TMI Tax Updates - e-Newsletter
March 18, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Obtaining high-tension electric supply converting it to low-tension supply, and supplying it to the occupants, liable to service tax.

  ---

Articles

1. GST ON LIQUIDATED DAMAGES AFFIRMED BY APPELLATE AUTHORITY – ADVANCE RULING

   By: Dr. Sanjiv Agarwal

Notifications

Customs

1. 07/2019 - dated 15-3-2019 - Cus

Seeks to amend notification No. 152/2009-Customs dated 31.12.2009 so as to grant tariff concession in respect of goods under tariff sub heading 4809 90 imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement (CEPA).

2. 23/2019 - dated 15-3-2019 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

3. 22/2019 - dated 15-3-2019 - Cus (NT)

Amendment to the Notification No. 63/1994-Customs (N.T) dated 21st November, 1994, by notifying Dera Baba Nanak LCS

GST - States

4. S. R. O. No. 947/2018 - dated 31-12-2018 - Kerala SGST

Seeks to exempt the supply of gold by nominated agencies to exporters of gold jewellery

5. S. R. O. No. 945/2018 - dated 31-12-2018 - Kerala SGST

Seeks to amend notification No 1/2017- State Tax (Rate) dated 28.06.2017

6. S. R. O. No. 935/2018 - dated 27-12-2018 - Kerala SGST

Insert explanation in an entry in notification No. S.R.O.No. 371/2017 by exercising powers conferred under section 11(3) of KSGST Act, 2017

Highlights / Catch Notes

GST

• Lead Acid Batteries Classified as Second-Hand Goods, Eligible for Margin Scheme u/r 32(5) CGST Rules 2017.

  Case-Laws - AAR : GST on Second hand goods - used lead acid batteries qualify to be second hand goods - Applicant dealer is entitled to operate under Margin Scheme under Rule 32(5) of the Central Goods and Service Tax Rules, 2017 - Equally applicable to inter-state supplies.
  Visit to Get Source

  ---

• GST Rate for 'Sight Vision Equipment' in Armoured Tanks Set at 18% Under HSN Code 9013.

  Case-Laws - AAR : Classification of goods - rate of GST - The said products i.e. ‘Sight Vision Equipment’, manufactured and repaired by the applicant for exclusive use in various types of Armoured Tanks, will be classified under HSN code 9013 - Rate of GST is 18%
  Visit to Get Source

  ---

• Polyester Viscose Interlining Fabric Reclassified Under GST Tariff Chapters 50-55, 58, or 60, Not HSN Code 5903.

  Case-Laws - AAR : Classification of goods - Interlining Fabrics - the specimen fabric is a ‘Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric and the same will fall under chapter 50 to 55, 58 or 60 of the GST Tariff - it does not fall under HSN Code 5903
  Visit to Get Source

  ---

• Solar Rooftop Power Plant Supply Excluded from "Works Contract" Due to Immovable Property Exemption.

  Case-Laws - AAR : Works contract or not - supply of solar rooftop power plant along with design, erection, commissioning & installation - the supplies under consideration are out of the ambit of “work contract” service in as much as the question of immovable property does not arise.
  Visit to Get Source

  ---

• GST on Solar Projects: 70% Value as Goods for 5% Tax on Rooftop Plants and Irrigation Systems.

  Case-Laws - AAR : The supply of goods along with design, erection, commissioning & installation of the same while supply of “solar rooftop power plant and solar irrigation water pumping systems” shall be treated as ‘composite supply’ and the 70% of the gross value shall be the value of supply of said goods attracting 5% GST rate.
  Visit to Get Source

  ---

• Poly Propylene Leno Bags under HS Code 3923 face 18% GST as per Customs Tariff.

  Case-Laws - AAR : Classification of goods - rate of GST - The 'Poly Propylene Leno Bags' is classified under HS Code 3923 of the Customs Tariff and, as per relevant chapter note of GST tariff, the tax is leviable @ 18% on supply of the subject goods i.e. 'Poly Propylene Leno Bags'
  Visit to Get Source

  ---

• Court Confirms Placement of Medical Instruments as Composite Supply, Naturally Bundled Under GST Regulations.

  Case-Laws - AAAR : Levy of GST - Supply or not? - naturally bundled services - the ruling of the original authority that the placement of the specified medical instruments in the instant case constitutes a composite supply is legally correct and proper.
  Visit to Get Source

  ---

• GST Tax Rate Classification for Wet Wipes and Towels: HS Code 3307 vs. 3401 Based on Soap or Detergent Coating.

  Case-Laws - AAR : Classification of goods - rate of tax - Wet Baby Wipes - Wet Face Wipes - Bed and Bath Towels - Shampoo Towels - the same would fall under HS code 3307 and if they are coated with soap or detergent, then it would fall under HS code 3401
  Visit to Get Source

  ---

• Watches and Accessories Designated as Butterfly Style Classified Under Heading 9101 for Tax Purposes.

  Case-Laws - AAR : Classification of goods - the watches in the design of butterfly with a ring, bracelet, bangle, necklace, ring etc. supplied by the applicant are covered under heading 9101.
  Visit to Get Source

  ---

Income Tax

• Assessing Officer Misclassifies Obsolete Stores as Capital Expenditure, Disallowing Section 42 Deductions for Taxpayer.

  Case-Laws - AT : Disallowance of obsolete store and spares - AO, treat the same as capital expenditure and did not constitute stock-in-trade and deduction u/s 42 could be allowed to the assessee for capital expenditure as and when the same are certified by the Auditors - it can't be treated as capital expenditure for the assessee.
  Visit to Get Source

  ---

• Reality Show Production Falls u/s 194C, Not 194J, for TDS Purposes in Income Tax Act.

  Case-Laws - AT : TDS u/s 194C or 194J - A person who is engaged in production of reality show cannot be equated with a person engaged in the production of cinematograph film, it would fall u/s 194C.
  Visit to Get Source

  ---

• Penalty Imposed Under Wrong Section: Initiated Under 271AAB, Imposed Under 271(1)(c) Not Permissible.

  Case-Laws - AT : Penalty proceedings initiated u/s 271AAB - penalty imposed u/s 271(1)(c) - imposition of penalty should be based on initiation & notice issued under that section, penalty imposed based on different section not permissible.
  Visit to Get Source

  ---

• Assessment Reopening Challenged: Jurisdiction Assumption u/s 147 Invalid Due to Opinion Change.

  Case-Laws - HC : Reopening of assessment - respondent (revenue) seeks to sit in appeal over the opinion expressed by his predecessor, and, therefore, the assumption of jurisdiction on the part of the AO u/s 147, which is based on a mere change of opinion, is invalid.
  Visit to Get Source

  ---

• Reopening Income Assessment by AO Challenged; Section 148 Notice Impermissible Due to Third Proviso of Section 147.

  Case-Laws - HC : Reopening of assessment - AO seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the CIT (A). The reopening of assessment by the impugned notice u/s 148 is, therefore, hit by the third proviso to section 147 and is not permissible in law.
  Visit to Get Source

  ---

• AO's Reopening of Assessment Invalid: Income Already Assessed, No Justifiable Reason u/s 147 of Income Tax Act.

  Case-Laws - HC : Reopening of assessment - Reason to belief - Addition u/s 69 was made in assessment u/s 143(3) r.w.s 153A - if such income has already been assessed then the AO could not have formed the belief that income chargeable to tax has escaped assessment, The assumption of jurisdiction u/s 147 of the Act on the part of the AO therefore, lacks validity and hence, cannot be sustained.
  Visit to Get Source

  ---

• Section 263 Revision Overruled: No Error or Revenue Prejudice in AO's Securitization Income Decision Without Revised Return.

  Case-Laws - HC : Revision u/s 263 - Exclusion of securitization income allowed by AO without revised return based on fact that it was spared over on succeeding years - both the pre-requisite requirements for invoking revisional powers under Section 263 were not satisfied namely, an error and a prejudice caused to the Revenue.
  Visit to Get Source

  ---

• Taxpayer Denied Fair Hearing: Appeal Challenged Over Missing Court Fee Proof, Violates Natural Justice Principles.

  Case-Laws - AT : Maintainability of Appeal before CIT(A) - non enclosure of payment of necessary court fees - CIT (A) to give the assessee an adequate opportunity to bring on record receipts for making the payment of appeal fee - not given adequate opportunity of being heard to the assessee violated the principles of natural justice
  Visit to Get Source

  ---

• Section 54 Deduction: No Need to Use Capital Gains for New House Purchase if Investment Exceeds Gains.

  Case-Laws - AT : Deduction claimed u/s 54 - There being no pre–condition u/s 54(1) providing for investment of the long term capital gain in purchase of new house for claiming deduction u/s 54 - If other or borrowed fund is used then also deduction is allowable as investment is more than capital gain.
  Visit to Get Source

  ---

• Court Rules Bogus Purchases Must Be Deducted from Genuine Sales to Accurately Calculate Taxable Profit; 12.50% Tax Rate Upheld.

  Case-Laws - AT : Bogus purchases - sales has been accepted then the corresponding purchases is required to be deducted for the purpose of arriving at profit - under the Income tax Act, the profit earned from the business transactions is alone taxable - CIT(A) to tax only 12.50% of purchases is upheld
  Visit to Get Source

  ---

• Section 254(2) of Income Tax Act: Tribunal Can Only Fix Clear Errors, Not Alter Orders or Reopen Cases.

  Case-Laws - AT : Rectification of mistake u/s. 254(2) - Scope of tribunal in rectification - review of the order passed by the Tribunal in the guise of rectification which is not permissible u/s. 254(2)
  Visit to Get Source

  ---

FEMA

• Varanasi Branch Penalized for Unauthorized Forex Transactions, Violating Foreign Exchange Management Act (FEMA) Regulations.

  Case-Laws - AT : Offence under FEMA - transaction in foreign exchange - the Varanasi branch was not authorised for such dealings but nevertheless they undertook the same. - Liability of penalty confirmed.
  Visit to Get Source

  ---

Service Tax

• Electricity Supply and Billing Classified as a Taxable Service Under Finance Act, 1994.

  Case-Laws - HC : Obtaining high-tension electric supply converting it to low-tension supply, and supplying it to the occupants, raising bills on such occupants and realizing the electricity consumption charges from such occupants, is a service which the petitioner renders and such an activity is exigible to Service Tax under the Finance Act, 1994.
  Visit to Get Source

  ---

• CENVAT Credit Denied for Hotel Construction: Central Excise Duty on Inputs, Capital Goods, and Services Disallowed.

  Case-Laws - AT : CENVAT credit of central excise duty paid on inputs capital goods and input services in respect of hotel (Novotel) construction - the said hotel is not a part of the airport. - Credit not allowed.
  Visit to Get Source

  ---

• Appellant Denied CENVAT Credit for Central Excise Duty on Volvo Chassis Used in Fuel Farm Operations.

  Case-Laws - AT : CENVAT Credit - Volvo chassis - chassis used for operation and maintenance of fuel farm - appellant is not entitled to avail CENVAT credit of the central excise duty paid on Volvo chassis.
  Visit to Get Source

  ---

• Court Rules Denial of Abatement for Installation Services Based on ST-3 Return Unjustified; Improper Reliance on Return Highlighted.

  Case-Laws - AT : CENVAT Credit - Erection, commissioning and installation services - benefit of abatement - merely relying upon ST-3 Return for holding the non-compliance of the condition was not justified on the part of the adjudicating authority.
  Visit to Get Source

  ---

• Service tax refund approved due to unjust enrichment; Chartered Accountant's certificate deemed comprehensive and irrefutable.

  Case-Laws - AT : Refund of service tax paid - unjust enrichment - This certificate by Chartered Accountant is comprehensive as to how he has arrived at the conclusion that the amount shown as service tax receivable in the books of accounts of the respondent as receivables included the disputed amount - CA certificate cannot be rejected - Refund allowed.
  Visit to Get Source

  ---

• Appellant Fully Liable for Service Tax on Pilotage Charges under Port Services, Finance Act 1994, Section 65(105)(zzl.

  Case-Laws - AT : Levy of service tax - reimbursement of costs - the appellant was fully liable to pay service tax on the pilotage charges which they received from their customers under the head “Port Services”, under section 65(105)(zzl) of Finance Act, 1994
  Visit to Get Source

  ---

Central Excise

• Sweet meat cereal bars, with or without cocoa, classified under 21069099, qualify for central excise exemption.

  Case-Laws - AT : Classification of goods - Sweet meat Cereal Bars - both types of cereal bars i.e those product not containing cocoa as well those containing cocoa would classification under 21069099 as Sweet Meat and are eligible for exemption
  Visit to Get Source

  ---

• Court Rejects Refund Claim Without Explanation, Lacks Reasoned Analysis, Violates Rule Against Arbitrary Decisions.

  Case-Laws - AT : Rejection of Refund claim - The observation appears to be arbitrary as nothing is forthcoming from his order as to why he disbelieved those documentary evidence or rejected those as insufficient. In a judicial proceeding, order has to be a reasoned one based on judicial analysis where whim and caprice have got no role to play.
  Visit to Get Source

  ---

• Scented Betel Nut 'Nizam Pakkku' Not Classified Under Chapter 21 CETA, CETH 21069030 as Suprai.

  Case-Laws - AT : Classification of goods - Scented Betel Nut 'Nizam Pakkku' - The classification of the product cannot be dragged into Chapter 21 of CETA and, in particular, sought to be classified under CETH 21069030 as betel nut product known as suprai.
  Visit to Get Source

  ---

• Appellants Not Required to Verify First Stage Dealer Records for CENVAT Credit Accuracy.

  Case-Laws - AT : CENVAT Credit - appellants cannot be expected to go behind the accounts maintained or transactions made by the first stage dealer so as to ensure whether the credit availed is correct or not
  Visit to Get Source

  ---

• CENVAT Credit Case: Demand Set Aside Due to Revenue's Change in Opinion, No Suppression of Facts by Appellants (5B.

  Case-Laws - AT : CENVAT Credit - partial/ full writing off of inputs - Rule 3(5B) of Cenvat Credit Rules, 2004 - The issue has arisen due to change of opinion on the part of the Revenue, but there is no suppression of facts on the part of the appellants - demand set aside.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (3) TMI 841
  Second hand goods - Applicability of Margin Scheme under Rule 32(5) of the Central Goods and Service Tax Rules, 2017 - selling the used lead acid batteries to other manufacturers whether such used lead acid batteries qualify as second hand goods - Outward Supply under the Margin Scheme - GSTR-3B - Held that:- The used lead acid batteries qualify to be second hand goods. Accordingly, the Applicant dealer is entitled to operate under the Margin Scheme in respect of the used lead acid batteries. In terms of Rule 2 of the Integrated Goods and Service Tax Rules, 2017, the Central Goods and Service Tax Rules, 2017, for carrying out the provisions specified in Section 20 of the Integrated Goods and Service Tax Act, 2017 shall, so far as may be, apply in relation to integrated tax as they apply in case of central tax. Section 20 of the IGST Act prescribes that the provisions of the CGST Act shall mutatis mutandis apply to various subjects which have been provided under Section 20 - The subject pertaining to time and value of supply is covered under Section 20, hence the rules made under CGST Act in relation to valuation of a supply is applicable to IGST Act as well. Rule 32(5) of the CGST Rules, 2017 which provides for Margin Scheme in case of intra-state supplies shall also be applicable in case of inter-state supplies and the applicant is entitled to make inter-state supplies of used lead acid batteries while operating under the Margin Scheme.

  ---

• 2019 (3) TMI 840
  Withdrawal of Advance Ruling application - levy of GST - Mining Rights provided by the Steel Mines Department, Govt of Odisha - reverse charge under Section 9(3) of the CGST Act, 2017 - Held that:- Since, the Applicant is no more desirous of the ruling sought for the application for withdrawal is hereby allowed - The application for advance ruling is thus disposed off.

  ---

• 2019 (3) TMI 839
  Classification of goods - rate of GST - AMI (Anaerobic Microbial Inoculums) - Held that:- The product - Anaerobic Microbial Inoculums (AMI) i.e. Animal Dung is nothing but an organic manure i.e. organic fertiliser which is generally used in Bio-toilets set up in Railways coaches, known as DRDO inoculums bacteria . As per the nature and usage, the products i.e. Anaerobic Microbial Inoculums (AMI) manufactured by the applicant will be classified under HSN code 3101 of the GST Tariff Act - On going through the HSN code 3101 of the GST Tariff, it is found that the products i.e. Anaerobic Microbial Inoculums (AMI) manufactured by the applicant will be classified under sub-heading 31010099 and accordingly, the GST will be leviable @ 5% on supply of these products as on date. The products i.e. Anaerobic Microbial Inoculums (AMI) will be classified under chapter sub-heading 31010099 of the heading 3101 of the GST Tariff and accordingly, the supply of these products will attract GST@ 5% [CGST @ 2.5% + SGST @ 2.5%] as on date.

  ---

• 2019 (3) TMI 838
  Classification of goods - rate of GST - various equipment manufactured for being used exclusively in various Tanks - Held that:- As per chapter heading [sub-heading 8710, it is found that it determines the rate of GST leviable @ 12% on the goods namely Tanks and other armoured fighting vehicles, motorized, whether or not fitted with weapons, and parts of such vehicles , which is not the subject goods manufactured and repaired by the said applicant. The said products i.e. Sight Vision Equipment , manufactured and repaired by the applicant for exclusive use in various types of Armoured Tanks, will be classified under HSN code 9013 of the GST tariff - the various products manufactured and repaired by the applicant i.e. Sight Vision Equipments being exclusively used in armoured tanks, will be classified as an optical instruments under HSN code 9013 and as per relevant chapter sub-heading 90131090, supply of these products will attract GST @ 18% as on date.

  ---

• 2019 (3) TMI 837
  Construction of Indo-Nepal Border Road - Applicability of N/N. 12/2017-Centra1 Tax (Rate) dated 28.06.2017 (as amended from time to time) - Benefit of exemption - whether the notification is applicable to the contractors/ sub- contractors involved in the construction of Indo-Nepal Border Road or otherwise - difference of opinion - Held that:- There are different views on the applicability of GST on the sub-contractors - since, there are different views on that particular issue, we are making a reference to the Appellate Authority for hearing and decision on said issue in terms of Section 98(5) of the Act ibid which provide that where the members of the Authority. differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question.

  ---

• 2019 (3) TMI 836
  Classification of goods - Interlining Fabrics - whether classified under HSN Code 5903 or should be classified as per the blend of Yam (in chapter 52-55)? - Held that:- The specimen fabric i.e. Polyester Viscose fusing Interlining Woven Fabric being a partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric will fall under Chapters 50 to 55, 58 or 60 as per chapter note 2(a)(4) of the relevant chapter 59 of the GST Tariff - the specimen fabric is a Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric and the same will fall under chapter 50 to 55, 58 or 60 of the GST Tariff - it does not fall under HSN Code 5903

  ---

• 2019 (3) TMI 835
  Classification of supply - composite supply or not - works contract or not - supply of solar rooftop power plant along with design, erection, commissioning installation - supply of solar irrigation water pumping systems along with design, erection, commissioning installation - rate of GST - Held that:- The definition of work contract is concerned with the immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved and thus question arises whether the said supply would be treated as immovable or not - we have gone through the pictures provided by the applicant and find that to erect the plant/system in question a concrete platform is required and with the help of nuts and bolts the supplies in question are erected on the said platform. In the present case we find that attachment of the plant/system in question with the help of nuts and bolts to a platform/foundation intended to provide stability to the working of the plant/system and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. The supplies in question cannot be termed as immovable property for the following reasons: (i) The plants/ systems in question are not per se immovable property; (ii) Such plants/systems cannot be said to be attached to the earth within the meaning of that expression as defined in Section 3 of the Transfer of Property Act; (ii) The fixing of the plants/ systems to a platform/foundation is meant only to give stability to the plant/ system and keep its operation vibration free and (iv) The setting up of the plant/ system itself is not intended to be permanent at a given place. Thus the supplies under consideration are out of the ambit of work contract service in as much as the question of immovable property does not arise - the supply of goods along with design, erection, commissioning installation of the same while supply of solar rooftop power plant and solar irrigation water pumping systems shall be treated as composite supply and the 70% of the gross value shall be the value of supply of said goods attracting 5% GST rate and the remaining portion (30%) of the aggregate value shall be the value of supply of taxable service attracting GST rate in terms of Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018.

  ---

• 2019 (3) TMI 834
  Classification of goods - rate of GST - Poly Propylene Leno Bags - Held that:- As per Introduction to GST Tariff , Customs Tariff is adopted for classification of the goods that are not classified anywhere in GST tariff. To avoid classification disputes, notifications issued by Government indicate that Customs Tariff has been adopted for descriptive classification of goods under GST. The Section Notes, Chapter Notes and Rules of interpretation of Customs Tariff have also been adopted - the subject goods i.e. Poly Propylene Leno Bags is classified under HS Code 3923 of the Customs Tariff. The Poly Propylene Leno Bags is classified under HS Code 3923 of the Customs Tariff and, as per relevant chapter note of GST tariff, the tax is leviable @ 18% on supply of the subject goods i.e. Poly Propylene Leno Bags - Further, as per the existing CBEC Revised Duty Drawback rates schedule applicable w.e.f.01.10.2017, polypropylene woven fabric/ bags/ sacks, whether or not laminated, with or without U. V. stabilization, with or without liners/fasteners are specifically classified under drawback chapter 39 under Tariff Item 392302. The item under consideration being woven bags of polypropylene therefore merits classification under this Chapter as it stands today without any ambiguity.

  ---

• 2019 (3) TMI 833
  Levy of GST - Supply or not? - naturally bundled services - placement of specified medical instruments to unrelated customers - Order of AAO challenged - Held that:- It has to be considered as to whether any new arguments or facts have been brought on record by the Appellant, during the personal hearing, which would require the modification of the Advance Ruling Order of the original authority in the instant case. The submission on merits, including the concomitant facts, made during the Personal Hearing and presented as a summary of the agreements entered into by the relevant parties have already been discussed in detail by the original authority and we do not find any reason to modify the Order. A thorough perusal of the facts of the said case, make it evident that it is not pari-materia, either on facts or on law, with the matter under consideration of this authority. In brief, the appellant has failed to provide any fresh cogent arguments or new evidence to further their case to modify the ruling of the advance ruling authority in the instant case. We are of the opinion that the ruling of the original authority that the placement of the specified medical instruments in the instant case constitutes a composite supply is legally correct and proper. The appeal is disallowed.

  ---

• 2019 (3) TMI 832
  Classification of goods - rate of tax - Wet Baby Wipes - Wet Face Wipes - Bed and Bath Towels - Shampoo Towels - Held that:- The relevant Chapter Notes and Explanatory Notes of HSN indicates that if non-woven are impregnated, coated or covered with perfume or cosmetic, the product would fall under Chapter Heading 3307 and in case such non-woven are impregnated, coated or covered with soap or detergent, the product would fall under Chapter Heading 3401 - These products would also not fall under Chapter Heading 4818 as the said heading covers the products of paper, cellulose wadding etc. and not of non-wovens - also, Chapter Heading 9619 covers Sanitary towels (pads) and tampons, napkins and napkin liners for babies and similar articles, of any material which heading does not specifically cover the aforesaid products. Thus, the products (a) Wet Baby Wipes, (b) Wet Face Wipes, (c) Bed and Bath Towels and (d) Shampoo Towels are appropriately classifiable under Heading 3307 or 3401 depending upon their constituents. If these products are impregnated with perfumes or cosmetics, the same would fall under HS code 3307 and if they are coated with soap or detergent, then it would fall under HS code 3401 - GST rate prescribed for the applicable HS code shall be charged under Central Goods Services Tax Act, 2017 and Gujarat Goods Services Tax Act, 2017 and notifications issued thereunder.

  ---

• 2019 (3) TMI 831
  Classification of goods - jewellery or watch - jewellery consisting of gold, diamond and precious stones also contains a small wrist watch - whether the item is falling in chapter 71 tariff item 7113 liable to 1.5% CGST + 1.5% SGST for sale within state of Gujarat? - Held that:- The applicant gets the jewellery prepared by artisans, which consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. A small watch is fitted in it. As per the Explanatory Notes to heading 9101, watches of this heading must have cases wholly of precious metal or of metal clad with precious metal, which may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal (gem set or not). The product of the applicant is thus undisputedly watch with case of precious metal and covered by Chapter Heading 9101 in view of Chapter Note 2 of Chapter 91 as well as Explanatory Notes to heading 9101. In view of the Explanatory Notes to heading 9101 read with Explanatory Notes to Heading 9102, timekeeping instruments with case and movement, of a kind intended to be worn or carried and designed to function in all positions, which indicate the time or measure intervals of time are covered under the said heading, which include wrist-watches, pocket-watches, fob-watches, watches for carrying in handbags, watches mounted in brooches, rings, etc. Therefore, the watches in the design of butterfly with a ring, bracelet, bangle, necklace, ring etc. supplied by the applicant are covered under heading 9101. The product in question is specifically covered under heading 9101 in view of the terms of that heading read with the relevant Chapter Note. Therefore, the product is not required to be classified in accordance with Rule 3(b) of the Rules for Interpretation.

  ---

• 2019 (3) TMI 830
  Extension of period for filing of GST Tran-1 - input tax credit - transition to GST Regime - Held that:- The respondents are directed to open the portal before 31st of March 2019. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - List this matter on 17.04.2019.

  ---

• Income Tax

• 2019 (3) TMI 813
  Reopening of assessment - Reason to belief- Addition u/s 69 was made in assessment u/s 143(3) r.w.s 153A - Addition deleted by CIT(A) - no appeal filed before ITAT - Notice for 148 was issued based on same material found in search - HELD THAT:- An income has been held to be income chargeable to tax in the proceedings u/s 143(3) r.w.s 153A of the Act and has been added to the income of the petitioner under section 69 of the Act, the very same income thereafter cannot be said to be income which has escaped assessment, inasmuch as such income has already been assessed. Therefore, on the reasons recorded, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment, inasmuch as such income has already been assessed u/s 143(3) r.w.s 153A of the Act. The assumption of jurisdiction under section 147 of the Act on the part of the Assessing Officer therefore, lacks validity and hence, cannot be sustained. Earlier an assessment order u/s 143(3) r.w.s 153A of the Act had been made making an addition under section 69 of the Act. Against the said order, the petitioner went in appeal before the Commissioner (Appeals), who by an order dated 11.8.2017, held in favour of the petitioner insofar as the addition made under section 69 of the Act is concerned. Thus, the order of the Assessing Officer insofar as the issue in respect of which the assessment is sought to be reopened, has merged with the order passed by the Commissioner (Appeals). The third proviso to section 147 postulates that the AO may assess or re-assess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax or escaped assessment. Thus, the third proviso to section 147 of the Act permits the Assessing Officer to assess or re-assess only such income which was not subject matter of appeal, reference or revision. In the present case, the Assessing Officer seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the Commissioner (Appeals). The reopening of assessment by the impugned notice under section 148 of the Act is, therefore, also hit by the third proviso to section 147 of the Act and is not permissible in law. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 812
  Revision u/s 263 - SCN relates to two issues one interest on NPA accounts and other exclusion of securitization income - Exclusion of securitization income allowed by AO without revised return based on fact that it was spared over on succeeding years - Revision of order prejudicial to revenue - HELD THAT:- so far as interest of NPA's is concerned, it has to be considered and included only after realising the income from NPAs. This observation was made following CIT Vs Elgi Finance Limited.[2007 (6) TMI 180 - MADRAS HIGH COURT] wherein it had been held that the interest computed as taxable income has to be deducted. It was therefore found that no error had crept in the assessment order. The Income from the relevant transactions, when they were treated as non securitized were spread over the assessment years from 2005-2006 to 2011-2012, whereas the income from the very same transactions had been offered in full for the assessment year 2005-2006. It was clear that there was no reduction of income in view of the fact that though the income reduces in the return year, it goes to increase the income of the Assessee in the subsequent years. As there was neither any new income nor any fresh expenditure and it was only computation of income from the same set of transactions in two ways, namely, one treating them as securitized and other treating them as non securitized, no prejudice was caused to the Revenue. Consequently, it is seen that both the pre-requisite requirements for invoking revisional powers under Section 263 were not satisfied namely, an error and a prejudice caused to the Revenue. The Judgement of Goetze (India) Limited [2006 (3) TMI 75 - SUPREME COURT] would not apply to the facts of this case. - decided in favour of Assessee

  ---

• 2019 (3) TMI 811
  Reopening of assessment - management training expense being incurred for Post Graduate programme of Director of the company - - Query raised by AO duly replied by assessee in original assessment u/s 143(3) - nexus between the expense of course fees and the relevance of the same wholly and exclusively for business purpose - change of opinion - HELD THAT:- From the facts as emerging from the record, it is evident that at the time of scrutiny assessment the Assessing Officer had duly considered this issue in detail and upon being satisfied with regard to the nexus between the expenses incurred by the petitioner for the management training of its Director and the business of the petitioner, had allowed such expenditure. AO now seeks to reopen the assessment on the very same ground, which is clearly, nothing but a mere change of opinion. AO cannot sit in appeal over the opinion expressed by his predecessor in the assessment order. In the present case, as recorded by the respondent in the reasons recorded, the predecessor of the respondent had gone into the issue and therefore, in effect and substance, the respondent seeks to sit in appeal over the opinion expressed by his predecessor, and, therefore, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act, which is based on a mere change of opinion, is invalid - Decided in favour of assessee.

  ---

• 2019 (3) TMI 810
  Levy of penalty u/s 271AAB OR u/s.271 - penalty proceedings initiated u/s 271AAB - no notice issued for initiating penalty proceedings u/s 271(1)(c) - penalty imposed u/s 271(1)(c) - addition u/s 68 - details of nine share applicants giving share application money to the assessee could not be verified and also showed his inability to prove the creditworthiness and genuineness of the amount received - HELD THAT:- penalty proceedings ought to have been intimated u/s 271(1)(c) of the Act but were wrongly initiated u/s 271AAB of the Act for Assessment Year 2012-13. we are of the view that as the basic requirements for invoking Section 271AAB of the Act is not fulfilled, we have no option left except to allow the legal grounds raised by the assessee and quash the penalty proceedings initiated u/s 271AAB of the Act and delete the penalty levied by the Ld. A.O. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 809
  Gains earned from share transactions engaging PMS [Portfolio Management Service] - characterization of income - correct head of income - capital gain or busniss income - HELD THAT:- As decided in own case in A.Y. 2010-11 we confirm the order of CIT(A) holding the activity of purchase and sale of shares by engaging PMS constitutes an investment activity and the resultant gain/loss is assessable under the head capital gains - Decided against revenue

  ---

• 2019 (3) TMI 808
  Bogus purchases - addition made on the basis of alleged concession recorded by the Chartered Accountant - no hawala purchases - pressure on CA of the assessee to agree for the addition and was not given time to consult the assessee before the addition -sworn affidavit of the CA - HELD THAT:- A glaring fact that has been brought to our notice is that the assessment order was passed on the very same day after the Chartered Accountant of assessee filed letter agreeing for the addition. The probability of averments in the affidavit being true is quite high in the light of fact that the assessment was completed by Assessing Officer on the same date when the Chartered Accountant of the assessee agreed for addition. The assessee has furnished confirmation letters from the suppliers of material and also furnished various details of the suppliers such as name, address, PAN, etc. of the suppliers to prove the identity and the genuineness of the suppliers. The assessee in an endeavor to prove the genuineness of the transactions and the suppliers has furnished the copies of return of income of the suppliers before the Commissioner of Income Tax (Appeals). As has been observed earlier it is not the case of Revenue that the assessee has made purchases from hawala operators. No infirmity in the order of CIT(Appeals) in deleting the addition - Decided against revenue Addition being differences in liability shown in the case of M/s. Kirti Construction Company - difference between the accounts maintained by the assessee and M/s. Kirti Construction Company - difference was mainly on account of security deposits and wrong entry passed by assessee in respect of VAT payments in the Financial Year 2006-07 - CIT (Appeals) deleted the addition - HELD THAT:- DR has failed to controvert the findings of Commissioner of Income Tax (Appeals) on the issue. In the absence of any contrary material brought to our notice we find no reason to interfere with the well reasoned findings of Commissioner of Income Tax (Appeals) in deleting the addition - Decided against revenue

  ---

• 2019 (3) TMI 807
  Disallowance u/s 14A u/s 8D - assessee has earned dividend income on investments - DR submitted that assessee incurs interest on its borrowings and since funds are maintained in a mixed account part of interest expenditure is to be held towards earning of dividend income - HELD THAT:- For year under consideration, disallowance cannot be made as per Rule 8D of Income Tax Rules, 1963. We are therefore inclined to set aside the issue back to AO to compute disallowance having regard to assessment year under consideration, as well as decision in case of Maxopp Investments vs. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. AO is also directed that the disallowance so computed shall not exceed the exempt income earned by assessee during year under consideration. Disallowance of prior period expenses - method of accounting followed - Year of assessment - HELD THAT:- For assessment year 2003-04 in assessee’s own case [2015 (1) TMI 739 - ITAT DELHI] has observed that expenses are always claimed by assessee in year in which the same are quantified, while allowing claim of assessee. It is observed that this method of accounting has been accepted by authorities below from assessment year 1991-92 to 2000-01. It is also observed that for assessment year 2000-01 notice under section 263 has been issued by CIT, for examining this issue, and the same has been dropped. Disallowance of commission expense - CIT-A deleted the addition - HELD THAT:- CIT(A) has ignored enquiries made by AO with bank wherein there is a categorical denial by bank in dealing with M/s.Umang Credit Capital Ltd., for disbursement of loan. We are of view that Ld.CIT (A) failed to examine whether party to whom commission has been paid by assessee during this year is same as that in earlier year, and whether such loan has been taken for purposes of assessee’s business. Under such circumstances we do not agree with Ld. CIT(A) as well as Ld.AR that issue stands covered by orders of this Tribunal in earlier years. We accordingly set aside this issue to Ld.AO for due verification in the light of relevant documents on record. Ld. AO is to verify the same as per law to ascertain true nature of transaction. - Decided in favour of assessee for statistical purposes.

  ---

• 2019 (3) TMI 806
  Maintainability of Appeal before CIT(A) - non enclosure of payment of necessary court fees - Details of fee payment is mentioned in appeal form 35 - no adequate opportunity of being heard to the assessee - denial of natural justice - Reopening of assessment denying exemption u/s 11 and 12 - HELD THAT:- When assessee has given complete particulars of payment of appeal fee but, if somehow, copy of receipt has not been annexed with the appeal, it was for the ld. CIT (A) to give the assessee an adequate opportunity to bring on record receipts for making the payment of appeal fee. CIT (A) has rather short-circuited the entire process of hearing by summarily dismissing the appeals for non-enclosure of the proof of payment of receipts. So, we are of the considered view that this is a case where that the ld. CIT (A) has not given adequate opportunity of being heard to the assessee and thereby violated the principles of natural justice. - remanded the appeal back to the ld. CIT (A) to decide afresh after providing an opportunity of being heard to the assessee.

  ---

• 2019 (3) TMI 805
  Penalty u/s 271(1)(c) - change of head of income or loss in the assessment order - AO treated the rental income as ‘Income from House Property’ in place of Income from business or profession shown by the assessee - AO allowed the business expenses but disallowed depreciation. - proof of concealment of income - HELD THAT:- Penalty u/s 271(1)(c) of the Act is not attracted on mere change of head of income or loss in the assessment order which does not result in any concealment of income, hence, Ld. CIT(A), has rightly deleted the penalty in dispute which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the grounds raised by the Revenue.

  ---

• 2019 (3) TMI 804
  Condonation of delay in filing appeal - sufficient cause for condone the of delay - order was passed ex-parte - HELD THAT:- The assessee also contended before the ld. CIT(A) that as a result of multifarious litigation due to financial crunch and court proceeding, the partners of the firm not only suffered stress and depreciation but also facing huge financial crisis. The partner of the assessee firm could not concentrate on other business activities burdened by prevailing circumstances, thereby missed the deadline for filing appeal before the ld. CIT(A). All these facts are not controverted by ld DR for the revenue. Considering the legal positions we are of the view that the assessee has shown sufficient cause for condone the of delay in both the appeal before the CIT(A). The order of CIT(A) in dismissing the appeal by not condoning the delay is not sustainable in the eyes of law, which we set-aside in both the appeals and restored back both the appeals to the file of CIT(A) to decide the appeals afresh. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 803
  Outstanding debtors - difference in closing balance of sundry debtors in the books of account and submitted to bank - difference in sundry creditors on account of foreign exchange fluctuation gain- violation of rule 46A - HELD THAT:- As rightly observed by the Commissioner (Appeals), AO while making the addition has not specifically referred to the difference in outstanding balances of a particular party. Simply relying upon the sundry debtors figure shown in the statement of account furnished to the State Bank of India, AO has added back the difference between the figure in the said statement and the sundry debtors as shown in the Balance Sheet. However, in the course of appeal proceedings, learned Commissioner(Appeals) has called for all necessary information and details from the assessee and having examined them in detail has found the difference in sundry creditors on account of foreign exchange fluctuation gain The impugned order of Commissioner (Appeals) does not reveal examination of any additional evidence furnished by the assessee. Rather, the order clearly reveals that learned Commissioner (Appeals) has rendered a factual finding after conducting a proper enquiry with reference to assessee’s claim and such enquiry was conducted in pursuance to the power conferred under the statute. That being the case, the contention raised by the Department with regard to violation of rule 46A is unacceptable. Moreover, the Department has failed to controvert the factual finding rendered by the learned Commissioner (Appeals) with regard to the actual difference in the closing balance of sundry debtors which has been arrived. That being the case, the decision of learned Commissioner (Appeals) on the issue deserves to be upheld. - Decided against revenue Disallowance on account of salary and interest paid to the partners - Addition based on statement of partner - Doubt regarding supplementary partnership deed - no requirement in law to mandatory register the partnership firm with the Registrar of Firm - HELD THAT:- In the course of assessment proceedings, the assessee has furnished an amended partnership deed providing for payment of salary and interest to the partner. It is evident, the AO has refused to accept the amended partnership deed pointing out certain technical defects and also alleging that the amended partnership is an afterthought. Commissioner (Appeals) after examining the amended partnership deed and other facts on record has recorded a factual finding that the reasoning on which the Assessing Officer has disbelieved the amended partnership deed is not valid reasons - facts on record reveal that the interest and salary income received by the partners have been offered in the return of income filed much prior to the survey operation. Therefore, the ‘afterthought’ allegation of the Assessing Officer may not have much relevance. - Decided against revenue

  ---

• 2019 (3) TMI 802
  Long term capital computation - Disallowance of deduction claimed on account of cost of improvement for computing long term capital gain - disallowance of deduction claimed on account of cost of improvement for computing long term capital gain - HELD THAT:- sale deed dated 12th July 2004, mentions the existence of a house constructed over an area of 6,500 sq.ft. Therefore, assessee’s claim that it has constructed a house over the plot of land cannot be discarded at the threshold. The assessee has to furnish credible evidence to demonstrate that after purchase of the plot the assessee has constructed the building and the actual amount of expenditure incurred by it towards construction of the building. Once the assessee brings all the evidences on record to justify its claim, the onus shifts to the Assessing Officer to consider allowability of assessee’s claim qua the evidences furnished. It is relevant to observe, except furnishing the photograph of the building the assessee has not furnished any other evidence even at this stage also to support its claim that an amount of Rs. 40 lakh was spent towards cost of improvement/development. Therefore, assessee’s claim cannot be allowed on mere face value. However, for enabling the assessee to justify its claim by furnishing credible supporting evidence, we are inclined to restore the issue to the file of the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Deduction claimed u/s 54 - disallowance of claim as flat was purchased in financial year 2003–04 relevant to assessment year 2004–05 and secondly, the investment made towards purchase of new flats was not out of assessee’s own funds - CIT(A) hold that the investment in new flat has been made by the assessee within the period stipulated under section 54 - HELD THAT:- The provision of section 54(1) allows deduction from taxation of capital gain in a case where the assessee has invested in purchase of new house before one year from the date of transfer of the original asset. Thus, at that stage, the capital gain has not accrued to the assessee. If the reasoning of the departmental authorities that the assessee has to invest the capital gain in purchase of new house to qualify for deduction is accepted, the provision becomes otiose. In view of the aforesaid, we hold that since the assessee has made investment in purchase of new house within the period prescribed under section 54(1) she is entitled to avail deduction under the said provision. There being no pre–condition under section 54(1) of the Act providing for investment of the long term capital gain in purchase of new house for claiming deduction under section 54 of the Act, the departmental authorities cannot import such restriction/condition to the statutory provision. The decisions cited by the learned Authorised Representative clearly support this view. In fact, the Hon’ble P&H High Court in CIT v/s Kapil Kumar [2015 (12) TMI 1075 - PUNJAB AND HARYANA HIGH COURT] has clearly and categorically held that section 54 of the Act does not require that the sale proceeds from transfer of original capital asset must be used for meeting cost of new asset. As regards the contention of the DR that the assessee has purchased two flats, it needs to be observed, assessee’s claim of deduction under section 54 has not been disallowed by the departmental authorities on the said reasoning. In any case of the matter, as per the provision of section 54 of the Act applicable to the impugned assessment year, the expression “a residential house” used in section 54(1) of the Act does not mean “one residential house”. Moreover, there is no allegation by the departmental authorities that the flats are not in the same building or are not inter–connected - Decided in favour of assessee.

  ---

• 2019 (3) TMI 801
  Disallowance of deduction claimed u/s 80P(2)(d) - interest received from the investment made with other Co–operative Bank qualification for deduction u/s 80P - non–appearance of the assessee before the first appellate authority - HELD THAT:- The cause of non–appearance of the assessee before the first appellate authority, deem it appropriate to restore the issue relating to assessee’s claim of deduction under section 80P(2)(d) to the file of the Commissioner (Appeals) for de novo adjudication. Commissioner (Appeals) must deal with all the submissions to be made by the assessee and the decisions to be cited and decide the issue through a speaking and well reasoned order after due opportunity of being heard to the assessee. Also direct the assessee to respond to the notice of hearing to be issued by the Commissioner (Appeals) and co–operate in finalizing the proceeding by making proper submissions with supporting evidences and case laws. It is made clear, have not expressed any opinion on the merits of the disputed issue. With the aforesaid observations, grounds raised are allowed for statistical purposes.

  ---

• 2019 (3) TMI 800
  Bogus purchases - addition @ 12.5% on the value of the alleged bogus purchases - Hawala transactions - estimation of profit - AO has drawn conclusion that the assessee had actually purchased materials from open market, but procured bills from the hawala parties - HELD THAT:- Under the Income tax Act, the profit earned from the business transactions is alone taxable. Since the sales has been accepted, the corresponding purchases is required to be deducted for the purpose of arriving at profit. The assessee has shown that it has purchased materials from certain dealers, but the same has not been accepted for the reason that the said dealers have admitted before the Sales tax authorities that they have not supplied materials. Even though the AO has presumed that the assessee might have received cash back from such dealers, the same has not been substantiated with any material. On the basis of available facts, the AO has drawn such presumption and in the absence of any material to support the view so taken, it may not be proper to presume that unaccounted cash would have been introduced. Another important factor, which has been rejected by the AO is the submission of the assessee that they were getting credit period of 90 days for making payment to the suppliers. If the same is factored in, then the addition computed by the AO would go down drastically. CIT(A) was justified in directing the AO to assess the profit element embedded in the alleged bogus purchases by taking the rate of profit as 12.50%. As noted earlier, his view also gets support from the decision rendered in the case of Simit P Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Hence we do not find any infirmity in the orders passed by him and accordingly we uphold the same. - Decided against revenue

  ---

• 2019 (3) TMI 799
  Disallowance u/s 14A - MAT u/s 115JB - Exclusion of yielded any exempt income investment - disallowance made under section 14A r/w rule 8D cannot be added to the book profit under section 115JB HELD THAT:- carefully considered the same and find that all the aspects of disallowance u/s 14A has exhaustively been considered by the co-ordinate bench in assessee s own case [2018 (12) TMI 396 - ITAT MUMBAI]. Facts circumstances being pari-materia the same, respectfully following the same, the grounds qua disallowance u/ 14A are disposed off Deduction under section 80IB(9) - activity of prospecting, exploration and production of mineral oil and natural gas undertaken by the assessee, whether satisfies the eligibility conditions of section 80IB(9) of the Act - each well by treating them as independent undertaking is allowable qua the provision of section 80IB(9) r/w the Explanation therein. - HELD THAT:- Therefore, facts being pari-materia the same, while admitting the new claim as raised by the assessee, the issue stand remitted back to the file of Ld. AO for adjudication on similar lines as in assessee s own case [2018 (12) TMI 396 - ITAT MUMBAI]. Disallowance of obsolete store and spares - AO, treat the same as capital expenditure and did not constitute stock-in-trade - deduction u/s 42 could be allowed to the assessee for capital expenditure as and when the same are certified by the Auditors - HELD THAT:- The undisputed fact that emerges are that the assessee incorporates the assets, liabilities, income expenditure arising from unincorporated joint venture operations based on the audited statement on line-to-line basis and to the extent of its participating interest in the unincorporated joint venture. The obsolete stock / spares have clearly been identified by the operator of the two blocks under question and the assessee has claimed the deduction of the same to the extent of its own share therein as computed in the manner. Undisputedly, these are old inventories as identified by the operator, which are found to be obsolete and no longer usable for the blocks. This being the case, both the authorities, in our opinion, fail to clinch the issue in the proper perspective. The said stock / spares could, by no stretch of imagination, be treated as capital expenditure for the assessee. Further, there is no double deduction as concluded by first appellate authority as evident from financial statements provided by the operator. Therefore, by deleting the same, we allow this ground of assessee s appeal.

  ---

• 2019 (3) TMI 798
  Levy of penalty u/s 271(1)(c) - penalty levied by AO on both the limbs (i.e. furnishing inaccurate particulars as well as concealment of income) - defective notice - non specification of charge - Disallowance u/s 69C being difference in cost of production as reflected in the Profit & Loss Account and as reflected in Schedule-8 of the accounts - HELD THAT:- The perusal of quantum order reveal that penalty has been initiated by AO by making observations - “Penalty proceedings u/s 271(1)(c) is being initiated separately.” Pursuant to the same, the assessee was issued notice u/s 274 r.w.s. 271 on 27/03/2006, the perusal of which reveal that AO has failed to mark the appropriate limb i.e. concealed the particulars of your income or furnished inaccurate particulars of income for which the penalty was being initiated against the assessee. AO has failed to frame a specific charge against the assessee. The terms furnishing of inaccurate particulars of income and concealment of income, as per settled legal proposition, carry different connotations and therefore, failure to specify the same violate the right of the assessee to defend the same. Our conclusion is duly supported by the cited decision of this Tribunal rendered in Mrs. Indrani Sunil Pillai Vs ACIT [2018 (1) TMI 1226 - ITAT MUMBAI] wherein in identical situation, the matter, after due deliberations, was decided in assessee’s favour

  ---

• 2019 (3) TMI 797
  Disallowance exemption u/s 11 and 12 - violation of provision of FCRA Guidelines - amounts were received by the assessee as commercial fee - applicability of proviso to amended Section 2(15) - private gain - HELD THAT:- In subsequent assessment years 2013-2014 and 2014-2015 considered similar objects of assessee and after examining the details found that assessee is registered under section 12AA and that objects of the assessee company are charitable, within the meaning of Section 2(15). The returned Nil income was thus accepted. It is well settled Law that though the principles of res judicata do not apply to the income tax proceedings, but, rule of consistency shall have to be applied by the Income Tax Authorities. We rely upon decision of the Hon’ble Supreme Court in the case of Radha Soami Satsang [1991 (11) TMI 2 - SUPREME COURT]. CIT(A) examined the entire issue in detail and have given a specific finding of fact in favour of the assessee that the assessee is engaged in the charitable activities and that the amount in question have been spent for charitable activities. Even if some amount have been received by assessee, that was received for charitable purposes only and no personal gain have been obtained by the assessee company. The finding of fact recorded by the CIT(A) have not been rebutted through any evidence on record. We, therefore, do not find any error in the order of the CIT(A) in allowing exemption under section 11 - Decided against revenue.

  ---

• 2019 (3) TMI 796
  Bogus purchases - purchase from the grey market - 100% disallowance for bogus purchase - Adverse inference has been drawn by the A.O. on the investigation wing action on Gautam Jain group - Borrowed knowledge - CIT(A) deleted addition and disallowed 3% on the total purchases - task force group for diamond industry constituted by the Government of India, Ministry of Commerce and Industry, after considering the BAP scheme, recommended presumptive tax for net profit calculated @2% of trading activity and @3% for manufacturing activity or @ 2.5% across the board - HELD THAT:- No independent enquiry has been conducted by the A.O. himself. We find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported in the case of Nikunj Eximp Enterprises [2014 (7) TMI 559 - BOMBAY HIGH COURT] has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However, in that case all the supplies were to the government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, 3% disallowance out of the bogus purchases meets the end of justice, as reasoned by the ld. CIT(A) above. - Decided against revenue

  ---

• 2019 (3) TMI 795
  Short deduction of tds u/s. 201(1) - TDS u/s 194C or 194J - payments made to various artists like singers, musicians etc who participated in the reality shows as guests or judges - payment is not related to production of services rendered by a person in connection with production of cinematograph film - payment made towards broadcasting and telecasting - assessee in default - HELD THAT:- As seen from the Explanation, services rendered by a person in connection with production of cinematograph film should be liable to deduct TDS u/s. 194J of the Act. A person who is engaged in production of reality show cannot be equated with a person engaged in the production of cinematograph film. Therefore, the persons who are engaged in production of film falls under the realm of said Explanation to s. 194J It is not possible to accept the contention of the Revenue that payments made to artists who participated in reality shows produced for television will fall outside the realm of section 194C r.w. Explanation III of the Act. In our opinion, it would fall under section 194C and not under section 194J of the Act. Since the assessee deducted TDS u/s. 194C there is no infirmity in the action of the assessee. Being so, we are inclined to decide the issue in favour of the assessee and against the Department.

  ---

• 2019 (3) TMI 794
  Rectification of mistake u/s. 254(2) - Scope of tribunal in rectification - eligibility for deduction u/s 35(1) - maintenance of books of account in respect of R before coming to the conclusion that in order to be eligible for deduction u/s. 35(1), the assessee is required to maintain separate books of account in respect of its R&D facilities. We, therefore are of the considered view that there is no error in the findings given by the Tribunal in its order dated 31.1.2018. The assessee is seeking review of the order passed by the Tribunal in the guise of rectification which is not permissible u/s. 254(2) of the Act. Hence, Miscellaneous Application filed by the assessee is dismissed.

  ---

• 2019 (3) TMI 793
  Rectification of mistake u/s 154 - mistake apparent from the record - rectification order passed by AO withdrawing the deduction towards 50% of receipts as exempt - Club did not maintain separate accounts for the receipts from members/non members and in those assessments - whether treatment of exempted 50% of taxable receipts was a mistake apparent from record - HELD THAT:- Contention of the Ld. DR cannot be accepted as it is a debatable issue. Under section 154 AO can rectify the mistake if it is a mistake apparent from record. It must be an obvious patent mistake and not something which can be established by a long process of reasoning on points on which there may be conceivable two different opinions and hence, it is a debatable issue. It was not a mistake apparent from record. Hence, rectification is not possible since in this case, the issue was taken up by the Assessing Officer in the proceedings u/s. 154 of the Act dated 03/06/2008 which is a debatable issue. AO is not justified in rectifying the mistake vide the impugned order. Accordingly, we quash the rectification order passed u/s. 154 . - decided in favour of assessee.

  ---

• 2019 (3) TMI 792
  Addition u/s 68 - genuineness of the share application money received - AO issued notices u/s 133(6)to all subscribers -Reply to all the notices were received by the Assessing Officer alongwith ledger account, bank statements and copies of Income tax returns - discharge of initial onus cast upon assessee - HELD THAT:- Once the appellant company filed complete details before the Assessing Officer, then the initial onus upon the assessee company has been discharged to prove the identity of the investor. The appellant company has provided the balance sheet of the investor company's alongwith with their company profiles and details with the Registrar of Companies. The subscriber companies themselves have provided the bank statements and their respective PAN details. It is not the case of the Revenue that the subscriber companies are name lenders or entry providers. Their details are available on public domain on the website of the Registrar of Companies. In the case of Lovely Exports Pvt Ltd [2008 (1) TMI 575 - SUPREME COURT OF INDIA] has laid down the ratio that the assessee has to be merely identified as the share holder and the initial onus u/s 68 of the Act stands discharged on mere identification. CIT Vs. Sophia Finance Ltd [1993 (8) TMI 62 - DELHI HIGH COURT] has laid down the ratio that if the share holders are identified and it is established that they have invested in the purchase of shares, then the amount received by the company would be regarded as capital received. The assessee has no further onus. Exhibits 123 to 139 of the paper book reveal the proportion of investment made by the share applicant companies in the share capital of the appellant company. The percentage of their investment ranges from 5% to 40%, which means that the share applicant company portfolios include investment in other companies also. There is nothing on record to suggest that the other investments made by the share applicant companies have been treated as bogus in the hands of other companies. The applicant company has successfully discharged the initial onus cast upon it by the provisions of section 68 and, therefore, no addition is called for u/s 68 as unexplained cash credit. - Decided in favour of assessee.

  ---

• Customs

• 2019 (3) TMI 829
  Rectification of mistake - power of Appellate Tribunal u/s 129B(2) of the Act to rectify mistake - scope of mistake and apparent - Held that:- It is no doubt true that evidence cannot be re-appreciated to come to a different conclusion and that mistake apparent from the record cannot be something which is established by a long drawn process of reasoning of points on which there may conceivably be two opinions, but it is equally true that the purpose behind the enactment of Section 129B(2) of the Act is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal and that if a decision is based on a material which could not have been used, then the Tribunal would have the power to rectify the mistake. If the Tribunal has not considered the material evidence which was available on the record, it would amount to a mistake apparent on the face of the record and the Tribunal would have the jurisdiction to correct the said mistake. It is not merely an arithmetical or clerical mistake that can be rectified because mistake in taxation laws has a different connotation and is mostly subjective. The mistake should be such which no Court would permit it to remain on the record for rectification of the order stems from the fundamental principle that justice is above all. If a decision is based solely on a material which is irrelevant or could not have been used then the mistake can be rectified. When it has been brought to the notice of the Tribunal that an issue was framed by the Commissioner of Customs (Preventive), Jodhpur as to whether the Commissioner of Customs (Preventive) had the jurisdiction to issue the show cause notice and a detailed finding has been recorded that it had the jurisdiction, then it would be a fit case for exercise of powers under Section 129B(2) of the Act to rectify the mistake committed by Tribunal, which mistake is so apparent on the face of the record. The Appeals were disposed of earlier on 11 August, 2017 by remanding the matter to the adjudicating authority for taking a fresh decision as the parties had agreed that the Commissioner of Customs (Preventive), Jodhpur was not the competent authority to issue notice. To rectify this mistake of the Tribunal, the entire order dated 11 August, 2017 would have to be recalled. It can be urged that this may not amount to rectification of mistake in the Final Order, but, in the peculiar facts and circumstances of the case, as it has been found that the Tribunal committed a mistake in view of the consent given by the Respondent against the record, it has become necessary to recall the Final Order, as the issues raised in the Appeals, including that relating to jurisdiction of the Commissioner of Customs (Preventive) to issue the notice, have now to be decided on merits. Thus, it is a fit case for exercising the powers under Section 129B of the Act to correct the mistake apparent from the record and, accordingly, recall the order dated 11 August, 2017 - Let the Appeals be listed on 13 March, 2019.

  ---

• Securities / SEBI

• 2019 (3) TMI 828
  Insider trading - Reported statement of the Chairman of a Company regarding his interest to acquire another Company is sufficient to invoke the provisions of PFUTP Regulations, 2003 - Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control - HELD THAT:- First of all the statement attributed to the appellant is as reported by a news reporter. There is no evidence as to the appellant acquiring any shares of Amrutanjan. On the other hand, what is available on record is that no effort in acquisition has been made. The appellant has clarified to the Stock Exchange immediately on receiving their communication on April 5, 2010 that it was a general statement relating to his business interest. The statement is further emphasized by the clarification provided by Amrutanjan itself which also stated that “the said news item is false and without basis and the promoters of the Company have no intention to sell out and the promoters do not foresee any reason to dilute their stake and exit from the company”. While dealing with a serious issue of fraud the authorities need to ascertain the motive in the absence of any connecting evidence. Is nothing to prove that the quoted statement in the news report is exactly what is stated by the appellant unless the statement is derived from a written communication issued by the Chairman or by his Company which is not the case here. There is no evidence to link to a motive. Neither the appellant nor his Company Emami had / have acquired the shares of Amrutanjan. In any case they were actually interested in acquiring; the Chairman of the acquiring company would not have talked up the prices of the shares of the acquiring company (Target Company). In the absence of any motive or a scheme or any evidence a reported news item alone is not sufficient to prove a serious charge like fraud. If at all the reported statement is correct it could an expansive mood of the person. Silence as a sign of wisdom cannot be stretched to a point of total silence in the world of securities market. Substantial movement in the prices etc. of a profitable company with sufficient liquidity cannot be attributed to such a reported statement alone. Before parting with, the limitations of a comparative static analysis as given in the impugned order also needs to be emphasized. The comparison made in the impugned order is by taking the price / volume data of April 1, 2010 and April 5, 2010. However a look at the data for 30th and 31st March, 2010 also give a different picture. On April 1 the volumes traded in NSE was 308538 shares and in BSE was 144644 shares which is shown to have increased to 887705 shares in NSE and 474050 in BSE on April 5, 2010. But if we take the volume on March 31, 2010 instead of April 1, 2010 the volume in NSE was 834070 and in BSE 393896. So, the volumes on March 31, 2010 and April 5, 2010 are not much different while when one compares the volume of April 5 with that of April 1 the volumes are quite different. This shows that a two day comparison can be misleading and is not sufficient to establish evidence for a serious offence like fraud.

  ---

• Insolvency & Bankruptcy

• 2019 (3) TMI 826
  Approval of Resolution Plan - Resolution Plan has been approved by the Committee of Creditors in its 7th COC meeting with a vote share of 83.02% - after Hon’ble High Court’s order for liquidation of the company, this petition was filed under section 10 of the Code without disclosing that the company has been wound up by order of the Hon’ble High Court - HELD THAT:- After liquidation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The alleged act of the corporate applicant is punishable under section 77 (a) of the Insolvency and Bankruptcy Code 2016. The Registrar of Companies, Mumbai is directed to lodge prosecution against the corporate applicant under section 77(a) of the insolvency and bankruptcy code in 2016. Since the petition has been filed under section 10 of the Insolvency and Bankruptcy Code 2016 after the suppression of the material facts, which were known to be material, therefore the petition is rejected with cost Rs. 10 lakhs which shall be paid by the Corporate Applicant. The cost will be deposited in the account of the Prime Ministers National Relief Fund. It is to be clarified that by the order dated 25.1.2017 of Hon’ble Bombay High Court, the Corporate Applicant stands wound up and the Ofifical Liquidator has already been directed to expedite process of liquidation expeditiously.

  ---

• 2019 (3) TMI 825
  Default by Insolvency Professional (IP) - contraventions of several provisions of the Insolvency and Bankruptcy Code, 2016 (Code), the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 and the IBBI (Insolvency Professionals) Regulations, 2016 - Mr. Kejriwal is a professional member of the ICSI Institute of Insolvency Professionals and an Insolvency Professional (IP) - Mr. Kejriwal [IP] did not conduct CIRP as required under section 23 of the Code. He did not submit progress report to AA in time, make public announcement in time, appoint registered valuers, prepare and circulate information memorandum, invite resolution plans under section 25(2)(h) of the Code, convene the meetings of CoC with adequate notice, etc.. He did not run the CDs as a going concern, as required under section 20 of the Code and resigned as RP in both the CIRPs, without prior permission of the AA, though he consented to act as IRP and as RP in both cases HELD THAT:- An IP is not just another professional. He is dealing with a CD in distress. He needs to go beyond the call of duty to address the distress. The DC unfortunately finds that Mr. Kejriwal did not discharge any of his statutory responsibilities as IRP or RP either to manage the operations of the two CDs as going concern under section 20 of the Code or to conduct the resolution processes of the two CDs under section 23 of the Code. He has, therefore, violated provisions of sections 18, 20, 23, 25(2)(g), 25(2)(h), 29, 208(2)(a), and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016, regulations 6(1), 19(1), 27 and 36 of the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 and regulation 7(2)(a) and 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 read with clauses 1, 2, 3, 5, 10, 12, 13, 14, and 25 of the Code of Conduct under the said Regulations. It, however, finds in his favour two mitigating factors, namely, (a) Mr. Kejriwal was not well for some time during the relevant period, and (b) the CDs were practically not going concerns to start with. Disciplinary Committee thus imposed monetary penalty equal to one hundred percent of the total fee payable to him as IRP and as RP in the CIRPs of respective companies and directs him to deposit the penalty amount by a crossed demand draft and undergo the pre-registration educational course specified under regulation 5(b) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 from his Insolvency Professional Agency to improve his understanding of the Code and the regulations made thereunder, before accepting any assignment under the Insolvency and Bankruptcy Code, 2016.

  ---

• FEMA

• 2019 (3) TMI 824
  Offence under FEMA - appellant had without any general or special permission of RBI, received amounts Rs. 2,47,99,350/- in India, otherwise than through an authorised person, by order or on behalf of his friend Madan, a person resident outside India - penalty imposed - HELD THAT:- From the documents/statements the Investigating Officer became aware of the identity of various persons from whom Shri Harish Kumar had been receiving payments in India, under instructions of his friend Madan, residing in USA, who was earlier residing in Mohali. In view of other certain searches were conducted and a number of persons examined and their statements recorded under FEMA, which brought out corroboratory evidence viz-a-viz the facts as stated by Shri Harish Kumar in his afore-mentioned statements. Shri Harish Kumar later on sought to retract from his abovementioned statements, by way of a letter sent during the course of investigations, besides by way of submissions made during the course of personal haring including in the form of Affidavits, both his as also of one other person, in which Affidavit, it is claimed that amount totaling to Rs. 26,25,000/- was received by Shri Harish Kumar from the said person (Harchand Singh) on interest for using the same in his business of Goldsmith. It is correctly found in the impugned order that from the seized material and the above-mentioned statements, and find that the said statements, when read with in conjunction with the seized documents/material, brings out the facts that the contention of the Noticee that he was forced to make inculpatory statements is not correct. Not only that these statements are in the form of explanation to the seized documents, it is also a matter of records that the said statements were recorded by Shri B.C. Mahey, Assistant Director and not by Shri Balwinder Singh (the then Chief Enforcement Officer), as alleged by the Noticee. Therefore, as agreeing with the finding arrived in the impugned order that it is established beyond a reasonable doubt that during the years 2002 and 2003, the said Shri Harish Kumar @ Rinku without any general or special permission of Reserve Bank, received amounts totaling to Rs. 2,47,99,350/-, in India, otherwise then through an authorized person, by order or on behalf of his friend Madan, a person resident outside India, and thereby he has contravened the provisions of Section 3 (c ) of the Foreign Exchange Management Act, 1999 - the seized amount of Rs. 21,75,000/- was the amount involved in afore-mentioned contraventions of the provisions of FEMA. It is also a matter record that the appellant had retracted his admission after the expiry of almost more than four years. The said period is long period of time. It is after thought thus has no value in the eyes of law. With regard to the penalty of Rs. 25,00,000/- is concerned, it has come on record that appellant is not in a position to deposit the said amount. The appellant is suffering from undue hardship. The financial condition of the appellant is very weak. He has been residing in House in Punjab, on rent from the last many years. On the perusal of the affidavit and a copy of the deed of conveyance filed therewith makes it abundantly clear that the father of the appellant Late Shri Kanwar Bhan had been residing in the aforesaid rented house and after the death of his father the appellant has been residing in that house. He is an unemployed person living with the generosity of the Management of the nearby Gurudwara where he and his family are having their daily meals in return of his help to the distribution of free meal to the devotees. He does not have any income who is not an income tax payee and does not have any other financial resources to make the pre-deposit of the penalty. There is no material on record on behalf of the respondent to show that the appellant is not suffering from the undue hardship. It appears from the record, there is no contrary evidence available. The appellant is exempted to deposit the penalty amount. The same is waived in view of the peculiar facts of the present case. The impupgned order is modified only to this extent of penalty component.

  ---

• 2019 (3) TMI 823
  Offence under FEMA - transaction in foreign exchange undertaken by the Varanasi branch with another company holding no license from the RBI to conduct the said business of money exchange - penalty imposed - separate license to companies and all its branches - HELD THAT:- Considering that the RBI grants license to the company as well as its branches separately, a fact which was reiterated by the learned counsel for the appellant, RMEL, Varanasi cannot take shelter under the main RMEL company located at Mumbai. From the emails it is clear that the consignment was sent from Varanasi. It belies common sense that if the transaction had been undertaken by the Lucknow branch as the appellants have tried to argue at one stage then why should the money/consignment/package be not transferred from Lucknow to Cochin their hub and why carry it to Varanasi and then send it to Cochin. Even the statement of Shri Sandeep Kumar Srivastava, State Head, Uttar Pradesh who reported to the zonal manager confirms that the consignment was transferred from Varanasi directly through Jet Airways via AWB 58979725306 to Cochin. In the present case, the Varanasi branch was not authorised for such dealings but nevertheless they undertook the same. Section 10(4) are the duties prescribed for the authorized person which in this case is not relevant as Varanasi branch is not an authorized person. To that extent, the RMEL, Varanasi branch has contravened the provisions of Section 3(a) of FEMA, 1999. With regard to the zonal manager, Mr. Dasgupta, the emails which have not been denied by him shows his involvement and culpability. He was very much in the knowledge about the whole transaction and the way it has been undertaken. Under the provisions of Section 42(2) of FEMA, he will be therefore deemed to be guilty of the contravention. The appellants in the present two appeals are liable to penalty under Section 13 of FEMA, 1999. But onsidering the case in its totality and the contraventions, hold that the penalty levied has been on a higher side. Reduce the same to Rs. 10,00,000/-(Ten lakhs only) for RMEL Varanasi, and Rs. 1,00,000/-(One Lakh only) for Shri Souvik Dasgupta.

  ---

• PMLA

• 2019 (3) TMI 822
  Offence under PMLA - Provisional Attachment Order - attachment confirmed against the properties which were already stand mortgaged in favour of the Appellant, (who is now seeking setting aside of the Impugned Order) - continuation of pending suits or proceedings against the corporate debtor - opinion based on “reason to believe” - proceeds of crime - HELD THAT:- A person must have reason to believe if the circumstances are such that a reasonable man would, by probable reasoning, conclude or infer regarding the nature of the thing concerned. Further, at the initial stage for believing the existence of a thing, condition or a statement of fact, one would collect information and then examine the information and come to a final conclusion on the basis of that information, that such a thing, condition or statement of a fact exists. All these ingredients are pre-requisite for forming an opinion based on “reason to believe”. Thus, the provisional attachment order is legally erroneous and untenable and could not have been passed more particularly in view of the fact that the complainant was aware of the fact that there is an exclusive and paramount claim of the Appellant Bank, therefore, The Adjudicating Authority had no justification/jurisdiction for confirming attachment of the aforesaid hypothecated/Equitably Mortgaged Moveable and immovable properties. As in Indian Bank Vs. Government of India [2012 (7) TMI 1085 - MADRAS HIGH COURT] held that the PMLA does not provide for redressing grievances of victims of fraud such that the Enforcement Directorate cannot take away the right of Banks as security holder by provisionally attaching such property and seeking confirmation thereof. Accordingly, in the present case, the Appellant is the victim of the fraud played upon it by Mr. Mehul Choksi and the Gitanjali group of companies. Accordingly, the Adjudicating Authority erred in confirming the attachment of properties already mortgaged to the Appellant. The Adjudicating Authority has failed to understand that the NCLT Mumbai vide order dated 08.10.2018 has declared moratorium under Section 14 of the IBC, 2016, inter alia, the said section 14 of the IBC, 2016 prohibits the continuation of pending suits or proceedings against the corporate debtor (i.e. Respondent No.2 herein). Therefore, the Adjudicating Authority could not have confirmed the PAO bearing No. 03/2018 dated 28.03.2018 passed by the Respondent No.1. The said process is promoted by the Government of India. Apex Court has also held in favour of the bank and the main provisions valid in order to recover the amount in the interest of public. One fails to understand why both authorities are against the said process of recovery. In view of the non-obstante clause as contained in Section 238 of the IBC, 2016, the Adjudicating Authority could not have continued with the Attachment proceedings under the PMLA. The IBC, 2016 being a subsequent legislation than the PMLA, therefore, the Non-obstante clause of the IBC,2016 shall prevail over the PMLA. The proceedings before the Adjudicating Authority are civil in nature, therefore, in view of the Section 14 of the IBC, 2016 the proceedings before the Adjudicating Authority cannot continue as there is clear prohibition under the said section of the IBC, 2016. This Tribunal is of the considered opinion that the proceeding u/s 8 of PMLA,2002 before the Adjudicating Authority is a civil proceeding. The Adjudicating Authority should have stayed the proceedings. The continuation of the proceedings after the date of commencement of the moratorium order is contrary to the intention of the legislature, hence the consequential order of confirmation of PAO is contrary to law. Impugned order is set aside to the extent the Order passed by the Adjudicating Authority confirming the Provisional Attachment Order with regard to properties mortgaged to the Appellant in the present case. ED is entitled to recover entire proceeds of crime amount from the accused parties in India or from overseas countries from these assets except the mortgaged properties for which the banks are secured creditors. Thus, this tribunal is of view that the public money should come to the public but at the same time the mortgaged properties cannot be blocked. The banks money must come to the banks in the interest of public. All the actions which are pending against the accused parties, the same shall be proceeded further against as per law and without any influence of this order.

  ---

• Service Tax

• 2019 (3) TMI 821
  Levy of service tax - supply of electricity by the petitioner to the occupiers of Galaxy Mall , a commercial complex - Held that:- Under the definitions as obtaining in the Electricity Act, 2003, the petitioner cannot be said to be a generating company. It has not claimed itself to be so. It also cannot be said that, the petitioner is engaged in the supply or trading of electricity as, the definition of supply and trading does not allow the petitioner to come within the same. The petitioner is not an electricity trader as defined in Section 2(26) of the Electricity Act, 2003. The petitioner does not have a licence to undertake trading in electricity under Section 12 of the Electricity Act, 2003. The petitioner also cannot be said to be engaged in the business of transmission as, the petitioner does not have such a licence. The petitioner is not a person authorised to transmit, supply, distribute or undertake trading in electricity. In view of the definitions as obtaining in the Electricity Act, 2003, therefore, the petitioner cannot be said to be distributing or selling or trading in electricity when, it is receiving high-tension supply from Indian Power Corporation Ltd. and providing low-tension electricity to the occupants of the commercial complex. Sale, trading and distribution being taken out of the contention, the only other thing that remains to describe the activity undertaken by the petitioner, is service. The activity of the petitioner sought to be made exigible to tax does not come within exclusions contained in Section 65B(44). The Finance Act, 1994 provides a negative list of services in Section 66D. If, an activity which does not come within the negative list of services as defined in Section 66D of the Finance Act, 1994, such an activity is to be termed as a service exigible to tax under the Finance Act, 1994. It is the contention of the petitioner that, the activity of the petitioner comes within the negative list of services defined in Section 66D particularly in view of Section 66D(e) and (k). As noted above, the petitioner cannot be said to be indulging in trading of goods or in transmission or distribution of electricity within the meaning of the Electricity Act, 2003. The transaction of the petitioner obtaining high-tension electric supply converting it to low-tension supply, and supplying it to the occupants, raising bills on such occupants and realizing the electricity consumption charges from such occupants, is a service which the petitioner renders and such an activity is exigible to Service Tax under the Finance Act, 1994. Petition dismissed.

  ---

• 2019 (3) TMI 820
  Liability of service tax - terminal charges received from Indian Railways - demurrages which they have collected from various clients - royalty which they received from terminal operator with whom they entered into a contract on Build-Operate-Transfer basis (BOT). Terminal charges received from Indian Railways - Held that:- The services rendered by the appellant, who are undisputedly a major port, in the port area for Indian Railways and for which they are getting paid is squarely covered by the definition of port services. The exemption available to Sec.99 of the Finance Act, 1994 and the notification 43/2012-ST dated 2-7-2012 are available to the services rendered by the Indian Railways the exemptions cannot be extended to services received by Indian Railways - the appellant is liable to pay the service tax on the terminal charges which they received from the Indian Railways. Demurrages which they have collected from various clients - Held that:- In view of the lack of clarity of the nature of demurrage charges as to whether these are the charges levied by the Indian Railways and only collected by the appellant and transferred to the Railways or only collected by the appellant from the client on their own, it is deemed to be a fit case to be remitted back to the original authority for determining as to who is service provider, what is the nature of service and who is the client paying the service charge. Royalty which they received from terminal operator with whom they entered into a contract on Build-Operate-Transfer basis (BOT) - Held that:- The service tax is proposed to be levied on the amount paid by the container terminal operator to the appellant as a part of the BOT agreement in which the appellant performs some services and the container terminal operator performs some other services. The question is whether such an arrangement would amount to container terminal operator using the franchise of the appellant and consequently, whether the royalty charges being chargeable to service tax under franchise services at the hands of the appellant or otherwise. Time limitation - Held that:- The appellant is an organisation under the Government of India and it is extremely difficult to imagine that they have an intention to evade payment of service tax. It is true that their understanding of the law could be different from that of the department. It is not in dispute that the appellant filed their ST-3 returns and were audited and they had provided whatever information was sought by the department - the extended period of limitation cannot be invoked. Appeal disposed off.

  ---

• 2019 (3) TMI 819
  CENVAT Credit - input services - Rent a Cab services - Insurance of Vehicles - Section 73(3) of the Finance Act, 1994 - Held that:- Once the appellant has paid the CENVAT of Rs. 34,02,602/- and interest of Rs. 5,85,931/- towards Rent-a-Cab service and other services, the Revenue should not have issued the SCN as there was no suppression of fact with intent to evade payment of Service Tax. Therefore, the imposition of penalty equal to the CENVAT credit of Rs. 34,02,602/- along with interest of Rs. 5,85,931/- which is paid before the issue of SCN is set aside. Other input services - Held that:- The adjudicating authority has only considered three service viz. Works Contract, Electrical Works and Hiring of Tugs for decision on their eligibility for CENVAT credit. Further, the original authority have not considered the material furnished by the appellant to prove that the said services fall in the definition of ‘input service’. Pest control services - Advertising service - Event Management service - Electrical Works - Erection, Commissioning and Installation of DG Set service - Held that:- The Commissioner (A) has merely confirmed the Order-in-Original without considering the submissions of the appellant and the various case laws relied upon by the appellant in support of their submission. In view of all these, this case needs to be remanded back to the original authority for passing a de novo order with regard to all the services except Rent-a-Cab service which is not being contested and CENVAT has been paid by the appellant - the appeal is allowed by way of remand to the original authority with direction to pass a de novo order after considering all the submissions of the appellant. Appeal allowed by way of remand.

  ---

• 2019 (3) TMI 818
  CENVAT Credit - sub-contract - steel and cement which has been procured by the appellant has been handed over to the contractors for construction of airport - Held that:- There is no dispute as to the fact that appellant was awarded a contract for constructing airport on build, operate, own and transfer basis; he had given various sub-contracts to others to construct airport facility; procure cement and steel on their own and gave it sub-contractors for construction of airport and avail CENVAT credit on such cement and steel, various input services were used during the construction of airport and hence availed CENVAT credit. It is also on record that appellant had been filing regularly returns with the authorities. This factual position of discharging the service tax liability on the airport services is not denied. The issue of availment of CENVAT credit on various items like steel and cement and other input services which are used for construction of airport is covered by the ratio laid down by the Hon’ble High Court of Gujarat in the case of Mundra Ports & Special Economic Zone Ltd [2015 (5) TMI 663 - GUJARAT HIGH COURT]. In view of the foregoing, the adjudicating authority’s order of denying CENVAT credit is incorrect and unsustainable. CENVAT credit of central excise duty paid on inputs capital goods and input services in respect of hotel (Novotel) construction - Held that:- The hotel is not a part of the airport and hence cannot be considered as used for rendering airport services. Further, it has to be noticed that the contractors who constructed the airport discharged service tax liability by availing abatement under Notification No 1/2006-ST. If the hotel would have been commercial in the proper definition of airport they need not have paid any service tax on such construction activity. L&T who were the contractors for airport did not discharge service tax liability on the construction of the airport. Further, the payment of service tax by the contractors who constructed the hotel without availing CENVAT credit is in itself indicated that the said hotel is not a part of the airport. - Credit not allowed. CENVAT Credit - service tax paid on input services by the contractor of fuel farm erection - Held that:- Appellant are eligible to avail CENVAT credit as fuel farm is a part of the airport and used for providing taxable output services i.e. airport services. The operation of fuel farm is done by M/s Reliance Industries Ltd., (RIL) and appellant pays operating charges to RIL on which service tax liability is discharged. The entire dispute in the case is regarding the central excise duty paid on the fuel which is required and maintaining minimum level of stock of fuel in order to fill the fuel in the aircraft - CENVAT credit on the fuel farm cannot be denied to the appellant herein as the same qualifies as an input services in terms of Rule 2(l) of the CENVAT Credit Rules 2004 as it is an activity relating to business. CENVAT Credit - Held that:- The voluminous documents are produced to justify that these services are output services. These documents needs to be considered by the adjudicating authority to come to a conclusion whether appellant s eligible for availment of CENVAT credit or otherwise - this exercise would have to be done by the adjudicating authority. Accordingly without expressing any opinion on the merits of this point, the matter is remanded back to the adjudicating authority to reconsider the issue afresh on this point as well as Point No. 9 after following the principles of natural justice. CENVAT Credit - Volvo chassis - Held that:- In the case in hand appellant is not entitled to avail CENVAT credit of the central excise duty paid on Volvo chassis. Hence the confirmation of demand along with interest is correct and needs to be upheld - Since we have disposed of the major demand of irregular availment of CENVAT credit on merits as well as we find that there is no reason to sustain penalties imposed on the appellant - Appellants are directed to pay/reverse the amount of CENVAT credit with interest. Appeal disposed off.

  ---

• 2019 (3) TMI 817
  Erection, commissioning and installation services - benefit of abatement - simultaneous availing cenvat credit - under Sl. No.5 of N/N. 1/2006-ST dated 01.03.2006 - Held that:- There is a detailed calculation table based whereupon the demand was proposed and subsequently confirmed. Such a calculation is not possible in the absence of the evidence. Further, the documents as that of giving details bifurcating the amount received by the appellant with respect to both kind of services (with and without material) are on record. A perusal thereof shows that the value mentioned for the services with material tallies with the value mentioned in the show cause notice. The said perusal is sufficient enough to hold that the services, which do not include the value of material and on which, the cenvat credit has been availed were not included by the appellant while availing the abatement under the said Notification. The details about cenvat credit on input services have also been brought to the notice of this Bench. There is no denial on part of Department that the appellants were rendering services of erection, commissioning and installation and there have been the work orders, which include the value of material as well as the labour. CENVAT Credit - Held that:- The adjudicating authority has simply relied upon the ST-3 Return for holding that since cenvat credit has been availed one condition for abatement stands not complied with, while denying the benefit of the Notification. But it is the simultaneous acknowledgement that the format of ST-3 Return is very restrictive and there is no scope of bifurcation. Hence, merely relying upon ST-3 Return for holding the non-compliance of the condition, to my opinion was not justified on the part of the adjudicating authority. Specially when there was enormous evidence giving bifurcation for both kind of services (eligible and not eligible for the abatement benefit under the impugned Notification) - the lack of evidence as has been held a ground for rejecting the appeal is not based on the true facts of the case and is rather against the record. Time limitation - Held that:- It is observed that apparently there had been two prior audits of the appellant’s record. First being in the year 2009, admittedly the appellant had regularly been filing the returns. No suppression or mis-representation of facts can be attributed to the appellant in the given circumstances. The Department was not entitled to invoke the extended period of limitation. Major portion of demand is, therefore, stands hit by principle of limitation - Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 816
  Refund of service tax paid - unjust enrichment - reliance on CA certificate - onus to prove that the burden of service tax has not been passed on to their customers either directly or indirectly - Held that:- If the refund is eligible on merits and is filed within the time limit, unless the unjust enrichment aspect has been provided by the claimant, the refund should be sanctioned and credited to the Consumer Welfare Fund. If the claimant proves that burden of the duty/service tax has not been passed on to their customers, the same needs to be refunded. The question is how to verify whether the claimant could have passed on the incidence of duty/service tax indirectly to their customers by adding the same as their cost of production of goods or cost of rendering the services. If so, whether the claimant can still get the refund of the duty/service tax. This issue has been settled by Hon’ble Apex Court in the case of Solar Pesticides Pvt.Ltd. [2000 (2) TMI 237 - SUPREME COURT OF INDIA] in which it has been categorically held that even if the appellant passes on the incidence of duty/service tax to their customers indirectly, the concept of unjust enrichment applies. In the present case, there is no dispute about the eligibility of the refund or the time limit. The lower authority rejected the refund claim on the ground of unjust enrichment which is, prima-facie, not in accordance with the law. If he had found that unjust enrichment applies, he should have sanctioned the refund and credited the same to the Consumer Welfare Fund. The first appellate authority, on the other hand, considered all the facts and came to the conclusion that the refund claim has been accounted for in the books of accounts of the appellant as service tax receivable. The contention of the department is the first appellate authority has wrongly came to this conclusion without himself verifying the books of accounts and merely relying on the Chartered Accountant certificate which is not a conclusive proof. This certificate by Chartered Accountant is comprehensive as to how he has arrived at the conclusion that the amount shown as service tax receivable in the books of accounts of the respondent as receivables included the disputed amount - There is no evidence, whatsoever, presented on behalf of the department to show that this certificate is incorrect or doubtful. The burden of service tax has not been passed on by the respondents to their customers and therefore the appeal needs to be rejected - appeal dismissed - decided against Revenue.

  ---

• 2019 (3) TMI 815
  Levy of service tax - pilotage charges - whether the appellant is liable to pay service tax on Port Service as per Section 65(105)(zzl) in respect of the services rendered by them in Ravva Port with permission of the Port Authority? - Held that:- The amount received by them under the head pilotage revenue was in the nature of reimbursement of costs and not in the nature of consideration for any service. Even if it was treated as services rendered by them upto 18.04.2006, the value of taxable services for the purpose of charging service tax was a cost charged by them for providing taxable service. The amounts which they received as reimbursement were not chargeable to service tax. Whether the appellant has received authorisation from the Port authorities and if so whether it can be considered as a valid authorisation? - Held that:- A plain reading of the above letter shows that the appellant has been authorised to undertake various activities including pilotage and for this purpose, they need a licenced pilot. Therefore, the requirement under section 65(105)(zzl) that the services must have been rendered at Port or by a person authorised by the Port, is fulfilled. In this case is appellant, authorised by the Port has rendered the services. Thus, the appellant was fully liable to pay service tax on the pilotage charges which they received from their customers under the head Port Services , under section 65(105)(zzl) of Finance Act, 1994 - the demand of service tax on port services on the pilotage charges received by the appellant are upheld and any amounts which they must have already paid will be adjusted against the same, but the amounts need to be recomputed reckoning the amounts they received as cum tax amounts. Time limitation - Held that:- The appellant has definitely violated the conditions of the Act and Rules and has not paid the service tax. The benefit of not paying the service tax is evident. Therefore there is no force in the argument that they have not violated any provisions of Act with an intent to evade payment of service tax. Jurisdiction - Held that:- The services were rendered within the jurisdiction of the adjudicating authority and therefore the order was correctly issued by him. Wherever they have paid the service tax on these services, he has already taken them into account while computing the tax liability. Demand of interest u/s 75 - Held that:- Interest under section 75 on the recomputing amount of service tax also needs to be paid. Penalty - Held that:- The appellant has not paid service tax in violation of the Act and Rules with an intention to evade - penalty upheld. Appeal allowed by way of remand.

  ---

• 2019 (3) TMI 814
  Construction services - It appeared to Revenue that services provided by the service provider were in relation to construction where the construction was alongwith the material and service provider had paid sale tax on the said material - Held that:- In the grounds of appeal Revenue has stated that similar projects were also executed by Municipalities. Therefore, we do not find any strength in the grounds raised by Revenue. We, therefore, uphold the impugned Order-in-Original in so far as it relates to setting aside the demand of service tax in respect of such construction work which were provided to various agencies as dealt with in the impugned proceedings - appeal of Revenue dismissed. Benefit of N/N. 01/2006 dated 01/03/2006 - work undertaken was with material and there was no transfer of property in goods involved - time limitation - Held that:- During the period 2011-12 the service provider was liable to pay service tax of Rs. 97 lakhs. Whereas the confirmation of demand was for Rs. 43 lakhs and there is no information about service tax paid during the year 2011-12 therefore the contention of the learned counsel for service provider that the demand for the period from April, 2011 to June, 2012 is barred by limitation is worth consideration.

  ---

• Central Excise

• 2019 (3) TMI 791
  100% EOU - Benefit of duty free removal of Modvat credit denied - N/N. 1/95 CE dated 4.1.1995 - Held that:- The matter is remanded to the Tribunal for fresh consideration in terms of the observations in M/s.Lakshmi Machine Works Limited [2008 (10) TMI 57 - CESTAT CHENNAI] - the matter shall be clubbed and heard together with other connected matters - appeal allowed.

  ---

• 2019 (3) TMI 790
  CENVAT Credit of Additional Duty of Customs (ADC) - ADC paid by the assessee on consignments of waste paper imported - Held that:- As is evident from the term input what matters is which material has gone into the process of manufacture. It is true if some element of the input goes into waste, credit cannot be denied on that count. What is important is, what does the input invoice/ bill of entry say and how it classifies the input. As long as input bill of entry is assessed or the input invoice classifies the product in a particular way, it has to be followed unless the classification itself is challenged and modified in an appeal. In respect of bills of entry where the input is treated as waste paper unless such classification has been challenged and modified at the appellate stage, the appellant is entitled to CENVAT credit. The eligibility of CENVAT credit depends solely on raw material used and how it was classified in the input bills of entry/ invoices. The classification made in the bills of entry/ invoices cannot be changed while determining the eligibility of the CENVAT credit. Wherever the inputs bills of entry classified the product as waste paper, the appellant is entitled to the benefit of CENVAT credit on waste paper regardless of the fact that some component of such waste paper may be non-paper. Wherever the bills of entry have classified the inputs under different headings, the appellant is entitled to the credit of additional duty paid on waste paper and not the credit of additional duty paid on plastic waste and metal waste. CENVAT Credit allowed - penalty set aside - appeal allowed in part.

  ---

• 2019 (3) TMI 789
  Classification of goods - Sweet meat Cereal Bars with brand name Rite Bite Nutrition Bars - benefit of N/N. 3/2006 dated 01.03.2006 as amended - Held that:- Admittedly, the Department has not come out with any evidence to show that the goods are not mithai or Misthans . Mere packing of the sweet meat same would not remove the product from the heading of mithais / misthans to make it ready to eat packaged food - Sl. No. 29 of the Notification No. 3/2006 is a wide entry, which encompasses not only Sweet Meat known as mithais / misthans (or by any other name), namkeen, Bhujia, Mixture, Chabena, but also similar edible preparations in ready for consumption form, papad, jalgira. The word similar edible preparation is of wide compass. If the goods are known as Sweet Meat and are marked and consumed as sweet meat in general parlance, then even-if packed would not lose its identity as misthans - With the advancement of technology, the Sweet Meat such as Rasgulla, Peda, Sohanpappdi and various other Sweet Meat are being sold in market after packing. The intention of packing these mithais / misthans is to preserve their freshness and save them from any contamination. But, this does not mean that only if the Sweet Meats are sold openly in sweet shops would classify as Sweet Meat and if sold in packaged form would change their nature to ready to eat packaged food . The CBEC vide Circular No. 841/18/2006 CX dated 6.12.2006 has clarified that even if same items fall under two entries of the notification, the exemption of NIL rate of duty would be available to goods covered by Sl. No. 29 of Notification No. 3/2006-CE dated 1.3.2006 even when the said goods are also covered by Sr. No. 30. The products not containing cocoa are eligible for exemption as sweet meat . Coming to the classification of the products containing cocoa, the Chapter Note 6 to Chapter 21 clarifies that Sweet Meats, commonly known as only Misthans , irrespective of their ingredients, would be classified under Ch. 21 only - both types of cereal bars i.e those product not containing cocoa as well those containing cocoa would classification under 21069099 as Sweet Meat and are eligible for exemption under S.N.29 of Notification No. 3/2006 CE dated 1.3.2006 and subsequent analogous notifications. Time limitation - Held that:- The appellant has adduced the copies of such correspondence with the appeal memo which clearly shows that there was no suppression of facts by the Appellant. In such case, the demands made against the appellant by invoking extended period of limitation are also time barred. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 788
  Valuation - related party transaction - clearance of goods to sister concerns - Section 4 of the Central Excise Act, 1944 - Held that:- If the transactions are to related parties, in terms of Section 4 of the Central Excise Act, the transaction value can be rejected and there is no requirement of flow back directly or indirectly. In such cases, the transaction value can be rejected and the value can be determined in terms of Central Excise Valuation Rules following Rules 4 through 11 - in the instant case, the extent of alleged undervaluation varied from invoice to invoice and the complete picture can only be found if duty paid with respect to each clearance to the related buyer and the transaction of unrelated buyer used for comparison is available - the SCN is vague inasmuch as the basis for alleging the undervaluation and calculating the extent of differential duty payable are not clear. Validity of subsequent SCN - Held that:- There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties. Thus, in both cases, the show cause notices do not indicate as to how the differential duty was worked out, invoice wise and which invoice value was used for comparison. There is a gap of 6 months between the two invoices. Further, the annexure to this show cause notice which gives the breakup of the differential duty of Rs. 1,04,221/- demanded for the period 2009-10 shows that there was no clearance during April, 2009 and from August, 2009 onwards. There were clearances only in May, June and July, 2009. The differential duty has been worked out with respect to these clearances to related parties compared with the highest transaction value (presumably during the month). There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties - There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties. Thus, in both cases, the SCNs do not indicate as to how the differential duty was worked out, invoice wise and which invoice value was used for comparison. The impugned order is set aside on the ground that SCN is vague - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 787
  Valuation - waste heat recovery boilers - inclusion of bought out materials like valves (manual/motor operated), PLC based BMS panel, I.D. Fan for boiler, inlet/outlet cones, side frames, panel for soot blowers, soot blowers, aluminum cladding, silencers for boilers etc. in assessable value - Held that:- The facts of the case are not disputed that the respondent is a manufacturer of waste heat recovery boilers and he is engaged in supply of waste heat recovery boilers to various customers who places an order on them for supply of waste heat recovery boilers. The respondent herein is procuring few items from the market like valves, PLC based BMS panel, I.D. Fan for boiler, inlet/outlet cones, side frames, panel for soot blowers, soot blowers, aluminum cladding, silencers for boilers etc., which are directly supplied by the suppliers at the site and it is also undisputed that the said suppliers discharge the applicable central excise duty on these parts when directly supplied at the site and respondent is not availing any CENVAT credit on the said parts. It is undisputed, in the case in hand, that after clearing the boilers from the factory premises and by assembling them at the site of customers along with bought out items, the waste heat recovery boilers become immovable. If that be the case, the reasoning adopted by the adjudicating authority, in the case in hand, in the impugned order is correct, legal and does not require any interference. Credit allowed - appeal dismissed - decided against Revenue.

  ---

• 2019 (3) TMI 786
  Method of valuation - free physician samples sold to distributors - section 4A of Central Excise Act, 1944 or not - It is the case of the department that physician samples cannot be sold and the assertion that they are sold is incorrect because it violates the Drugs & Cosmetics Rules. Therefore, physician’s samples should be treated at par with the normal goods - Held that:- This question as to how to value physician samples which are sold and not supplied free was answered in the case of Parnax Lab. Pvt. Ltd. vs. CCE, Vapi [2012 (11) TMI 254 - CESTAT, AHMEDABAD], where it was held that the demand of the duty liability on the physician samples sold by the appellant to the principals, the assessable value as ascertained by the assessee and the duty liability discharged is correct and there is no reason for recalculating the assessable value based upon the value arrived at on pro rata basis of sales pack. Once the samples are sold and there is a transaction value, the price at which they are sold forms the assessable value and the assessment has to be done. Therefore, no differential duty can be charged, holding that Section 4A should be applied even in cases where the appellant has sold the physician samples. On the factual position whether the physician samples were actually sold or otherwise, the matter needs to be verified by the adjudicating authority after giving the appellant an opportunity to present the documents - appeal allowed by way of remand.

  ---

• 2019 (3) TMI 785
  Imposition of penalty u/s 11AC of Central Excise Act, 1944 - suppression of facts - Held that:- Admittedly the respondent has paid the entire duty along with interest prior to the issue of show-cause notice and therefore, in view of the Section 11A(2) of the Central Excise Act, 1944 department should not have issued the show-cause notice as the proceedings are deemed to be concluded unless the Department can establish suppression of material fact with intent to evade payment of duty - In the present case, the department has not been able to bring any material on record to show that the appellant has suppressed the facts with intent to evade duty. Penalty set aside - appeal dismissed - decided against Revenue.

  ---

• 2019 (3) TMI 784
  CENVAT Credit - common input services used in manufacture of dutiable as well as exempt goods - non-maintenance of separate records - Rule 6(3A) of the CCR - for the purpose of calculating the Cenvat credit for reversal in terms of Rule 6(3A) as per of formula given therein, whether the total Cenvat credit means it is including the Cenvat credit of input services exclusively used for dutiable product should be taken or total Cenvat credit of only common input service should be taken? - interpretation of statute. Held that:- From the reading of Rule 6(1), it is clear that only in respect of input or input service used in exempted goods are not allowed. That means input or input service used in taxable service/dutiable goods, Cenvat credit is allowed. Sub-rule (2) of Rule 6 is only as an option that if any input or input services used in exempted goods, credit should not be allowed and only with this intention some mechanisms for expunging Cenvat credit attributed only to the exempted goods are provided. As per clause (b) (ii) (iv), it is clearly provided that entire credit in respect of receipt and use of inputs/ input service is allowed when such input and input service is used in dutiable final products and taxable service. However, nowhere in Rule 6 it is provided that the input or input service used in dutiable goods shall not be allowed. The Revenue is only interpreting the term total Cenvat credit provided under the formula. If the whole Rule 6(1)(2)(3) is read harmoniously and conjointly, it is clear that Total Cenvat Credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and will not include the Cenvat credit on input/ input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. When anomaly was noticed, the Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/ input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub Rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-Rule (3A) shall have retrospective effect being clarificatory. This, for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input service and not of input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the respondent in its entirety. Jurisdiction - GST regime - all the units within that State are covered under one registration or not? - Held that:- The refund claims, even though pertaining to different units, the common jurisdiction lies where the assessee has registration for their principal business location. Therefore, the appellant have rightly filed the appeal before the Commissioner (Appeals) Rajkot who has the correct jurisdiction over the principal business location of the assessee. Appeal disposed off.

  ---

• 2019 (3) TMI 783
  Refund claim - duty paid under protest - unjust enrichment - Held that:- The test of unjust enrichment, in its limited applicability, is confined to the consideration as to who had borne to the incidence of tax? If it is borne by the appellant and not passed on to any other person- say customer, appellant cannot be regarded as being enriched with refund of such tax component borne by other person - In the instant case, appellant had not only made declaration in writing in advance way back in 2006, that it would not pass the incidence of tax to the customers but also had produced invoice copies as well as Chartered Accountant certificate to establish that MRP of the product remained unchanged and the incidence of tax has been shown as receivable in the Balance Sheet. Without taking into account the evidenciary value of the additional evidence like Chartered Accountant certificate, invoice copies, appellant’s own declaration made before- hand, he just gave his opinion that those documents were not sufficient proof. The observation appears to be arbitrary as nothing is forthcoming from his order as to why he disbelieved those documentary evidence or rejected those as insufficient. In a judicial proceeding, order has to be a reasoned one based on judicial analysis where whim and caprice have got no role to play. Refund allowed - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 782
  Classification of goods - Scented Betel Nut Nizam Pakkku - Whether classified under CETH 21069030 attracting rate of 16%, as contended by the department or under CETH 08029019 attracting Nil rate of duty, as contended by the assessee? - Held that:- From the samples of the product at various stages submitted during the course of hearing, we find that the assessee will start with betel nut split as raw material, convert it and adding flavourings like cardamom etc. to arrive at the end product. Possibly, final product would only look as betel nut in crushed form. It is also interesting to note that the final product is marketed in pouches with the brand name / description Nizam Pakku (in Tamil) and Betel Nut (in English). It is therefore evident that the asssseee markets this product only as betel nut and not as supari. It therefore appears to reason that in the market, this product is only known as pakku or betel nut and not as supari. The classification of the product cannot be dragged into Chapter 21 of CETA and, in particular, sought to be classified under CETH 21069030 as betel nut product known as suprai. In consequence the product satisfying the requirements of Chapter Note 3 (b) of Chapter 8 will therefore necessarily fall under 08029019 as claimed by the assessee. The impugned order dt. 17.02.2012 upholding the classification of Scented Betel Nut under CETH 21069030 as against CETH 08029019 claimed by the assessee, cannot be sustained and is therefore set aside - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 781
  CENVAT Credit - it was alleged that Ellen received only non-duty paid scrap without any valid cenvat documents - Held that:- The Ld. Consultant is correct in his assertion that similar issue had been addressed by the Tribunal in the case of M/s. Ferro Cast Industries [2018 (11) TMI 1203 - CESTAT CHENNAI], where it was held that When the invoices had clearly stated the description of the goods and the duty paid, the appellants cannot be expected to go behind the accounts maintained or transactions made by the first stage dealer so as to ensure whether the credit availed is correct or not - credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 780
  CENVAT Credit - duty paying invoices - ISD registration - rent and maintenance charges paid to marketing office, commission charges and rent paid for storage of machinery before putting it into use in the factory of production - period December 2013 to June 2014 - Held that:- The convenience of ISD registration is to have a single unit which can avail the credit and thereafter make pro-rata distribution to other units. The invoices ought to have been raised in the name of the ISD unit. Thus there is a procedural lapse in availing the credit - Credit allowed. CENVAT Credit - rent for the premises in which the capital goods were stored - Held that:- The premises were used by Wayne Burt for their job work manufacture of cylinders which were solely supplied to the appellant. The capital goods and the tooling equipment were thus kept in the premises where during the period, Wayne Burt was doing the manufacturing activity. Even though after the disputed period the capital goods were transferred to the appellant’s factory, since the premises was solely used by Wayne Burt for their manufacturing activities, the credit of service tax paid on rent of such premises is not eligible for credit - credit not allowed. Time limitation - Held that:- It is held in the impugned order that the issue is interpretational - the first issue is only a procedural lapse. The department has not put forward any positive act of suppression of facts with intent to evade payment of duty. The credit availed in respect of first issue is only a procedural error - In the second issue, the rent was paid by appellant for the premises and the service tax also was collected from them. They were under the belief that the credit is eligible - thus there are no ingredients for invocation of extended period - SCN is time-barred. The appeal succeeds on limitation.

  ---

• 2019 (3) TMI 779
  CENVAT Credit - suppression of facts or not - extended period of limitation - penalty - Held that:- The Commissioner (A) has not considered the certificate of the Chartered Engineer which clearly certify the location and the function of switchyard - Further, in view of the various decisions relied upon by the appellant has been held that to decide the admissibility of the credit of any service, the use of service is important and not the location where the service is performed. The appeal is allowed on merits, the question of limitation is not considered - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 778
  Restoration of appeal - rectification of mistake - application was dismissed for want of prosecution of the same on the date of hearing - Held that:- The ROM application filed earlier by the applicant stands dismissed. It is to be recorded that on the date when the ROM was listed none appeared on behalf of the applicant. Even today when the ROA was called, there is no appearance on behalf of the applicant - the appeal is dismissed for want of prosecution - application rejected.

  ---

• 2019 (3) TMI 777
  Valuation - inclusion of freight charges - return of empty vehicles after delivering the goods up to the buyers - CBEC Circular No. 643/34/2002-CX dt. 01.07.2002 - Held that:- This Tribunal in the case of Haldia Petrochemicals Ltd vs. CCE, Haldia [2008 (12) TMI 47 - CESTAT KOLKATA] which has been affirmed by the Hon’ble Apex Court, the Revenue issued another Circular No. 923/13/2010-CX dt. 19.05.2010 wherein the Circular dt. 01.07.2002 was withdrawn and it has been clarified that cost of return fare of the empty vehicles is not required to be added in the assessable value of the goods supplied by the appellants. The demand against the appellants on account of inclusion of freight charges on the return fare of the empty vehicles is not sustainable - Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 776
  CENVAT Credit - partial/ full writing off of inputs - Rule 3(5B) of Cenvat Credit Rules, 2004 - extended period of limitation - validity of SCN - Interpretation of statute - Held that:- The issue is one of interpretation. For reversal of cenvat credit on partial writing down of value of inputs , the provision was introduced only first time by amendment of Rule 3(5B) of Cenvat Credit Rules, with effect from 01.03.2011 - Further, there was no provision prior to 01 March 2013 for recovery of cenvat credit and interest thereon under Rule 3(5B) etc. which was made applicable with effect from 01.3.2013 only, by virtue of Notification No. 3 of 2013-CE(NT) dated 01.03.2013. The notification provides that if the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (5), (5A) and (5B), it shall be recovered, in the manner as provided in Rule 14, for recovery of CENVAT credit wrongly taken. The issue has arisen due to change of opinion on the part of the Revenue, but there is no suppression of facts on the part of the appellants - Further, no amount was due to be reversed under rule 3(5B) on the date of issue of show cause notice. Thus, larger period for limitation can not be invoked and no show cause notice was required to be issued - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 775
  Validity of SCN - SCN issued by invoking the extended period of limitation - change of opinion - Held that:- The SCN in question, invoking the extended period of limitation has been issued by way of change of opinion, there being no condition precedent available for invocation of extended period of limitation - The SCN is not maintainable - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2019 (3) TMI 774
  Validity of reassessment proceedings - reopening of assessments - change of opinion - input tax credit - Held that:- Admittedly, the reassessment proceedings have been initiated only on the basis of the information received from the Deputy Commissioner (SIB), Commercial Tax, Muzaffarnagar pertaining to the search/survey dated 04.07.2013 at M/s TISCL and search/survey dated 11.07.2013 carried out at the business premises of the petitioner by the DGCEI, New Delhi. On the basis of the said search, notices were issued by the excise authorities and the replies have been submitted by the petitioner. Thereafter, no proceeding, whatsoever, has been undertaken by the excise authorities, nor has levied any duty, tax or imposed penalty upon the petitioner. The basis of reassessment proceedings initiated by the respondents – authorities is only the survey/search conducted by the DGCEI, New Delhi and no further action or order has been passed or brought on record by the respondents - The jurisdiction to initiate reassessment proceedings arises only after the Assessing Authority records his reason to believe that any turnover has escaped assessment. Thus, not only is the belief of escapement essential, but, more importantly, it is necessary for the Assessing Authority to record his reason(s) as to existence of the belief of such escapement - In the present case, the respondents, while making proposal for reassessment, record their reason to the effect that survey has been conducted by the Central Excise authorities at the business premises of M/s TISCL, in which certain incriminating materials were found, which represent clandestine removal of goods and non-payment of due taxes and therefore, verification is required for the said figures and reassessment proceedings may be permitted. In the present case, the reassessment proceedings have only been initiated on the basis of the survey/search conducted by the Central Excise authorities, i.e., DGCEI, New Delhi, and this fact is admitted between the parties that no further action has been taken by the said authorities, nor any tax, duty or penalty has been imposed upon the petitioner - the present proceedings of reassessment are absolutely bad in law and are not permissible under the law. Petition allowed.

  ---

• 2019 (3) TMI 773
  Principles of natural justice - Section 22(4) of the Tamil Nadu Value Added Tax Act - Held that:- It is admitted fact that the pre-assessment notice as well as the impugned assessment order were sent by the respondent only to the address at No.116/1-20B, Belimer Complex, Veppamoodu Junction, Nagercoil, whereas the registered office of the petitioner as per the respondent records is at No.94, Ramakrishna Nilayam, S.P.Office Road, East of Tower, Nagercoil, Kanyakumari District - It is the case of the petitioner that he has not received the preassessment notice as well as the impugned assessment order and it is his case that only an employee of the petitioner's son had received the notice. When the impugned assessment order was served at the address of the petitioner's son, the petitioner's son was hospitalized as he met with an accident. It is also evident from the assessment order that the respondent did not give personal hearing to the petitioner before passing the impugned assessment order. In the instant case, admittedly, the pre-assessment notice as well as the impugned assessment order were sent to the wrong address instead of the registered address of the petitioner and no personal hearing was given to the petitioner. Therefore, this Court is the considered view that the respondent has violated the principles of natural justice. The matter is remanded back to the respondent for fresh consideration by affording sufficient opportunity - Petition allowed by way of remand.

  ---

• 2019 (3) TMI 772
  Principles of natural justice - validity of Assessment order - TNVAT Act - It is the case of the petitioner that the details of the alleged sale to M/s. Jay Jay Agency, namely, the invoices, payment details and other documents sought for by the petitioner, were not provided by the respondent despite the request made by them - Held that:- The respondent ought to have considered all the above mentioned factors and should have given sufficient opportunity to the petitioner to place all his objections and also should have given an opportunity to the petitioner to cross examine the alleged purchasers M/s.Jay Jay Agency, Pollachi - But, in the instant case, no such opportunity was given to the petitioner and therefore, the respondent has violated the principles of natural justice - the matter is remanded back to the respondent for fresh consideration - appeal allowed by way of remand.

  ---

• 2019 (3) TMI 771
  Whether the assessee is liable for payment of sales tax in terms of Section 3(2) of the TNGST Act on the re-sale of sanitary fittings effected by the assessee within the State, which were purchased from WORTH, an organisation, which was granted exemption by the Government of Tamil Nadu under Section 17 of the TNGST Act in G.O.(Ms) No.436, dated 19.04.1983? Held that:- Section 17 of the TNGST Act is the power of the Government to notify exemption and redemption of tax. Under sub-Section (1) of Section 17 of the TNGST Act, the Government may, by notification issued whether prospectively or retrospectively, make an exemption or reduction in rate, in respect of any tax payable under the TNGST Act - In the instant case, the petitioner s seller, WORTH was granted exemption in regard to the whole of turnover relating to the sale of its products manufactured and on all sales incidental or ancillary to such manufactures in their various centres by notification published under the Government Gazette. The exemption, which was granted to WORTH, falls under Section 17(1)(ii), as it is for a specified class of person, in regard to the whole of their turnover. Section 7-A of the TNGST Act clearly provided for levy of purchase tax and the contingencies provided therein clearly fell within the said parameters and accordingly, the contention of the assessee was rejected. If the said decision is applied to the facts of the present case, we need to be conscious of the subtle yet marked distinction between the language employed in Section 7-A and an amended Section 3(2) of the TNGST Act - the charging section which stood prior to the amendment, did not contain any clause as contained in Section 7-A of the TNGST Act making the purchaser liable to pay purchase tax when they fall within any one of the contingencies in Section 7-A(1) of the TNGST Act. The order passed by the Tribunal is not sustainable and the point of taxation cannot be shifted - this tax case revision is allowed and the substantial questions of law are answered in favor of the assessee.

  ---

• 2019 (3) TMI 770
  Principles of Natural Justice - case of petitioner is that no opportunity has been afforded to the petitioner prior to the framing of the impugned assessments - Held that:- An order of assessment has to be a speaking one, containing reasons for the adjustments and additions effected revealing application of mind to the objections raised by the assessee and for rejection thereof, if the officer is not inclined to accept the same. The orders impugned do not satisfy the requirements and are non-speaking and bereft of reasons. The assessments are set aside - The Assessing Authority is directed to redo the same after affording an opportunity to the assessee who shall appear before him at the first instance on 25.02.2019 at 10.30 a.m - Petition allowed - decided in favor of petitioner.

  ---

• Indian Laws

• 2019 (3) TMI 769
  Dishonor of Cheque - cheque were returned unpaid either for the reason that the opening balance was insufficient or for the reason that the account was closed - section 138 of NI Act - Held that:- The Trial Court concluded that the accused was successful in bringing rebuttal evidence to the requisite level of preponderance of probabilities; and observed that the complainant had failed to prove, beyond all reasonable doubt, that the cheques were issued in part payment of the loan amount of Rs. 22,50,000/-. The High Court observed that if the transaction in question was not reflected in the accounts and income-tax returns, that would at best hold the assesse or lender liable for action under the income-tax laws but, if the complainant succeeds in showing the lending of amount, the existence of legally enforceable debt cannot be denied. The High Court also observed that the issue regarding washing away of the cheques in rain water was of no significance when the accused had accepted his liability in clear terms. The High Court found that the defence plea of the accused that the money was given as hand loan by his friend Shri Jagdishbhai got falsified by the version of the said Shri Jagdishbhai, who was examined as a witness on behalf of the complainant. The High Court, therefore, set aside the impugned orders and, while convicting the accused-appellant for the offence under Section 138 of the NI Act, sentenced him in the manner noticed hereinbefore. Preponderance of probabilities - Held that:- The accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Section 118 and 139 of the NI Act. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant s case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The High Court has conscientiously and carefully taken into consideration the views of the Trial Court and after examining the evidence on record as a whole, found that the findings of the Trial Court are vitiated by perversity. Hence, interference by the High Court was inevitable; rather had to be made for just and proper decision of the matter - the findings of the High Court convicting the accused-appellant for offence under Section 138 of the NI Act deserves to be, and are, confirmed. Question of punishment for the offence aforesaid - Held that:- In the totality of the circumstances of this case and looking to the nature of offence which is regulatory in nature, while we find that the punishment as regards monetary terms calls for no interference but then, the sentence of imprisonment deserve to be modified - In the singular and peculiar circumstances of this case, where the matters relating to 7 cheques issued by the appellant in favour of respondent No. 2 for a sum of Rs. 3 lakhs each are being considered together; and the appellant is being penalised with double the amount of cheques in each case i.e., in all a sum of Rs. 42,00,000/-, in our view, the appellant deserves to be extended another chance to mend himself by making payment of fine, of course, with the stipulation that in case of default in payment of the amount of fine, he would undergo simple imprisonment for a period of one year. Appeal allowed in part.

  ---