TMI Tax Updates - e-Newsletter
March 29, 2019

Case Laws in this Newsletter:

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

Articles

1. WRIT OF HABEAS CORPUS SHALL NOT BE MAINTAIANBLE WHEN A PERSON IS IN THE CUSTODY ON THE BASIS OF ORDERS PASSED BY AN AUTHORITY OF COMPETENT JURISDICTION

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. CEA asks the Indian Economic Service (IES) Officers to keep themselves updated and skilled with tools and techniques concerning econometrics, data analytics & effective visualization among others; Also emphasizes the need of sharing of experiences and best practices regularly on a common platform amongst the IES Officers

Notifications

Customs

1. 26/2019 - dated 27-3-2019 - Cus (NT)

Appoints Commissioner of Customs, Chennai (Import), Chennai-II to act as a Common Adjudicating Authority

GST

2. 15/2019 - dated 28-3-2019 - CGST

Extend the due date for furnishing of FORM GST ITC-04 for the period July 2017 to March 2019 till 30th June 2019

Circulars / Instructions / Orders

GST

1. 94/13/2019 - dated 28-3-2019

Clarifications on refund related issues under GST

2. 96/15/2019 - dated 28-3-2019

Clarification in respect of transfer of input tax credit in case of death of sole proprietor

3. 95/14/2019 - dated 28-3-2019

Verification of applications for grant of new registration

FEMA

4. 26 - dated 27-3-2019

Investment by Foreign Portfolio Investors (FPI) in Government Securities Medium Term Framework

Customs

5. STANDING ORDER NO: 05/2019 - dated 19-3-2019

Document exchange under SASEC

6. PUBLIC NOTICE NO: 02/2019 - dated 15-2-2019

Implementation of Risk Management system (RMS) in Imports at 9 (Nine) Land Customs stations from 15.02.2019

7. STANDING ORDER NO: 03/2019 - dated 13-2-2019

Implementation of the Risk Management System (RMS) in imports Local Risk Management System and PCA administration

8. STANDING ORDER NO: 04/2019 - dated 13-2-2019

Implementation of the Risk Management System (RMS) in Exports -Local Risk Management System Administration

Highlights / Catch Notes

GST

• Transfer of Input Tax Credit Allowed for Successor Continuing Sole Proprietor's Business After Death Under Relevant Act Provisions.

  Circulars : Transfer of input tax credit in case of death of sole proprietor - Credit can be transferred if the successor is continuing the business of the easter deceased as per the provisions of the act.
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• New GST Registration Verification Guidelines: Ensure Compliance, Prevent Fraud, Use Tech for Transparency and Efficiency.

  Circulars : Verification of applications for grant of new registration
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• GST Authority Clarifies Refund Process: Eligibility, Documentation, and Timelines to Streamline Compliance and Minimize Disputes.

  Circulars : Clarifications on refund related issues under GST
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• Repair and servicing of transformers focus on services, not goods ownership; spare parts are ancillary per GST Schedule II, para 3.

  Case-Laws - AAR : Repairing and servicing of transformers - predominant element of the supply is not transfer of title to the goods, but service in terms of para 3 of Schedule II to the GST Act, and supply of spare parts is ancillary to such supply.
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• Health Supplements Not Classed as Medicaments Under HSN 3004, Impacts GST Tax Treatment.

  Case-Laws - AAR : Classification of dietary/health supplements - to be classified as Medicaments or not - The products are being offered as food supplements and sometimes with specific declaration that they are not meant for use as medicine for treatment of any disease - Not classifiable as medicament under HSN 3004
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Income Tax

• TDS Deduction Confirmed u/s 194C for Contracts Involving Work, Not Professional Services u/s 194J.

  Case-Laws - HC : TDS u/s 194C or 194J - payments to subcontractor - assessee getting a physical output, a tangible structure and not merely the services of its qualified, professional engineers/staff from the sub-contractor - TDS deductible u/s 194C
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• Income Addition Deemed Unsustainable: Section 131(1) Lacks Corroborative Evidence, Despite 44AB Audit and 15% Gross Profit Rate Applied.

  Case-Laws - AT : Addition based on statement u/s 131(1) of managing partner - GP rate at 15% - No rejection of books of accounts - Account audited u/s 44AB - no independent corroborative evidences - Addition not sustainable
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• Court Rules Against Isolating Fee Payments for Transfer Pricing; Consistency Required in Benchmarking Method.

  Case-Laws - AT : Disallowance of payments made for royalty and technical know-how received - Accepted Most appropriate method for benchmarking the manufacturing segment as TNNM - Different method (CUP method) for royalty and technical knowhow - it was not open to the TPO to subject only one element, i.e. payment of technical assistance fee, to an entirely different method (CUP)
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• Bombay High Court to Decide on Automatic Vacating of Stay by Assessing Officer After Six Months in Tax Matters.

  Case-Laws - HC : Stay granted by AO in term of CBDT circular - Whether stay shall vacated automatically after six month in view of decision of Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd [2018 (7) TMI 924 - SUPREME COURT OF INDIA] - observation in civil and criminal litigation can be imported in quasi judicial proceedings - Issue under consideration before Bombay High Court
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• No TDS on Payment Gateway Charges: Exempt u/s 194H Notification for Merchant-Bank Transactions. No Disallowance u/s 40(a)(ia).

  Case-Laws - HC : TDS on account of payment gateway charges u/s 194H - covered under notification dated 31.12.2012 for non deduction of TDS as “credit card or debit card commission for transaction between the merchant establishment and the acquirer bank” - no disallowance u/s 40(a)(ia)
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Customs

• Rule 6(l) mandates waiver of demurrage charges for goods seized or detained by customs officials.

  Case-Laws - HC : Demurrage and Container Detention Charges - Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - charge of rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer shall be waived
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• Tribunal and Commissioner (Appeals) cannot waive or reduce mandatory pre-deposit under Customs Act Section 129E.

  Case-Laws - HC : Power to waiver of mandatory pre-deposit - Section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre-deposit.
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IBC

• IBC 2016 Takes Precedence Over TNPID Act in Corporate Insolvency Cases Due to Section 238's Overriding Effect.

  Case-Laws - Tri : Corporate insolvency process - proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 (TNPID Act) - IBC, 2016 being a special legislation and by virtue of Section 238 of the IBC, 2016, shall overrides the provisions of TNPID Act.
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• Corporate Insolvency Process Begins u/s 7 of IBC 2016; Debtor's Request for Extension Denied by Authority.

  Case-Laws - AT : Corporate insolvency process - application u/s 7 of the I & B Code, 2016 admitted by Adjudicating Authority as all condition are satisfied - Seeking further time by Corporate Debtor to settle the matter is not sufficient ground to set aside admission order
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Service Tax

• Penalty Removed Due to Confusion Over Service Tax Liability on Individuals Under Finance Act Sections 77 & 78.

  Case-Laws - AT : Penalty u/s 77 and 78 of FA - service tax on Manpower Recruitment or Supply Agency Service by individual - relevant period confusion as to whether the individual person or only a commercial concern is liable to pay service tax is reasonable cause for deleting penalty
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• Electricity charges based on actual use, not floor area, not subject to Service Tax on rental property services.

  Case-Laws - AT : Renting of immovable property Services - appellant has recovered the electricity charges on actual consumption basis and not on floor area basis, for their shop premises hence cannot be clubbed with the amount of rent, for levy of Service Tax
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• No Reverse Charge Mechanism for Machinery Installation by Manufacturer's Branch; No Separate Supply Contract Exists.

  Case-Laws - AT : Reverse Charge - Machine imported without separate contract for supply and installation - branch office of manufacturer erected & installed the machinery - No Erection commissioning or installation service under RCM
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• Extended Limitation Period Applies for Failure to Reverse CENVAT Credit, Despite Clear Law and ST-3 Disclosure.

  Case-Laws - AT : Extended period of limitation - non reversal the proportionate cenvat credit when law regarding reversal is clear is sufficient for Extended period of limitation irrespective of Disclosure in ST-3 as non taxable/exempted services
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• Penalty for Delayed Service Tax Payment Overturned; No Malafide Intent Found Due to Documented ST-3 Returns.

  Case-Laws - AT : Imposition of penalty for delayed in payment - liability of service tax & actual payment shown in ST-3 Returns - fact of knowledge of the department hence malafide cannot be attributable against the appellant - penalty imposed on the appellant is set-aside
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• Service Tax Installment Requests: No Approval Power for 36 Installments by Commissioner or Deputy Commissioner (Technical).

  Case-Laws - HC : Application for grant of installments for Payment of Service Tax - Circular dated February 28, 2015 - neither the Commissioner nor the Deputy Commissioner (Technical) has the authority to consider a prayer for grant of thirty six instalments
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VAT

• Wire Ropes in Mobile Cranes Classified as Integral Components Under Entry 155, Schedule IV of VAT Act.

  Case-Laws - SC : Wire ropes used in the Mobile Cranes are a part of the Mobile Cranes and thus fall in Entry 155 of Schedule IV of the VAT Act.
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Case Laws:

• GST

• 2019 (3) TMI 1408
  Repairing and servicing of transformers owned by WBSEDCL - Job-work or not - composite or mixed supply? - principal supply - rate of tax - supply against challans without raising tax invoices - Held that:- Repairing and servicing of defective transformers signify working on something which is already in existence. It involves supply of goods, but not as chattels. The goods, namely the spare parts that have replaced the defective ones, are embedded or fixed to the transformer already in existence so that the defects get removed. The contract is not for the supply of the spare parts, but for the treatment or process for maintenance and removal of the defects from the transformers that belong to WBSEDCL. The predominant element of the supply, therefore, is not transfer of title to the goods, but service in terms of para 3 of Schedule II to the GST Act, and supply of spare parts is ancillary to such supply. The service so supplied is classifiable under SAC 998719, being repair of transformers, and taxable under Sl No. 25(ii) of the Rate Notification, as amended from time to time.

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• 2019 (3) TMI 1407
  Classification of products - to be classified as Medicaments or not - whether the products are meant for therapeutic or prophylactic use - Applicant himself has labeled in the category of dietary/health supplements - whether classified under HSN 2106 or under HSN 3004? - Held that:- Classification refers to determination of the nature and character of the goods being supplied. The purpose of the exercise is to ascertain the applicability of any entry of the notifications issued under the GST Act, specifying the rate of tax or exemption from payment of tax - Explanation to the Rate Notification clearly mentions that Tariff item, subheading, heading and Chapter in the Rate Notification refer to those specified in the First Schedule to the Customs Tariff Act, 1975. For the purpose of interpreting the Rate Notification, so far as may be, the Rules of Interpretation, Section and Chapter Notes and the General Explanatory Notes to the Tariff Act may be applied. The term Medicament is not defined in the GST Act or in the Tariff Act. The meaning and scope of Medicaments and, more specifically, of HSN 3004 need, therefore, to be ascertained from judicial observations in this regard - In HSN 3004 the emphasis is on therapeutic or prophylactic uses. Even if a product is manufactured using ingredients and according to the formula prescribed in the Pharmacopeia, it should not be classified as a medicament under heading 3004 unless it is meant for therapeutic or prophylactic uses. Its curative or preventive value must be substantial, and the product must be manufactured primarily to control or cure a disease, and the consumers use it primarily for treatment, mitigation, cure or prevention of specific disease or disorder. The emphasis clearly, therefore, lies in the user s perception of a particular product. If the user consumes the product primarily for cure from or treatment or mitigation of or for prevention of a disease or disorder, it should be treated as a medicament classifiable under HSN 3004. The products are being offered as food supplements and sometimes with specific declaration that they are not meant for use as medicine for treatment of any disease. Note 1(a) of Chapter 30 excludes food supplements from Chapter 30. These products are not, therefore, classifiable as medicament under HSN 3004 - Moreover, according to section 3(b) of the Drugs and Cosmetics Act, 1940, drug includes inter alia all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals. Section 18(c) of the said Act prohibits manufacture, stocking or sale of any drug without a license procured under the Act. The Applicant has failed to show any such license for the manufacture and sale of the products mentioned under Sl Nos. 2 to 13 of the above table. These products cannot, therefore, be lawfully offered to the consumers as medicines having therapeutic or prophylactic uses. The Application has been admitted for classification of the products mentioned in Table I of the Application that are labelled as dietary/health supplements - Products mentioned under Sl Nos. 2 to 13 are classifiable under HSN 2106, and taxable under Sl No. 23 of Schedule III of Notification No. 1/2017-CT (Rate) dated 28/06/2017 of the Centre (corresponding State Notification No. 1125-FT dated 28/06/2017), as amended vide Notification No. 41/2017-CT(Rate) dated 14/11/2017 (corresponding State Notification No. 2019-FT dated 14/11/20174).

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• Income Tax

• 2019 (3) TMI 1406
  Penalty under Section 271AAA - surrender of income made by one of the directors - HELD THAT:- SLP dismissed. No reason to entertain the Special Leave Petition under Article 136 of the Constitution of India.

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• 2019 (3) TMI 1405
  Charitable activity - exemption u/s 11 - mandation to specify the object/purpose in Form No.10 for claiming accumulation u/s. 11(2) - assessee in detail pointed out background under which the board of trustees had met, considered the material and eventually passed a formal resolution setting apart the funds for the ongoing hospital projects of the Trust and for modernization of the existing hospitals. - Held that:- SLP dismissed.

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• 2019 (3) TMI 1404
  Revision Petition u/s 264 - petitioner's claim for depreciation is reflected in the return but not in the schedule - HELD THAT:- Revised return ought to have been entertained. There is no scope for, in fact, filing a revision as rightly pointed out by the Commissioner. Nevertheless, what assumes importance is that in the factor of claim made by the petitioner in regard to depreciation. Therefore, revised return shall be accepted and appropriate order shall be passed, taking note of the claim for depreciation made by the petitioner, after affording an opportunity of being heard to the petitioner, within a period of two months from the date of receipt of a copy of this judgment. Till the revised order is passed, any demand based on the return shall not be enforced.

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• 2019 (3) TMI 1403
  Assessment of 'managerial remuneration' under the head 'salary' within the scope of sections 15 and 17 - taxing the 'managerial remuneration' on 'accrual basis' - salary due from an employer or a former employer whether paid or not - HELD THAT:- Assessee has admitted to have maintained his accounts on mercantile basis and therefore any negation on this aspect could be verified only by the learned Tribunal. The finding on fact as recorded by the Tribunal, is binding on this Court. It appears that no such evidence or withdrawal of the managerial remuneration, which was debited by way of provisions in the books of accounts maintained by the Company appears to have been placed before the authorities below. Had it been so, the Tribunal as well as CIT (Appeals) were bound to take note of the same and the effect thereof on the taxability of the said managerial remuneration in the hands of the present Assessee, could have been discussed by them. Going by the facts that the Company for which the Assessee was the Managing Director during the period had made a provision for managerial remuneration of Rs. 9 lakhs to be paid to the Assessee creates an obligation on the present Assessee to bear the tax liability in respect of the same, in view of the definition of the word 'salary' under Section 15 of the Act which includes both 'salary' actually received or accrued to the person concerned. We are of the clear opinion that the order of the Tribunal does not suffer from any legal infirmity and the Appeal of the Assessee deserves to be dismissed and the same is accordingly dismissed.- Decided against the Assessee and in favour of the Revenue.

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• 2019 (3) TMI 1402
  Reopening of assessment - Reasons recorded based on sworn statement recorded u/s 133A - no incriminating material found - reason to believe - HELD THAT:- In the present case, there is no dispute on the position that the survey initiated by the Department on 12.01.2018 has yielded no tangible incriminating material. In fact, the Mahazarnama of even date reveals as much. Notwithstanding this, the Department has gone ahead with the impugned proceedings based solely upon the sworn statement recorded under Section 133A from one of the partners. In the light of Circular F.No.286/2/2003 dated 10.03.2003 as well as the admitted position that there is not a shread of material apart from the statement recorded under Section 133A that forms the basis of the proceedings for reassessment, the reasons dated 28.05.2018 have no legs to stand. The impugned notices dated 31.03.2018, which trace their existence to the reasons dated 28.05.2018 must thus fail and quash the same as well as the impugned orders dated 30.07.2018 rejecting the preliminary objections. - Decided in favour of assessee.

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• 2019 (3) TMI 1401
  TP adjustment - ascertaining the Arms Length Price through the method of Transactional Net Margin Method with the aid of the results of one M/s Schrader Duncan Limited being taken as comparable - assessee seeked to remove M/s Schrader Duncan Limited fro comparable list - Revenue argues that when the assessee itself for the purpose of TNMM, had referred to the said M/s Schrader Duncan Ltd as a comparables, it would not thereafter be open for the assessee to take up a different stand during the course of the assessment - Tribunal rejected revenue contentions - HELD THAT:- Merely because the assessee at one stage had referred to M/s Schrader Duncan Ltd. for the purpose of benchmarking, would not mean that the assessee cannot, even though the facts so suggest, take the legal contention that two were not comparable. On merits also the Tribunal examined the facts on record, found that the products manufactured and dealt with by the two companies were vastly different and that, therefore, there was no functional similarity between the assessee and the suggested comparable. No question of law, therefore, arise. Exclusion of M/s Areva T & D as comparable - turnover of the said company was high as compared to the assessee - TPO had rejected the assessee's objections to the selection of said company on the ground of vast difference in the turnover and dissimilarities of the products between the two companies - DRP however accepted the assessee's objections also upheld by Tribunal - HELD THAT:- We do not find that the Tribunal has committed any error. The Tribunal has referred to the relevant materials on record and noted that the products manufactured by M/s Areva T & D were firstly different from those manufactured by the assessee and further ordered that there was substantial difference in the turnover between the two companies. No question of law, therefore, arises. The Income Tax Appeal is dismissed.

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• 2019 (3) TMI 1400
  Addition u/s 68 - Unexplained cash deposits - unexplained nature and source of loan received - doubtful creditworthiness of the lender - HELD THAT:- The creditworthiness of the lender is in serious doubt and could not be demonstrated to the satisfaction of the Assessing Officer when seen on the touchstone of preponderance of probabilities. We observe that the Assessing Officer has rightly recorded its conclusion against the assessee on the ground that deposit of cash in the account of the lender prior to its lending to the assessee is not supportable with the worth and conduct of the lender. Therefore, the primary onus placed on the assessee, in our view, could not be discharged. The CIT(A), in our view, has rightly analysed the factual matrix and answered the appeal of the assessee in negative - decided in favour of revenue

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• 2019 (3) TMI 1399
  Penalty levied u/s.271(1)(c) - non specification of charge - both the limbs of charge are mentioned there i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ - HELD THAT:- Hon'ble Bombay High Court in the case of CIT Vs. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein has considered in the case of CIT Vs. Manjunath Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT], the legal proposition that comes out and which is binding in nature is that the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. The sanctity in terms of natural justice with regard to this proposition is that the assessee under the scheme of welfare legislation which is embedded in the Income Tax Act, 1961 should get an opportunity to prepare himself for the defense as regards to the exact charge on which penalty is imposed upon him u/s. 271(1)(c). In the instant case, the charge is vague and therefore, levy of penalty is not warranted. Furthermore, the revised return filed by the assessee is in conformity with section 139(5) of the Act wherein all the particulars of income have been disclosed - direct the Assessing Officer to delete the penalty from the hands of the assessee - decided in favour of assessee.

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• 2019 (3) TMI 1398
  Disallowance u/s 14A while computing book profit u/s 115JB - MAT computation - HELD THAT:- This question in favour of the assessee and held that computation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully following the decision of ACIT Vs. Vireet Investments P.Ltd. [2017 (6) TMI 1124 - ITAT DELHI] we allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules. Depreciation @ 25% on leasehold right acquired in respect of land at Dahej SEZ - HELD THAT:- Since there is no independent finding recorded by the ld.CIT(A) in this year except putting reliance on the order of the ld.CIT(A) in the Asstt.Year 2011-12 and that order has already been set aside by the ITAT and the issue has been remitted to the file of AO for adjudication afresh. Similar procedure be followed in this year also. Respectfully following the order of the Co-ordinate Bench, we allow this ground of appeal for statistical purpose and restore the issue to the file of the AO who will follow directions given by the ITAT in the Asstt.Year 2011-12.

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• 2019 (3) TMI 1397
  Penalty levied u/s 271(1)(c) - collection collected and credited to building fund, disallowance of excess depreciation and commission income accounted short - HELD THAT:- As relying on SAMSON PERINCHERY [2017 (1) TMI 1292 - BOMBAY HIGH COURT] satisfaction of the AO with regard to only one of the two breaches mentioned under Section 271(1)(c) for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice. - We delete the penalty u/s 271(1)(c) confirmed by the Ld. CIT(A). - Decided in favour of assessee.

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• 2019 (3) TMI 1359
  TDS u/s 194H - TDS liability on account of payment gateway charges - addition u/s 40(a)(ia) since according to the AO the said payment was in the nature of commission paid to the Banks - ITAT has allowed the Assessee’s appeal on this issue and held that the payment gateway charges were in nature of fees for banking services and not ‘commission’ or ‘brokerage’ and thus no TDS was deductible from the said charges under Section 194H - HELD THAT:- Central Government, by notification dated 31st December, 2012 has notified that no TDS shall be made on specified payments to the banks listed in the Second Schedule to the Reserve Bank of India Act. The assessee is right in contending that by virtue of the above notification no TDS is deductible from payments made towards “credit card or debit card commission for transaction between the merchant establishment and the acquirer bank”. This applies to the charges paid to the Banks for providing payment gateway in the case on hand. In that view of the matter, this Court finds that the ITAT has not committed any error in deleting the addition This Court finds that the ITAT has not committed any error in deleting the addition made by the Assessing officer under section 40(a)(ia) of the Act on account of non-deduction of TDS from the payment gateway charges paid to the Banks - Decided in favour of assessee.

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• 2019 (3) TMI 1358
  Benefit of deduction u/s 54EC - availability of requisite funds to invest within six months of the transfer to claim the benefit under section 54EC - as per revenue since the assessee had made investment in REC bond on 6.8.2010, i.e. after a period of six months from the date of transfer of the shares irrespective of when the whole or part of sale consideration was actually received, the assessee was not entitled to deduction under Section 54EC - whether amount was deposited in the Escrow Account as a security in respect of future liabilities of the company/ transferor? - Tribunal deleted the addition and held that admittedly the amount was deposited in the Escrow Account - HELD THAT:- Both the transferrer and the transferee had common rights over the said amount as the said amount was deposited in the Escrow Account as a security in respect of future liabilities of the company/ transferor. There was no certainty about the quantum of amount likely to be received by transferor or transferee out of the said amount deposited in Escrow Account. - Since, there was no certainty of the time of release of the said amount or the part of the amount to either of the parties as dispute between the parties had occurred and the litigation was going on, it cannot be said that the assessee had got a vested right to receive the amount in question. It was only at the end of the litigation that the rights and liabilities of the transferor and transferee were ascertained and thereupon the share of the assessee was passed on to the assessee for which the assessee offered capital gains in the immediate assessment year 2010-11. Further, the Tribunal had held the assessee entitled to the benefit of deduction under Section 54EC of the Act as the amount was invested by him in the Rural Electrification Corporation Ltd. bonds in the year of receipt which was also the year of taxability of the capital gains so received. No error could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal warranting interference by this Court. Further, referring to the judgment of the Apex Court in Sanjeev Lal and another v. Commissioner of Income Tax and another (2014 (7) TMI 99 - SUPREME COURT), relied upon by the learned counsel for the revenue, in view of the factual matrix noticed hereinbefore, suffice it to observe that the said pronouncement being based on its own facts does not advance the case of the revenue. - Decided against revenue

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• 2019 (3) TMI 1357
  Rectification of mistake u/s 154 - modifying the rate of FBT treating the assessee's sales promotion items as gifts - review w/s rectification - Tribunal allowed the assessee's appeal - HELD THAT:- We are in agreement with the view of the Tribunal. A.O. having examined the assessee's claim and having passed the order, accepting the FBT after scrutiny, could not have modified such an order in purported exercise of rectification powers. It is well settled that the power of rectification is not the same as review power. Under such powers, the A.O. can rectify errors apparent on record. Detailed consideration would not be permissible. - Decided against revenue

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• 2019 (3) TMI 1356
  TDS u/s 194C or 194J - short deduction of TDS - payments made to the subcontractor - as per revenue payment is for professional and technical services - scope of work given to the sub-contractor was construction work for grounding including straightening, cutting, unloading in the site, transporting to pre-assembly/erection site, alignment, welding, text and inspection, illumination and communication work etc. - liability of any interest under Section 201(1A) - HELD THAT:- The assessee was executing a works contract (Thermal Power Plant) for its customer. It included men, machinery, material, other tangible and intangible goods. For the said project, the services of technical personnel including engineers were inevitable. The scope of work given to the sub-contractor was construction work for grounding including straightening, cutting etc. material receipt from contractors stores or unloading in the site, transporting to preassembly/ erection site, erection, alignment, welding, test and inspection etc., illumination and communication work. The assessee was getting a physical output, a tangible structure and not merely the services of its qualified, professional engineers/staff from the sub-contractor. The said activities were undertaken with the help of men and machines which were beyond the scope of technical services. The said contract between the assessee and the sub-contractor satisfied the provisions of Section 194C of the Act and did not attract the provisions of Section 194J of the Act. The Tribunal had, thus, rightly concluded that the case of the assessee fell under Section 194C of the Act and not under Section 194J of the Act. Tribunal had noticed that the sub-contractor had already offered the payments received from the assessee to tax and, thus, there was no justification in creating additional demand on account of short deduction of tax. Since, there was no short deduction of tax at source under Section 201(1) of the Act, therefore, there would be no liability of any interest under Section 201(1A) of the Act upon the assessee. - decided against revenue

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• 2019 (3) TMI 1355
  Penalty levied u/s.271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2019 (3) TMI 1354
  Rectification u/s 254 - apparent mistake in the order of the Tribunal - allowabilty of discount in absence of details - non consideration of order of co-ordinate benches of Tribunal - HELD THAT:- Tribunal has considered the contentions and arguments of the assessee and has also considered the net profit shown by the assessee during preceding and in the year under consideration. Also observe that the assessee, before CIT(A) expressed her inability to furnish the details on discount invoice-wise, which resulted into confirmation of disallowance by the first appellate authority. From paras 8 & 9, clearly observe that the Tribunal has taken a lenient view as the part amount of cash discount @1% of total turnover has been allowed to the assessee and balance amount of claim of cash discount has been confirmed. Fully satisfied that there is no apparent mistake in the order of the Tribunal dated 30.11.2017 which requires any rectification permissible u/s.254(2). If findings arrived by the Tribunal are disturbed, then certainly it would amount to review of order under the garb of rectification which is not permissible as per the provisions of the Act. Therefore, inclined to hold that this miscellaneous application is devoid of merits and without any substance, therefore, the same is dismissed.

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• 2019 (3) TMI 1353
  Disallowance of payments made for royalty and technical know-how received - Accepted Most appropriate method for benchmarking the manufacturing segment as TNNM - Different method (CUP method) for royalty and technical knowhow - HELD THAT:- Neither the TPO nor the CIT (A) has discarded the most appropriate method adopted by the Assessee which was TNMM in the present case for benchmarking the manufacturing segment. Facts on the record also show that the TPO has not discarded the exercise undertaken by the Assessee in determining the ALP of the international transaction related to royalty and technical fees by using the aggregate approach and benchmarking it with manufacturing segment. We find force in the arguments of the Ld. AR that where the assessee had used TNMM to benchmark all its transactions and the TPO having accepted TMNN as the most appropriate method, it was not open to the TPO to subject only one element, i.e. payment of technical assistance fee, to an entirely different method (CUP) as this would lead to chaos and be detrimental to the interests of both the assessee and the revenue. We also find it appropriate to mention that the TPO, in the subsequent years, has accepted the aggregate approach and the TNMM method as against the approach of the TPO in this year to benchmark the transaction separately. The TPO has arbitrarily applied CUP, which is not supported by the approach of the TPO in the subsequent years. The view of the lower authorities that the benchmarking done by the Assessee is incorrect and the approach of the TPO, as has been upheld by the CIT (A), is not sustainable. Our view is also supported by comparison of margins of the Assessee with the margin of the comparable companies. As stated elsewhere in the order, the Assessee has earned the margin of 9.25% with respect to manufacturing activities as against the margin of 11.98% earned by the comparable companies. Thus, the Assessee’s margin is within the (+/-) 5% range. Therefore, the approach of the Assessee is correct in so far as it relates to the payment of Royalty and Fee for Technical know-how and the adjustment in relation to international transactions pertaining to payments for royalty and technical know-how deserve to be deleted.

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• 2019 (3) TMI 1352
  Validity of notice issued u/s 274 r.w.s. 271(1)(c) - defective notice - non specification of charge - HELD THAT:- A.O. has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Alleged notice issued u/s 274 r.w.s. 271(1)(c) dated 30.10.12 is invalid, untenable and suffers from the infirmity of non application of mind by the AO. We accordingly direct to delete the penalty for AY 2006-07 and 2008-09 respectively imposed u/s 271(1)(c) on this ground itself. We accordingly allow the additional ground raised by the assessee on the legality of the penalty proceedings initiated u/s 271(1)(c). Since the issue of penalty u/s 271(1)(c) also has been dealt on the preliminary points other arguments of the assessee dealing with the merits of the levy of penalty are not been dealt with, as the same are rendered academic in nature and thus the appeal of the assessee are allowed.

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• 2019 (3) TMI 1351
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - issuing notice in general proforma - HELD THAT:- From perusal of the above show cause notice we find that the A.O has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Now whether such type of notice which does not speak about the specific charge leveled against the assessee is valid and tenable in the eyes of law. Notice issued by the AO under Section 274 r.w.s. 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2019 (3) TMI 1350
  Stay of demand - Tribunal granting stay recovery of demand beyond the period of 365 days - HELD THAT:- Hon'ble Jurisdictional High Court in Tata Teleservices (Maharashtra) Ltd. (2015 (12) TMI 1507 - BOMBAY HIGH COURT), held that the Tribunal has power to grant stay beyond a period of 365 days. Though, it may be a fact that the delay in disposal of corresponding appeal may not be attributable to the Department, at the same time, non–disposal of the appeal cannot be attributed to the assessee also. Further, Department’s contention that the financial position of the assessee is good is not backed by any supporting evidence. Be that as it may, while extending the stay vide order dated 26th October 2018, the Tribunal has taken note of the attending facts and circumstances which is evident from the facts narrated in Para–2 of the order. That being the case, the decision so taken by the Tribunal cannot be subject matter of review by the Tribunal. If the Department, in any manner, was aggrieved with the aforesaid order of the Tribunal, they could have approached the higher court seeking appropriate relief/remedy instead of filing a Misc. Application seeking review of the order passed by the Tribunal.

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• 2019 (3) TMI 1349
  Levy of penalty u/s 271B - delay in completion of statutory audit - reasonable cause for delay in conducting the audit u/s 44AB - HELD THAT:- In the instant case, the C&AG has appointed the statutory auditor of the assessee company on 02.09.2014 and after confirmation of remuneration and other terms of appointment by the Board of Directors, the statutory auditors have given their acceptance on 22.09.2014. The statutory audit was thereafter undertaken and the statutory auditors have given their audit report on 15.01.2015 and thereafter the tax auditor completed the tax audit on 28.09.2015. We therefore find that the facts of the present case are parimateria to the facts in case of the M/s RRVUNL Vs. ACIT [2018 (4) TMI 256 - ITAT JAIPUR] wherein held that where there is a delay in completion of statutory audit, there exist a reasonable cause for the delay in completion of tax audit and issuance of tax audit report. The ratio of the said decision equally applies in the instant case as the accounts of the assessee company are subject to statutory audit and once the statutory audit is completed, the tax audit can be initiated. Further, we find that under similar fact pattern, there was delay in completion of tax audit for the previous AY 2013-14 and the penalty proceedings so initiated u/s 271B were dropped by the Assessing officer himself. - Decided in favour of assessee.

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• 2019 (3) TMI 1348
  Course of action by Tribunal - Additional ground raised first time before Tribunal - Denial of exemption u/s 10(23C)(iiiad) - additional ground submitting that the appellant society has been granted registration u/s 12AA subsequently w.e.f. 1.4.2013 and the income of the appellant society would be exempt u/s 11 & 12 for the preceding years also including the year under appeal - HELD THAT:- From perusal of Form No.35 filed by the assessee before CIT(A) we observe that the additional ground raised before us has not been raised before CIT(A). The reason for not raising this additional ground is that the assessee was granted registration u/s 12AA on 11.7.2014 effective from 1.4.2013 whereas the appellate order framed by CIT(A) is dated 23.5.2014, therefore CIT(A) had no occasion to adjudicate this issue as it did not arise till the time of finalisation of appellate order. Before us the revenue has not disputed the objects of the society as mentioned in the bye-laws placed at page 3 to 6 which remain unchanged since its inception. Registration u/s 12AA of the Act have been granted by Ld.CIT, Bhopal on the basis of the objects mentioned in the bye-laws. Therefore following the judgment of CIT V/s Tolaram Somal [2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT] are bound to hold that the additional legal ground which has been taken before us for the first time and which goes to the root of the matter needs to be set aside to the file of Ld. CIT(A) for adjudication in the light of various judgments referred by Ld. Counsel for the assessee as well as the provisions of law and decide accordingly as to whether the assessee in view of being registered u/s 12AA of the Act is eligible for benefit of Section 11 & Section 12 from retrospective effect. We accordingly set aside the additional ground as well as Ground No.2 to 6 relating to denial of exemption u/s 10(23C)(iiiad) of the Act to the file of Ld. CIT(A) for afresh adjudication.- Appeal of the assessee is partly allowed for statistical purposes.

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• 2019 (3) TMI 1347
  Addition based on statement u/s 131(1) of managing partner - GP rate at 15% - No rejection of books of accounts - Account audited u/s 44AB - no independent corroborative evidences - HELD THAT:- In this case, the books of account of the assessee were required to get audited u/s. 44AB. It is an admitted fact that books of account of the assessee had not been rejected by the AO. However, the AO relied on the statement of managing partner of the assessee recorded u/s. 131(1) for the purpose of framing the assessment. CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. Without commenting on the authenticity of the statement by the managing partner of the assessee Shri Tomy C. Vadayil, we are of the opinion that there is no corroborative evidence to support the claim made by the Assessing Officer. Even otherwise, uncorroborative statements collected by the Assessing Officer cannot be an evidence for sustenance of addition made by the Assessing Officer. We are of the view that the statement recorded u/s. 131 cannot be independently used for making any addition in the hands of the assessee and the said statement cannot, in our view, be the sole basis for making any addition and must be independently corroborated by evidences. Thus, we are of the view that the legal position that emerges is that a sworn statement, though binds the assessee, it cannot be the sole basis for making the assessment. It is open to the assessee to show the circumstances in which confessional statements were recorded and once the assessee proves that confessional statements were recorded under threat and coercion and retracts from the same, the confessional statements cannot be the sole basis for making assessments or for making any addition in the hands of the assessee. AO has made the addition only on the basis of sworn statement of the managing partner. Accordingly, we dismiss the ground taken by the Revenue. The appeal of the Revenue is dismissed.

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• 2019 (3) TMI 1346
  Stay on the recovery of demand - Tribunal power to extend the period of stay even beyond 365 days - Whether as almost 50% of the demand has been paid and, therefore, stay on the balance of the outstanding demand be continued - HELD THAT:- We deem it fit and proper to continue the stay on the recovery of demand for a further period of three months from today or till the date of order of the Tribunal in assessee’s appeal, whichever is earlier. At this stage, we may also notice that the corresponding appeal of the assessee was posted today alongwith the stay application, but due to the non-availability of the counsel, it has been requested to be adjourned for further hearing on 28.01.2019 at 2.30 p.m., a date consented by both the parties. It is also directed that till such time the present stay operates, the refund of `7,59,94,310/-, which is determined payable to the assessee be retained/adjusted by the Department against the presently outstanding demand, as per law. Continuation of the stay will be more than the period envisaged under Section 254(2A) of the Income Tax Act, 1961, i.e. more than 365 days - It is noted that in the case of CIT vs. Tata Teleservices (Maharashtra) Ltd. [2015 (12) TMI 1507 - BOMBAY HIGH COURT] has upheld the proposition that the Tribunal is vested with the power to extend the period of stay even beyond 365 days, if the circumstances so warrant. In this view of the matter and considering the circumstances of the case, we have extended the stay as stated in the earlier paras. Accordingly, the stay application is disposed off as above.

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• 2019 (3) TMI 1345
  Exemption u/s 11 - charitable activity - investment in immovable property - HELD THAT:- It is a fact that section 11(5)(x) authorizes investment in immovable property. AO has not considered the investment in land and flat has been done for charitable purposes. He has not accepted the explanation of assessee that investment in immovable property has been done as preliminary steps towards establishment of University. AO was under the impression that in order to qualify for charitable purpose, the trust has to spend the amount on charitable activities only. Section 11(5)(x) clearly authorize investment in immovable property for claiming exemption u/s 11. If the findings of the AO are accepted then no investment would be qualified u/s 11(5). Since the investment in immovable property is permitted as per section 11(5)(x) of the Act, therefore, there was no necessity for the assessee to prove that it was done so for charitable purposes. Section 11(5) provides that accumulated amount u/s 11(2) has to be kept in specified moods of investment which include investment in immovable property. It does not provide such immovable property must be meant for any specific purposes. Therefore, there is nothing wrong committed by assessee so as to violate any provisions of law. Assessee has explained that out of the addition in question as made by AO, the amount was in fact towards corpus donation. The assessee produced confirmation and bank account and relevant details to prove it was a corpus donation. Therefore, it could not be added to the income of the assessee. CIT(A) correctly directed to delete the addition. The Revenue did not challenge the deletion of addition on account of corpus donation. Therefore, findings of fact recorded by CIT(A) are confirmed. If the corpus donation is excluded nothing would survive against the assessee so as to make any addition. There is no merit in Departmental appeal. Same is accordingly dismissed. Expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking section 11 - HELD THAT:- assessee rightly contended that the authorities below have failed to appreciate that income has to be computed commercially even in cases covered u/s 11 – 13 and resultant loss, if any, arising due to surplus application of income has to be computed and carry forward to the next year to be set off therein. AO has not given any findings on the same. CIT(A) without examining the issue in detail dismissed the claim of assessee because section 11 provides for exemption of income of charitable organization. However, it is a fact that assessee claimed carry forward of the losses for subsequent year as per law which should have been appreciated and should be considered in favour of the assessee. The issue is covered by above judgment referred above. We, accordingly, set aside the orders of the CIT(A) and restore this issue to the file of the AO with direction to allow the claim of assessee after verifying the facts on record. The AO shall give reasonable sufficient opportunity of being heard to the assessee.

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• 2019 (3) TMI 1344
  Dismissal of appeal for non-prosecution - neither representation nor petition seeking time - dismissal of appeal in limine - HELD THAT:- Notice dated 12.07.2018 was issued to the assessee as per address furnished in Form No.36. It was the bounden duty of the assessee to move revised appeal memo (Form No.36) in terms of Rule 9A of Income Tax (appellate tribunal) Rules 1963. The assessee has failed to do so. In the aforementioned peculiar facts and circumstances of the case, in the absence of any representation on behalf of the assessee or petition seeking time, it can be presumed that the assessee is not serious in pursuing the appeal filed. Accordingly the only alternative left is to dismiss the appeal of the assessee in limine. Support is drawn from the order of the Tribunals in Commissioner of Income Tax vs. Multi Plan India (P)Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] and Estate of Late Tukojirao Holkar vs. CWT: TAX [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT]. Before parting, it would be appropriate to add that in case the assessee is able to show that there existed a reasonable cause for non-representation on the date of hearing, it would be at liberty, if so advised, to seek for a recall of this order.

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• 2019 (3) TMI 1320
  Stay granted by AO in term of CBDT circular - delay in disposal of the appeal before the Commissioner - Whether stay shall vacated automatically after six month - HELD THAT:- There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd [2018 (7) TMI 924 - SUPREME COURT OF INDIA] Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the Supreme Court, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the Assessing Officer to review the situation every six months, would not authorized him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances. Revenue prayed for time for filing reply. By way of ad-interim relief, the impugned orders dated 22.1.2019 and 11.2.2019 are stayed. The respondents are prevented from carrying out any further recoveries pursuant to the order of assessment in respect of the petitioner for assessment year 2013-14.

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• 2019 (3) TMI 1319
  Stay of demand beyond 365 days by Tribunal u/s 254(2A) - HELD THAT:- We noted that judgement of Hon'ble Supreme Court in case ASIAN RESURFACING OF ROAD AGENCY PVT. LTD. AND ANR. VERSUS CENTRAL BURUEAU OF INVESTIVATION [2018 (4) TMI 3 - SUPREME COURT OF INDIA] will not help the Revenue for the reason that even the Legislature in this provision of Section 254(2A) introduced third proviso vide Finance Act, 2008 and allowed the period for granting of stay not exceeding 365 days in normal circumstances. Hence the Legislature was conscious of the fact that there are circumstances where stay has to be granted beyond six months as the facts requires in the exceptional cases. We have gone through the said order and noticed that no such plea was placed before the Tribunal at the time of hearing or from record we could not trace such arguments or plea. Taking into consideration all the facts and circumstances, we are of the view that the TATA TELESERVICES (MAHARASHTRA) LTD. [2015 (12) TMI 1507 - BOMBAY HIGH COURT] has struck down the expression, “even if the delay in disposing of the appeal is not attributable to the assessee” as substituted by 3rd proviso to Section 254(2A) of the Act and taken a view that the Tribunal has power to extend stay even beyond 365 days and even after the substitution of 3rd proviso to Section 254(2A) of the Act. Hence, respectfully following the above referred decisions, discussing legal positions, we dismiss this miscellaneous application of the Revenue.

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• Customs

• 2019 (3) TMI 1343
  Release of consignments - Peas/Pulses imported by the petitioner s Proprietor Firm - issuance of Detention Certificate for waiver of Demurrage and Container Detention Charges in terms of Regulation 6(1)(1) of Handling of Cargo in Customs Areas Regulations 2008 - Held that:- The petitioner will remit the entire duty component of the consignments imported by him in case were such duty is leviable as per paragraph 15(iii) above along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignment shall be released forthwith. Waiver of Demurrage and Container Detention Charges - Held that:- In the light of Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off.

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• 2019 (3) TMI 1342
  Power to waiver of pre-deposit - maintainability of appeal - appeal of the petitioner has been dismissed on account of pre-deposit clause - petitioner claims financial constraints for non-deposit - Section 129E of the Customs Act, 1962 - Held that:- This Court is of the opinion that Section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre-deposit - this Court is also not inclined, keeping in view the statutory provision of law to waive or reduce the pre-deposit and, therefore, no case for interference is made out in the matter - petition dismissed.

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• 2019 (3) TMI 1341
  Provisional release of seized consignments - LED monitors - Revenue was of the opinion that these were television monitors - Held that:- Even after lapse of more than one year and three months we are not in a position to be told that whether proceedings under Section 124 have been commenced or not. Revenue is not in a position to say whether 110(2) extension has been granted or not. However, since appellant have been pursuing with regard to modification of order of provisional release of the seized goods we agree to the prayer made with respect to the terms and conditions - Bank guarantee equivalent to 100% of differential duty and probable redemption fine and penalty cannot be justified, even to the extent as modified by the Commissioner(Appeals). Revenue is directed to allow provisional release on execution of bond of value and bank guarantee of Rs. 7 lakhs within a period of one month from date of receipt of this Order - appeal allowed in part.

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• 2019 (3) TMI 1340
  Rectification of mistake - error apparent on the face of record - Held that:- There is no cogent reason to interfere with nor is there any case made out, to interfere with the factual/legal findings - Therefore, application for rectification is rejected.

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• 2019 (3) TMI 1339
  Rectification of Mistake - recall of order - Held that:- The appellant has approached the Hon’ble High Court against the Order passed by the Tribunal vide Final Order dated 27.06.2016. The Hon’ble High Court has given liberty to the appellant to file the present ROM application and also to raise the plea on factual discrepancies. Taking note of the submissions as well as the direction of the Hon’ble High Court and after perusal of the impugned Order, I am of the view that the appeal requires to be re-heard in order to consider the factual discrepancies as directed by the Hon’ble High Court. The impugned Final Order No. 41053/2016 dated 27.06.2016 is recalled. ROM application is allowed - The appeal is listed for hearing on 15.03.2019.

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• Insolvency & Bankruptcy

• 2019 (3) TMI 1338
  Corporate insolvency process - Whether the proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 (TNPID Act) can be taken over by the Resolution Professional under the Provisions of the Insolvency and Bankruptcy code, 2016? - HELD THAT:- On completion of the maximum period of time provided under Section 12, if no resolution plan is received by the Adjudicating Authority under Section 30(6) or it rejects the resolution plan under Section 31 for the non- compliance of the requirements specified under Section 30(2) of the IBC, 2016, then liquidation order has to be passed against the Corporate Debtor u/s 33 of the IBC, 2016 and in the process of the liquidation, the Assets of the Company are to be disposed of in order to distribute the proceeds among the stakeholders as per the waterfall mechanism provided under Section 53 of the IBC, 2016. In short, a comprehensive scheme is available under the IBC, 2016 for the companies which fail to pay its debt to the creditors. In view of the legal position stated above, the IBC, 2016 being a special legislation and by virtue of Section 238 of the IBC, 2016, overrides the provisions of TNPID Act. This view is fortified by the proposition settled in the matter of M/S. Aryarup Tourism Club Resorts Private Limited (in Liquidation) [2017 (6) TMI 608 - BOMBAY HIGH COURT] wherein it has been held that the powers of the competent authority appointed under the Maharashtra Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (MPID Act) and the MPID Court does not supersede or prevail upon the powers of the Official liquidator or of the Company Court under the provision of the Companies Act. Therefore, in the light of the provisions of the IBC, 2016 the proceedings initiated under TNPID Act can legally be taken over by the Resolution Professional in relation to the Corporate Debtor viz. Thiripura Chits Private Limited. Accordingly, the issue framed herein above is answered in affirmative. The competent authority and the investigation officer(s) under TNPID Act including Deputy Superintend Police, Economic offences wing-Il, are directed to hand over all the records of the Corporate Debtor viz. Thiripura Chits Private Limited, including books of Account along with chits security deposits amounting to Rs. 2.71 Crores as mentioned above, to the Resolution Professional viz. J. Manivannan, within a period of two weeks after receiving the certified copy of this order. The Resolution Professional is directed to obtain a certified copy of this order and to submit to the competent authorities and the investigating officers of the Police including Deputy Superintendent of Police, Economic offences wing-II for record and compliance. However, it is made clear that the Deputy Superintendent of Police, Economic offences wing-II may retain the Xerox copies of the record, original will be handed over to the Resolution Professional, for taking appropriate action against the accused persons in accordance with law.

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• 2019 (3) TMI 1337
  Corporate insolvency process - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There being a debt and default and the application being complete, the Adjudicating Authority admitted the application under Section 7. The Appellant submits that the ‘Corporate Debtor’ is a solvent Company and amount is lying in the Escrow Account and they intend to settle the claim. The ‘Corporate Debtor’ wanted six months’ time to settle the matter but such time was not granted. Such ground cannot be taken into consideration to set aside the impugned order of admission dated 14th December, 2018. We make it clear that this order will not come in the way of the Appellants or Shareholders of the ‘Corporate Debtor’ to settle the claim of the creditors and take advantage of Section 12 A of the ‘I&B Code’, to which, no objection raised by the 1st and 2nd Respondents.

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• 2019 (3) TMI 1336
  Corporate Insolvency Resolution Process - Corporate Debtor committed default to the extent under Section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Investment Manager at his sole discretion is entitled to declare that the whole of debenture outstanding become due and payable immediately and accordingly recalled the entire debentures’ dues including interest and the same is in order. Accordingly the entire outstanding becomes due and since no payment was made, the Corporate Debtor committed default in repayment of the dues in respect of the debentures. Further during the hearing on 19.11.2018 the Managing Director of the Corporate Debtor was also present and submitted that he accepts the liability and default but requested time to settle the dues to the Petitioner by selling his private properties, but that has not materialized. This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition

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• PMLA

• 2019 (3) TMI 1318
  Corporate insolvency process - Offence under PMLA - attachment orders - Resolution Professional authority to proceed to take charge of the properties - HELD THAT:- Attachment order dated 29.05.2018 and the Corrigendum dated 14.06.2018 issued by Respondent and as confirmed Adjudicating Authority under PMLA Court is a nullity and nonest in law in view of Sections 14(1)(a), 63 and 238 of IBC and the Resolution Professional can proceed to take charge of the properties and deal with them under IBC as if there is no attachment order. The concerned sub-registrars are directed to give effect to this order and remove their notings of attachment, if any, in their file in respect of properties belonging to the Corporate Debtor. It is needless to mention that the attachments in respect of the properties of the Corporate Debtor only are covered in this order. Consequently, the sub-registrar at Jambusar is directed to register and hand over the two Original lease deeds entered into between Sterling SEZ and Infrastructure Ltd. and P. I. Industries Ltd. on 28.08.2018, as prayed for in this application.

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• Service Tax

• 2019 (3) TMI 1396
  Demand of interest - Valuation of manpower recruitment or supply agency service - inclusion of administrative charges received in assessable value - Held that:- Section 75 of the Finance Act, deals with the provision for payment of interest. It says that whoever fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay interest at the rates specified. In the present case, the appellants have discharged the differential service tax with delay. Therefore, they are bound to pay the interest demand also - The non-payment of interest along with service indicates an intention to escape from such liability and intention to evade such payment. Therefore, the show cause notice issue invoking extended period is justified. Appeal dismissed - decided against appellant.

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• 2019 (3) TMI 1395
  Rectification of mistake - error apparent on the face of record or not - failure to discharge the service tax - suppression of facts - time limitation - Held that:- The applicant has not been able to rebut the allegations with regard to suppression of facts raised in the show-cause notice and confirmed by the authorities below. The non-payment of tax could not have come to light but for the audit conducted by the department. For these reasons, the plea of the applicant on the ground of limitation is without factual basis. There is no apparent error in the final order - Further, the question of limitation is a question of fact and would vary from case-to-case - ROM Application dismissed.

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• 2019 (3) TMI 1394
  Penalty u/s 77 and 78 of FA - GTA Services - Held that:- During the relevant period, many amendments had been brought forth in the levy of service tax with regard to GTA Services and several Notifications were also issued. The appellant’s contention that they were under the bona fide belief that they will come within the small consignment sections can therefore be accepted - Section 80 of the Finance Act, 1994 invoked to set aside the penalties imposed under Sections 77 and 78 of the Act ibid - the demand or interest thereon is upheld - appeal allowed in part.

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• 2019 (3) TMI 1393
  Classification of services - Auctioneering Services or not - appellants are providing Storage and Warehousing Services and are selling the products on behalf of starch and sago manufacturers by issue of tenders - Held that:- The issue is decided in the case of M/S. THE SALEM STARCH & SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. VERSUS CCE & ST, SALEM [2018 (3) TMI 192 - CESTAT CHENNAI], where it was held that although the authority has reasoned that the appellants have performed the services of providing facility for easy interaction between the manufacturers and the merchants, provided short term services and have also been involved in the pre-auction price estimation, however, no evidence is forth coming to substantiate such a finding. Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1392
  Classification of services - Manpower Supply and Agency Services or not - supply of labourers to M/s. Madras Steel Industries Pvt. Ltd. - period from 16.06.2005 to Oct.’09 - Held that:- In the SCN it is alleged by Department that these processes do not amount to manufacture and that only if the process undertaken by the job worker amounts to manufacture would the activity fall under description of job work. This allegation of the department is without substance. There are several processes undertaken by job worker, which may not be in the nature of manufacturing activity. In the present case, the activities undertaken are heat treatment, gas cutting etc. From the invoices it is seen that job work charges are paid on the basis of nature of work carried out. The invoices show heat treatment charges, gas cutting charges etc. Thus, the payment is not based on man hours or as salary towards engagement of a person for doing work. The payment is made on piece rate basis depending upon the work done - The Tribunal in the case of M/s. Indira Industrial Labour Welfare Association [2018 (6) TMI 1363 - CESTAT CHENNAI] had analysed a similar issue and held that job work is done on piece rate, and the same cannot be considered as Man-power Recruitment or Supply Agency Services. Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1391
  Banking and other Financial Services or not - charges/amount collected for bill discounting facility - Levy of service tax - Held that:- the consideration received in the present case by way of bill discounting being akin to interest is eligible for exemption - The very same issue was considered by Tribunal in the case of M/s. UCO Bank, Kolkata [2014 (9) TMI 820 - CESTAT KOLKATA] - the demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1390
  Short payment of service tax - Cable Operators Service - period 16.08.2002 to 31.12.2004 - Held that:- It is seen that appellant had taken registration and thereafter not paid service tax except for the amount of Rs. 2,380/-. The department has quantified the demand basing upon the estimation given by the M/s. SCV, who were providing link/signals to the appellants. There is no document to support such quantification of demand. The appellant also failed to maintain proper accounts - there is no ground to interfere with the demand confirmed or interest thereon. Penalty - Held that:- aking note that there was a Board Circular dt.1.8.2002 which clarified that when MSO receives signals they first transmit signals to the cable operator who in turn retransmits the same to the viewers through the cable network and the liability is on cable operator providing service to the ultimate subscriber, we accept the plea of appellant that they failed to discharge service tax placing reliance on such Circular. Being interpretational and bonafide doubt, and due to the peculiar facts of the case, we hold that this is a fit case to invoke Section 80 of the Finance Act, 1994 - penalty u/s 77 and 78 set aside. Appeal allowed in part.

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• 2019 (3) TMI 1389
  Construction of residential complex service - management, maintenance or repair service - demand of service tax - Held that:- It is not disputed that such construction activities involve both supply of labour as well as element of service and contracts are composite in nature. The demand prior to 1.6.2007 cannot sustain as per the decision of Apex Court in Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] - The Tribunal in the case of Real Value Promoters [2018 (9) TMI 1149 - CESTAT CHENNAI] had analyzed the very same issue and had held that even after 1.6.2007, service tax on such composite contracts would not be sustainable under Residential Complex Services or Commercial or Industrial Construction Services - the demand made under Construction of Residential Complex cannot sustain and requires to be set aside. Management, maintenance or repair service - Held that:- The appellant has collected a lumpsum amount which forms a corpus and is transferred to the flat owners association. Apart from this, the appellant has collected maintenance charges at Rs. 1.25 per square feet. The said amount would definitely be subject to levy of service tax if it has not been formed as part of corpus that has been transferred to the association. However, this fact whether corpus was transferred to association and how much was collected by appellant for Management, Maintenance and repair service is not forthcoming. For this reason, the matter requires to be remanded to the adjudicating authority who shall look into the issue of demand under management, maintenance or repair service. Appeal allowed in part and part matter on remand.

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• 2019 (3) TMI 1388
  Business Auxiliary Service - collection of mark-up on the ocean freight - levy of service tax - Held that:- The Tribunal in the case of M/s. Karam Freight Movers [2017 (3) TMI 785 - CESTAT NEW DELHI] have analysed the very same issue and held that mere sale and purchase of cargo space is trading and is not a taxable activity. It is trading of cargo space - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1387
  Non-payment of service tax - excess amount of Rs. 16,69,841/- collected from customers/public which were not shown in the periodical ST-3 returns - mandap keeper service - Held that:- Undisputedly, the appellants are a charitable organisation. Although, they are rendering Mandap Keeper Services, they may also be receiving funds in the nature of donation. The learned counsel for the appellants has furnished the details with regard to the amount received by the appellants in the nature of donation. The department has not done any investigation so as to check whether such amounts were received from various persons. Being a charitable organisation, a strong inference can be drawn that the amount received are in the nature of donations only. The demand is raised on mere assumption that appellant has not been able to explain that these are donations. The department has not been able to support their allegation with evidence that the said amount were collected for providing services of Mandap Keeper. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1386
  CENVAT Credit - Outdoor Catering Services - Rent for Car Parking - Subscription for Global Tender Information and certain services - denial for the reason that the invoices are not produced - Held that:- The period involved in prior to 01.04.2011, when the definition of „input services had a vide ambit as it included phrases “activity relating to business”. The Tribunal as well as various High Courts have held that almost all the activities which fall into the category of “activity relating to business” will be eligible for credit. Penalty - Held that:- Taking note of the fact that the appellant had initially availed the credit on invoice and thereafter, could not trace the invoice and also taking into consideration that they had availed the credit on a bonafide belief that the credit is eligible to them, the penalty imposed in this regard for Rs. 66,854/- cannot sustain and has to be set aside. Appeal allowed in part.

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• 2019 (3) TMI 1385
  Rectification of mistake - error apparent on the face of record or not - Held that:- The error pointed out by the ld. Counsel is not an error apparent on the face of record. It requires long drawn process of argument to find out what is the error that is alleged in the application. The error is not patent or it is not a mistake which can be found out by bare perusal of the impugned order - ROM application dismissed.

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• 2019 (3) TMI 1384
  Imposition of penalty - service tax with interest paid on being pointed out - Sub-Section 3 of Section 73 of FA - Held that:- The appellants have discharged the service tax on both categories of services on being pointed out by the Officers of the Department. When the amounts, as determined by the Officers, have been discharged by the appellant as per Sub-Section 3 of Section 73 ibid, there is no requisite for issuing a Show Cause Notice at all - The Hon’ble High Court of Karnataka in the case of M/s. Adecco Flexione Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT] has categorically held that no penalty can be imposed when the amount along with interest has been discharged much before issuance of Show Cause Notice. Penalty cannot sustain - demand with interest upheld - appeal allowed in part.

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• 2019 (3) TMI 1383
  Rectification of mistake - typographical mistake - Held that:- In respect of the first rectification sought for namely, repetition of Appeal No.ST/41748/2015 in para 15.5, it is very obviously a typographical mistake, considering the discussions contained in the entire order which is apparent on the face of record. Hence para 15.5 of the Tribunal Final Order No.41891-41896/2018 dt. 29.06.2018 is ordered to be rectified. In respect of the second point for rectification prayed by assessee, it is apparent from the facts on record that in the appeal wise table provided by the assessee in respect of Appeal ST/42180/2017, the said table did indicate disputed amounts with reference to BDA also, in addition to KHB - The errors pointed out by the applicant are patent errors of typographical mistake and omission and does not require any long drawn process of argument or hearing to find out the error. The errors being apparent on record we consider that these require rectification. ROM Application allowed.

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• 2019 (3) TMI 1382
  Short payment of service tax - Management, Maintenance or Repair Service - October 2004 to September 2008 - Held that:- The services involved are in the nature of composite work contract including supply of material - reliance placed in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - demand do not sustain. Demand of service tax - job work charges - Business auxiliary service - Held that:- During the disputed period service tax is required to be paid on receipt basis but the SCN has proposed to demand service tax even on amounts not received - The appellant have contended that against billed amount of Rs. 46,17,956/- during the year 2004-05, out of which an amount of Rs. 38,13,398/- is outstanding as on 31.03.2009 and have submitted the C.A certificate certifying the same. This being so, Ld. Consultant is correct in his assertion that demand relating to the amount outstanding will not sustain - the demand of Rs. 10,16,862/- relating to alleged BAS provided by the appellants will not survive - demand do not sustain. GTA service - demand of service tax - liability of interest - Held that:- Demand of Rs. 2,00,218/- relating to GTA and interest liability amounting to Rs. 13,861/- has been conceded by the Ld. Consultant and hence demand on that score are not interfered with and upheld. Demand of service tax - consumables - Held that:- In respect of demand of Rs. 1,96,952/- on consumables admittedly used in the composite contracts, the same will also not survive - said demand is also set aside. Penalty - Held that:- It cannot be denied that there was some amount of confusion with respect to the taxability or otherwise of the concerned demands during the period of dispute. It cannot then be said that service tax had been evaded on account of wilful suppression or misstatement etc. - the imposition of penalty in respect to the remaining demands which are not interfered with, will also not survive. Appeal allowed in part.

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• 2019 (3) TMI 1381
  Refund of service tax paid - GTA Services - exemption in terms of N/N. 25/2012-ST dated 20.06.2012 - Rejection of refund on the ground that the appellants have exported their goods under the claim of rebate and in terms of N/N. 41/2012-ST refund of service tax paid on various services utilized for export purposes would not be admissible - Held that:- There are no merits in the reasoning of the Lower Authorities - N/N. 25/2012-ST dated 20.06.2012, as amended by N/N. 3/2013-ST dated on 01.03.2013 exempts the services provided by good transport agents by way of transportation in a goods carriage for foods stuffs including Flours, tea, coffee, jiggery, sugar , milk products, salt and edible oil, excluding alcoholic beverages. There is no dispute that frozen meat is food stuff and transportation of the same stands exempted vide the said notification from payment of service tax. Apart from the fact that GTA service is not one of the specified service in Notification No.41/2012, the applicability of the said notification to the facts of the instant case, as adopted by the Lower Authorities is not justified inasmuch as the Notification No.25/2012-ST is an independent notification. The refund claim having been made in terms of the said notification is required to be adjudged in the light of the wordings of the said notification. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1380
  Levy of service tax - health services - period from 01.07.2010 to 30.04.2011 - scope of Section 65(105) (zzzzo) of Finance Act, 1994 - Held that:- The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider. then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994 - the Hon’ble Madras High Court in the case of M/S. ARVINTH HOSPITALS VERSUS THE ADDITIONAL COMMISSIONER CENTRAL EXCISE, THE JOINT COMMISSIONER CENTRAL EXCISE [2016 (11) TMI 238 - MADRAS HIGH COURT] has remanded the matter to the respondent before them to consider the entire issue afresh. The appellant during the relevant period had provided said services and therefore there is no reason for us to interfere with the impugned order - Appeal dismissed - decided against appellant.

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• 2019 (3) TMI 1379
  Commercial and Industrial Construction Service - period from April, 2005 to August, 2007 - demand of service tax - Held that:- The construction activity undertaken by the appellant was in the nature of a composite contract and the demand raised therein is also under CICS - This being the case, this issue has been decided in favor of the taxpayer by the Hon’ble Apex Court in the case of Commissioner of C. Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - the demand under CICS for the period 04/2005 to 08/2007 cannot sustain. Works Contract service - period from June, 2007 to October, 2007 - demand of service tax - Held that:- The work in connection with the construction of water treatment plants undertaken for Kerala Water Authority, cannot be covered under WCS as the same are not for any commercial or industrial purpose - similar issues in this regard have already been decided in the case of Lanco Infratech Ltd. Vs. C.C.E. [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], where demands are set aside - thus, the construction activity was not for the purpose of commerce or industry - demand do not sustain. Appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1378
  Reverse charge mechanism - use of services of commission agents for procurement of export orders outside India and paid commission to such foreign based agents - non-payment of service tax for the period 18-4-2006 to 29-2-2008 - Held that:- Cotton yarn is not an agricultural produce falling within the exemption notification. The argument that the appellants are not liable to pay service tax under Notification No. 13/2003-S.T., dated 26-6-2003 therefore cannot sustain - demand upheld. Penalty - Held that:- The issue whether the assessee was liable to pay service tax under reverse charge mechanism was under litigation for a long time Appeal allowed in part.

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• 2019 (3) TMI 1376
  Demand of Service tax - Outdoor catering service - Assessee paying Vat and Sales Tax - Whether assessee liable for services tax when he is already paying VAT - the issue involved in this central excise appeal is under consideration before the Apex Court in Petition (s) for Special Leave to Appeal © No.18745/2014 arising out of a decision of the Allahabad High Court in case of Indian Coffee Workers' Cooperative Society Limited v. CCE & ST, Allahabad [2014 (4) TMI 407 - ALLAHABAD HIGH COURT]. Held that:- The appellant submits that at present, the appellant is ready to deposit the demand of Service Tax on Outdoor Catering Services in question,subject to the final decision of the Apex Court in the aforesaid pending special leave petition - we dispose of Central Excise Appeal No.66/2018, subject to decision of the Apex Court in Petition (s) for Special Leave to Appeal (C)No.18745/2014 arising out of a decision of the Allahabad High Court in case of Indian Coffee Workers' Cooperative Society Limited v. CCE & ST, Allahabad.

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• 2019 (3) TMI 1335
  Application for grant of installments for Payment of Service Tax - Circular dated February 28, 2015 - Deputy Commissioner denied permission - whether Deputy Commissioner have power to do so in term of circular - Held that:- Although, the impugned order records that, the same was issued with the approval of the Commissioner, there is no material on record to establish that, the impugned order was passed with the approval of the Commissioner. In any event, neither the Commissioner nor the Deputy Commissioner (Technical) has the authority to consider a prayer for grant of thirty six instalments in view of the circular dated August 28, 2015. The writing dated November 20, 2018 is quashed. The parties are at liberty to proceed in accordance with law with regard to the request for grant of installments - Petition disposed off.

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• 2019 (3) TMI 1334
  Reversal of CENVAT Credit - shifting of capital goods from their own unit to the another unit - Held that:- As the appellant are transferring capital goods of their one unit to another unit it means the appellant is clearing goods for themselves only, in that circumstances, the appellant is not required to reverse cenvat credit as held by this Tribunal in their own case M/S BSNL, SALEM VERSUS CCE, SALEM [2013 (1) TMI 142 - CESTAT CHENNAI] - reversal not required - penalty set aside. CENVAT credit - recovery in terms of Rule 6 (3)(C) of Cenvat Credit Rules, 2004 - taxable as well as exempted service - Held that:- It is fact on record that in the month of February 2008 the appellant utilized cenvat credit account more than 20%, but, in the subsequent month i.e. March 2008 the appellant has not utilized 20% of the cenvat credit available in the cenvat credit account. If utilization of both months is taken together, in that circumstances, the appellant has utilized only 20% of the cenvat credit lying in their cenvat credit account - no demand is sustainable against the appellant on this issue - penalty set aside. Extended period of limitation - Held that:- The appellant as claiming bonafide belief that on non taxable/exempted services, they are not required to reverse the service tax, as same has shown in their ST-3 returns. This cannot be the reason for bonafide belief when law is clear from 01.04.2008. As on 01.04.2008 law has been changed for the period of availment of cenvat credit restricted to 20%, but, post on 01.04.2008 law has been changed and they are required to reverse the proportionate cenvat credit or to pay 8/6% of the value of the exempted services. In that circumstances, bonafide of the appellant are absent - the demand is rightly confirmed by invoking the extended period of limitation for non reversal of proportionate cenvat credit of exempted service or payment of 8/6% of the exempted services alongwith interest. Penalty - Held that:- The appellant is a public sector undertaking and being a mistake of the officers of the organisation should not be penalized as no benefit is going to arise to the public sector undertaking. Therefore, penalty against the appellant on this account is set-aside. Appeal disposed off.

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• 2019 (3) TMI 1333
  Adjustment of duty paid in subsequent period - imposition of penalty for delaying in payment - short payment of service tax - Held that:- The appellant has shown their liability of service tax in ST-3 Returns and also shown that how much service tax they have paid. This fact of knowledge of the department at the time of service tax returns, in these circumstances, malafide cannot be attributable against the appellant. Therefore, no penalty is imposable on the appellant for delaying payment made by the appellant - The fact of short payment of service tax in the knowledge of the department itself, therefore, show cause notice issued to the appellant is barred by limitation. Therefore, penalty imposed on the appellant is set-aside. Adjustment of excess service tax - Held that:- Admittedly, for the period April 2010 to Sept. 2010 the appellant filed service tax returns on 25.10.2010. In the said return, although the appellant paid short payment of service tax, but, also failed to mention the amount of adjustment if same is taken into account the differential amount of service tax which is none other than is only adjustment of excess of service tax. In that circumstances, merely non mentioning the adjustment of excess payment of service tax in the ST-3 Return shall not be fatal - the appellant is entitled to adjustment of excess payment of service tax paid by them during the period 2009-2010 - demand of service tax is set-aside. Appeal allowed in toto.

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• 2019 (3) TMI 1332
  Nature of activity - sale or service - printing of Photographs and Printed photo albums, commonly known as Photobooks/Photo albums and not sold in the open market as these are created for particular persons - Held that:- On identical facts, it was held in the case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR [2018 (11) TMI 754 - CESTAT CHANDIGARH] that the activity undertaken by the appellant under chapter heading 4911, is very much clear that the appellant has undertaken the activity of printing photograph on plain printing paper and thereafter bind them and selling them as photo books. The said activity amount to manufacture and the appellant is paying VAT and therefore, the said activity merit manufacturing activity and classified under Chapter 4911 and the appellant has classified accordingly. Thus, the activity undertaken by the appellant amounts to manufacture and classifying under Chapter 4911, therefore, no service tax is payable by the appellant - demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1331
  Classification of services - support services of business or commerce or not - doctors/consultants’ fee collected by the respondent-assessee for providing administrative support services - Held that:- The issue has been settled by this Tribunal in the case of M/s. Sir Ganga Ram Hospital and others [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that The service provided by the respondent hospital would merit classification under Health Care Services extended to the patients. Thus, the respondent-assessee were not provided any business support service to the consultants/doctors or patient, therefore, no service tax is payable by respondent/assessee under the category of Business Support Service - appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1330
  Reverse charge mechanism - applicability of Section 66A of FA - Erection commissioning or installation service - Machine imported - branch office of manufacturer erected install the machinery - No separate contract for supply and installation - Held that:- It is not the case of the Revenue that there is separate agreement for providing the service of erection, commissioning or installation and it is not even its case that the main purpose of invoices was for providing the services of installation (erection, commissioning and installation), nor is the case of the Revenue that the payment as per the invoices were made only towards the installation service - it appears that the fact of sale and purchase of machinery has been side-lined and the fact of installation is bloated to make it as though that is the only activity involved. The alleged service and installation has been carried out by the suppliers through their branches and hence we are of the view that Section 66 A has no role - there are no merits in the impugned order as also the demand, for which reason we set aside both - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1329
  Construction Services - Construction of Residential Complex - indivisible composite contract with buyers - period April 2007 to January 2010 - Held that:- Similar facts have been addressed by this Bench in the case of M/s. Real Value Promoters Pvt. Ltd. & Ors. Vs. Commissioner of G.S.T. & Central Excise, Chennai & Ors. [2018 (9) TMI 1149 - CESTAT CHENNAI] and after considering various decisions, it has been held that the demand will have to be made under Works Contract Service - the demand raised is not sustainable and hence set aside - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1328
  Application for early hearing of appeal - Substantial amount involved - contention that issue is covered - Held that:- The amount involved in these appeals is more than Rs. 35 crores - the EH applications are acceded to - Registry is directed to list the appeals for hearing on 24.04.2019.

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• 2019 (3) TMI 1327
  Rectification of Mistake - Refund claim - rejection of refund claim on the ground of lack of nexus between input services and output services - Held that:- The Tribunal had upheld the remand order passed by the Commissioner (Appeals), had not specifically clarified as to what is the amount that is sought to be remanded for reconsideration of the issue of lack of nexus. We find that this it is necessary to clarify for facilitating the process of refund claim. It is hereby clarified that the remand order with regard to eligibility of credit on account of lack of nexus between the input services and the output service would be limited to Rs. 7,27,697/-. However, it is clarified that the issue with regard to reconciliation as remanded by the Commissioner (Appeals) would apply to the entire refund claim. The ROM applications are disposed of by way of clarification.

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• 2019 (3) TMI 1326
  Levy of service tax - Renting of immovable property Services - electricity charges recovered by the appellant/ coal company from its tenants (occupants of shops etc.,) - clubbing of such charges with the rent receipt - Held that:- As the appellant has recovered the electricity charges on actual consumption basis and not on floor area basis, for their shop premises, thus electricity charges cannot be clubbed with the amount of rent, for purpose of levy of Service Tax - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1325
  Penalty u/s 77 and 78 of FA - non-payment of service tax - intentional mistake or not - no willful suppression of facts - reasonable cause - Held that:- During the relevant period there was confusion as to whether the individual person who is rendering the service is liable to pay service tax. It was pleaded by the respondent that only a commercial concern would come within the purview of the levy of service tax. It is seen that the respondent has paid up the service tax liability. Taking note of the facts, the Commissioner (Appeals) invoking section 80 concluded that the respondent has given reasonable cause for not discharging the service tax liability. There is no evidence adduced by the department to disturb the findings that the respondent has not furnished reasonable cause for non-payment of service tax - the appeal filed by the department is devoid of merit and the same is dismissed - Decided against Revenue.

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• 2019 (3) TMI 1324
  Levy of service tax - activity, being Special Project under Swaranjayanti Gram Swarojgar Yojana (SGSY) of the Central Govt., which is a Government of India Centrally Sponsored Scheme along with the State Govt. - assessee is registered with department, and also under the Societies Registration Act - Held that:- The Board have clarified vide Circular No. 125/7/2010-ST dated 30th July 2010 read with Circular No. 127/09/2010-ST dated 16th August 2010, wherein it have been clarified that grant released by the Central Government under a Centrally Sponsored Scheme, cannot be presumed as consideration for providing a taxable service. Accordingly, there is no question of levy of service tax on such activity for which amount is received by way of grant in aid - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1323
  Refund of unutilized CENVAT Credit - rejection on the ground that the claimants have not debited the amount claimed as refund from their CENVAT credit account at the time of making the claim and the FIRCs have not been furnished for the relevant period - Held that:- It was held in the case of SANDOZ PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [2015 (10) TMI 882 - CESTAT MUMBAI], where it was held that the condition in question is not such that it could debar the appellant from claiming the refund. Thus, the appellant is eligible for claiming the refund - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1322
  Construction services - construction of Residential Complex Services - Commercial or Industrial Construction Services - non-payment of service tax - period prior to 01.06.2007 - Held that:- The Ld. Advocate is correct in his assertion that the issue in dispute is squarely covered by the case laws cited by him, in particular, that of the Hon’ble Apex Court in M/s.Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] for the period upto 01.06.2007 - demand do not sustain. Period after 01.06.2007 - Held that:- The Chennai Bench of the CESTAT in the case of M/s. Real Value Promoters Pvt. Ltd. & Ors. Vs Commissioner of G.S.T & Central Excise, Chennai & Ors. [2018 (9) TMI 1149 - CESTAT CHENNAI] have held that even after 01.06.2007, service tax liability for composite contracts can only be demanded under Works Contract Service and not under CICS etc. - the impugned order demanding the amount of tax liability under CICS for a composite contract will not survive and will require to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1317
  Levy of service tax - sale of space or time for advertisement - Held that:- Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, LUCKNOW VERSUS M/S LUCKNOW NAGAR NIGAM [2018 (8) TMI 1787 - CESTAT ALLAHABAD] has held that such charging of fee to the agencies was a statutory levy for which municipal corporations had powers and such levies did not amount to any service so as to call for payment of Service Tax - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (3) TMI 1377
  Whether the omission of section 3A of the Central Excise Act, 1944 by section 121 of the Finance Act, 2001, without any savings clause would affect proceedings in respect of which action had already been initiated? Held that:- The learned Counsel for both the parties are ad-idem that in so far as substantial question of law framed by this Court is concerned, the said question is concluded by the judgment of this Court in the case of COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, PANAJI-GOA VERSUS M/S SHIVAM ISPAT (P) , LTD. [2019 (1) TMI 709 - BOMBAY HIGH COURT] and accordingly the impugned order passed by the CESTAT can be set aside and the appeals preferred by Assessee can be restored to the file of the CESTAT with a direction to dispose of these appeals on its own merits and in accordance with law.

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• 2019 (3) TMI 1375
  CENVAT credit - provision of taxable as well as exempt service (trading) - non-maintenance of separate records - Rule 6(3)(1) of CENVAT Credit Rules - demand of interest and penalty - Held that:- Prior to the amendment, the recovery of interest was permissible when CENVAT credit has been wrongly taken or utilized and in the present case, the appellant reversed the CENVAT credit attributable to trading activity and there happened to be a short-reversal amounting to Rs. 29,17/911/- which was reversed by 17/09/2014 - as per the documents placed on record including various returns and CENVAT credit account, which shows that the closing credit in the CENVAT credit account was much more than the total amount of credit as wrongly availed and further the said credit was not utilized by the appellant. In view of the decision of Karnataka High Court in the case of Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] which clearly hold that if the CENVAT credit wrongly availed is reversed before utilization, then the assessee is not liable to pay interest and penalty. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1374
  Rectification of mistake - error apparent on the face of record or not - case of Revenue is that Tribunal has not examined the issue of compliance of condition of No.45/2001-CE (NT) dt.26.6.2001 and the conditions of the notification are to be strictly followed - Held that:- This Tribunal has examined the issue in detail and observed that the condition of the said notification was not required to be complied by the appellant. In fact, the correspondence exchanged between the Nepalese Customs Authorities and departmental authorities and when there is clear-cut finding in the order itself - there is no mistake apparent on record in the order dt.26.10.2015 of this Tribunal - ROM application dismissed.

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• 2019 (3) TMI 1373
  Utilization of CENVAT Credit of education cess and higher education cess lying in Cenvat credit account - period prior to 01.03.2015 - Held that:- The said issue has been examined by this Tribunal in the case of M/s Paras Petrofils Ltd. Vs. Commissioner of C.Ex. & ST. Surat-II [2017 (10) TMI 798 - CESTAT AHMEDABAD] and in the case of PSL Ltd. Vs. Commissioner of C.Ex. & Cus. Vishakhapatnam-I [2013 (11) TMI 1023 - CESTAT BANGALORE] wherein it has been held that Cenvat credit of education cess and higher education cess erred prior to 01.03.2015 cannot be utilized for payment of duty - demand of duty alonhgwith interest upheld. Penalty - Held that:- It was a bona fide mistake of the appellant for utilization of said Cenvat credit after introduction of Notification No. 12/15-CE anti-dated 13.04.2015, the appellant was under an impression that they can utilize Cenvat credit of education cess and higher education cess for payment of duty, therefore, the penalties imposed on the appellant are set aside. Appeal allowed in part.

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• 2019 (3) TMI 1372
  Rectification of mistake - Held that:- The applicants want some directions pre-determining that the adjudicating authority in remand order shall pass order in their favour which is not permissible in law - there is no merits in the ROM - ROM application dismissed.

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• 2019 (3) TMI 1371
  Rectification of mistake - mistake apparent on the face of record or not - cause title of the caption appeal is M/s Avery Dennison India Private Ltd., whereas the name of cost title of the appeal name is mentioned as Avery Dennison India Interiors Pvt. Ltd. - Held that:- There is mistake apparent on record, the cause title of appeal be read as Avery Dennison India Pvt. Ltd. - application for ROM is allowed.

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• 2019 (3) TMI 1370
  Rectification of mistake - error apparent on the face of record or not - Held that:- The appellant had not filed any documents - there is correctness in the appellant’s plea as to non- consideration and that the findings may vary if the appellant is found to have furnished such invoices - It is also seen that the officer has affixed the official seal on the covering letter and accordingly, a rectifiable mistake has crept in and hence for the above reasons, the impugned order is recalled - the registry is directed to post the appeal for hearing on 22.04.2019.

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• 2019 (3) TMI 1369
  CENVAT Credit - input services - services rendered for preparation of returns relating to ESI/EPF Contribution for the man-power supply and bills raised by the job worker - period from Sept. 15 to Jun. 17 - Held that:- It is seen that the invoices issued by the Man-power Recruitment and Supply Agency includes the service charges as well as service tax on such charges. The said charges are part of charges paid for Man-power Supply. When the appellants have already paid service tax to the service provider, the same is eligible as input services for the appellants - disallowance of credit not justified. CENVAT Credit - service tax paid on rent for the job workers premises - Held that:- The invoices show that the rent has been paid by the job worker. In that case, the appellants cannot avail credit of the service tax paid on such rent - credit not allowed. Appeal allowed in part.

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• 2019 (3) TMI 1368
  CENVAT Credit - capital goods - MS Angles, MS Plates, MS Channels, MS Joist, HR Plates etc. - period Apr.’09 to Jul.’13 - Held that:- The Hon’ble jurisdictional High Court in the case of M/s. India Cements Ltd., [2015 (3) TMI 661 - MADRAS HIGH COURT] has considered the same issue and held that such items used for fabrication of capital goods and for support of various machines like crusher, kiln, hoopers etc., is eligible for credit. In the Show Cause Notice it is alleged that the appellants have not declared to the department as to what is the capital goods they have manufactured using the MS Angles, Channels etc. That the description or chapter heading of such capital goods is not stated. The Chartered Engineers Certificate is produced to show that MS Angles, Channels etc., were used for manufacture of capital goods. The SCN does not specifically allege that these are used for support structures, but merely states that the details of capital goods fabricated is not declared. The appellant is eligible for credit - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1367
  Imposition of penalty - availment of irregular credit - credit reversed before issuance of SCN - revenue neutrality - Held that:- The appellant has reversed the credit before issuance of the show-cause notice. Undisputedly, the sister Unit would be eligible for the credit of the electricity consumed by them. The situation is, therefore, a revenue neutral one as argued by the learned counsel for the appellant - the penalty imposed is unjustified. Penalty set aside - other demand upheld - appeal allowed in part.

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• 2019 (3) TMI 1366
  Demand of interest and penalty - wrongly availed credit has been reversed - Held that:- Appellant have reversed the wrongly availed credit before its utilization - In such circumstances, following the decision in the case of M/s. Strategic Engineering (P) Ltd., [2014 (11) TMI 89 - MADRAS HIGH COURT] the demand of interest and the penalties imposed cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1365
  CENVAT Credit - input services - capital goods - Repair and Maintenance Charges of air conditioners installed in the factory premises - Held that:- The learned counsel adverted to the definition of ‘input services’ and submitted that the inclusive part of the definition specifically mentions the service of repair and maintenance. Indeed, the said services do not restrict itself to repair and maintenance of capital goods alone. For this reason, the disallowance of credit alleging that the air conditioners installed in office are not capital goods is incorrect - credit availed on such ‘input services’ is eligible for credit. Service tax paid on common facility charges - denial on account of nexus - Held that:- The credit availed on Renting of premises has been allowed by Commissioner (Appeals). When the premises is taken on rent, the appellants have to pay maintenance charges, for the common facility also - the disallowance of credit on such maintenance charges paid for common facility is incorrect - credit allowed. Charges paid by the appellants for taking Xerox copies - Held that:- The charges paid by the appellants for taking Xerox copies is explained to have incurred by them for taking copies of documents in the Head Office of the appellants. Such necessity for taking photocopy of documents is related to the activity of manufacture and appellants are eligible for credit - credit allowed. Appellants have availed services of M/s. Esvin Advanced Technologies Ltd., for improving the quality of molasses by desalting - Held that:- The appellants have availed services of M/s. Esvin Advanced Technologies Ltd., for improving the quality of molasses by desalting. These services are intended to improve the quality of their finished product - the credit on such services is eligible - credit allowed. Membership Fees has been paid by the appellants to take membership specifically in M/s. Indian Sugar Mills Association and M/s. South Indian Sugar Mills Association - Held that:- Such association helps its members to understand the trends in the market and allows a common platform to raise their grievances before the concerned authorities. The credit availed on such services is eligible - credit allowed. AMC for maintenance of attendance machines - Held that:- The AMC for maintenance of attendance machines is indeed directly related to the manufacturing activity. Such machines are used to monitor attendance of employees and also to monitor their presence within the factory. The credit availed on such charges is eligible - credit allowed. CENVAT Credit - capital goods - Roofing sheets, GI Pipes, Welding Electrodes and RM White Metal etc. - Held that:- The Larger Bench of the Tribunal in the case of M/s. Modi Rubber Ltd., [2000 (5) TMI 64 - CEGAT, NEW DELHI] has held that when the goods fall either in “capital goods” or ‘inputs’, the credit ought to have been allowed - In the present case, the department cannot disagree that these items fall within the definition of ‘inputs’. After 01.04.2011, the definition of ‘inputs’ is so wide to include almost all goods that are brought into the factory - credit allowed. The disallowance of credit on various input services and items which are availed under the category of “capital goods’ is unjustified - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1364
  CENVAT Credit - inputs - certain items which are brought into the factory by the appellant and cleared along with the final product which was exported to Vietnam - Held that:- The very same issue has been analyzed in the appellant’s own case M/S. KCP LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (12) TMI 845 - CESTAT CHENNAI] and the Tribunal has held that the credit to be eligible. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1363
  CENVAT Credit - input services - Management Maintenance and Repair Service of helicopter - Rent-a-Cab and Contract Bus Service - Management Consultancy Service - Held that:- The issue decided by the Bench by appellant own case M/S. SANMAR FOUNDRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [2016 (4) TMI 1069 - CESTAT CHENNAI], the credit is eligible for management, maintenance and repair service of helicopter and management and consultancy service. With regard to Rent-a-Cab and Contract Bus Service, proportionate credit for the cost recovered from the employees is liable to be reversed. The credit is otherwise eligible. - Decided in favour of assessee

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• 2019 (3) TMI 1362
  Adjustment of short paid duty against excess paid duty - finalization of provisional assessment - Unjust enrichment - Rule 7 of CER, 2004 - period November 2006 to May 2008 and November 2006 to December 2009 - Held that:- Once the appellants have not been found in breach of Guidelines contained in the Office Order dt. 22.12.2004 the finalization of provisional assessment indeed will naturally be treated to have done only following the said Order. It is also to be noted that certain verifications regarding the value and weight of DTS items and the items supplied by assessee’s units for all items covered by commercial invoices are required to be done periodically, to ensure that at the time of finalization of assessment there will not be any need to check even figures with respect to any documents other than the commercial invoice. In finalization of provisional assessment the assessee is eligible for adjustment of excise duty paid against short payment of duty and refund of excess amount, if any, arising upon ultimate adjustment without bar of unjust enrichment being applicable. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1321
  Valuation - inclusion of subsidy amounts utilized for VAT liability in the assessable value - Section 4 of the Central Excise Act - Held that:- relying on assessee own case held that here is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (3) TMI 1361
  Classification of goods - rate of tax - Mobile Crane Wire Ropes - whether the rate of tax chargeable to the goods in question is 12.5% as prescribed in the Residuary Entry in Schedule V under the Act or at 4% as prescribed in Entry 155 of Schedule IV of the VAT Act - Held that:- Mere reading of Entry 155 would go to show that the goods called Hydraulic excavators (earth moving and mining machinery), Mobile Cranes and Hydraulic Dumpers (including parts thereof) are chargeable to tax at the rate of 4% - the expression including parts thereof was inserted in the Entry 155 by an amendment w.e.f. 09.05.2006. It, therefore, indicates that the parts of the goods specified in the Entry were not chargeable to tax at the rate of 4% prior to 09.05.2006 but became chargeable at the rate of 4% only on and after 09.05.2006. There is no difficulty in holding that the wire ropes used in the Mobile Cranes are a part of the Mobile Cranes and thus fall in Entry 155 of Schedule IV of the VAT Act. Appeal dismissed - decided against Revenue.

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• Indian Laws

• 2019 (3) TMI 1360
  Enhancement of punishment of debarment from the profession of Chartered Accountant - Act of misconduct - Held that:- Perusal of the order impugned, more particularly Paragraphs 11 and 12, clearly shows that considering the facts of the case, the consequent misconduct on the part of the respondent No.2 and upon consideration of the written and oral submissions, the Board of Discipline has taken a view that the ends of justice shall be met if reasonable punishment is awarded to the respondent No.2. Accordingly, the punishment of reprimand and imposition of fine of Rs. 1,00,000/is considered to be reasonable by the Board of Discipline in exercise of its power under Section 21A(3) of the Chartered Accountants Act - We are not sitting in appeal over the decision of the Board of Discipline and, therefore, on merits also, we do not find that a case is made out for claiming debarment of the respondent No.2 from practising the profession of Chartered Accountant. Petition dismissed.

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