. We allow the ground raised by the assessee.

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• 2018 (2) TMI 874
  Eligibility to registration of the trust u/s 12AA - denial of claim stating that the trust is formed merely for complying the CSR requirements of the settler - proof of charitable activity - Held that:- A profit making Company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. The fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. From the perception of the assessee trust the amount received as donation whether will be eligible for exemption under section 11 depends on the application of such fund for the charitable activities by the trust only. CIT is empowered to satisfy himself only about two factors i.e. the objects of the trust and the genuineness of the activities of the trust or institution and such powers does not extend to the eligibility of the trust/ institution for exemption u/s 11 r.w.s 13 which falls in the domain of the AO. Once the CIT has not doubted about the genuineness of the activities of the assessee nor doubted its charitable object, his powers under section 12AA end. We direct the CIT to grant the registration u/s 12AA and also the approval u/s 80G(5)(vi) - Decided in favour of assessee.

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• 2018 (2) TMI 873
  TPA orders against non existent company - Held that:- TPO passed the order u/s 92CA(3) on 29.01.2013. Thereafter, the AO passed the draft assessment order dated 12.03.2013 and the assessee raised the objections before the ld. DRP who issued the direction to the TPO/AO vide order dated 26.12.2013 and the TPO on the directions of the ld. DRP passed the order giving effect of the direction of the DRP-1 u/s 24(5) of the Act on 21.01.2014. All the aforesaid orders were passed in the name of erstwhile entity i.e. M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. without any mentioning of the transferee name i.e. M/s Genpact India. Therefore, it is crystal clear from the aforesaid narrated facts that the entity M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. which amalgamated with M/s Genpact India, was not in existence when the TPO/AO/DRP passed their respective orders. Thus the assessment was framed by the AO on the non-existent amalgamated company, not on the amalgamating company, therefore, the assessment framed was void ab initio - Decided in favour of assessee

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• 2018 (2) TMI 872
  Undisclosed cash deposits in bank account - Held that:- The enquiries of the A.O. revealed that the parties who have purportedly made the impugned advances were related parties and they did not have the creditworthiness to make the advances. The lack of financial capacity of the parties clearly shows an indication that the sale agreements were only make believe arrangements. Since the assessee failed to furnish the evidence to establish the genuineness of the advance, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. Ground No.1.1 of the assessee’s appeal on this issue is dismissed. Unexplained cash deposit by cheque - A.R. stated that these deposits were the business receipts but no evidence was furnished with regard to the source of deposits as well as expenditure incurred in connection with the earning of this money. Therefore it is established that the cheque deposits were from unexplained sources and the Ld.CIT(A) has rightly confirmed the addition. Hence, we do not find any infirmity in the order of the CIT(A) and the same is upheld. In the result, the appeal of the assessee on this ground is dismissed. Estimation of income @ 5% - A.O. has rejected the books of accounts and estimated the income - Held that:- A.R. did not make out a case for estimation of income @ 4% with relevant evidences except arguing that earlier percentage of income required to be adopted. We are unable to consider the request of the assessee to reduce the estimation of income without placing the material to substantiate that the estimation of profit @5% was unreasonable. Therefore, we uphold the order of the CIT(A) and dismiss the appeal of the assessee. Allowance of telescopic benefit of estimated income for the additions made independently i.e. cash credits and cheque deposits - Held that:- As A.R. did not make out a case for allowing the telescopic benefit by furnishing the necessary details. Therefore, we do not find any justification for allowing the telescopic benefit and request of the Ld. A.R. is hereby rejected.

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• 2018 (2) TMI 871
  Reopening of the assessment - non application of mind BY CIT-A - No proper sanction - Held that:- Perusal of the noting sheet dated 09.03.2010 to 30.12.2010 made available to the Bench for perusal shows that only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO who has recorded the reasons cannot enter into the mind of the sanctioning authority (Addl.CIT) discharging the quasi-judicial function for according valid sanction for reopening the assessment. Moreover, according sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Addl.CIT as required u/s 151 of the Act. When the Revenue Department is manned by highly qualified officers they are to evolve legally sustainable standard operating procedure for discharging quasijudicial function. Reassessment opened by the AO in this case is not sustainable in the eyes of law, hence hereby quashed. - Decided in favour of assessee

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• 2018 (2) TMI 870
  Revision u/s 263 - how order passed by the AO was erroneous and prejudicial to the interests of the Revenue ? - Held that:- In the instant case, the assessee has provided the entire information to A.O. at the time of assessment, which was being verified by the A.O. before completing assessment. This is evidenced by the questionnaire issued by the A.O. as well as the information furnished by the assessee at the time of assessment. In the consequential order passed u/s 143(3) r.w.s 263 of the Act, the A.O. has not made any specific disallowance in respect of the issues raised by the Ld. Principal Commissioner of Income Tax u/s 263 of the Act except the estimated additions. The Ld. PCIT has not made out a case of not conducting the enquiry on any of the issues, hence, we are unable to sustain the order of the Ld. Principal Commissioner of Income Tax and no reason to hold the assessment order passed by the A.O. was erroneous and prejudicial to the interest of the revenue. We set aside the order of Ld. Principal Commissioner of Income Tax. - Decided in favour of assessee

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• 2018 (2) TMI 869
  Entitlement for exemption u/s 54F denied - denial of claim as new property required to be acquired by the HUF but not the individual - HUF and individual are two separate entities and if individual co-parcener acquires the property the same cannot be treated as HUF property - Held that:- HUF has sold the property and received 1/6th share of consideration amounting to ₹ 20,00,000/- out of which contributed ₹ 15 lakhs towards purchase of new property and the remaining amount of ₹ 25 lakhs was contributed by the co-parcener for acquiring the new property. Both the HUF and co-parcener of the property have entered into a memorandum of understanding to transfer the property in the name of HUF after complete repayment of the loan, which was granted to the individual co-parcener Mr. G. Rama Murthy Setty, S/o Nageswara Rao. The assessee also declared the rental income in its hands and the loan is being repaid by the HUF. Co-parcener is one of equal shareholder of the HUF. Under the similar facts and circumstances, the coordinate bench of ITAT, Chennai in the case of Purnachand & Family (HUF) cited (2017 (3) TMI 1175 - ITAT CHENNAI) held that the property acquired in the name of Karta is entitled for the deduction u/s 54F of the Act. - Decided in favour of assessee

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• 2018 (2) TMI 868
  Addition on account of the assessee’s share of loss in the partnership firm while computing the book profit u/s 115JB - MAT - assessee is a non-banking finance company which is engaged in the business of trading of investment in shares and securities as well as rendering financial consultancy services - Held that:- The decision in the case of Metro Exporters Ltd. (2006 (7) TMI 353 - ITAT MUMBAI) was rendered on a similar issue wherein it was held that the case of the assessee not being the case of share of profit from a partnership firm in the hands of the assessee credited to the profit and loss account, no addition for the purpose of computation of total income of the assessee under section 115JA could be made with regard to the share of loss from the partnership firm. - Decided in favour of assessee. Addition on account of expenditure disallowed u/s 14A r.w.r. 8D while computing the book profit u/s 115JB - Held that:- The computation of the amount of expenditure relatable to exempt income of the assessee must be made independently by applying clause (f) of Explanation (1) under section 115JB of the Act where the assessee has not claimed such expenditure to be nil. Respectfully following the said decision in the case of Jayshree Tea Industries Ltd. (2014 (11) TMI 1169 - CALCUTTA HIGH COURT) we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the A.O. for computing the amount of expenditure relatable to the exempted income of the assessee independently by applying clause (f) of Explanation (1) under section 115JB of the Act without resorting to section 14A or Rule 8D - Decided partly in favour of assessee

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• 2018 (2) TMI 867
  Disallowance of loss on foreign exchange fluctuation - allowable busniss expenditure - Held that:- The issue of loss on foreign exchange fluctuation was examined by this Tribunal for assessment year 2012-13 in the assessee's own case. Placing reliance on the judgment of Apex Court in Woodward Governor India (P) Ltd. (2009 (4) TMI 4 - SUPREME COURT) this Tribunal found that the loss suffered by the assessee on foreign exchange fluctuation has to be allowed under Section 37(1) of the Act. We hold that the loss suffered by the assessee on foreign exchange fluctuation has to be allowed under Section 37(1) of the Act. - Decided in favour of assessee

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• 2018 (2) TMI 866
  Eligibility for claiming deduction u/s 80P - denial of claim as assessee failed to fulfil the principal objective of providing agricultural credits to members and it was engaged in the business of banking and only negligible percentage of loans disbursed by the assessee was for agricultural purposes - Held that:- An identical issue was considered by this Tribunal in the case of Edanad-Kannur Service Co-operative Bank Ltd [2018 (1) TMI 848 - ITAT COCHIN] wherein held that the Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only “Primary Agricultural Credit Society” not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license. That being the case, the assessing officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. The assessee had extended credit facilities only to the members. The Revenue does not have a case that such credit facilities are extended to the outsiders. Therefore the income generated in the instant case is only out of the transaction with the members. Deduction u/s. 80P is allowed only for the said income. The assessee had claimed deduction u/s. 80P only in respect of net income which is derived by extending credit facilities to the members. - Decided against revenue

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• 2018 (2) TMI 865
  Penalty u/s 271(1)(c) - addition relating to ESOP expenses - Held that:- It is noticed that the addition relating to ESOP expenses has been deleted and relevant findings are given in para 13 of the aforesaid referred to order [2016 (8) TMI 821 - ITAT DELHI]. Thus no merit in the appeal of the department. Accordingly, we confirm the view taken by the ld. CIT(A) for deleting the penalty u/s 271(1)(c) Transfer pricing adjustment u/s 92CA(3) - Held that:- We restore the issue relating to levy of penalty on account of TP adjustment to the file of the AO to be decided afresh in accordance with law after considering the outcome of the order to be passed on the quantum additions in accordance with the directions given in aforesaid referred to order [2016 (8) TMI 821 - ITAT DELHI]

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• 2018 (2) TMI 864
  Addition under the head salary - assessee was unable to prove the attendance of the employee through attendance register - Held that:- In the FY 2012-13, the assessee company has itself got registered with the PF authorities retrospectively from FY 2007-08 onwards and that in the present FY i.e. 2008-09 the liability towards PF has been remitted and for the relevant assessment year under consideration the assessee has produced before us the list of 21 employees for whom the PF has been remitted. This particular fact though stated before the CIT(A) have not been verified by the Ld. CIT(A), therefore, we are of the considered view that this fact of the assessee getting the registration under the PF Authorities and the fact of remitting the amount in the name of employees (21 nos.) need to be verified by the AO and thereafter, the AO has to adjudicate this issue afresh. Therefore, we set aside this issue back to the file of the AO for de novo adjudication. Addition of discrepancies in figures of bad debts, commission - Held that:- AO has made the disallowance merely on the basis that the Postal Department has returned the notice issued to them with the remarks that ‘Not Known’ which action we don’t countenance. We note that the Ld. CIT(A) has appreciated the facts in the right perspective and therefore rightly deleted the addition of ₹ 3,14,392/- since the bad debt is an allowable deduction u/s. 36(1)(vii). Once the assessee has written off the bad debt as irrecoverable in its books in the previous year in which claim of deduction is made, then the amount written off as irrecoverable in the accounts of the assessee for the previous year in question has to be allowed. We note that these debts were included in sales in earlier years and, therefore, relying on the decision of the Apex Court in the case of TRF Ltd. Vs. CIT (2010 (2) TMI 211 - SUPREME COURT), we confirm the order of Ld. CIT(A) and dismiss this ground of appeal of revenue. Addition of payment made to M/s. Todi Investors - allowable busniss expenses - Held that:- CIT(A) has allowed the claim of the assessee that the borrowed capital was used in its business either for the purchase or for day to day financial necessity. The genuinity of the borrowing and interest payment were verified and confirmed by the AO of the assessee from the AO of the Todi Investor i.e. ITO, Ward 31(4), Kolkata. In the light of the aforesaid facts without bringing any material to show that the assessee had used the borrowed capital for non-business purpose, merely on surmises and conjectures the assessee’s claim ought not to have been disallowed. Addition on the ground that the incentive and discount claimed by the assessee was not actually passed to the customers - non deduction of tds - Held that:- CIT(A) has taken note of the fact that assessee has admitted to have not deducted TDS on an amount of ₹ 1,29,563/- incentive payment made to dealers and, therefore, he restricted the disallowance to ₹ 1,29,563/-. Since the assessee has not pressed the disallowance restricted by the Ld. CIT(A) the same is confirmed and the Ld. CIT(A)’s action of deleting ₹ 2,24,773/- which is an allowable expenditure as per the ratio decidendi of the Hon’ble jurisdictional High Court in Ravi Marketing (P) Ltd. (2005 (1) TMI 20 - CALCUTTA High Court ), we confirm the order of Ld. CIT(A) Addition of advance from customers - Held that:- CIT(A) has clearly made a finding that the advances given to the assessee for purchase of vehicles is nothing but trade advances and not cash credits. The Ld. CIT(A) has found that for the advances given by the customers, the assessee has supplied the goods (vehicles) and, therefore, there is no justification for the AO to treat these cash advances as unexplained cash credits u/s. 68 and, therefore, the Ld. CIT(A) has rightly deleted the addition which does not require any interference Addition on the ground of registration expenses - Held that:- The registration of a vehicle has to be done as per the procedure prescribed by the Motor Vehicles Act governing the subject. The extra expenses other than registration fees applicable as per the Motor Vehicles Act of West Bengal is not an allowable expenditure unless the assessee is able to prove with cogent evidence as to the genuineness of the expenditure. In this case, since the assessee has been able to only file the affidavit of an employee Shri Rabindra Nath Bhattacharya which is self serving and without any other evidence to prove that the amount has been spent legally it cannot be allowed. Therefore, we reverse the order of Ld. CIT(A) and uphold the disallowance Addition invoking sec. 40(a)(ia) in respect to expenditure claimed by assessee on account of repair and maintenance - Held that:- Since the sums credited or paid or likely to be credited or paid to the account of the contractor did not exceed ₹ 50,000/- during the assessment year, the amount credited or paid was not liable for TDS u/s. 194C, CIT(A) has rightly deleted the disallowance made by the AO u/s. 40(a)(ia) of the Act

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• 2018 (2) TMI 863
  Claim of exemption u/s 54 - AO denied the claim because as per the agreement with the builder, the house was to be completed within 4 years, whereas, as per the provisions of section 54 of the Act, the house should have been constructed within 3 years from the date of receipt of the capital gains - Held that:- Various courts have held that if assessee invests the amount in purchase / construction of building within the stipulated period and the construction is in progress, then the benefits of exemptions, cannot be denied to the assessee. We have also gone through the provisions of sections 54 54F of the Act and we do not find any such distinction as drawn by the CIT(A) or any such dissimilarity in the wordings of the provisions from which any such conclusion can be drawn that u/s 54F of the Act the investment is to be considered and / or that u/s 54 of the Act, the house must be completed within the stipulated period of three years or that investment is not be considered. if agreement for purchase of residential flat is made and the entire amount is paid within three years from the date of sale, the basic requirement for claiming relief u/s 54(1) of the Act is to be taken as fulfilled. The issue, thus, is squarely covered in favour of the assessee by the various decisions of the Hon'ble High Court. Assessee did not deposit the amount of sale receipt in the capital gains account scheme before the due date for filing of return u/s 139(1) - Held that:- If the intention is not to retain cash but to invest in construction or any purchase in property and if such investment is made within the period stipulated therein, than section 54F(4) is not at all attracted. We may clarify here that provisions of section 54(2) are almost identically worded as in section 54F(4) of the Act. Admittedly, in this case, the assessee has invested the amount for the purchase / construction of the house within the stipulated period as also observed above while deciding the first issue. The assessee has proved such investment during the assessment proceedings and, thus, the assessee has complied with the requirement of substantive provisions and, thus, is entitled to the claim of exemption u/s 54F of the Act. In view of this, we direct the Assessing officer to grant exemption to the assessee as permissible under the provisions of section 54 - Assessee appeal allowed.

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• 2018 (2) TMI 862
  Interest disallowance - CIT-A granted relief to assessee - Held that:- Order passed by Ld CIT(A) on this issue does not call for any interference, since the own funds available with the assessee is more than the value of investments made in subsidiaries and further, there is commercial expediency in making investments, since the subsidiary companies are also said to be engaged in the similar line of business activity. Accordingly we uphold the order passed by Ld CIT(A) on this issue. Disallowance made u/s 40A(2)(b) - payments made to M/s ICICI Bank - rental payments made to M/s Customer Assets India P Ltd. - contention of the Ld A.R that both the assessee and M/s ICICI Bank Ltd are liable to pay tax at the same rate and hence the transaction is revenue neutral and no disallowance u/s 40A(2)(a) is called for - Held that:- There is merit in the submissions of the assessee. However, the above said claim of the assessee has not been examined by the tax authorities. Hence, for the limited purpose of verifying as to whether the assessee and M/s ICICI Bank Ltd are paying tax at same rate, i.e., whether the transaction is revenue neutral or not, we restore this issue to the file of the assessing officer. If he is satisfied that the impugned transactions are revenue neutral, we direct the AO not to make any disallowance u/s 40A(2)(a) of the Act. Disallowance relates to disallowance of 20% of rental expenses - A.R submitted that the assessee has submitted both the agreements before the AO, but the AO has made the disallowance without verifying the assessee’s claim - Held that:- We find force in the arguments of the Ld A.R. If the assessee is paying rent at the very same rate at which it was payable to the original lessor by M/s Customer Asia India, then the question of payment of excess rent does not arise. We notice that the AO has not examined the relevant agreements in this regard. Hence, for the limited purpose of verification of this claim of the assessee, we restore this issue to the file of the AO. If the AO is satisfied that there is no excess payment, then no disallowance out of rental expenditure is called for. If the AO is not satisfied, he may take appropriate decision in accordance with the law Disallowance of Provision of various expenses - Held that:- We notice that the AO did not examine the details furnished by the assessee in order to demonstrate that the concerned liability did not accrue as at the year end. Hence, we have no other option, but to accept the explanations of the assessee, as the same is in accordance with the accounting principles and requirements. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the expenses relating to provisions, listed above. Adhoc disallowance made out of Meeting and Seminar expenses - Held that:- assessee has furnished all the details before the AO. We further notice that the AO has made adhoc disallowance only on presumption that there may be personal element. It can be noticed that the AO has made the impugned disallowance on surmises and conjectures without showing how personal element is involved in meetings and seminars. Hence we do not find any justification in making adhoc disallowance of 20% from this expenditure. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the impugned disallowance. Adhoc disallowance of 20% made out of Staff welfare expenses - deduction u/s 10A eligibility - Held that:- We notice that the assessee has given details of expenses except for a sum of ₹ 19.95 lakhs. Hence, we are of the view that the disallowance, if any, should be restricted to that portion for which no detail was given. Accordingly we are of the view that no disallowance is called for from out of expenses for which details were given. We are also of the view that the disallowance @ 20% is also on the higher side. Accordingly we modify the order passed by Ld CIT(A) on this issue and direct the AO to restrict disallowance to 10% of ₹ 19.95 lakhs, for which details were not given. However, this disallowance shall be eligible for deduction u/s 10A of 10 the Act as held by Ld CIT(A), since the said decision has not been challenged by the revenue. Interest income and miscellaneous income - assessed under the head “Income from other sources” OR "business income" - Held that:- This issue requires fresh examination at the end of AO. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh in the light of decision rendered by Hon’ble Bombay High Court in the case of Green Infra Ltd (2017 (4) TMI 185 - BOMBAY HIGH COURT) Adjustment of profits of STP units against loss of non-STP units - Held that:- This issue has since been decided in favour of the assessee in the case of CIT Vs Black & Veatch Consulting P Ltd (2012 (4) TMI 450 - BOMBAY HIGH COURT ) and CIT Vs. Yokogawa India Ltd (2016 (12) TMI 881 - SUPREME COURT). Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow deduction u/s 10A of the Act without setting off of loss from non-STP units. Deduction claimed u/s 10A - deduction u/s 10A shall be allowed qua unit wise instead of aggregating profits/losses of all eligible units - Held that:- Hon’ble Bombay High Court in the case of Hindustan Unilever Ltd Vs. DCIT (2010 (4) TMI 206 - BOMBAY HIGH COURT) and CIT Vs. Yokogawa India Ltd (2016 (12) TMI 881 - SUPREME COURT). Accordingly we direct the AO to compute deduction u/s 10A qua unit-wise. Addition u/s 14A to confirm the interest expenditure allocated to STP units - Held that:- AO did not disallow the impugned amount of ₹ 36.93 lakhs as presumed by Ld CIT(A) and hence the question of invoking provisions of sec. 14A does not arise. What AO has done is to allocate a part of interest expenditure towards STP units, which in turn, will reduce the amount allowable u/s 10A of the Act. We have noticed that the manner of allocation of interest expenditure shall be on the basis of user of borrowed funds between STP units and non-STP units. We have also noticed that the details relating to user of borrowed funds have not been brought on record. Hence we are of the view that this issue requires fresh examination at the end of the AO. Allocation of expenses to STP units - Held that:- Neither the AO nor the Ld CIT(A) has examined the nature of expenses and its nexus between STP unit or non-STP unit. Under these set of facts, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine the nexus between the expenditure and the STP or non-STP units. Nature of legal and professional expenses - revenue or capital exp - Held that:- As the assessee did not furnish any detail relating to these expenses. Hence we have no other option but to confirm the disallowance. Setting off unabsorbed depreciation pertaining to previous years from the positive income of the units eligible for deduction u/s 10A - Held that:- his issue has been decided in favour of the assessee by Hon’ble Supreme Court in the case of CIT Vs. Yokogawa India Ltd (2016 (12) TMI 881 - SUPREME COURT) and Techno Tarp & Polymers P Ltd (2015 (12) TMI 909 - BOMBAY HIGH COURT). Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to compute deduction u/s 10A/10B without adjusting brought forward depreciation.

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• 2018 (2) TMI 861
  Reopening of assessment - addition on account of unexplained investment - addition on the basis of non-appearance of some of the persons before the AO - Held that:- Observation of CIT(A) indeed does not state that the sources are totally bogus and AO was in fact, asked to make further enquiries. Prima-facie the report of the Inspector does indicate that many of the people are existing and they have lands. Even though the Inspector seems to have issued summons to them to appear, the verification of the names of creditors with the names to whom summons were issued indicate that there are certain mismatches. For example, the first name ‘Bunga Padma Pedapatnam’ was not shown as creditor in the case of assessee. How summons could be issued to such person could not be examined. We are unable to understand how the conclusions were drawn just on the basis of non-appearance of some of the persons before the AO at Hyderabad, when ITI’s field enquiry revealed that they are existing and they have lands in their name. Some of the persons also reported to have been died by the time enquiries were conducted. Since so much time has lapsed and the affidavits furnished dt. 25- 10-2007 have not been disproved, the contentions of assessee in this regard has merit. Revenue wrongly relied on the reports in the case of company and on the order of CIT(A), Bhubaneswar and has not made any serious enquiry in assessee case to disprove the credits claimed. Thus direct the AO to accept the credits as such, as genuine. For reopening of assessment is to be placed on record that the contentions on the issue have merit. First of all, assessee has disclosed the investment and enclosed the confirmations to the original return which was accepted. There was a direction by Addl. CIT, Range-11 to reopen the assessment. Another offer (whose jurisdiction is not examined) has issued the notices, even though assessee was assessed earlier. The reasons for reopening were not communicated violating the directions of Hon'ble Supreme Court in the case of GKN Drive Shaft [2002 (11) TMI 7 - SUPREME Court] - Decided in favour of assessee

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• 2018 (2) TMI 860
  Reopening of assessment - Unexplained investment - guinity of credits - Held that:- Observation of CIT(A) does not state that the sources are totally bogus and AO was in fact, asked to make further enquiries. Since no enquiries worth were made, the order of CIT(A) Bhubaneswar cannot be relied on, for denying the genuineness of the credits. Since so much time has lapsed and the affidavits furnished dt. 25-10-2007 have not been disproved, the contentions of assessee in this regard has merit. Revenue wrongly relied on the reports in the case of company and on the order of CIT(A), Bhubaneswar and has not made any enquiry in assessee case to disprove the credits claimed. Thus direct the AO to accept the credits as such, as genuine. In fact, the borrowals are only to the extent of ₹ 13.50 lakhs. Addition of ₹ 22.30 lakhs, being the entire investment in that company without examining the other sources is not correct and hence deleted. For reopening of assessment in view of the acceptance of issue of credits on merit, it is to be placed on record that the contentions on the issue have merit. First of all, assessee has disclosed the investment and enclosed the confirmations to the original return which was accepted. There was a direction by Addl. CIT, Range-12 to reopen the assessment. Another offer (whose jurisdiction is not examined) has issued the notices, even though assessee was assessed earlier. The reasons for reopening were not communicated violating the directions of Hon'ble Supreme Court in the case of GKN Drive Shaft, [2002 (11) TMI 7 - SUPREME Court]. The contentions extracted in assessee counsel’s submissions and the case law relied, support the conclusion that the reopening itself is bad in law. - Decided in favour of assessee

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• 2018 (2) TMI 859
  Disallowance of commission expenses - bogus expenditure - CIT-A allowed the claim - Held that:- The services have been rendered for appellant’s business by the above said commission agents, the appellant has discharged its onus by filing all possible details including confirmations and TDS and successfully established that the genuine expenditure has been expended for the business purposes. On the other hand, the AO could not gather the positive evidence for the department and taken decision based on presumptions and not on the facts on record. It is not the case of AO that the commission has been paid to bogus parties which has come indirectly to the appellant through cash. In absence of any proof AO should not have given such finding. CIT(A) has passed detailed and reasoned order. - Decided in favour of assessee Addition invoking section 40A(3) - proof of payment made in cash exceeding ₹ 20000/- - Held that:- As we can see hotel and restaurant bills, no payment has been made more than 20,000/-. Ld. CIT(A) has given reasoned and detailed order and we find force in the observation of the ld. CIT(A) therefore, we dismiss this ground of appeal of revenue

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• 2018 (2) TMI 858
  Addition made u/s 69C - bogus nature of purchases made from suppliers and the parties were not found existing at the given addresses - estimation of profit - FAA restricted the addition @ 12.5% of the bogus purchases - Held that:- In such type of cases, there is no option but to estimate the profit which depends upon the subjective approach of an individual and the material facts available on record. In the present appeals, before this Tribunal, as mentioned earlier, the assessee is in the business of trading of Iron & Steel. AO received information from the Sales Tax Department that the assessee claimed to have made purchases from 15 bogus concerns, the names of whom are available in the assessment order and the Ld. Assessing Officer also made independent enquiries and then made the addition on account of bogus purchases. Even the notices issued u/s 133(6) to such parties were returned unserved. On further investigation by the Inspector of the Department, no such parties were found existing at the given addresses. In such a situation, the First Appellate Authority has taken a reasonable, which requires no interference. Contention of the Ld. counsel for the assessee, that GP of last ten year was not more than 4% is concerned, it depends upon the facts of the each case and probably in other years there may not be allegation of bogus purchases and each year is independent. No material was produced before this Tribunal contradicting the factual finding recorded in the impugned order. - Decided against assessee Addition u/s 68 - Held that:- Neither before the Ld. Commissioner of Income Tax (Appeal) nor before this Tribunal, no evidence was produced by the assessee in support of his claim. Thus, considering the factual matrix, no infirmity is found in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, this ground of the assessee is having no merit, therefore, dismissed.

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• 2018 (2) TMI 857
  Benefit of exemption u/s. 11 - AO held that the activities of the assessee falls within the limb of “any other objects of general public utility” - activities of the assessee are in the nature of trade, commerce or business, since they are in receipt of fee/cess from their activity - assessee engaged in the promotion and upliftment of the game of cricket in the State of Kerala and received ₹ 18.63 crores from BCCI as contribution - Held that:- Perusal of the objects of the Society that it is doing activities to promote the game of cricket in the State of Kerala and to arrange for coaches for the players, to train and maintain panel of umpires and to do such acts for the furtherance of the game of cricket. The income and the property of the assessee-Society shall be applied solely for the promotion of the objects of the Society and no portion of such income shall be paid or transferred directly or indirectly by way of dividend or otherwise. According to the CIT(A), this makes it amply clear that the Society has been established in order to popularize the game of cricket in the State of Kerala and provide and strengthen the players with competitive skills. It is, further, held by the CIT(A) that the source of funds for the relevant assessment year is only the grant received from the BCCI, and the interest earned on deposits of surplus amount (past year’s surplus). It cannot be stated that the assessee was doing any activity in the nature of business, trade or commerce. In other words, the assessee is not driven by any profit motive, on the contrary its primary objective is only to promote the game of cricket in the State of Kerala. Thus we hold that the activity of the assessee is not hit by the proviso to sub-section (15) of section 2 of the Act. The receipts from BCCI are not in the nature of trade, business or commerce and consequently the proviso to section 2(15) of the Act was not applicable.The assessee is an affiliate of the Board for Control of Cricket in India (BCCI in short) and is the body representing cricketing activities in Kerala. The assessee carries out various activities for the sole purpose of development of the game of cricket in Kerala. The assessee is also not providing any service to any trade, commerce or Industry. The assessee is not created for earning profit as its motive and object of the assessee is towards the uplifment of game of cricket in the state of Kerala. The assessee is not driven with any profit motive. we conclude that the assessee’s activities are charitable and is not hit by the proviso to section 2(15) of the Act and consequently the assessee is entitled for exemption under section 11 and 12 of the Act. - Decided in favour of assessee. Prepaid expenses disallowed - Held that:- No details were placed before the Assessing Officer or before the CIT(A) as regards the claim of pre-paid expenses of ₹ 18,55,697/-. Even before us, no details are provided and, hence, the disallowance made by the Income Tax authorities is confirmed. - Decided against assessee. Disallowance u/s. 40a(ia) - non deduction of tds on fee given to Coaches - Held that:- Admittedly, the above payments were made to the coaches without making any TDS, thereby violating the provisions of section 40(a) (ia) of the Act and, hence, we see no reason to interfere with the orders of the Income Tax authorities and we confirm the same.- Decided against assessee.

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• 2018 (2) TMI 856
  Taxability of capital gains in India - transfer of shares held in ‘AB’ India to its subsidiary company, ‘AB’ Singapore - eligibility of benefits of India-Mauritius tax treaty - benami transaction - Held that:- Neither was the Applicant acting on its own behalf in taking decisions like an independent company with a separate legal status in a foreign territory, regarding the investment in ‘AB’ India, though it was an Investment Holding company itself; and also that the manner and accounting followed in acquiring those shares only go to show that they were taken on its books on hindsight, at the directions of the Holding company. Only this can explain the various lacunae noticed, and as discussed above. It had only lent its name and was a benami of the ‘C’ Group. We are unable to rule that the shares were genuinely acquired by the Applicant, that it became the beneficial owner of those shares, and that the capital gains derived on the transfer of those shares to ‘AB’ Singapore was income in its hands. On the above facts, since the ‘C’ Group, comprising of two US companies had acquired the shares in ‘AB’ India from two other US companies, the gain having arisen in India in the hands of the ‘C’ Group of the US, was taxable in India as per the India-US DTAA. In the above factual matrix, the Applicant, “AB” Mauritius, would not be entitled to the benefits of the Agreement between the Government of Mauritius and the Government of the Republic of India for the avoidance of double taxation and prevention of fiscal evasion, with respect to taxes on income from capital gains. Applicability of section 195 - i.e. whether tax has to be withheld on the gains arising from the sale of shares - Held that:- Since in the instant case we have held that the income would be chargeable to tax in India, there would be a liability to withhold tax as required by this section. The cases cited by the Applicant are not applicable. Applicability of transfer pricing provisions - Held that:- As against the position in section 195 of the Act, there is no such requirement in section 92 that the transaction should result in income chargeable to tax under the Act. Hence, the transaction in the instant case of sale of shares in the Indian Company will have to be benchmarked as per the transfer pricing provisions contained in Chapter X of the Act. Transfer pricing provisions contained in section 92 to 92Fof the Act would apply to the proposed transaction. Application of section 115JB on the subject transaction - Held that:- As the Applicant as well Revenue agree that the provisions of the said section shall not be applicable to foreign companies, as per the retrospective amendment to section 115JB by Finance Act, 2016, and the clarification issued by the CBDT dated 24 September 2015. This being so, we have no reason to disagree. Thus the provisions of section 115JB shall not be applicable.

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• 2018 (2) TMI 855
  Taxability of capital gains in India - transfer of shares held in ‘AB’ International Private Limited (‘AB’ International) to a group company, ‘AB’ Singapore Pte - eligibility of benefits of India-Mauritius tax treaty - Held that:- Yes, the Applicant would be entitled to the benefits of the Agreement between the Government of Mauritius and the Government of the Republic of India for the avoidance of double taxation and prevention of fiscal evasion; and the income and capital gains arising to the Applicant from the proposed sale of shares in ‘AB’ International to a group company in Singapore would not be liable to tax in India in terms of Article 13 of the said Treaty. Applicability of section 195 - whether tax has to be withheld on the gains arising from the sale of shares? - Held that:- As held in GE Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] that in cases where there is no chargeability to tax under the provisions of the Act, as per expressions used in the section itself (unlike section 92), there will be no obligation to withhold tax. Respectfully following that decision, we are of the view that there is no obligation on the Applicant to withhold tax in this case, as we have held that the capital gains arising in the hands of the Applicant was not chargeable to tax in view of paragraph 4 of Article 13 of the India – Mauritius DTAC. Applicability of transfer pricing provisions - Held that:- As against the position in section 195 of the Act, there is no such requirement in section 92 that the transaction should result in income chargeable to tax under the Act for TP provisions to get attracted. Hence, the transaction in the instant case of sale of shares in ‘AB’ International will have to be benchmarked as per the transfer pricing provisions contained in Chapter X of the Act. Thus transfer pricing provisions contained in sections 92 to 92F of the Act would apply to the proposed transaction. Applicability of section 115JB on the subject transaction - Held that:- The Applicant as well Revenue agree that the provisions of the said section shall not be applicable to foreign companies, as per the retrospective amendment to section 115JB by Finance Act, 2016, and the clarification issued by the CBDT dated 24 September 2015.This being so, we have no reason to disagree. The provisions of section 115JB shall not be applicable.

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• Customs

• 2018 (2) TMI 854
  Condonation of delay in filing appeal - Refund claim - the decision in the case of MRF Ltd. Versus Commissioner of Customs, Chennai [2017 (5) TMI 1324 - CESTAT CHENNAI] contested - Held that: - Delay of 174 days in filing the appeal is condoned subject to payment of costs of ₹ 2,00,000/- to be deposited by the petitioner with the Cancer Institute (WIA), Adyar, Chennai, Tamilnadu within four weeks.

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• 2018 (2) TMI 853
  Interest u/s 27(a) of the Customs Act, 1962 - Iranian National - Baggage Rules - foreign currency - Smuggling - section 27 and 27(a) of the CA - Held that: - any person claiming refund of any duty or interest paid by him or borne by him may make an application in such form as may be prescribed for such refund to the named authority before the expiry of one year from the date of payment of such duty or interest. How that application should be made, what it should accompany and later on how it is to be dealt with, is set out in sub-section (2) of Section 27 of the Act - Section 27A sets out the obligation on delayed refund. That opens with the words “if any duty ordered to be refunded under sub-section (2) of Section 27 to an applicant is not refunded”. Merely because such a refund application has been considered on the basis that the power to confiscate and impose redemption fine and penalty would include within its purview a power to grant the refund of the excess amount, still for such delayed refund interest cannot be granted or awarded, absent a specific provision in the statute. Section 27 of the Act is not such a provision and that is erroneously relied upon. Once that provision together with Section 27A deals with specific cases of refund application claiming refund of duty or interest paid or borne by the applicant, then, that refund being sanctioned, delayed payment of that amount carries interest. Such is not the nature of the amount recovered from the petitioner nor borne by him. Once that is the admitted position, then, in the given facts and circumstances, we do not see how a claim for interest can be considered, leave alone granted. The petitioner may lay a claim for interest on receipt of such amount belatedly - petition dismissed.

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• 2018 (2) TMI 852
  Drawback u/s 75 of the CA 1962 - the second ingredient copper that goes into the manufacture of their products is procured indigenously from local producers. Since the products exported by the respondent contained copper, the respondent claimed drawback - powers conferred by Section 75(1A) of CA. Held that: - power u/s 75(1A) is to declare through a notification to be published in the official gazette that the material contained in a particular category of goods exported was imported. The concept of deemed import is to be applied in cases where the conditions stipulated by Section 75(1A) stands satisfied. It is on the basis of such a satisfaction that Ext. P7 notification has been issued. Ext. P7 notification is not under challenge. It is not in dispute that, copper is contained in the manufactured product of the respondent. Therefore, going by the terms of Ext. P7 the respondent is entitled to claim the benefit of Ext. P7. In other words, in terms of Ext. P7 the respondent is entitled to claim that the whole of the copper content in its manufactured product should be treated as “deemed to be imported material”, for the purpose of sub-section (1) of Section 75 of the Act. Availing of the Cenvat credit also does not disentitle the respondent from claiming the above benefit since there is not such restriction in Ext. P7. Whether it is the “all industry rates” stipulated by Rule 3 of the Rules or what is commonly called “the brand rates” to be fixed under Rule 6 of the Rules, that should apply in computing the rate of drawback applicable to the respondent? - Held that: - the rate applicable to the respondent would have to be determined separately under Rule 6 of the Rules. In Ext. P9, the second respondent has proceeded on the basis that fixation of the rate under Rule 6 should be only on the basis of the actual customs duty suffered by the product - the said reasoning is not sustainable in view of the clear wording in Ext. P7 notification. The rate of drawback applicable to the respondent’s product would have to be fixed in exercise of the powers under Rule 6 of the Rules. Appeal dismissed.

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• 2018 (2) TMI 851
  100% EOU - benefit of N/N. 53/97-Cus. dated 03.06.1997 - demand on the ground that cotton waste generated (32.10%) out of duty free imported raw cotton was over and above the permissible limit of 25% - Held that: - once the manufactured goods which are excisable are allowed to be sold in accordance with Exim Policy no demand of customs duty can be raised - In the present case cotton waste which is cleared to DTA is an excisable goods falling under Chapter heading 52.02 of CETA, 1985. The said clearance of waste is also permissible as per para 6.8(d) of the Exim Policy 2002-07 within the overall limit of 50% of the FOB value. Hence the present demand of duty is untenable under the above Notification - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 850
  Classification of imported goods - Thermistor, Thermistor-sub assembly/ assembly - appellant claimed the classification under CTH---85334030, Thermistors - Revenue objected to the said classification holding that these ‘Thermisters’ are used in automobiles and are accordingly to be classified under Chapter heading 84159000 as parts of auto air conditioners. Held that: - identical issue decided in appellant own case CC, Patparganj Versus M/s Subros Limited [2018 (1) TMI 1023 - CESTAT NEW DELHI], where it was held that The present case, Note 2(a) has relevance and the impugned order correctly following the said Section Note alongwith explanation given under HSN to classify the resistor under Chapter 85. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 849
  Suspension of CHA License - validity of proceedings - time limit as per CBLR 2013 - Regulation 20 of CBLR, 2013 - Held that: - In the present case, the said notice has been issued, admittedly, on 9.12.2016 only, much later than 90 days limit. We note that by now, it is well settled principle that has been upheld by the various High Courts as well as by this Tribunal that the time limit mentioned in the CBLR, 2013 are mandatory and are to be statutorily enforced in proceedings against Customs Broker. The present proceedings are not sustainable for violation of period of limitation as per CBLR 2013 - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 848
  Classification of import goods - Detention of goods - imported “Polyester Quilt cover” from China - Held that: - the “quilt covers” usually comes in pieces but in the instant case, it is in length. When the cloth is in 280 bales having the weight of 25900 Kgs., one cannot be identified as what is the length of quilt and its weight. Moreover, Apparel Export Promotion Council (AEPC) by its letter dated 1.04.2015 has declared the goods as “Upholstery Fabrics”. The AEPC has declared the imported bales as fabrics and not as “quilt covers” as there was no individual weight and/or length - imported items cannot be covered as “quilt covers” as there was no reference to composition, nature, structure to be identified as „quilt cover‟. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2018 (2) TMI 847
  E-auction - non-deposit of the security money and request for “adjustments” - withdrawal of LOIs - Held that:- The impugned letters of the NDMC withdrawing the LoIs is based on justifiable grounds, inter alia: violation of the conditions of the NIT by the Petitioners (such as, non-deposit of the security money and request for “adjustments” not provided for in the NIT, in the case of Honshu), and engaging in business relationships with black-listed companies in violation of the conditions of the NIT. No reason to interfere with the decisions of the NDMC. The decision to award a public contract is not premised merely on fulfillment of technical qualification and financial viability of the offer of a given bidder; the larger public interest is a necessary condition which invariably informs every decision of the executive authority or agency that is to award the contract. The vital public interest in ensuring that contracts are awarded to genuine bidders, and not to those who devise myriad devices to keep out true competition on one hand, and corner contracts- in this case, in relation to parking lots cannot be undermined. The NDMC thus had a vital interest in ensuring that the group of individuals, who adopted the stratagem of ensuing that they “rotated” the contracts, through different entities, which came to light in the financial linkage between them – as well as controls through the same set of people does not hamper the transparency of the bidding process. This linkage was also evident from other materials such as common email identities of some of the entities; common premises and, in some cases, common directors or individuals controlling the entities. Further, the cancellation of the letters of intent by NDMC and thereby rejecting the tender bids of the Petitioners cannot be accepted to be arbitrary and malafide as such decision is based on concrete grounds, and opportunity was afforded to the petitioners to negate the same and make their stance when Show Cause Notices to that end were sent to them by the NDMC, as mentioned previously.

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• Insolvency & Bankruptcy

• 2018 (2) TMI 885
  Corporate Insolvency Resolution Process - Time limit for completion of insolvency resolution process - extension of the CIRP more than 90 days after the completion of 180 days - Held that:- It is settled principle that the proviso cannot be torn apart from the main enactment nor can it be used to nullify by implication what enactment clearly says, nor set at naught the real object of main enactment, unless the words of proviso are such that it is its necessary effect. To support the view, a reference may be made to Maxwell on the “Interpretation of Statues” 10th Edition page 7 states thus “…if the choices is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility and should rather accept the holder construction based on the view that Parliament would legislate only for the purpose of bring about an effective result.” In view of the legal position stated above, the second objection raised by the Counsel for the Operational Creditor stands rejected. Therefore, this Authority is satisfied that the CIRP could not be completed during 180 days plus 30 days in this matter, so there is a requirement to grant extension of CIRP for a further period of sixty days. Hence, the CIRP period in relation to the Corporate Debtor, viz., M/s. Forward Shoes (India), private Limited, is hereby extended for a further period of 60 days w.e.f. 15.01.2018 onwards.

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• 2018 (2) TMI 884
  Corporate Insolvency Resolution Process - Held that:- We have seen the primary document, Annexure-R/1 which is entered between M/s. Blue Star Alloys Pvt. Ltd. and the respondent company. The respondent company has also relied on Annexure-R/5, the power of attorney given by M/s. Blue Star Alloys Pvt. Ltd., in favour of Shri Mohammed Saleem Shaikh wherein he was only an authorised representative to lift the scrap material from the respondent company and that too on behalf of M/s. Blue Star Alloys Pvt. Ltd. The same Mr. Mohammed Saleem Shaikh is representing the petitioner company in this petition. So, it is only a power of attorney of M/s. Blue Star Alloys Pvt. Ltd. The petitioner has no locus standi to initiate Insolvency Resolution Process against the respondent. The petitioner is not the operational creditor of the respondent. Therefore, the present petition is liable to be rejected.

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• Service Tax

• 2018 (2) TMI 845
  Penalty - Advertising Services - non-payment of tax within due dates - payment of tax dues within interest before issuance of SCN - Whether the CESTAT is correct in holding that penalty u/s 76 & 77 of the Service Tax Act is not leviable when part of the service tax due and the interest is paid before the issuance of show cause notice? Held that: - Perusal of the material on record discloses that interest payable on the belated payment of service tax was ₹ 12,63,324/- and that even prior to issuance of the show cause notice, assessee/respondent paid interest amount of ₹ 5,23,151/-. The remaining amount of ₹ 7,40,163/- had been paid on 03.11.2009 immediately on receipt of show cause notice dated 20.10.2009, i.e., within 13 days. As per Section 80 of the Finance Act, 1994, notwithstanding anything contained in the provisions of Section 77 or 1st proviso to Section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure. On belated payment, the assessee has substantiated reasonable cause for the failure in payment of service tax, within the stipulated time and hence, he is entitled to the benefit under Section 80 of the Finance Act. There is no manifest error is committed by the CESTAT, Madras - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 844
  Classification of taxable service - works contract service - effective date of tax liability - Held that: - the services rendered by the appellant, are of composite in nature involving transfer of goods as well as provision of service. As such, the tax liability on such contracts will arise only w.e.f. 1.6.2007 - the works contract service shall be liable to tax only w.e.f. 1.6.2007. Whether or not the appellant discharged service tax correctly by availing the composition scheme as per 2007 Rules? - Held that: - the appellants discharged service tax at the composition rates w.e.f. 1.6.2007 and claimed to have filed regular returns indicating the availment of such scheme by them - there is no tax liability on such work contract prior to 1.6.2007 - the tax liability fixed on an ongoing contract can arise only w.e.f. 1.6.2007 and the appellant can avail the composition scheme when such tax liability arises. Penalties imposed on the demands raised for the period 1.10.2009 to 30.09.2010 - interest - Held that: - Considering the question of interpretation and judicial pronouncements, which came much after the impugned order, we are inclined to set aside the penalties imposed on the appellant - Interest wherever applicable on delayed payment of service tax is statutorily requirement and has to be complied by the appellant. Appeal allowed in part.

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• 2018 (2) TMI 843
  Business Auxiliary Service - appellant entered into one such agreement with IGL for giving facility of selling CNG through their outlets; accounting and selling of the said CNG - Revenue entertained view that the considerations received by the appellant from IGL are in the nature of commission for rendering Business Auxiliary Service in terms of Section 65(19) of the Finance Act, 1994. Held that: - similar set of facts has been a subject matter of decisions of this Tribunal in the case of Indian Oil Corporation Versus CST, Delhi-II [2017 (12) TMI 20 - CESTAT NEW DELHI], where it was held that service tax cannot be demanded under the category of Business Auxiliary Service as the gas has been sold by IGL to IOCL on principal to principal basis. The transaction between IGL and the appellant are on principal to principal basis. The appellant has been prohibited from holding himself as an agent of IGL. The agreement categorically states that the same is on principal to principal basis. The service tax liability under BAS cannot be sustained against the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 842
  Renting of immovable property service - Revenue held a view that license agreement is for renting of immovable property service and service tax was liable to be paid w.e.f. 1.6.2007 - Held that: - the whole consideration is with reference to leasing out of commercial property and is rightly to be taxed as renting of immovable property w.e.f. 1.6.2007. The appellant pleaded that they have paid service tax on such liability - a portion of the consideration for such renting cannot be taxed prior to 1.6.2007 under a heading of maintenance or repair service. Service tax liability on IPR service - Held that: - The said transfer admittedly happened through a MOU dated 27.03.2000. The considerations were received periodically does not make the service as a continuing service - the taxable event happened prior to the tax entry was introduced in the law, no tax liability can be confirmed against the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 841
  Commercial Training or Coaching Service - Franchise Services - appellants are not paying service tax on the consideration received for sale of books and materials to the franchise - exemption under N/N. 12/2003 ST dated 20.06.2003 - whether or not the appellants are right in their claim for exemption under Notification No.12/2003? - Held that: - The said Notification provides for exemption of Service Tax for “so much of the value of all taxable services, as it is equal to the value of goods and materials sold by the service provider to the recipient of service from the Service Tax leviable therein under Section 66 of the Act, subject to the condition that there is documentary proof specifically indicating the value of said goods and materials. In the present case, one of the grounds for denial of exemption is lack of documentary evidence as required for the Notification - the claim of the appellant that they have sold the books and study materials as per the commercial invoices stands established. However, the total quantum of such sale can be verified with all the supporting evidence to determine the correct quantum of exemption available to the appellant. This can be done by the jurisdictional assessing authority. Similar dispute with reference to applicability of N/N. 12/2003 ST came-up before the Tribunal in the case of M/s Cerebral Learning Solutions Pvt Ltd [2013 (4) TMI 527 - CESTAT NEW DELHI], where it was held that the exemption Notification is clear and it admits no restrictive clauses - In the present case, on perusal of the contractual arrangement as well as sale invoices, it can be held that the claim of the appellant for exemption under N/N. 12/2003 cannot be denied. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 840
  Renting to Immovable Property Service - parking fees collected from various persons who used the premise of the appellant to park vehicles - Held that: - The parking facility availed by various visitors to the mall is not in furtherance of any business or commerce as the other party is not involved in any such activity. However, the owners of the shop/ and their employees are availing the parking facility for which monthly consideration is collected by the appellant along with the rent payable for the said shops and premises - the consideration attributable to such income is liable to be taxed. CENVAT credit - banking and other financial services availed by the appellant during the course of raising finance for the construction of the mall which is further used by the appellant for business or commerce - Held that: - we are in agreement to the appellant that the finance arrangement is attributable to the appellant’s creation of the mall which are regularly used for providing taxable output service. Such finance is with reference to the business of the appellant and will be covered as input service - credit allowed. Appeal allowed in part.

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• 2018 (2) TMI 839
  Banking and other Financial Services - Consulting Engineering Services - reverse charge mechanism - Section 66A of the Finance Act, 1994 - Held that: - It is a fact that the interpretation of applicability of reverse charge as per the Service Tax Rules, 1994 and thereafter Section 66A of the Act was subject matter of substantial litigation. Since in the present case full tax amount stands discharged we note that the circumstances of imposing penalty is not justifiable. This is a fit case for invoking provisions of Section 80 for waiver of penalty on reasonable cost for non-payment of tax. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 838
  Construction services - the applicants have referred to a decision of Hon’ble High Court of Allahabad pronounced in the case of M/s. Vishnu Saran And Co. Versus Union Of India And Another [2013 (2) TMI 848 - ALLAHABAD HIGH COURT] which covers the issue in question - Held that: - admittedly the said decision of the Hon’ble Allahabad High Court was not before the adjudicating authority and as such the applicability of the same could not be considered by the adjudicating authority - matter referred to the adjudicating authority for fresh decision in the light of the above judgement of the Hon’ble High Court - appeal allowed by way of remand.

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• 2018 (2) TMI 837
  Works Contract Service - composite contract - erection, commissioning or installation service - Held that: - the type of services rendered by the appellant has been clearly brought out by the adjudicating authority. He has recorded the finding that the services are in the nature of composite contracts which involve supply of material and rendering of services. Such contracts are rightly classifiable under works contract services which was included in the statute from 1.6.2007 - Hon’ble Supreme Court in the case of L & T Ltd. [2015 (8) TMI 749 (SC)] has held that composite work contract will be leviable to service tax only from the date of introduction of such services i.e. 1.6.2007 when Section 65 (105)(zzzza) was introduced. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 836
  Works contract - denial of composition scheme - N/N. 01/2006-ST dated 01.03.2006 - Held that: - the appellant has failed to show the evidence that during the impugned period, the whole of the turnover of the appellant pertains to new contracts therefore, benefit of composite scheme is not available to the appellant. As per N/N. 01/2006-ST dated 01.03.2006, the appellant is entitled for the benefit of said notification as the appellant has not availed any Cenvat credit on input/ input services. Therefore, the appellant is liable to pay service tax on 1/3rd of their gross turnover - Admittedly, in this case the appellant has not availed Cenvat credit on input/ input services, therefore, they are entitled for the benefit of N/N. 1/2006-ST. The appellant is liable to pay service tax on 33% of the total contract value received during the impugned period along with interest - penalty not imposable. Appeal allowed in part.

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• 2018 (2) TMI 835
  Demand - Collection in the name of service tax - Construction activity - works contract service - revenue contented that the terms of the contract clearly stipulate that Service Tax is included in the consideration - invocation of Section 73A (2) of FA - Held that: - the appellant did establish that they have not collected any amount in any manner representing Service Tax. The existence of clause in the contract to the effect that it will include Service Tax by itself will not give any inference that such Service Tax has been collected from the client. The checklist for RA bills makes it clear that the recipient is also not recognizing any payment in any manner which can be attributed Service Tax - the demand in terms of Section 73A (2) will not survive. Practice venue for the Common Wealth Games - commercial building or not? - Held that: - the practice venue for the Common Wealth Games cannot be considered as a commercial building. The said stadium or facility is mainly used for sports activities. This is not disputed - collection of fee and charges for use of the stadium does not make the stadium as a commercial building - the sports facility constructed by the appellant cannot be considered as a commercial construction liable to Service Tax. Demand of interest - construction of independent duplex houses - Held that: - having already collected and paid the tax, the appellants are not disputing on merit - Since the Tax liability may not stand there can be no question of interest payment on such non-existing tax liability. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 834
  Goods Transport Agency Service - benefit of reduced penalty u/s 78 - Held that: - For availing reduced penalty of 25%, the assessee has to deposit the adjudged tax with applicable interest along with 25% of the penalty imposed under Section 78, within 30 days of the receipt of adjudication order - Admittedly, in the present case, the time limit of 30 days has not been followed by the appellant/assessee. There is no provision to extend such time limit - benefit of reduced penalty not allowed. Penalty u/s 76 - Held that: - when penalty has already been imposed under Section 78, we hold that prior to amendment in Section 78 w.e.f. 10.05.2008, there is no bar in imposing penalty under both the sections - penalty u/s 76 upheld. Appeal allowed - decided in favor of Revenue.

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• 2018 (2) TMI 833
  Construction of complex service - whether or not the appellants have undertaken the taxable activities of construction of complex service. We have perused the impugned orders? - Held that: - the appellants constructed individual houses of less than 12 nos. and also G + 3 buildings, having multiple units, in large numbers. They have constructed housing units in such different multi-story buildings numbering 96, 48, etc. It is apparent that such complexes would be having common facilities. However, this requires categorical finding upon perusal of the approved layout by the competent authority as well as the blue print of the layout - matter requires re-examination. Tax liability - construction of road as well as construction of drainage system, water supply - Held that: - if these activities are independent of any residential complex or constructed in already existed residential complex, the same will not be categorized under “construction of complex service”. These aspects require factual finding by the Original Authority. Time limitation - penalties - Held that: - Admittedly, in the case of construction activities, there has been a substantial litigation on the applicability of the various tax entries - the case against the appellant has to be restricted to the normal period and there can be no penalty for such tax liability. The matter is remanded back to the Original Authority for a fresh decision - appeal allowed by way of remand.

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• 2018 (2) TMI 832
  Penalty - CENVAT credit - sister units - case of appellant is that inasmuch as, they were sharing their services with their own sister Unit, they were under a bonafide impression that they are entitled to the entire service tax so paid, even though, a part of the tax was being collected from their sister Unit - Held that: - in the absence of any specific allegations and evidence to show that the appellant was availing the credit with malafide intention, their plea of bonafide needs acceptance. Inasmuch as, both the Units were belonging to the same appellant, there could be a belief on their part that the service tax paid by them in respect of the entire services is available to the appellant as credit. As soon as the same was pointed out by Revenue, the appellant deposited the same alongwith interest - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 831
  Validity of SCN - Classification of services - appellants had provided certain services to various organizations on behalf of the main consultants, with whom the appellant had entered into the agreement for providing such service - whether the services provided by the appellant should be classifiable under “Management Consultancy Service” or “Business Auxiliary Service? - Held that: - it transpires that in case of Management or Business Consultant, there must be involvement two persons in the contract, one is the service provider and the other is the service recipient. On the contrary, in the case of “Business Auxiliary Service”, the said service involves more than two persons in order to perform such service. In the case in hand, the appellant claimed that it had provided services to different parties, mostly Government Organizations, parties situated within the country or on behalf of the main consultant. The Department has also not countered the submission of the appellant. Thus, it is evident that the appellant has provided this service to the third parties on behalf of the main consultant - the services provided by the appellant should merit classification under “Business Auxiliary Service” - cannot taxed under “Management Consultancy Service” - Demand cannot sustain on the ground of wrong classification of the service Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 830
  Refund claim - rejected on the ground that the same were filed beyond the prescribed time limit of 60 days provided under the N/N. 41/2007-ST dated 6.10.2007 - Held that: - Since the present refund application is in relation to availment of the exemption, and is no way, connected with the erroneous payment of service tax, the time limit provided under Section 11B of the Act is not applicable and the time frame prescribed in the Notification dated 6.10.2007 is strictly applicable for consideration of the refund application - Since the Notification dated 6.10.2007 clearly provides that refund application should be filed on a quarterly basis, within 60 days from the end of the relevant quarter, such time limit provided in the notification has to be strictly adhered to for consideration of the refund application. Tribunal in the case of K.S. Oils [2017 (3) TMI 422 - CESTAT NEW DELHI] has held that the time limit provided under N/N. 41/2007 dated 6.10.2007 is strictly applicable for consideration of refund of service tax - the refund claims filed in respect of quarter ending October to Dec. 2007 and Jan. to March 2008 are barred by limitation of time and thus, there is no infirmity in impugned order, in rejecting the refund claims filed by the appellant. With regard to the refund claim filed for the quarter ending April 2008 to June 2008, in terms of the notification dated 18.11.2008, the same is not barred by limitation of time, having been filed within six months from the relevant date. However, since this limitation aspect has not been dealt with by the authorities below, we are of the view that the matter should go back to the original authority for proper verification of the refund applications to ascertain, whether such applications were filed within the prescribed time limit prescribed under Notification No.32/2008-ST dated 18.11.2008. Appeal rejected in part and part matter on remand.

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• 2018 (2) TMI 829
  Consultancy Engineer Service - whether the appellant is liable to pay service tax for the amount received as professional fees for service rendered for a project outside India? - Held that: - the service was rendered by the appellant for a foreign project and the professional fees, though received in Indian currency, is not liable to levy of service tax being export of services - issue decided in favor of assessee in the case of INDIAN NATIONAL SHIPOWNERS' ASSOCIATION Versus UNION OF INDIA [2009 (3) TMI 29 - BOMBAY HIGH COURT]. Time limitation - Held that: - SCN dated 30.11.2006 has been issued invoking the extended period, which is not sustainable as the issue was interpretational and had travelled upto the Apex Court. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 828
  Maintainability of Appeal - validity of SCN - Held that: - SCN did not disclose the reason why there is a discrepancy between the financial statements and the tax returns. It was stated that the invoices are prima facie evidence to bring the value and services to the fold of tax. Further, show-cause notice does not provide any basis to hear the grievance of the Revenue today - Determination of the liability than the liability already determined by the adjudicating authority by his order dated 07/09/2012 is not entertainable without any basis - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 827
  Levy of service tax - Authorized Learning Centre (in short LCs) of the Sikkim Manipal University, Gangtok - fees collected was shared by LC - The department has brought the fee shared by the LCs in the clutches of the Service Tax - Held that: - N/N. 10/2003-S.T.dated 20.06.2003 provides the exemption from the service tax pertaining to any institutions or establishment, leading to issuance of any certificate or diploma or degree or educational qualification recognized by law for the time being in force. In the instant case, it is evident that fee is directly collected by the university who ultimately provides degree/diploma/certificate. The University is recognized by the Statute as well as by the UGC, DEC & AICTE. When, it is so, then the LCs have no control over the fee which is directly collected by the University who later shared with LCs. In these circumstances, no service tax is leviable in the hands of LCs. Appeal dismissed - decided against Revenue

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• 2018 (2) TMI 826
  Valuation - cable operator service - Revenue entertained a view that the appellants incurred much higher expenditure in receiving the signal from MSO whereas they have collected much lesser amount for the same service rendered by them to their employees - Held that: - The quantification of non-monetary consideration should be based on specific and tangible evidence - In the present case, there is no non-monetary consideration or any extra payment by the employees which can be added to the taxable value. The appellants received signals and distributed the same. There is no allegation that such consideration has been specifically under-stated - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 811
  Commercial or Industrial Construction Service - building constructed was not used for commercial purposes and the construction services rendered by appellant did not fall under the definition of Commercial or Industrial Construction Service - Held that: - Merely because there is some common facility for the benefit of members, it cannot be said that the building is for trade or commerce. The plan approved shows that building constructed is for training centre. Board vide its Circular No. 80/10/2004-ST clarified that the information as to purpose for which the building / construction is used has to be gathered from the plan approved by the concerned authorities. In the instant case, the plan approval shows that the building is approved for the use as training centre - the building is a Government building which is used for creating a facility of training, testing etc. for industrial units, in consonance with the Board circular, the building cannot be said to be a commercial building. The appellant succeeds on merit. It is not necessary to deal with the issue of limitation. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 788
  Liability of tax - sub-contractor - whether the appellant who has rendered services under the category of ‘commercial or industrial construction service’ as a sub contractor of M/s Paharpur Cooling Towers Ltd., as per the pleadings of the appellant, that the main contractor-Paharpur Cooling Towers Ltd., have discharged the service tax liability, whether the appellant is liable again on the same amount of turnover? Held that: - the facts of this case are squarely covered by the ruling in BCC Developers and Promoters Private Ltd. [2017 (9) TMI 156 - CESTAT NEW DELHI], where it was held that If the Service Tax has already been paid by the principal, then the same cannot be demanded again. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (2) TMI 825
  SSI Exemption - use of Brand name - denial of exemption on the ground that that affixing the name, logo and particulars of buyers like the FCI and State Governments amounts to affixing on the jute bags a brand name . Held that: - merely because the name of an institution is printed or embroidered on articles would not mean that they would become branded products. A brand name, in addition to the name or logo, would have to be given in order to attract excise duty. Also, mere affixing of the name of a manufacturer would not constitute a brand name. In the present case, the markings on the jute bags are not for the purpose of indicating a connection in the course of trade between the jute bag and some person using such name or mark. The markings are by compulsion of law only in order that Governmental authorities involved in the PDS may identify and segregate the aforesaid jute bags. This being the case, it is obvious that there is no brand name involved in the facts of the present cases. Appeal allowed - decided in favor of appellant

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• 2018 (2) TMI 824
  Valuation - clearance of manufactured computers after pre-loadingh with Application Software - misdeclaration of value - the decision in the case of Hewlett Packard India Sales (P) Ltd. Versus Commissioner of Central Excise, Pondicherry [2017 (7) TMI 406 - CESTAT CHENNAI] contested, where it was held that Deduction of software cost has to be on the basis of amount equivalent to market prices of the comparable product, that the cost of operating software was not the cost of CD alone but other costs such as royalty, warranty, after-sales service etc. are to be taken into account, that the intrinsic value of software is to be calculated by taking into account not only the purchase price but other costs, and that department charged that appellant overstated the value of software in undervalue the computer do not stand on firm ground. Held that: - the decision in the above case upheld - appeal dismissed.

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• 2018 (2) TMI 822
  CENVAT credit - input/input services - Rule 3 of CCR 2004 - whether the assessee has taken input service tax credit in respect of services which are utilised beyond the place of removal and the assessee has taken credit in respect of service utilised in respect of traded goods either partially or fully? Held that: - there was a clear debate and issue and the argument of the Revenue was that that order does not deal with all the issues leave alone conclude them. There was no concession that the earlier order covers the matter fully. Instead the Revenue argued extensively why benefit of the earlier order cannot be availed of by the assessee. In the circumstances, the Tribunal was required to discuss in details the facts, set out the submissions and analyse the materials in accordance with the settled legal principles. That is not done admittedly. The department's / revenue's appeal restored to the file of the Tribunal for a decision afresh on merits and in accordance with law.

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• 2018 (2) TMI 821
  Rectification of mistake - contravention of condition of N/N. 2/95 dated 4.1.1995 readwith EXIM Policy 1997-02 - Held that: - writ against show cause notice is not maintainable. There is no manifest error in the order impugned before us. Hence, the same is sustained - appeal dismissed as not maintainable.

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• 2018 (2) TMI 820
  Debonding of units - depreciation of capital goods - matter placed on remand - Held that: - Central Board of Excise and Customs Circulars right from 1994, which, in the opinion of the tribunal, allow depreciation of capital goods at the time of de-bonding. It gave illustration as to how the notifications were applied and in the cases of 100% EOU as well that scheme operates. Finally, the tribunal referred to the two notifications. Beyond all this and which had missed the attention of the adjudicating authority, the tribunal did not render any definite or final opinion. It is in these circumstances that the tribunal directed a remand on the second occasion. That is because the Revenue argued, according to the tribunal's opinion and prima facie contrary to its own circulars and notifications issued from time to time - That is why the assessee was also mandated to follow the prescribed procedure. If that has been fulfilled, then, the duty liability in terms of the Revenue scheme had to be worked out. We do not see how such an order, by which the tribunal did not allow the appeal of the assessee but remanded the matter to the adjudicating authority, results in a substantial question and arising for our consideration - Appeal dismissed.

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• 2018 (2) TMI 819
  Modvat Credit - Manufacture of Steam - Whether STEAM should not be treated as final product when it is not only manufactured through a conscious activity undertaken by the respondents but also requires several well defined steps to manufacture it? - Held that: - there is no dispute as to the process adopted by the assessee to manufacture Carbon Black from CBFS or even as to the generation of 'steam' - admittedly only "lean gases" or "off gases" were released in the manufacture of Carbon Black from CBFS by way of technological necessity. These gases contained Carbon Monoxide. Upon burning Carbon Monoxide content in 'off gases' / 'lean gases' to render that 'waste' or 'refuse' or 'by-product' fit for release in the atmosphere, heat was obtained. Further, it was heat and not "off gases" or "lean gases" thus produced that was used to produce 'steam' - 'steam' is a final product. Whether the benefit of Rule 57-D (1) of the erstwhile Central Excise Rules, 1944 should be extended to STEAM by treating it as a by-product or whether the restriction envisaged under Rule 57-C should be applied for availing credit on inputs used in or in relation to the manufacture of STEAM by treating it as a final product as STEAM is exempted from duty? - Whether for denial of credit under Rule 57-C of the erstwhile Central Excise Rules, 1944 the inputs must be directly linked to the final product? - Held that: - upon a co-joint reading of Rule 57C and Rule 57CC and Rule 57D it thus emerges that full input credit is to be availed by the assessee in cases covered under Rule 57D that is where the 'waste', 'refuse', 'by-product' or 'intermediate product' emerges but at the same time is chargeable to nil rate of duty or is exempt from payment of duty - 'off gases'/'lean gases' having been obtained by way of a technological necessity and their use to generate heat that was employed by the assessee to generate 'steam' from water rendered Rule 57C and 57CC wholly inapplicable to the facts of the present case despite the fact that steam was a final product - decided in favor of assessee. Reference allowed.

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• 2018 (2) TMI 818
  Whether any notice or opportunity of hearing is mandatory before passing an order of appropriation under Section 142(1)(a) of the Customs Act, 1962? Held that: - when the assessee is given opportunity of hearing in the determination of the amount and he is aware of the amount, which he has to pay under the Act but even then he fails to pay the same, no further notice is necessary and the said amount can always be appropriated from the amount, which is payable or due to him under the Act - it is not mandatory for the Department to issue any further notice before appropriating any amount under Section 142(1)(a) of the Act - appeal allowed.

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• 2018 (2) TMI 817
  Maintainability of appeal - Section 35 G of the Central Excise Act 1944 - Held that: - the impugned order of the CESTAT has the stamp of approval of the Delhi High Court and there is no new ground of attack in this appeal. Once the very impugned order has been affirmed by another High Court, we do not find any reason to interfere with the same in this appeal - appeal dismissed.

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• 2018 (2) TMI 816
  CENVAT credit - duty paying documents - Rule 9 of the Cenvat Credit Rules, 2004 - Held that: - rule 9 nowhere provides that Cenvat credit cannot be availed on the basis of photocopy of the documents especially when the respondents have not disputed the correctness of the contents of the photocopies of the invoices produced by the petitioner - From the perusal of the certificate issued by the Superintendent, Customs and Central Excise, Range-III, Division-I, Ghaziabad, it is evident that the excise duty has been duly paid by the petitioner - petition allowed.

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• 2018 (2) TMI 815
  Benefit of N/N. 6/2006-C.E., dated 1-3-2006 - electric wires and cables - non-fulfillment of conditions of notification - Whether the Tribunal was justified in holding that electric wires and cables falls under the heading 98.01 of Customs Tariff Act, 1975 and thus entitled for exemption under Notification No. 6/2006-C.E., dated 1-3-2006? - penalty. Held that: - wires and cables is only for project therefore, ultimately it has to be applied under the provisions of law with the ultimate object of the project and not for creating a hurdle in the creation of any industry - The man who has been assigned the work was authorised to certify and it was not fault of the assessee. It was fault of representative of the department being a part of Central Government, which is a creation of Government therefore, for omission on the part of the representative of Government, assessee cannot be penalised - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 814
  Penalty u/r 25 of CER - Whether Order passed by the learned Tribunal is sustainable when the Settlement Commission had settled the case of main notice? - Whether penalty under Rule 25 of the Central Excise Rules, 2002 is sustainable in case goods are not held liable to confiscation as there were no goods? - Held that: - it was conceded by the assessee before the authorities below that the invoices were issued without even supplying any goods. It was also recorded that the Settlement Commission did not admit the case of the appellant and also that Settlement Commission nowhere had held that their order would be extended in the case of the appellant as well. Penalty under Rule 25 of the Rules - Held that: - the Tribunal relying upon the judgment of this Court in V.K. Enterprises v. CCE, [2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT], had held that the person purporting to sell goods could not say that he was not concerned with selling of goods and had not contravened the provisions of Rule 25 of the Rules. In such cases, the penalty was held to be imposable - the Tribunal had correctly held that the quantum of penalty in the circumstances of the present case could not be faulted on the ground that it was excessive. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 813
  Benefit of N/N. 67/95 - denial on the ground that molasses has been consumed in the manufacture of non-excisable ethyl alcohol - Held that: - rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 812
  Clandestine removal - allegation is that unaccounted raw materials, i.e. MS ingots were received by the respondent from DSML - Held that: - the main documentary evidence in this case is the loose sheets recovered from the respondent factory and hard disc recovered from the computer installed in the premises of DSML. According to department, the Director of respondent company Shri Ashok Bohra has identified the handwriting of the loose sheets is that of Christopher. But the department thereafter has not chosen to record any statement of Christopher. No reason is seen stated for not recording his statement. The allegation is that unaccounted raw materials, i.e. MS ingots were received by the respondent from DSML. However, no documents have been unearthed from the premises of the respondent to show such unaccounted receipt of raw materials or unaccounted manufacture and clandestine clearance of finished products. The use of the electricity consumption or the accounts of finished products manufactured during the relevant period as recorded in the registers do not show any discrepancy. So also there is no evidence to support the transportation of unaccounted receipt of raw materials or the unaccounted / clandestine clearance of finished products. The main evidence which is the computer printout taken from the hard disc of the computer of DSML also does not relate to the accounts of the respondent. The department has no case that these in any manner deal with the accounts/ registers maintained by respondent. Demand set aside - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 810
  Clandestine manufacture and removal - Glazed vitrified Tiles - excesses and shortage of stock - case is mainly based on statements, which remins uncontroverted - Held that: - All these statements remain uncontroverted and the Appellant at no point of time has requested for cross-examination of these evidences. Besides, from the statement of the Director, it is concluded by the authorities below that M/s Labh Traders was a fictitious firm and created only for the purpose of clearance of vitrified tiles by the Appellant without payment of duty to various traders. On the issue of confiscation of excess quantity of 22,453 boxes of glazed vitrified tiles seized during the course of visit to the factory of the Appellant, the ld. Commissioner (Appeals) observed that even though the Director Shri Chetan K. Patel in his statement furnishing explanation on the excess stock submitted that approximately 10,000 boxes were in semi-finished condition and not reached at RG-1 stage, and certain quantity of tiles were rejected and returned by their customers, however failed to furnish any evidence in this regard before the authorities. Hence, the explanation furnished by the Director of the Appellant was not accepted and confiscation was directed. Considering the circumstances, shortage in the stock, clearance of the of vitrified tiles cleared clandestinely and seizure of the certain quantity of goods in the premises of the buyers, it can safely be inferred that excess quantity of Vitrified Tiles found in packed in boxes was not in semi finished condition but was kept to be cleared without payment of duty, hence liable for confiscation. Penalty on Director - Held that: - the authorities below had observed that the entire activity of manufacture and clearance of goods was carried out at the behest of Director and hence, the Director is liable to be subjected to personal penalty. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 809
  Benefit of N/N. 52/2003 and N/N. 22/2003 - raw materials, capital goods imported and locally procured - whether the inputs and capital goods used in R&D is eligible for exemption from duty and whether the input services used in R&D is eligible for Cenvat credit? Held that: - after the R&D process the samples of the final products undergo test and then are manufactured and exported by the appellants. It is very much clear that the R&D activities are directly linked to the process of manufacture of the final products of the appellants. The appellants being a 100% EOU, the finished products are exported. Therefore, the availment of concession of duty on inputs and capital goods and Cenvat credit on input services is fully in order. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 808
  CENVAT credit - Department was of the view that the credit on various services is not eligible as the services were rendered at various other places for which the corporate office had made payments - Held that: - When the corporate office of he appellant has taken input service distributor registration, the distribution of credit on ISD invoices is in accordance with law. Intention of having ISD registration is for distribution of credit when there are more than one unit. All the activities relating to the business of the assessees would qualify as input services - The services involves would sufficiently qualify as activities relating to the business of the manufacturer. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 807
  CENVAT credit - N/N. 29/2004-CE dated 09/07/2004 and N/N. 30/2004-CE dated 09/07/2004 - allegation raised in the SCN is that the appellants are not eligible for the credit available on the components, spares and accessories of capital goods, for the reason that the final products cleared by them are exempted from payment of duty - Held that: - identical issue decided in the case of The Commissioner of Central Excise Versus M/s. Same Duetz Fahr India (P) Ltd., Customs, Excise & Service Tax Appellate Tribunal [2017 (7) TMI 25 - MADRAS HIGH COURT], where it was held that India is a party to the WTO regime and, therefore, it is permissible for it to neutralise duties on inputs, whether in the form of goods or services - we see no difficulty in the Assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 806
  CENVAT credit - allegations against the appellants are that they have never purchased raw material from the various suppliers and issued bogus invoices to M/s Veekay Industries for availment of Cenvat credit - Held that: - Since, the department has not adduced any plausible evidence to substantiate its stand that the appellant did not supply the goods and only issued invoices, facilitating the buyer to avail Cenvat credit, such stand of department cannot be accepted in view of the documents/records submitted by the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 805
  CENVAT credit - rejection on the ground that the appellant had raised debit notes towards rejection of inputs upon the supplier of inputs - Held that: - the Appellant has disputed the demand on various reasons which cannot be gone into detail at this stage as the same requires the verification of records of the Appellant - the Appellant should be extended an opportunity to produce the relevant records which they wish to rely in their support - appeal allowed by way of remand.

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• 2018 (2) TMI 804
  CENVAT credit - supplementary invoices - Rule 9(i)(bb) of the CCR - ST paid on reverse charge basis - Held that: - Rule 9(i)(bb) is applicable to supplementary invoice, bill or challan issued by provider of output service and Rule 9(i)(e) is applicable, inter alia, to a person liable to pay service tax under Rule 2(1)(d) of Service Tax Rules, 1994 - It is apparent that the appellant is not service provider and therefore Rule 9(i)(bb) would not be applicable to them. The appellant is paying service tax on reverse charge basis in terms of Rule 2(1)(d) of Service Tax Rules, 1994 and therefore credit can be availed in terms of Rule 9(i)(e) of CCR - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 803
  Refund of the amount of interest paid on transfer/sale of assets to their joint venture unit - time limitation - Section 11B of the Central Excise Act, 1944 - Held that: - even if an amount is paid under mistake of law, the limitation under Section 11B is applicable - time limitation applicable to the facts of present case - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 802
  CENVAT credit - steel items used for fabrication of molasses tanks in appellant's factory - credit has been denied as the appellant had failed to produce certificate from the Range Superintendent of Medak unit to the effect that no credit has been availed at Medak unit. Held that: - Rule 9(5) of the Cenvat Credit Rules puts onus on the claimant to establish receipt and utilization of the material and to satisfy Central Excise officers regarding admissibility of credit - In the instant case, the documents on which credit has been availed are found to be distinctive in certain respects and the onus was on the appellant to claim credit after satisfying the authorities regarding receipt and utilization of the material - The appellant has merely produced a C.A. certificate and has failed to produce any evidence regarding non-availment of credit at their Medak unit before the lower authorities - credit rightly denied. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 801
  Refund of unutilized CENVAT credit - deemed export - Rule 5 of CCR - Held that: - the Hon’ble High Court of Gujarat in the case of A.I Dupont India Pvt. Ltd. [2014 (5) TMI 128 - GUJARAT HIGH COURT] is essentially on the issue of binding precedence, where it was held that on inputs used in manufacture of goods cleared by TDA units to 100% EOU refund of CENVAT credit would be available to the assessee and it would not be denied on the ground that it was the case of deemed export and refund could be granted only in case of physical export - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 800
  Demand of interest and penalty - demand has been made without raising any demand under Section 11A of CEA - Held that: - no demand of interest and imposition of penalty can be made unless there is a determination of duty under Section 11A of the Central Excise Act - Since in the instant case, there is no demand of duty and determination u/s 11A of the CEA, the demand of interest and imposition of penalty cannot sustain - appeal allowed.

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• 2018 (2) TMI 799
  Extended period of limitation - CENVAT credit - stocks at the time of surrender of their licence - Held that: - the appellant calculated the amount wrongly and reversed the lower amount. This very act of the appellant is amounting to mis-declaration and suppression with intention to evade duty - extended period of limitation rightly invoked - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 798
  Rectification of mistake - applicant pointed out that he could not appear when the matter was called in respect of the impugned order and therefore, could not inform the Court that in the appellant’s own case, this Tribunal has vide order No.A/772/C-IV/WZB/2006/WMB dated 09/01/2006 allowed the benefit of similar items - Held that: - for the purpose of limitation, the appellant could have held a bonafide belief in view of the Tribunal’s order in their own case dated 09/01/2006. The said bonafide belief could not have continued after Rule 2 (k) of Cenvat Credit Rules, 2004 was amended on 07/07/2009 when such goods were specifically excluded from the definition of the capital goods - impugned order modified as required - ROM application allowed.

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• 2018 (2) TMI 797
  Rectification of mistake - the order dated 24/08/2017 records that no evidence has been given in support of the assertion that the appellant had not utilised the credit - Held that: - the liability of interest cannot be set aside, even if the appellants have not utilised the credit. It is seen that the show-cause notice does not specifically say that the appellants have mis-declared the price or committed fraud, etc. The appellant had taken 14 times and the consumption cannot be a clerical mistake which is apparent from the number of appellants have taken credit wrongly - ROM application dismissed.

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• 2018 (2) TMI 796
  Valuation - fully manufactured motor vehicle cleared by the job worker - Revenue held a view that the job worker having cleared fully manufactured motor vehicle on behalf of the appellant to depot of the appellant for further sale, the correct valuation should be the transaction value of such motor vehicle and not the cost plus processing charge as adopted by the job worker. Held that: - Admittedly, the manufacture of full vehicle is not carried up by the appellant in their premises - The duty liability and correct valuation on such goods rest with the actual manufacturer. There is no job work arrangement in terms of Central Excise provisions to link up these two (appellant and job worker) for Central Excise provisions including the differential duty. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 795
  Clandestine removal - manufacturer of Goa Gutka or bonafide purchaser of the goods - Held that: - it is established that the respondent have purchased the goods in the market bonafidely, therefore no duty can be demanded from the respondent who is not a manufacturer of Goa Gutka. Since he is the bonafide buyer of the goods, the goods is also not liable to confiscation. Irrespective of the fact whether the subject goods were cleared on payment of duty or otherwise, the duty demand proposed on the respondent being a non-manufacturer and merely a trader, not liable for payment of Excise duty and consequential punishment - Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 794
  CENVAT credit - whether the appellant is entitled for CENVAT credit in respect of input services provided at job worker premises? - Held that: - though the service was provided in the premises of job worker but the bill was raised in the name of appellant only expenses of such services was born by the appellant. Merely because the service was provided in the premises of job worker it cannot be said that the service was not received by the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 793
  CENVAT credit - denial on the ground that the CENVAT documents have discrepancy and some information is not appearing on the bills/challan - Held that: - only due to reason some information not appearing in the invoices/challan CENVAT credit cannot be denied - There is no hard and fast rule that unless all the information available on the document such as bill, challan etc. then only credit can be allowed. Matter remanded to the Adjudicating Authority for passing a fresh order after consideration the above aspects without going into the small discrepancies pointed out in the show-cause notice and adjudication order in the cenvatable documents - appeal allowed by way of remand.

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• 2018 (2) TMI 792
  Manufacture - Appellants carried out fabrication activity across all parts of the country and offered complete structure and execution and installation of the structure - whether the activity amounts to manufacture? - Held that: - In the present case, the appellants have no workshop to carry out the fabrication like cutting, welding, grinding etc. The appellants gave the work to a sub-contractor who assembles structure at the customer site. The structure constructed at the customer’s site has no marketability except to the customer concern. Similar view was observed by the Hon’ble Bombay High Court in the case of Shapoorji Pallonji [2005 (4) TMI 91 - HIGH COURT OF JUDICATURE AT BOMBAY] where it was observed that the cutting / drilling / welding steel channels angles, etc. and thereafter erecting, them does not amounts to excisable production. Appeal allowed - decided in favor of appellant

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• 2018 (2) TMI 791
  Difference in the stock vis-a-vis RG-I - Revenue submits that 2% norm is prescribed and it will have to be followed. However, he accepts that somewhere the loss was below 2% - Held that: - it appears that 2% limit prescribed by the Board is on estimate basis and it is a guiding factor. By looking the chart in another year, the loss was somewhere below the 1%. If the average will be taken it will go on minor side. Specially when the assessee is a Public Sector Undertaking and no individual interest is involved - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 790
  Valuation - includibility - freight element - Held that: - the goods were cleared on ex factory basis and no central excise duty has been paid on the freight element - From the order of the adjudicating authority, it is evident that it has applied the Board circular dated 23.8.2007 incorrectly because on one hand there is a finding given that the goods have been cleared on ex factory basis and on the other it has proceeded to examine the three conditions in the said circular which relate only where the place of removal is not the factory gate. Since the facts need to be amply clear and accordingly the law has to be applied, the order of the Commissioner (Appeals) remanding the matter to the adjudicating authority is modified to the extent that the adjudicating authority would bring out the relevant facts clearly and pass a fresh order in accordance with law - appeal allowed by way of remand.

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• 2018 (2) TMI 789
  CENVAT credit - Outdoor Catering Services - Held that: - there is no dispute the “Outdoor Catering Services” is exclusively used for the employee of the company - “Outdoor Catering Services” for personal use, accordingly clearly get covered under the exclusion provided under the Clause (C) - credit not allowed - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 787
  Area Based Exemption - Benefit of N/N. 50/03-CE dated 10.6.2003 - denial of duty exemption on the ground that unit No.III is just an addition to the existing Unit and it cannot be considered as an independent unit - circular No.939/29/2010-CX dated 22.12.2010 - Whether in the facts and circumstances of the case, the benefit of Notification No.50/03 dated 10.6.2003 can be denied to the unit No.III on the ground that the unit No.III was not an independent industrial unit but an addition of unit? Held that: - the appellant has started their production in different units in the same factory having different inputs for manufacturing of their final products and final products are different. All the units are independent as they are having their own factory building, and the plant and machinery, employees, bank accounts, etc. separately. Whether all the units located in the same factory can be treated a separate unit in terms of the N/N. 50/03-CE dated 10.6.2003? - Held that: - it is clear that the factory and unit are two different connotations and a factory can have three different industrial units. The Revenue has heavily relied on the CBEC circular No.939/29/2010-CX dated 20.10.2010. In that circular where the industrial unit manufacturer a new product by installing fresh plant, machinery or capital goods after the cut-off date, the said circular will apply. Admittedly, the appellant has started their production before the cut-off date, therefore the said circular has no relevance. The appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances and are manufacturing different products, therefore, all the three units cannot be considered as one unit. In fact in the factory, there are three different units, therefore the Unit No.III is separate from Unit No.I is entitled for exemption under N/N. 50/03-CE. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 786
  CENVAT credit - certain items falling under Chapters 72 and 73 of the Tariff - manufacturer of sugar, molasses etc. - Held that: - the items in question have been used in fabrication of plant and machinery and as such they are eligible for input credit as defined in Rule 2(k) read with Rule 2(a)(A) of CCR 2004 - similar view was taken by the Hon'ble Madras High Court in Dalmia Cements Bharat Ltd vs. CCE, Chennai [2015 (8) TMI 1336 - MADRAS HIGH COURT], where it was held that The benefit of Rule 57Q is available, on the duty paid on the capital goods used by the manufacturer in his factory and for utilising the credit so allowed towards payment of duty of excise leviable on the final products. The appellant shall be entitled to take back the Cenvat Credit they have reversed earlier - Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 785
  Clandestine removal - excesses of stock - molasses found in excess than the recorded balance in RG-1 Register - Held that: - Admittedly the molasses quantum is dependent upon the foam which might appear in the said storing tanks on account of whether conditions and various other factors - Further there is no evidence on record to show that such excess molasses, which are under the control and supervision of State Excise Authorities were meant for clandestine removal - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 784
  Whether the show cause notice have been validly issued, invoking the extended period of limitation? Held that: - there is no allegation in the SCN in the nature of concealment of facts or recording of wrong or misleading information in the records or books of accounts or any other contumacious conduct on the part of the appellant - it appeared that the assessee have taken the credit without any ulterior motive or with intention to evade payment of tax - Under these facts and circumstances, the extended period of limitation is not invokable and accordingly, the SCN is not tenable. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 783
  N/N. 149/86 dated 01.03.1986 and 98/88 dated 01.03.88 - extended period of limitation - validity of SCN - Held that: - As the activity of the respondent was in the knowledge of the Revenue, nobody has stopped the Revenue to issue SCN within time - As the activity of the respondent came to the knowledge of the department in May 1987 itself and respondent was asked to file requisite declaration under N/N. 149/86, in that circumstance, learned adjudicating authority has rightly held the demand is barred by limitation - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 782
  Refund claim of the excess duty paid - denial on the ground of unjust enrichment - Held that: - the duty paid by the appellant has not been borne by the user of the vehicle - the appellant has been able to pass bar of unjust enrichment therefore the appellant is entitled to claim refund of duty paid by them - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 781
  Liability of Central Excise Duty - proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944 - electricity consumed by the appellant during the period from 2007-08 to 2011-12 - Held that: - it was settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 780
  Maintainability of appeal - monetary limit involved in appeal - Held that: - In view of Second proviso to Section 35B (1), this Tribunal has discretion to refuse of to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/-(before 6/8/2014) and ₹ 2 Lakhs. The duty amount involved in the case is ₹ 10,219/- - appeal is dismissed only on the ground that amount is below threshold limit of ₹ 50,000/- without going into merit of the case - appeal dismissed.

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• 2018 (2) TMI 779
  Liability of duty - dummy packs - classification - Held that: - the dummy packs were not marketable, since they were not capable of being bought and sold in the market because they were advertising material of the assessee - dummy packs did not attract Central Excise duty. Since the question of dutiability does not arise, the question of classification of the said goods under chapter 48 and 49 does not arise. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 778
  CENVAT credit - whether Cenvat credit have been rightly denied on the transportation expenses of employees/workers engaged, through the manpower service provider? - Held that: - the transport charges raised by the service provider for manpower service is related to the transport/conveyance expenses of the workers provided to the appellant manufacturer. Such transport expenses are incidental to providing of manpower service. The transport expenses incurred are nothing but part of the amount paid for manpower service. Accordingly, the appellant is entitled to Cenvat credit for transportation of manpower also being incidental to providing of manpower service. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 777
  Clandestine removal - - Held that: - Indubitably, the appellants were in error in not including the money value of the free issue materials and not amortizing the money value of tools issued free of cost by M/s. FIL. Nonetheless, it clearly emerges that their gaffe was only on account of procedural misunderstanding and misinterpretation of law. There is no allegation that appellants had been indulging in clandestine removal of goods without payment of duty. Penalty - Held that: - there is a case for leniency in the matter of imposition of penalties, for which reason, we set aside the imposition of penalties under section 11AC of the Central Excise Act, 1944 and under Rule 25 of Cenvat Credit Rules, 2002/Rule 15 of the CCR 2004 - interest upheld. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 776
  100% EOU - CENVAT credit - outdoor catering service - rent-a-cab service - accident insurance - Held that: - any activity that has some connection with the business, whether directly or indirectly, would be entitled to availment of CENVAT credit - ‘outdoor catering service’ is a statutory requirement in factories, while ‘rent-a-cab service’ is utilized for picking up and dropping of employees, and ‘accident insurance’ is for coverage of contingencies at the workplace - credit allowed on all services - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 775
  CENVAT credit - storage and warehousing services abroad, rendered to the appellant for storing the finished goods abroad - whether the appellant herein is eligible to avail CENVAT credit of service tax paid on warehousing services performed outside the country (post export services)? - Held that: - the goods are already exported from India and on landing abroad they are stored in the warehouses situated in such countries where the goods are despatched. It is an unacceptable proposition that the place of removal in the case in hand shifts to the warehouse situated aboard. The 1st Appellate Authority has correctly held that the warehousing services are availed not only after the finished goods are fully manufactured and cleared from the place of removal but after it reaches its country of destination. Hence by no stretch of imagination, the impugned service would fit into the definition of “input service”. Credit cannot be allowed - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 774
  Classification of goods - carpets/floor coverings - car mats, made up of felt - predominance test - whether classified under Chapter Sub-heading No.5703.20 of the CETA or under under Chapter Sub-heading No.5703.90? - Held that: - the mere fact that the surface of the carpet is polypropylene fibre, it does not cease to be jute carpets. The argument of Revenue on the basis of surface or essentially test was held to be erroneous. - Rule 3 of the Rules of interpretation of the schedule to the Act should be applied and by applying the said Rule the goods manufactured by the respondent company - Champdany Industries Ltd., should be covered under the heading ‘others’. Hon'ble Supreme Court in M/s Champadany Industries Ltd. [2009 (9) TMI 7 - SUPREME COURT OF INDIA] have been followed by coordinate Bench of this Tribunal in UNI Products India Ltd. versus CCE [2009 (9) TMI 6 - SUPREME COURT OF INDIA], wherein under similar facts and circumstances of classification of jute carpets having content of about 75% to 80% of jute and rest of other textile material. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (2) TMI 773
  Input tax credit - Section 10(3) of the KVAT Act, 2003 - Held that: - the controversy involved in these writ petitions is squarely covered by a decision of this Court in Kirloskar Electric Co. Ltd. And Others Versus The State of Karnataka [2018 (2) TMI 524 - KARNATAKA HIGH COURT], where it was held that the machinery provisions cannot be allowed to override and defeat the substantive claim of the Input Tax Credits under Section 10(3) of the KVAT Act, 2003, which without any restriction of the time frame, allowed such deduction or credit of the ITC against the OPT liability of the Dealer in question - petition allowed.

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• 2018 (2) TMI 772
  Validity of assessment order - APVAT act, 2005 - appeal rejected on the ground that the pre-deposit condition was not satisfied - main grievance of the petitioner is two fold, viz., (a) that the original order of assessment was without jurisdiction, as it included the turnover relating to works executed in other States; and (b) that in any case, the decision of this Court in Ankamma Trading Company [2011 (2) TMI 1254 - Andhra Pradesh High Court] has been suspended by the Supreme Court. Held that: - the Division Bench came to the conclusion in Ankamma Trading Company that even the payment of admitted tax and 12.5% of the disputed tax beyond the period of 60 days, from the date of receipt of a copy of the order of assessment, would disable the appellate authority from admitting the appeal and that the prescription was mandatory and not directory - it is contended by the learned counsel for the petitioner that as on date, the decision in Ankamma Trading Company cannot be taken to be a binding precedent and that it is always open to this Court to be allowed to be persuaded to come to a different conclusion. The contention of petitioner cannot be agreed. On first principles, there cannot normally be an interim suspension of a principle of law enunciated in a decision. At the most, the interim relief granted by the Supreme Court in the Special Leave Petition filed by the Ideal Industrial Explosives Limited, can be taken to be an interim suspension of the consequences that flowed out of the judgment of this Court. By way of an interim order, the ratio decidendi of a judgment cannot be kept in suspended animation or in a state of limbo. Therefore, we do not agree with the contention that the ratio of the decision in Ankamma Trading Company stands suspended. Whether it will be open to an assessee to challenge the original order of assessment, after getting their statutory appeal rejected for failure to comply with the statutory prescription? - Held that: - In cases where an assessee chooses to challenge the original order of assessment, after his appeal is rejected for non-compliance with the statutory prescription, this Court will also see whether the assessee is guilty of delay and laches. In other words, the assessee falling under this category should satisfy this Court not only on the parameters of violation of natural justice or lack of jurisdiction but also on the parameters of delay and laches. Wherever it is found by this Court that an assessee has come up with a writ petition at the earliest point of time, without being guilty of delay and laches, this Court can certainly examine whether the original order of assessment was vitiated by a violation of the principles of natural justice or lack of jurisdiction on the part of the assessing authority. The second objection to the original order of assessment is that in respect of the works carried out outside the State, the 2nd respondent had no jurisdiction. But in support of this contention the petitioner ought to have produced pending agreement copies. The other contention that the works executed by the petitioner for AMR Constructions and Sushee Infratech Private Limited are in the nature of civil contracts for removal of overburden and that therefore the receipts cannot be considered as hire charges, is an argument that does not go to the root of the issue of jurisdiction. Petition dismissed.

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• Indian Laws

• 2018 (2) TMI 846
  Whether the petitioner was justified in holding the amount payable to the respondent after clearing its dues in apprehension of any tax liability that may have any reason against the company? Held that: - the witness of the respondent had admitted that the tax liability had arisen because of a typographical error of the staff of the respondent in documents relating to the transaction and hence for fault of the respondent, the petitioners have to write various letters to release such amount which was not released and hence the interest on late payment of such dues cannot be denied. Thus there is no infirmity in the award of the learned arbitral tribunal in granting an interest on ₹ 1,88,08,233/- to the respondent herein. The award is fully justified - petition dismissed.

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• 2018 (2) TMI 823
  Transfer of license in favor of partnership firm - manufacture of liquor - payment of the requisite transfer fees and damages for short lifting of liquor - Held that: - this Court is satisfied that the petitioner cannot lay a challenge to the transfer of licence in favour of the partnership firm in accordance with the partnership deed dated 1st April, 2002, even though such an application was filed by the said firm belatedly in the year 2013, since the respondent–firm undertook and paid the requisite transfer fees and other due charges of the Respondent–Excise Department. The said transfer has already been effected way back in the year 2014 by the impugned endorsement and the same has been upheld by the Tribunal. Petition dismissed - decided against petitioner.

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