TMI Tax Updates - e-Newsletter
February 2, 2018

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

TMI SMS

• Budget 2018-19, budget speech, news, updates with Notifications and Finance Bill 2018 - Clause by Clause

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Articles

1. BUDGETARY CHANGES IN CUSTOMS – PART I

   By: DR.MARIAPPAN GOVINDARAJAN

2. Budget 2018 - Direct tax - Birds eye view

   By: CSSwati Rawat

3. Budget 2018 - ONE TO ALL

   By: CSSwati Rawat

4. Major Takeaways - Budget 2018

   By: CSSwati Rawat

5. Union Budget 2018 Highlights

   By: CSSwati Rawat

6. RESERVE UNIQUE NAME

   By: DR.MARIAPPAN GOVINDARAJAN

7. Clarification regarding applicability of GST on Polybutylene feedstock and Liquefied Petroleum Gas retained for the manufacture of Poly Iso Butylene and Propylene or Di-butyl para Cresol

   By: CASanjay Kumawat

News

1. Memorandum Explaining the Provisions in The Finance Bill, 2018

2. INFO GRAPHIC GALLERY BUDGET 2018-2019

3. Explanatory memorandum to Notifications Customs and Central Excise.

4. Tax incentives for International Financial Services centre

5. Incentive For Real Estate: No Adjustment To Be Made If The Circle Rate Value Does Not Exceed 5% Of The Consideration

6. Social Welfare Surcharge, On Imported Goods, To Provide For Social Welfare Schemes Of The Government

7. Benefits Under Section 80-Jjaa Of The Income-Tax Act Extended To Footwear And Leather Industry To Help Employment Generation

8. Stricter controls over small cash flow by companies;

9. Central board of excise and customs [CBEC] to be renamed central board of indirect taxes and customs (CBIC).

10. Changes Proposed To The Customs Act To Improve Ease Of Doing Business By Smoothening Dispute Resolution Process And Reducing Litigation

11. To Incentivise Domestic Value Addition And Make In India, Customs Duty Increased On Mobile Phones And Tv Parts

12. Amendments in the income-tax act proposed to notify a new scheme for assessment in electronic mode.

13. Rationalisation of long term capital gains proposed

14. SEBI to consider mandating corporates to meet one-fourth financing from bond market

15. Budgetary support to Defence sector to remain government’s priority

16. 372 specific business reform actions being implemented through states

17. Total expenditure for the fiscal year 2018-19 is estimated to be over ₹ 24.42 lakh crore

18. More than 1.26 Crore accounts opened across the country under Sukanya Samriddhi Account scheme

19. Allocation for SCs And STs increased

20. Relief to Senior Citizens: Exemption of Interest Income on deposits increased to ₹ 50,000

21. Relief to salaried taxpayers: standard deduction of ₹ 40,000 allowed in lieu of present exemptions

22. Ayushman Bharat for a new India -2022, announced

23. “Education will be treated holistically from pre-nursery to class XII”, says Finance Minister

24. Government to move ahead with reforms for building institutions and improving public service delivery

25. A record one Lakh Crore Rupees expected to be generated through disinvestment during the period 2017-18

26. 99% MSMEs to gain by Tax Incentives provided in General Budget 2018-19

27. MSMEs provided ₹ 3794 Crore for Credit Support & Innovation

28. Railway’s Capex for the year 2018-19 Pegged at ₹ 1,48,528 Crore

29. Infrastructure Allocation enhanced To ₹ 5.97 Lakh Crore: Transport Sector Gets An All Time High Allocation

30. Launch of Gobar-Dhan Scheme announced to improve lives of villagers

31. Rs.14.34 Lakh Crore to be spent in 2018-19 for creation of livelihood and infrastructure in rural areas

32. Tax Incentive for Promoting Post-Harvest Activities of Agriculture

33. Government undertakes various Programmes to benefit Farmers, Poor and other vulnerable sections

34. Doubling farmers’ Income: government keeps MSP of all hitherto unannounced Kharif crops at least at one and half times of production cost

35. Summary of Budget 2018-19

36. Highlights of Budget 2018-19

37. Budget 2018-2019 Speech of Arun Jaitley ( Minister of Finance )

38. Govt to take steps to promote agri commodity exports: FM

39. Sensex firms up 183 pts as Jaitley presents Budget

40. Agri credit target for FY'19 up 10% to ₹ 11 lakh cr

41. Exports seen growing at 15 pc in 2017-18: Jaitley

42. Budget 2018-19 - Central Excise Tariff Notifications

43. Budget 2018-19 - Customs Tariff Notifications

44. Budget 2018-19 + Finance Act, 2018

45. Finance Bill 2018

46. India may grow 7.2-7.5% in H2; on way to becoming 5th largest economy: FM

Notifications

Central Excise

1. 13/2018 - dated 2-2-2018 - CE

Seeks to exempt high speed diesel oil blended with alkyl esters of long chain fatty acids obtained from vegetables oils, commonly known as bio - diesels, up to 20% by volume, that is, a blend, consisting 80% or more of high speed diesel oil from the addition al duty of excise (road and infrastructure cess) levied under clause 110 of the Finance Bill 2018

2. 12/2018 - dated 2-2-2018 - CE

Seeks to exempt the 10 % ethanol blended petrol from the additional duty of excise (road and infrastructure cess) levied under clause 110 of the Finance Bill 2018

3. 11/2018 - dated 2-2-2018 - CE

Seeks to exempt the 5% ethanol blended petrol from the additional duty of excise (road and infrastructure cess) levied under clause 110 of the Finance Bill 2018

4. 10/2018 - dated 2-2-2018 - CE

Seeks to exempt duties of excise on the goods falling within the Fourth Schedule to the Central Excise Act, 1944, in excess of amount calculated at the rate of 50%

5. 09/2018 - dated 2-2-2018 - CE

Seeks to amend the notification No. 11/2017 dated 30.06.2017 so as to reduce the rate of Basic Excise Duty (BED) on petrol diesel by ₹ 2/- per litre

6. 08/2018 - dated 2-2-2018 - CE

Seeks to exempt Additional Duty of Excise (Road Cess), levied under section 133 of the Finance Act, 1999

7. 07/2018 - dated 2-2-2018 - CE

Seeks to exempt Additional Duty of Excise (Road Cess), levied under section 111 of the Finance ( No.2) Act, 1998

8. 06/2018 - dated 2-2-2018 - CE

Seeks to rescind notification No. 29/2002-Central Excise dated 13.05.2002

9. 05/2018 - dated 2-2-2018 - CE

Central Government rescinds the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 21/2009 –Central Excise, dated the 7th July, 2009

10. 04/2018 - dated 2-2-2018 - CE

Central Government rescinds the Notification No. 62/2008 –Central Excise, dated the 24th December, 2008

11. 03/2018 - dated 2-2-2018 - CE

Central Government rescinds the Notification No. 38/2004 –Central Excise, dated the 4th August, 2004

12. 02/2018 - dated 2-2-2018 - CE

Seeks to rescind Notification No. 11/2015 –Central Excise, dated the 1st March, 2015

13. 01/2018 - dated 2-2-2018 - CE

Seeks to rescind Notification No. 10/2015 –Central Excise, dated the 1st March, 2015

Customs

14. 23/2018 - dated 2-2-2018 - Cus

Seeks to further amend notification No. 27/2011-Customs dated the 1st March, 2011 so as to prescribe ‘Nil’ rate of export duty on Electrodes of a kind used for furnaces.

15. 22/2018 - dated 2-2-2018 - Cus

Seeks to further amend notification No. 57/2017-Customs dated the 30th June, 2017 so as to prescribe effective rates of BCD on specified parts of cellular mobile phones and other electronic goods.

16. 21/2018 - dated 2-2-2018 - Cus

Seeks to exempt Additional Duty of Customs (CVD), in lieu of Additional Duty of Excise (Road and Infrastructure Cess) levied under clause 110 of the Finance Bill, 2018.

17. 20/2018 - dated 2-2-2018 - Cus

Seeks to exempt Additional Duty of Customs (Road Cess) levied under section 116 of the Finance Act, 1999

18. 19/2018 - dated 2-2-2018 - Cus

Seeks to exempt Additional Duty of Customs (Road Cess) levied under section 103 of the Finance (No.2) Act, 1998.

19. 18/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 59/99-Customs dated 11.05.1999.

20. 17/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 57/98-Customs dated 01.08.1998.

21. 16/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 7/2015-Customs dated 01.03.2015

22. 15/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 6/2015-Customs dated 01.03.2015

23. 14/2018 - dated 2-2-2018 - Cus

Seeks to amend notification No. 82/2017-Customs dated the 27th October 2017 to increase the effective rate of BCD on silk fabrics from 10% to 20%

24. 13/2018 - dated 2-2-2018 - Cus

Seeks to exempt Integrated tax and Goods and Services Tax compensation cess on imported goods from the whole of levy of Social Welfare Surcharge.

25. 12/2018 - dated 2-2-2018 - Cus

Seeks to exempt specified goods from the of levy of Social Welfare Surcharge in excess of 3%

26. 11/2018 - dated 2-2-2018 - Cus

Seeks to exempt specified goods from the whole of levy of Social Welfare Surcharge.

27. 10/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 28/2007-Customs dated 01.03.2007 exempting specified goods from the levy of Secondary and Higher Education Cess.

28. 09/2018 - dated 2-2-2018 - Cus

Seeks to rescind notification No. 69/2004-Customs dated 09.07.2004 exempting specified goods from the levy of Education Cess.

29. 08/2018 - dated 2-2-2018 - Cus

Seeks to exempt levy of the whole of the Secondary and Higher Education Cess on all goods in the First schedule to the Customs Tariff Act, 1975.

30. 07/2018 - dated 2-2-2018 - Cus

Seeks to exempt levy of the whole of the Education Cess on all goods in the First schedule to the Customs Tariff Act, 1975.

31. 06/2018 - dated 2-2-2018 - Cus

Seeks to further amend notification No. 50/2017-Customs dated the 30th June so as to prescribe effective rate of basic customs duty (BCD) consequent to the changes proposed in the Union Budget 2018-19.

GST - States

32. ERTS(T) 79/2017/478 - dated 29-12-2017 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Tenth Amendment) Rules, 2017.

33. ERTS(T) 79/2017/477 - dated 29-12-2017 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Ninth Amendment) Rules, 2017.

34. ERTS(T) 79/2017/476 - dated 29-12-2017 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Eighth Amendment) Rules, 2017.

35. ERTS(T) 79/2017/475 - dated 29-12-2017 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Seventh Amendment) Rules, 2017.

Circulars / Instructions / Orders

Service Tax

1. D.O.F. No. 334/04/2018-TRU - dated 1-2-2018

Union Budget 2018 - Changes in Service Tax.

Customs

2. D.O.F.No. 334/4/2018-TRU - dated 1-2-2018

To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts.

Central Excise

3. D.O.F.No. 334/4/2018-TRU - dated 1-2-2018

To prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts

Highlights / Catch Notes

Income Tax

• Actions Without Authority Under Benami Act Are Invalid; Unauthorized Proceedings Lack Jurisdiction and Collapse.

  Case-Laws - HC : Benami Transactions - a person, who has no authority to initiate proceedings under the Benami Act or issue orders of attachment under the Benami Act, does so, the very foundation on which he has done such act collapses and the proceedings have to be held to be wholly without jurisdiction. - HC
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• Court Rules Builder's Land Transfer as Fraudulent, Impacting Capital Gains Tax Treatment Under Income Tax Law.

  Case-Laws - HC : Capital gain - The Builder's agreement with respect to share in land and transfer of land under the impression that land itself has been converted into 'stock in trade' is nothing but a colourable transaction and it amounts to fraud. - HC
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• Court Rules No Penalty u/s 271AAA for Tax Payment Compliance on Undisclosed Income; Language Deemed Similar to Section 271(1.

  Case-Laws - HC : Penalty u/s 271AAA - sufficient compliance - the language employed in the second exception under Explanation 5 to section 271(1) is, “pays the tax together with interest, if any, in respect of such income” and clause (iii) of sub-section (2) of section 271AAA employs the language “pays the tax, together with interest, if any, in respect of the undisclosed income”. Thus, the language employed in both the sections is similar - No penalty - HC
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• Business Expenses Allowed Despite Initial Challenges or Unrealized Benefits Under Business Expediency Rules.

  Case-Laws - HC : Allowable busniss expenditure - Merely because there was some difficulty faced by the assessee in commencing the use of the premises it does not follow that the expenses claimed were not for the purpose of the assessee's business. If the expected fruits are not reaped from a business proposition, it will not be a basis to challenge the business expediency. - HC
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• Trust-Run College Gains Tax Approval u/s 10(23C)(vi) for AICTE-Approved Polytechnic and Engineering Programs.

  Case-Laws - AT : Grant of approval u/s 10(23C)(vi) - trust runs a college that helps in enhancing the future of students by providing the education and making available the diploma courses in Polytechnic and Engineering which are duly approved by AICTE - approval granted - AT
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• Pharma Firm Challenges Disallowance of Freebies to Doctors Under Income Tax Act Section 37(1.

  Case-Laws - AT : Disallowance of marketing & sales promotion expenses u/s 37(1)- Freebies to Doctors - The pharmaceutical company like the assessee is outside the scope of the circulars by the Medical Council of India or the CBDT. - AT
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• Section 10(23C)(vi) Registration Examined: Buses Used Solely for Student Transport, No Commercial Use Evidence Found.

  Case-Laws - AT : Registration u/s 10(23C)(vi) eligibility - proof of charitable activities - buses were being utilized for the purpose of carrying students from their homes to school and vise versa and there is no material available with the department to hold that the buses were being utilized for commercial purposes other than for carrying the students. - AT
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• Penalty u/s 271(1)(C) Invalid Due to Defective Notice; No Penalty Imposed for Lack of Specificity.

  Case-Laws - AT : Penalty u/s. 271(1)(C) - defective notice - neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r. w. S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the AO - No penalty - AT
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• Trust Denied 12A Registration Due to Restrictive Structure, Incompatibility with Charitable Requirements Highlighted.

  Case-Laws - AT : Registration u/s 12A refused - charitable activities - it is militates against the legal principal that the social enterprises cannot be a direct recipient of money from a corporate as it is a profit making company and it is also clear that the composition of the trust is restrictive in nature and to that extent not amenable to the public charity. - AT
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Customs

• Interest Due on Late Refunds of Special Additional Duty as per Section 27A of the Customs Act.

  Case-Laws - HC : Refund of SAD - payment of interest on late refund of SAD - Interest would be payable in terms of Section 27A of the Customs Act on refund of SAD - HC
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Corporate Law

• Court Questions NCLT Order Validity: Arbitration Findings Binding on Non-Parties? Legal Basis Under Scrutiny.

  Case-Laws - HC : Validity of order passed by NCLT - The Court is at loss to understand as to how the findings recorded in the arbitration proceedings pending between the respondents inter se could be made binding to the petitioners who are the strangers to the arbitration agreement and the proceedings. - HC
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Indian Laws

• Budget 2018-19: Tax Reforms, Infrastructure Boosts, Social Welfare Enhancements, and Rural Economy Focus for Growth.

  News : Budget 2018-19, budget speech, news, updates with Notifications and Finance Bill 2018 - Clause by Clause
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Case Laws:

• GST

• 2018 (2) TMI 39
  Rectification of mistake - migration to GST - defect in issuance of ID/password inasmuch as instead of containing the PAN number of the partnership firm, it depicts the PAN number of one of its partner - Held that: - a week's time sought for getting instructions and to ensure that the mistake, if any, is rectified and a fresh ID/password with the correct PAN number is issued to the petitioner so that there may not be difficulty in the migration of the registration certificated and consequently, filing of the return for the month of July and August, 2017 - petition allowed.

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• Income Tax

• 2018 (2) TMI 62
  Assessment u/s 153C - existence of satisfaction note - Held that:- The Special Leave Petition is dismissed. HC order confirmed [2017 (7) TMI 539 - DELHI HIGH COURT] wherein held while the documents may ‘pertain to’ the Assessee, but in the context explained above, they cannot be presumed to be documents that ‘belonged to’ the searched person. Consequently, even with regard to these documents, the jurisdictional requirement under Section 153 C (1) of the AO of the searched person having to be satisfied that the said documents do not belong to searched person but to the Assessee, has not been fulfilled. - Decided in favour of assessee.

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• 2018 (2) TMI 61
  Reopening of assessment - disallowance u/s 80-IB(8A) - change of opinion - Held that:- It is pertinent note that the Assessing Officer while reworking the deduction has observed that “The detailed scrutiny of the claim of the assessee revealed that while claiming the deduction the assessee has not excluded the “notice pay income” and “other income” being not eligible for deduction under section 80IB of the Income Tax Act, 1961”. The said observation belies the contention of the department that no detailed analysis was done by AO in the original scrutiny in relation to the activities carried out by the petitioner. As observed in the preceding paragraphs, the petitioner had supplied all the details of the activities in response to the notice dated 12.11.2012. Thus, it can be assumed that the claim of the petitioner was processed in detail. The assessment cannot be reopened by forming an opinion that the activities carried on by the petitioner was professional service of research not leading to technology development only on the basis that the Assessing Officer failed to raise a particular question to that effect. The earlier claim of deduction was examined and processed after calling for detailed explanation from the petitioner, and the same was accepted after forming an opinion on the activities carried out by the Company. There was no failure on the part of the petitioner as to full and true disclosure. The aforesaid analysis unveils that the reopening the petitioner's case for reassessment under section 147 of the Act is based on change of opinion and hence, the same is not justifiable as per the settled position of law. - Decided in favour of assessee.

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• 2018 (2) TMI 59
  Capital gain computation - Determination of value of land - possession over land in dispute - transfer of land - Held that:- What has been done in the case in hand is that ignoring the fact that Assessee did not have any title over land but possessed only lease rights, and land was owned by State Government, Revenue Authorities have proceeded to consider valuation assuming that Assessee had a right/title over land which is convertible into the manner, Assessee liked, and have proceeded accordingly. Lease land was converted by Assessee in 'stock in trade' on 01.04.2003 i.e. Financial Year 2003-04 (A.Y. 2004-05). As is admitted, land being Nazul, owned by State Government and Assessee was only enjoying lease rights over the land, the definition of 'capital asset' includes within it, 'lease rights' over land since 'capital asset' means property of any kind held by an Assessee but that will not extend to land itself. The term 'transfer' in relation to a 'capital asset' includes extinguishment of any right therein and conversion or treatment as 'stock in trade' in business. Such conversion or treatment is defined under Section 2(47) but this conversion is only in relation to 'lease rights' over land in question and not the title or ownership of land. That continued to be vested in State Government even in A.Y. 2004-05. In respect of capital gain over land in question, thus occasion for computation would arise only when title is transferred by State Government, i.e., ownership, upon Assessee/lessee who held that land under a lease agreement of 1942 for a period of 30 years, renewable upto 90 years. It is nobody's case that such transfer of property took place in the A.Y. 2004-05. Therefore, transfer of land as such resulting in capital gain could not have been worked out in A.Y. 2004-05 in the manner as has been done by Assessee since it did not own land in A.Y. 2004-05. It has not come on record, when Assessee got title of land after execution of freehold deed/sale deed from State Government. The Builder's agreement with respect to share in land and transfer of land under the impression that land itself has been converted into 'stock in trade' is nothing but a colourable transaction and it amounts to fraud. Revision u/s 263 - Held that:- The view taken by Tribunal cannot be sustained inasmuch A.O. having not examined the matter in correct perspective, as discussed above, it is a clear case where his order is erroneous and prejudicial to the interest of Revenue and, therefore, CIT has rightly exercised jurisdiction under Section 263 of Act, 1961. - Decided in favour of Revenue.

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• 2018 (2) TMI 58
  Income from sale of shares - treatment of Long Term Capital Gains or busniss income - Held that:- Tribunal is justified in confirming treatment of Long Term Capital Gains and Short Term Capital Gains as income from business Appeal is admitted on the substantial question of law at (b) - Whether in the facts and circumstances of the case and in law, the Tribunal was justified in holding that once an assessee trades in shares then, ipso facto even bonus shares received by the assessee are to be held as trading stocks ?

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• 2018 (2) TMI 57
  Penalty u/s 271AAA - sufficient compliance with the provision if tax is shown to have been paid before the assessment was completed - Held that:- A conjoint reading of the provisions of clause (iii) of subsection (2) of section 271AAA of the Act and Explanation 5 to section 271(1) of the Act shows that the language employed in the second exception under Explanation 5 to section 271(1) is, “pays the tax together with interest, if any, in respect of such income” and clause (iii) of sub-section (2) of section 271AAA of the Act employs the language “pays the tax, together with interest, if any, in respect of the undisclosed income”. Thus, the language employed in both the sections is similar. Therefore, the Tribunal as well as the Commissioner (Appeals) were wholly justified in applying the principles enunciated by this High Court in Commissioner of Income Tax v. Mahendra C. Shah (2008 (2) TMI 32 - GUJARAT HIGH COURT) while interpreting the provisions of sub-section (2) of section 271AAA of the Act. Accordingly, the assessee has also satisfied the third condition laid down under sub-section (2) of section 271AAA of the Act. The Tribunal was, therefore, wholly justified in upholding the deletion of penalty under section 271AAA of the Act. - Decided in favour of assessee.

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• 2018 (2) TMI 56
  Allowable busniss expenditure - payment for lease rental made by cheque after deducting the due TDS - genuineness & business expediency of any expenditure - Held that:- Question No.1 is framed incorrectly. The question has been worded to suggest that the authorities held that if the payment of lease rent has been made by cheque and TDS has been deducted, the genuineness of the same and the business expediency stands established. Indeed mere payment by cheque purportedly towards lease rent and the deduction of TDS would not establish a case for deduction. However, the Appellate Authorities have not allowed the claim merely on the basis of payment being made by cheque and TDS having been deducted. The facts in entirety have been considered and thereafter, a conclusion has been arrived at that it was a business expenditure which was genuinely made towards payment of lease rent. Whether the assessee could not prove the business expediency of expenses when the said premises had not been used for the purpose of business? - Held that:- This question challenging the deletion of addition made as the assessee failed to prove the business expediency as the said premises was not used for business purposes is not a question of law, much less a substantial question of law. Merely because there was some difficulty faced by the assessee in commencing the use of the premises it does not follow that the expenses claimed were not for the purpose of the assessee's business. If the expected fruits are not reaped from a business proposition, it will not be a basis to challenge the business expediency. Even if there was a delay in getting the electricity connection, that may be a result of non-fulfilment of contractual obligations, for which the assessee can claim damages. It would not be open for the department to suggest that in such circumstances, the lease should have been terminated. It is a business decision to be taken by the assessee. It is not the case of the department that the expenses have not been incurred or that they were made under an understanding camouflaged as a lease agreement. - Decided against revenue

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• 2018 (2) TMI 55
  Addition on account of remission of Principal amount of loan - whether remission of Principal amount of loan obtained from financial institution and banks constitutes a benefit or perquisite arising from business and would fall within the ambit of section 28(iv)? - Held that:- Even otherwise the loan which was taken was capital investment and always treated in the capital account as liability and if it is so, it will naturally go as wiping out the capital liability. The contention taken by the appellant is required to be accepted. See Modern Syntex (india) Ltd. case [ 2018 (1) TMI 1298 - RAJASTHAN HIGH COURT] - Decided in favour of assessee

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• 2018 (2) TMI 54
  Grant of approval u/s 10(23C)(vi) - Held that:- It is pertinent to note that the main objects of the trust are to encourage backward and discarded people towards education and social development works, helping children by providing education and livelihood to them etc. The same was at no point amended by the assessee. Also the trust runs a college that helps in enhancing the future of students by providing the education and making available the diploma courses in Polytechnic and Engineering which are duly approved by AICTE. Hence all objects are in consideration for granting the approval u/s 10(23C)(vi) of the Act. - Decided in favour of assessee.

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• 2018 (2) TMI 53
  Gross receipts for the purpose of determination of income u/s 44BB - Receipts on account of reimbursements of expenses incurred on supply of materials inclusion - Held that:- It was not in dispute that the amount had been received by the assessee. Therefore the AO added the said amount which was received by the nonresident company rendering services under the provisions of section 44 BB to the ONGC and imposed the income tax thereon. He was justified in doing so. - Decided against assessee. TDS - Reimbursement of service tax and interest on service tax - Held that:- This issue is to be decided is in favour of the assessee in case of DIT Vs. Mitchell Drilling International Pvt. Ltd. [2015 (10) TMI 259 - DELHI HIGH COURT] wherein the Jurisdictional Delhi High Court decided the issue in favour of the assessee. In Circular No. 4/2008 dated 28th April 2008 it was clarified that “Service tax paid by the tenant doesn't partake the nature of “income” of the landlord. The landlord only acts as a collecting agency for Government for collection of Service Tax. Therefore, it has been decided that tax deduction at source) under sections 194-1 would be required to be made on the amount of rent paid/payable without including the service toot. In Circular No. 1/2014 dated 13th January 2014, it has been clarified that service tax is not to be included in the fees for professional services or technical services and no TDS is required to be made on the service tax component under Section 194J.

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• 2018 (2) TMI 52
  Disallowance of marketing & sales promotion expenses u/s 37(1)- Freebies to Doctors - Held that:- the circular issued by the CBDT enlarging the scope of disallowance to the pharmaceutical companies is without any enabling notification or circular of the Medical Council of India. Considering the settled legal position on the issue, we are of the opinion that the issue now stands covered in favour of the assessee. The pharmaceutical company like the assessee is outside the scope of the circulars by the Medical Council of India or the CBDT. Therefore, the conclusions of the AO/CIT(A) in this regard are reversed. Thus, the grounds raised by the assessee are required to be allowed. See The Dy. CIT 8 (2) , Mumbai Versus PHL Pharma P Ltd. [2017 (1) TMI 771 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2018 (2) TMI 51
  Reopening of assessment - payment of “on money” was made by the assessee for purchase of flats - Held that:- The reassessment proceedings initiated by the A.O beyond a period of four years from the end of the assessment year, without making a mention in the ‘reasons to believe’ that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment, cannot be sustained and on the said count too is liable to be vacated. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of “on money” by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. A strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the ‘market value’ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of “on money” by the assessee formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration, but the same falling short of clinching material which would have irrefutably evidenced the said fact, thus, does not inspire much of confidence as regards the way they have been construed by the lower authorities for drawing of adverse inferences in the hands of the assessee. the adverse inferences drawn by the A.O as regards payment of “on money” of 2.23 crore by the assessee for purchase of Flat No. 2501 from M/s Lakeview Developers are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. - Decided in favour of assessee.

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• 2018 (2) TMI 50
  Allowable busniss expenditure - expenses relatable to increase in Share Capital - revenue v/s capital expenditure - Held that:- We find that it is noted by CIT (A) in Para no. 4.1 of his order that the assessee company had sought private equity investment from different investors and the prospective investors had conducted various audits and due diligence study to ensure the viability of such investment. It is also noted by CIT(A) that M/s. Napean Trading and Investment Co Pvt. Ltd. was engaged by the prospective investors for making such due diligence study and the assessee had apparently reimbursed the expenses incurred in this regard to the investors. From these facts, it comes out that the expenses in question are incurred in respect of increase in capital base of the assessee company. The judgment in the case of Brooke Bond India Ltd. vs. CIT (1997 (2) TMI 11 - SUPREME Court) is squarely applicable and as per this judgment, the expenses relatable to increase in Share Capital are not allowable as revenue expenditure because the same are capital expenditure. - Decided against assessee. Invoking the provisions of section 79 - Held that:- We find that the AO has invoked the provisions of section 79 of the IT Act for the purpose of disallowing the set off of brought forward business loss and depreciation. In the facts of the present case as noted above, we find that more than 51% of shares, in fact, to the extent of 55.90% of the total shares, only two persons were holding those shares as on 31.03.2008 being the year in which loss was incurred and as on 31.03.2009 being the year in which the set off of brought forward depreciation is being claimed and hence, the claim of the assessee cannot be disallowed by invoking the provisions of section 79 of the IT Act. Therefore, on this issue, we decide the issue in favour of the assessee. Denial of carry forward of unabsorbed depreciation loss u/s. 72A on the ground that the amalgamating company, M/s. Banashankari Medical Oncology Research Centre Limited (BMORCL) is not an industrial undertaking as per the provisions of the said section - Held that:- As we consider the applicability of the judgment cited by ld. DR of revenue rendered in the case of ACIT Vs. Apollo Hospitals Enterprises Ltd. (2008 (3) TMI 56 - MADRAS HIGH COURT), in this case, the issue before Hon’ble Madras High Court was the same as in the present case as to whether the hospital can be considered as an industrial undertaking under clause (aa) of sub section 7 of section 72A. In that case, a scheme was approved to amalgamate M/s. Deccan Hospital Corporation Limited (in short ‘DHCL’), running a Hospital at Jubilee Hills, Hyderabad with the assessee company i.e. Apollo Hospitals Enterprises Ltd. of Chennai and the issue in dispute was regarding the set off of unabsorbed depreciation of 11.60 crores on account of amalgamation of DHCL with Apollo Hospitals Enterprises Ltd. and it was held by Hon’ble Madras High Court that neither Apollo Hospitals Enterprises Ltd. nor DHCL are industrial undertaking within the meaning of section 72A and therefore, the set off of unabsorbed depreciation is not allowable. Respectfully following this judgment of Hon’ble Madras High Court, we decline to interfere in the order of CIT (A). Accordingly this ground is rejected.

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• 2018 (2) TMI 49
  Registration u/s 10(23C)(vi) eligibility - proof of charitable activities - Held that:- From the examination of the objects it is apparent that the assessee’s main objects are to provide education to children and which as per the provisions of section 2(15) are charitable in nature therefore this finding of Ld. CIT(E) is not correct. As far as the objection of CIT(E) regarding earning of income from buses and from sale of books and dresses, we find that these buses were being utilized for the purpose of carrying students from their homes to school and vise versa and there is no material available with the department to hold that the buses were being utilized for commercial purposes other than for carrying the students. As regards the objection of Ld. CIT(E) that the name of school in the MOA is not mentioned, we find that this objection of Ld. CIT(E) is absurd as Memorandum of Association is a document wherein main objects of society are mentioned and to carry out these objects, the assessee started school to fulfill the main objects. We direct the Ld. CIT(E) to grant registration to the society u/s 10(23C)(vi) of the Act. - Decided in favour of assessee.

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• 2018 (2) TMI 48
  Validity of the reassessment - capital gain computation u/s 45 arising from the transfer of capital asset - Held that:- CIT(A) while deciding the appeal of the assessee directed the AO to assess the long term capital gain of 61,53,470/- in the assessment year 2008-09 where part of it already stood assessed at 22,50,190/-. Against this finding of CIT(A), the Revenue has not preferred any appeal. Therefore, it can be safely inferred that the Revenue has accepted that income which escaped assessment was pertaining to the A.Y. 2008-09. As per the notice for reopening the assessment year for opening is taken as assessment year 2009-10. In our view, this is not permissible under the law, in view of the explanation to section 2(47) wherein it clarifies that “transfer” includes and shall be deem to have always included disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally voluntarily or involuntarily, by way of an agreement or otherwise notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company. Hence, under the facts of the present case the transfer of capital asset took place in the financial year 2007-08, relevant to A.Y. 2008-09. AO is empowered as per section 147 if the assessing officer has reason to believe that any income chargeable to tax has escaped assessment or any assessment year, he may subject to the provisions of sections 148 to 153 assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings. Therefore, the assessing officer should form a belief in respect of the escapement of income pertaining to a particular assessment year in the given case, the income escaped relates to the earlier year and notice is issued u/s 148 for the subsequent year. - Decided in favour of assessee.

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• 2018 (2) TMI 47
  Revision u/s 263 - diallowance of interest claimed by the assessee for paying earnest money - interest free funds sufficient to meet investments - Held that:- In reply to show cause notice the assessee had explained the facts that there were sufficient interest free funds but Ld. CIT held that no evidence was filed whereas the fact remains that assessment record was with him and copies of balances sheet were part of the assessment record. The Ld. CIT should have examined those records with respect to reply filed by assessee and then he should have noted his satisfaction which he has failed to do. In view of the above, the order passed by CIT u/s 263 is quashed. - Decided in favour of assessee.

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• 2018 (2) TMI 46
  Addition U/s 69-C - differences in purchase has not been proved by the assessee due to input VAT, as claimed by the assessee - Held that:- In the remand report of AO it is clearly mentioned that assessee has explained the difference with reconciliation statement on production of different ledgers, VAT Returns etc. therefore, there is no question of treating the amount as ‘unexplained expenditure’. We note that CIT(A) did not considered the remand report at all therefore, it is against the principle of natural justice. Therefore, based on the factual position, we delete both the additions made by AO, [that is, we delete addition based on undisclosed purchases by applying GP rate at 95,654/-, (@ 3.11% of 30,75,702), and under section 69C as unexplained expenditure 30,75,702/-]. - Decided in favour of assessee.

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• 2018 (2) TMI 45
  Penalty u/s. 271(1)(C) - claim as made by the assessee of reduction of its book profit as per clause (vii) of Explanation-1 below section 115JB(2) shows that it has filed inaccurate particulars of its income - defective notice - Held that:- The intent and purpose of this notice is to inform the assessee as to the specific charge for which he has been show caused so that he could furnish his reply without any confusion and to the point. In the present case, neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r. w. S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. See CIT v. Manjunatha Cotton and Ginning Factory & Ors. and Veerabhadrappa Sangappa and Co. (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2018 (2) TMI 44
  Disallowance u/s 14A - interest free funds sufficient to meet the investment - Held that:- Wherein interest free funds are much more than the impugned investment and therefore, no disallowance of interest expenditure is called for u/s 14A of the Act. See CIT Versus Reliance Utilities 6,25,840/- is credited and offered to tax. The assessee has rightly claimed the business loss of 6,25,840/- and both the lower authorities erred in disallowing the same. We, therefore, delete the disallowance Disallowance of expenditure incurred towards payment of PF by the assessee - Held that:- It has been consistently held that such type of statutory payments on account of employer’s contribution are allowed as deduction if they are paid before the due date of filing the return of income as provided in section 43B. There is no dispute about the actual date of payment of the impugned amount is before the due date of filing the return of income. Therefore, delete the impugned disallowance of 1,03,694/- wrongly disallowed u/s 36(1)(va) r.w.s. 2(24)(10) - Assessee appeal allowed.

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• 2018 (2) TMI 43
  Non granting of approval for registration u/s 12AA - proof of charitable activities - Held that:- We observe that CIT rejected the application u/s 12AA on the premise of his observation that the society is running for profit motive and not providing charitable services. The society is registered by the M.P. State Government under the gazette notification placed and the society is an university running under the approval of the M.P. State Government. This fact is not disputed by Revenue. We agree to the fact that some of the details which were called for by CIT were not provided by the assessee during the course of proceedings. Further CIT has made specific observation about the application of income towards the cost of its assets but merely for applying the surplus from activities carried out during the year towards investment in fixed assets, per se, cannot prove that the assessee is not engaged in charitable activities. We observe that CIT has rejected the application u/s 12AA without considering relevant facts, financial statements, gazette notification of State Government and examining the activities carried out by the assessee in detail. Both the 4 parties have no objection if the issue raised in this appeal is remitted back to the file of the CIT for de novo adjudication. - Decided in favour of assessee for statically purposes.

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• 2018 (2) TMI 42
  Registration u/s 12A refused - proof of charitable activities - relinquished of function as the primary implementation of the agencies - Held that:- In the instant case, there is clause No.(v) in the trust deed which specifying that any donation received “shall be spent/applied by the trust as per the objects of the trust, donation trust corpus of the trust shall be applied in accordance with specific directions from the donor.” Further in clause (vi) specifies that any donation or contribution received from Ludhiana Beverage Pvt. Ltd or from any other company in pursuance of their Corporate Social Responsibility shall be spent/applied by the trust as per directions of the donor. These clauses in the trust deed are clearly seems to keep the trust by the settler etc. Ludhiana Beverage Pvt. Ltd. in its own domain. The directions shall however fall within the purview of the objects of the trust. Further from the trust deed it reflects that settler and the trustees are almost family members having no participation of the public which also not sync with the Corporate Social Responsibility project and in addition to that except giving donation to the tune of 40,000 and 30,000/- to the Govt. Schools out of 11,00,000/-, the applicant trust has not carried out any activities till passing of the impugned order even otherwise till disposal of this appeal. We are in agreement with the CIT(E) that activity so far clearly shows that the trust has relinquished its function as the primary implementation of the agencies and undertaking its own programmes to impact targeted beneficiaries by transferring its funds to other societies and it is also militates against the legal principal that the social enterprises cannot be a direct recipient of money from a corporate as it is a profit making company and it is also clear that the composition of the trust is restrictive in nature and to that extent not amenable to the public charity. Thus the Ld. CIT(A) has gone into the genuineness of the activities of the society and made necessary enquiries and after non-satisfying about the genuineness of the activities rightly passed an order refusing the registration to the applicant society. - Decided in favour of revenue

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• 2018 (2) TMI 41
  Denying the registration u/s 12AA - absence of dissolution clause as well as beneficiary clause in the MOU of the society - Held that:- Dissolution clause has only been incorporated on 9th April, 2017 which is much beyond the date of the impugned order, however, it reflects that beneficiary clause has not been incorporated so far. CIT(E) has rightly passed the order under challenge for denying the registration u/s 12AA of the Act in the absence of dissolution clause and beneficiary clause in the MOU of the society. However, in the interest of justice, we give opportunity to the applicant/appellant to approach the Ld. CIT(E) by making fresh application while incorporating the dissolution clause and beneficiary clause and getting the same registered in the office of the Registrar of the Society of Registration Act and the Ld. CIT(E) is requested to expedite the application of the assessee, if file afresh and adjudicate the same de novo. - Decided against assessee

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• 2018 (2) TMI 40
  Computation of deduction u/s 10A - exclude the reimbursement of communication expenses both from the export turnover as well as from total turnover - Held that:- The issue of expenditure incurred towards communication charges in foreign currency is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction under section 10A of the Act, is covered in favour of the assessee by the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd.(2011 (8) TMI 782 - KARNATAKA HIGH COURT). Exclusion of certain companies as functionally dissimilar with that of assessee company as pure software service provider Adjustment on account of interest on ECB - assessee has taken external commercial borrowing from the AE and paid interest at LIBOR + 3% which is equivalent to 7.22% per annum - TPO has applied the arm’s length interest rate at LIBOR + 138 basis points which is equivalent to 6.08% - Held that:- The assessee has not produced any material to show that the interest paid to AE @LIBOR +3% is arm’s length interest. We further note that this Tribunal has taken a consistent view that in the case of interest on ECB, LIBOR +1.5% can be taken as arm’s length interest therefore, the TPO applied the arm’s length interest at LIBOR +1.38% is within the justified range and we do not find any reason to interfere with the orders of the authorities below on this issue. The revenue’s appeal and C.O. of the assessee are partly allowed.

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• Benami Property

• 2018 (2) TMI 60
  Benami Transactions - Proposed parties proper and necessary parties to the Writ Petitions - Held that:- The reason, which makes it necessary to make a person, a party to an action, so that he should be bound by the result of the action and question to be settled. Thus, the test would be whether the said party is a necessary or proper party and presence of such party before the Court is necessary for complete and effective adjudication of the subject matter. Further, proper party has been explained is a person, whose presence is considered appropriate for effective decision of the case, though no relief may have been claimed by him. A party can be impleaded, if he has a direct interest and a legal interest in the subject matter. In a Writ Petition against the Government, if allegations are made against private parties or the officials, they should be impleaded as respondents. In the cases on hand, the petitioner has made several allegations against the Deputy Commissioner of Income Tax, Corporate Circle (I), Chennai, who was the Initiating Officer of the impugned proceedings and rightly he has been impleaded as the second respondent in his personal capacity. However, the petitioner has not impleaded Mr.RR and Archer, though there are several allegations made against them relating to transactions with the petitioner and connecting them with the second respondent. Therefore, it is of the considered view that the impleading parties are proper parties, whose presence is necessary for a complete and final decision of the question involved in these proceedings. Second respondent s jurisdiction to issue the impugned notice, prohibitory order and impugned attachment order - Held that:- The applicability of the defacto doctrine cannot be made to the present proceedings in an abstract manner, but has to be done bearing in mind the provisions of the Benami Act and in particular Section 24, Section 59 read with Section 2(19) and the notification dated 18.05.2017. If it is done, then the second respondent is not a person, who is the holder of the office, the Deputy Commissioner of Income Tax (Bename Prohibition), Chennai and for the purposes of the Benami Act, he could be termed as an usurper or total stranger to the office though not as a Deputy Commissioner of Income Tax, Central Circle (I). Thus, when a person, who has no authority to initiate proceedings under the Benami Act or issue orders of attachment under the Benami Act, does so, the very foundation on which he has done such act collapses and the proceedings have to be held to be wholly without jurisdiction. Thus, for the above reasons, it is held that the second respondent lacked inherent jurisdiction to initiate proceedings as on 19.05.2017 and the impugned notice, the impugned prohibitory order and the order of attachment are held to be without jurisdiction and consequently are liable to be set aside. In the above, question No.(ii) is answered in favour of the petitioner.

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• Customs

• 2018 (2) TMI 36
  Entitlement of interest - relevant date for calculation of interest - Refund claim rejected on the ground of unjust enrichment - Section 27 and 27(A) of the Customs Act, 1962 - Held that: - issue is covered by the decision in the case of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. [2011 (10) TMI 16 - Supreme Court of India], where it was held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made - Even assuming that the petitioner furnished the evidence with respect to the issue of unjust enrichment later it would make no difference as Section 27A mandates the payment of interest from the date of the application. The revenue in any case does not suffer any loss as it has the benefit of the use of the money, in fact, even prior to the date of the filing of the application for refund under Section 27(1). The petitioner shall be paid interest from 23.10.2007 i.e. 90 days after the date of the application under Section 27(1) viz. 23.07.2007 till payment - petition allowed.

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• 2018 (2) TMI 35
  Refund of SAD - payment of interest on late refund of SAD in terms of Section 27A of the Customs Act - contention of the respondents is that Section 27A is not applicable to refunds of SAD as Notification No.102/2007-Cus. dated 14th September, 2007, has been issued under sub-section (1) to Section 25 of the Customs Act and not under Section 27A of the Customs Act. Held that: - N/N. 102/2007-Cus. has been issued in exercise of power conferred by Section 25 of the Customs Act. As noticed above, it exempts goods falling within the First Schedule of the Customs Tariff Act, 1975, from the whole of SAD leviable under sub-section (5) of Section 3 of the Customs Act, when imported into India for subsequent sale, subject to the conditions in paragraph 2 of notification being fulfilled. Paragraph 3 of the said notification states that jurisdictional customs officer shall sanction refund on being satisfied that conditions referred to in paragraph 2 are fulfilled. It is not disputed that conditions mentioned in paragraph 2 of the notification in respect of 38 Bills of Entry are fulfilled. The orders passed by the jurisdictional customs officer, appellate authority and the Tribunal have attained finality. As a sequitor, it follows that SAD refundable was a duty paid by the petitioner under the Customs Act in respect of which exemption vide N/N. 107/2007-Cus dated 14th September,2007 has been granted by the Central Government. Section 27A states that duty directed to be refunded under sub section 2 to Section 27, if not paid within three months from date of receipt of application under sub section 1 to section 27, interest would be paid by the authorities as per the rate specified. In other words, if the refund is paid within three months of date of receipt of application under sub section 1 to Section 27, no interest is payable. Interest is payable on delayed refunds after three months post the application for refund till the date of refund. Section 27A therefore ensures prompt decision and payment of refunds, when due and payable under sub section 2 of Section 27 of the Act. Interest would be payable in terms of Section 27A of the Customs Act on refund of SAD payable in terms of N/N. 102/2007. Petition allowed.

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• 2018 (2) TMI 34
  Benefit of N/N. 11/97 - Customs authorities were of the view that 2900 MTs declared as heavy melting scrap (HMS) were re-usable for other purposes without reclaiming the metal and therefore, the benefit of Customs N/N. 11/97 applicable to HMS, was not available to the case - Held that: - Though Mr.Pramod Kumar Chopda, learned counsel for the appellant, made submissions, in support of the substantial questions of law, finding of fact, confirmed by a coordinate bench in the case of the respondent, on the same set of facts, is binding on us. Though, being aggrieved over some portion of the common order, the Commissioner of Customs/appellant herein, has filed the instant appeals, final order made in 1140 and 1141 of 2006 dated 30.11.2006, has been confirmed in entirety - appeal dismissed.

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• 2018 (2) TMI 33
  Suspension of CHA License - Jurisdiction to pass order of suspension - the Commissioner of Customs and Central Excise, Coimbatore, suspended the operation of their CHA Licence No.08/2004, within Coimbatore Customs Formations, for a period of 6 months, with effect from 13.10.2006, vide order, dated 07.11.2006 - principles of Natural Justice - Held that: - CESTAT, Chennai, has stated that there is no intimation in Form-C, from the Commissioner of Customs, Coimbatore, to Commissioner of Customs, Mumbai, based on the regular licence. Therefore, CHA has been transacting business, based on the regular Licence No.11/1134, dated 03.12.1999, issued by the Commissioner of Customs, Mumbai. Thus, by observing that in the absence of Form-C intimation from the Commissioner of Customs, Coimbatore to Commissioner of Customs, Mumbai, rights and obligations of CHA, under the abovesaid licence, renewed upto 26.07.2014, would not operate within the jurisdiction of Mumbai and similarly, in the absence of Form-C intimation of Mumbai-licence to the Commissioner of Customs, Coimbatore, the rights and obligations of the respondent, under that licence would not have any operation, within the jurisdiction of the Commissioner of Customs, Coimbatore, CESTAT, Chennai has set aside the suspension order, issued by the Commissioner of Customs, Coimbatore. There is no ground to reverse the findings of the CESTAT, Chennai - petition dismissed.

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• 2018 (2) TMI 32
  Confiscation of goods - Gold is being melted in one Furnace - smuggling - Held that: - In the present case, there is no material available that the goods are imported - the goods were seized at a melting shop at Kolkata, it is a registered melting shop and there is no material available that the goods are of foreign origin and therefore the confiscation of the goods is not justified - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 31
  Valuation - mis-declaration of value - enhancement of invoice price - penalty - Held that: - Indenting agents have no knowledge of the trade transaction; their role is merely to bring buyer and seller together in the highseas sale for a commission. In the instant case, evidence was collected by the department that some amount over and above the invoice value was paid. Payment was made through account payee cheque. The statement given by Shri Niraj Sharma is also doubtful. The show-cause notice is based merely on suspicion without having actual fact. It may be mentioned that scrap is always cheaper than the prime metal. Sale price on highseas could also be cheaper than the sale by the exporter. The charge of under-invoicing has to be supported by the evidence of prices of contemporaneous imports of similar/identical goods - determination of such price has to be in accordance with the relevant rules and subject to the provision of Section 14(1). It is made clear that these provisions are not mutually exclusive. Therefore Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 (1) speaks of deemed value. Appeal allowed.

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• 2018 (2) TMI 30
  100% EOU - Penalty u/s 112 (a) - The case against the EOU is that they have not undertaken any manufacture as mandated in the permission nor they have followed the procedure for getting the goods manufactured from the job workers - Held that: - The role of the appellant for the violation of various provisions of Customs Act, 1962 connected to duty-free import of items for the EOU cannot be contested with any force. The original authority examined the depositions made by the appellant during investigation as corroborated by various other evidences before arriving at his conclusion. In the present appeal there is no substantial ground to reverse the finding of the original authority. The appellant cannot shift the blame to the carelessness of the employees for the violation of Customs Act - the liability for penalty u/s 112(a) cannot be contested - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 29
  Delay in filing appeal - time limitation - defect in service of notice - Held that: - Though it is argued by the ld. AR that the copy of the order was dispatched by speed post on 19.01.2015, undisputedly the said order dispatched was not served upon the appellant. The same has been returned as undelivered as seen from the documents produced by the appellant - the appeal is filed within time - the impugned order requires to be set aside and the matter has been remanded to the Commissioner (Appeals) who is directed to consider the appeal on merits - appeal allowed by way of remand.

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• 2018 (2) TMI 28
  Valuation - freight - includibility - Held that: - There is broad agreement on the aspect of quantum of freight cost that will require to be added. It is a fact that as per the Customs Valuation Rules as in force during the material period, even when the cost of transportation of imported goods was ascertainable, for the purpose of adding freight element to form part of the assessable value only 20% of the FOB value would be adopted in respect of goods imported by air - for the limited purpose of re-determining the revised differential duty liability after limiting the freight cost to 20% of the FOB value, the matter is being remanded to the original authority. Redemption fine - Held that: - there has been misdeclaration on the part of the importer. It is also noted that in the very same month for similar items, the same omission had occurred. Viewed in this light, we cannot but take the protestations of the appellant into a pinch of salt - taking into account that differential duty liability would be calculated only on 20% of the FOB value, and also taking note of the fact that no research was done on the market value of the goods is evident from the record, it is held that a lower redemption fine of 1,00,000/- would serve the ends of justice in this case - So also reduction of penalty to 50,000/- ordered. Appeal allowed in part.

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• Corporate Laws

• 2018 (2) TMI 27
  Dissolution of firm - Held that:- When the relevant provisions of Section 497 of the Act appear to have been complied with and when the affairs of the company are stated not to have been conducted in a manner prejudicial to the company, its members, as also to the public interest, the company could be ordered to be dissolved in terms of Section 497 of the Act. However, while ordering dissolution of the company under Section 497 of the Act, the Voluntary Liquidator is required to be directed to preserve the Books of Accounts of the company for a period of five years from the date of dissolution of the company. As the Official Liquidator is required to incur expenses for the purpose of making present report seeking dissolution of the company in terms of Section 497 of the Act, the directors of the company are required to be directed to pay 10,000/- being office expenses to the Official Liquidator. The company is ordered to be dissolved in terms of Section 497 of the Act from the date of submission of the report. The Voluntary Liquidator – M/s.J. H. Mehta and Company, Chartered Accountant is directed to preserve the Books of Accounts of the company for a period of five years from the date of dissolution of the company.

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• 2018 (2) TMI 26
  Challenging the impugned order passed by the NCLT in arbitration proceedings - Held that:- Though the statutory remedy of filing appeal under Section 421 of the Companies Act is available to the petitioners for challenging the impugned order passed by the NCLT, the said remedy would not be effective or efficacious alternative remedy in the facts and circumstances of the case. As stated herein above the NCLT vide the impugned order has refused to exercise the jurisdiction vested in it under the Companies Act by postponing its decision on the reliefs claimed by the petitioners in the Company Petition filed under the Companies Act till the final outcome of the arbitration proceedings pending between the respondent inter se though the petitioners are not the parties to the said arbitration proceedings. The NCLT has also travelled beyond its jurisdiction by making the reliefs claimed in the Company Petition by the petitioners, dependent on the outcome of such arbitration proceedings. Prima facie there being no arbitration agreement existing between the concerned petitioners and the concerned respondents for resolving the disputes in respect of the shares in question, and the petitioners being not the party to the arbitration proceedings pending before the respondent No.18, the NCLT could not have passed the impugned order holding that the decision on the reliefs “C” “D” E” and “I” shall depend upon the findings of arbitral tribunal regarding the restrictions contemplated on the transfer of shares in SHA and its binding nature, and that the decision on reliefs relating to “A” “B” “F” “G” “H” “J” and “K” is postponed till the decision of the arbitral tribunal. The Court is at loss to understand as to how the findings recorded in the arbitration proceedings pending between the respondents inter se could be made binding to the petitioners who are the strangers to the arbitration agreement and the proceedings. The NCLT is bound to decide the issues raised in the company petition independently and in accordance with law. By passing the impugned order, the NCLT has clearly abdicated its statutory duty cast on it and has refused to exercise the jurisdiction vested in it under the Companies Act.

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• Insolvency & Bankruptcy

• 2018 (2) TMI 38
  Corporate Insolvency Resolution Process - whether petition is premature - Held that:- A perusal of letter dated 13.06.2017 issued by Reserve Bank of India have given period to resolve “within” six months. The resolution plan proposed at the meeting of the Joint Lender Forum stand rejected on 15.11.2017 and the present petition has been filed on 20.11.2017. In any case the period of six months as on today has expired. There is no approved proposal by any acceptable lender forum to suggest that resolution of stressed assets is possible. The possibility of resolution under the Insolvency and Bankruptcy Code widened up as a large number of players may apply with much more ambitious and varieties of resolution plans. It brings to fore the various shades of interplay of market forces. Therefore, it is not possible to accept the aforesaid argument that the petition is in any way premature. Even otherwise there is no bar created by the Insolvency and Bankruptcy Code to proceed with adjudication of such petition merely because some process is pending at the Joint Lender Forum Another objection in respect of choice of the Interim Resolution Professional in view of the replacement of the Interim Resolution Professional the argument advanced by Mr. Chaudhary, learned Senior counsel would also not require any further consideration and we accept the appointment of Mr. Navneet Kumar Gupta to act as Interim Resolution Professional. As a sequel to the above discussion, this petition is admitted and Mr. Navneet Kumar Gupta, 520, 5th Floor, Caddie Commercial Tower, Aerocity, New Delhi-110037 is appointed as an Interim Resolution Professional.

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• 2018 (2) TMI 37
  Corporate insolvency process - no direct notice was issued by the Adjudicating Authority to the ‘Corporate Debtor’ - Held that:- In view of the fact that no notice was issued by the Adjudicating Authority as required to be issued in view of the decision of this Appellate Tribunal in “M/s. Innoventive Industries Ltd. Vs. ICICI Bank Company Appeal (AT) (Insolvency) [2017 (6) TMI 959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI], we have no other option but to set aside the impugned order dated 3rd November, 2017 passed in Company Petition No. IB-276/ND/2017. As the matter has been settled between the parties which is accepted by the learned counsel for the Respondent, we find no ground to remit the case to the Adjudicating Authority.

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• Service Tax

• 2018 (2) TMI 24
  Principles of Natural Justice - condonation of delay in filing appeal - delay in filing appeal due to sickness of petitioner - Held that: - it appears that there is a mistake, which had occurred even at the stage of issuance of the SCN. However, had the petitioner been vigilant, he could have placed necessary material to show that he is not liable to pay the service tax as demanded by the first respondent. Nevertheless, due his ailment and since he is bedridden, probably he was unable to take effective steps. Thus, taking note of the communication given by the second respondent dated 06.8.2014, this Court is inclined to grant one more indulgence to the petitioner to place the facts before the first respondent - appeal allowed by way of remand.

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• 2018 (2) TMI 23
  Extended period of limitation - Penalty for non-compliance with the provisions of FA, 1994 - whether the Appellate Tribunal fell into error in holding that invocation of the extended period under proviso to Section 73(1) of the Act in respect of two services, i.e. management, maintenance and repair services and mandap keeper services is justified in the facts and circumstances of the case? Held that: - it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word „suppression’ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. “fraud, collusion, wilful misstatement” - there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid paying excise duty. The terms „mis-statement’ and „suppression of facts’ are preceded by the expression „wilful’. The meaning which has to be ascribed is, deliberate action (or omission) and the presence of an intention. Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention. In the present case, the revenue argues that appellant wilfully suppressed the value of taxable services and thus did not discharge its liability of paying the service tax on same. The contention of the appellant is that the appellant was under a bona fide belief that the appellant was not liable for payment of Service Tax for the Mandap Keeping and Management, Maintenance and Repair Services. The Revenue has not been able to prove an intention on the part of the appellant to evade tax by suppression of material facts. In fact, it is clear that the appellant did not have any such intention and was acting under bona fide beliefs. For these reasons, it is held that the revenue cannot invoke the proviso to Section 73(1) of the Finance Act to extend the limitation period for issuing of SCN. The SCN was issued on 24.10.2008. The undischarged liability for payment of service tax with respect to Mandap Keeper Service and Management, Maintenance and repair services alleged in the SCN is for the period 2004-06 and 2005-08 respectively. Since the proviso to Section 73(1) cannot be invoked the SCN had to be served within one year from the relevant date. Therefore, the SCN with respect to short-payment of service tax for Mandap Keeper Service for the years 2004-2006 is barred by limitation. The SCN with respect to short- payment of service tax for Management, Maintenance and Repair Services for the years 2005-2007 is also barred by limitation. The SCN for the year 2007-2008 is, however, not barred by the limitation period of one year and the assessee is liable to pay service tax on the same. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 22
  Liability of service tax - expenses incurred by the appellants which is claimed as reimbursable expenditure from their principal during the course of providing C&F Agents Service - Held that: - actual reimbursable expenditure incurred by the C&F Agents on behalf of the principal under a contractual arrangement is not to be included in the taxable value at the hands of C&F Agents. The condition for such exclusion is that the expenditure should be on behalf of the principal and it should be as per a pre-arrangement and payment should be on actual basis only, as submitted by the department - In the present case, the appellants are pleading for fulfillment of these conditions. As such, there is no justification to include such actual reimbursable expenditure in the taxable value at the hands of the appellants. Liability of service tax - GTA Service for goods transported by the principal to the premises managed by the appellant - Held that: - the freight is paid by PEIL through their agent (i.e., appellants) for transportation of such goods. In such a situation, it is PEIL, who is liable to pay the freight, is apparently liable to pay service tax. The appellants cannot be considered as a ‘Consignor' or ‘Consignee' of the goods as they are acting only as an agent in the transaction of PEIL, who are manufacturing and selling the goods. In such a situation, provisions of section 2(1)(d)(v) will not apply to the appellants in the present case. Delayed payment of service tax - short-payment of service tax with intention for evasion - Held that: - There is no misrepresentation or suppression by the appellants as they have not filed any statutory return covering this period, as the same is due only in Apr.'08. Delay in payment of service tax beyond the period as mentioned in Service Tax Rules, 1994 will attract interest. In the absence of any intentional violation, penalty under section 78 on such delay alone will not be justified. If at all, a penalty under section 76 my have application, which, in any case, has not been imposed in the present case. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 21
  Abatement - Commercial or Industrial Construction Service - Works Contract Service - N/N. 1/2006-ST - Held that: - It is not in dispute that the services were rendered prior to 01.06.2007. The show-cause notices pertaining to later periods have been issued, only because the receipts for the said services already completed by the appellants, were received after 01.06.2007 and the appellants reflected the receipts of the payments in their ST-3 returns - The issue whether "Works Contract Services"/ "Construction of Commercial or Industrial Construction Services" are subject to levy of service tax prior to 01.06.2007 - demand set aside - appeal allowed.

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• 2018 (2) TMI 20
  Levy of service tax - Consulting Engineering Services - sub-contract - Held that: - the Trade Notice / CBEC circular did clarify that the services when provided to a prime consultant would not attract service tax during the material time - identical situation was analyzed by the Tribunal in the case of OIKOS Versus COMMISSIONER OF C. EX., BANGALORE-III [2006 (10) TMI 379 - CESTAT BANGALORE] wherein it was unequivocally held that appellant therein being a sub-contractor, levy of service tax was not justified - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 19
  CENVAT credit - allegation of the department is that M/s. BVIHR indulged in evasion of service tax by not paying the service tax to the department but issuing fake invoices to their customers - Held that: - there is no iota of evidence to show that the respondent is involved in any fraudulent availment of credit. In fact, the respondent had availed credit on the invoices distributed by their Head Office, M/s.Bata, Gurgaon - without seizure there can be no confiscation of the goods and when the goods are not confiscated, the penalty imposed cannot be justified - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 18
  Intellectual Property Service - The department was of the view that since the Intellectual Property Service came within the tax net with effect from 10.09.2004, the respondents were liable to pay service tax as a service recipient of the foreign company under the reverse charge mechanism - Held that: - an identical issue was considered by the Tribunal in the case of Commissioner of Service Tax, Delhi-III Vs Denso Haryana Pvt. Ltd [2015 (11) TMI 235 - CESTAT NEW DELHI] where the Tribunal has observed that the agreement was executed before 10.09.2004 and there cannot be any continuous supply of service so as to make the same taxable after 10.09.2004 - however, prior to 18.04.2006, the demand unsustainable as per decision laid down in the case of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 17
  Liability to tax - whether maintenance or repair services and management consultancy service in respect of software development is liable to service tax or not during the period 09/07/2004 to 31/03/2006? - Held that: - before 01/06/2007, in the definition of maintenance and repairs, the goods did not include the software. Accordingly, the maintenance and repair of software was not considered as taxable before 01/06/2007 - as per the law prevailing at the relevant time maintenance and repair services of the software is not taxable - appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (2) TMI 16
  CENVAT credit - Whether, in the facts and circumstances of the case, the demand raised by the Respondents is sustainable since even if credit is denied to the Appellants, it is simultaneously available to other factories who according to the Respondents have received the inputs under consideration? - extended period of limitation - proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the erstwhile Cenvat Credit Rules, 2002. Held that: - Once the stock of raw materials has not gone out of the units of the Sanvijay Group or the Group as a whole, then, what ought to be apparent to all of them is that there was an irregularity and at best discrepancy, but not a wrongful availment of the cenvat credit. It is, therefore, clear that the Tribunal noted the arguments of the assessee's Advocate, and particularly that the shortage is not due to the clandestine removal of the goods, but it is only due to the accounting method and secondly, that the difference in the stock is less than 5% which is permissible by the BIS standards. Apart therefrom, the confirmation of demand of cenvat credit was on the basis of non receipt of inputs in the respective units. The Tribunal holds that there is no dispute that the entire shortage found in the physical stock taken by the officers is less than 5%. It is in these circumstances and when in the assessee's own case it was held that shortage in the range of +/­ 5% should be ignored, then, the Tribunal followed its own order in the case of this very assessee and dropped the demand in respect of shortage found in the physical stock and consequent penalty commensurate to the duty on such shortage. Thus, the Group, the units and their activities were known to the Revenue. It is not as if the shortage was noticed for the first time. The shortage was not to such an extent as would make a demand for duty interest and penalty sustainable. It was in the permissible range. Wrongful availment of CENVAT credit - Held that: - the goods have been consumed within the Group units and there is no cenvat credit which was wrongfully availed, but was adjusted as stated above. Thus, this was a case where the adjudicating authority so also the Commissioner (Appeals) and the Tribunal could not establish any loss of revenue. We are also not been shown any finding of such nature. Else, the penalty would not have been dropped. Once the explanation in regard to shortage of raw materials was found to be plausible and is accepted and the Appeal allowed in part, then, we do not see why for an alleged irregularity on penalty, the same view was not taken. It was imminently possible given the fact that no fraud has been established. Once the assessees derive no benefit by not reversing cenvat credit on the inputs, when sister concerns are also eligible to take that credit, then, in the absence of any cogent and reliable evidence particularly on the diversion of inputs, the principle or doctrine of revenue neutrality, which was applied in that case by the Tribunal, was rightly upheld. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 15
  Rebate claim - the petitioner's request is that if rebate is not to be granted on such additional amount of CIF value of goods, such extra amount be recredited to the Cenvat account of the petitioner - Held that: - undisputed facts are that the petitioner had paid excise duty on CIF value of goods exported. The petitioner does not dispute the stand of the Government of India that excise duty was payable on FOB vale and not on CIF value. The Government of India also does not dispute the petitioner's stand that in such a case the additional amount paid by the petitioner would be in the nature of deposit with the Government which the Government cannot withhold without the authority of law. If these facts are established, a simple corollary thereof would be that the the amount has to be returned to the petitioner. If therefore, the petitioner's request was for re- credit of such amount in Cenvat account, same was perfectly legitimate. The respondents are directed to recredit the excess amount paid by the petitioner categorising as excise duty of CIF value of the goods to the Cenvat credit account. Petition allowed - decided in favor of petitioner.

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• 2018 (2) TMI 14
  Demand of differential duty - SCN was issued alleging that M/s. KTC had sold yarn which was received from the appellant at a higher price than that was mentioned in the Central Excise invoice of the appellant and thus resulted in undervaluation of the yarn - Held that: - The main evidence relied by department is the Roker Ledger recovered from M/s. KTC and the statement of Shri R. Pari. The said Roker Ledger was maintained by M/s. KTC only - The Roker Ledger which is a third party document shows only receipt of money by M/s. KTC. There is no evidence to show that the higher price was paid by M/s. KTC to appellant. Needless to say that these are third party documents and have to be corroborated by independent evidence. The adjudicating authority has merely presumed the entries in page 130 also to be genuine and reliable without support of any evidence to show the flow of money from M/s. KTC to appellant. Interestingly M/s. KTC is not a co-noticee to the proceedings. There is no independent evidence forthcoming to connect the appellant with the entries in page 130 of the Roker Ledger - Even though M/s. KTC who is a yarn broker might have received extra consideration or commission, there is no cogent evidence to establish that the appellant have received consideration over and above the invoice value. The material placed before us are insufficient to hold that the appellants have received higher consideration as alleged by the department - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 13
  Compliance with mandatory pre-deposit - section 35F of the Central Excise Act - Held that: - compliance of mandatory predeposit stands settled by the decision of the Hon’ble Madras High Court in the case of Dream Castle Vs. Union of India [2016 (5) TMI 672 - MADRAS HIGH COURT], where it was held that even the substantive provision of Section 35-F, after its amendment, is not capable of any other interpretation. Our conclusions on the first contention was not on the basis of the second proviso. Therefore, we need not even find out whether the second proviso is exhaustive about the exclusions, or whether the second proviso is a substantive provision in itself or the extent to which the second proviso would control the substantive provision - the appellant has to comply with the mandatory predeposit. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 12
  Valuation - Demand of duty with penalty - Period of limitation - sale of motor vehicles from depots / sales offices - case of Revenue is that the assessee had failed to intimate the difference in the above values and make payment of the excise duty on the differential amount on its own. The Revenue's statement throughout has been that this short­payment and evasion was noticed during the audit conducted in January, 2001. This suppression was made by the assessee with a view to evade payment of actual duty - Held that: - the Tribunal relying on the language of Rule 7 of the Central Excise Valuation Rules, 2000 and analysing it, came to the conclusion that the language of it says that the price prevailing at the place of sale of goods shall be the transaction value in respect of the goods cleared from the factory to depot. Therefore, the Tribunal held that the submission, that in some of the cases the motor vehicles were sold at higher price than the price prevailing at the depot of sale and therefore the demand is not sustainable, cannot be accepted as those clearances are not subject matter of the present case. To that extent, the Tribunal did not agree with the assessee. Extended period of limitation - Held that: - the Tribunal held that if the suppression came to light in January, 2001, subsequent to that it cannot be said that there was any further suppression or there was continued suppression. There was no fresh act by which a suppression can be inferred nor is such material brought on record. If that is how the matter is brought by the Revenue Officials, then subsequent to that period it could not be alleged by the Revenue that there was a suppression on the part of the assessee. The demand for the period February, 2001 to June, 2004 becomes time barred. The Hon'ble Supreme Court has been emphasising that the Revenue cannot resort to what it has repeatedly done in matters after matters. It cannot cover up its own fault or error by such erroneous application of law. Once the legal position was clear and throughout, we do not see any justification for the Revenue bringing this appeal. Appeal dismissed.

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• 2018 (2) TMI 11
  SSI exemption - clubbing of clearances - dummy units - Held that: - In the present case, the factory premises is found to be common where goods have been manufactured and cleared under the invoices of M/s Electro Industrial Sales Corporation, as well as M/s Numinous Supplies Pvt. Ltd. separately. Even though both the firms have been shown to have separate existence, since the goods have been manufactured from single common factory premises, the values of clearances of both the firms are required to be clubbed in terms of the above provision of the Notification - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 10
  CENVAT credit - shortage of the goods detected during the transition period of the long standing practice in the month of November 2007 - processing loss - clandestine removal - Held that: - In the case of Tata Motors Limited Vs. Commissioner of Central Excise, Jamshedpur [2010 (10) TMI 458 - CESTAT, KOLKATA], the Tribunal allowed the Cenvat Credit on the quantity found short on account of processing loss at the hand of job workers - There is no allegation of removal of shortage materials in any manner. The processing loss is inevitable during the manufacture of the finished goods. Thus, there is no reason to deny Cenvat Credit on such processing loss. Demand of SAD on Customs - Held that: - the appellant contended that they have paid the amount attributable to SAD along with interest and penalty of 25% of the SAD. The appellant is contesting only the demand of 15,96,309.00 and penalty and interest thereon - the impugned Order is modified to the extent of demand of Cenvat Credit of 15,96,309.00 along with interest and penalty are set aside. Appeal allowed in part.

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• 2018 (2) TMI 9
  Valuation - includibility - The department is of the view that the amount of the subsidy received from the M.P. Government is includible in the assessable value of the goods cleared during the period of dispute - Held that: - the identical issue has come up before the Tribunal in Shree Cement Ltd. vs. CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 8
  Validity of SCN - Time limitation - Held that: - the SCN was issued by the department on 19.8.2011. It is an admitted fact on record that the show cause notice has not been issued in this case within the normal period of one year provided under Section 11A of the CEA, 1944. Since, between the period of conducting such audit in August, 2008 and issuance of the show cause notice in August, 2011, the department has not gathered any additional information for initiation of the show cause proceedings, it cannot be said that the SCN issued in August 2011, is sustainable on the ground of limitation - there are no merits in the impugned order so far as it adjudicated the matter, beyond the normal period of limitation - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 7
  CENVAT credit - duty paying invoices - Invoices issued by Aurangabad Unit to their sister Units namely Sultanganj and Manikchak Units - Held that: - Proviso to Sub Rule (2) of Rule 9 had given an option to allow the credit even after the said documents does not contain all the particulars but contains the details of duty or Service Tax payable, description of goods or taxable service or Service Tax Registration of the person issuing the Invoice, name and address of the Factory or Warehouse of the first or second stage dealer subject to its satisfaction that the goods covered by the said documents have been received and accounted for in the books of accounts of the receiver. In the present case there is no dispute that the appellant received the duty paid packing materials under the cover of Central Excise Invoice issued by their Sister Unit - It has been mentioned that when inputs or capital goods on which Cenvat Credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such inputs and such removal shall be made under the cover of Invoice issued under Rule 9 of the Rules. As such it is a case of Inter Unit transaction of the input materials. In such situation, the Cenvat Credit cannot be denied for non-observance of procedural condition of technical nature. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 6
  CENVAT credit - capital goods/inputs - Diesel Locomotive used for conveyance of the raw materials and finished goods within the factory premises - Held that: - the appellants have availed the CENVAT Credit on diesel locomotive, which is admittedly used for handling of raw material/finished goods in the factory of the appellant - there is no dispute that the said goods is used in or in relation to the manufacture of the final product. Therefore, it qualifies as an input and credit is admissible - appeal allowed.

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• 2018 (2) TMI 5
  CENVAT credit - input services - transit insurance - marine insurance - C&F agency services - subscription to associations - dinner expenses - Held that: - Regarding transit insurance and C&F Agency service, with reference to export goods, it is noted that these activities are prior to the shipment of cargo in the port in India. It is by now settled legal position that place of removal in case of export is port of shipment and as such expenses incurred on various input services prior to that shipment are eligible for credit unless excluded specifically - transit insurance and C&F Agency Service connected to export of goods which were availed prior to shipment of goods are rightly eligible for the appellant. Marine insurance - Held that: - Since the present case is relating to the period prior to the amendment in Rule 2(l) CENVAT Credit Rules, 2004, which brought in certain restrictions regarding the credit available on business activities, the said credit cannot be denied. Credit on all services allowed - penalty set aside - appeal allowed.

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• 2018 (2) TMI 4
  CENVAT credit - Capital Goods - MS angles, channels, plates, non-metallic pipes etc. - appellants claim that they are eligible for such credit as these are used in relation to fabrication of capital goods inside the factory - Held that: - Similar facts were examined by the Hon’ble High Court of Madras in the case of Thiru Arooran Sugars Ltd. [2017 (7) TMI 524 - MADRAS HIGH COURT]. The “User Test” was evolved by the Hon’ble Supreme Court to determine the eligibility of credit on MS items - the appellant’s eligibility to credit cannot be denied, after applying user test - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 3
  Classification of goods - Ground Power Unit - whether classified under Chapter 85 or Chapter 88? - Held that: - the appellant had taken a categorical stand before the Commissioner (Appeals) that they have not availed the Cenvat credit of duty paid on the inputs which stand utilized by them in the manufacture of ground power units - The appellate authority has observed that they have not produced any tangible evidence/documentary proof to substantiate their claim that the credit was not availed by them and whatever Cenvat credit was availed pertained to other final products, which were cleared on payment of duty - matter remanded to the original adjudicating authority for verification of the assessee's records - appeal allowed by way of remand.

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• 2018 (2) TMI 2
  CENVAT credit - Reverse Charge Mechanism - service tax paid on the Product Insurance Services availed by him from a foreign country - denial on the ground of nexus - Held that: - Reference can be made to Tribunal's decision in the case of M/s. Neo Foods Pvt Ltd. Vs Commissioner of Central Excise, Service Tax and Customs, Bangalore-II [2017 (1) TMI 151 - CESTAT BANGALORE], wherein, Product Liability Insurance were held to be covered by the definition of "Input Services", so as to make the same as cenvatable - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1
  CENVAT credit - steel articles - M.S. Channels - MS. Angles - CHN Channels etc. - it was alleged that the said goods have been used in the construction of plant and machinery and as such, cannot be considered to be eligible cenvatable articles - Held that: - The issue stands decided in the assessee's own case by the Hon'ble Madras High Court in the case of Commissioner of Central Excise and Service Tax Vs M/s. India Cements Ltd., [2014 (7) TMI 881 - MADRAS HIGH COURT] wherein it was held that such steel items used for construction activities will satisfy the eligibility criteria as contained in Rule 57Q of Central Excise Rules - credit allowed. Time limitation - Held that: - There is no allegation in the show-cause notice reflecting upon any suppression or mis-statement, with intent to evade payment of duty on the part of the assessee - in the absence of any malafide, demand is barred by limitation. Appeal allowed in toto.

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• Indian Laws

• 2018 (2) TMI 25
  Stay of further proceedings at the stage of Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - failure to make payment of dues - SARFAESI Act - Held that: - The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available - The pleadings in the writ petition are very bald and contain no statement that the grievances fell within any of the well defined exceptions. The allegation for violation of principles of natural justice is rhetorical, without any details and the prejudice caused thereby. It harps only on a desire for regularisation of the loan account, even while the Respondent acknowledges its own inability to service the loan account for reasons attributable to it alone. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. Appeal allowed - decided in favor of appellant.

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