TMI Tax Updates - e-Newsletter
March 20, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Decisions taken by the GST Council in the 34thmeeting held on 19th March, 2019 regarding GST rate on real estate sector

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Articles

1. INDIRECT TAXATION ON ALCO BEVERAGES – WAY FORWARD

   By: Dr. Sanjiv Agarwal

2. SETTLEMENT PROCEEDINGS UNDER SEBI

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Decisions taken by the GST Council in the 34th meeting held on 19th March, 2019 regarding GST rate on real estate sector

2. 14th CII-EXIM Bank Conclave on India-Africa Project Partnerships Concludes in New Delhi

3. IBBI, SEBI sign MoU for better implementation of IBC

Notifications

GST - States

1. Order No. 3/2019-State Tax - dated 8-3-2019 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Third Removal of Difficulties) Order, 2019

2. 30/2018-State Tax (Rate) - dated 18-1-2019 - Mizoram SGST

Inserts the Explanation in Notification No. 11/2017- State Tax (Rate), dated the 7thJuly, 2017

3. 29/2018-State Tax (Rate) - dated 18-1-2019 - Mizoram SGST

Seeks to amendment in Notification No. 13/2017- State Tax (Rate), dated the 7thJuly, 2017

4. 26/2018-State Tax (Rate) - dated 18-1-2019 - Mizoram SGST

Seeks to exempt central tax on supply of gold by nominated agencies to registered persons

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 50/2018-19 - dated 18-3-2019

Online filing and processing of applications for export of Restricted items (Non-SCOMET) at DGFT HQ.

Highlights / Catch Notes

GST

• GST Council Lowers Tax Rates for Affordable Housing, Simplifies Tax Structures for Under-Construction Properties in Real Estate Sector.

  News : Decisions taken by the GST Council in the 34thmeeting held on 19th March, 2019 regarding GST rate on real estate sector
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• IIM Calcutta Recognized as "Educational Institution" Under Clause 2(y) of Notification No. 12/2017-Central Tax (Rate.

  Case-Laws - AAAR : Educational institution or not - IIM, Calcutta - the Indian Institute of Management, Calcutta, the Respondent, is an 'education institution' in terms of meaning of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) after the enactment of IIM Act on and from 31.01.2018
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• GST Rate for Gold and Precious Stone Articles with Watch Movements Under Chapter Heading 9101 Confirmed.

  Case-Laws - AAAR : Classification of goods - rate of GST - articles, consisting of gold, diamond, precious stones like ruby, emerald, sapphire, pearls etc., wherein a watch movement is fitted - products supplied by the appellant are appropriately classifiable under Chapter Heading 9101 of the Customs Tariff Act, 1975.
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• GST Classification: Walkie-Talkies Not Part of Ship; AIS and SART Deemed Essential Ship Components.

  Case-Laws - AAAR : Classification of goods - rate of GST - import of various goods/spares, which are supplied on ships and these equipment form an essential part of the ship, and makes the ship “sea worthy” - A walkie-talkie has general application and cannot said to be specific to the functioning of the ship - thus, the walkie-talkie would not form part of the ship - However, Automatic Identification and ‘SART’ are part of ship.
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• GST Exemption Denied for UCMAS Abacus Activity; Exemption Not Applicable Through Strained Reasoning.

  Case-Laws - AAAR : Exemption from GST - activity provided by UCMAS using abacus - By a strained reasoning, benefit cannot be given when it is clearly not available. - Benefit of exemption not available.
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• GST Applies to Services Supplied to SEZ; No Conflicts Found Between SEZ Act 2005 and GST Laws.

  Case-Laws - AAAR : Levy of GST - Supply of services to SEZ - Section 51 of the SEZ Act, 2005 provides for overriding effect in case there is anything inconsistent contained in any other law. However, no inconsistency between the provisions of the SEZ Act, 2005 and IGST Act, 2017 or CGST Act, 2017 / GGST Act, 2017 has been pointed out by the appellant
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• Appellant's view on SEZ service supply implies full exemption from Indian laws, sparking legal framework concerns.

  Case-Laws - AAAR : Supply of services to SEZ - the interpretation advanced by the appellant would lead to a situation where a Special Economic Zone would not be subject to any laws of India whatsoever.
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• Circular No. 16/16/2017 Clarifies GST Classification for Warehousing Services of Agricultural Produce; Supersedes Previous Tax Interpretations.

  Case-Laws - AAAR : Warehousing services - Agricultural Produce or not - rate of tax - Circular No. 16/16/2017 GST - This circular is an excellent guide to determine whether a particular produce can be termed as an agricultural produce or not. Vide this circular it has also been made clear that any clarification issued in the past contrary to this circular in the context of Service Tax or VAT/ Sales Tax is no more relevant.
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• GST Set at 18% for Outdoor Catering Services, Including In-House Canteens and Excluding Alcoholic Drinks.

  Case-Laws - AAAR : Rate of GST - outdoor catering - business of caterers and supply food, beverages and other eatables (nonalcoholic drinks) - complete services at various places of their customers, who have in house canteens at their factories - liable to GST @18%
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Income Tax

• Tax Officer Misses Section 143(2) Notice Post-Reassessment Filing, Sparking Key Procedural Dispute in Tax Case.

  Case-Laws - HC : Reassessment - in response to the notice u/s 148, the returns were filed in consequence thereof, the officer has to apply his mind to the contents of fresh return and then issue a notice u/s 143(2) which has not been done in the present case.
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• Assessee denied double deduction on rental income; can't claim both depreciation and Section 24 deduction.

  Case-Laws - HC : Receipts from rent, derived from surplus space being let-out - the assessee has claimed depreciation on the building, which was let out and on the other hand, wants to claim deduction u/s 24 as house property - Double deduction not possible.
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• Taxpayer Fraud Allegations: Revenue Must Prove Intent u/s 271(1)(c) for False Depreciation Claims.

  Case-Laws - HC : Penalty u/s 271(1)(c) - defraud by making false depreciation claim - The burden of proving the guilty animus on the part of the assessee is on the Revenue, like on Prosecution in criminal cases and no such negative burden could be cast upon by the assessee himself.
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• Interest on Broken Period for Securities in Stock Should Be Deductible for Income Tax.

  Case-Laws - AT : Broken period interest for the purchase of securities - the securities formed part of the stock in trade and therefore, the broken period interest paid should be allowed as a deduction.
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• Ex-Gratia Payment Challenge by AO Rejected; Employees Not Entitled to Profit Shares or Dividends.

  Case-Laws - AT : Addition of ex-gratia payment by assessee-bank - The view of the AO that the payment is made in lieu of the dividend or distribution of profit cannot be accepted because employees are not entitled to share in the profits as well as distribution of the dividend.
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• Penalty for Wrong Set-Off Loss Claim Contested; No Evidence of Income Concealment or Inaccurate Details u/s 271(1)(c.

  Case-Laws - AT : Penalty u/s 271(1)(c) - wrong claim of set off loss - explanation was not found false - no iota of evidence of concealment of any fact relating to particulars of income or furnishing of inaccurate particulars of income - Merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the revenue, that by itself would not, attract the penalty u/s 271(1)(c)
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• Rectification u/s 154 Not Allowed for Debatable TDS Credit Withdrawal Initially Approved u/s 143(3.

  Case-Laws - AT : Rectification of mistake u/s 154 - withdrawal of TDS credit in an order u/s 154 after allowing the same in 143(3) on the ground that corresponding income has not been offered for tax in the relevant assessment year is debatable issue - rectification not permissible.
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• Court Rules Reassessment u/s 147 Invalid Due to Change of Opinion and Lack of Non-Disclosure Evidence.

  Case-Laws - HC : Reopening of assessment u/s 147 - original assessment u/s 143(3) - change of opinion - allegation of non-disclosure not find favour from court - Once there is finding that reasons to believe are not good reasons, jurisdiction is not derived to compel assessee to submit to reassessment.
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Customs

• Duty Credit Scrips Issuance Under Foreign Trade Policy Sections 3.14.4 & 3.14.5 Aims to Boost Exports.

  Case-Laws - HC : Issuance of duty credit scrip (authorization) in terms of paragraphs 3.14.4 and 3.14.5 of the Foreign Trade Policy - The policy’s terms must, therefore, receive an interpretation as would advance its stated purpose, viz., to promote and encourage exports.
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• Redemption fine for gold seizure is based on market value at seizure time, not at order issuance.

  Case-Laws - AT : Relevant date for fixing redemption fine - seizure of Gold - when the redemption fine is imposed, the relevant date for fixing the redemption fine should be the market value of the goods prevailing at the time of seizure and not at the time of passing the order.
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• Customs Law: Rejected Timber Valuation Cannot Reflect Good Quality Timber Values for Tax Purposes.

  Case-Laws - AT : Rejection of declared value - enhancement of value - the value of rejected grade timber cannot be enhanced on the basis of good quality timber.
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DGFT

• DGFT Launches Online System for Export Applications of Non-SCOMET Restricted Items to Boost Efficiency and Transparency.

  Circulars : Online filing and processing of applications for export of Restricted items (Non-SCOMET) at DGFT HQ.
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IBC

• Insolvency Resolution Process: Applicants must deposit Rs. 2,00,000 to cover initial expenses, preventing personal financial burden on IRP.

  Case-Laws - Tri : Corporate Insolvency Resolution Process - to discourage IRP from spending the initial expenses from his or her own pocket, it is fair and just to direct the Applicant/Operational Creditor to deposit ₹ 2,00,000/- (Two lakhs) for the initial expenses to be spent by the IRP.
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Service Tax

• Sports Stadiums for Non-Commercial Use Exempt from Service Tax Despite Partial Commercial Activities.

  Case-Laws - HC : Commercial or industrial construction service - if the predominant user of the “sports stadium” is not commercial, then the same cannot be subjected to levy of service tax - though an area to the extent of 1/3rd is used for commercial purpose prescribing separate rates for such user, this by itself is not sufficient to attract service tax.
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• Service Provider's Role: Supplying Materials and Executing Projects is a Composite Contract, Not Just a Service.

  Case-Laws - AT : Nature of services - When there is supply of material involved by the service provider in execution of the product project / work contracted to him, the activity done on such service provider cannot be mere “service simplicitor” but will be a composite contract comprising of both materials and services.
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• Loan Services Exempt from Tax; Interest Counts in Reversal Calculation u/r 6(3A)(c) of CENVAT Credit Rules.

  Case-Laws - AT : Reversal of proportionate credit - the services in advancing loans etc. are exempt. Therefore, the amount of interest earned in advancing of loans needs to be taken into consideration while determining the amount to be reversed in term of Rule 6(3A)(c) of the CENVAT Credit Rules, 2004.
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• Service Tax Paid on Govt Transactions Before Collection, No Penalty Imposed on Appellant for Compliance with RBI Directive.

  Case-Laws - AT : Demand of service tax - non-payment of Service Tax on Government transactions - the appellant in compliance of the direction of the RBI paid the Service Tax even before collecting the same from RBI - No penalty.
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• Refund Denied for SEZ Services Due to Non-Compliance with Condition 1(c) of Notification No. 09/2009-ST.

  Case-Laws - AT : Refund of duty paid - services wholly consumed within SEZ - non compliance of condition 1(c) of notification no. 09/2009-ST - as per the first para of the notification all the services provided in relation to authorized operations in a SEZ and received by SEZ unit are exempted
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Central Excise

• CENVAT Credit recognized as a fundamental right in indirect taxation, equated to cash balance for duty liabilities.

  Case-Laws - AT : The availment of CENVAT Credit and its utilization is akin to a fundamental right in the area of indirect taxation. It has been time and again reiterated that CENVAT Credit is as good as a cash balance, to be utilized for the discharge of duty liability in lieu of actual cash.
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• Manufacturer Entitled to Refund of Unutilized Cenvat Credit After Factory Closure Due to No Fault of Their Own.

  Case-Laws - AT : Refund of Cenvat Credit - If a factory of a manufacturer has closed down for no fault of theirs, the unutilized Credit, which rightfully belongs to the manufacturer, cannot be denied to them when claimed by way of refund.
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• Shop Owners Admit Receiving Goods, Invoices; Evidence Points to Appellants' Secret Manufacturing and Duty Evasion.

  Case-Laws - AT : Duty evasion - The shop owners have admitted receiving the goods from Appellant and invoice from the society, and such admission is itself enough to hold that the goods were manufactured and cleared by the appellants clandestinely.
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VAT

• Maharashtra Entry Tax Act Upheld: Legislative Practices from 1935 Not Binding Under India's Constitution; Autonomy Reinforced.

  Case-Laws - HC : Constitutional validity of the Maharashtra Entry Tax Act - The Legislative practice to enactment of Constitution and Government of India Act, 1935 framed by the then British Parliament has no binding limitation and practice under the Constitution of India in independent India. The Legislation is not ultra vires in any manner.
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• Maharashtra's Goods Entry Tax Act of 2002 Upheld; No Discrimination Against Local Purchases or Importers Found.

  Case-Laws - HC : Validity of Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002 - no set-off is granted in respect of tax paid outside the State - The Act in no way makes any discrimination against the local purchases and importers much less any hostile discrimination. - Constitutional Validity upheld.
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• Interest Rates on Delayed Refunds: 9% Pre-GVAT Act, 6% Post-GVAT Act; Doctrine of Merger Applies for Date Calculation.

  Case-Laws - HC : Interest on delayed refund - relevant date for calculation of interest - Doctrine of merger - for the period prior GVAT Act, interest is payable @ 9% per annum and post GVAT Act, interest is payable @ 6% per annum.
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Case Laws:

• GST

• 2019 (3) TMI 1015
  Educational institution or not - IIM, Calcutta - Exemption under Entry No. 66(a) of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 - refund of tax - Held that:- The Indian Institute of Management Act, 2017, which came into force on and from 31.01.2018, granted IIMs the status of institutions of national importance and they were empowered to grant degrees, diplomas and other academic distinctions or tiles. Thus the Respondent is an Educational Institution within the meaning of sub-clause (ii) of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017, with effect from 31.01.2018. Circular No. 82/01/2019-GST (F. No. 354/428/2018-TRU) dated 01.01.2019 issued by the Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit, dealt with the applicability of GST on various programmes conducted by the IIMs. It clarified that from 01.07.2017 to 30.01.2018, 11Ms were not covered by the definition of education institutions as given in Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 thus they were not entitled to exemption under serial No. 66 of the said Notification. However, 11Ms were entitled to exemption for specific programmes falling under serial No. 67 of the Notification. Thus, the Indian Institute of Management, Calcutta, the Respondent, is an education institution in terms of meaning of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 after the enactment of IIM Act on and from 31.01.2018 - The exemption from GST under serial No. 66 of the said Notification was not available to the Respondent from 01.07.2017 to 30.01.2018, however, during this period exemption was available for specific programmes under serial No. 67. Further, for the period 31.01.2018 to 31.12.2018, the Respondent could avail exemption for the eligible programmes either under serial No. 66 or serial No. 67. After the deletion of serial No. 67 with effect from 01.01.2019, the exemption is available under entry 66.

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• 2019 (3) TMI 1014
  Classification of goods - rate of GST - articles, consisting of gold, diamond, precious stones like ruby, emerald, sapphire, pearls etc., wherein a watch movement is fitted - whether the above articles fall under entry 13 of Schedule V to Notification No. 1/2017 Central Tax (Rate) dated 28/6/17 prescribing rate of 1.5% CGST and 1.5% SGST? - challenge to AAR decision - Held that:- The Chapter Notes of Chapter 91 of the Customs Tariff Act, 1975 as well as Explanatory Notes of Harmonised System of Nomenclature of Heading 9101 and 9102 covers watches with case wholly of precious metal or of metal clad with precious metal, or of the same materials combined with natural or cultured pearls, or precious or semi-precious stones (natural, synthetic or reconstructed). Wrist-watches, pocket-watches, fob-watches, watches for carrying in handbags, watches mounted in brooches, rings etc. are covered under Chapter 91 of the Customs Tariff Act, 1975 - on the basis of relevant Chapter Notes of Customs Tariff Act, 1975 and Explanatory Notes of Harmonised System of Nomenclature, it is found that products supplied by the appellant are appropriately classifiable under Chapter Heading 9101 of the Customs Tariff Act, 1975. Various arguments put forth by the appellant in their appeal are devoid of any merit and the advance ruling given by the GAAR does not suffer from any infirmity. The decision of AAR upheld.

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• 2019 (3) TMI 1013
  Classification of goods - rate of GST - import of various goods/spares, which are supplied on ships and these equipment form an essential part of the ship, and makes the ship sea worthy - Whether classifiable as Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 under entry 252 of Schedule 1 of CGST N/N. 01/2017-Central Tax (Rate) dated 28th June, 2017 (Amended from time to time)? - GST @ 5% or IGST-5% as specified in entry 252 of schedule 1 of N/N. 01/2017-lntegrated Tax 28-06-2017? Held that:- The appellant is engaged in the business of sale and distribution of Marine Distress Signals, EPIRB, SART, marine chemicals navigation and communication and also providing lifesaving equipment related to the marine industries. The appellant imports various goods and spares which are supplied to ships. It is seen from the grounds of appeal that NAVTEX, SART and Two Way RT Walkie Talkie, AIS and Voyage Data Recorder along with other equipment constitute the list of equipment comprising GMDSS (Global Maritime Distress Safety System). GMDSS is an international system which uses terrestrial and satellite technology and ship board radio system to ensure rapid alerting of shore based rescue and communication operations in the event of an emergency - SART, NAVTEX are essential components of the GMDSS and as per SOLAS Convention of IMO, ships are required to carry the above equipment. SART -A search and rescue transponder is a self-contained, waterproof transponder intended for emergency use at sea. These devices may be either a radar-SART, or a GPS-based AIS-SART. The radar-SART is used to locate a survival craft or distressed vessel by creating a series of dots on a rescuing ship s radar display. It is used to ease the search of a ship in distress. The National Maritime Search and Rescue Manual (for the Indian Coast Guard) makes SART mandatory for all ships. It is also an essential part of the GMDSS - EPIRB on SART are a part of the positioning and localization system and NAVTEX is a part of maritime and safety information. The Two Way RT does not find the place in the GMDSS. It is used for internal communication for the staff of the ship. A walkie-talkie has general application and cannot said to be specific to the functioning of the ship - thus, the walkie-talkie would not form part of the ship and would not be covered by Sr. No.252 of Notification No. 1 of 2017.

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• 2019 (3) TMI 1012
  Exemption from GST - activity provided by UCMAS using abacus - applicability of Entry No. 80 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - challenge to AAR decision - Held that:- N/N. 9/2003-Service Tax dated 20.06.2003 and N/N. 24/2004-Service Tax dated 10.09.2004 provided exemption from taxable services provided in relation to commercial training or coaching by a recreational training institute. Recreational Training Institute was defined in those Notifications as a commercial training or coaching centre which provides coaching or training relating to recreational activities such as dance, singing, martial arts, hobbies. Hon ble CESTAT in the case of FAST ARITHMETIC VERSUS ACCE, ST EOU DIVISION, MANGALORE [2009 (5) TMI 70 - CESTAT, BANGALORE] held that the abacus training programme imparted is mainly to create interest in children for mathematics and also to enhance their thinking capacity. It is held that the entire thing is done by employing methods of play so as to make the whole thing interesting and by no means, this activity could be compared with the activities undertaken by commercial coaching or training centre. It was further held that Notification Nos. 9/2003-Service Tax dated 20.06.2003 and Notification No. 24/2004-Service Tax provided specific exemption for recreational training institute and vocational training institute. It was held that the activities of the appellant therein would more appropriately be classified as recreational. It is settled principle of law that exemption notification has to be read strictly so far as the eligibility is concerned. When the wordings of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning, benefit cannot be given when it is clearly not available. The appellant has failed to establish that activities carried out by them are covered under Entry No. 80 of N/N. 12/2017-Central Tax (Rate). Decision of AAR upheld.

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• 2019 (3) TMI 1011
  Levy of GST - Supply of services to SEZ - supply of services by way of providing accommodation services, supplying food and beverages and supplying services ancillary to providing accommodation services - zero rated supply or not - Section 16 of the IGST Act, 2017 - Accommodation services to a visitor other than a visitor located in SEZ - Held that:- It is evident that clause (b) of sub-section (1) of Section 16 of the IGST Act, 2018 provides that supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit, is covered under zero rated supply . Thus, to be qualified as zero rated supply, the law specifically refers the supply to SEZ developer/unit and not to or by SEZ developer / unit. Therefore, the supply of service by the appellant would be liable to Goods and Services Tax, unless specifically exempted by law. There is no doubt that supplies made by units or developers / co-developers of SEZ are treated as inter-state supply under Section 7(5) of the IGST Act, 2017 and are liable to IGST under Section 5(1) of the IGST Act, 2017. Out of these, only supplies made to SEZ developer / unit for authorized operations have been made zero rated, other are liable to IGST. The sub-section (1) of Section 53 of the SEZ Act, 2005 provides a deeming fiction whereby the Special Economic Zone shall be deemed to be a territory outside the customs territory of India and that too for the specific purposes of undertaking the authorized operations. The term customs territory cannot be equated to the territory of India. Further, the interpretation advanced by the appellant would lead to a situation where a Special Economic Zone would not be subject to any laws of India whatsoever. The entire SEZ Act, 2005 would be rendered redundant since it is stated to extend to the whole of India. Section 51 of the SEZ Act, 2005 provides for overriding effect in case there is anything inconsistent contained in any other law. However, no inconsistency between the provisions of the SEZ Act, 2005 and IGST Act, 2017 or CGST Act, 2017 / GGST Act, 2017 has been pointed out by the appellant - the reliance placed by the appellant on Section 53 and 51 of the SEZ Act, 2005 in support of contention that their activity in SEZ is not liable to IGST, is not acceptable. Section 53(2) of the SEZ Act, 2005 creates a deeming fiction whereby a SEZ is deemed to be a port, airport, inland container depot, land station and customs stations under section 7 of the Customs Act, 1962. On the other hand, Circular Nos. 46/2017-Cus dated 24.11.2017 and 3/1/2018-IGST dated 25.05.2018 clarified applicability of IGST / GST on goods transferred / sold while being deposited in a warehouse registered under section 57 or 58 or 58A of the Customs Act, 1962 (customs bonded warehouse), without payment of duty. The purpose of appointing any port, airport etc. under Section 7 of the Customs Act, 1962 is quite different than the purpose of licensing any warehouse under Section 57, 58 or 58A of the Customs Act, 1962. Therefore, the clarification issued for customs bonded warehouse are not applicable to the appellant even if a SEZ is deemed to be a port etc. under Section 7 of the Customs Act, 1962. Application disposed off.

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• 2019 (3) TMI 1010
  Warehousing services - Agricultural Produce or not - rate of tax - Circular No. 16/16/2017 GST dated 15-11-2017 - challenge to AAR decision - Appellant submitted that none of the products goes through any processing till they come to the cold storage which changes the essential character or marketability of these produce purchased from the farmers/cultivators by the traders. - Held that:- These products are sold in primary market by Cultivator as raw and green. Various processes like cleaning, deshelling, specialized drying, sorting, grading, packing etc. are then undertaken before these goods become ready for consumption by the consumer. These are not the processes which can be undertaken at the farm. These processes substantially add to the value of the produce - the above produce do not fall under category of Agricultural Produce and Services of storage or warehousing of such produce would not remain exempt under the above said notifications No. 11/2017-Central Tax (Rate) and 12/2017-Central Tax (Rate) both dated 28.06.2017. Reference is also invited to Circular No. 16/16/2017-GST dated 15.11.2017 which squarely delineates applicability of GST on agricultural produce. It has been made very much clear vide this circular that what is an agricultural produce and what is not. This circular is an excellent guide to determine whether a particular produce can be termed as an agricultural produce or not. Vide this circular it has also been made clear that any clarification issued in the past contrary to this circular in the context of Service Tax or VAT/ Sales Tax is no more relevant. There is no reason to interfere with the Ruling given by the Authority for Advance Ruling - AAR decision upheld.

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• 2019 (3) TMI 1009
  Rate of GST - outdoor catering - business of caterers and supply food, beverages and other eatables (nonalcoholic drinks) - complete services at various places of their customers, who have in house canteens at their factories - Circular issued from F.No. 354/03/2018 (Circular No. 28/02/2018-GST dated 08.01.2018) - Sr. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended - challenge to AAR decision. Held that:- The terms outdoor catering , restaurant , mess and canteen have not been defined in the CGST Act, 2017 and the GGST Act, 2017 or the Notifications issued there under. However, in the catering industry, the term outdoor catering refers to service wherein the kind, quantum and manner in which food / eatable/ drinks is to be served is decided by the service recipient and the service provider provides service of catering at the place other than his own. This meaning of outdoor catering has legal precedence as the term outdoor catering was specifically defined in Chapter V of the Finance Act, 1994. In the present case, the service recipient has engaged the appellant for running of the canteen and rates for the meal, snacks, tea have been fixed and payable by the service recipient. The menu is required to be decided by the canteen committee of the service recipient. Further, the appellant is providing these catering services from other than his own premises. Therefore, the nature of service provided by the appellant is that of outdoor catering service in view of the meaning of the said term as commonly understood, even though there is no statutory definition of the said term provided in the CGST Act, 2017 and the GGST Act, 2017. The issue whether the nature of service provided by the appellant would change since the meal, snacks, tea etc. are consumed by the workers / employees of the recipient, the AAR has referred to the judgement of Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-Op. Society Ltd. Vs. CCE ST, Allahabad [ 2014 (4) TMI 407 - ALLAHABAD HIGH COURT] . In the said judgement, it has been held that the taxable catering service cannot be confused with who has actually consumed the food, edibles and beverages which are supplied by the assessee. It is also held that the taxability or the charge of tax does not depend on whether and to what extent the person engaging the service consumes the edibles and beverages supplied, wholly or in part. The situation where the food / eatables/ drink are the choice of the recipient and the kind, quantum and manner in which the food is to be served is also decided by the recipient, as is the issue in the present case, has not been covered by the said Circular and hence the same is not applicable in the facts of the present case - thus, the supply of services by the appellant is covered under Sr. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax @ 18% (CGST 9% + SGST 9%) and reject the appeal filed by M/s. Rashmi Hospitality Services Private Limited. AAR decision upheld.

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• 2019 (3) TMI 1008
  Exemption from tax or not - amount charged as interest on transaction based short term loan given by the Del Credere Agent (DCA) to buyers of material - N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 (Serial Number 27) - Section 15(2)(d) of the CGST Act, 2017 - Sr. No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 Difference of opinion. - Both members passed separate order.

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• 2019 (3) TMI 1007
  Seizure of goods with vehicle - validity of e-way bill had expired - interim relief sought - Section 129(1)(c) of The Central Goods and Services Tax Act, 2017 - Held that:- As an interim measure, it is directed that the vehicle of the petitioner shall be released forthwith provided the petitioner furnishes a security before the authority concerned as per the provisions contained under clause (c) sub-section (1) of Section 129 of The Central Goods and Services Tax Act, 2017 - Application disposed off.

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• Income Tax

• 2019 (3) TMI 1006
  Addition based on search and seizure operation - surrender made voluntarily - incriminating material or the surrounding circumstances reveal that there is any material to justify the addition - ITAT deleted the addition - confession during the course of search and seizure operation - HELD THAT:- The Tribunal as well as CIT(Appeals) after recording finding of fact in favour of the assessee has rightly deleted the addition of Rs. 7 crores as there is no incriminating document or material on record which could be a good ground for addition of seven crores be added in the hand of the assessee. Circular dated 10.3.2003 F. No. 286/2/2003- IT (Inv) held that more confession during the course of search and seizure operation cannot be a ground for addition in the income of the Assessee. Therefore, the case law relied upon by the Appellant is of no help. The case in hand the assessee has given documents, material and explained threadbare with regard to amount of Rs. 24 crores but the assessing authority has mechanically made the addition of Rs. 7 crores and added back the same amount only on the basis of statement having been made by the assessee which is not permitted. There is no legal infirmity in the order passed by the Tribunal. The assessee-respondent in the statement given on 6.10.2005, has surrendered Rs. 18 crores on account of investment made in purchase of jewellery/precious stones and Rs. 6 crores were surrendered as cash in hand duly shown in the books of account, balance Rs. 7 crores were surrendered with stipulation that details of the same would be given in due course of time. The assets to the magnitude of Rs. 7 crores were neither found by the authorities below nor such assets were identified or declared by the appellant. In such a situation, it could be inferred that no such assets actually exists. In other words, there is no clinching evidence or material to justify such addition of Rs. 7 crores. The case in hand the assessee-respondent has given documents, material and explained threadbare with regard to amount of Rs. 24 crores but the assessing authority has mechanically made the addition of Rs. 7 crores and added back the same amount only on the basis of statement having been made by the assessee which is not permitted. No legal infirmity in the order passed by the Tribunal. - decided against revenue.

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• 2019 (3) TMI 1005
  Reopening of assessment - whether notice under Section 143(2) was validly served within limitation? - after issuance of notice u/s 148 the assessee in response to the same had submitted the return but after receiving the return no notice as prescribed under the Act was issued to the appellant - HELD THAT:- It is admitted case between the parties that after issuance of notice u/s 148 the assessee in response to the same had submitted the return but after receiving the return no notice as prescribed under the Act was issued to the appellant. The statute provides that after filing of return, the assessing authority should apply its mind. After considering the fresh material on record and after recording reasons to believe, then issue notice under Section 143(2) of the Act afresh. The case in hand, the record reveals that in response to the notice u/s 148, the returns were filed in consequence thereof, the officer has to apply his mind to the contents of fresh return and then issue a notice u/s 143(2) which has not been done in the present case. The satisfaction under reasons to believe must be recorded by the AO after applying mind to the contents of fresh return before issuing notice under Section 143(2). It reveals that the provision contained in Section 143(2) is mandatory in nature and it shall be obligatory for the AO to apply mind to the contents of the return filed in response to notice under Section 148 and record reasons and thereafter, issue notice under Section 143(2) of the act before proceeding to decide the controversy with regard to escaped assessment. - Decided against revenue.

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• 2019 (3) TMI 1004
  Receipts from rent, derived from surplus space being let-out - Classification of income - Business Income OR Income from House Property - HELD THAT:- From the perusal of the record, it also reveals that the assessee has claimed depreciation on the building, which was let out and on the other hand, wants to claim deduction under section 24 of the Income Tax Act as house property. From the perusal of the record of the case in hand, it is crystal clear that the assessee, in its Memorandum of Association, had an object to earn income from renting out its property. The assessee has filed its returns showing income earned only from renting out of the property and there is no other income of the assessee in the disputed year. The assessee, in the disputed year, has also claimed deduction on the same property, rented out, which is not permissible under the Act. The authorities below were justified in rejecting the second claim made by the appellant assessee under section 24 of the Income Tax Act, as only one deduction is permissible under the Income Tax Act. - Decided against the Assessee.

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• 2019 (3) TMI 1003
  Penalty u/s 271(1)(c) - defraud by making false depreciation claim - pant and machinery, namely three Pay Loaders in question were not actually used - proof of conscious concealment or a deliberate filing of inaccurate particulars - existence of mens rea or guilty animus - HELD THAT:- The words use in Section 32 is not restricted to actual, full or continuous user of Plant and Machinery. It includes within its ambit the status of kept ready for use or ready for use as well. A partial user is also sufficient to apply Section 32 of the Act. For the reasons best known to the assessee, may be to buy peace and to avoid litigation or under pressure not knowing the correct legal position, he gave up the said claim of depreciation under Section 32 but, that does not mean that the assessee admitted the guilt of giving a wrong explanation or a false explanation or having concealed his income or filing inaccurate particulars. There was a total absence of mens rea or guilty animus on the part of assessee in present case. Giving up of the claim of depreciation could not automatically entail the penalty under Section 271(1)(c) of the Act. The imposition of penalty is neither automatic nor is expected to be imposed even if the bona fide explanation of the assessee is not finally accepted by the statutory authorities of the Act. The burden of proving the guilty animus on the part of the assessee is on the Revenue, like on Prosecution in criminal cases and no such negative burden could be cast upon by the assessee himself. No material on record brought by A which would indicate, much less, prove the guilty animus on the part of the assessee in the present case. Therefore, the restoration of penalty in the present case by the Second Appellate Authority, Tribunal, should fall to the ground. - Decided in favour of assessee.

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• 2019 (3) TMI 1002
  Addition u/s 14A - Disallowance of expenses on exempted income - application to securities/shares held as stock-in-trade - whether assessee bank is having sufficient non - interest bearing funds? - whether no expenditure was incurred to earn the exempt income as the employees, who are employed to carry out banking activity are used in the activities related to the earning of the exempt income? - HELD THAT:- AO had not recorded finding as to the satisfaction reached by him about the contention of the appellant that the appellant has not incurred any expenditure. In the light of this finding by the AO, the contentions urged by the assessee-bank that resort cannot be made to the provisions of s. 14A of the Act cannot be accepted. Further, the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA] had clearly held that whether the shares are held as stock in trade or to maintain a controlling interest in the company is irrelevant for disallowance u/s. 14A of the Act. Therefore, the contention that the resort to provisions of s. 14A of the Act cannot be made when the shares are held as stock in trade is rejected. The approach of the AO in making a disallowance @ 2% of exempt income was also approved - Decided against assessee Addition of ex-gratia payment - assessee-bank made a claim for deduction of exgratia payment made to the employees excluded from the purview of the payment of bonus act, the incentives were paid to these employees on the completion of 90 years of the existence - AO disallowed the claim placing reliance on the provisions of s. 36(1)(ii) which lays down that any sum paid to an employee as a bonus for services rendered, where the same would not have been payable to the employee as profit or dividend, if it is not paid as a bonus or commission shall be allowed as a deduction - HELD THAT:- There are no doubts about the genuineness of the expenditure but the AO disallowed that the ex-gratia payment holding that it is in the character of bonus and gratuity, which are specifically covered by the provisions of s. 36(1)(vii) and s. 37(1) of the Act. The view of the AO that the payment is made in lieu of the dividend or distribution of profit cannot be accepted because employees are not entitled to share in the profits as well as distribution of the dividend. The second contention of the AO that the ex-gratia payment is in the nature of bonus and gratuity also cannot be accepted for the reason that the gratuity is only paid at the time of retirement and the bonus, which is paid in excess what prescribed in the Bonus Act is also allowable as deduction as in the light of the decision of Hon ble Jurisdictional High Court in the case of Kumaran Mills Ltd. v. CIT [1997 (12) TMI 31 - MADRAS HIGH COURT] and in the case of CIT v. Carborundum Universal Ltd. [1976 (4) TMI 21 - MADRAS HIGH COURT]. Inasmuch as, the Bonus Act only prescribed the minimum amount of bonus to be made there is no bar on the payment of bonus over and above prescribed under the Bonus Act. We are of the considered opinion that the claim for deduction of ex-gratia payment should be allowed, accordingly, we direct the AO to allow the same as a deduction. Nature of expenses - disallowance of expenditure incurred on bonus shares - issue of right shares - AO disallowed the same holding to be a capital expenditure - Held that:- Undoubtedly, on account of right issue shares, there would be change in the capital structure of the company. Any expenditure incurred in increasing the capital structure of the company is a capital expenditure as held by the Hon ble Supreme Court in the case of Punjab State Industrial Development Corporation v. CIT [1996 (12) TMI 6 - SUPREME COURT] and Brooke Bond India Ltd. v. CIT [1997 (2) TMI 11 - SUPREME COURT]. The case laws relied upon by the ld. Counsel cannot be applied to the facts of the present case, wherein the Hon ble Supreme Court held that the expenditure incurred on issue of bonus shares is revenue expenditure, whereas In the present case, we were concerned with the issue of right shares. Thus, this ground of appeal filed by the assessee is dismissed. Disallowance of Pooja expenses - Allowable business expenses - AO disallowed claim holding that the expenditure, was not incurred wholly and exclusively for business purpose also confirmed by CIT-A - HELD THAT:- Similar expenditure was allowed in the assessee s own case in the AY 2004-05, 2005-06 and 2006-07 by this Tribunal, following the decision in the case of CIT v. Aruna Sugars Ltd. [1977 (1) TMI 8 - MADRAS HIGH COURT]. The decision of the Tribunal was accepted by the Revenue by not filing any further appeal. These submissions of the ld. Authorized Representative of assessee were not controverted by the ld. Sr. Departmental Representative. In the circumstances, following the decision of this Tribunal in assessee s own case, we direct the AO to allow the same as a deduction. Disallowances of interest swap transactions - HELD THAT:- The issue in the present grounds of appeal is covered by the decision of Mumbai Special Bench of Tribunal in the case of Bank of Baharain Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI]. It is further submitted that for AY 2010-11, the ld. CIT(A) granted relied to the assessee-bank on the issue. The decision of ld. CIT(A) was accepted by the Department by not filing further appeal. Thus, it is prayed that the same may be allowed as a deduction. The above submissions made on behalf of the assessee-bank were not controverted by the ld. DR. In the circumstances, this ground of appeal filed by the assessee-bank is allowed. Disallowance of loss on account of sale of HTM securities - AO denied the claim on the ground that the claim was made in the revised return, which was beyond the time prescribed u/s. 139(5) - HELD THAT:- In the return of income, the claim relating the sale of securities was made but the claim was made at an amount of Rs. 1,39,30,565/- as against the correct amount of Rs. 24,78,54,994/-. The correct amount of claim was made by filing a revised return. The AO as well as ld. CIT(A) denied the claim on the ground that the claim was made by a revised return which was filed beyond the prescribed period under the statute. The approach of the AO cannot be appreciated in view of the settled principle of law that it is the bounden duty of the AO to compute the taxable income of the assessee in accordance with law and the assessment proceedings are not adverse proceedings. In fact, it is not a new claim made for the first time before the AO. It is only the variation in the amount of the claim. Therefore, we direct the AO to examine workings furnished by the assessee-bank and if, satisfied about the correctness of the working of the loss on sale of HTM securities to allow the same as a revenue loss. Disallowance of entertainment expenditure - expenditure was incurred for supplying tea, coffee etc, to the customers at the time of canvassing the business - AO agreed in principle on the allowabillity of expenditure but made adhoc disallowance of 5% of the total expenditure on the ground that a certain portion of the expenditure may not be relating to the business also confirmed by CIT-A - HELD THAT:- Issue is covered in favour of the assessee-company in its own case by the decision of this Tribunal for the AY 2010- 11 wherein the Tribunal deleted the addition on the ground that there was nothing on the record to show that any expenditure was incurred for the benefit of the employees. The ld. CIT(A) had not controverted above submissions. Therefore, we allow this ground of appeal. Disallowance of claim for deduction u/s. 36(1)(vii) - credit balance available in the account of provision for bad and doubtful debts more than the amount claimed as a bad debts - HELD THAT:- The issue in the present grounds of appeal is covered against the Revenue by decision of Hon ble Supreme Court in the case of Catholic Syrian Bank Ltd. v. CIT [2002 (8) TMI 266 - ITAT COCHIN]. Calculation of deduction u/s. 36(1)(viia) - inclusion of outstanding rural advances or incremental advances made by the rural branches - HELD THAT:- In the case of PCIT v. Uttarbanga Kshetriya Gramina Bank [2018 (5) TMI 903 - CALCUTTA HIGH COURT] upheld the interpretation of the provisions of Rule 6ABA of the Rules for the purse of s. 36(1)(viiia) that only aggregate average advance made by rural branches of a scheduled bank should be computed by aggregating separately the advances made by each rural branch as outstanding at the end of the last day of each months comprised in the previous year. The Hon ble High Court had categorically held that the method of taking the loans and advances made during the year only is not correct. Therefore, we direct the AO to consider only the outstanding rural advances not the incremental advances made by the rural branches for the purpose of calculating the deduction u/s. 36(1)(viia) of the Act Deduction of loss on account of HTM category of securities held by the assessee-bank - addition on ground that the notional profit made on account of AFS and HFT securities categories cannot be brought to tax - bona fide of the assessee-bank in changing the method of accounting - HELD THAT:- As decided in assessee s own case [2004 (7) TMI 52 - MADRAS HIGH COURT] Notwithstanding treatment given in the books of account, it is undisputed fact that investments are made only to comply with the regulations of RBI governing SLR requirement. Even otherwise, the Hon ble jurisdictional High Court in the case of Karnataka Bank [2013 (7) TMI 656 - KARNATAKA HIGH COURT] held that circular issued by the RBI for treatment in the books of account is not relevant for classifying the investments whether stock-in-trade or not. In the present case, undisputedly, assessee-bank has changed its method of accounting by classifying the investments from investments to stock-in-trade. Addition on account of brokerage paid to HTM securities - Revenue or capital expenditure - HELD THAT:- While dealing with the issue of allowability of loss of depreciation on the value of HTM securities, we held that the securities held by banking company are stock in trade. When the securities have been held as stock in trade the expenditure incurred for the acquisition of the same should be treated as Revenue expenditure and the same should allowed as deduction. Therefore, we do not find any fallacy in the reasoning of ld. CIT(A). Hence, this ground of appeal by the Revenue is dismissed. Broken period interest for the purchase of securities - AO disallowed a sum being the interest paid on broken period of the HTM securities purchases - CIT(A) allowed the same following the reasoning that the HTM securities were stock in trade in the case of the assessee bank - HELD THAT:- Supreme Court had laid down in the case of City Bank 2008 (8) TMI 766 - SUPREME COURT OF INDIA that where the securities were forming part of the stock in trade the broken period interest should be allowed as a deduction, while dealing with the issue of disallowance on account of depreciation of HTM securities, we have categorically held that the securities formed part of the stock in trade and therefore, the broken period interest paid should be allowed as a deduction. Therefore, we do find any fallacy in the reasoning of the ld. CIT(A). Additions unclaimed balance - HELD THAT:- The issue is covered in favour of the assessee company by Karnataka High Court in the case of Karnataka Vikas Gramena Bank [2015 (12) TMI 1420 - KARNATAKA HIGH COURT], wherein held that the decision of Hon ble Supreme Court in the case of T.V. Sundaram Iyengar [1996 (9) TMI 1 - SUPREME COURT] cannot be applied to the present claim. Addition of provision for leave encashment and medical leave u/s 43B - HELD THAT:- The clause (f) to s. 43B of the Act enacts that no expenditure shall be allowed on account of any leave salary unless, the expenditure is actually paid. Thus, provision is intended to overcome the decision of Hon ble Supreme Court in the case of Bharat Earth Movers v. CIT [2000 (8) TMI 4 - SUPREME COURT]. The case laws relied upon by the ld. Counsel cannot come to the rescue of the assessee-bank. Thus as long as Section 43B(f) is on Statute, the said disallowance is justified. Addition on account of loss on derivatives transactions - HELD THAT:- Mumbai Special Bench, in the case of Bank of Baharain Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI], wherein it was held that edging against the future losses cannot be treated as a speculative loses. Loss incurred for derivative transaction is allowable as a business deduction. Accordingly, we direct the AO to allow the same as deduction. Addition u/s 14A - contention of the appellant that the appellant has not incurred any expenditure to earn exempt income - HELD THAT:- AO had not given any finding as to how the claim of the assessee-bank that no expenditure was incurred to earn the exempt income was incorrect. In the absence of this finding resort to the provisions of Rule 8D of the Income Tax Rules cannot be made as held by the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. Therefore, this ground of appeal filed by the assessee is allowed. Addition on account of interest accrued in NPAs accounts - AO had brought to tax the interest on the NPAs accounts by holding that interest had accrued in terms of the agreement entered by the appellant with borrowers - HELD THAT:- This issue is now covered in favour of the assessee-bank by decision of Hon ble Supreme Court in the case of CIT v. Vasisth Chay Vyapar Ltd.[2018 (3) TMI 56 - SUPREME COURT OF INDIA], wherein confirmed the decision of Hon ble Delhi High Court, that the interest income cannot be said to have been accrued to the assessee on the NPA accounts. Accordingly, we direct the AO to delete the addition Rectification u/s 154 - mistake apparent from the record, inasmuch as, the deprecation debited to the profit and loss account is apparent and patent - HELD THAT:- Adopting wrong amount of provision for depreciation in the books of account constitutes a mistake apparent from the record. The application was made by the assessee-bank within the period of four years from the date of receipt of the assessment order as the assessment was completed on 15.03.2000 and the petition u/s. 154 of the Act was made on 23.06.2003. Thus, the contention that the petition was filed beyond the period of limitation has no legs to stand. Thus, we do not find any fallacy in the orders of ld. CIT(A) directing the AO to allow the petition filed by the assessee-bank. Allowance of depreciation claimed on the assets leased - HELD THAT:- There is no conclusive finding by the Tribunal on the issue. Therefore, the submissions made on behalf of the appellant that the AO had travelled behind the direction of the Tribunal cannot be accepted. However, the reasons assigned by the AO as confirmed by the CIT(A) to disallow the claim for depreciation cannot be accepted as the assessee had no control over the assessment record of M/s. Prakash Industries Ltd. It is always open to the AO to verify the assessment records of M/s. Prakash Industries Ltd. Therefore, we are of the considered opinion that the AO was not justified in disallowing the claim for depreciation on unjustified grounds. In the case of Annamalai Finance Ltd. [2004 (10) TMI 51 - MADRAS HIGH COURT] has laid down certain parameters for allowance of depreciation in the case of sale and leased back of transaction. Nothing is brought on record to say that the above parameters are not met by the assessee and therefore we direct the AO to allow the depreciation as claimed by the appellant. MAT provision application u/s 115J to banking companies - HELD THAT:- This issue is settled in favour of the assessee-bank by several judicial decisions. The recent decision of Co-ordinate Bench of Tribunal, Bangalore in the case of Canara Bank v. JCIT [2017 (11) TMI 1425 - ITAT BANGALORE] held that the assessee-bank is not liable for tax u/s 115JB for the year under consideration.

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• 2019 (3) TMI 1001
  Revision u/s 154 - computation of Long Term Capital Gain - whether doctrine of merger prevents the undersigned from a ruling at variance with CIT(A) order pre-existing and very much alive? - rectify the assessment u/s 154 by replacing value determined by the DVO - HELD THAT:- When the AO has taken one of the possible view at the time of 143(3) assessment can he rectify the assessment u/s 154 by replacing value determined by the DVO. The provisions of section 154 makes it clear that in order rectify any order u/s 154 there should be a prima-facie mistake apparent from record. If the issue is debatable which can be decided on prolonged discussions or deliberations, the same cannot be subject matter of 154 proceedings. In this case, the issue of full value of consideration is a subject matter of deliberations and which can be decided by prolonged discussions and a view can be taken, therefore, the Ld. CIT(A) came to the conclusion that there is prima facie merit in the arguments of the assessee insofar as subject matter of 154 proceedings, but he went on to decide the issue on technical grounds by applying the principle of doctrine of merger because in earlier proceedings, the CIT(A) has decided the issue of computation of Long Term Capital Gain against the assessee. CIT(A) has been accepted the fact that the assessee has strong case on legal grounds of initiating 154 on subject matter in question, wrong in not adjudicating the issue on merit. We, therefore, of the opinion that, there is no merit in the finding of the CIT(A) and hence, we set-aside order of CIT(A) and restore the issue to the file of the AO to decide the issue on the basis of DVO report and objections of the assessee.- Appeal filed by the assessee is allowed for statistical purpose.

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• 2019 (3) TMI 1000
  Penalty levied u/s. 271(1)(c) - non specification of charge - AO did not strike off and specify the charge/limb for which he is proposing to initiate the penalty proceedings - defective notice - HELD THAT:- An identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT [2017 (5) TMI 904 - ITAT MUMBAI] as to whether the action of the AO in initiating penalty proceedings U/s. 271(1)(c) without striking off one of the limbs and without specifying the specific charge in the notice initiating penalty proceedings for inaccurate particulars of income in the Assessment Order and in the case of CIT v. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] and also various decisions held that action of the Assessing Officer in non-striking off relevant clause in the notice shows that the charge being made against the assessee is not firm therefore proceedings suffer from non-compliance with principles of natural justice in as much as the Assessing Officer himself is not sure of the charge and the assessee is not made aware as to which of the two limbs of section 271(1)(c) he has to respond. We hold that the notice issued by the AO U/s. 274 r.w.s 271(1)(c) of the Act is on account of non-application of mind and therefore the penalty proceedings initiated are bad in law. Thus, we direct the Assessing Officer to delete the penalty levied U/s. 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2019 (3) TMI 999
  Addition u/s 68 - treating the share capital and share premium as unexplained cash credit - non-compliance on the part of the assessee - CIT(A) passed ex-parte order - HELD THAT:- Matter to be sent back to the A.O. for examining the issue on merit after considering the said details and documents and after giving one more opportunity to the assessee of being heard. We find merit in this contention of the learned DR. The impugned order of the CIT(A) passed ex-parte is accordingly set aside and the matter is restored to the file of the A.O. for deciding the same afresh. - Assessee treated as allowed for statistical purpose.

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• 2019 (3) TMI 998
  Disallowance u/s 14A r.w.r.8D - own funds exceeding the investments held - HELD THAT:- Assessee’s own funds in the shape of Share Capital & Free Reserves far exceeded the investment held by the assessee and the investments got reduced in the impugned AY. Therefore, in terms of binding decision rendered in CIT Vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] & CIT Vs. HDFC Bank Ltd.[2014 (8) TMI 119 - BOMBAY HIGH COURT] a presumption was to be drawn in assessee’s favor that the investments were made out of interest free funds available with the assessee. Therefore, interest disallowance u/r 8D(2)(ii) could not be held to be justified. We order so. Expense disallowance u/r 8D(2)(iii) - suo moto disallowance by assessee - HELD THAT:- The assessee has earned the stated exempt dividend income only from one investment i.e. DWS Ultra Short-Term Fund. The average investments in this fund is Rs. 25.49 Lacs & 0.5% of the same comes to Rs. 12,749/- which is less than suo-moto disallowance of Rs. 42,572/- offered by the assessee. This computation is in line with the decision of rendered in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that only exempt income yielding investments were to be considered to arrive at the said disallowance. Therefore, the additional expense disallowance, as computed by Ld. AO also could not be sustained. Thus the suomoto disallowance already offered by the assessee was justified and therefore, additional disallowance as sustained by first appellate authority was to be deleted.

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• 2019 (3) TMI 997
  Disallowance u/s. 40A(2)(b) - excess remuneration to directors - disallowance u/s. 14A - valuation of closing stock - Addition on account of notional interest on delayed refund of security deposits - Held that:- SLP [2019 (3) TMI 527 - SUPREME COURT] was dismissed against the same impugned judgment of the High Court[2018 (8) TMI 760 - GUJARAT HIGH COURT]. The Special Leave Petition is, accordingly, dismissed.

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• 2019 (3) TMI 996
  Maintainability of appeal - monetary limit - Addition u/s 68 on account of “unexplained cash credits” - HELD THAT:- The tax effect is Rs. 9,21,213. In view of Circular No. 3/2018 dated 11 July 2018, as amended by Circular dated 20 August 2018 of the Central Board of Direct Taxes “CBDT”, the Special Leave Petition need not be entertained. SLP dismissed.

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• 2019 (3) TMI 995
  Disallowance of deduction u/s 80IA (4) - assessee undertaken road development project, for which, it had entered into an agreement with Gujarat State Road Development Corporation which was incorporated by the Government for the special purpose - Tribunal deleting the disallowance of deduction made by the Assessing Officer - HC held that rigid interpretation of this provision as canvassed by the Revenue would only result into the assessees involved in genuine infrastructure development projects for and on behalf of the Government or local authorities would be denied the deduction merely on the ground that the State Government had created a nodal agency for working out the finer details and nittygritty of such infrastructure development - HELD THAT:- Special leave petition is dismissed on the ground of delay.

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• 2019 (3) TMI 994
  TDS u/s 194L/194LA - cost of construction incurred by the assessee is the consideration paid for acquiring such rights, interest and titles from such squatters/hutments - whether consideration given by assessee to such squatters/ hutments was not in the nature of 'compulsory acquisition of land/ structure'? - TDS u/s 194C or 194J - short deduction of tds - payment of of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc. - HELD THAT:- SLP dismissed.

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• 2019 (3) TMI 993
  Reopening of assessment u/s 147 - original assessment u/s 143(3) - change of opinion - validity of reason to believe - allegation of suppression - proof of non-disclosure - Additional depreciation allowabilty as manufacturer of carbun black or as power generating company - Amendment of section 32 allowing power companies to claim depreciation - HELD THAT:- Facts recorded in last preceding paragraph make contention of assessee regarding reasons to believe based on availing a benefit subsequently made available by amendment, acceptable as against revenue. AO had found as a fact, that which has been extracted above in the assessment made u/s 143(3). Subsequently, revenue cannot have reason to believe, on those facts, that petitioner is engaged in generation or generation and distribution of power and has claimed additional depreciation on plant and machinery for use of it in a period prior to said insertion by amendment. Once there is finding that reasons to believe are not good reasons, jurisdiction is not derived to compel assessee to submit to reassessment. Submissions made on behalf of revenue regarding non-disclosure also cannot be accepted in the facts and circumstances, Court having noticed there is no such statement to that effect in the reasons to believe. - Decided in favour of assessee.

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• 2019 (3) TMI 992
  Rectification of mistake u/s 154 - debatable issue - AO withdrawing TDS credit in an order u/s 154 on the ground that corresponding income has not been offered for tax in the relevant assessment year - CIT-A confirmed AO order - HELD THAT:- We are of the view that the issue is debatable and would not come within the purview of section 154 of the I.T.Act. The Delhi Bench of the Tribunal in the case of Bikramjit Ahluwalia [2017 (5) TMI 1667 - ITAT DELHI]had held that when tax has been deducted and paid into the Government account, the credit of the same should be given to the assessee in the year of deduction of TDS. Similar view was held by the Visakhapatnam Bench of the Tribunal in the case of ACIT v. Peddu Srinivasa Rao [2011 (3) TMI 1495 - ITAT VISAKHAPATNAM] and PARDEEP KUMAR DHIR. [2007 (4) TMI 294 - ITAT CHANDIGARH-B]shows that the issue raised u/s 154 of the I.T.Act is a debatable one. For the aforesaid reasons, we are of the view that withdrawal of tax credit which was given in the assessment completed u/s 143(3) of the I.T. Act by resorting rectification proceedings u/s 154 of the I.T.Act is legally untenable and cannot be sustained. However, we make it clear that TDS which is given due credit in this assessment year, the same should not be given credit during any other assessment year when income was offered for taxation - Decided in favour of assessee.

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• 2019 (3) TMI 991
  Penalty u/s 271(1)(c) - wrong claim of set off loss - scheme of amalgamation adopted - brought forward and carried forward loss - AO with the view that the assessee company was not liable to carry forward loss as per the provision of Section 72A(2) as amalgamation company was not in the business for a period of three years asked for explanation from the appellant - assessee thereafter suo moto withdrew the claim of the said amount and revised return was also filed - bonafide mistake - upon raising the query the assessee has withdrawn the wrong claim of set off loss - penalty deleted by CIT(A) - findings as no concealment of income or furnishing of inaccurate particulars - HELD THAT:- assessee explained the situation to the best possible manner pleaded bonafide. Such explanation was not found false by the Learned AO. The materials relating to returned income was duly disclosed before the Learned AO. At that relevant point of time, there was no iota of evidence of concealment of any fact relating to particulars of income or furnishing of inaccurate particulars of income. Merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the Act. In that view of the matter the penalty order was rightly deleted by the Learned CIT(A). - decided in favour of assessee.

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• 2019 (3) TMI 990
  Disallowance u/s 14A read with rule 8D - HELD THAT:- The amount of divided earned by the assessee from its own subsidiary as well from outside / other companies, in our view, a total disallowance of Rs. 5 lacs will be justified in this case on account of administrative expenses. However, since the assessee itself has suo motu made disallowance of Rs. 2 lacs, the assessee will be given the benefit of the same. Disallowance of interest on notional basis u/s 36(i)(iii) - HELD THAT:- In the light of the decision of the on Supreme Court in the case of ‘CIT (LTU) Vs. Reliance Industries Ltd.’ [2019 (1) TMI 757 - SUPREME COURT], no disallowance is attracted under this head as the assessee has demonstrated that it had sufficient own funds to meet the investments / advances given etc. This issue is accordingly decided in favour of the assessee. Allowability of Premium paid on redemption of Foreign Currency Convertible Bonds (FCCB) as business expenditure - capital receipt OR Revenue expenditure - HELD THAT:- Tribunal in assessee's own case [2010 (3) TMI 1242 - ITAT CHANDIGARH] held that the said expenditure is to be treated as Revenue expenditure, in the year of payment Disallowance of export commission for non deduction of TDS u/s 195 - addition u/s 40(a)(ia) - HELD THAT:- The assessee had paid certain commission to foreign agents for procuring orders. The assessee has justified the payment of aforesaid commission by stating that those foreign agents had direct liaison with the parties, they not only fulfilled the procurement of orders but also are helpful in acquiring the payments of the sales made. AO disallowed the aforesaid commission holding that the assessee was liable to deduct tax at source in respect of the aforesaid payments. After going through the assessment orders, we find that the Assessing officer has not disputed that the aforesaid payments were made to foreign agents who were not taxable in India. Since income, if any, received or accrued to foreign agents was not taxable in India, hence, as per the settlement law, the expenditure cannot be disallowed for non-deduction of TDS on such payments.- No justification on the part of the lower authorities in disallowing the expenditure under this head. - Decided in favour of assessee Interest received - head of income - ‘Income from other sources’ OR ‘Business and Profession’ - Characterization of income - HELD THAT:- It is an undisputed fact on the file that the aforesaid amount of interest has not been received by the assessee during the course of business i.e. to say that from customers or suppliers etc., hence, the same, in our view, cannot be treated as ‘income from business or profession’. Netting of the interest expenditure and the interest income received from other parties / banks etc. - alternative contention - We accordingly direct the Assessing officer to allow the expenditure incurred by the assessee for earning of the interest income i.e., if assessee is able to bring nexus between the expenditure incurred and the interest income earned, net of the income will be taxable under the head ‘income from other sources’. This ground is accordingly partly allowed in favour of the assessee. Treating the income from the profits of the units eligible for deduction u/s 80IB / 80IC of the Act - HELD THAT:- So far as the claim of deduction in respect of the insurance claim, which admittedly was on account of loss of trading assets is concerned, it has been held time and again that if the loss therein is indemnified by way of compensation received from insurance company that can be said to be not a separate income, rather, the same will have effect for reducing loss / expenditure. Hence, if the assessee has booked the aforesaid loss, in relation to which insurance claim has been received, as expenditure, then the amount received by the assessee from insurance company will be eligible for deduction u/s 80IB/80IC of the Act. This issue is accordingly restored to the file of the Assessing officer for verification of the facts. Gains on the foreign exchange rate fluctuation - HELD THAT:- The foreign exchange fluctuation gain is in respect of export receipts / receivable of the assessee and any gain in respect of receivable on account of foreign exchange fluctuation in fact contributes to the profits of the assessee from the sale/ export of the products. The assessee is held to be eligible to claim deduction u/s 80 IB / 80 IC of the Act in this respect. We direct the AO to verify whether these are independent receipts, if found so, the Assessing officer is directed to allow the income from sundry balance written back, commission / discount received and exchange rate fluctuation as the same is related to the business activity of the assessee, however, the income from rent is not allowable to be eligible u/s 80IC / 80IB of the Act. So far as the Misc. receipts is concerned, since we do not have exact details of such Misc. receipts, hence, the assessee has submitted that he does not press the issue relating to Misc. Receipts under the head ‘Misc. Income’. So far as the ‘prior period income’ is concerned, the same is also not pressed. Ground No. 9 is accordingly partly allowed. Adjustment of head office expenses to claim deduction u/s 80IC/ 80IC - HELD THAT:- As decided in assessee's own case upheld the findings of the CIT(A) to allocate the net of head office expenses. Following the same proposition and for the sake of consistency, the Assessing officer is directed to allocate the net of head office expenditure, and not the gross net expenditure under this issue. Treating interest reimbursement under Technology Upgradation Fund Scheme (TUFS) as capital receipt. Sales tax subsidy treated as a capital receipt. Treating the line/bay charges - capital receipt OR Revenue receipt - HELD THAT:- As decided in assessee's own case [2010 (3) TMI 1242 - ITAT CHANDIGARH] Tribunal after discussing the details upheld the order of the CIT(A) in that year treating the aforesaid expenditure as Revenue expenditure. No contrary decision has been cited before us. In view of this, the issue is accordingly decided in favour of the assessee. Interest received from customers / suppliers whether - treated as business income or not - HELD THAT:- Admittedly, the interest received form customers / suppliers is a part of the business transaction and is received in the regular course of business, hence, we do not find any infirmity in the order of the CIT(A) while treating it as business income of the assessee.

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• 2019 (3) TMI 989
  Penalty u/s.271(1)(c) - disallowance of expenditure of professional fees and income for the presence of the assessee as brand ambassador are concerned - HELD THAT:- Penalty u/s.271(1)(c) was levied in respect of addition towards disallowance of expenditure of professional fees and Rs. 7 Crores towards income for the presence of the assessee as brand ambassador are concerned, we find that this Tribunal in assessee's own case for the A.Y.2009-10 [2017 (3) TMI 957 - ITAT MUMBAI] had deleted the quantum addition made thereon. As agreed that the quantum addition has been indeed deleted by this Tribunal on the addition made on aforesaid two sums of Rs. 10 Crores and Rs. 7 Crores. We hold that once the quantum is deleted, the concealment penalty u/s. 271(1)(c) does not survive. Accordingly, grounds No.1 & 2 raised by the revenue are dismissed. Addition towards deemed rental income - assessee was gifted a Villa in Dubai by Nakheel PJSE and possession was received by the assessee in 2008 - AO estimated annual letting value of Villa and thereafter, allowed deduction u/s. 24(a) and assessed the remaining sum as deemed rental income under the head "income from house property" - HELD THAT:- In assessee's own case for the A.Y.2010-11 [2018 (6) TMI 147 - ITAT MUMBAI] had deleted the penalty on the very same issue on the ground that the revenue had placed reliance on Notification Nos. 90 & 91 of 2008 dated 28/08/2008 and whether such notification would supersede over the DTAA, was a debatable issue and that the very same issue have travelled up to the level of Tribunal in assessee's own case wherein the scope and gamut of the term “may be taxed in such other state” was subjected to heavy deliberations and debate. Since, the issue per se was debatable, this Tribunal in assessee's own case for the A.Y.2010-11 in the case referred held that no concealment penalty u/s.271(1)(c) of the Act could be levied on a debatable issue. - Appeal of the revenue is dismissed.

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• 2019 (3) TMI 988
  Deduction admissible u/s. 80 IC - Disallowance of expenses of taxable unit after reallocation - Low NP of taxable units as compared to the exempt ones also audit expenses were only debited in one taxable unit - HELD THAT:- As decided in favour of assessee [2016 (9) TMI 752 - ITAT DELHI] and [2018 (3) TMI 1738 - ITAT DELHI] assessee has produced all the books of accounts and vouchers before the AO during the assessment proceedings. In fact, no show cause query was issued by the AO on this account during the assessment proceedings. AO has not considered the fact that the units in exempted zones are mainly engaged in manufacturing on job work basis where there is either negligible or no input cost of raw material involved. It was noted that if the sales were made using their own raw material, there would be substantial difference in the GP rate insofar as, if the cost of raw material was excluded, the GP rate in all the units would remain the same. The fact that the exempted unit at Haridwar has shown a loss has not been referred to by the AO. Therefore, it is clear that no profit has been diverted to this unit. It was further noted that there has been no investigation or specific exercise to show that the amount claimed as deduction u/s 80-IC was wrong. We find considerable cogency in the finding of the CIT(A) that there is no ground for disallowing claim for job work expenses for the eligibility u/s 80-IC as the same is allowable. Deduction under Section 80-IC - Substantial expansion - claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT:- On a perusal of para 21 of the decision rendered in the case of CIT vs. Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] it is seen that the said position of law has not been varied. Accordingly upholding the order to the extent as far as position of law is concerned the issue is restored back to the file of AO with a direction to grant relief after verification of facts in accordance with law. Needless to say that the assessee shall be granted a reasonable opportunity of being heard.

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• 2019 (3) TMI 987
  Computation of capital gain - Valuation of property as on 01.04.1981 - FMV determination - AO has simply followed the guideline value fixed by the Sub-Registrar for registration of property - HELD THAT:- The property is located in prime location of Cuddalore. The property appears to have been located on the eastern side of link road to railway over bridge and Cuddalore main bus stand. The Departmental Valuation Officer has also noted that it is located on the rear side of busy Lawrence Road and even in the year 1981, the Departmental Valuation Officer found that there was high potential for development of property as commercial campus / cinema theatres / Kalyana Mandapam, etc. The frontage of the building is admittedly 178 ft. By considering the nature of building, future development and potential for establishing commercial campus / cinema theatres, this Tribunal is of the considered opinion that the value of the property could naturally be estimated at Rs. 100 per sq.ft. as estimated by the assessee. Even though the Valuation Officer has taken three instances, this Tribunal is of the considered opinion that by considering the location and potential for future development, it would easily fetch Rs. 100/- per sq.ft. as on 01.04.1981. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to take the market value as on 01.04.1981 at Rs. 100/- per sq.ft. and thereafter recompute the capital gain. Claim of exemption u/s 54F - AO found that the assessee renovated the existing building - Assessee claim before this Tribunal that they have put up an additional construction - HELD THAT:- There was a confusion whether it is renovation of existing building or additional construction as claimed by the assessee or it is improvement of existing building as claimed by the valuation officer. In those factual situation, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of both the authorities below are set aside and the issue of claim of exemption u/s 54F is remitted back to the file of the Assessing Officer. AO shall re-examine the matter and find out the nature of work that was carried on by the assessee by spending the capital gain and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. Disallowance of loan and interest paid to REPCO Bank in computataion of capital gain - Purpose of loan not known - HELD THAT:- The assessees claim that this amount has to be allowed while deducting capital gain. Even though the Revenue claims that it was a commercial loan borrowed by the assessees and other co-owners by mortgaging the property, it is not known the purpose for which the loan was borrowed. Unless the purpose for which the loan borrowed was brought on record, this Tribunal is of the considered opinion that it is difficult to decide whether it is allowable deduction or not. This Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, orders of both the authorities below are set aside and the claim of deduction of repayment of loan and interest to REPCO Bank is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter on the basis of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. Determination of date of sale for Long term capital gains - Transfer u/s 2(47) vs Transfer u/s 53A of TPA- date on possession given to power of attorney holder or execution of sale deed and handing over possession pursuant to sale deed - whether power of attorney in favour of third party for negotiating the sale cannot be considered to be sale of property within the meaning of Section 2(14) of the Act - HELD THAT:- Tribunal is of the considered opinion that mere execution of power of attorney agent cannot be considered to be transfer of property. For transfer of property, the assessee has to enter into an agreement for sale either by himself or through power of attorney agent and also hand over the physical possession of the property as contemplated under Section 53A of Transfer of Property Act. Moreover, in case there was agreement between the assessee and purchaser, by which the purchaser was allowed to continue to enjoy the property, then also there may be transfer within the meaning of 2(14) of the Act. In the case before us, it not the case of the Revenue that the assessees entered into an agreement for sale or arrangement allowing the purchaser to continue to enjoy the property. In those circumstances, this Tribunal is of the considered opinion that the execution of sale deed and handing over possession pursuant to sale deed would be the date of sale. Therefore, the Assessing Officer shall verify the sale deed and find out when actually the possession of the property was handed over. Accordingly, orders of both the authorities below are set aside and the matter is remitted back to the file of the Assessing Officer - Appeals filed by the assessees are allowed for statistical purposes.

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• 2019 (3) TMI 986
  Reopening of assessment - reopening after the end of four years from the end of relevant assessment year - Assessment was originally completed u/s 143(3) - conversion from investment to stock in trade merely because the investment was treated as inventory for considering the diminution in its value in books of account - assessee has followed the accounting standard issued by ICAI - HELD THAT:- AO has called for the information relating to investment in shares and valuation of the same. He has applied his mind and formed an opinion, but, he has not discussed elaborately in his order. It is settled precedent that AO cannot reopen the assessment merely on change of his opinion. Further, we notice that AO recorded the reasons for reopening, in which, he has not recorded anywhere that there is failure on the part of the assessee. Since, the assessment was reopened after four years, it is the duty of the AO to bring on record the failure on the part of the assessee, as held in the case of Tecumseh Products India Pvt. Ltd. Vs. ACIT and Anr.[2014 (4) TMI 239 - ANDHRA PRADESH HIGH COURT]. We notice that AO has not recorded any reasons of failure on the part of the assessee. Hence, the reopening itself is illegal. Therefore, in our considered view, the reopening was bad in law and therefore, the same is hereby quashed. Accordingly, we allow the grounds raised by the assessee in this regard. Penalty u/s 271(1) - HELD THAT:- As the reopening of assessments made by the AO u/s 147 of the Act were quashed by us in these appeals, penalty levied u/s 271(1) on such assessments were null and avoid

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• Customs

• 2019 (3) TMI 985
  Issuance of duty credit scrip (authorization) in terms of paragraphs 3.14.4 and 3.14.5 of the Foreign Trade Policy - refusal of duty scrip by invoking paragraph 3.14.5 (C)(i) of the Foreign Trade Policy 2009 2014 read with Notification No.43(RE 2009 14) dated 25/9/2013 - applicability of binding judgment of this Court in the case of JSW Steel Ltd. Vs. Union of India [2016 (1) TMI 957 - BOMBAY HIGH COURT]. Held that:- In view of the Incremental Export Growth achieved by the petitioner and having realized the sale proceeds in convertible foreign exchange, vide online application dated 24th March, 2015, the petitioner claimed duty scrip for Rs. 7,59,65,508.03 in the prescribed form ANF 3F. However, the EDI system, at that point of time, did not accept application for issuance of scrips for value above Rs. 1 crore - the judgment in JSW Steel Ltd. [2016 (1) TMI 957 - BOMBAY HIGH COURT] is applicable to the facts of the present case, where it was held that None can claim any benefit or incentive as an absolute right. However, a definite policy is enunciated in the present case. That policy extends an incentive for a demonstrated increase in exports. Its purpose is also clear, viz., to encourage more exports. The policy s terms must, therefore, receive an interpretation as would advance its stated purpose, viz., to promote and encourage exports. Petition allowed.

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• 2019 (3) TMI 984
  100% EOU - Release of benefit at 5% under the Merchandise Exports from India Scheme (MEIS) - In case of export, shipping bill is filed claiming applicable and admissible export benefits under the MEIS. According to the petitioner, it is entitled to MEIS benefit at 5% which has been denied - principles of natural justice. Held that:- We find force in the submission of learned counsel for the petitioner that before passing any final orders, the 2nd respondent should have given the petitioners an opportunity to deal with the order- in -original dated 20/11/2018 - From the record it appears that the order- in- original dated 20/11/2018 was received by the petitioner only on 5/12/2018, that is after the impugned order is passed by the 2nd respondent. This Court in the case of AXIOM CORDAGES LTD. VERSUS UNION OF INDIA AND ORS. [2018 (8) TMI 1243 - BOMBAY HIGH COURT] had in clear terms directed the 2nd respondent to consider the Petition and its annexures as a representation of the petitioner and to pass a speaking order after hearing the petitioner. If at all the 2nd respondent wanted to rely upon the order- in -original dated 20/11/2018, the least the 2nd respondent should have done is to give an opportunity to the petitioner to deal with the order- in -original dated 20/11/2018 for considering its effect/impact on the proceedings before the 2nd respondent. The matter is remitted back to the 2nd respondent for a fresh decision on merits and in accordance with law.

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• 2019 (3) TMI 983
  Relevant date for fixing redemption fine - seizure of Gold - Held that:- The provision contained in Section 14 says that the value of the goods has to be arrived on the date of import / export. The delay in adjudication cannot be a factor for deciding the market value of the goods by the department. In the case of enhancement alleging non-declaration of correct value of goods, the basis of the similar imports during the relevant period is to be taken into consideration and not the value of the goods at the time of passing the order by the authority. In this line, when the redemption fine is imposed, the relevant date for fixing the redemption fine should be the market value of the goods prevailing at the time of seizure and not at the time of passing the order. The Five Member Larger Bench of the Tribunal had addressed the very same issue in the case of Omex India Vs. Commissioner of Customs [1992 (12) TMI 57 - CEGAT, NEW DELHI]. It was held that the market price at the time of importation has to be taken into consideration for calculating the fine that has to be paid for redeeming the goods. The appellant is liable to pay redemption fine on the market value of the goods as it stood at the time of seizure which is Rs. 7,35,247.81 - The Commissioner (Appeals) has held that the margin of profit would range from 30% to 50%. Therefore, the redemption fine is reduced to Rs. 3,70,000/- - appeal disposed off.

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• 2019 (3) TMI 982
  Misdeclaration and undervaluation of imported goods - Timber - rejection of declared value - enhancement of value - reliability on statements - demand of differential duty - Held that:- In the present case the Appellant has imported goods on correct transactional value and the allegation of undervaluation are not supported by any cogent evidence. Further the goods by other importers are also on same price. Hence, the declared value cannot be doubted. It is also found from the data submitted by the Appellant that the contemporaneous imports of such or like goods were allowed to be cleared only at the same price or comparable price, but in fact at price lower than those declared by the Appellant. There is no reference of any excess payment made to any of the suppliers, the mode of such payment, manner of payment or person through whom such payments were made. In absence of same, it cannot be held that the Appellant has under-valued the imported goods. Even though the other importers were importing same quality, quantity of goods at the same prices, no question has been raised against such importers. The case of the Appellant is squarely covered by the Tribunal’s order in case of Vijay Leather Stores [2007 (2) TMI 498 - CESTAT, BANGALORE] as the same and similar goods were also imported on same price and the allegation of undervaluation thus would not sustain. The records of contemporaneous imports and the data have not been considered by the adjudicating authority and in such cases, we find that there is no case of demand against the Appellant. The goods at the time of importation were physically examined by Customs authorities and were found as per the declared description. Thus, in absence of any contrary evidence, the value of rejected grade timber cannot be enhanced on the basis of good quality timber. Reliability on statements - Held that:- The burden to prove under-valuation lies upon the Revenue by bringing credible and cogent evidence, whereas the submissions made by the Appellant clearly shows that in the present case, except third party documents and statements, no evidence has been brought by the Revenue on record - The statements of Shri Avinash Jindal and Shri Rajendra Agarwal and their employee corroborated which was corroborated with their own record is not a tangible and cogent evidence and cannot form the basis of under-valuation in respect of value declared by the Appellant. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 966
  Valuation of imported goods - enhancement of value - Penalty - Held that:- The exchange of E-mail, the content of which has not denied by appellant establishes that there was undervaluation in respect of Mobile Charging Connector and Memory Card Reader. We therefore, do not interfere with the finding of lower authorities in respect of the same - However, in respect of the other items revenue has enhanced the value on the basis of data available in respect of similar goods imported during the relevant period. There is no evidence established by revenue that said data was applicable to the imported goods and in respect of the goods such as Mobile Adopter, Mobile Zipper Cover Plastic and Mobile Batteries, revenue could not establish that the Price reflected in the invoice is not actual price paid by the appellant to the foreign supplier. The value declared by the importer in respect of Mobile Adopter, Mobile Zipper Cover Plastic and Mobile Battery is restored - appeal allowed in part.

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• 2019 (3) TMI 965
  Condonation of delay of 2 days in filing the appeals - Held that:- The Bills of Entry were assessed on 15th & 16th November, 2017 and the due date of filing the appeals before the lower appellate authority was within sixty days. We further observe that all the six appeals were filed beyond the statutory period of 60 days but within the condonable period of thirty days. Accordingly, the delay in filing the appeal before the lower appellate authroity is condoned. The impugned order set aside and matter remanded to the lower appellate authority for deciding the issue on merits.

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• 2019 (3) TMI 964
  Import of prohibited goods - import of drugs - Revenue entertained a view that the items in question being Homeopathic Medicines are not permitted to be imported at Dadri - absolute confiscation - penalty - scope of SCN - Held that:- Having seen the Tariff Heading which covers Dental Cement , there is no merits in the above allegation of the Revenue in holding Dental Cement as Homeopathic Medicines - In any case and in any view of the matter, the notice raised dispute only in respect of the goods falling under said Tariff Item i.e. Dental Cement. There was no allegation in respect of the other items so imported by the appellant. In spite of that, the Adjudicating Authority has ordered absolute confiscation of all the items. The notice proposed confiscation of the goods on the basis of the same being Homeopathic Medicines whereas the Adjudicating Authority has travelled beyond the show cause notice and has confiscated the goods by holding the same as Medical devices covered by the definition of Drugs. It is well settled law that show cause notice is the basis for initiation of proceedings and it is not proper for any Adjudicating Authority to travel beyond the allegations made in the notice - Having accepted that such goods are not Homeopathic Medicines which was the basic charge against the notice, the Adjudicating Authority should have vacated the proceedings instead of moving ahead for confiscation of goods on an altogether different ground. The denial of import of the same at ICD Dadri is not in accordance with provisions of Rule 43A, Drugs and Cosmetics Rule, 1945 - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2019 (3) TMI 963
  Application for grant of injunction made - maintainability of the suit - High court jurisdiction in the matter - suppression of material facts - praying for similar reliefs simultaneously before two different forums - HELD THAT:- It can be said without hesitation that a person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. A litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court. Furthermore, a person who seeks equitable relief from the court must come to the court with clean hands and disclose all facts which are relevant to the case. In my considered view, the statement in the plaint that the plaintiff is intending to file an application before the NCLT, when the truth was that the application had already been filed is a case of misrepresentation and amounts to suppression of material facts. On this count itself, the application for injunction needs to be dismissed. Proviso to Section 58(2) states provided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract . This power under Section 58 read with Rule 70(5)(b) that gives the power to the Tribunal to generally decide any question which is necessary or expedient to decide in connection with the application for rectification read with Section 70(4)(a) that gives the power to the Tribunal to pass any interim order including any orders as to injunction or stay makes it clear that it is the Tribunal that has the power to decide all issues in relation to transfer of shares by way of an oral or written contract. The very fact that the Tribunal has been empowered with these powers leads one to the inference that all issues relating to transfer of shares, registration and rectification of register of members and any matter incidental to the same including oppression and mismanagement would be retained by the Tribunal. Under these circumstances, it is of the prima facie view that this High Court does not have jurisdiction in the above matter. Plaintiff praying for similar reliefs simultaneously before two different forums - HELD THAT:- A litigant cannot be allowed to seek similar reliefs in different forums at the same time. It would have been a different matter if the application before the NCLT had not been filed or was withdrawn before the filing of the suit. In the event both the applications before the NCLT and the interim application before this Court are allowed to run parallelly, a dichotomous situation would arise as the vital issues involved in both the suit and NCLT petition are the same. The rectification sought for before the Tribunal also proceeds on the argument that the defendants have acted in a fraudulent manner and did not register the name of the plaintiffs as shareholders. The same argument finds place in the suit and the interim application before this Court. The two parallel proceedings may result in diametrically opposite orders being passed with regard to the same core issue. Such a situation is not acceptable and contemplated in law. The present application for an ad interim order of injunction cannot be allowed on two counts (a) suppression of material facts and (b) the plaintiff praying for similar reliefs simultaneously before this Court and NCLT that would require adjudication on the identical core issue.

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• 2019 (3) TMI 962
  Outstanding dues - undefended suit - Plaintiff entitlement to get the decree prayed for in the instant suit - HELD THAT:- As established from the evidence on record that the defendant was to supply 92,000 Metric Tonnes (MT) of Iron Ore fines to the plaintiff company after the advance payment for the same was made. The plaintiff company paid a sum of Rs. 15,66,50,000/- to the defendant in lieu of the agreement with the defendant, but the plaintiff company received Iron Ore fines worth only Rs. 5,84,10,000/-, thus supply of iron ore fines worth Rs. 8,82,40,000/- remained outstanding. The plaintiff company tried to approach the defendant on various occasions demanding the outstanding amount but the defendant never repaid the said amount to the plaintiff company. The defendant through an e-mail dated 13th November, 2011 acknowledged the sum due and also promised to refund an initial amount of Rs. 4,20,00,000/- by January, 2012 to the plaintiff company. When the defendant on various occasion failed to pay the amount due to the plaintiff company, the plaintiff company on 31st March, 2014 through its advocate filed a Civil Suit in this Court with regard to the outstanding claim of the plaintiff. It is to be noted that the suit is well within the period of limitation. It is to be noted that the defendant has entered appearance but chosen not to file any written statement. In view of the same the suit has been treated as an undefended suit. The plaintiff company has prayed for Rs. 12,00,06,400/-, out of which Rs. 8,82,40,000/- is the principal amount and Rs. 3,17,66,400/- is the interest amount (calculated @ 18% p.a. from January, 2012 to December, 2013). In view thereof, the plaintiff company is entitled to get an ex-parte decree against the defendant for the principal sum of Rs. 8,82,40,000/- along with the interest @ 9% p.a. from 13th November, 2011 till the date of payment.

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• 2019 (3) TMI 961
  Misstatement in public issue of shares - Rectification of shareholder register - seeking an order against the respondent company to rectify the shareholder register of the respondent Company and to delete the name from the ownership of 1,49,300 shares allotted to the appellant on the basis of prospectus dated 11.03.1996 containing misstatement - issue was not 100% underwritten and that the respondents No. 1 to 9 who signed and issued the prospectus are personally and jointly liable for consequences and to refund the appellant’s entire amount with 24% compound interest - period of limitation - HELD THAT:- No worthwhile document is placed on record to show existence of a fraud. The evidence is sketchy. There is nothing to show what was the fraud played on the appellant. Company Law Board has already recorded a finding of fact that the petition is barred by limitation. The petition was barred by limitation as it pertains to the year 1996 and the petitioner/appellant has been enjoying all the benefits as a shareholder. No reason to disturb the findings of fact recorded by the Company Law Board. That apart, it is difficult to believe the version of the appellant. The public issue came in January 1996. The appellant has enjoyed the fruits of the shares allotted to it for more than 8 years and suddenly wakes up in 2004 to claim a fraud based on some hearsay evidence gathered from some proceedings pending in the Supreme Court. Even the copies of the proceedings that were pending before the Supreme Court are not sought to be placed on record. There is no worthwhile and credible evidence led before this court to come to a different conclusion. There are no substantial questions of law which would persuade this court to exercise jurisdiction under Section 10 (F) of the Companies Act.

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• 2019 (3) TMI 960
  Winding up petition - whether suit prior to filing of winding up petition an impediment against the petitioner in filing the present petition? - calculation of amount due - as submitted claim of interest is based on an alleged oral agreement between the parties and is not in any manner reflected in any written documents exchanged between the parties - HELD THAT:- As per the records available with the respondent company, they have accepted a liability of Rs. 50,16,189/- in favour of the petitioner as on 31.03.2008, which is clear from the communication dated 13.08.2010 sent by the respondent company to the Income Tax Department. It is also a matter of fact that TDS certificate had been issued by the respondent company to the petitioner for the said dues. Further in their reply, the respondent company accepted that the amount relied upon by the petitioner was duly received in their account though it was claimed that the same was returned by Mr.R.P.Mittal. Clearly, prima facie amount appears due and payable to the Petitioner. As decided in Bank of Nova Scotia vs. RPG Transmission Ltd [2002 (10) TMI 696 - HIGH COURT OF DELHI] mere filing of a proceeding before the DRT would not negate the right of the banks to file a petition for winding up of the respondent company. Hence, in view of the dicta of the Division Bench filing a suit prior to filing of winding up petition may not be an impediment against the petitioner in filing the present petition. By the present petition what the Petitioner seeks is to wind up the Respondent Company. An opportunity should be given to the respondent company to prove its case before a civil court. However, it is necessary to secure the claim of the petitioner. The petitioner has claimed outstanding amount in the notice sent for a sum of Rs. 39,17,007/- which includes interest @ 12% per annum. There is some merit in the plea of the learned counsel for the respondent that the claim of interest is based on an alleged oral agreement between the parties and is not in any manner reflected in any written documents exchanged between the parties. Keeping in view the above facts the principal amount outstanding prima facie payable by the respondent is Rs. 17,57,000/-. Let the respondent deposit a sum of Rs. 20 lacs in court with the Registrar General of this court.

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• Insolvency & Bankruptcy

• 2019 (3) TMI 1016
  Withdrawal of application for insolvency admitted u/s 7, 9 or 10 - withdrawal after issue of invitation for expression of interest - HELD THAT:- The only reason why the withdrawal was not allowed, though agreed to by the Corporate Debtor as well as the Financial Creditor -State Bank of India and the Operational Creditor-Respondent No.3, is because Regulation 30A states that withdrawal cannot be permitted after issue of invitation for expression of interest. According to us, this Regulation has to be read along with the main provision Section 12A which contains no such stipulation. Accordingly, this stipulation can only be construed as directory depending on the facts of each case. We allow the Settlement that has been entered into and annul the proceedings.

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• 2019 (3) TMI 981
  Corporate Insolvency Resolution Process - arbitration proceeding is pending and some order has been passed by the Hon’ble Supreme Court - HELD THAT:- The payment of dues of Rs. 550 Crores to ‘Ericsson India Private Limited’- (‘Operational Creditor’) by three Reliance Companies has not been linked with the assets of the ‘State Bank of India’/ ‘Joint Lenders Forum’ or any other Bank, who are third party to the settlement between the three Reliance Companies and the ‘Ericsson India Private Limited’. By interim order dated 30th May, 2018, this Appellate Tribunal noticed the terms of the agreement/ settlement between the parties. One of the terms of the settlement is with the ‘RCom Group’ and the ‘State Bank of India’/ ‘Joint Lenders Forum’. The other part of the settlement/ agreement is between three Reliance Companies and ‘Ericsson India Private Limited’- (‘Operational Creditor’). Once such settlement is reached, it is for the parties to comply with the terms of settlement without any interference by this Appellate Tribunal. This Appellate Tribunal is only to find out whether the parties have settled the matter in terms of the order dated 30th May, 2018 or have failed to settle. On failure, it is open to this Appellate Tribunal to vacate the interim order of stay dated 30th May, 2018 and in absence of any merit, the appeal can be dismissed. As per the interim order, the ‘Financial Creditors’/ ‘Joint Lenders Forum’ with whom the assets of the ‘Corporate Debtors’ have been mortgaged have been allowed to sell the assets of the ‘Corporate Debtors’ and to deposit the total amount in the ‘Joint Lenders Forum’ subject to the decision of these appeals. It was made clear that if the appeals are rejected, the ‘Financial Creditors’/ ‘Joint Lenders Forum’ and other Banks with whom the amount is deposited, will have to return the total amount in the respective accounts of the ‘Corporate Debtors’. Admittedly, the ‘Financial Creditors’/ ‘Joint Lenders Forum’ and other Banks have failed to recover any amount by selling the mortgaged properties of the ‘Corporate Debtors’ in spite of the interim order of stay passed on 30th May, 2018. We have also noticed that the ‘Corporate Debtors’- ‘Reliance Infratel Ltd.’; ‘Reliance Telecom Ltd.’ and ‘Reliance Communications Ltd.’ have failed to pay the total amount of Rs. 550 Crores (jointly) till today. As per the interim order, in case of non-payment of the amount and part of the same, the concerned appeal(s) may be dismissed and this Appellate Tribunal may direct to complete the ‘Corporate Insolvency Resolution Process’ and may pass appropriate order. The payment of Rs. 550 Crores in favour of ‘Ericsson India Private Limited’ is also subject to the decision of the appeals. In an appeal filed under Section 61 of the ‘I&B Code’, no direction can be given to any party to the settlement (particularly the third party) to perform certain duties to ensure settlement between other parties. This order will not come in the way of the Appellants to ask for relief as sought for in this interim application from the Hon’ble Supreme Court, which has the jurisdiction to pass appropriate order under Article 142 of the Constitution of India (Enforcement of decrees and orders of Supreme Court and orders as to discovery, etc.). For the reasons aforesaid, no interim order is passed in these Interlocutory Applications in question and they stand disposed of.

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• 2019 (3) TMI 980
  Corporate Insolvency Resolution Process - Corporate Debtor failure in payment of principal amount and interest thereon @ 24% in respect of goods supplied and delivered to the Corporate Debtor despite repeated demands - delay in completing the resolution process by the IRP - proof of any pre-exiting dispute - HELD THAT:- An overall screening of the documents produced on the side of the Corporate Debtor as well as on the side of the applicant, it appears to me that the case trying to set up on the side of Operational Creditor is more believable and more credit worthy than that of the case attempted to be established on the side of the corporate debtor. In view of the above said discussion, no hesitation in holding that the invoices referred to in the Application and challans referred to in the Rejoinder were delivered to the Corporate debtor and thereby the amount in demand is found due and payable by the corporate Debtor. The amount found due was not repaid. No pre-existing dispute as per S. 5(6) of the Code stands proved on the side of the Corporate debtor. Whether the applicant proved compliance of the requirement to be meted out u/s. 9(5) of the Code? - HELD THAT:- he applicant also succeeded in proving that the application filed is complete as per sub-section 2 of S.9 of the Code, that there is no payment of unpaid amount found liable to be paid by the Corporate Debtor, that the invoices and notice were delivered to the Corporate Debtor, that affidavit is filed in compliance of Section 9(3)(b) to the effect that there is no notice given by the Corporate Debtor relating to a dispute of the unpaid operational debt and that the bank statement copy is produced in compliance of S.9(3)(c). Since no resolution professional name was proposed, compliance of section 9(5)(i)(e) does not at all arise. The Application filed under Section 9 being proved to be complete, it is liable to be admitted. Taking judicial notice of delay in completing the resolution process by the IRP because of lack of adequate fund for meeting the initial expenses for initiating CIRP like publications in leading news papers etc. by the IRP. To overcome the said circumstances and to discourage IRP from spending the initial expenses from his or her own pocket, it appears to me that it is fair and just to direct the Applicant/Operational Creditor to deposit Rs. 2,00,000/- (Two lakhs) for the initial expenses to be spent by the IRP.

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• 2019 (3) TMI 959
  Travel restraint to respondents nos. 2 to 5 from leaving the country without prior permission of this Bench - overseas trip to Abu Dhabi, UAE to attend the wedding ceremony of friend's son as per e-invitation received by the present applicant - Respondent moved seeking direction against the respondent Nos. 2 to 5 to deposit their passports with the Registry of this Tribunal during the pendency of IA - allegation of applicant as siphoned off huge amounts of the Company and is not cooperating with the liquidator in the liquidation proceedings HELD THAT:- There are various allegations levelled upon the friend of the present applicant and in view of those allegations, applicant should also be restrained to travel abroad. In fact, no clinching evidence produced against the present applicant (respondent No. 2) so as to make any ground to restrain him from travelling abroad and/or for attending wedding ceremony of his friend's son. All the allegations are only against third party. That the present applicant has filed his travel program along with e-invitation card specifying the place of visit for a period from 19.02.2019 to 24.02.2019. The respondent has also failed to produce any evidence of the recent past about the conduct of the present applicant (respondent No. 2 ). Moreover, it is the domain of the liquidator to raise objection, if any, when the company is already under liquidation. It is pertinent to mention herein that as per Section 35 of the IBC, the moment, the order of liquidation is passed, the Liquidator takes into his custody or control, all the assets, properties, effects and the actionable claims of the corporate debtor. It is only the Resolution Professional and/or Liquidator as the case may be, is/are competent to file an application before the Adjudicating Authority under sections 60(5)(c), 66 and 67 of IBC. Under the facts and circumstances and the discussions in sequel, we do not find any reason for not granting permission to the present applicant (respondent No. 2) to attend the wedding ceremony of his friend's son for a limited period. However, with abundant caution, we hereby direct the present applicant to furnish Indemnity Bond of Rs. 5.00 lakhs and the surety of a like amount with the Registry of this Tribunal. The present applicant is also directed to inform this Bench immediately through his authorised counsel, after return from his overseas trip to Abu Dhabi, UAE. It is further directed that the applicant shall produce order of this Bench at the Indian Embassy at Abu Dhabi, UAE.

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• 2019 (3) TMI 958
  Corporate Insolvency Resolution Process - Outstanding loan - respondent company has taken a loan from the applicant in the year 2010, however the respondent company failed to repay the loan amount as per the agreed terms and conditions - whether claim of the applicant is barred by the limitation? - HELD THAT:- The applicant clearly come within the definition of Financial Creditors. The material placed on record further confirms that applicant financial creditor had disbursed various loan to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. Applicant has placed on record voluminous and overwhelming evidence in support of the disbursement as well as to prove the default. We are satisfied that the present application is complete in all respect and the applicant financial creditors are entitled to claim their outstanding financial debts from the corporate debtor and that there has been default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted.

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• 2019 (3) TMI 957
  Initiation of Corporate Insolvency Resolution Process - pre-existing disputes - HELD THAT:- No reply-affidavit has been filed by the ‘Operational Creditor’ against the statement made by the Appellant that there were pre-existing disputes intimated by letter dated 10.04.2017. Taking into consideration the aforesaid fact, that there were pre-existing disputes between the parties and the matter have been settled subsequently on 08.02.2018 and the ‘Committee of Creditors’ have not yet been constituted, we set aside the impugned order dated 08.02.2019. In effect, order (s) passed by AA appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the ‘Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by the Respondent under Section 9 of the "I&B Code" is dismissed.

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• Service Tax

• 2019 (3) TMI 979
  Commercial or industrial construction service - construction of Shiv Chatrapati Sports Complex - scope of Section 65(25b) of the Finance Act - whether, user of the stadium area to the extent of 1/3 rd of the total area for commercial purpose would tantamount to commercial or industrial construction service as defined by Section 65 (25)(b) of the Finance Act, 1994? Held that:- It is not even the case of the appellant that the stadium is exclusively used for commercial purpose. Relying on materials which indicate that 1/3rd of the area of the stadium can be utilized for commercial purpose, other than sports, the appellant wants us to arrive at a conclusion that construction is commercial construction service as defined under Section 65(25b) of the Finance Act, 1994. No doubt, various rates are specified for different facilities in the sports complex - it is not even the case of the appellant that sports complex is exclusively or even primarily used for commercial purpose. The plain meaning of definition of Commercial or industrial construction service, as can be understood from the definition clause, more particularly, the clarification contained in clauses (i), (ii), (iii) is that the construction ipso facto is not leviable to service tax, but it is only when it is used, or to be used, primarily for commerce or industry or work intended for commerce or industry that service tax can be levied. Thus, it is only that construction which is to be used or primarily to be used for commerce that is subject to levy of service tax. In the present facts, the dominant user of the sports complex is non commercial. The definition uses the words used or to be used primarily for commerce or industry clearly indicating that the user is to be exclusively for commercial purpose or at least it must be primarily for commercial purpose. The definition leaves us in no manner of doubt that if the predominant user of the sports stadium is not commercial, then the same cannot be subjected to levy of service tax - Thus, in the facts of the present case, though an area to the extent of 1/3rd is used for commercial purpose prescribing separate rates for such user, this by itself is not sufficient to attract service tax. Appeal dismissed.

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• 2019 (3) TMI 978
  Nature of services - Benefit of abatement under N/N. 1/2006-ST dt. 1.3.2006 - Erection, Installation or Commissioning services - Department was of the view that to avail the benefit of notification, the plant, machinery, equipment and other material should be supplied by the service provider and not for simple supply of any other material for providing service - input tax credit - Held that:- Perusal of the purchase order and invoices indicates that the appellant’s activities are not restricted only as a service provider simplicitor, for example a purchase order / invoice clearly indicate “supply and installation of power cables multi strand, Armoured copper UG, Tower implementation, shelter erection on site, supply and installation of earthing pits, supply and installation of aviation lamp for towers and so on. The SCN has also alluded to the appellant’s letter dt. 21.09.2007 wherein the appellants have reported to have informed that “major equipment” would be supplied by the customer Nortel. While this may very well be so, there is no allegation by the department that entire equipment and material has been supplied in totality by Nortel. Whether for being considered as a composite works contract, the service provider is required to provide not only of the services required for execution of the contract but also all materials and equipments required for such execution? - Held that:- When there is supply of material involved by the service provider in execution of the product project / work contracted to him, the activity done on such service provider cannot be mere “service simplicitor” but will be a composite contract comprising of both materials and services. It really does not matter what percentage of the materials is being provided by such service provider at his cost. However, necessary facts as to whether the appellants had actually supplied material also for the works executed by them is not forthcoming. More so because, the purchase order says “for services only”. It is seen that appellants have rendered ECIS in nature of laying foundation for tower, installation of machinery equipments etc. Though tower, machinery, equipments are provided by Nortel, the contractor would have to use other materials for rendering ECIS. The facts in such line have to be verified - matter remanded to adjudicating authority for de novo adjudication - appeal allowed by way of remand.

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• 2019 (3) TMI 977
  Refund claim - Selling of Space or Time Slot for Advertisements - Renting of Immovable Property - rejection of the said refund claims on the ground that the “Adwords” services cannot be held to be Cenvatable input services used in providing output export services - Held that:- The Appellate Authority has passed a detailed order based upon the law declared by the Larger Bench of the Tribunal - Admittedly, assessee was providing services to M/s Google Asia Pacific Pte. Ltd., Singapore, which was located outside India and the input services were being received from an altogether different legal entities i.e. M/s Google India Pvt. Ltd. Gurgaon. Similarly, he has examined clause (d) Rule 6A of the Service Tax Rule and has correctly held that the place of provisions of the service was outside India - Commissioner (Appeals) has also referred to the Tribunal’s decision in the case of Vodafone Essar Cellular Ltd. vs. CCE [2013 (7) TMI 178 - CESTAT MUMBAI] wherein the telecom service provided to the customers of the foreign telecom service provider while using the assessee’s telecom network in India for which the consideration was paid in foreign currency, was held to be export of services inasmuch as the foreign telecom service provider, was the recipient of the services and was located outside. There are no reasons to interfere in the above findings of Commissioner (Appeals) - appeal disposed off.

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• 2019 (3) TMI 976
  Reversal of proportionate credit - Exempt service or not? - lending of loans - Whether the Appellants are required to reverse proportionate Cenvat credit and as to whether interest etc. earned by them from cash credit, overdraft, etc. would be treated as exempted service? - Held that:- As per sub- section 4 of section 67 of Finance Act 1994, the value of taxable services has to be determined in terms of Service Tax (Determination of Value) Rules, 2006. As per Rule 6 (2) (iv) the interest on loans has to be excluded from the taxable value - In case of HDFC [2018 (9) TMI 312 - CESTAT MUMBAI] the Tribunal Mumbai has gone further ahead and have put to rest the argument that only interest part is exempted and not the other administrative charges and fees etc. are not exempted and thereby the service would not come under the purview of exempted services - the Banks are free to decide the interest after taking into consideration administrative expenses if any - there is no merit in the Appellants argument that interest is to be deducted only for the purpose of calculating the taxable value - the lending of loans on interest as an exempted service. Thus, the services rendered by the Appellants in advancing loans etc. are exempt. Therefore, the amount of interest earned in advancing of loans needs to be taken into consideration while determining the amount to be reversed in term of Rule 6(3A)(c) of the CENVAT Credit Rules, 2004. Levy of service tax - alleged supply of manpower to their subsidiary - Held that:- As long as it is not proved that the Appellants have received anything other than the reimbursement of wages, no Service Tax can be levied - demand do not sustain. Cenvat Credit - credit availed on input services availed by them in respect of their branches in J & K - Held that:- The Learned Commissioner has not accepted the claim of reversal made by the Appellants only on the ground that the reversal is not made on annual basis and that the Chartered Accountant has not certified the amounts reversed. We find that this argument is not acceptable. In case the reversal was not within time it was free for the Learned Commissioner to charge interest applicable thereof - it is a fit case to remand this matter to the Commissioner for examining the issue once again. Levy of service tax - Directors’ sitting fees - Held that:- The reimbursed expenses are not to be included in the value of the taxable services - this issue also needs to go back to the adjudicating authority for a proper appreciation of the facts of the case and to give allowance in respect of reimbursed expenses to the Appellants. Time limitation - suppression of facts or not? - Held that:- We are not inclined to give a carpet ruling that since the Appellants are public sector undertaking suppression of facts cannot be alleged. The issue depends on case to case basis. Therefore we find that this issue also needs to be looked into again by the adjudicating authority. Penalty - Held that:- Looking into the fact that the Appellants are public sector undertaking and that most of the issues involved were interpretative in nature we find that imposition of 100% penalty is certainly not warranted. The amounts being paid before the issue of Show Cause Notice itself, penalties can be restricted to 25%. Appeal allowed in part and part matter on remand.

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• 2019 (3) TMI 975
  Demand of service tax - Section 11AA of the Central Excise Act - non-payment of Service Tax on Government transactions - Held that:- As per the Larger Bench decision of the Tribunal in the case of CCE vs. State Bank of Patiala [2016 (10) TMI 800 - CESTAT NEW DELHI], the appellant being agent of the RBI is not liable to Service Tax on Government business. In the present case, the appellant in compliance of the direction of the RBI dated 04.11.2016 paid the Service Tax even before collecting the same from RBI. Further, the appellant has paid the Service Tax in compliance of Section 73A(2). Further, in the facts and circumstances of the case demanding interest under Section 75 is not tenable in law because the appellant is not liable to pay Service Tax under Section 68. The impugned order demanding interest in terms of Section 11AA of the Central Excise Act is not sustainable in law - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 971
  Refund of duty paid - services wholly consumed within SEZ - case of Revenue is that the Ld. Commissioner. while allowing the appeal has not seen that the condition 1(c) of notification no. 09/2009-ST dated 03/03/2009 was not complied with - Held that:- Since the service was wholly consumed within SEZ, the appellant is otherwise entitled for the refund. It is also observed that as regard the condition and documents, the Ld. Commissioner has given a categorical finding. Therefore, there is no infirmity in the order. On the identical facts, this tribunal has taken view in the case of Zydus BSV Pharma Pvt. Ltd. Vs. CST Ahmedabad [2018 (8) TMI 961 - CESTAT AHMEDABAD] has held that the exemption by way of refund is not available to the services consumed wholly within the Special Economic Zone however as per the first para of the notification all the services provided in relation to authorized operations in a SEZ and received by SEZ unit are exempted therefore the services received by the appellant even though consumed wholly within the SEZ are exempted per se. The appellant was rightly entitled for the refund - appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 956
  Pre-deposit - appeal was dismissed by the CESTAT on account of non payment of pre-deposit sum - Held that:- Since the writ petitioner has already made the pre-deposit,which was the ground for dismissal of the appeal, and an application is pending before the CESTAT for revival of the appeal,we are of the opinion that the garnishee notice may not be given effect to till CESTAT makes adjudication of the writ petitioner’s application filed on 28th January, 2019. We are not making any observation in this order as regards maintainability of that application as that would be a matter for the Tribunal to decide. The matter shall be listed again on 7th March, 2019.

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• 2019 (3) TMI 955
  Valuation - Commercial or Industrial Construction Service - inclusion of free supplies in assessable value - composite contracts - demand is for the period from 2005-06 to 2009-10 - Held that:- Though the appellants have received free supplies of cement and steel from the customers, the use of other materials by the appellants for execution of the Works Contract would make it a composite contract, which involves both supplies of materials and rendering of services. The decision of M/s. Larsen Touboro Ltd., [2015 (8) TMI 749 - SUPREME COURT] will be applicable for the period prior to 01.06.2007 and, therefore, the demand prior to 01.06.2007 cannot sustain - the decision in the case of M/s. Real Value Promoters Pvt. Ltd., [2018 (9) TMI 1149 - CESTAT CHENNAI] would be applicable for the period after 01.06.2007 for the reason the Tribunal has held that the demand under CICS cannot sustain in contracts of composite nature. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 954
  Refund of service tax - rejection on the ground of time limitation - Held that:- Notification No. 40/2012 – ST dated 29.06.2012 exempts the services on which service tax is eligible under Section 66b of the said Act received by a unit allocated in Special Economic Zone (SEZ) or developer of SEZ and used for authorised operation from the whole of the service tax education cess and secondary and higher education cess leviable thereupon. The said exemption is amended to have been provided by way of refund of service tax paid specified services received by the SEZ unit or the developer of SEZ and use for the authorised operations however subject to the conditions as mentioned therein including that the claim especially be filed within one year from the end of the month in which actual payment of service tax was made by such SEZ unit or developer of SEZ to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit. Admittedly the refund claim was filed beyond the time limit as prescribed above. Admittedly there was no former Application seeking condonation of the said delay except the oral submission of appellant before adjudicating authority below about shortage of staff - the said plea of the appellant has duly been dealt with in the Order under challenge holding the said explanation is not satisfactory as the appellant was otherwise running business and all other operations pertaining to their business - Once the said eligible criteria has not been made with or any condition pre-requisite for the said benefit has not been made that the benefit of exemption Notification cannot be made available to the assessee. Appeal dismissed.

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• 2019 (3) TMI 953
  Rectification of mistake - review of order - scope of rectification - Held that:- The scope of the rectification of the mistakes application is very limited. Only mistakes which are apparent on the face of the record and which do not require long drawn process of arguments by both sides, may be rectified. It is well settled law that applicant cannot seek review of the order in the guise of rectification of mistake - ROM application dismissed.

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• 2019 (3) TMI 952
  Port Services - these services were demanded the same was recovered by LDT i.e. Light displacement tonnage which is on account of tonnage not brought in comparison to the agreed tonnage - Held that:- From the nature of amount collected by the appellant it is clear that the said amount relates to the compensation paid by the ship breaker on account of failing to fulfill the contracted LDT. In these circumstances, it cannot be said that the said charges related to provision of any service - Prior to 1.7.2003 the levy under the head of Port Service was limited to the services provided in Major Ports. None of the ports administered by the Gujarat Maritime Board are major ports. In these circumstances, there cannot be any levy under the head of Port Service in respect of the services allegedly provided on minor ports prior to 01.07.2003 - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 951
  Refund of CENVAT Credit - input services - insurance auxiliary service - credit in respect of SEZ unit - October, 2010 to December, 2010 - Rule 5 of Cenvat Credit Rules, 2004 - Held that:- The issue is covered by the decision of this Tribunal in the respondent s own case CC, CE ST, NOIDA VERSUS M/S HCL TECHNOLOGIES LTD. [2014 (1) TMI 261 - CESTAT NEW DELHI], where it was held that even if appellant was not eligible for refund under Notification No. 9/2009, dated 3-3-2009, the appellants were certainly eligible for refund under Section 11B of the Act - credit allowed. Medical insurance services - Held that:- There are different views on the issue - the respondent has failed to produce mandate of the Employees State Insurance Act, 1948, in that circumstance, we are not in agreement of the decision of this Tribunal in the case of KPMG [2013 (4) TMI 493 - CESTAT NEW DELHI] - The Registry is directed to place the matter before the Hon ble President to constitute lager bench of this Tribunal to resolve the issue.

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• Central Excise

• 2019 (3) TMI 974
  CENVAT Credit of differential duty - Refund - price increase on goods stock transferred during the quarter April 2008 to June 2008 - closure of factory - Held that:- The accumulation of CENVAT Credit in the CENVAT account is done over a period of time by a manufacturer by taking Credit of the duty suffered on inputs, capital goods and eligible input services. Thus, this Credit balance is built up and assiduously gathered over time. In the normal course, this Credit would have been utilized towards discharge of duty liability on goods that may be manufactured and cleared or taxable services provided/received. The closure of the factory should not be allowed to snatch away that amount from the manufacturer. The availment of CENVAT Credit and its utilization is akin to a fundamental right in the area of indirect taxation. It has been time and again reiterated that CENVAT Credit is as good as a cash balance, to be utilized for the discharge of duty liability in lieu of actual cash. If a factory of a manufacturer has closed down for no fault of theirs, the unutilized Credit, which rightfully belongs to the manufacturer, cannot be denied to them when claimed by way of refund. The issue in dispute is no longer res integra and it has now been conclusively settled by both the Hon’ble High Court and the Hon’ble Apex Court that pursuant to closure of a factory, the manufacturer can avail refund claim for the unutilized CENVAT Credit lying in the balance. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 973
  Restriction of CENVAT Credit - N/N. 14/97-CE(NT) dated 03.05.1997 - Restriction on credit in respect of LSHS - case of respondent is that the notification restricts the credit in respect of LSHS to the extent of 10% however the impugned order allows the cenvat credit of entire 15% to the respondent - Held that:- Notification 14/97-CE (NT) amends Notification 5/94-CE(NT) by introducing a proviso which restricts the availability of credit on certain fuel oils like LSHS to 10% ad valorum - In the present case it is not disputed that the item under dispute i.e. Gas Oil is also LSHS - In the present case, the respondent had voluntarily paid duty on the Gas oil consumed captively for generation of electricity. In terms of the decision of Hon’ble Apex Court in case of Indian Oil Corporation Ltd. (supra), the appellants were not liable to pay duty on the said material consumed captively. The respondent had paid duty on such captive clearances. The said payment of duty by the respondent was not disputed by them and consequently the said assessment has attained finality. Whether the appellant are entitled to take credit of the entire duty of 15% paid by them as credit when Notification No. 14/1997-CE (NT) restricts the same to 10%? - Held that:- In the plain and simple language of the notification and law, it is clear that the credit is restricted to 10%. Ld. Counsel has sought to invoke the reasons behind restricting the credit to 10% as enumerated in the trade notice number 56/1997-(S). It is seen that the notification 14/97-CE(NT) does not specify the intention behind the same. It merely restricts the credit to 10% - it cannot be held that the appellants are entitled to credit @ 15%, the plain and simple language of the Notification does not allow any scope of any interpretation. Appeal dismissed - decided against appellant.

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• 2019 (3) TMI 972
  Clandestine removal - leather footwear - bogus transactions - admissibility on the statements - extended period of limitation - cum-duty benefit - penalties - Held that:- The real actors behind the both the bogus co-operative societies were Shri Ashok Mane and Shri Ramchandra Mane the Directors of SRSPL. Further the fact of supply of goods by Appellant to various shop owners in the name and against the bills of Cooperative Societies has been admitted by various shop owners in their statements - The issue in respect of admissibility of the statements recorded under Section 14 of Central Excise Act, 1944 is well settled and the depositions made in the statements cannot be discarded - The shop owners have admitted receiving the goods from Appellant and invoice from the society, and such admission is itself enough to hold that the goods were manufactured and cleared by the appellants clandestinely. Once revenue is able to make allegation of clandestine clearance on the basis of records and circumstantial evidence such as statements of the person concerned, it has discharged its burden and it is for the Appellant to show that charge of clandestine clearance is not true in their case. From the records of cross examination it is quite evident that the shoes were supplied to these shop owners through one Mr Raju and were the goods supplied were from the M/s Start Rite Shoes. Most of the dealers have even during the cross examination before the adjudicating authority, with the pre43 ponderence of probability admitted that shoes received by them were manufactured and cleared by M/s Start Rite Shoes against the invoices issued by the cooperative society. Extended period of limitation - Held that:- Since the issue is in respect of duty evasion by committing fraud etc., the extended period of limitation under proviso to Section 11A(1) will be applicable in the present case. Cum duty value benefit - Held that:- There are no merits in that submission as the issue is one involving fraud and clandestine clearance. Penalties - Held that:- The penalty imposed by the adjudicating authority under rule 173Q of the erstwhile Central Excise Rules, 1944 is upheld - Shri Ashok Mane was responsible for causing the duty evasion by resorting to the fraud through fictitious cooperative societies and the penalty on him is upheld. Appeal dismissed - decided against appellant.

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• 2019 (3) TMI 970
  CENVAT Credit - marketing and festival expenses - marketing and sales promotion expenses towards hire of mobile vans - Held that:- The issue of marketing and festival services is covered in favour of the appellant by the ruling of Toyota [2011 (3) TMI 1373 - KARNATAKA HIGH COURT] and accordingly the same is held to be allowable. Marketing and sales promotion expenses towards hire of mobile vans - Held that:- Admittedly appellant have used the motor vans for business purpose/ sales promotion/ marketing, and accordingly they have taken entire cenvat credit of Rs. 1,38,966/- - credit allowed. So far the charging of interest is concerned under Rule 14 of CCR, the appellant shall be liable for interest only on such portion of cenvat credit which they have utilized - this issue is remanded to the Adjudicating Authority who shall calculate the interest payable under Rule 14. Appeal allowed by way of remand.

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• 2019 (3) TMI 950
  CENVAT Credit - input services - GTA service - place of removal - Held that:- The Hon’ble Supreme Court in the case of Ultra Tech Cement Ltd. [2019 (2) TMI 1487 - CESTAT AHMEDABAD] has held that credit is eligible from the place of removal upto the buyer’s premises. However, in the case of Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], the Hon’ble Apex Court has held that when the sale is on FOR basis, all the charges / cost have to be included in the assessable value for the payment of central excise duty. Thus, in such cases, when the sale takes at buyer’s premises, the place of removal is the buyer’s premises - Therefore, it is necessary to determine the place of removal to consider the eligibility of credit of service tax paid on freight charges upto the buyer’s premises. For this purpose, I deem it fit to remand the matter to the adjudicating authority who shall look into the issue of eligibility of credit on GTA service after determining the place of removal - matter on remand. CENVAT Credit - works contract service - Held that:- The mere allegation in the Show Cause Notice is that the input service is not eligible for credit. The period involved is prior to 1.4.2011. The invoice produced by the ld. Counsel also shows that the period is prior to 1.4.2011. The input services for setting up of factory / premises is eligible during the period prior to 14..2011 - credit allowed. Appeal allowed in part and part matter on remand.

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• 2019 (3) TMI 949
  CENVAT Credit - removal of capital goods “as such” to their other units from June 2006 to December 2007 - time limitation - Held that:- The present proceedings are surely hit by limitation. Having issued an earlier SCN on 19.02.2007 covering the period February 2006 to June 2006 the subsequent SCN should have been issued within the normal period and without invocation of extended period of demand - the present SCN issued only on 25.08.2009 for the period June 2006 to December 2007 only is surely hit by limitation - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 948
  Refund of excess payment of duty - unjust enrichment - amount credited to Consumer Welfare Fund - Section 11B of Central Excise Act, 1944 - Held that:- The background of the refund claim is that the appellant though paid excess duty but the rate of duty was revised downward by notification. Only due to the reason that system was not updated, the duty was paid on the higher rate, the appellant though shown the higher duty in the invoices, subsequently, the excess paid duty was adjusted and the same was given reduction in the subsequent updated payment recovered from buyers of the goods. To this effect, the appellant have made a joint certificate between the appellant and the buyers of the goods wherein it is certified that the excess duty paid shows recoverable in the invoice as adjusted in the subsequent payment from the customers. Therefore with this evidence, it is clear that incidence was not passed on to the ultimate buyer of the goods. It is clear that incidence was not passed on to the ultimate buyer of the goods. It is also observed that the appellant have obtained a Chartered Accountant certificates wherein it was certified that the amount of refund amount has been shown as amount Receivable/Recoverable from the Revenue that means the said amount was not otherwise passed on in any manner either to the buyer or to any other persons. The appellant have produced ample evidence to establish that the incidence of duty has not been passed on, whereas both the lower authorities have only discarded the same without any contrary evidence. To discard such evidence either the Revenue should establish that the evidence are not appropriate or incorrect or false or the counter evidence to discard the appellant s evidence should have been produced which both the lower authority have failed to do so, therefore, there is no reason to not accept the evidence such as Joint Certificates of the appellant and buyer and CA Certificate. The sanctioned amount is not liable to be credited into Consumer Welfare Fund. Since, on the fact, itself, it is clear that the incidence of duty has not been passed on to any other person, we need not be going into various judgments relied upon by the appellant - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 947
  Rectification of mistake - seal of the packing machine was broken - Held that:- The applicant has been contending since beginning that initially on 03-03-2010 the packing machine was sealed at 4-5 different points and only one seal got loose and still the machine could not have been used without breaking seals of all the points. The Applicant has requested for verifying the fact by getting the machine checked/examined, as the said machine is still lying in a room sealed by the officers. This issue goes to the root of the matter, and requires verification for the ends of justice - There have been miscarriage of justice, as the Adjudicating Authority have used material collected behind the back, without confronting the appellant. The Final Order dated 07.11.2017 is recalled - ROM is allowed - Appeal is allowed by way of remand.

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• 2019 (3) TMI 946
  SSI Exemption - use of brand name of other person - ‘Sudarshan’ - N/N. 08/03-CE dated 01.03.2003 - Held that:- The lower authorities have not properly considered the verification report, invoice and relevant documents. As regard 5 machines which appellant had claimed that the same is not bearing the brand name of ‘Sudarshan’ i.e. of another person, whereas 5 machines are bearing name of ‘Mohansons’ of their own, therefore, on these 5 machines no demand should have been confirmed. However, both the authorities have not properly verified these documents and given proper findings, therefore this needs to be re-considered by the adjudicating authority and demand should be re-quantified - matter on remand. Cum duty benefit - Held that:- It is settled law as held in Hon’ble Supreme Court judgment in case of M/s Maruti Udyog Ltd [2002 (2) TMI 101 - SUPREME COURT], whenever demand is confirmed, the cum duty should be extended to the assessee, accordingly, we hold that appellant is entitled for the cum duty benefit. Penalty u/s 11AC - Held that:- Since both the lower authorities have not considered the option of 25% penalty as provided under proviso to Section 11AC and the same can be re-considered. Penalty on partner - Held that:- Since the partnership firm has been penalised, no separate penalty can be imposed on the partner as held by Hon’ble Gujarat High Court in case of M/s Pravin N. Shah Vs. CESTAT [2012 (7) TMI 850 - GUJARAT HIGH COURT], therefore, penalty on partner is set aside. Appeal allowed in part and part matter on remand.

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• 2019 (3) TMI 945
  CENVAT Credit - duty paying documents - credit availed on supplementary invoices issued by IOCL, Trombay, Mumbai with reference to the original invoices on which the credit was already availed - case of the department is that, there is no provision in Cenvat Credit Rules to issue supplementary invoices in respect of inputs cleared as such - Time Limitation - Held that:- The appellant initially availed the credit on the original invoices and the supplementary invoices, corresponding to the said original invoices on which the credit was taken, were issued by their own another unit. There is no dispute about the payment of duty on which the Cenvat credit was taken. It is also a fact that appellant is a public sector undertaking therefore, there is no question of malafide intention to evade payment of duty and wrong availment of credit. Accordingly, extended period of limitation cannot be invoked as provided under Section 11A of Central Excise Act, 1944. Accordingly, the demand is clearly time-barred, and is set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 944
  Supply of Expansion Bellow which is used as joints for the pipes from the source of water to water treatment plant - N/N. 3/2004-CE dated 08.01.2004 - case of the department is that since the Expansion Bellow is not part of water treatment plant nor it is pipe and the same is used for jointing the pipes while laying the pipeline, therefore it is not covered under the said notification - Held that:- There is no dispute between the assessee and the Revenue inasmuch as the goods namely Expansion Bellow was used as joints while laying pipeline from source of water to water treatment plant. From the notification, it is clear that either the goods should be water treatment plant and its instrument, parts apparatus and appliances, auxiliary equipment and components/parts of water treatment plant and as per the description at serial No. 2, pipelines for delivery of water from its source to the plant. However, in the present case, Expansion Bellow is not part of water treatment plant and therefore, it is not covered in description serial No. 1 and it is also not a pipe which can be covered under serial No. 2 - thus, the Expansion Bellow which is neither part of the water treatment plant nor it a pipe, it is therefore, not eligible for exemption. Penalty - Held that:- Since the issue relates to interpretation of the notification, there is no malafide on the part of the appellant - penalty set aside. Benefit of cum-duty price - Held that:- Since exemption has been denied, the duty should be recomputed considering the cum-duty benefit as held by the Hon ble Supreme Court in the case of CCE, Delhi vs. Maruti Udyog Limited [2002 (2) TMI 101 - SUPREME COURT]. Therefore, the Adjudicating Authority should re-calculate the duty by considering the benefit of cum-duty. Appeal allowed in part and part matter on remand.

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• 2019 (3) TMI 943
  Refund of accumulated CENVAT Credit - rectified spirit - case of Revenue is that rectified spirit was non-dutiable product and since appellant was not manufacturing any dutiable final product, the said Cenvat credit was not admissible to them - Held that:- The matter is now settled in favour of the appellant in the case of M/S. SHARDA CERAMICS PVT. LTD. VERSUS C.C.E., JODHPUR [2018 (8) TMI 407 - CESTAT ALLAHABAD], where it was held that appellants were manufacturing excisable commodity and therefore they were entitled to avail Cenvat credit which was reversed by the Central Excise officers. The appellant is entitled to refund of the balance amount of Rs. 21,51,812/- - the Adjudicating Authority is directed to refund the same alongwith interest, w.e.f. the date of adjustment i.e. 11 July, 2016 till the date of disbursement - appeal allowed.

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• 2019 (3) TMI 942
  CENVAT Credit - input services - air travel service used for travel of their employees between headquarters and their factory as well as for sales and marketing, etc. - Held that:- The issue is squarely covered by the decision of Tribunal in the case of Keihin Fie Pvt. Ltd. [2017 (10) TMI 122 - CESTAT MUMBAI], where it was held that travelling of the executive and staff is inevitable to run the business therefore service is related to travelling i.e. Air & Rail Travel Booking Services is necessary service for running the business hence in our view credit is admissible - credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 941
  Recovery of erroneous refund/rebate - Section 11A of CEA - recovery sought on the ground that appellant have neither received the inputs covered under the duty paying cenvatable documents nor sent to the job worker for getting the final product manufactured - Held that:- The adjudicating authority confirmed the demand mainly on the ground that the process carried out by the job worker is amount to manufacture whereas as per para 4 of notification 21.2004-CE(NT) the job worker are authorized only to carry out the activity such as test, repairs, refining, reconditioning or manufacture of intermediate products - It is observed that these charges were not raised either at the time of sanction of refund/rebate nor even in the SCN which is a subject matter of this case. The matter was reached up to the Tribunal and thereafter remanded to the Ld. Commissioner for de novo adjudication. At the stage of de novo adjudication, raising a fresh issue which is not existing within the four corners of the allegation made in the SCN, is not permitted under the settled law. Matter remanded to the adjudicating authority for passing a fresh order without going into the issue which are not existing in the SCN - appeal allowed by way of remand.

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• 2019 (3) TMI 940
  Rectification of Mistake - Held that:- The corrected sentence mistake pointed out by Ld. Counsel Stand rectified. Review of order - Held that:- Re-visiting in the aspect of applicability of the Rule 26/Rule209A will amount to review of our order which is not permissible in law. ROM allowed in part.

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• 2019 (3) TMI 939
  Transfer of goods by from Jamshedpur unit to Bhiwadi unit - case of Revenue is that the excess duty paid by the supplier unit was with a view to transferring excess Cenvat credit in the hands of the supplier unit - Held that:- Similar issue was decided by the Hon’ble Supreme Court in the case of, MDS Switchgear Ltd [2008 (8) TMI 37 - SUPREME COURT] wherein the Apex Court has held that the credit cannot be varied at recipient’s end on the ground that the supplier should have paid lesser duty. There is no justification for denial of CENVAT credit in the hands of the appellants - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 938
  Clandestine removal - opportuity of cross-examination not granted - principles of natural justice - Held that:- In terms of Section 9D of Central Excise Act, 1944, if the assessee requests for cross-examination, it is incumbent on the Adjudicating Authority to grant cross-examination and after examining the witness, their statements can be relied upon while adjudicating the case. Therefore, without cross-examination of witnesses, passing the impugned order is in gross violation of principles of natural justice. Matter remanded to the Adjudicating Authority for passing a fresh order after allowing the cross-examination and after granting the personal hearing - appeal allowed by way of remand.

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• 2019 (3) TMI 937
  CENVAT Credit - various items such as H.R. Plates, M.S. Sheet, M.S. Plate, M.S. Angle, M.S. Channel, C.R. Coil, S.S. Flat, Chequered Plate, M.S. Square, C.R. Strips, M.S. Girder, C.I. Casting, Rails & Welding Electrodes, which were used in fabrication of new machineries and parts thereof used for manufacture of sugar - Held that:- The issue is no more res-integra and the same has been decided by this Tribunal in appellant’s own case M/S DSM SUGAR, SHRI GAURAV GOYAL, MANAGING DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [2018 (5) TMI 464 - CESTAT ALLAHABAD], where it was held that the definition of inputs in Rule-2 (k) read with Explanation-2 provides– input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 936
  CENVAT Credit - bought out drums which were cleared on payment of duty, after carrying out the process of coating and painting - denial of credit on the ground hat the activity do not amount to manufacture - Held that:- The appellant have availed credit on bought out drums and at the time of clearance, after the activity of coating and painting, cleared the same on payment of duty. This is permissible under Rule 16 of Central Excise Rules, 2002 - credit on bought out drums is allowed. Demand of duty - third party inspection charges, wherein the inspection/ certification was done on the request of the buyers - Held that:- These inspection charges is only in those cases where buyers had made a request for such inspection/ testing. Otherwise, in other clearances, neither any testing was done nor such inspection/ testing charges were recovered from the buyers - since the inspection/ testing was carried out by the third party on the request of buyer, the charges of the same shall not be included in the assessable value - reliance placed in the case of COMMISSIONER OF C. EX., AHMEDABAD-II VERSUS LUBI SUBMERSIBLES LTD. [2015 (10) TMI 35 - CESTAT AHMEDABAD], where it is held that for the inspection/ testing charges, done at the request of the parties, should not be included in the assessable value - demand set aside. Penalty - Held that:- Penalty on Director set aside - As regards the penalty imposed on the appellant, as the penalty was imposed under Section 11AC and admittedly the samples cleared were liable to duty and the appellant have knowingly cleared the drums without payment of duty, therefore, penalty corresponding to demand of Rs. 7,563/- is maintainable. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2019 (3) TMI 1017
  Levy of tax - KVAT Act - whether the medicines supplied, implants carried out, the consumables used and surgical tools exclusively used in a particular procedure, as part of treatment of patients in a hospital, the price of which is recovered by way of bills from the patients are sale of goods as contemplated by the legislation levying such tax? - Held that:- The three contracts - works contract, hire purchase contract and catering contract - along with other transactions (with which we are not concerned in the present case) were deemed to be sales under Article 366(29A) by an amendment to the Constitution. However, the position even after the said amendment, with respect to transactions of a composite nature based on an indivisible contract, were not covered under the specific clauses (a) to (f). The position as to other composite contracts remained the same and there could be no separation of a composite, indivisible transaction so as to tax the transfer of goods, if at all there is such a transfer in the course of such composite contract or the service rendered - The sale element in composite, inseparable contracts which are covered by the six sub-clauses of Article 366(29A) can be separated and subject to sales tax. With respect to all other composite transactions, the State would not have such power to distinctly tax the transfer of goods forming part of a composite contract or a rendering of service. With respect to hospital services, we cannot but observe that the sale of drugs, implants and other consumables are a part of the medical treatment rendered. There is no identity of the medicines or consumables or implants, as it does not lie in the mind or mouth of the patient to identify the drugs to be administered in the course of the treatment. Though a patient on his volition could refuse to take a particular drug, he cannot demand, as a matter of right, that a drug be administered to him in the course of the medical treatment. A demand of that nature will not be complied with by either a medical practitioner or a hospital, the latter of whom dispenses medicines only in accordance with the directions of the attending Physician or Surgeon - The cost of the implants, consumables or the drugs is irrelevant insofar as deciding what is the dominant nature of the transaction or service rendered to the patient in a hospital, which, without any doubt, is the therapeutic treatment rendered. The patient has no control or say, has limited control, on the procedures taken in the course of the treatment, the drugs administered and the consumables used. The decisions in Malankara Orthodox Syrian Church [2002 (12) TMI 587 - KERALA HIGH COURT] and Comtrust Eye Hospital, [2006 (10) TMI 413 - KERALA HIGH COURT] do not propound and declare the correct position in law. We direct the Registry to place the matters before the Division Bench for consideration of the individual cases.

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• 2019 (3) TMI 969
  Validity of Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002 - case of petitioner is that the eventual fiscal burden may differ, despite the intention to equalise the same, since no set-off is granted in respect of tax paid outside the State - scope of Local Area. Held that:- The issue or point raised by petitioners in these petitions is squarely covered by the recent judgment of the Supreme Court delivered by nine judges, in the case of JINDAL STAINLESS LTD. AND ANOTHER VERSUS STATE OF HARYANA AND OTHERS [2006 (4) TMI 120 - SUPREME COURT], where it was clarified that taxation does not amount to restriction on trade, commerce and intercourse. The levy of tax which is non discriminatory would not constitute an infraction of Article 301 - it was finally concluded that imposition of entry tax under Entry 52 of the State list would not violate Article 301 or 304(b) of the Constitution. The object and purpose of the Maharashtra Entry Tax Act is not to discriminate against goods from outside the State but instead is to bring about economic unity and parity by doing away with the discrimination visited by virtue of differing rates of tax in different States - There is no Constitutional burden on the State to equalize all inequalities of burden on goods even if such inequalities do not result from the State s taxation. No inequality results from any action /legislation attributable to the State of Maharashtra. Merely since the State of Maharashtra has allowed reduction for Central Sales Tax in the Maharashtra Tax on Entry of Motor Vehicle into Local Areas Act, 1987, does not mean that it is obligated to give a similar reduction for entry tax under the Maharashtra Entry Tax Act. Notably, other States also do not give any reduction for Central Sales Tax while levying entry tax. Therefore, local goods exported from Maharashtra to other States, which also bear Central Sales Tax, would incur a higher tax burden than just the VAT of the State to which they are exported. Under Entry 52 of List II of Seventh Schedule appended to the constitution, the State is empowered to levy and collect entry tax on the entry of the goods into local areas. Further, the imposition of tax on sale or purchase of goods is permissible under entry 54 of List II. Entry 52 and Entry 54 are two separate fields of legislations. Incidence of tax under these two entries is also independent. Merely because the rate of tax under both the taxing statutes is the same, it cannot be said that the state is levying VAT in the garb of Entry Tax. The State having taken a conscious decision to avoid discrimination has decided not to levy Entry tax in excess of VAT applicable on similar goods. The Act in no way makes any discrimination against the local purchases and importers much less any hostile discrimination. The importers are given input tax credit of Entry Tax Paid to the Government against the VAT liability and balance is payable or refundable as the case may be. Hence tax burden of Entry Tax not borne by the dealers who purchase locally within the State who get set off of the input tax credit u/s 48 r/w 52, is balanced in case of persons who suffer entry tax by making provisions in the MVAT Act that the entry tax can be adjusted against the MVAT liability thus in effect the dealers who import from other State or Country are at par with local manufacturers who purchase from local dealers so far as burden of tax is concerned since in effect there is no entry tax at all when rebate or set off or ITC is granted for the same - Thus the rebate is provided in second proviso of the Act that the tax payable by the importer under this Act shall be reduced by amount of tax paid, if any, under the law relating to General Sales Tax in force in the UT or the State in which the goods are purchased by the importer in effect takes care of the ground that the dealers who import goods are discriminated vis a vis the dealer who procure the goods from local sources. It is not a correct proposition of law that the scope of Entry in the Lists to the Constitution would be governed by the consistent legislative practice that has been followed prior to the enactment of the Constitution of India. The Legislative practice to enactment of Constitution and Government of India Act, 1935 framed by the then British Parliament has no binding limitation and practice under the Constitution of India in independent India. The Legislation is not ultra vires in any manner - the Constitutional validity of the Maharashtra Entry Tax Act is upheld. Petition dismissed.

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• 2019 (3) TMI 968
  Interest on delayed refund - Relevant date for calculation of interest - Held that:- The controversy involved in the present case is no longer res integra, inasmuch as the same stands decided by the above referred decision of this court in the case of M/s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat [2018 (4) TMI 1669 - GUJARAT HIGH COURT]. In the said case this court, relied upon an earlier decision of this court in the case of State of Gujarat v. Doshi Printing Press [2015 (3) TMI 211 - GUJARAT HIGH COURT] wherein the court turned down the contention that while giving effect to section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first appellate authority or thereafter, the second appellate authority or even third appellate authority, as the case may be. The court held that the interpretation canvassed by the revenue of section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of the doctrine of merger which is a well accepted doctrine incorporated in the system of administration of justice. The Gujarat Value Added Tax Act, 2003 came into force with effect from 1st April, 2006. In the light of what is held in the above decision, considering the fact that in the present case the payment has been made in August, 2006, that is, after the coming into force of the Gujarat Value Added Tax Act, 2003, for the period prior to the coming into force of the GVAT Act, the petitioner would be entitled to payment of interest at the rate of 9% per annum as provided under section 54 of the Gujarat Sales Tax Act and for the subsequent period it would be entitled to interest at the rate of 6% per annum as provided under section 38 of the Gujarat Value Added Tax Act. Petition allowed.

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• 2019 (3) TMI 967
  Interest on delayed refund - relevant date for calculation of interest - Doctrine of merger - Held that:- The controversy involved in the present case is no longer res integra, inasmuch as the same stands decided by the above referred decision of this court in the case of M/s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat [2018 (4) TMI 1669 - GUJARAT HIGH COURT]. In the said case this court, relied upon an earlier decision of this court in the case of State of Gujarat v. Doshi Printing Press [2015 (3) TMI 211 - GUJARAT HIGH COURT] wherein the court turned down the contention that while giving effect to section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first appellate authority or thereafter, the second appellate authority or even third appellate authority, as the case may be. The court held that the interpretation canvassed by the revenue of section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of the doctrine of merger which is a well accepted doctrine incorporated in the system of administration of justice. The Gujarat Value Added Tax Act, 2003 came into force with effect from 1st April, 2006. In the light of what is held in the above decision, considering the fact that in the present case the payment has been made in August, 2006, that is, after the coming into force of the Gujarat Value Added Tax Act, 2003, for the period prior to the coming into force of the GVAT Act, the petitioner would be entitled to payment of interest at the rate of 9% per annum as provided under section 54 of the Gujarat Sales Tax Act and for the subsequent period it would be entitled to interest at the rate of 6% per annum as provided under section 38 of the Gujarat Value Added Tax Act. Petition allowed.

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• 2019 (3) TMI 935
  Revision of assessment - Deemed assessment - Section 22(2) of the TNVAT Act, 2006 - non-speaking order - principles of natural justice - change of opinion - Held that:- The observation made in the impugned orders for passing the reassessment order is nothing but change of opinion without any new material being brought on record, which has come to the knowledge of the respondents and the said action cannot be permitted under the law. The reassessment proceeding must be based on some material and not on mere suspicion. The Assessing Authority must have some material, on which it forms its opinion and the same should not be arbitrary, irrational, vague or irrelevant. In the absence of such material, the action taken by the respondents cannot be sustained - The case in hand, the reassessment proceedings and the consequential assessment order have been passed only on presumption and conjectures, which is not permissible under the law. A Division Bench of this Court in the case of G.V.Cotton Mills (P) Ltd., vs., the Assistant Commissioner (CT) [2018 (3) TMI 1617 - MADRAS HIGH COURT] has held that the right of personal hearing to the assessee is mandatory even if the assessee fails to submit objections to the pre-assessment notice. The impugned order dated 07.09.2017 passed by the respondent no. 2, granting permission to reopen the completed assessment, as well as the consequential ex parte reassessment order dated 31.03.2018 for the Assessment Year 2009-10 passed by the respondent no. 3 are liable to be quashed being tantamount to change of opinion, which is not permissible under the law - petition allowed.

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• 2019 (3) TMI 934
  Reopening of assessment proceedings - compounding of tax - U.P. Tax on Entry of Goods into Local Area Act, 2007 Act - ex-parte order - change of opinion - Held that:- The observation made in the impugned orders for passing the reassessment order is nothing but change of opinion without any new material being brought on record, which has come to the knowledge of the respondents and the said action cannot be permitted under the law. The reassessment proceeding must be based on some material and not on mere suspicion. The Assessing Authority must have some material, on which it forms its opinion and the same should not be arbitrary, irrational, vague or irrelevant. In the absence of such material, the action taken by the respondents cannot be sustained - The case in hand, the reassessment proceedings and the consequential assessment order have been passed only on presumption and conjectures, which is not permissible under the law. The Hon'ble Supreme Court in the case of State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog and others [2008 (5) TMI 621 - ALLAHABAD HIGH COURT] has held that mere change of opinion while perusing the same material cannot be a “reason to believe” that a case of escaped assessment exists requiring assessment proceedings to be reopened. This Court is of the opinion that the impugned order dated 07.09.2017 passed by the respondent no. 2, granting permission to reopen the completed assessment, as well as the consequential ex parte reassessment order dated 31.03.2018 for the Assessment Year 2009-10 passed by the respondent no. 3 are liable to be quashed being tantamount to change of opinion, which is not permissible under the law - Petition allowed.

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• 2019 (3) TMI 933
  Revision of assessment - Deemed assessment - Section 22(2) of the TNVAT Act, 2006 - non-speaking order - principles of natural justice - Held that:- Even though, the respondent in the impugned order has acknowledged receipt of the objections raised by the petitioner, has passed a non-speaking order, without considering all the objections raised by the petitioner, in the reply dated 30.11.2015. As seen from the impugned orders, personal hearing was also not afforded by the respondent to the petitioner, even though a specific request was made. A Division Bench of this Court in the case of G.V.Cotton Mills (P) Ltd., vs., the Assistant Commissioner (CT) [2018 (3) TMI 1617 - MADRAS HIGH COURT] has held that the right of personal hearing to the assessee is mandatory even if the assessee fails to submit objections to the pre-assessment notice. The revision of assessment made by the respondent under Section 27 of the TNVAT Act, 2006 without affording an opportunity of personal hearing to the petitioner is bad in law and violates the principles of natural justice - the matters are remanded back to the respondent for fresh consideration and the respondent is directed to afford sufficient opportunity to the petitioner including the right of personal hearing and pass final orders under Section 27 of the TNVAT Act, 2006 on merits - Petition allowed by way of remand.

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• 2019 (3) TMI 932
  Revision of earlier assessment - Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - revision of assessment mainly based on the inspection report - opportunity of personal hearing not provided - principles of natural justice - Held that:- As seen from the impugned order, personal hearing was not afforded by the respondent to the petitioner, even though a specific request was made. A Division Bench of this Court in G.V.Cotton Mills (P) Ltd. Vs. The Assistant Commissioner (CT), Coimbatore [2018 (3) TMI 1617 - MADRAS HIGH COURT] has held that the right of personal hearing to the assessee is mandatory even if the assessee fails to submit objections to the pre-assessment notice. Thus, the revision of assessment made by the respondent under Section 27 of the TNVAT Act, 2006 without affording an opportunity of personal hearing to the petitioner is bad in law and violates the principles of natural justice - the matter is remanded back to the respondent for fresh consideration and the respondent is directed to afford sufficient opportunity to the petitioner including the right of personal hearing - petition allowed by way of remand.

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