TMI Tax Updates - e-Newsletter
February 26, 2019

Case Laws in this Newsletter:

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

News

1. ROLE OF COMPETITION IN PUBLIC WELFARE IS PIVOTAL: GOVERNOR E.S.L. NARASIMHAN Roadshow On Competition Law organized by Competition Commission of India on 25th February in Hyderabad

2. Payroll Reporting in India – A Formal Employment Perspective

3. CIPAM Invites Entries for Intellectual Property Competition

4. Auction for Sale (Re-issue) of Government Stocks

5. Successful Operationalisation of Electronic Transfer of Funds to a Large Number of Farmer Beneficiaries under the Scheme PM Kisan Samman Nidhi (PM-KISAN) with in a short timeline through Public Finance Management System (PFMS): A Historic Achievement

6. Sebi orders impounding of ₹ 1 cr from ADF Foods' promoters, 4 others in insider trading case

Notifications

GST - States

1. FIN/REV-3/GST/1/08(Pt-1)(Vol.1)/18 - dated 15-1-2019 - Nagaland SGST

Seeks to amend notification No. FIN/REV-3/GST/1/08 (Pt-1)/52 dated the 26th October, 2017

2. FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /14 - dated 31-12-2018 - Nagaland SGST

Seeks to specify the late fee payable for delayed filing of FORM GSTR-3B and fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-3B for the period July, 2017 to September, 2018 in specified cases

3. FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /10 - dated 31-12-2018 - Nagaland SGST

Seeks to extend the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the newly migrated taxpayers

4. FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /09 - dated 31-12-2018 - Nagaland SGST

Seeks to amend Notification No. FIN/REV-3/GST/1/08 (Pt-1)/232, dated the 6th August, 2018

5. FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /02 - dated 31-12-2018 - Nagaland SGST

Seeks to amendment in Notification No. F. /no. Fin/REV-3/GST/1/08(Pt-1) “D” dated the 30th June 2017,

6. CT/LEG/GST-NT/12/17/32 - dated 31-12-2018 - Nagaland SGST

Seeks to extend the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the newly migrated taxpayers

7. CT/LEG-NT/12/17/31 - dated 31-12-2018 - Nagaland SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers

8. CT/LEG-NT/12/17/30 - dated 31-12-2018 - Nagaland SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated Taxpayers

9. CT/LEG-NT/12/17/29 - dated 31-12-2018 - Nagaland SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated Taxpayers

10. CT/LEG-NT/12/17/1190 - dated 29-11-2018 - Nagaland SGST

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

11. CT/LEG-NT/12/1189 - dated 29-11-2018 - Nagaland SGST

Seeks to extend the last date for filing of FORM GSTR-3B for taxpayers in Srikakulam dist of Andhra Pradesh and 11 districts of Tamil Nadu

Income Tax

12. 11/2019 - dated 21-2-2019 - IT

U/s 138 (1) of IT Act 1961 Central Government specifies Joint Secretary (PMAY), Ministry of Housing and Urban Affairs

Highlights / Catch Notes

Income Tax

• Joint Secretary in Housing Ministry Gains Powers for PMAY Under Income Tax Act Section 138(1.

  Notifications : U/s 138 (1) of IT Act 1961 Central Government specifies Joint Secretary (PMAY), Ministry of Housing and Urban Affairs
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• Bogus Purchases Assessment Reopened; Profit Estimation Deemed Fair by Authorities, No Further Intervention Needed.

  Case-Laws - AT : Reopening of assessment - Bogus purchases - estimation of profit @ 12.50% - Estimation of the profits requires some guess work to assess income - as assessed by both the authorities below is very reasonable and fair and do not call for our interference.
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• CSR Expenses Not Disallowed: Explanation 2 to Section 37(1) Lacks Retrospective Effect Under Income Tax Act.

  Case-Laws - AT : Disallowance of claim of CSR expenditure - the amendment is not with retrospective effect - CSR expenditure cannot be disallowed by invoking the explanation 2 to section 37(1) of the Act.
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• Property Transfer Finalized in 2009; No Capital Gain for 2010-2011 u/s 2(47) on Capital Assets.

  Case-Laws - AT : Capital Gain - transfer of property u/s 2(47) - the transfer in relation to capital asset have completed on 30.01.2009 which pertain to preceding A.Y. 2009-2010, therefore, no capital gain could be assessed in assessment year under appeal i.e., 2010-2011.
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• Undisclosed TDS in ITR Doesn't Automatically Mean Additional Income; Mere TDS Details Aren't Extra Receipts.

  Case-Laws - AT : Addition on account of undisclosed TDS was not shown in ITR - undisclosed income - merely because there is a TDS details uploaded by the other party would not ipso facto amounts to an additional receipt by the assessee which can be considered as income.
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• Gratuity Provision Rules: Section 43B vs. Section 40A(7)(b)(i) in Income Tax Act Explained for Deductibility.

  Case-Laws - AT : Provision made towards gratuity - the meaning as given in section 43B cannot be said to be the same as in section 40A(7)(b)(i) - it is not necessary that actual payment has to be made - If such amount is earmarked for payment of gratuity, i.e., provision is made for payment of gratuity, the amount has to be allowed for deduction.
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• CIT(A) confirms asset classification doesn't block depreciation claims; assets in use since 2008 verified by South Central Railways.

  Case-Laws - AT : CIT(A) rightly observed that mere quantification and classification in accounts cannot deter assessee from claiming depreciation when factually the assets has been put to use since 2008, as per the account statement rendered by South Central Railways.
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• Assessee's Manual Appeal Rejected for Not Filing Electronically; Delayed E-Filing Shouldn't Block Justice Delivery.

  Case-Laws - AT : Filling of appeal manually - appeal of assessee rejected on the ground that it was not filed electronically but was filed manually - delay in filing appeals electronically should not come in the way of rendering justice to the assessee.
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Customs

• Importer Granted Benefit as Denial Issue Doesn't Arise Due to No PTA Notification Claim by Appellant.

  Case-Laws - AT : Exemption under PTA Notification - Admittedly the appellant never claimed the benefit of the Notification in which case the question of denial of the same cannot arise and it can be safely concluded that there was no ‘lis’ between the importer and the Revenue - Benefit allowed.
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• Canned Software Import Not Exempt from Customs and CVD Duties; Exemptions Apply Only to Customized Software.

  Case-Laws - AT : Import of software - Exemption from the customs duty and CVD - software imported is not a customized software and the same fall in the category of canned software - demand sustained.
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• Second-Hand EVA Injection Moulding Machine Import Exempt from Anti-Dumping Duty as per Notification.

  Case-Laws - AT : Imposition of ADD - import of one second-hand EVA linear type injection moulding machine with accessories - the import of second-hand machinery cannot be subjected to imposition of Anti-Dumping Duty by the particular Notification.
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• Order Extending Show Cause Notice Date Deemed Unsustainable Due to Ignoring Affected Party's Viewpoint on Seized Goods.

  Case-Laws - AT : Extension of the date for issuing show cause notice after detention/seizure of the goods - view of the affected party from whom seizure has been made has not been taken - The impugned order is not sustainable.
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• Customs Handling Agent's License Revocation Overturned Due to Disproportionate Punishment; Penalty Imposed for Duty Manipulation.

  Case-Laws - AT : Revocation of CHA License - Any person who has been assigned the duty under provisions of law and found manipulating the same is liable to punishment. However the punishment should be proportionate to the offence committed. - Having regard to past records, cancellation of registration order set aside - levy of penalty sustained.
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• Imported RPC Received Before Aug 30, 2018, Should Not Be Adjusted Against Second Half FY 2018-19 Allocation.

  Case-Laws - HC : Limit for import of RPC for the manufacture of CPC - There is no reason for the respondents to adjust the RPC imported prior to 30.08.2018 against the allocation for the latter half of the Financial Year 2018-19.
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Indian Laws

• High Court's decision to condone 721-day appeal delay due to advocate's oversight challenged for insufficient justification.

  Case-Laws - SC : Condonation of delay of 721 days in filing appeal - explanation offered in support of condonation of delay was that the then advocate had not informed the respondent about the disposal of suit - The delay ought not to have been condoned by the High Court
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Service Tax

• Refundable Security Deposits Not Considered as Service Taxable Income for Renting Property u/s 67.

  Case-Laws - AT : Liability of service tax - advance deposit received for Renting of Immovable Property Services - refundable security deposit - Such refundable amount cannot form consideration as defined u/s 67.
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• Rule 6(3A) CENVAT Credit Reversal: Only Wholly Exempt Services Count, Partial Exemptions Excluded.

  Case-Laws - AT : Reversal of CENVAT Credit - The formula prescribed in Rule 6(3A) also uses the word “exempted services” and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those services which are wholly exempted from service tax can be included to indicate the value of exempted services.
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• MSO Signal Classified as Input Service; Appellant Can Claim CENVAT Credit for Service Tax Paid by MSO.

  Case-Laws - AT : Cable operator service - the signal provided by the MSO to the appellant is an input services for the appellants - the service tax paid by the MSO is available as cenvat credit to the appellants.
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• Cable Operators Qualify for SSI Exemption Under Notification No. 6/2005-ST, Avoiding Service Tax on Unbranded Services.

  Case-Laws - AT : Branded service or not - Cable operator service - SSI Exemption - the appellants are not providing any branded service to the subscribers therefore, the appellants are entitled to avail the benefit of exemption Notification No. 6/2005-ST
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Central Excise

• CENVAT Credit Cannot Be Denied for Procedural Lapses if Duty-Paying Documents and Input Use Are Valid.

  Case-Laws - AT : CENVAT Credit - duty paying documents - Receipt of inputs and used thereof also not in dispute, therefore merely for procedural lapse, substantial benefit of cenvat credit cannot be denied.
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• Rule 6(1) Exempts Reversal of CENVAT Credit for Input Services Used in Dual Activities.

  Case-Laws - AT : CENVAT credit - During the relevant period Rule 6(1) did not provide for reversal of CENVAT credit in respect of input services used both in provision of taxable services and for activities which do not amount to service.
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• Court Rules Workstations, Partitions, and Tables Assembly Not Manufacturing; Deemed Immovable Property by Commissioner.

  Case-Laws - AT : Process amounting to manufacture or not - Immovable property or not - workstations, partitions, storage units, tables etc. Came into existence, piece by piece, at the site of the customers and were permanently embedded/fixed to the ground - commissioner has rightly set aside the demand.
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• Refund Claims Timing: Section 11B and Rule 5 Clarify Limitation Period for Exported Goods Under Central Excise.

  Case-Laws - AT : Refund claim - Rule 5 of CCR, 2004 - Section 11B will be applicable - Relevant date for purpose of limitation in respect of refund claims filed under Rule 5, will be the last date of quarter in which the goods were actually exported.
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• Court Rules Duty Demand on Surplus Electricity from Bagasse Waste is Unsustainable.

  Case-Laws - AT : Excisability - waste - bagasse - the duty demand made against such sale of surplus electricity manufactured through waste product is not sustainable in law.
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• Ink Refilling and Labeling Not Manufacturing, No Excise Duty Under Central Excise Laws, Credit Reversal Applies.

  Case-Laws - AT : Process amounting to manufacture or not - The ink was procured and refilled in the containers and labelled and cleared as such - There is no change in the essential character or end use of printing ink. Thus, no transformation takes place which would result to be referred as manufacturing activity - Activity not liable to duty - Amount paid as duty is amount to reversal of credit.
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VAT

• Substation Equipment Classified as Part of "Solar Power Generating System" for Tax Exemption on VAT and Sales Tax.

  Case-Laws - HC : Classification - Substation Equipments - part of “Solar Power Generating System” or not - Once the entry includes “Solar Power Project”, all the material equipments used for the purposes of setting up power based project are certainly entitled for grant of exemption.
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Case Laws:

• Income Tax

• 2019 (2) TMI 1396
  TDS on bills discounting charges recovered - delayed payment charges assessee had to receive from Gujarat Electricity Board during the year under consideration - netting of the interest for disallowance under Section 80IA - HELD THAT:- Special Leave Petition is dismissed on the ground of delay.

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• 2019 (2) TMI 1395
  Deduction u/s 80IB - Allocation of selling and distribution expenses for the purpose of deduction under section 80IB - Tribunal reversing the view of the Assessing Officer - HELD THAT:- Special Leave Petition is dismissed on the ground of delay as well as on merits.

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• 2019 (2) TMI 1393
  Revision u/s 263 - Petitioner's grievance that the Tribunal remanded the proceedings before the CIT(A), in the present case, the powers are exercised by the Principal Commissioner which is not in consonance with the directions of the Tribunal - Rectification application - HELD THAT:- We request the Tribunal to pass an early order on the application for rectification filed by the department. The same may be disposed of preferably within two months from the date of receipt of copy of this order. The apprehension of the Counsel for the Revenue about limitation can be easily put to rest. Once the Tribunal passes an order on the rectification application of the department and rectifies its concluding portion of the order by remanding the proceedings before the Commissioner instead of CIT(A), the directions would take effect from the date of the order on rectification application. Any reference to limitation for passing revisional order may, therefore, to be from said date. We notice that the order of the Tribunal was passed on 27th November, 2017 but the department claims that the same was served on 14th March, 2018 and the rectification application was filed sometime in July, 2019 which would be within six months from the date of communication. Request the Tribunal to hear the rectification application on merits without raising question of limitation.

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• 2019 (2) TMI 1391
  Valuation of land under litigation/encroachment - status of the land for the purpose of determination of value - CIT(A) concurred with the view of the Assessing Officer and has held that the value of land cannot be taken at NIL and has further upheld that the assessee appellant has changed its method of valuation during the year under consideration - assessee has argued that the learned ITAT failed to appreciate that valuing the closing stock of encroached/litigated land at actual direct development expenditure upto assessment year 2005-2006 is against the principle of prudence - HELD THAT:- The Tribunal considering the decisions of Coordinate benches of the Tribunal itself in assessee s own case, set aside the issue to the record of the Assessing officer for fresh adjudication after conducting a proper verification and enquiry. The assessee was also directed to produce all the relevant facts in respect of each and every piece of land under litigation and encroachment so as to reveal the actual status of the land for the purpose of determination of value. Moreover, in the subsequent assessment year viz assessment year 2007-08 in the case of assessee, the Tribunal [2011 (6) TMI 954 - ITAT JAIPUR], restored back the matter to the Assessing Officer for deciding the issue and even in subsequent years i.e. 2009-10, 2010-11, 2011-12, 2012-13, vide order dated 23.02.2018, the Tribunal set aside this issue to the record of the Assessing Officer for deciding the same afresh in terms of the directions as given by the Tribunal in the assessment year 2007- 2008 and no appeal has been filed against the aforesaid orders by the assessee before this Court or before the Supreme Court.

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• 2019 (2) TMI 1380
  Rectification application - determination of arms length price u/s 92 of the Act in respect of international transaction of providing software development services by the assessee to its holding providing software development services by the assessee to its holding company - HELD THAT:- It is correct that the assessee had made submission on foreign exchange gain being part of the operating profit of the assessee for the purpose of determining the PLI of the assessee and the comparables and in this regard, the assessee has even drawn attention of the Bench to decision of the Delhi High Court in the case of Pr. CIT Vs. Ameriprice India Pvt. Ltd. [2016 (3) TMI 1272 - DELHI HIGH COURT] and Pr. CIT Vs. S.T Ericsson India Ltd. [2018 (1) TMI 1453 - DELHI HIGH COURT] this Tribunal has taken a view that foreign exchange gain or loss resulting from trading items has to be considered as part of the operating profit or loss. We are therefore, of the view that there is an error apparent on the face of the record and the same is rectified by inserting the following as paragraph 14A. “14A) As far as foreign exchange gain earned by the assessee is concerned, the same should be treated as part of the operating profit or not has already been decided by the Hon’ble Delhi High Court in the case of Prl.CIT Vs. S.T.Ericsson India Ltd. (supra) and Ameriprice India Pvt. Ltd., (Supra).It is the plea of the assessee that foreign exchange gain arose from trading items and therefore it should be regarded as part of the operating profit. We are of the view that the claim made by the assessee in this regard deserves to be accepted and AO is directed to treat the foreign exchange gain as part of the operating profit and compute the PLI of the assessee accordingly".

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• 2019 (2) TMI 1379
  Stay petition - rectification order passed u/s 154 as the total demand outstanding was recomputed at inclusive of interest as charged under section 234B - HELD THAT:- It is not in a position to pay any amount towards the outstanding tax demand raised, we are of the view that this is not a fit case for grant of stay on recovery of the outstanding demand of Rs. 9,29,93,360/- and accordingly dismiss the assessee’s stay petition. On the request of both the parties, the hearing in this case which was fixed for 28.06.2019, stands preponed and early hearing is granted on 13.03.2019. Since the date of early hearing is pronounced in open court in the presence of both the parties, no notice of hearing the appeal in IT(TP)A No.3282/Bang/2018 for Assessment Year 2014-15 in the present case need be issued.

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• 2019 (2) TMI 1374
  Condonation of delay - Filling of appeal manually - appeal of assessee rejected on the ground that it was not filed electronically but was filed manually - delay in filing appeals electronically - HELD THAT:- Appeal of the assessee cannot be rejected on the ground that it was not filed electronically but was filed manually. In the instant case, the assessee has filed the appeals manually for the above said two years within the limitation period and the delay has occurred only in filing the appeals once again electronically. We are of the view that the delay in filing appeals electronically should not come in the way of rendering justice to the assessee. Accordingly, we condone the delay that occurred in filing the appeals electronically. Eligibility to deduction u/s 80P(2)(a)(i) - HELD THAT:- The question of allowing deduction u/s 80P would arise only if the income is taxable. Further the AO has declined to examine the decision rendered by jurisdictional High Court. Hence the reasoning given by the AO to reject the claim of the assessee is not sustainable. The AO has also not given reasons for applying the provisions of sec.80P(4) of the Act in the hands of the assessee. Since the facts prevailing in the instant case require examination; since the scope of taxability of two streams of income of the assessee has also not been examined and since the AO has not given correct reasoning to reject the claim of the assessee, we are of the opinion that this issue requires fresh examination at the end of the AO.

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• 2019 (2) TMI 1373
  Penalty levied u/s. 271(1)(c) - deduction u/s 80 IA which resulted in allowance of double deduction on same profit - HELD THAT:- The assessee lost the appeal before the First Appellate Authority, penalty proceedings were separately initiated on the ground that the assessee claimed deduction u/s 80 IA of the Act and simultaneously claimed u/s 80 HHC of the Act without reducing the profit to the extent claimed deduction u/s 80IA of the Act which resulted in allowance of double deduction on same profit. The Assessing Officer was convinced that the assessee has concealed particulars of income, therefore, invoking explanation- 1 to u/s 271 (1) (c) of the Act penalty was levied. The assessee carried the matter before the CIT(A) and strongly contended that it has not claimed simultaneous deduction intentionally and therefore, it is not a fit case for levy of penalty. Strong reliance was placed on the judgment in the case of Reliance Petro Projects Private Limited [2010 (3) TMI 80 - SUPREME COURT]. After considering the facts and the submission and drawing support from various judicial decision the CIT(A) deleted the penalty so levied. The claim of the assessee is a highly debatable issue as there are conflicting decisions of High Courts and the Tribunal. Though the jurisdictional High Court of Delhi is against the assessee but that is relevant for quantum proceedings. Findings in quantum proceedings may be relevant but are not conclusive or determinative of the penalty proceedings. - Decided against revenue

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• 2019 (2) TMI 1372
  Penalty u/s 271(1)(c) - assessee has been assessed on MAT as per the provision of the section 115JB - HELD THAT:- It is not in dispute that the original assessment as well as reassessment has been computed at nil income and the tax paid by the assessee is on book profit u/s 115 JB of the Act. In our considered opinion the facts of the case in hand clearly show that this is not a fit case for levy of penalty u/s 271 (1) (c) of the Act. Levy of penalty u/s 271 (1) (c) of the Act is not justified accordingly the order of the CIT(A) is upheld and appeal filed by the revenue is dismissed.

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• 2019 (2) TMI 1371
  Allowing deduction u/s 80JJA on baggase / hunk - waste or a by-product of agri-produce - poultry farming - HELD THAT:- We find that the Tribunal in assessee’s own case in assessment years 2008-09 and 2009-10 has decided similar issue. The first issue decided by the Tribunal vide para 11 is with regard to the claim of deduction under section 80JJA of the Act, which was allowed by the CIT(A). The Tribunal in turn, relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Smt. Padma S. Bora [2012 (12) TMI 666 - BOMBAY HIGH COURT] had held the assessee to be eligible to claim the deduction under section 80JJA of the Act. Claim of depreciation on windmill - HELD THAT:- Tribunal had also adjudicated the aforesaid issue of depreciation on windmill vide para 14 of the order and has held the assessee to be entitled to claim the aforesaid depreciation. Following the same parity of reasoning, we uphold the order of CIT(A) in this regard and dismiss the grounds of appeal raised by the Revenue. Disallowance made on account of employees contribution to Provident Fund, ESIC and Maharashtra Labour Welfare Fund - HELD THAT:- As decided in in CIT Vs. Ghatge Patil Transport Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] to hold that in case the payments were made before due date of filing the return of income, then no disallowance is to be made under section 43B of the Act. Following the same parity of reasoning, since the assessee has made payments before due date of filing the return of income, there is no merit in making any disallowance under section 43B of the Act.

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• 2019 (2) TMI 1367
  Penalty u/s 271E - assessee collected certain deposits in cash exceeding Rs. 20,000/- - HELD THAT:- In appellant’s own case for AYs 1993-94, 1999-00, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05 & 2005-06 wherein penalty imposed by Additional CIT has been deleted the on the same issue of levy of penalty u/s 27IE holding the appellant to have reasonable cause as contemplated in Section 273B. The facts of the present case are the same as in earlier years and find no reason to differ with the view taken by my predecessor. - Decided against revenue.

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• 2019 (2) TMI 1366
  Deduction u/s 80IC - initial year for claiming benefit u/s 80IC - 5th year for counting deduction - HELD THAT:- A plain reading of Section 80IC shows that any undertaking or enterprise which begins or begun to manufacture or produce any article or thing or which manufactures or produces any article or thing and undertakings substantial expansion during the specified period is entitled to claim deduction u/s 80IC(3)(ii). The interpretation adopted by the Revenue for “initial assessment year” does not promote the object of Section 80IC for the undertakings which have completed the substantial expansion but at the same time it was impossible for such undertaking to commence business or to claim any benefit of an enactment in Section 80IC. Law does not require any assessee to do an impossible act and claiming benefit by the assessee in this particular set of circumstances is nothing but impossibility. As we have observed the initial assessment year means the assessment year relevant to the previous year in which the undertaking or an enterprise begins to manufacture or to produce articles or things or commences operations or completes substantial expansion. Here the completion of substantial expansion has to be read with reference to the expression in the company of which this particular expression happens to be. We are of the considered opinion that completing the substantial expansion for the purpose of claiming benefit u/s 80IC for the first time shall be read in the context of the proviso as a whole and it shall mean that the completing of substantial expansion would be equivalent to the commencement of the operation. Undertaking of substantial expansion would be complete only when substantial expansion is capable of producing the desired results. We, therefore, find it difficult to agree with the interpretation given by the authorities below. Assessment order for the AY 2006-07 also contains a reference to this claiming of deduction u/s 80IC for the first time on account of substantial expansion in that year only. It,thus, goes without saying that it has been in the knowledge of the Revenue right from AY 2006-07 that though the assessee has been mentioning the date of substantial expansion as 31.3.2005, it had taken a clear stand that the initial assessment year for commencement of claiming benefit u/s 80IC is 2006-07. The same was accepted for all these years. We do not find any valid reason for the revenue now to take a different stand. It is not the self serving statement of the assessee alone that the assessee is taking support from, but it is the acceptance of such a statement by the Revenue for all these year, that lend support to the case of the assessee. Thus the ‘initial year’ for claiming benefit u/s 80IC is 2006-07 and going by that 2010- 11 is the fifth year for claiming the benefit and not sixth year as held by the authorities below. - Decided in favour of assessee.

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• 2019 (2) TMI 1364
  Denying appellant carry forward of unabsorbed depreciation - HELD THAT:- CIT(A) rightly observed that mere quantification and classification in accounts cannot deter assessee from claiming depreciation when factually the assets has been put to use since 2008, as per the account statement rendered by South Central Railways. The assessee has earned certain income of Rs. 8,20,74,197/- during the year which has rightly been brought to tax by the AO, as income from business and hence, depreciation ought to be allowed for the current year. The CIT(A) rightly directed the Assessing Officer to allow the quantum of depreciation. Thus, the order of the CIT(A) is reasoned order and there is no need to interfere with the same. Hence, appeal of the assessee as well as Revenue is dismissed.

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• 2019 (2) TMI 1363
  TDS u/s 194H - addition on account of the liabilities of consolidation charges outstanding as on 31.03.2009 for non deduction of tds - transactions being of sale /purchase and relationship being on principal to principal basis - HELD THAT:- MOU makes it clear that the contract between the consolidators and the assessee company is in the nature of 'contract of sale' with a guarantee period and not a 'contract of agency' and the difference between the agreed price and sale price for surrender of rights was an incentive /compensation /profit (whatever one may call) for offer of sale with guarantee which cannot be called a commission or a brokerage for invoking the provisions of section 194H as the contract between the consolidators and the assesse company was a contract of a principal with a principal. The principal-agent relationship which is a sine qua non for invoking provisions of section 194H is missing in this case. It was a contract of sale with a guarantee period. The Hon’ble Delhi High Court in case of CIT vs. Mother Dairy India Ltd. [2012 (2) TMI 80 - DELHI HIGH COURT] held that amount received for undertaking procurement and marketing of milk and milk products through concessionaires is a case of purchase of milk outright and not agency sales. Disallowance of salary and wages - HELD THAT:- The adhoc addition made by the Assessing Officer at 80% of the salary and wages claimed has been reduced by the CIT(A) to 20% of such salary and wages on the basis that it is excessive in nature. The CIT(A) has taken proper consideration of the nature of the assesse's business and its turnover in consonance with the ratio of salary and wages vis-a-vis turnover. Addition u/s 68 - Cash credit of Surjeet Singh - HELD THAT:- Assessing Officer noted Surjeet Singh’s confirmation. Yet, the person himself could not be produced before the Assessing Officer as the time given was short towards the end of the assessment proceedings. The Ld. AR submitted that he can be produced if so directed by the Tribunal.Therefore, we are of the opinion that it will be appropriate to remand back this issue to the file of the Assessing Officer to decide the same afresh after verifying all the details about the cash credits including presence of Shri Surjeet Singh before the Assessing Officer and his confirmation. TDS u/s 194H - HELD THAT:- It is pertinent to note that some of the evidences were not before the Assessing Officer and Assessing Officer has also not verified the whereabouts of Shri Mange Ram. Therefore, it will be appropriate to remand back this issue this issue to the file of the Assessing Officer to decide the same afresh after verifying all the details about the said transaction. Needless to say, the assessee be given the opportunity of hearing by following principles of natural justice. Ground No. 4 is partly allowed for statistical purpose. Addition he provision of 40(a)(ia) r.w.s.l94H - HELD THAT:- AR submitted that the evidence of identity & address of Shri Dharm Raj & the receipt of payment of Rs. 42,84,375/- by him for Makan, Tubewell, fasal, Pad-poudha, Murgi farm had been filed for verification alongwith sale deed of the land. As regards treating the separate additional payment to Shri Dharm Raj as mentioned above as in the nature of commission for extraneous grounds for certain services, as held by the CIT(A), no cogent reason and material /evidence has been given to treat this as commission in order to invoke the provision of sec 40(a)(ia) r.w.s. 194H despite of the evidence given by the assessee. TDS u/s 194H - consideration of various land and structures on the land purchased - HELD THAT:- evidence of identity & address of Shri Dharm Raj & the receipt of payment of Rs. 42,84,375/- by him for Makan, Tubewell, fasal, Pad-poudha, Murgi farm had been filed for verification alongwith sale deed of the land which was not at all considered by the revenue authorities. As regards treating the separate additional payment to Shri Dharm Raj as in the nature of commission for extraneous grounds for certain services, while deciding this issue also the Assessing Officer as well as CIT(A) failed to looked into the material /evidence given by the Assessee before treating this as commission in order to invoke the provision of sec 40(a)(ia) r.w.s. 194H - it will be appropriate to remand back this issue this issue to the file of the Assessing Officer to decide the same afresh

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• 2019 (2) TMI 1359
  Disallowance of provisions made towards gratuity - provision for gratuity as disallowed on the ground that it was not actually paid and also not ascertained - HELD THAT:- Gauhati High Court in the case of George Williamson (Assam) Ltd. vs. CIT [1996 (9) TMI 52 - GAUHATI HIGH COURT] held that there are three modes of payment, namely, (1) having an approved fund, (2) by having a fund though not approved, and (3) when there is no fund but provision is made for payment of gratuity. In the first two cases payment has to be made and in the third case it is not necessary to make payment but a provision has to be made for such payment. U/s. 43B of the Act, the Legislature has specifically mentioned about fund. Therefore, the meaning as given in section 43B cannot be said to be the same as in section 40A(7)(b)(i) of the Act. Thus, in this case, provision was made for payment of gratuity to retiring employees in respect of the previous year, it is not necessary that actual payment has to be made. If such amount is earmarked for payment of gratuity, i.e., provision is made for payment of gratuity, the amount has to be allowed for deduction. In view of this, we are inclined to decide the issue in favour of the assessee

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• 2019 (2) TMI 1357
  TDS u/s 194A - nature of a cash discount extended by the assessee being short realisation of the sale price or bill discounting - HELD THAT:- As far as receiving of the finance amount from financial institution prior then the normal period of release of amount, the relationship of debtor and creditor or lender/borrower has come into existence. On perusal of the detail of party-wise charges paid, which is available on page 128 of the paper book, we find that out of the sum of Rs. 9,02,309/-, an aggregate amount of Rs. 1,19,806/- has been paid in relation to HDFC bank, which is not covered under section 194A because of the exclusion given to banking company under section 194A(3)(iii)(a) of the Act. Thus, assessee can be held liable for non-deduction of tax for the remaining charges of Rs. 7,82,503/- (9,02,309 -1,19,806). We, accordingly, uphold the liability of non-deduction of tax at source to this extent and direct the Assessing Officer to restrict the disallowance under section 40(a)(ia) to this extent only. Addition on account of the machine supplied to M/s. Kazstray service infrastructure Private Limited is a free of cost - when the sale receipt should accrue to the assessee - HELD THAT:- Respectfully following the finding of the Hon’ble Supreme Court in the case of Excel Industries Ltd [2013 (10) TMI 324 - SUPREME COURT] we set aside the order of the lower authorities on the issue in dispute and direct the Assessing Officer to delete the addition made in the year under consideration of the amount of Rs. 19.50 lakhs, which the assessee has already offered in the subsequent assessment year under the head miscellaneous income.

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• 2019 (2) TMI 1356
  Disallowance made u/s 14A r/w rule 8D - investment in unquoted shares. - no exempt income/ dividend income has been earned in the relevant previous year - HELD THAT:- In the absence of any exempt income earned in the relevant assessment year, no disallowance under section 14A of the Act can be made. Further, being bound by the decision of the Hon'ble Jurisdictional High Court as well as other High Courts as referred to above, we are unable to accept the proposition laid down in Lally Motors India Pvt. Ltd. [2018 (5) TMI 794 - ITAT AMRITSAR] and M.A. Alagappan [2017 (7) TMI 427 - ITAT CHENNAI] cited by the learned Departmental Representative. We uphold the decision of the learned Commissioner (Appeals) in deleting the disallowance made under section 14A of the Act only on the proposition that in absence of any exempt income earned by the assessee in the relevant assessment year no disallowance under section 14A of the Act can be made. Ground raised is dismissed.

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• 2019 (2) TMI 1355
  Addition on account of undisclosed income as alleging that undisclosed TDS was not shown in ITR - AR has submitted that it may be a TDS deducted by the said party on amount of service tax and therefore, the same cannot be treated as income of the assessee - HELD THAT:- Variation of receipts shown in the two Form No. 26AS first taken on 18/8/2015 at the time of filing of return of income and another taken on 21/11/2017 clearly manifests that some amounts were subsequently added in the traces. The Assessing Officer has made addition without verification of the nature of the receipt and even without verification whether any incorrect details are uploaded in the account of the assessee. Therefore, merely because there is a TDS details uploaded by the other party would not ipso facto amounts to an additional receipt by the assessee which can be considered as income. The assessee has submitted that the additional amount shown as receipt from Capital First was never received by the assessee, therefore, it requires a proper verification from the other party as to what this amount of Rs. 20,970/- on which the TDS of Rs. 2,098 was deducted U/s 194H of the Act is actually representing. Accordingly we direct the Assessing Officer to verify the correctness of the details and the nature of the alleged receipts. Receipts from the TVS motors on which the TDS u/s 194A is deducted - HELD THAT:- We find that if the interest if any was became due and payable by the said company to the assessee then it would be an income of the assessee as it was credited only during the year under consideration. However, the actual receipt of the said income or whether the said amount of Rs. 5,548/- is actually payable to the assessee by the TVS motors or not is to be verified from the other party. Hence, the Assessing Officer is directed to verify whether the said amount was payable by the said company to the assessee or actually paid during the year under consideration or not and then consider the same after giving an opportunity of hearing to the assessee. Receipt as rent from Worldwide Machinery Solution Pvt. Ltd - HELD THAT:- We find that the assessee has already shown an interest income of Rs. 1,43,400/- from Worldwide Machinery Solution Pvt. Ltd., therefore, a lessor amount shown in the Form No. 26AS would not lead to the conclusion that this is an additional income of the assessee when the assessee has already declared the interest income from the same party. Accordingly, we delete the addition Amount shown as receipt from Raj Motors on which the TDS of Rs. 851/- was deducted U/s 194C - AR has submitted that the assessee is not working under contract of the said company but the assessee purchases spare parts from the said party and there is no question of any receipt but the assessee has been paying against the purchases made from the said party - HELD THAT:- Once, there is no business between the parties which would fall under the provisions of Section 194C of the Act then the said amount of Rs. 42,556/- shown as receipt under contract is required to be verified from the other party. Accordingly, we direct the Assessing Officer to verify the correctness of the said entry in the Form 26AS from the other party and then consider the issue after giving an opportunity of hearing to the assessee. - Appeal of the assessee is partly allowed for statistical purposes.

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• 2019 (2) TMI 1351
  Short term capital gain - part-payment of sale consideration by cheque at the time of entering into an Agreement to Sell - HELD THAT:- The Agreement to Sell is not required to be registered as per Section 2(47)(vi) of the I.T. Act because the conditions of this provision are satisfied in the present case. The decisions relied upon by the Assessee squarely apply to the facts and circumstances of the case, particularly decision in the case of Shri Chandra Prakash Jain vs. ACIT [2014 (5) TMI 819 - ALLAHABAD HIGH COURT] to prove that the transfer of impugned property was completed on 30.01.2009 on the day of execution of Agreement to Sell and handing-over possession to the purchaser. Therefore, the transfer in relation to capital asset have completed on 30.01.2009 which pertain to preceding A.Y. 2009-2010, therefore, no capital gain could be assessed in assessment year under appeal i.e., 2010-2011. - Decided in favour of assessee.

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• 2019 (2) TMI 1346
  Disallowance of claim of CSR and SD expenses - allowable expenses u/s 37(1) - HELD THAT:- AO disallowed the above expenditure applying the provision of explanation 2 to section 37(1) of the Act which has been introduced w.e.f. 01.04.2015. The decision cited by the ld AR M/S. HLL LIFECARE LIMITEDC/O. K. VENKATACHALAM AIYER AND CO. CHARTERED ACCOUNTANTS VERSUS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1 (1) , TRIVANDRUM [2018 (6) TMI 552 - ITAT COCHIN] clearly covers the issue in favour of the assessee that the explanation 2 introduced w.e.f. 01.04.2015 applies from Assessment Year 2015-16 only. The ld DR could not produced any contrary decision wherein, it has been held that above explanation applies with retrospective effect. Therefore, we hold that for AY 2013- 14 CSR expenditure cannot be disallowed by invoking the explanation 2 to section 37(1) of the Act. In view of this we reverse the order of the lower authorities and direct the ld AO to delete the disallowance of CSR expenses and sustainable development expenses - Decided in favour of assessee.

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• 2019 (2) TMI 1345
  Addition towards denial of 50% deduction claim u/s 54F - Whether provision of section 54/54F does not include investment made jointly with a relative, who is not a legal heir? - HELD THAT:- Admittedly, the assessee has invested his entire capital gains in the acquisition of a new residential property. Admittedly, the joint owner has also categorically admitted that he has not made any investments in the construction of the property in the name of the assessee. Just because, the assessee has made an investment and has held it jointly with the assessee’s brother, it would not disentitle the assessee to claim of deduction u/s.54F of the Act, especially when he is the one, who has made the entire investments. - Decided against revenue

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• 2019 (2) TMI 1344
  Reversing assessment u/s 263 - addition on account of difference in 26AS statement regarding receipts realized from the assessee’s seven payer parties - additions of amount on which TDS has been deducted - HELD THAT:- Assessee is engaged in travel agent and tour operation business. The only issue herein is that of re-conciliation of the corresponding statements in from 26AS vis-a-vis assessee’s computation of income declared pertaining to the impugned assessment year. The CIT(A) has examined assessee’s all seven parties’ ledgers, details and receipt in issue to come to the conclusion that it had rightly not treated gross sum of its receipts as income as per Form 26AS statement. The assessee mainly derives commission income only from the parties/payers concerned after maintaining ledgers of its customers whose payments are made in advance. As rightly not treated all the receipt amounts as its income as confirmed by the corresponding ledger accounts. We make it clear that these clinching ledger accounts of its parties have gone unrebutted during the course of assessment as well as the instant second appeal proceedings before us. We conclude in these facts that the CIT(A) has rightly deleted the impugned addition made by the Assessing Officer alleging lack of reconciliation between assessee’s total receipts vis-a-vis the income component admitted therein in its computation. - Decided against revenue

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• 2019 (2) TMI 1343
  Long Term Capital Gains from the sale of immovable property u/s. 50C - reopening of assessment - HELD THAT:- AO computed the income from the sale of land under the head Capital Gain and determined the total income at Rs. 2,23,76,000/- and reduce an amount of Rs. 40,00,000/- from such amount considering such amount having been offered as value of consideration in the A.Y. 2007-08. The word “or assessable” inserted in Section 50C by Finance Act, 2009 with effect from 01/04/2009 is applicable from 2009-10 only and hence provisions of Section 50C cannot be applied in the year under consideration. Therefore, Capital Gain cannot be assessed u/. 50C in the case of assessee. Now property under consideration stood transferred on 15/07/2006 on handing over of the possession to Jhonson Electric Co. Pvt. Ltd. in compliance to Agreement for Sale dated 06.04.1993. Accordingly, subsequent transfer of the said property by Jhonson Electric Co. Pvt. Ltd. to Tanman Finvest Pvt. Ltd. vide Deed of Conveyance dated 08.05.2007 would result capital gain in the hands of Jhonson Electric Co. Pvt. Ltd. only. It is worthwhile to mention here that the Long Term Capital Gain on the basis of Deed of Conveyance dated 08.05.2007 has been assessed in the case of Jhonson Electric Co. Pvt. Ltd. vide an order u/s. 143(3) r.w.s. 147 dated 03.11.2010. Since Long Term Capital Gains on the basis of sale consideration disclosed in Conveyance Deed determined u/s. 50C has already been assessed in the case of Jhonson Electric Co. Pvt. Ltd. which had purchased the property from the assessee. Therefore, CIT(A) has rightly hold that property cannot again be assessed in the hands of assessee. - Decided against revenue.

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• 2019 (2) TMI 1342
  Reopening of assessment - Bogus purchases - estimation of profit @ 12.50% - HELD THAT:- AO deputed inspector to make enquiries who also reported that these parties do not exist at their given addresses. The assessee could not produce these parties before the authorities below. The assessee could not furnish the proof of delivery, transport challans and goods inward register at godown etc with respect to the alleged goods purchased by the assessee from these parties. The incriminating information was received from Maharashtra Sales Tax Department that these eleven parties from whom the assessee allegedly purchased material were accommodation entry providers who were merely issuing bogus bills without supplying/delivering any material. The genuineness of the purchases made from these eleven parties could not be proved by the assessee and the incriminating information received by Revenue from Maharashtra VAT department remained un-controverted. The authorities below have estimated embedded profits @12.5% of alleged bogus purchases made by the assessee from these accommodation entry providers who were issuing bogus bills without supplying material. Estimation of the profits have to be undertaken which requires some guess work to assess income underlying these bogus bills which are allegedly obtained to reduce profits. The higher appellate authorities in such cases will not normally interfere unless its shown that the guess work undertaken by Revenue authorities is palpably perverse which in our considered view in the instance case as assessed by both the authorities below is very reasonable and fair and do not call for our interference - Decided against assessee.

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• Customs

• 2019 (2) TMI 1392
  Limit for import of RPC for the manufacture of CPC - limit of import of RPC restricted to 0.7 Million MT for the period between October, 2018 and March, 2019 - manufacture of Calcined Pet Coke (CPC) - feed stock of RPC required for manufacturing CPC - Held that:- In order to implement the directions passed by the Supreme Court in M.C. MEHTA VERSUS UNION OF INDIA ORS. [2018 (11) TMI 1352 - SUPREME COURT], stating that RPC could be used as a feedstock for producing CPC, but had clarified that imported RPC for this purpose cannot exceed 1.4 Million Metric Tonnes (MT), the DGFT issued a Public Notice (Public Notice NO. 50/2015- 2020) dated 26.11.2018, and also in exercise of the powers under Section 5 of the Foreign Trade (Development Regulation) Act 1992, notifying the procedure to implement the quantitative restrictions imposed on the import of RPC. The said procedure, inter alia, provided that the quantitative restrictions as directed would be implemented on a fiscal year basis, that is, the fiscal year from 01.04.2018 to 31.03.2019 would be considered to implement the overall annual import limit of 1.4 Million MT of RPC. Since more than six months of the Financial Year 2018-19 had already expired as on 09.10.2018, it was further decided to limit the import of RPC to 0.7 Million MT for the period between October, 2018 and March, 2019. The quantitative limit for the import of RPC was incorrectly noted at 0.52 Million MT and the same was rectified by a Public Notice dated 06.12.2018 - The respondents are required to implement the quantitative restrictions on the import of RPC and the decision to implement the same on a fiscal year basis cannot be faulted. There is no reason for the respondents to adjust the RPC imported prior to 30.08.2018 against the allocation for the latter half of the Financial Year 2018-19. It is relevant to bear in mind that the respondents are only implementing the quantitative limit of 1.4 Million MT as directed by the Supreme Court. Admittedly, even if the RPC imported prior to 30.08.2018 is considered, and further import of 0.7 Million MT is fixed for the period between October, 2018 and March, 2019, the total quantity of RPC imported during the Financial Year 2018-19 would be within the overall annual cap as fixed by the Supreme Court. The present petition is allowed to the extent that the RPC already imported by the petitioner prior to 30.09.2018 shall not be considered against the allocation for the period October, 2018 to 31.03.2019.

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• 2019 (2) TMI 1388
  Denial of facility of exemption from payment of customs levy for the goods imported solely for the purpose of fulfilling export obligations - denied merely on the premise of the introduction of a new levy under the Goods and Service Tax with effect from 01.07.2017 - Extension of benefit of exemption notifications to levies under the Integrated Goods and Service Tax Act (IGST) - Held that:- Identical issue decided in the case of JINDAL DYECHEM INDUSTRIES (P) LTD. VERSUS UNION OF INDIA AND ORS. [2018 (10) TMI 709 - DELHI HIGH COURT], where it was held that since the benefit of exemption in fact existed at that point of time, the most appropriate course would be for the respondent authorities to verify whether as a matter of fact the petitioner in fact fulfilled the export obligations pursuant to the advance license of 18.07.2017 - petition disposed off.

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• 2019 (2) TMI 1387
  Refund of SAD - N/N. 102/20007-CUS dated 14.09.2007 - Rejection on the sole ground that the appellant had not attached the original Bill of Entry along with their refund claims - Held that:- There are no merits in the above contention in the absence of any provision shown by the Revenue that such original copy of Bill of Entry was required. Further the facts are also undisputed that such copy was produced by the assessee while filing the refund claims, which stands mis-placed by the Revenue. In such a scenario the assessee cannot be expected to produce the original Bill of Entry - appeal of Revenue rejected. Entitlement to Interest - case of appellant is that inasmuch as the refund claims were delayed on account of the lapse on the part of the Revenue, they are admittedly entitled to interest - Held that:- The issue before the original adjudicating authority was claim of refund of SAD which stands denied by him. As such there was no occasion for the original adjudicating authority to deal with interest aspect. Further Commissioner(Appeals) though had allowed the refund claims, but rejected the interest amount by one line observations reproduced above. There was no discussion or observations by Commissioner(Appeals) as regards interest claimed by the assessee. As such we are of the view that the matter should be remanded to original adjudicating authority for deciding the appellant s claim of interest. Application on remand.

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• 2019 (2) TMI 1381
  Revocation of CHA License - penalty u/s 117 of the Customs Act, 1962 - cancellation of registration to operate as shipping line agent - misconduct of stealing and modifying the custom seal and also forgery of signatures of the Custom Officers - manipulation of the seals and signatures - Board Circular No.30/2004-Cus. dated 16.4.2004 - Held that:- A show-cause notice under Section 124 is adjudicated as per Section 125 of the Customs Act. Section 125 of the Customs Act provide for confiscation of the goods and for redemption of the same on payment of redemption fine invoked. A proceeding under Section 124 could have led to the cancellation of the registration issued to the appellant for undertaking various activities in the Port. Section 34 provides that no goods should be loaded or unloaded on a vessel except under supervision of a Customs Officer. In his order, Commissioner has not shown in how and what manner the provisions of these Sections has been contravened in the present case. Secondly, how appellants were responsible for such contravention - Similarly, how provisions of Section 42(2) have been contravened is not clear. It is not the case of the Commissioner in adjudication order that vessel MV Varda V 0004E had sailed without written permission from the Custom officer. The case of the department is to the effect that certain documents on the basis of which crew has been cleared were manipulated at the initiation stage, but were presented to the custom officers for the clearance of crew. The crew was in fact cleared on the said documents after proper and physical examination - In the cross-examination, the officers had admitted that no person has boarded or de-boarded the vessel nor any cargo loaded or unloaded without actual physical verification and explicit approval of the Customs Department. It is settled principle in law that procedures prescribed for performance of duties assigned under the law or the rules/ regulations made under the law should be respected and followed. Any person who has been assigned the duty under provisions of law and found manipulating the same is liable to punishment. However the punishment should be proportionate to the offence committed. Whether the appellants should be held vicariously liable for the act of manipulation of the documents by their employees? - Held that:- Because of Master Servant relationship such vicarious liability shall follow - Various High Courts have held that punishment for the offences should be proportionate to the gravity of offence - In the present, it is not found that appellants were in any way responsible for forging the documents themselves but are vicariously responsible for the acts of their employees. We also find that no attempt in the present case was made to contravene the provisions of Customs Act leading to confiscation of any goods for the reason that they were prohibited/ restricted or were sought to be cleared without payment of appropriate duty. The contraventions were only in the manner of facilitation of clearance of crew. The fact is also noted that for last four year, appellants have been awarded best Steamer Agent in Cochin Port. Copy of such awards given to them have been placed at page 27, 28, 29 and 30 of the Paper Book. Looking into the past records of the Department itself appreciating the performance of the appellants, we are of the view that act of cancellation of registration is highly disproportionate to the offence alleged. Penalty under Section 117 which have been imposed is necessary to deter appellants or for that matter anybody else to indulge into such activities in future. Section 117 of the Customs Act provided for penalties for contravention not expressively mentioned - a penalty under Section 117 would suffice to deter the happening of similar incidence in future. The appeal filed to the extent of cancellation of registration of the appellants is allowed - penalties upheld - appeal allowed in part.

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• 2019 (2) TMI 1375
  Extension of the date for issuing show cause notice after detention/seizure of the goods - appellant submits that in this case, the appellant were not issued the Show Cause Notice and given opportunity to be heard before extending the time limit for issuance of Show Cause Noptice under provisions of Customs Act - whether after the amendment of Section 110(2) of Customs Act by Finance Act, 2018 is there any need for issuance of the Show Cause Notice before the extension is permitted by another six months on the reasonable ground by the Commissioner/adjudicating authority? - Section 110 of the Customs Act, 1962. Held that:- Clause 90 of the Bill seeks, to amend Section 110 of the Customs Act so as to give power to extend the period for issuing Show Cause Notice in case of seized goods by a further period of six months to case in cases where no order for provisional release of goods has been passed. After amendment not only the Show Cause Notice is required to be issued by the Adjudicating Authority, but he has also to give a reasoned order after hearing the Investigation Officer and also taking view of the affected party from whom seizure has been made as his personal right is being deprived of which emanate from the Section 110(1) of the Act that entitled him to got the goods returned which has been seized from his possession. The impugned order is not sustainable and the same are being set aside with consequential benefit, as per law, which includes the return of imported goods to the person from whom the seizure have been made.

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• 2019 (2) TMI 1370
  Jurisdiction - Application for transfer of this appeal to the ADD Bench - whether the issue falls within the jurisdiction of this Tribunal? - Held that:- The Department has not been able to say whether the Miscellaneous Application was accepted at Principal Bench, New Delhi or whether numbered. Interestingly, this appeal is filed by the Department before this Tribunal. They cannot object to the jurisdiction of the Tribunal in an appeal filed by them. In any case, if they have any grievance as to lack of jurisdiction, the correct procedure is to withdraw the appeal and file it before the Bench which has jurisdiction. They cannot take the shelter of filing a transfer application and overcome the hurdle of limitation - the contention of the Ld. AR that they have filed an application for transfer and the matter has to be transferred to ADD Bench, New Delhi, deserves to be disregarded in toto - this is a fit case within the jurisdiction of the Tribunal. Imposition of ADD - import of one second-hand EVA linear type injection moulding machine with accessories - N/N. 47/2009 - case of respondents are that neither the findings of the Designated Authority nor the Notification in question had envisaged levy of ADD on used machinery and that therefore ADD is not leviable on the subject goods - Held that:- The purpose and intent of the Anti-Dumping Duty is recognized and permitted by the World Trade Organization. Dumping is said to occur when goods are exported by a country to another country at a price lower than its normal value and that causes injury to the domestic industry. Anti-Dumping measures rectify the situation arising out of such dumping of goods and its trade distortive effect. This is part of the General Agreement on Tariffs and Trade (GATT), 1994, commonly known as The Anti-Dumping Agreement - Ld. Advocate is correct in his assertion that the legal framework for Anti-Dumping measures are enshrined in Sections 9A, 9B and 9C of the Customs Tariff Act, 1975 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 framed thereof. It is evident that the Anti-Dumping measures are targeted at goods which are dumped by a foreign country and as a resultant, the domestic industry is adversely affected. Obviously, the domestic industry would only be concerned about the products that it releases into the market, namely, the new items thereof and not the second-hand sales of the products that they have sold earlier. Comparison has to be of two comparables, namely, of new domestic products against new imported goods, as there cannot be a comparison between new domestic output and second-hand imported goods. Once we recognize that the basic purpose of the ADD is to serve as a price leveller to protect the domestic industry, the same intent and purpose is served even in case of second-hand machinery imports by way of re-appraisement of the declared value, based on the present condition of the imported item, by the Chartered Engineer - the import of second-hand machinery cannot be subjected to imposition of Anti-Dumping Duty by the particular Notification, which evidently would only be applicable for the import of new machinery or goods listed therein. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 1368
  Import of software - Exemption from the customs duty, the additional customs duty and CVD - N/N. 20/2002(Cus) dt. 01/03/2002, No.20/2006(cus) dt. 01/03/2006 and No.6/2006CE dt. 01/03/2006 - Appellant imported certain telecommunication software through Air Cargo Complex, Thiruvananthapuram and declared the same as customized information technology software in CD falling under CTH 84 23 8020 and CETH 85 23 8020 - Held that:- The Commissioner in the impugned order has given detailed reasons for holding that the software imported is not a customized software and the same fall in the category of canned software - Further, the Commissioner has considered all the materials during the investigation. The relevant findings of the Commissioner are that the importer subscribes to different reasons for shifting the import from Bangalore to Trivandrum Air Cargo Complex including expense on transportation from Bangalore to Palakkad and increase in freight charges by M/s. Air India. No proof was produced by the importer to substantiate it. Further the importer neither explained the reasons for the payment of appropriate duty at Bangalore Air Cargo Complex when these software were cleared through Air Cargo Complex, Bangalore nor about the payment of duty on import of software from First Communication, Taiwan and M/s. Tecom, Taiwan - the appellant has not been able to rebut the detailed findings of the Commissioner in the impugned order. There is no infirmity in the impugned order - appeal dismissed.

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• 2019 (2) TMI 1365
  Exemption under PTA Notification No. 152/2009 - import of shipments of complete build up units i.e. Washing Machine, Refrigerator, Microwave Oven, LED TV, Air Conditioner etc. - production of a certificate under Comprehensive Economic Partnership Agreement indicating the place of origin of the goods - Held that:- As held by the Hon’ble Delhi High Court in the case of Aman Medical Products Ltd. vs. Commissioner of Customs, Delhi [2009 (9) TMI 41 - DELHI HIGH COURT], subsequently followed in the case of Micromax Informatics Ltd. vs. Union of India [2016 (3) TMI 431 - DELHI HIGH COURT], the law declared in the case of Priya Blue [2004 (9) TMI 105 - SUPREME COURT OF INDIA] would be applicable when there would be ‘lis’ between the importer and the Revenue where the said ‘lis’ stands decided against the assessee and the assessee has not challenged the said decision of the Revenue - the objection of the Revenue as regards the subsequent production of certificate cannot be upheld. Non-challenge of bills of entries - Held that:- Admittedly the appellant never claimed the benefit of the Notification in which case the question of denial of the same cannot arise and it can be safely concluded that there was no ‘lis’ between the importer and the Revenue. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (2) TMI 1352
  Initiating Corporate Insolvency Resolution Process - Corporate Debtor liquidation as per provisions of Regulation 32(b) & (e) of the IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- We direct that the Corporate Debtor be liquidated as per provisions of Regulation 32(b) & (e) of the IBBI (Liquidation Process) Regulations, 2016 which provides for assets in a slump sale, the corporate debtor as a going concern, in the manner as laid down in Chapter III under Part II of IBC, 2016. Considering the national importance attached to product line of the company, the customers explicitly Ministry of Defence, Indian Coastguard, Customs etc, order book size, advances paid by various Government Departments, the work in progress stalled at various stages of production and huge number of workforce (around 850 employees) we direct that the Liquidator shall endeavour to sell the Corporate Debtor company as a going concern. Given the conflict of interest of the RP as discussed in detail above, we intend to appoint a new Liquidator. We hereby appoint Mr. Vijay Kumar V Iyer having registration no. IBBI/IPA-001/IP-P00261/2017-18/10490, e-mail id. [email protected] and Ph. No. 9821219493. The RP is directed to handover all the documents/records to the liquidator. The Liquidator shall issue a public notice inviting interested investors from across the globe,in National level newspaper having all India circulation, in all the editions, stating that the Corporate Debtor is in liquidation. The maximum period applicable for trying the sale on a going concern basis of the Corporate Debtor will be only six months from the date of the order. In case the efforts to sell the company as a going concern fails during the stipulated period of six months, then the process of the sale of the assets of the company will be undertaken by the liquidator as prescribed under Chapter- III of IBC, 2016 and the relevant regulations of IBBI. The Designated Registrar is directed to send a copy of this order, to RoC under which this Company is registered. All powers of the Board of Directors, key managerial persons and the partners of the Corporate Debtor shall cease to affect and at this moment vest in the Liquidator. The personnel of the Corporate Debtor are directed to extend all co-operation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor. This liquidation order shall be deemed to be notice of discharge to the officers, employees and workmen of the Corporate Debtor, except to the extent of the business of the Corporate Debtor is continued during the liquidation process by the Liquidator. We direct the CoC/Resolution Professional for initiation of the process of the sale of the corporate debtor unit as a whole, on a going concern basis, i.e. slump sale, to extract maximum value to the assets of the company which may be in the interest of the company and its employee. Since this liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor without prior approval of this Adjudicating Authority save and except as mentioned in sub-section 6 of Section 33 of the IBC.

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• PMLA

• 2019 (2) TMI 1362
  Offence under PMLA - Attachment orders - Appellant Bank has the right to recover the loan amount against the mortgaged properties, under law - HELD THAT:- As per admitted position as that the attached properties are the mortgaged /Hypothecation/pledge agreements and deeds of corporate and personal guarantee, the due amount alongwith the interest is to be realized by the banks/lenders. The trial in the matter against the borrowers may take number of years. The borrowers have cheated not only the bank but also appropriated the public money and left the country by playing the fraud upon this country. No one is aware when the borrowers will return back, and pay the due amount and face the criminal trial and how much time will take to complete the trial. The amount due against the security cannot be delayed. Therefore the resolution process cannot be blocked. The amount must come to the banks/public sector banks being public money. The approach of the government is appreciable for bringing the law on this as aspect of Resolution process. Under these circumstance till the next date of hearing the operation of the impugned order shall remain stayed. The Resolution process shall continue but the properties shall not be finally disposed without the permission of this Tribunal till the next date.

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• Service Tax

• 2019 (2) TMI 1385
  SSI Exemption - branded service or not - N/N. 6/2005-ST dated 1.03.2005 - Cable operator service - appellants were not paying service tax on the ground that they are not liable to pay service tax and did not get some registered with the department - Extended period of limitation - best judgement under Section 72 of the Finance Act, 1994 - service tax on the gross value of the services or otherwise - CENVAT credit of service tax paid by the MSO. Whether the appellants are providing branded service or not? Consequently they are entitled for exemption under Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012? - Held that:- In this case, the appellants are cable operator and providing cable services to the subscribers on the basis of signals received from the MSO. The subscriber has not asked for any brand for providing the said services. In fact, the appellant is also not providing any branded service as MSO is supplying signal to the appellants which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers - the appellants are not providing any branded service to the subscribers therefore, the appellants are entitled to avail the benefit of exemption Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012. Whether the extended period of limitation is invokable or not? - Held that:- The appellants were under bonafide belief that they are not liable to pay service tax as they are entitled for benefit of exemption under notification no. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012, therefore, they did not pay service tax. Moreover, there was confusion in the industry during the relevant period whether the appellants are liable to pay service tax or the MSO liable to pay service tax on their activity, in that circumstances, the benefit of doubt goes in favour of the appellants - the extended period is not invokable - penalty also not imposable. Whether the best judgement under Section 72 of the Finance Act, 1994 has been assessed correctly or not? - Held that:- In this case, it is a fact on record, the appellants were not given time of supply the data of their activity and assessment has been done on the basis of the data supplied by the MSO which is not correct, therefore, we hold that the assessment under Section 72 of the Finance Act, 1994 is not correct - the impugned demand is not sustainable, but the appellants are directed to provide the data for their activity within the period of limitation to the adjudicating authority within 30 days of the communication of this order and on the basis of the data supplied by the appellants, the correct service tax liability shall be determined by the adjudicating authority - matter needs examination. Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not? - Held that:- In terms of Section 67 of the Finance Act, 1994, the appellants are liable to pay service tax on the gross value of subscription received by them - Admittedly, in this case, the appellants have received subscriptions from the subscribers for providing the services, on the said amounts, the appellants are liable to pay service tax. Whether the appellants are entitled for cenvat credit of service tax paid by the MSO or not? - Held that:- Out of the total amount received by the appellants, some amounts of total subscriptions, the appellants are remitting to the MSO on which the MSO is paying service tax, therefore, the signal provided by the MSO to the appellant is an input services for the appellants. Therefore, the service tax paid by the MSO is available as cenvat credit to the appellants - the appellants are entitled to avail cenvat credit of the service tax paid by the MSO. Appeals disposed off.

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• 2019 (2) TMI 1383
  CENVAT Credit - the assessee had not furnished the cenvat return or abstract or details of the cenvat credit availed, also had not furnished the duty paying documents - statements of service provider - Original Invoices - Rule 9 of Cenvat Credit Rules, 2004 (CCR) - Held that:- It is a self-contained document incorporating all the mandatory requirements of proviso to Rule 4A and in any case, NPCI is not a private body just to ignore its statement; as to the nature of service, there is an agreement in place - It is not the case of the Revenue that NPCI has not filed its ST-3 return or that there was any contravention by NPCI whereby a doubt is entertained as to the transactions, to deny cenvat credit availed by the assessee on its payment to NPCI - Hence, we are unable to subscribe to the views of the Ld. Commissioner and hence, we are setting aside the same. Cenvat on statements of service provider - Held that:- The service providers include private parties which is not as per Rule 9 (2) of CCR, 2004 read with Rule 4A of Service Tax Rules, 1994, lacking even the minimum necessary details. There is no whisper about any agreement with the parties, but, however, considering the fact that the assessee is a banker, we find it appropriate to give one more opportunity to prove its case, by producing bills/invoices and not just invoice of invoices. The assessee should co-operate with the Revenue and it cannot claim any special status by filing appropriate documents. Cenvat on Original Invoices - Held that:- The assessee has furnished the photocopies of the invoices and it is the settled legal position of law that even photocopies of invoices are the valid documents - Denial of cenvat credit on the photocopy of the invoices is not justified and hence the same is set aside. Cenvat Credit where no documents furnished - Held that:- No documents were furnished - we do not propose to interfere with the findings of the lower authority. Appeal allowed in part.

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• 2019 (2) TMI 1382
  CENVAT Credit - proportionate credit attributable to exempted services - taxable service “hypothecation and loan activity” - Rule 6(3A) of the CENVAT Credit Rules 2004 - determination of the amount that has to be reversed by the appellants when common inputs/input services are used for providing output services - appellants have maintained separate records with regard to the common inputs used for the exempted as well as taxable output services - Held that:- The dispute in this case is with regard to the exemption given by Notification No. 04/2006 dated 01.03.2006 wherein 90% of the amount of interest received in granting loans and financing services is exempted. By such Notification, service tax is required to be paid on a value equal to 10% of the total amount representing interest; balance 90% thus enjoys exemption from payment of service tax. The Show Cause Notice has been issued alleging that the appellant has to consider the 90% which enjoys exemption from payment of service tax as exempted services and include this value for arriving at the amount that has to be reversed - The formula prescribed in Rule 6(3A) also uses the word “exempted services” and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those services which are wholly exempted from service tax can be included to indicate the value of exempted services. The assessing officer shall carry out the computation afresh and requantify the liability, if any - Appeal allowed in part.

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• 2019 (2) TMI 1377
  Imposition of penalty u/s 78 - the entire service tax liability was paid much before the issue of show-cause notice which was issued after a lapse of 2 years 6 months by invoking the extended period of limitation - suppression of facts or not - Business Auxiliary Service - Held that:- The original authority has confirmed the demand of Rs. 6,49,185/- but the appellate authority has given the cum-tax benefit and confirmed the tax liability to Rs. 5,83,590/- which is also wrong in quantification and the actual liability comes to Rs. 5,77,773/- and the appellant has already paid Rs. 6,15,926/- as per the various challans attached and he has also paid the interest of Rs. 33,437/- voluntarily computed and also paid the late filing fee of Rs. 52,100/- towards service tax returns - the entire amount was paid before issuance of the show-cause notice and the Department has failed to bring any evidence on record to show that there was suppression on the part of the appellant to evade the payment of service tax. Penalty not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 1376
  Non-payment of service tax - port services in respect of incoming and outgoing vessels and handling the import of export of the goods - Department entertained a view that all the services rendered by the assessee are liable to service tax but no service tax is being paid by the assessee on various income received by them - Held that:- This issue is no more res integra and has been settled in favour of the appellant in appellant’s own case for previous period by this Tribunal COCHIN PORT TRUST VERSUS COMMISSIONER OF CENTRAL EXCISE, COCHIN [2012 (6) TMI 67 - CESTAT, BANGALORE], where it was held that Renting of immovable property services under which the impugned activity will be appropriately classified was introduced only on 1.6.2007 - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 1353
  Satisfaction of requirements of the pre-deposit - the appellant has not submitted proof of mandatory deposit in terms of section 129 A of the Customs Act, 1962 - service of order - proof of delivery - Held that:- Section 37C which deals with service of decision, orders, summons etc. provides that decision / orders shall be served by tendering the decision, order summons or notice, or sending it by registered post with acknowledgement due or by speed post with proof of delivery. The department has only placed before us a copy of the dispatch register with postal receipts to demonstrate that it was dispatched, but proof of delivery has not been placed before us. In such circumstances, it is difficult to presume that order was actually served by speed post upon the appellant. The matter is remanded to the Commissioner (Appeals) to decide it on merits - appeal allowed by way of remand.

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• 2019 (2) TMI 1349
  Time Limitation - Renting of immovable property service - Section 35 of Central Excise Act, 1944 - Held that:- As per Section 35 of Central Excise Act, 1944, Appeal before Commissioner(Appeals) can be filed within 60 days of the receipt of the copy of order by the appellant. Statute itself vide provision to Section 35 empowers Commissioner(Appeals) to condone the delay beyond 60 days on being satisfied that the appellant was prevented by sufficient cause from presenting said appeal. But the extent of only 30 days of delay beyond said 60 days is statutorily provided to be condoned by the Commissioner(Appeals) - Since in the present matter the appeal before Commissioner(Appeals) was filed beyond 90 days that he was not empowered to condone the delay. The Commissioner Appeals was burdened with statutory mandate for not entertaining any Appeal which has been filed beyond a period of three months - appeal dismissed - decided against appellant.

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• 2019 (2) TMI 1348
  Condonation of delay of 780 days in filing appeal - law of limitation - Held that:- The Order to be challenged was announced on 28.04.2016. No doubt, the applicant has attached a date sheet showing the time taken in getting sanction to file the Appeal. But perusal thereof is sufficient to hold that the appellant’s Department has acted absolutely with negligence while dealing with the matter of filing the Appeal for which a specific statutory period is provided. Ignorance of law is no excuse. Otherwise also as far as information about period of limitation for final appeal is concerned, the same is very much available on the preamble of the Order. It was mandatory even for the Government Department to be careful about that statutory time limit. The date sheet produced on record rather reflects the casual and negligent attitude of the appellant which is highly unappreciable for a Government Department. Even under the name of administrative constraints, the delay of 780 days is not sufficiently explained. The Application in hand is hereby dismissed for want of any reasonable explanation or sufficient cause shown for delay of more than two years rather for the apparent negligence on part of the appellant - appeal dismissed.

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• 2019 (2) TMI 1347
  Liability of service tax - advance deposit received for Renting of Immovable Property Services - Held that:- The demand is on the advance amount received by the appellants for renting out their immovable property - The said issue is covered by the decision in M/s. Satya Prakash Builder Ltd. Vs. C.C.E. & S.T., Bhopal [2018 (8) TMI 622 - CESTAT NEW DELHI], where it was held that The demand raised in the impugned order is erroneous being made on the refundable security deposit. Such refundable amount cannot form consideration as defined under Section 67 - the demand cannot sustain - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (2) TMI 1386
  Process amounting to manufacture or not - appellant imported ink in bulk and procured the container form third parties in open market. The ink was procured and refilled in these containers and labelled and cleared as such - Refilling of ink/labelling of the containers from bulk drums/cans amounts to manufacture or not? - cenvat credit of CVD - extended period of limitation. Process amounting to manufacture or not? - Held that:- The containers are various different sizes shapes which are procured from third party. Ink is transferred to these containers from the control machine by using the same control machine after which the containers are sold. We have also seen that printing ink bulk drums is classified under heading 3215. We also find that the appellant is importing ink filled above said containers and affixing the label on such containers - Even if when these containers are cleared by the appellant after affixing the label on the containers the same were classified under heading 3215. Only reason for holding that the activity amounts to manufacture by the Commissioner is that these containers are specific shapes and sizes of impugned items making them compatible with printers manufactured/traded by them. The impugned items are made as per fitment, which make them unique for their compatible printers only and hence the amounts to manufacture. From the provisions of section 2(f) defines the term manufacture in an inclusive manner which covers both the processes which are commonly understood as manufacture as well as the processes covered in the inclusive clause which are deemed to be manufacture - admitted position is that the items in question do not form part of Third Schedule of the Central Excise Act in section 2(f) (iii). We observed that the Commissioner have given finding that the containers are specialized containers which are specially designed for the purpose of a printer and hence the process of filling and labelling amounts to manufacture. We find that neither these containers nor the ink manufactured by the appellant, therefore, by merely undertaking the process of filling of ink/labelling of the containers which would enable the container to be used for printing. In the present case, filing in to containers enables the impugned items to be used as printing ink. However there is no change in the essential character or end use of printing ink. Thus, no transformation takes place which would result to be referred as manufacturing activity - the character, name and use of the printing ink does not change. Therefore, the process of refilling and relabeling which enables the products to be used with printing ink does not amount to manufacture - Also, the Chapter note 7 to chapter 32 does not refer to heading 3215 or any Tariff item. Therefore, as per Chapter Note 7 to chapter 32, the activity shall not deem as manufacture. Therefore, we hold that the activity undertaken by the appellant does not amount to manufacture - answered in favour of the appellant. Classification of goods - scope of SCN - Held that:- Turing the course of adjudication, the Commissioner have travelled beyond the allegation in the show cause notice and classified the impugned products under sub heading 8443 99 51/52 of Central Excise Tariff without assigning any reason/evidence. It is settled law, that the show cause notice is the foundation of the case on which the Revenue has to form its case and in the absence of any allegation with regard to the classification, in the circumstances, the adjudicating authority cannot change the classification of the products. Therefore, the impugned order classifying the goods under 8443 99 60 is beyond the scope of show cause notice. CENVAT credit sought to be denied of CVD on the imported printing ink make up cartridges and wash solution which relabelled and cleared on payment of duty holding that the activity of labelling does not amount to manufacture - Held that:- Admittedly in this case, the appellant cleared the said imported goods after refilling on payment of duty. Therefore, if the activity does not amount to manufacture, in that case, the duty paid by the appellant shall amount to reversal of credit. Therefore, the appellant is not required to reverse the credit of CVD availed by the appellant at the time of import. Extended period of limitation - Held that:- The appellant is regularly filing their excise returns and specifically mentioned the activity of relabeling or packing does not amount to manufacture - In that circumstance, it is held that the activity undertaken by the appellant was in the knowledge of the department. Therefore, the extended period of limitation is not invokable. Penalty - Held that:- As duty confirmed against the appellant is not sustainable, therefore, the question of imposing penalty does not arise. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 1384
  Excisability - waste - the electricity sold by the appellant that was being generated from bagasse - Applicability of Explanation 1 inserted to Rule 6(1) of Cenvat Credit Rules 2004 - Held that:- Admittedly electricity, though not found in tangible form, is classifiable under Tariff item no. 27160000 of Central Excise Tariff Act, 1985. But it is a non-excisable goods and the process of generation of electricity though a manufacturing process is dutiable if it is generated from mineral oils, bitumen substance, mineral waxes etc. and electricity generated from bagasse is not covered under Chapter 27 like electricity generated through solar power, hydro power, wind power etc. It has been held by this Tribunal in the case of Jakarya Sugars Ltd, [2018 (5) TMI 1665 - CESTAT MUMBAI], that electricity generated from bagasse which is a by-product is neither a dutiable goods nor liable for payment of 6% - the duty demand made against such sale of surplus electricity manufactured through waste product is not sustainable in law - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 1378
  Refund claim - Rule 5 of CCR, 2004 - time limitation - refund rejected on the ground of limitation as the refund claims were filed beyond period of one year from the relevant date as defined under Section 11B - Held that:- In respect of the refund claims filed claiming refund of accumulated CENVAT Credit under Rule 5, the period of limitation as prescribed by the Section 11B will be applicable. The relevant date in respect of such claims of refund under Rule 5 has not been defined by the said Section. Explanation A, to the said Section defines the refund to include the claim for rebate of duty paid on goods exported or in respect of the goods used in manufacture of the exported goods. Explanation B, while defining relevant date denes the relevant date for claiming the rebate of duty on the goods exported out of India or in respect of excisable materials used in manufacture of such goods. The said relevant date does not define the relevant date for the purpose of the refund under Rule 5 of CCR. In case of mPortal India Wireless Solutions Private Limited, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], relied upon by the appellants the High Court was not even seized with issue application of limitation under section 11B to the cases of refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004. Yes, period of limitation as provided under Section 11B will be applicable to refund claims filed in terms of Rule 5 of CENVAT Credit Rules, 2004. - Relevant date for purpose of limitation in respect of refund claims filed under Rule 5, will be the last date of quarter in which the goods were actually exported. The appeal filed by the appellants is allowed and matter remanded back to the adjudicating authority for consideration the refund quarter-wise and determine whether it is hit by limitation or not.

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• 2019 (2) TMI 1369
  Process amounting to manufacture or not - Immovable property or not - workstations, partitions, storage units, tables etc. Came into existence, piece by piece, at the site of the customers and were permanently embedded/fixed to the ground - Held that:- The Commissioner has aptly considered the items for purpose of holding whether the processes under taken amount to manufacture as per the test laid down in the order of Hon’ble Supreme Court in case of Craft Interiors [2006 (10) TMI 2 - SUPREME COURT OF INDIA] - However in their appeal revenue has failed to consider the complete findings recorded by Commissioner in respect of each item. There is no merit in the revenue's appeal - appeal of Revenue dismissed.

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• 2019 (2) TMI 1361
  CENVAT credit - common input services for dutiable as well as exempt goods - common input services which were used both for those flats on which they have paid service tax and those flats on which they have not paid service tax holding them as ‘not service’ but as transactions in immovable properties - non-maintenance of separate records - Rule 6 of CENVAT Credit Rules, 2004 - Held that:- Rule 6 required reversal of proportionate amount of CENVAT credit wherever the input services or inputs were used both for provision of taxable as well as exempted services. There was no provision during the relevant period for reversal of credit where common inputs or input services were used for provision of taxable services and also activities which do not amount to services at all. It is nobody’s case that the appellant has availed credit on the inputs and input services used exclusively in activities which do not amount to service. If that be so, they would not have been entitled to the credit of service tax paid or duty paid in view of Rule 2(l) and Rule 3 of CENVAT Credit Rules, 2004. There was a gap in the law during the relevant period inasmuch as one could have availed complete credit of the common inputs and input services which are used in providing taxable services and not activities which do not amount to service at all and the assessee could have used only a small fraction of common inputs/ input services in providing taxable services and rest in activities which do not amount to service at all and still would have been entitled to full credit of the tax paid. This was rectified by insertion of explanation (3) to Rule 6(1) with effect from 01.4.2016 vide notification 13/2016-CE (NT) dated 01.3.2016. During the relevant period Rule 6(1) did not provide for reversal of CENVAT credit in respect of input services used both in provision of taxable services and for activities which do not amount to service. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 1360
  Levy of service tax - Commercial or Industrial Construction Service - case of appellant is that the recipient of service i.e. M/s D.S. Green Agro Tech is engaged in agricultural activity and such activities cannot be considered as commerce or industrial activity - Held that:- There is no documentary evidence on record to indicate the exact nature of the activities undertaken by the service recipient. The lower authorities have held that such activities are towards commerce or industry. The Original Authority has recorded that the notice to whom the show cause notice was issued has failed to clarify the matter and have not produced any document evidencing the exact nature of the service provided. In view of above, we are unable to take a clear view as to the nature of the activity engaged in by M/s D.S. Green Agro Tech and consequently whether the construction activities undertaken will fall within CICS. The claim of the appellant that the activities are appropriately classifiable under WCS also has not received consideration by both the authorities below who did not examine the claim of the appellant for WCS. The Original Authority is directed to finalize the matter in denovo adjudication within a period of three months from the date of receipt of this order - appeal allowed by way of remand.

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• 2019 (2) TMI 1358
  Rectification of Mistake - apparent error existed or not? - Revenue submitted that since the Ld Counsel has taken so much time for arguing the instant application this itself shows that there is no apparent mistake in the order - Held that:- There is no mistake in the order which required to be rectified and whatever has been argued at the time of passing the Final Order, has been recorded and considered therein and the submissions made in this application do not fall within the ambit of rectification of mistake - ROM application dismissed.

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• 2019 (2) TMI 1354
  Clandestine removal - duplicacy in demand - allegation based on computerized sales register - Held that:- Tribunal vide Order No. A/2966 to 2968/WZB/AHD/2007 dated 26.11.2007, in respect of issue relating to the value of clandestine clearances as per computerized sales record has held that - the issue regarding the duplication of demand has been finalized by Tribunal and Commissioner has no jurisdiction to question the said decision. If Revenue had any doubt regarding the aforesaid decision they should challenged the said decision of the Tribunal. Having failed to challenge the said decision it become final and binding on Commissioner. Thus, the impugned order is being in violation of Tribunal order is set aside. Non confirmation of the interest - Held that:- Since, impugned order has been set aside for the re-quantification, the matter regarding interest will be decided a fresh by the lower authority. Adjustment of outstanding - Held that:- The same requires reexamination as the total clearances/ sales have to be re-quantified and the duty liability re-calculated after re-quantification of the sales value arrived at on the basis of computerized sales register. Matter remanded to the adjudicating authority to pass a fresh adjudication order - appeal allowed by way of remand.

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• 2019 (2) TMI 1350
  CENVAT Credit - duty paying documents - case of the department is that since the supplier importer was registered as a first stage dealer but not registered as importer for issuing invoice, the invoice issued by him is invalid document - Held that:- Though the invoice was issued by importer not as a registered importer for issuing the invoice but he issued the invoice as a first stage dealer, the first stage dealer registration is also under Rule 9 and which was in force at the time of issuing the invoice, therefore, the invoice issued by an importer even in the capacity of first stage dealer, it cannot held invalid particularly for the reason that the first stage dealer inovice also contain all the information such as duty payment particulars, importers bill of entry etc. Receipt of inputs and used thereof also not in dispute, therefore merely for procedural lapse, substantial benefit of cenvat credit cannot be denied - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (2) TMI 1390
  Classification of goods - Concessional rate of tax - sale of traction batteries - issuance of Form XVII - Section 3(5) of the Tamil Nadu General Sales Tax Act, 1959 - whether traction batteries specifically designed to suit electrically operated material handling equipments and vehicles like fork-lifts, power trolleys, electric vehicles can be considered as part of the electrically operated vehicles equipments? Held that:- The product in question are traction batteries which are specifically designed to suit electrically operated material handling equipments and therefore, the Tribunal was right in holding that they can be purchased by issue of Form XVII declaration, thereby entitled for concession under Section 3(5) of the Act. Penalty u/s 16(2) of the TNGST Act - Held that:- The Tribunal after taking into consideration that the revision of assessment was made under Section 16 (1) (b) and noting that there was a dispute as to whether the claim of exemption by the respondent dealer was correct or not and what is the correct rate of tax, held that there was no escapement of turnover and therefore, vacated the levy of penalty. The Tax Case Revision is dismissed.

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• 2019 (2) TMI 1389
  Classification of the product - 'Substation Equipments' - the equipment installed by the petitioner/company under the contract with its clients Focal Energy Group of Companies as integral and inseparable part of the works contract for erecting and installing the solar power generating system - MP VAT Act - petitioner's contention is that respondent No.1/Commissioner of Commercial Tax has erred in law and facts in passing the impugned order, as the equipments supplied by the petitioner, are part of “Solar Power Generating System” and are covered under entry No.71. Whether item No.10 of entry no. 71 includes the entire set up, which constitutes solar power generating system or not. According to Oxford Dictionary, system means a set of things work together as parts of a mechanism or a interconnecting work? Held that:- The solar power generating system includes all devices or equipments, which are connected or combined together to complete the solar power generating system. If one ingredient is missing, the solar power generating system will not function - thus solar power generating system would necessarily include a substation for evacuation and upliftment of power generated by solar power plants. The Hon'ble Supreme Court in the case of CCE v/s Hewlett Packard India Sales Pvt. Ltd. [2007 (8) TMI 347 - SUPREME COURT OF INDIA] has explained the meaning of word 'System' with reference to operating system of the computer and it has been held that the pre-loaded operating system recorded in the hard drive of the computer is an integral part of the computer, without which, the computer cannot open and work and has been classified as operating system under entry relating to computer itself. Even by taking into account the aforesaid judgment, this Court is of the opinion that power generating system includes all components even the grid/goods related to substation, without which, the system cannot work - Once an exemption has been granted in the matter of Value Added Tax/Entry Tax for setting up solar power based projects, the exemption has to be given in respect of a complete project, as all the equipment used in the project are integral part of the project and even without one of the equipments, the project cannot function. Once the entry includes “Solar Power Project”, all the material equipments used for the purposes of setting up power based project are certainly entitled for grant of exemption. The respondents shall grant exemption under entry No.71 (10) in respect of substation equipment/grid and all other equipments supplied by the petitioner during the course of execution of its works contract, as they form integral part of solar power generating system - petition allowed.

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• Indian Laws

• 2019 (2) TMI 1394
  Condonation of delay of 721 days in filing appeal - explanation offered in support of condonation of delay was that the then advocate had not informed the respondent about the disposal of suit - Possession of Villa - Held that:- What is more striking is that the delay to the tune of 721 days was condoned by the High Court when there was no satisfactory explanation. In our view, there was gross negligence on part of the respondent and the explanation offered in support of the prayer for condonation does not appear to be correct. This is evident from the fact that no effective steps were taken to pursue the complaint which was lodged against the then advocate. In the petition for special leave, it was asserted that the complaint against the Advocate was not being proceeded with and the respondent had remained absent on the relevant date. Said assertion was not answered satisfactorily in the affidavit in reply filed in this Court. The delay ought not to have been condoned by the High Court - the order condoning delay is set aside - possession of the villa which was handed over to the appellants in pursuance of the order dated 23.05.2018 shall continue to remain with the appellants and be taken to be in terms of the Agreement entered into between the parties - appeal disposed off.

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