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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter March 9, 2018 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles 1. TIME OF SUPPLY (GOODS & SERVICES), GST LAW By: Praveen Nair Summary: The article discusses the "Time of Supply" under the Goods and Services Tax (GST) law, which determines when the liability to pay tax arises for goods and services. For goods under forward charge, the tax liability arises on the earlier of the invoice date or payment receipt date. Under reverse charge, it arises on the earliest of goods receipt, payment date, or 31 days post-invoice. For services, forward charge liability arises on the earlier of the invoice date or payment receipt, while reverse charge liability arises on the earlier of payment date or 61 days post-invoice. The article also notes temporary postponements in GST applicability on advance payments and supplies from unregistered to registered persons. 2. REFUND OF IGST TO FOREIGN TOURIST By: Dr. Sanjiv Agarwal Summary: Section 15 of the IGST Act, 2017, outlines the refund of IGST to foreign tourists on goods taken out of India. A "tourist" is defined as someone not normally resident in India, staying for less than six months for non-immigrant purposes. Refunds apply only to goods taken out of India, not services consumed within the country. The procedure for refunds is yet to be prescribed. Goods supplied to tourists are treated as interstate supplies, requiring IGST, despite being intra-state transactions. Currently, there is no specific mechanism in the GSTR-1 return form to facilitate this distinction for foreign tourists. News 1. Department Related Parliamentary Standing Committee on Commerce Invites Memoranda on the subject ‘Impact of Chinese Goods on Indian Industry’ Summary: The Department Related Parliamentary Standing Committee on Commerce is examining the impact of Chinese goods on the Indian industry. The committee, led by a member of the Rajya Sabha, is inviting written submissions and oral evidence from interested parties within 15 days. Details for submission are available on the Rajya Sabha's website. Correspondence should be directed to the Additional Director at the Rajya Sabha Secretariat in New Delhi. 2. Direct Tax collections for F.Y. 2017-2018 show growth of 19.5% up to February, 2018 Summary: Direct Tax collections for the fiscal year 2017-2018 have shown a 19.5% increase up to February 2018, reaching Rs. 7.44 lakh crore, compared to the same period the previous year. This figure represents 74.3% of the Revised Estimates for Direct Taxes for the year, set at Rs. 10.05 lakh crore. Gross collections, before refunds, rose by 14.5% to Rs. 8.83 lakh crore. Refunds issued amounted to Rs. 1.39 lakh crore. Corporate Income Tax collections grew by 19.7%, while Personal Income Tax collections increased by 18.6%. 3. RBI Reference Rate for US $ Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 64.9212 on March 8, 2018, slightly down from Rs. 64.9627 on March 7, 2018. The exchange rates for the Euro, British Pound, and Japanese Yen against the Indian Rupee were also adjusted. On March 8, 2018, the rates were Rs. 80.5412 per Euro, Rs. 90.2275 per British Pound, and Rs. 61.26 per 100 Japanese Yen. These rates are determined based on the US Dollar reference rate and the middle rates of cross-currency quotes. The SDR-Rupee rate is also derived from this reference rate. 4. Insolvency and Bankruptcy Board of India (IBBI) invites comments on draft IBBI (Mechanism for Issuing Regulations) Regulations, 2018; Summary: The Insolvency and Bankruptcy Board of India (IBBI) is seeking public comments on its draft regulations for the mechanism of issuing regulations under the Insolvency and Bankruptcy Code, 2016. The draft outlines a structured, transparent process for regulation-making, emphasizing stakeholder engagement and public consultation. Comments can be submitted via email by March 31, 2018. The process includes public disclosure of draft regulations, economic analysis, and consideration of international best practices. Urgent regulations can be enacted swiftly if necessary. The regulations will be reviewed every three years to ensure relevance and effectiveness. 5. Cabinet approves two percent Dearness Allowance to Central Government employees Summary: The Union Cabinet has approved a 2% increase in Dearness Allowance for Central Government employees and Dearness Relief for pensioners, effective from January 1, 2018. This adjustment raises the rate from 5% to 7% of the Basic Pay/Pension to offset inflation. Approximately 48.41 lakh employees and 61.17 lakh pensioners will benefit from this decision. The financial impact is estimated at Rs. 6077.72 crore annually and Rs. 7090.68 crore for the financial year 2018-19, covering 14 months. This increase follows the 7th Central Pay Commission's recommendations. Notifications GST - States 1. CGST/01/2018 (03)-02/2018-State Tax - dated 20-1-2018 - Chhattisgarh SGST Seeks to extend the last date for filing Form GSTR-3B for December,2017 till 22.0.2018 Summary: The notification issued by the Commissioner of State Tax in Chhattisgarh extends the deadline for filing Form GSTR-3B for December 2017 from January 20, 2018, to January 22, 2018. This amendment is made under the authority of section 168 of the Chhattisgarh Goods and Services Tax Act, 2017, and sub-rule (5) of rule 61 of the Chhattisgarh Goods and Services Tax Rules, 2017, following the recommendations of the Council. The change is reflected in the notification dated September 15, 2017, under serial number 5 in the specified table. 2. 7/2018 - State Tax - dated 23-2-2018 - Delhi SGST Waiver of late fee for failure to furnish the returns in FORM GSTR 6 by due date Summary: The Government of the National Capital Territory of Delhi issued Notification No. 7/2018, waiving the late fee for registered persons who failed to submit returns in FORM GSTR-6 by the due date. Under the Delhi Goods and Services Tax Act, 2017, the late fee is reduced to twenty-five rupees per day of delay. This waiver applies from January 23, 2018, as per the authority of the Lt. Governor, following the Council's recommendations. 3. 5/2018 - State Tax - dated 23-2-2018 - Delhi SGST Reduction of late fee in case of delayed filing of FORM GSTR-5 Summary: The Government of the National Capital Territory of Delhi issued Notification No. 5/2018 under the Delhi Goods and Services Tax Act, 2017, reducing the late fee for delayed filing of FORM GSTR-5. The late fee is reduced to twenty-five rupees per day for registered persons who fail to file by the due date, and ten rupees per day if the central tax payable is nil. This waiver applies from January 23, 2018, as per the order of the Lt. Governor of Delhi. 4. 04/2018 - State Tax (Rate) - dated 23-2-2018 - Delhi SGST Registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure Summary: The notification issued by the Government of the National Capital Territory of Delhi under the Delhi Goods and Services Tax Act, 2017 specifies that registered persons supplying development rights to developers, builders, or construction companies in exchange for construction services, or vice versa, are liable to pay state tax. The tax liability arises when the developer or builder transfers possession or rights in the constructed property to the supplier of development rights through a conveyance deed or similar instrument. This notification took effect on January 25, 2018, as ordered by the Lt. Governor of Delhi. 5. 131-F.T.-03/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST Seeks to amend notification No. 1137-F.T. dated 28/06/2017 so as to specify services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a registered person under WBGST Act, 2017 to be taxed under RCM Summary: The notification amends a previous notification dated 28th June 2017 to specify that services provided by the Central Government, State Government, Union territory, or local authority through renting immovable property to a registered person under the West Bengal Goods and Services Tax Act, 2017, will be taxed under the reverse charge mechanism (RCM). Additionally, it introduces a clause defining "insurance agent" as per the Insurance Act, 1938. This amendment, issued by the West Bengal Finance Department, is effective from 25th January 2018. 6. 130-F.T.-02/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST Seeks to amend notification No. 1136-F.T dated 28/06/2017 so as to exempt certain services. Summary: The Government of West Bengal issued a notification amending the previous notification No. 1136-F.T. dated June 28, 2017, under the West Bengal Goods and Services Tax Act, 2017. The amendments include exemptions and modifications for various services. Key changes involve the insertion of new service categories, such as composite supply of goods and services to government entities, transportation of goods by aircraft and vessel, and life insurance services by the Naval Group Insurance Fund. Exemptions are also extended to educational services, reinsurance services, and services provided by financial intermediaries in multi-services SEZs. Additionally, the notification revises the terms and conditions for several existing service categories. 7. 129-F.T.-01/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST Seeks to amend notification No. 1135-F.T dated 28/06/2017 so as to notify WBGST rates of various services. Summary: The Government of West Bengal issued a notification amending the previous notification No. 1135-F.T dated 28/06/2017 to update the West Bengal Goods and Services Tax (WBGST) rates for various services. Key amendments include changes to tax rates and conditions for services related to civil structures under housing schemes, works contracts, housekeeping, construction, transportation, and real estate. The notification specifies new provisions for services such as fumigation, exploration, and maintenance, and introduces revised tax rates for admission to amusement parks and entertainment events. The amendments aim to align tax rates with public interest and government policies. 8. 003/2018–C.T./GST - dated 25-1-2018 - West Bengal SGST Notification under rule 138(14)(d) regarding intra-State e-waybill. Summary: The West Bengal Directorate of Commercial Taxes issued a notification stating that, under rule 138(14)(d) of the West Bengal Goods and Services Tax Rules, 2017, no e-way bill is required for intra-State movement of goods within West Bengal, regardless of the consignment's value, until May 31, 2018. From June 1, 2018, the provisions requiring the furnishing of information and generation of e-way bills for such movements will apply. This notification takes effect from February 1, 2018, as authorized by the Commissioner of State Tax, West Bengal. 9. 122-F.T.-09/2018-State Tax - dated 24-1-2018 - West Bengal SGST Amendment of notification No. 1069-F.T. dated 21/06/2017 for notifying e-way bill website. Summary: The Government of West Bengal has amended its previous notification to designate www.gst.gov.in as the official portal for Goods and Services Tax (GST) activities such as registration, tax payment, and return filing. Additionally, www.ewaybillgst.gov.in is established as the portal for electronic way bill submissions. This amendment, effective from January 16, 2018, is enacted under the West Bengal Goods and Services Tax Act, 2017. The GST Network manages the GST portal, while the National Informatics Centre oversees the e-way bill portal. The notification supersedes the prior notice dated June 21, 2017, except for actions completed before this change. 10. 121-F.T.-07/2018-State Tax - dated 24-1-2018 - West Bengal SGST Reduction of late fee in case of delayed filing of FORM GSTR-6. Summary: The Government of West Bengal has issued a notification under the West Bengal Goods and Services Tax Act, 2017, reducing the late fee for delayed filing of FORM GSTR-6. The late fee payable by registered persons for not submitting the return by the due date is now waived, except for a charge of twenty-five rupees per day for each day the delay continues. This notification is effective from January 23, 2018. 11. 120-F.T.-06/2018-State Tax - dated 24-1-2018 - West Bengal SGST Reduction of late fee in case of delayed filing of FORM GSTR-5A. Summary: The Government of West Bengal has issued a notification reducing the late fee for delayed filing of FORM GSTR-5A under the West Bengal Goods and Services Tax Act, 2017. The late fee is reduced to twenty-five rupees per day for registered persons who fail to file by the due date. If the total integrated tax payable is nil, the late fee is reduced to ten rupees per day. This notification is effective from January 23, 2018, as per the powers conferred by section 128 of the Act and the recommendations of the Council. 12. 119-F.T.-05/2018-State Tax - dated 24-1-2018 - West Bengal SGST Reduction of late fee in case of delayed filing of FORM GSTR-5. Summary: The Government of West Bengal, under the West Bengal Goods and Services Tax Act, 2017, has reduced the late fee for delayed filing of FORM GSTR-5. The late fee is now capped at twenty-five rupees per day for registered persons who fail to file by the due date. If the central tax payable in the return is nil, the late fee is reduced to ten rupees per day. This notification is effective from January 23, 2018, as authorized by the Governor and recommended by the Council. 13. 118-F.T.-04/2018-State Tax - dated 24-1-2018 - West Bengal SGST Reduction of late fee in case of delayed filing of FORM GSTR-1. Summary: The Government of West Bengal, through a notification dated January 24, 2018, has announced a reduction in the late fee for delayed filing of FORM GSTR-1 under the West Bengal Goods and Services Tax Act, 2017. The late fee for failing to furnish details of outward supplies by the due date is reduced to twenty-five rupees per day. If there are no outward supplies in a month or quarter, the late fee is reduced to ten rupees per day. This notification is effective from January 23, 2018, as ordered by the Governor. 14. 117-F.T.-03/2018-State Tax - dated 24-1-2018 - West Bengal SGST WBGST (First Amendment) Rules, 2018. Summary: The West Bengal Goods and Services Tax (First Amendment) Rules, 2018, effective from January 23, 2018, introduce several amendments to the West Bengal GST Rules, 2017. Key changes include extending the time for certain actions from ninety to one hundred and eighty days, altering tax rates for turnover and taxable supplies, and modifying rules related to the value of supply for lotteries and gambling. The amendments also address the issuance of invoices by registered persons, the requirement of tax invoices during goods transport, and the e-way bill system for goods movement. Additionally, new provisions for tax refunds and export procedures are established, with specific forms and rules updated accordingly. 15. 002/2018–C.T./GST-08/2018-State Tax - dated 24-1-2018 - West Bengal SGST Extension the time limit for filing FORM GSTR-6 for the months of July, 2017 to February, 2018 till 31.03.2018. Summary: The Commissioner of State Tax in West Bengal has extended the deadline for filing FORM GSTR-6 by Input Service Distributors for the period from July 2017 to February 2018. The new deadline is set for March 31, 2018. This extension is made under the authority of the West Bengal Goods and Services Tax Act, 2017, and supersedes a previous notification dated November 15, 2017. The notification is effective from January 23, 2018, as issued by the Commissioner of State Tax, West Bengal. 16. 001/2018–C.T./GST-002/2018–State Tax - dated 24-1-2018 - West Bengal SGST Extension the time limit for filing FORM GSTR-3B for the month of December, 2018 till 22.01.2018. Summary: The Commissioner of State Tax in West Bengal has extended the deadline for filing FORM GSTR-3B for December 2018. Initially set for January 20, 2018, the deadline is now extended to January 22, 2018. This amendment is made under the authority granted by section 168 of the West Bengal Goods and Services Tax Act, 2017, following the Council's recommendations. The change is retroactively effective from January 20, 2018, as stated in the notification issued by the Directorate of Commercial Taxes, West Bengal. 17. 61-F.T. - dated 10-1-2018 - West Bengal SGST Memorandum to set up an office of the West Bengal Authority for Advance Ruling. Summary: The West Bengal Authority for Advance Ruling has been established under section 96 of the West Bengal Goods and Services Tax Act, 2017, effective from July 1, 2017. The Governor has approved the creation of an office for this authority within the Directorate of Commercial Taxes, located at 14, Beliaghata Road, Kolkata - 700015. This office will facilitate the functions of the West Bengal Authority for Advance Ruling. The memorandum is issued by the Additional Secretary to the Government of West Bengal. 18. 007-F.T.-001/2018-State Tax - dated 2-1-2018 - West Bengal SGST Seeks to further amend notification No.1142-F.T. dated 28.06.2017 so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers. Summary: The Government of West Bengal issued a notification amending Notification No. 1142-F.T. dated June 28, 2017, under the West Bengal Goods and Services Tax Act, 2017. Effective from January 1, 2018, the amendments adjust the tax rate under the composition scheme for manufacturers and other suppliers. Specifically, the tax rate in clause (i) changes from "one per cent" to "half per cent," and in clause (iii), the phrase "half per cent. of the turnover" is revised to "half per cent. of the turnover of taxable supplies of goods." These changes were made following recommendations from the Council. 19. 26–C.T./GST-72/2017-State Tax - dated 29-12-2017 - West Bengal SGST Extension of due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores in supersession of notification No. 19 C.T./GST, dated the 15th November, 2017. Summary: The Commissioner of State Tax, West Bengal, has extended the deadlines for filing FORM GSTR-1 for taxpayers with an aggregate turnover exceeding 1.5 crore rupees, superseding a previous notification. The new deadlines are as follows: for July to November 2017, the deadline is 10th January 2018; for December 2017, 10th February 2018; for January 2018, 10th March 2018; for February 2018, 10th April 2018; and for March 2018, 10th May 2018. Further extensions for filing under sections 38 and 39 for July 2017 to March 2018 will be announced later. 20. 2318-F.T. - dated 29-12-2017 - West Bengal SGST Amendment to Notification No. 1142-F.T. dated 28.06.2017. Summary: The Government of West Bengal has amended Notification No. 1142-F.T. dated 28.06.2017 under the West Bengal Goods and Services Tax Act, 2017. The amendment revises the calculation of tax amounts. For manufacturers, it is set at one percent of the turnover in the state. For certain suppliers, as per clause (b) of paragraph 6 of Schedule II, it is two and a half percent, and for other suppliers, it is half a percent. This amendment is effective retroactively from June 25, 2017, as ordered by the Governor. 21. 2313-F.T.-75/2017-State Tax - dated 29-12-2017 - West Bengal SGST The West Bengal Goods and Services Tax (Fourteenth Amendment) Rules, 2017. Summary: The West Bengal Goods and Services Tax (Fourteenth Amendment) Rules, 2017, amends several provisions of the West Bengal GST Rules, 2017, effective immediately. Key changes include the recognition of the Unique Identity Number under the Central GST Act as valid under the West Bengal GST Act, restrictions on amending registration details retroactively, and a new formula for refunding input tax credit on zero-rated supplies. The amendment also updates procedures for claiming tax refunds, including electronic submissions and revised forms for registration and refund applications. These changes aim to streamline tax administration and compliance for businesses operating under the GST framework in West Bengal. 22. 2312-F.T.-74/2017-State Tax - dated 29-12-2017 - West Bengal SGST Appointment of the 1st day of February, 2018 as the effective date from which the provisions of serial number 2(viii) and 2(ix) of Notification No. 1568-F.T. dated 30.08.2017, shall come into force. Summary: The Government of West Bengal has designated February 1, 2018, as the effective date for implementing the provisions outlined in serial numbers 2(viii) and 2(ix) of Notification No. 1568-F.T., dated August 30, 2017. This decision is made under the authority granted by section 164 of the West Bengal Goods and Services Tax Act, 2017. The announcement was issued by the Finance Department's Revenue section, with the order signed by the Joint Secretary to the Government of West Bengal. 23. 2311-F.T.-73/2017-State Tax - dated 29-12-2017 - West Bengal SGST Waiver of certain amount of late fee payable by any registered person for failure to furnish Form GSTR-4 by the due date. Summary: The Government of West Bengal has issued a notification waiving certain late fees for registered persons who fail to submit Form GSTR-4 by the due date under the West Bengal Goods and Services Tax Act, 2017. The waiver reduces the late fee to twenty-five rupees per day of delay. If the State tax payable in the return is nil, the late fee is further reduced to ten rupees per day. This waiver is enacted under the authority of Section 128 of the Act and follows recommendations from the Council. 24. 2310-F.T.-71/2017-State Tax - dated 29-12-2017 - West Bengal SGST Extension of time for furnishing GSTR-1 for QE September, 2017, December, 2017 and March, 2017 for registered persons having turnover upto 1.5 crore. Summary: The Government of West Bengal has extended the deadline for registered persons with an annual turnover of up to 1.5 crore rupees to submit their GSTR-1 forms for the quarters ending in September 2017, December 2017, and March 2018. The new deadlines are January 10, 2018, for the July-September 2017 quarter, February 15, 2018, for the October-December 2017 quarter, and April 30, 2018, for the January-March 2018 quarter. This extension is granted under the West Bengal Goods and Services Tax Act, 2017, and further procedures will be notified in the Official Gazette. 25. 25–C.T./GST-68/2017-State Tax - dated 21-12-2017 - West Bengal SGST Extension of time limit for filing FORM GSTR-5 till 31.01.2018 Summary: The Commissioner of State Tax, West Bengal, has extended the deadline for non-resident taxable persons to file FORM GSTR-5 under the West Bengal Goods and Services Tax Act, 2017. This extension applies to the returns for the months of July through December 2017, with the new deadline set for January 31, 2018. This notification supersedes the previous notification dated November 15, 2017, except for actions already completed or omitted before the supersession. 26. 24–C.T./GST-67/2017-State Tax - dated 21-12-2017 - West Bengal SGST Extension of time limit for filing FORM GST ITC-01 till 31.01.2018 Summary: The Commissioner of State Tax, West Bengal, has extended the deadline for registered persons to file FORM GST ITC-01 until January 31, 2018. This extension applies to those who became eligible to claim input tax credit under section 18(1) of the West Bengal Goods and Services Tax Act, 2017, during July to November 2017. This notification supersedes the earlier notification dated October 13, 2017, except for actions already completed. 27. 2275–F.T. - dated 21-12-2017 - West Bengal SGST Corrigendum to Notifications No. 1151-F.T. and No. 1568-F.T. Summary: The corrigendum addresses amendments to previous notifications by the Finance Department of West Bengal concerning the State Goods and Services Tax (SGST). The corrections include changes in wording and structure across various rules. Notably, the term "an non-resident" is corrected to "a non-resident," and adjustments are made to the application process for GST practitioners, including eligibility criteria. Additional corrections involve clarifications in rules regarding forms, documentation, and specific clauses. The amendments aim to ensure accuracy and clarity in the application and interpretation of the SGST regulations. 28. 2274–F.T.-70/2017-State Tax - dated 21-12-2017 - West Bengal SGST The West Bengal Goods and Services Tax (Thirteenth Amendment) Rules, 2017. Summary: The West Bengal Goods and Services Tax (Thirteenth Amendment) Rules, 2017, effective immediately, amend the existing GST rules. Changes include updates to FORM GSTR-1, particularly Table 6, which now covers zero-rated supplies and deemed exports. FORM GST RFD-01 and GST RFD-01A have been revised to clarify refund claims for deemed export supplies, including new declarations and undertakings. These amendments specify how refunds should be claimed, ensuring that claims do not exceed input tax credits reported. The amendments aim to streamline the refund process for deemed exports and address issues related to inverted tax structures. Circulars / Instructions / Orders GST - States 1. TRADE CIRCULAR NO. 04/2018 - dated 22-2-2018 Re-organisation of Large Tax Payer Unit (LTU) Summary: The Government of West Bengal's Directorate of Commercial Taxes has announced the re-organization of the Large Taxpayer Unit (LTU) following the implementation of GST. Taxpayers listed in the annexure are reassigned to LTU jurisdiction for GST purposes. However, jurisdiction over legacy matters under the WBVAT, WBST, CST, Entry Tax, and WBTIDF Acts will remain with their current administrative setups. Officers from previous jurisdictions will continue handling legacy matters, while LTU officers will maintain jurisdiction over their pre-reorganization taxpayers, irrespective of new GST assignments. Taxpayers will be notified of their assigned officers soon. 2. Corrigendum to Trade Circular No. 14/2017 - dated 6-2-2018 Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger. Summary: A corrigendum to Trade Circular No. 14/2017 from the Directorate of Commercial Taxes, West Bengal, dated February 6, 2018, corrects a reference in paragraph 8.0 from 'the WBGST Act' to 'the CGST Act.' The paragraph clarifies that while claiming a refund of accumulated Input Tax Credit (ITC) under section 54(3)(ii) of the CGST Act, the drawback of all taxes under GST should not have been availed. This declaration is included in FORM GST RFD-01A. The correction is issued by the Commissioner of State Tax, West Bengal. 3. TRADE CIRCULAR NO. 03/2018 - dated 5-2-2018 Re-introduction of Waybill System as existed till 31.01.2018. Summary: The Government of West Bengal has reintroduced the previous waybill system, effective immediately, as it existed until January 31, 2018. This decision rescinds the earlier notification dated December 29, 2017, which had implemented a new electronic waybill system under the West Bengal Goods and Services Tax (GST) framework starting February 1, 2018. The reversion to the earlier system is in variance with a prior trade circular from January 8, 2018, and will remain in effect until further notice. This change is communicated for the information and necessary action of all relevant parties. 4. 03/2018 - dated 2-2-2018 Introduction of e-Way Bill system on inter-State and intra-State movement of goods - Reg. Summary: The Government of Assam has issued a circular regarding the introduction of the e-Way Bill system for the movement of goods both inter-State and intra-State. The trial phase for generating e-Way Bills will be extended, with the official nationwide implementation date to be announced later. Until then, the existing system of GST Inward and Outward Permits for transporting taxable goods into and out of Assam will remain operational. This notice is intended for the information and necessary action of all relevant parties. 5. 01/2018 - dated 28-1-2018 Effective date of introduction of e-Way Bill system on inter-State and intra-State movement of goods — Reg. Summary: The Government of Assam has announced the implementation of the e-Way Bill system for the movement of goods. Starting February 1, 2018, the system will be applicable for inter-State movement of goods, aligning with the national rollout. From March 1, 2018, it will also apply to intra-State movement within Assam. Until February 28, 2018, no e-Way Bill is required for intra-State consignments. The e-Way Bill must be generated from the GST Electronic Portal before goods commence transit. This notice is intended for the information and necessary action of all relevant parties. 6. 02/2018 - dated 28-1-2018 GST Inward Permit under GST - Reg. Summary: The Government of Assam announced the implementation of a new electronic system for GST Inward and Outward Permits under the Assam Goods and Services Act, 2017. Effective from February 1, 2018, the nationwide e-way bill system will be introduced for inter-State goods movement, and from March 1, 2018, for intra-State movement. The existing permit system will cease on January 31, 2018. Unutilized permits will be invalidated, and any inter-State transportation without the new e-way bill post-February 1, 2018, will be considered a punishable offense. The e-way bill can be generated via the GST portal. 7. TRADE CIRCULAR NO. 02/2018 - dated 17-1-2018 Setting up of Advance Ruling Authority under the West Bengal GST Act Summary: The West Bengal Authority for Advance Ruling has been established under section 96(1) of the West Bengal Goods and Services Tax Act 2017, effective from July 1, 2017, as per Notification No. 1157 FT dated June 30, 2017. It also serves as the Authority for Advance Ruling under section 96 of the Central Goods and Services Tax Act 2017. The office is located at 14 Beliaghata Road, Kolkata, and operates from the 4th floor of Annex Building-III, as notified by Notification No. 61 - FT dated January 10, 2018. 8. TRADE CIRCULAR NO. 01/2018 - dated 8-1-2018 e-WAYBILL UNDER GST WITH EFFECT FROM 1st February, 2018. Summary: The Government of West Bengal announced the implementation of a new electronic waybill system under GST, effective from February 1, 2018. This system replaces the existing waybill process for the entry of taxable goods into the state. The current system will cease operations at midnight on January 31, 2018, with specific conditions for waybill generation, validity, and cancellation until February 15, 2018. After this date, any consignment entering West Bengal without a valid e-waybill will be considered a punishable offense under the WBGST Act, 2017. Necessary details and links will be provided on the GST website. 9. 12/2017 - dated 22-12-2017 Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling —Reg. Summary: The Government of Assam has issued a circular regarding the manual filing of applications for Advance Ruling and appeals before the Appellate Authority for Advance Ruling due to unavailable forms on the common portal. As per the Assam GST Rules, applicants must manually file applications in FORM GST ARA-01 and appeals in FORM GST ARA-02, with respective fees deposited online. The application or appeal must be signed by authorized individuals or representatives. Appeals by officers require no fee and must be filed within 30 days. The circular emphasizes that it is clarificatory and not intended for interpreting the Act or rules. 10. 11/2017 - dated 22-12-2017 Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc.- regarding Summary: The circular addresses issues regarding the maintenance of books of accounts for additional business locations by principals and auctioneers involved in the auction of tea, coffee, rubber, etc., under the Assam Goods and Services Tax Act, 2017. It clarifies that principals and auctioneers must declare warehouses as additional business locations and maintain accounts at these locations. If maintaining accounts at each location is challenging, they may keep them at their principal business location, provided they notify the jurisdictional officer. The circular also confirms eligibility for input tax credit, subject to compliance with the Act's provisions. 11. 10/2017 - dated 22-12-2017 Clarification on issues regarding treatment of supply by an artist in various States and supply of goods by artists from galleries—Reg. Summary: The circular issued by the Commissioner of State Tax, Assam, clarifies the GST treatment for art supplies by artists across different states. When artists supply artworks to galleries, a delivery challan is used for transportation, and a tax invoice is issued at the time of actual supply to the buyer. Inter-state supplies attract integrated tax under the Integrated Goods and Services Tax Act, 2017. Artworks sent to galleries for exhibition are not considered supply until a buyer selects the artwork, at which point GST is applicable. This circular aims to ensure uniform implementation of the Assam Goods and Services Tax Act, 2017. 12. TRADE CIRCULAR NO. 14/2017 - dated 21-12-2017 Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger Summary: The circular from the West Bengal Directorate of Commercial Taxes addresses the manual filing and processing of refund claims due to the absence of a refund module on the GST portal. It mandates manual filing for refunds related to the inverted duty structure, deemed exports, and excess balance in the electronic cash ledger. Refunds must be filed monthly using FORM GST RFD-01A, with exceptions for certain small businesses opting for quarterly filings. The circular outlines the necessary documentation and procedures for refund claims, including undertakings and statements required for deemed exports. It emphasizes adherence to timelines and coordination between State and Central tax authorities for processing refunds. 13. TRADE CIRCULAR NO. 15/2017 - dated 21-12-2017 Clarification on issues regarding treatment of supply by an artist in various States and supply of goods by artists from galleries. Summary: The circular addresses the taxation of art supplies by artists across different states and through galleries. It clarifies that when artists transport artworks for exhibition without immediate sale, a delivery challan and e-way bill are required, with the tax invoice issued upon sale. Inter-state art supplies are subject to integrated tax. When artworks are exhibited in galleries without payment to the artist, it is not considered a supply until a buyer selects an artwork, at which point GST is applicable. The directive aims to ensure uniform implementation of the West Bengal Goods and Services Tax Act, 2017. 14. TRADE CIRCULAR NO. 16/2017 - dated 21-12-2017 Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling. Summary: The circular from the West Bengal Directorate of Commercial Taxes outlines procedures for the manual filing of applications for Advance Ruling and appeals before the Appellate Authority due to the unavailability of electronic forms on the common portal. Applications must be submitted in quadruplicate using specified forms and accompanied by a fee payable online. The document details the signing requirements for various entities and specifies the process for generating a User ID to facilitate fee payment. Appeals must be filed within 30 days of the ruling notification, and all submissions should be made to the jurisdictional office. Any implementation difficulties should be reported to the Commissioner. 15. TRADE CIRCULAR NO. 17/2017 - dated 21-12-2017 Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc. Summary: The circular addresses issues related to maintaining books of accounts for additional business locations by principals and auctioneers involved in the auction of goods like tea, coffee, and rubber. Under the West Bengal Goods and Services Tax Act, principals and auctioneers must declare warehouses as additional business locations and maintain accounts there. However, if maintaining accounts at each location is challenging, they may keep them at their principal business location, provided they inform the proper officer. The circular also clarifies conditions for availing input tax credit and applies to goods supplied through auctions where auctioneers claim ITC. 16. 27/WBGST/PRO/17-18 - dated 21-12-2017 Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03. Summary: The Government of West Bengal has extended the deadline for submitting details of stock held on the day before opting for the composition levy under the West Bengal Goods and Services Tax Act, 2017. This extension, authorized by sub-rule (4) of rule 3 of the West Bengal GST Rules, 2017, and section 168 of the Act, allows businesses to file FORM GST CMP-03 until January 31, 2018. This order supersedes a previous order dated October 28, 2017. 17. 11/2017 - dated 21-12-2017 Extension of time limit for intimation of details of stock held on the date preceding the from which the option for composition levy is exercised in FORM GST CMP-03 Summary: The Commissioner of State Tax in Chhattisgarh has extended the deadline for submitting details of stock held before opting for the composition levy under the Chhattisgarh Goods and Services Tax Act, 2017. This extension applies to FORM GST CMP-03 and moves the deadline to January 31, 2018. This decision, based on recommendations from the Council, supersedes the previous order dated October 28, 2017. 18. 26/WBGST/PRO/17-18 - dated 15-12-2017 Amendment of Commissioner’s Order No. 25/WBGST/PRO/17-18 dated 14/12/2017 Summary: Order No. 26/WBGST/PRO/17-18 amends the previous Order No. 25/WBGST/PRO/17-18 issued under the West Bengal Goods and Services Tax Ordinance, 2017. The amendment involves changes in designations within the order's table. Specifically, "State Tax Officer" is replaced with "Assistant Commissioner," and titles such as "Senior Joint Commissioner," "Additional Commissioner," and "Special Commissioner" are updated to include "(Appeals)." These amendments are retroactively effective from October 16, 2017, and November 15, 2017, respectively. The order is issued by the Commissioner of State Tax, West Bengal. 19. 24/WBGST/PRO/17-18 - dated 14-12-2017 Delegation of powers by the Commissioner under different sections under West Bengal Goods and Services Tax Act, 2017 Summary: The Commissioner of State Tax in West Bengal has delegated various powers under the West Bengal Goods and Services Tax Act, 2017, to specified tax officers. These powers include issuing notices to defaulters, levying late fees, handling refunds, conducting audits, and managing assessments, among others. The delegation covers a wide range of sections such as 46, 54, 67, and 129, and is applicable to roles including Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, and Assistant Commissioner. This order, effective from October 16, 2017, supersedes a previous order dated July 5, 2017. 20. 25/WBGST/PRO/17-18 - dated 14-12-2017 Appellate Authorities Summary: In accordance with the West Bengal Goods and Services Tax Act, 2017, specific officers are designated as Appellate Authorities for appeals against orders or decisions by Adjudicating Authorities. The hierarchy is as follows: appeals from State Tax Officers or Deputy Commissioners go to the Senior Joint Commissioner; from Joint Commissioners to the Senior Joint Commissioner or Additional Commissioner; from Senior Joint Commissioners to the Additional Commissioner; and from Additional Commissioners to the Special Commissioner. This order is effective from July 1, 2017, as authorized by the Commissioner of State Tax, West Bengal. Highlights / Catch Notes Income Tax Tribunal Finds No Evidence to Support Claim of Diverted Funds in Ranbaxy Non-Compete Agreement Case. Case-Laws - HC : Non-competition agreement with Ranbaxy Laboratories Ltd. - nature of receipt - Though a vague finding was rendered that the amount which was otherwise receivable by the company was diverted by the appellant, the same was not substantiated by the Tribunal - in the absence of a finding that the two agreements entered with RLL and SPIL are sham and nominal, no addition can be made - HC Visit to Get Source Taxpayer's Payment to UEEL for Waste Management Falls u/s 194C, Not Section 194J, as a Work Contract. Case-Laws - AT : TDS u/s 194C or 194J - contract for managing of solid waste - payment made by the assessee to UEEL for exhibiting the work contract would fall u/s 194C and not u/s 194J - AT Visit to Get Source Foreign Agent Commission Not Taxable in India; No TDS Deduction Needed u/s 195 of Income Tax Act. Case-Laws - AT : TDS u/s 195 - Assessee paid Commission to foreign agent is not the income chargeable to tax in India. Once an income is not chargeable to tax in India then the question of deducting TDS under the provision u/s 195 of the Act does not arise. - AT Visit to Get Source Section 54: Exemption on Long-Term Capital Gains Still Valid Without Property Possession. Case-Laws - AT : LTCG - Deduction claimed u/s 54 - Section 54(2) does not say that in case the assessee could not get the possession of the property, he is not entitled for exemption u/s 54 - AT Visit to Get Source Customs Anti-Dumping Duty Applies to Goods Cleared for Home Use Under Ex-Bond Bill of Entry from August 31, 2017. Case-Laws - HC : Imposition of ADD - relevant date - warehoused goods - clearance of goods for home consumption - The levy of Anti Dumping Duty under the Notification dated 11.05.2017 is applicable to the goods cleared under the Ex-Bond Bill of Entry dated 31.08.2017. - HC Visit to Get Source Court Balances Natural Justice and Practicality in Customs Dispute on Cross-Examination of Driver in Fake Exports Case. Case-Laws - HC : Principle of natural justice - seeking cross examination of driver - fake clearance / deemed exports - The question as to what extent the principles of natural justice need to be stretched as they cannot be moulded and are not to be construed with stringent strictness but needs to be dealtwith the flexibility. - HC Visit to Get Source Additional Director General Authorized to Issue Show Cause Notice Under Customs Act 1962; Taxpayers Cannot Choose Adjudicating Authority. Case-Laws - HC : Jurisdiction of the Additional Director General to issue the said SCN - Nobody can deny that these authorities work for the ultimate object of implementation of the Customs Act, 1962. The tax payers have no right to choose their adjudicating authority. - HC Visit to Get Source Smuggling Case: Concealed Gold in Zinc Ingots Violates Import Conditions Under Customs Regulations. Case-Laws - HC : Smuggling - Gold concealed in Zinc ingots - Attempt to smuggle the goods would breach all these conditions - there is clear breach of conditions of import of goods though perse import of goods may not be prohibited. - HC Visit to Get Source Court Rules Petitioner Not Liable for Intentional Short Landing of Goods; Entire Penalty Vacated. Case-Laws - HC : Penalty - short landing of goods - no blame can be fastened on the petitioner for intentionally being the cause for the short landing, this is a fit case, where, the entire penalty imposed on the petitioner requires to be vacated - HC Visit to Get Source Customs Department Wrongly Denies Sports Goods Exemption to Renowned Shooters Certified by National Rifle Association. Case-Laws - HC : Exemption to sports goods - The customs department cannot deny the fact that both the petitioners are Renowned Shooters and National Rifle Association certified so and considering the fact that one of them has done prior imports through the Bangalore Airport, the 4th respondent was not justified in denying the relief of exemption to the petitioner. - HC Visit to Get Source Government Revokes Custom Duty Exemption for Medical Equipment Due to Misuse by 392 Out of 396 Institutions. Case-Laws - HC : Revocation of Custom Duty Exemption Certificate (CDEC)- import of certain medical equipments - The gross abuse of customs duty exemption by these Institutions and as many as 392 Institutions out of 396 given such exemption lost their CDECs, defeats the very purpose for which such exemption was given, for the avowed purpose of providing free medical aid to the poor sections of the Society. - HC Visit to Get Source Video Server RAM Classified for Internet Circuit Use, Not as Storage Device. Case-Laws - AT : Classification of imported goods - Video Server having memory - The RAM of any device is meant only to assist the function of the internet circuit it cannot be treated as recording /storage device. - AT Visit to Get Source Indian Laws India's Direct Tax Collections Surge 19.5% in FY 2017-2018 Through February 2018. News : Direct Tax collections for F.Y. 2017-2018 show growth of 19.5% up to February, 2018 Visit to Get Source IBC Court Admits Insolvency Proceedings Over Unpaid Paddy Procurement Debt. Case-Laws - Tri : Corporate insolvency process - existence of operational debt - failure to make payment against procurement of paddy - the application deserves to be admitted. - Tri Visit to Get Source Service Tax Assessee Can Reverse Proportionate CENVAT Credit for Common Services; Demand u/r 6(3)(i) Not Valid. Case-Laws - AT : CENVAT credit - common services used for taxable as well as exempted service - The option was available to the assessee to reverse the proportionate credit under Rule 6(3) (ii) in terms of Rule 6(3A) of Cenvat Credit Rules, 2004. Accordingly, the demand of 8%/6% in terms of Rule 6(3) (i) cannot be sustained. - AT Visit to Get Source Central Excise Duty Exemption on Waste from Cotton Blended Yarn Manufacturing for 100% Export Oriented Units Under Chapter 52. Case-Laws - AT : 100% EOU - the waste generated during the manufacturing process of cotton blended yarn - predominating factor is of cotton waste, and waste is classifiable under Chapter 52 of cotton yarn manufactured in question, the duty cannot be demanded - AT Visit to Get Source "Green Houses" Classified Under Tariff Heading 9406 00 11 as Ready-to-Assemble Sets per Central Excise Rules. Case-Laws - AT : Classification of goods - “green houses” - the goods cleared by the appellant are classifiable under 9406 00 11 as green houses in ready to assemble sets - AT Visit to Get Source Appellants' vehicles classified as tipper trucks under tariff 8704 2390, not dumpers under 8704 10; chassis under 87060042. Case-Laws - AT : Classification of goods - The motor vehicles manufactured by the appellants do not fall in the category of dumpers designed for off-highway use under 8704 10. They are classifiable, as claimed by the appellant under 8704 2390 as tipper trucks likewise the classification of chassis also will fall under 87060042 and not under 87060043 as claimed by the Department. - AT Visit to Get Source Court Rules CENVAT Credit on Inputs Valid; Assessee Not Required to Verify Beyond First Stage Dealer Records. Case-Laws - AT : CENVAT credit - inputs - it would be impractical to require the assessee to go behind the records maintained by the first stage dealers. The respondent under the fact of this case were found to have duly acted with all diligence in their dealings with the first stage dealers Simandhar. - AT Visit to Get Source Appellants accused of clandestine product removal; evidence includes excess materials, labor payments, and electricity use. Case-Laws - AT : Clandestine removal - Revenue has been able to establish the procurement of the excess raw materials, excess payments made to the labourers, the excess electricity consumption and the excess installed capacity, the cumulative effect of all these evidences would lead to the inevitable conclusion that the appellants have manufactured and cleared clandestinely their final product. - AT Visit to Get Source VAT Old Act Exemption Still Valid Under New VAT Act Despite Different Tax Rates in 2008 and 1948 Acts. Case-Laws - HC : Claiming benefit of exemption notification issued under old act even after introduction of VAT Act - Such a notification would not become inconsistent only because the right of tax payable for the transaction in the Act of 2008 is different from the rates specified in the Act of 1948. - HC Visit to Get Source Case Laws: Income Tax 2018 (3) TMI 317 TDS u/s 194C OR 194J - placement fees / carriage fees paid to Cable Operators / MSO / DTH Operators - Held that:- As relying on UTV Entertainment Television Ltd. case [2017 (11) TMI 915 - BOMBAY HIGH COURT] the placement fees are paid under the contract between the respondent and the cable operators/ MSOs. Therefore, by no stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted. - Decided in favour of assessee TDS u/s 194H - reimbursement of expenses as part of the commission paid by the assessee to Zee Turner Ltd. Held that:- In the present case, the respondent made payments which were reimbursement by the assessee to Zee Turner Ltd. Thus holding that there was no occasion to deduct tax on the reimbursement of the expenses paid by the respondent assessee to Zee Turner Ltd. This concurrent finding of fact by the CIT(A) as well as by the Tribunal has not been shown to be perverse. It is settled position in law that reimbursement of expenses is not taxable as held by this Court in Commissioner of Income Tax Vs. Siemens Aktiongesellschaft [2008 (11) TMI 74 - BOMBAY HIGH COURT] and Director of Income Tax (International Taxation) Vs. Krupp Udhe Gmbh [2010 (3) TMI 287 - BOMBAY HIGH COURT] - Decided in favour of assessee Commission paid by the assessee to the directors treated as salary by AO - relationship between the directors and the assessee - Held that:- CIT(A) as well as the Tribunal have on examination of the facts come to the conclusion that the commission which was paid to the directors to attend meetings of the board as well as various committees of the company were not payment made to employees of the company as these directors were non-executive / independent directors of the respondent.The payments made to these non-executive / independent directors could not be treated as salary and there would be no occasion to deduct tax. The concurrent finding of fact has not been shown to be perverse by the Revenue in any manner. Short deduction of tax at source resulting in the respondent assessee becoming liable under section 201(1) and 201(1A) - Held that:- On examination of all the details, the CIT(A) found that there has been no default in deducting tax at source. Thus, no short deduction of tax. This finding of fact by the CIT(A) has been upheld by the impugned order dated 20th February, 2015 of the Tribunal. This finding of fact has not been shown to be perverse in any manner. Appeal is admitted on substantial question at (ii) and (iii) above. (ii) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the payments for programme software purchases, equipment hire charge and other production related expenses excluding dubbing and processing charges made to production houses, are payments for work contract covered u/s 194C and not fees for technical services under section 194J? (iii) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the assessee has correctly deducted tax under section 194C on the payments made to event managers, for events other than sport related activities, as per CBDT's notification no.188 of 2008 dated 21.08.2008, without appreciating that this notification has merely brought sport related event managers under section 194J whereas the other professional event managers are always covered under section 194J for TDS purpose? 2018 (3) TMI 316 Addition in allowing loss of valuation of Held to Maturity (HTM) securities, when HTM securities are capital in nature - Held that:- The change sought in the method of valuation of its stock is not bonafide and that it is not regularly followed thereafter. Its only grievance is that these RBI guidelines classify the same as Investments and, therefore, for the purpose of the Act also HTM securities should be considered to be the Investments. It is well settled that merely because RBI guidelines direct a particular treatment to be given to particular asset, the same would not necessarily hold good for the purposes of income chargeable to tax under the Act. In the view of the clear finding of fact recorded by the impugned order of the Tribunal that the securities HTM are stock-in-trade and the income on sales have been offered to tax as business income, has not been shown to be perverse. Appeal entertained on substantial question of law No.(ii)- Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that provisions of Section 115JB are not applicable to a Banking Company ? 2018 (3) TMI 315 Reopening of assessment - reopened within a period of four years from the end of the assessment year - entitled to duty drawback incentive deduction u/s 80IB (4) - Held that:- No substitution or deletion is permissible nor inferences therefrom are permitted. This is completely different from the present facts where an Assessee points out that the reasons recorded by the AO are not his own reasons and therefore, the reopening notice issued under Section 148 on the basis of such reasons are without jurisdiction. In such cases one would necessarily have to look at the surrounding circumstances which led to the issue of the reopening notice and recording of the reasons. Thus it is not a case of adding to the reasons and / or varying the reasons recorded by the AO but pointing out how the Assessing Officer having himself concluded that no income chargeable to tax has escaped assessment, on the very ground has now issued the reopening notice. Thus there is no merit in this objection of the Revenue. Time gap between the AO's response to the audit objection contesting that any income chargeable to tax has escaped audit and his issuing the reopening notice - Held that:- There is no evidence of the same on record. In any event in such a case the least that is expected of the Assessing Officer is to record in his reasons that he had earlier opposed the objection of the audit and the reason for the change of view on his part. It cannot be that passage of time would alone by itself indicate that there has been a fresh application of mind to the order passed under Section 143 (3) of the Act leading to his reason to believe that the income chargeable to tax has escaped assessment. One more fact that must not be missed is that reasons recorded itself indicates that “it is noticed from the Assessment records that the Assessee….”. On being specifically asked, Mr. Chhotaray very fairly informed us that the audit objection would be a part of the assessment records. Therefore, there is evidence on record that the audit objection was considered while issuing the reopening notice and there is nothing on record to even remotely suggest that in view of the delay in issuing the notice, AO applied his mind afresh (without being influenced by audit objection) to come to the same view as indicated in the audit objection Third grievance of the Revenue is that the impugned order is perverse in as much as it holds that the Assessing Officer did not apply his mind is without any basis. This we do not accept. The impugned order records the fact that it had examined the Assessing Officer's letter to the audit objection in respect of grant of deduction under Section 80IB (4). The response of the Assessing Officer's as contained in letter dated 29 October 2007 was before the Tribunal as a part of the paper book and in that letter, it has been mentioned at length on the basis of case law as existing in the relevant time that in his understanding of law the Respondent was entitled to the deduction under Section 80 IB (4) in respect of duty drawback incentive. Further the impugned order of the Tribunal also reproduced the audit objections as well as the reasons recorded and on comparing the two comes to a view that in substance both of them are identical. In the above view, it cannot even be remotely suggested that the impugned order of the Tribunal is perverse. Thus there is no merit in this objection of the Revenue. - Decided in favour of assessee. 2018 (3) TMI 313 Rejection of books of accounts - non presenting true and correct picture - Held that:- The issues are squarely covered by the decision of this court in CIT Central Jaipur vs. M/s Unique Builders And Developers Jpr (2017 (5) TMI 1505 - RAJASTHAN HIGH COURT) as held merely because of non maintenance of a detailed qualitative and quantitative register alone, the same could not be a valid reason to reach a finding that books of account do not present true and complete picture of accounts and financial transactions. The finding by the assessing authority being perverse is, therefore, set aside. The perusal of the impugned order reveals that this was only a prima facie view which the assessing authority entertained before issuing a show cause notice to the assessee for rejecting its accounts by invoking provisions of section 145(3) of the Act. He has not been able to point out as to which of these payments in respect of direct expenses could not be verified by him nor the Assessing authority is shown to have required the assessee to get payment of any specific amount of direct expenses verified. Merely for saying it could not be taken a lacuna in the books of account of the assessee and take the same as a reason for rejecting the books of account that were maintained by assessee in regular course of its business. The finding of "on-money transactions" in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business. The same, therefore, could not be taken a valid basis for change of method regularly employed by the appellant. The Income-tax Authority, therefore, has no option or jurisdiction to meddle in the matter either by directing the assessee to maintain its account in a particular manner or adopting a different method for valuing work-in-progress. It also cannot recompute income by adopting any method other than that regularly employed by the appellant in a case like this nor make the same as basis to reject its accounts. - Decided in favour of assessee. 2018 (3) TMI 312 Sale of property at Ghatkopar as a slump sale within the meaning under Section 2(42C) - Revenue’s case is that real intention of the Assessee is to be ascertained from the transaction and not in what manner they have designed the transaction - Held that:- Defining criteria for determining as to whether a particular transaction of property involving both movable and immovable is slump sale or not is composite sale of an undertaking or part thereof. Second point on which Mr. Nizamuddin emphasised was that the sale of both the immovable assets as well as plant and machinery etc. took place in the same financial year. Whether it is a composite sale of the assets or there was the sale of individual components thereof is essentially a question of fact. On this point, we find both the Commissioner of Appeals and the Tribunal went with the Assessee’s case. Commissioner in particular has analysed the transaction and directed the Assessing Officer to allow relief to the appellant considering the amount of long term gains computed by the Assessee itself which was without invoking the computation methology stipulated in Section 50B of the Act. On this point we do not find the first and the second appellate fora went wrong in law. The assessee showed separate sale of furniture and fixtures and plant and machinery. The impact of subsequent development of property was also considered by the Commissioner of Appeals. We, accordingly, answer the first question in the negative and in favour of the assessee. Writing off bad advances - Held that:- We accept the argument of Mr.Khaitan that for determining the character of claim for deduction AO need not confine his scrutiny on the accounts as submitted by the assessee but he ought to analyse the nature of the claim himself on the basis of materials on record. AO has not undertaken that exercise. But in our opinion without that exercise being undertaken, the Tribunal ought not to have had sustained the claim of the assessee straightway. There is no proper analysis of the nature of advances which were sought to be written off. For this reason, we answer the second question in affirmative and in favour of the Revenue and remand the matter to the AO for deciding the limited question as to whether there was actual irrecoverability of the advances which the assessee chose to write off in its account and claimed the written off amount as business loss. On the basis of such analysis, further determination would be necessary as to whether the expenditure claimed as bad advances constituted revenue expenditure or capital expenditure. 2018 (3) TMI 311 Non-competition agreement with Ranbaxy Laboratories Ltd. - nature of receipt - capital receipt or a revenue receipt - Held that:- Undoubtedly the right to manufacture the products was with the company when the non-competition agreement was entered into, in the absence of any material showing that a similar non-competition agreement was entered between the company and the appellant, it cannot be inferred that merely because the company was at the relevant time using the technical know-how possessed by the appellant, the latter was barred from using the same in future. Indubitably knowledge and technical know-how are intellectual properties and they undoubtedly constitute capital. When an individual is deprived of using such property in future, the same amounts to capital loss and the income derived from such capital loss constitutes capital receipt. In our opinion, the Tribunal has fallen into error in holding that the appellant has failed to prove that the specialized knowledge was treated as a capital asset. On its own finding the Tribunal held that it is the appellant who pioneered the Time Release Technology and promoted the company. This by itself would show that the technical know-how constituted a part of the capital. As observed hereinbefore, unless any specific material existed showing that the appellant has once and for all transferred the technical know-how in favour of the company and that there was no possibility for him to use the same in future without the permission of the company, it would be highly presumptuous for the Tribunal to hold that the appellant had no right to use the technology. Though a vague finding was rendered that the amount which was otherwise receivable by the company was diverted by the appellant, the same was not substantiated by the Tribunal. This finding, in our opinion, is based on a mere surmise or conjecture in the absence of a finding that the two agreements entered with RLL and SPIL are sham and nominal. - Decided in favour of assessee 2018 (3) TMI 310 Revision u/s 263 - order of the AO does not explain as to how the figure of Rs. 40 lakhs has been arrived at as undisclosed turn over and on what basis, income was estimated at 10% thereof - the order does not even explain the basis for allowing Rs. 36 lakhs as expenditure out of the unaccounted sales of Rs. 40 lakhs thereby taxing the balance of Rs. 4 lakhs only - Held that:- As held by the Supreme Court in Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court) an order would be termed as erroneous, if the same is based on an incorrect assumption of facts or an incorrect application of law. Commissioner considered any material available on record, which would have improbablised the claim of the assessee that out of the turnover of Rs. 40 lakhs, he has incurred an expenditure of Rs. 36 lakhs, it would have been permissible for him to interfere with the assessment order, for, in such a case, acceptance of the claim of the assessee by the AO could have been termed as based on an incorrect assumption of facts contrary to the record. The Commissioner has not pointed out any such material. In the absence of such material, in our opinion, the Commissioner wanted a further enquiry into the correctness or otherwise of the claim of expenditure, which, totally, falls outside the scope of his jurisdiction under Section 263 of the Act. It is the order of the Commissioner, which is based on an incorrect assumption that the expenditure might have been exaggerated or bloated up without there being anything on record. The Commissioner has also not rendered a finding that assumption of income at 10% of the undisclosed turn over is contrary to any statutory provisions or settled legal principle. Therefore, it cannot be said that the order of the AO suffers from the defect of an incorrect assumption of fact or an incorrect application of law warranting interference - Decided in favour of assessee 2018 (3) TMI 309 Claim of deduction u/s.80P to the assessee-co-operative society - Held that:- It is clear from the order of CIT(A) that after applying judicial pronouncements, as laid down in M/s. The Quepem Urban Co-operative Credit Society ltd., Vs ACIT Circle-1 [2015 (6) TMI 573 - BOMBAY HIGH COURT] held that assessee-Co-operative society is eligible for deduction u/s. 80P. The finding recorded by CIT(A) has not been controverted by learned DR by bringing any positive material on record. No reason to interfere in the order of CIT(A). - Decided against revenue 2018 (3) TMI 308 Deductions u/s.80P(2)(a)(i) - interest income earned on Fixed Deposits - Held that:- As decided in assessee's own case the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. - Decided against revenue 2018 (3) TMI 307 Deduction in respect of employee's contribution to PF and ESI - contribution deposited beyond the due date prescribed under the relevant law governing contribution to provident fund - Held that:- The amendment to the second proviso to the Sec. 43(B) as introduced by Finance Act, 2003, was curative in nat2607 of 2011 ure and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. See Vijayshree Ltd [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Decided against revenue Allowing puja expenses and temple expenses - allowable business expenses - Held that:- As decided in assessee’s own case for A.Y.2007-08 [2013 (12) TMI 1573 - ITAT KOLKATA] wherein it was held that such expenses are incurred to keep harmony among the assessee’s employees and therefore have to be considered as business expenses.- Decided in favour of assessee TDS u/s 194H - non deduction of tds on commission paid by the assessee to persons who are not residents in India and who rendered services outside India - Held that:- As decided in Circular No.786, dated 07.02.2000 If commission does not accrue or arise in India, the same is not taxable. in India. Non-resident agent operates outside the country, no part of his income arises in India, and since the payment is usually remitted directly abroad, it cannot be held to have been received by or on behalf of the agent in India. Such payments were therefore, held to be not taxable in India - Decided in favour of assessee Addition made under Nursery expenses - nature of expenditure - revenue or capital - Held that:- We are of the view that in the light of the admitted factual position that expenses were incurred on plants and for replantation without any expansion of plantation area or replantation in an abandoned area, the expenditure in question cannot be regarded as a capital expenditure. - Decided in favour of assessee 2018 (3) TMI 306 Penalty u/s 271AAA - search and seizure - Held that:- A perusal of sub-section (2) would indicate that it postulates three conditions for an assessee on whose fulfillment he will be absolved from levy of penalty. In the present case, we have perused the statement recorded under section 132(4) of the Act at the time of search. Thus, so far as first condition is concerned, the assessee should admit the undisclosed income in a statement given under sub-section (4) of section 132, that condition has been fulfilled The assessee has admitted additional income of Rs. 40 crores whose break up has been given in the explanation given before both the Revenue authorities. On account of search and seizure of the incriminating material, this income was offered for taxation. The manner was disclosed as on-money received out of various housing projects constructed by the group. Apart from this question, no other question relating to manner and substantiate earning of such income was asked from the assessee during the course of assessment proceedings. Similarly, we have gone through the assessment order. The AO has nowhere asked the assessee to demonstrate the manner or substantiate that manner. Thus, taking into consideration facts and circumstances, we are of the view that the ld.CIT(A) has rightly deleted the penalty, and accordingly, we dismiss the appeal of the Revenue. 2018 (3) TMI 305 Deemed dividend u/s 2(22)(e) - Held that:- Since the Assessee in the present case is not a shareholder in the lender company, we are of the view that CIT Vs. Ankitech Pvt.Ltd. & others [2011 (5) TMI 325 - DELHI HIGH COURT] is squarely applicable to the facts of the Assessee’s case. - Decided against revenue. 2018 (3) TMI 304 Addition u/s 68 - share capital introduced by the assessee afresh during the year - Held that:- If the assessee has discharged primary onus by submitting confirmation, bank statements, copies of income-tax returns, PAN data then it would be construed that the assessee has discharged primary onus put upon it by virtue of section 68. It is the AO who has to carry out investigation and demonstrate that these materials are not sufficient for discharging the onus cast upon assessee by section 68. No such steps have been taken by the AO. He simply assumed that since the assessee was directed to produce applicants and it failed to produce, therefore, everything is to be construed as manipulated. AO failed to carry out any inquiry for falsifying evidence submitted by the assessee in support of its explanation. Thus delete the addition - Decided in favour of assessee. Addition of interest - AO found that the assessee given interest free advances - Held that:- The assessee failed to give justification as to how these advances were given for the purpose of business. The ld.CIT(A) has rightly confirmed the disallowance. - Decided against assessee. 2018 (3) TMI 303 Disallowance of exemption claimed u/s 10(10B) - amount paid to the employer on resignation - compensation on retrenchment from the job or ex-gratia payment - Held that:- As decided in Vishnu Mohan T. Nair Vs. ITO [2018 (1) TMI 324 - ITAT AHMEDABAD] the conditions of section 10(10B), so far as eligibility for exemption is concerned, is satisfied. That, however, is not the end of the matter. As regards the amount eligible for exemption under section 10(10B), it is specifically provided in the aforesaid section that the amount eligible for exemption will be the least of (i) actual amount received by the assessee; (ii) the amount specified by Central Government i.e. Rs. 5,00,000; and (iii) an amount calculated in accordance with the provisions of clause (b) of Section 25F of the Industrial Disputes Act, 1947 i.e. 15 day’s average pay for every completed years of services or part thereof in excess of 6 months. One of the important restrictions on the amount eligible for exemption under section 10(10B) is that it should not exceed fifteen days’ average pay for every completed years of services or part thereof in excess of six months This aspect of the matter has not been examined at all. Therefore, uphold the claim in principle but remit the matter to the file of the AO for examination of the quantification part in the light of the above observation. 2018 (3) TMI 302 Addition to the total income towards reimbursement of salary cost - ALP determination - Imparting business support services to its AE and project management services - Held that:- The Assessee Company had earned income on the sale of the project and also project management income in the subsequent years. Assessee Company was under contractual obligation to provide project management services and business consultancy services to TBSL post-sale, and also the income earned from such services has been offered for tax. In fact, the TPO has allowed the Indian component of salary paid to such employees, however, denied the deduction of foreign component by determining the ALP of such cost as ‘Nil’. TPO has accepted the business support income and project management income earned by the Assessee through employment of such expats. This action of the TPO is not just and proper when it is accepting the salary paid to such employees in India should not deny the deduction on foreign component of the same. The same set of expats were also engaged in providing business support services and the income from such services has been offered for tax and accepted by the TPO. Also, post-sale of the project, the Assessee Company has charged to TBSL towards provision of project management services which has also been offered for tax and accepted by the Department. Since the income earned through these expats has been accepted by the TPO and the local expenditure also against the said income has been allowed, only the foreign component which was disbursed in Australia for convenience of such expats cannot be disallowed. These factual aspects where never rebutted by the TPO/AO. The CIT(A) has taken cognizance of all these factors and given a detailed findings in respect thereof. There is no need to interfere with the finding of the CIT(A). All the three appeals filed by the Revenue are identical. Therefore, all the appeals are dismissed. 2018 (3) TMI 301 Disallowance u/s 14A - Held that:- While making disallowance under Rule 8D(2)(iii), it is only the average of those investments which have yielded exempt income are to be taken into consideration and not the average of all investments. Adverting to the facts of the instant case, it is seen that the disallowance has been made in ignorance of the above mandate of law as approved by the Hon’ble Delhi High Court in ACB India Ltd. vs. ACIT [2015 (4) TMI 224 - DELHI HIGH COURT]. We, therefore, set aside the impugned order and direct the computation of correct amount of disallowance under clause (iii) of Rule 8D(2) accordingly. It is made clear that if the disallowance under clause (iii) of Rule 8D(2) exceeds the amount of exempt income, then, the disallowance should be restricted to such income alone. If, however, this exercise results in some further relief to the assessee, the same should be granted. Non-refundable membership fee - Held that:- CIT(A) has deleted the addition by relying on the orders passed by the Tribunal in the assessee’s own case for the assessment year 2006-07 and 2007-08. The ld. AR submitted that the order passed by the Tribunal for the assessment year 2006-07 has been upheld by the Hon'ble Delhi High Court and, further, the SLP filed by the Revenue has been dismissed. This position has not been controverted by the ld. DR. In view of the fact that the ld. CIT(A) deleted the addition by relying on the Tribunal order, respectfully following the precedent, we uphold his decision on this issue. Disallowance on account of brokerage/demat charges - Held that:- It is palpable that section 48(1) of the Act provides for deducting expenditure incurred wholly and exclusively in connection with the transfer of shares from the full value of consideration received in the computation of income under the head ‘Capital gains.’ Since the brokerage of Rs. 5.45 lac was paid in connection with shares, the same has, inter alia, to be allowed as deduction in the computation of capital gain in terms of section 48(1) of the Act. As regards the payment of demand charges of Rs. 80,030/- we find that the same cannot be allowed as deduction in the computation of business income as the investment activity in shares carried on by the assessee is not of the trading nature. We, therefore, uphold the impugned order on this score. Both the grounds stand dismissed. Disallowance on account of disallowance of excessive brokerage - Held that:- Assessing Officer has not doubted the genuineness of brokerage paid to Gaurav Associates and M/s DTZ International Property Advisors Ltd. His point of view is that the deduction on account of brokerage should be allowed only to the extent of income earned in this year and the remaining amount of brokerage should be adjusted against the income in succeeding years. We are unable to appreciate this stand point of the Assessing Officer. Obviously, when an expenditure has been incurred on account of brokerage for letting out of property, the same has to be allowed as deduction in the year of incurring/payment itself. It is not permissible to allow expense on account of brokerage to the extent of income earned during the year and then carry forward such unabsorbed expenditure to the succeeding years for set off against the future income. Addition on account of partial disallowance of deduction u/s 80IAB - Held that:- When common expenses are incurred, a reasonable proportion allocable to SEZ unit is required to be debited to the Profit & Loss Account of such eligible SEZ unit, so that proper amount of profits relatable to the SEZ units and the resultant deduction could be computed. In the given circumstances, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is restored to the file of Assessing Officer for deciding this issue afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. We order accordingly 2018 (3) TMI 300 TDS u/s 194C or 194J - contract for managing of solid waste - tds liability - whether the work carried out by the assessee would fall in the category of technical services as envisaged by the provisions of section 9 of the Act? - Held that:- Mere use of machinery or human intervention by the sub contractor are the decisive factors to decide the issue against the AO. We also hold that each and every payment for the contracts would not be for professional or technical services rendered by the contractor to the assessee as per the provisions of section 194J of the Act. The Hon’ble High Court in Bharat Heavy Electrical Ltd [2016 (12) TMI 955 - PUNJAB AND HARYANA HIGH COURT] has also held that Section 194J of the Act was not a residuary clause, that in other words, it was not that if a contract did not fall within the ambit of section 194C, it must be deemed to fall within the ambit of section 194J, that Sections 194C and 194J were independent provisions. We find that there was no direct and Livelink between the payment and receipt/use of technical services/information. In our opinion the AR head rightly argued that technical services would not include services provided by the machines. In the case of Parsurampuria Synthetic Ltd. (2007 (11) TMI 436 - ITAT DELHI), the tribunal has held that there might be use of services of technically qualified person to render the services, that same would not bring the amount paid as fee for technical services within the meaning of explanation 2 to section 9 (1) (vii)of the Act. Accordingly, we hold that payment made by the assessee to UEEL for exhibiting the work contract would fall within the provisions of section 194C of the Act and not under the section 194 J. 2018 (3) TMI 299 Adjustment made to export turnover on account of freight, telecommunication and insurance, on-site fees and marketing fees - Held that:- Justification in excluding the above mentioned expenditure both from the export turnover as well as from the total turnover while calculating deduction under section 10A of the Act. Allowing deduction u/s. 10A - Held that:- As decided in Black and Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT] deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance. The Tribunal was right in holding that the deduction under section 10A in respect of the allowable unit under section 10A has to be allowed before setting off brought forwarded losses of a non-section 10A unit. Transfer pricing (TP)adjustments - comparable selection criteria - Held that:- We find that the assessee in engaged in the business of software development, that it had adopted TNMM for benchmarking the IT's, thus companies functionally dissimilar with that of assessee need to be deselected from final list. Seven comparables have to treated as invalid comparables for the year under consideration, as stated earlier. We find that if the above referred seven comparables are not included in the final list, then the average margin of the assessee is within the range of (+/-)5%. Therefore, we hold that adjustment made by the TPO and confirmed by the FAA have to be deleted. - Decided in favour of the assessee. 2018 (3) TMI 298 Claim deduction u/s 80P denied - interest income and dividend income earned - Held that:- If the deposits in bank are out of own funds of society then the interest on same is eligible for deduction u/s. 80P (1) and if the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act. The conclusion is different in both the judgments because the facts are different in both these cases. If as per the facts of the present case, it is found that the deposit in bank are out of own funds of society then the interest on same is eligible for deduction u/s. 80P (1) as per the judgment in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015 (2) TMI 995 - KARNATAKA HIGH COURT) but if it is found that the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act as per the judgment rendered in PCIT and Another vs. Totagars Co-operative Sale Society (2017 (7) TMI 1049 - KARNATAKA HIGH COURT). Hence, the facts of the present case has to be looked into and since the facts of the present case are not readily available and there is no finding of any of the authorities below in respect of these facts, set aside the orders of CIT (A) in both years and restore the matter back to his file for a fresh decision - Decided in favour of assessee for statistical purposes. 2018 (3) TMI 297 Deduction u/s.80IB(10) eligibility - Held that:- The assessee is entitled for deduction on proportionate basis. However, it is the decision of the Tribunal that AO needs to verify on the aspects narrated in the order of the Tribunal. Considering the settled nature of the issue, we are of the opinion that assessee is entitled to proportion deduction u/s.80IB(1) of the Act in view of the directions given by the Tribunal in the assessee’s own case for A.Y. 2010-11. We therefore direct the AO accordingly. Thus, the grounds of appeal raised by the Revenue are dismissed. 2018 (3) TMI 296 Non-consideration of the foreign exchange gains as operational income for the purpose of computing the PLI - Held that:- We find that Hon’ble Delhi High Court in the case of BC Management Services (P) Ltd., (supra), has held that the “Safe Harbour Rules” which were notified by the Revenue authorities came into force in 2013 and therefore not applicable to A.Y. 2011- 12. Before us, Revenue has not placed any contrary binding decision in its support. Thus TPO and DRP has erred in considering the foreign exchange gain to be as non-operational income by relying solely on Rule 10TA. We therefore set aside the order of TPO and direct that the foreign exchange gains to be considered as operational income for the purpose of computation of PLI. - Decided in favour of assessee 2018 (3) TMI 295 Reopening of assessment - change of opinion - eligibility of reasons to believe - reduction of entertainment tax subsidy from the cost of assets for the purpose of depreciation - Held that:- From the reasons recorded for re–opening of assessment under section 147 it is evident that the formation of belief for escapement of income is on the reason that the entertainment tax subsidy received by the assessee should be reduced from cost of assets, thereby, no depreciation is allowable to the assessee on such assets. From the reasons recorded, it is very much evident that at the time of recording of reasons for re–opening of assessment no fresh tangible material was available with the Assessing Officer. On mere re–visit and re–appraisal of the materials already available on record and considered by the Assessing Officer in original assessment proceedings, the Assessing Officer formed an opinion that income has escaped assessment. Re–opening of assessment is on a mere change of opinion. AO in the original assessment proceedings, has not expressed any opinion with regard to the applicability of Explanation 10 to section 423(1), however, it is evident that he had examined the issue in the original assessment proceedings. If he had any doubt he certainly would have mentioned in the assessment order that in the event of the receipt being held as capital in nature, the subsidy received should have been reduced from the actual cost for computing depreciation. Having not stated so in the original assessment order cannot lead to the conclusion that the Assessing Officer has considered the issue at all. That being the case, in the absence of any fresh tangible material, the re–opening of assessment under section 147 in the present case is invalid. - Decided in favour of assessee. 2018 (3) TMI 294 TDS u/s 195 - payment of export commission made by the assessee company to two non-resident agents for services rendered outside India - non deduction of tds - addition u/s. 40(a)(ia) - Income deemed to accrue or arise in India - Held that:- It is beyond doubt the payment for the commission was not received by the foreign agents in India. Therefore, the same cannot be taxed in India as per clause (a) of sub-section (2) of section 5 of the Act. Similarly, we further note that the income was received by the foreign agents on account of services rendered by then in their respective countries. Therefore, we conclude that such income has not accrued or arisen in India and consequential not chargeable to tax in India. Assessee paid Commission to foreign agent is not the income chargeable to tax in India. Once an income is not chargeable to tax in India then the question of deducting TDS under the provision u/s 195 of the Act does not arise. - Decided in favour of assessee 2018 (3) TMI 293 Deduction claimed u/s 54 - payment was made within the stipulated period and the construction could not be completed by the developer of the flat - eligibility criteria - Held that:- Section 54(2) of the Act clearly says that in case the capital gain, which is not appropriated by the assessee towards purchase of new asset or which is not utilized in purchase of residential house or construction of residential house, then it shall be deposited in a specific account. In this case, it is not the case of Revenue that capital gain was not appropriated or it was not utilised. The fact is that the entire capital gain was paid to the developer of the flat. In other words, the assessee has utilised the entire capital gain by way of making payment to the developer of the flat. Section 54(2) does not say that in case the assessee could not get the possession of the property, he is not entitled for exemption under Section 54 of the Act. The requirement of Section 54 of the Act is that the capital gain shall be utilised or appropriated as specified in Section 54(2) of the Act. The assessee has complied with the conditions stipulated in Section 54(2) of the Act, therefore, the CIT(Appeals) has rightly allowed the appeal of the assessee. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against revenue 2018 (3) TMI 234 Rectification of mistake - since the transaction of commodities trading had not been entered by the assessee in his books of accounts as on the date of search on 01.08.2012 and thereby it takes the character of undisclosed income for which penalty u/s 271AAB CV is exigible - Held that:- AR drew our attention to the computation of the total income wherein the assessee had offered income from commodity trading only under the head income from other sources. AO had also specifically stated in the body of the assessment order vide column no. 10 that the assessee is having only salary income and income from other sources. Due to the absence of the assessee at the time of hearing this particular fact had escaped the attention of the Tribunal. On perusal of the fact available on record, we find that the finding recorded by this Tribunal in para 9 of its order dated 10.11.2017 that the assessee is mandated to maintain books of accounts u/s 44AA of the Act is factually incorrect and deserves to be rectified. This mistake of primary fact had lead to a conclusion of upholding the levy of penalty u/s 271AAB of the Act. Hence, in these facts and circumstances and in view of the aforesaid mistake of primary fact rightly pointed out by the ld. AR , we deem it fit to recall the orders of this Tribunal dated 10.11.2017 in the case of aforesaid assessees. Miscellaneous applications of the Assessees are allowed. Customs 2018 (3) TMI 292 Imposition of ADD - relevant date - warehoused goods - Hot Rolled Painted Steel Plates - the 4th respondent detained the goods to interpret the Anti Dumping Duty Notification dated 11.05.2017 claiming that the Anti Dumping Duty on the subject goods will have to be paid by taking the date of filing of the Ex-Bond Bill of Entry dated 31.08.2017 without considering the Warehouse Bill of Entry dated 22.01.2016, which is much prior to the coming into force of the levy of even the provisional Anti Dumping Duty Notification dated 08.08.2016 - Held that: - the goods declared as Hot Rolled Painted Steel Plates imported, vide Ex-Bond Bill of Entry dated 31.08.2017, by the petitioner, were attempted to be cleared by evading payment of Anti Dumping Duty, was intercepted by the Special Intelligence and Investigation Branch (SIIB), Customs House, Chennai. The petitioner has self-assessed the goods under the Customs Tariff Item 7225 40 19 and paid the applicable Duty, except Anti Dumping Duty. The petitioner had originally filed the Warehouse Bill of Entry dated 22.01.2016 for clearance of 55.07.403 MTs of Steel Plates and Warehoused goods. Subsequently, they filed the subject Ex-Bond Bill of Entry for clearance of 878.395 MTs of Warehoused goods. It is settled position that the date of filing of Bill of Entry for home consumption is the relevant date for levy of Duty, including Anti Dumping Duty. As per Section 15(1)(b) of the Customs Act, in the case of goods cleared from a Warehouse under Section 68, the rate of Duty and Tariff valuation, if any applicable to any imported goods, shall be the rate and valuation in force on the date on which a Bill of Entry for home consumption in respect of such goods is presented under that Section - Admittedly, the goods covered under the impugned Seizure Memo were not cleared out of Customs. The contention of the learned counsel appearing for the petitioner that the Anti Dumping Duty cannot be levied retrospectively, cannot be accepted for the reason that the date of filing of Bill of Entry for home consumption is the relevant date for levy of Duty, including Anti Dumping Duty. The levy of Anti Dumping Duty under the Notification dated 11.05.2017 is applicable to the goods cleared under the Ex-Bond Bill of Entry dated 31.08.2017. Petition dismissed - decided against petitioner. 2018 (3) TMI 291 Writ in the nature of mandamus - Penalty - Search and Seizure of various documents - Principle of natural justice - the show cause notice alleges that the petitioner's company have been habitually indulged in diversion of the imported goods, imported by them on payment of duty and Imported duty free against Advance Authorization / Licences. It was alleged that in order to fulfill export obligation, they are showing fake clearance / deemed exports under CT3 to M/s. Tara Holdings Ltd. (100% EOU), West Bengal - For effective adjudication of the controversy in hand and to determine as to whether the petitioners ought to be permitted to avail the opportunity of crossexamination, as prayed by them, it would be necessary to dwell upon the statutory scheme under which such a right is claimed. The Adjudication procedure contemplated in Chapter 14, thus mandates the adjudicating authority to follow the principles of natural justice before issuing an order of confiscation of any goods or imposition of any penalty on any person and it mandates issuance of notice in writing, informing the owner of the goods or such person of the grounds on which it has proposed to confiscate the goods or to impose the penalty and on affording an opportunity to make a representation in writing within such reasonable time, as may be specified and also offer the reasonable opportunity of being heard in the matter. Section 124 of the Customs Act, 1962 under which show cause notice has been issued to the petitioner contemplates a notice in writing informing the grounds on which it has proposed to confiscate the goods or impose a penalty and giving an opportunity of making representation in writing within a reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty - Further every departure from principles of natural justice may not result in miscarriage of justice and the Hon'ble Apex Court has at times refused to strikeout an action, not being in conformity with the principles of natural justice, unless the prejudice caused is demonstrated. In the words of the Hon'ble Apex Court, it will be “useless formality”, if the resultant situation would be the same even after due adherence to the principles of natural justice. The question as to what extent the principles of natural justice need to be stretched as they cannot be moulded and are not to be construed with stringent strictness but needs to be dealtwith the flexibility. In order to effectively defend itself the petitioner is entitled to crossexamine the said transporters as that would offer the petitioner “a reasonable opportunity” as contemplated under section 124 (c) of the Customs Act, 1962. The Petitioner company is entitled for the said opportunity since the Revenue Authority specifically relied on the statements of the transporters in support of the show cause notice, proposing confiscation of the goods and levying of penalty and foisting the liability on the petitioner company under the said Act - Petition allowed. 2018 (3) TMI 290 Deliver/release of the outstanding quantities of replenishment gold pertaining to seven exports made by the petitioner under the Replenishment Scheme of the Foreign Trade Policy 2015-2020 - what the petitioner is seeking is a benefit in terms of the policies which the competent authorities framed under the Foreign Trade (Development and Regulation) Act, 1992. Held that: - we do not see how the third respondent and which apprehends any action being taken against it by the competent authorities and particularly respondent Nos.1 and 2 can, in the facts and circumstances peculiar to this case, insist on the furnishment of a Bank Guarantee only. We have noted that Fixed Deposit or Bank Guarantee is a condition which has been insisted upon initially from the letter dated 2712017, addressed by the third respondent. In that letter, the third respondent says that the petitioner has been supplied gold under the Replenishment Scheme till date. However, the transactions under the scheme are currently under investigation by the Central Government Agencies. In the circumstances, the third respondent would consider the supply of gold under the said scheme subject to the petitioner providing a Fixed Deposit/Bank Guarantee towards the customs duty. This will be used as a cover for the third respondent's liability under the Bond and the Bank Guarantee, except on duty free gold to be supplied to the petitioner. The third respondent stated that the security would be discharged on release of the Bond and the Bank Guarantee by the Customs authorities. It was clarified that the third respondent supplies gold as replenishment of the quantity of gold jewellery exported and it has no relation to the percentage of customs duty of gold being sold in the market. As such the third respondent is not liable for any change in customs duty or incidental losses/gains. Interest of justice would be served if the petitioner executes an Indemnity Bond, indemnifying respondent No.3 against all the claims that would be raised by the competent authorities in the Central Government and exercising powers under the Customs Act, 1962, the Central Excise Act, 1944 and the FTDR Act, 1992 - petition disposed off. 2018 (3) TMI 289 Validity of SCN - Revocation of CHA License - forfeiture of security deposit - Department of Revenue Intelligence (DRI) initiated investigation on the allegation of undervaluation - whether the impugned show cause notice dated 31.10.2014 is liable to be set aside on the ground that it still continues to have the inherent defects, which were pointed out by this Court while setting aside the earlier show cause notice dated 02.07.2014, issued on identical grounds? Held that: - What is to be remembered is that, both the show cause notices are issued on the same set of facts and therefore, there is bound to be repetition of the factual averments. Therefore, the petitioner cannot contend that both notices are verbatim repetition of each other. If it is not so, then also the respondent would be faulted. Therefore, I am not inclined to take note of the said submission for upholding that the impugned show cause notice is not sustainable. What is required to be seen is whether the respondent had borne in mind the object for issuing a show cause notice while issuing the impugned show cause notice. The purpose of issuing a show cause notice is to intimate the party, who has to show cause as to what is the allegation against the said noticee, for which he as to respond. Therefore, show cause notice apart from being clear and unambiguous and specific, it should also be issued with an open mind, which should be manifest on reading of the show cause notice. hat has been mentioned in the show cause notice is a proposal, whereby, the respondent proposed to take action in accordance with Regulation 20(1) of the CBLR. Thus, the petitioner has adequate opportunity to put forth all their contentions by answering to the show cause notice and on the grounds raised by the petitioner, the impugned show cause notice cannot be interfered with. Consequently, the writ petition is liable to be dismissed - petition dismissed. Renewal of CHA License - Held that: - Admittedly, as on the date, when the petitioner's application for renewal of the custom broker licence was rejected, there was no conclusive finding rendered against the petitioner holding that their conduct was not satisfactory with relevant to the obligation mentioned in the CBLR - I am unable to agree with the conclusion recorded by the respondent while rejecting the application for renewal stating that the conduct of the custom Broker is not found to be satisfactory, with reference to the obligations mentioned in the CBLR. Thus, the petitioner's application for renewal is to be rejected on the ground that it would amount to pre-deciding the issue, which is subject matter of show cause notice dated 31.10.2014. Therefore, the order rejecting the petitioner's application for renewal of custom brokers licence has to be set aside petition allowed. Petition allowed in part. 2018 (3) TMI 288 Payment made under protest - extended period of limitation - penalty - Held that: - There is a concurrent finding of fact of mis-declaration of the value, and consequently, Section 111 (m) of the Customs Act, gets attracted. Section 112 of the Customs Act which provides for penalty follow. Though CESTAT was empowered to impose a penalty, not exceeding the value of the goods of Rs. 5,000/-, whichever is greater, in the case on hand, considering the quantum of penalty of Rs. 10,00,000/- on the assessee, CESTAT has reduced the same to Rs. 5 lakhs. The appellant has not made out a case for interference and substantial question of law raised is answered against the assessee - appeal dismissed. 2018 (3) TMI 287 Benefit under Advance Authorisation Scheme - advance authorisation contained a condition, by which the petitioner was obligated to export finished products within a specified time. The admitted fact is that the petitioner did not comply with the said condition within the time stipulated - Held that: - the impugned orders in W.P.Nos.2304 and 2305 of 2018 though appear to grant relief to the petitioner have in fact denied the relief. While passing the impugned order, the second respondent has exercised his power and granted extension of time and further made a direction unworkable by stating that the direction will operate from 22.02.2014. Thus, the benefit granted in favour of the petitioner has ended in futility and the impugned order is a paper order, probably with a view to comply with the direction issued by this Court. The second respondent cannot be given an opportunity to revise his own order and he having not been vested with any such power to revise his own order under the relevant regulations, the question of remanding the matter does not arise. With regard to the period for which the extension has to be granted, the respondent should have taken a realistic approach, because, admittedly, the petitioner is yet to fulfil the export obligation. Therefore, to grant extension up to August 2014 is an unworkable order and probably would serve statistical purposes only. Therefore to that extent the impugned orders in W.P.Nos.2304 and 2305 of 2018 call for interference. Petition allowed in part. 2018 (3) TMI 286 Reward scheme - reward for disclosed vital information about evasion of tax / public revenue - the grievance of the petitioner is that his reward which was allegedly due and payable is withheld on untenable grounds - Held that: - the petitioner claims that a case has been booked on the basis of specific and elaborate information provided by him but the amount of deposit is just a peanut. The tax evader should have deposited much more and the petitioner hopes that the investigation has not missed out anything. Then he says that he is entitled to an advance reward but he will forward further emails to DRI to fetch more revenue in this case. In the case at hand there is a dispute as to whether the department indeed relied on the information or the details provided by the petitioner. It specifically denies that it has so relied on the same. It says that it has its own sources to obtain information and its own intelligence generated led to investigations being carried out much prior to the petitioner coming on the scene. The petitioner came on the scene on January 2015 and the department claims to have obtained the information in April 2014 and in relation to certain transactions by the courier mode. Thus the petitioner has occasion of obtaining these details of the information collected and generated by the department from his own sources and encashing upon the same. The petitioner is accused of having relied on this very piece of information available with the department but without its details and he commenced correspondence in January 2015. He commenced correspondence about those cases which were already under the scanner of the department. The department had an in-house investigation mechanism and which it resorted to. It did not rely on the information made available by the petitioner. The petitioner's emails did not gave the details as were necessary and that is why the respondents have raised a dispute on the petitioner's right or entitlement to reward. Even the initial entitlement or an advance reward is disputed and that was not granted. The petitioner relies upon his e-mails but conveniently omits to give details of how the proceedings ended. The petitioner claims that it was his information which led to the investigations but the department says otherwise. From inception therefore there is a clear factual dispute The petitioner's entitlement being not consistent with the policy or guidelines as noted by the Revenue, in writ jurisdiction we are not inclined to consider it - petition dismissed. 2018 (3) TMI 285 Provisions of sub-section (11) of Section 28 of Customs Act, 1962 inserted by the Customs (Amendment & Validation) Act, 2011, with effect from 16.9.2011 - lack of jurisdiction of the respondent-Additional Director General to issue the said SCN - Held that: - As far as the validity of the provisions of Section 28(11) of the Act is concerned, this Court does not find any illegality or lack of legislative competence or ultra vires in the said provision. As per the well settled legislation practice of undoing the effect of the judgments of the Constitutional Courts by removing the defects pointed out by the Courts of law, the legislature came forward to frame laws in consonance with the legislative objects sought to be achieved. Deeming of all designated officers to be ‘proper officers’ for undertaking the assessment proceedings, cannot be said to be unguided power conferred upon the authorities of concerned Revenue Department. It is left to the concerned Revenue Department itself to bifurcate, assign and divide its jurisdiction amongst its several designated officials. Nobody can deny that these authorities work for the ultimate object of implementation of the Customs Act, 1962. The tax payers have no right to choose their adjudicating authority. The Revenue’s contention that once the territorial jurisdiction is conferred, the Collector of Customs (Preventive) becomes a ‘proper officer’ in terms of Section 28 is not acceptable, the Parliament had no option, but to declare even these Anti-evasion Wing officials to be ‘proper officers’ to legally vest them with the jurisdiction to undertake the proceedings for assessment. This was obviously done to save the proceedings in the Courts of law particularly Constitutional Courts challenged on the technical and narrow ground of lack of jurisdiction. The petitioner does not appear to have filed any reply or objections to the said show-cause notice before the Principal Commissioner/Commissioner of Customs Bengaluru - the challenge to such SCN must fail as premature - petition dismissed. 2018 (3) TMI 284 Smuggling - Gold concealed in Zinc ingots - Case of the petitioner is that such show cause notice was never served on him. The department though fully aware that the petitioner is a resident of Sharjah, sent the notices at the address of partnership firm at Rajkot and, thereafter, proceeded exparte against the petitioner without service of notice on him - principles of Natural Justice. Held that: - The petitioner cannot take a stand that the notices and summonses were not duly served. All the attempts of actual service having failed, the department had no choice but to exhibit such notices and summonses at the Customs House. Significantly, such notices and summonses were dispatched at the Rajkot address of the partnership firm, of which the petitioner was the partner. The petitioner may have been called upon in his personal capacity to answer the charges, nevertheless, he cannot disown the establishment of the partnership firm, of which he was an active partner and claim that any summons or notice dispatched at the address of the partnership firm would not amount to service on him. This would be way too technical. Even otherwise the department had sent one summons to his address at Sharjah and finally relied on exhibition of such notices and summonses at the Customs House - question of breach of principles of natural justice therefore does not arise. Whether the power of the Commissioner to impose penalty under section 112 of the Customs Act was hedged with limitation of maximum of 10% of the duty attempted to be evaded or 100% of the value of goods? - Held that: - Chapter XIV of the Customs Act pertains to confiscation of goods and conveyances and imposition of penalties. Section 111 contained in the said chapter pertains to confiscation of improperly imported goods etc. The said section provides that goods brought from a place outside India in case of any of the eventualities mentioned in clauses (a) to (p) thereof shall be liable to confiscation. When clause (ii) of section 112 therefore, refers to dutiable goods other than prohibited goods, it shall necessarily have the reference to the goods, import of which is not prohibited or of which import is permissible subject to fulfillment of conditions and such conditions have been complied with. Condition of declaration of dutiable goods, their assessment and payment of customs duties and other charges is a fundamental and essential condition for import of dutiable goods within the country. Attempt to smuggle the goods would breach all these conditions. When clearly the goods are sought to be brought within the territory of India concealed in some other goods which may be carrying no duty or lesser duty, there is clear breach of conditions of import of goods though perse import of goods may not be prohibited. Petition dismissed - decided against petitioner. 2018 (3) TMI 283 Penalty - Delay in adjudication process - quantity mentioned in the Bills of Lading is not prima facie evidence for the quantity loaded on board the vessel - Held that: - the respondents, while exercising the powers under Section 116 of the Customs Act, have to exercise the same within the reasonable period, though the Act does not provide for a limitation, within which, the said power should be exercised. The Courts have consistently held that the period of five years to complete the adjudication proceedings should be reasonable period, as the bond executed by the agent is required to be kept alive for a period of five years. The Government of India, in exercise of its revisional powers, followed the decision of various Court and held to the same effect. In the preceding para, the relevant dates have been noted and the time taken between two stages have also been mentioned. Though an Authority, exercising power under the statute can do so, and if such an action has the effect of disturbing rights of a citizen, it should be done within a reasonable time, even if period of limitation is not stipulated under the relevant statute. What is required time would depend upon the facts and circumstances of each case. Thus, bearing the legal principle in mind, it is absolutely necessary to examine the factual matrix of the case. In the cases on hand, though cargo was completely discharged on 19.02.1993, it took two years for the Department to issue show cause notice, (i.e. on 19.03.1995). The petitioner appears to have been prompt in responding to the show cause notice by submitting reply, dated 15.04.1995, and nothing happened thereafter for four years and the order-in-original was passed on 04.08.1999. Immediately thereafter, the petitioner preferred Appeal to the second respondent/Appellate Authority, which was rejected only after four years, i.e., 31.01.2003. The petitioner's Revision Petition, which was filed within the limitation, took one year, to be disposed of by the first respondent, by order, dated 31.03.2004. Only saving grace being that the penalty was reduced. The inordinate delay in concluding the adjudication proceedings is unreasonable - the Revisional Authority, Government of India, having found that, no blame can be fastened on the petitioner for intentionally being the cause for the short landing, this is a fit case, where, the entire penalty imposed on the petitioner requires to be vacated - petition allowed - decided in favor of petitioner. 2018 (3) TMI 282 Benefit of N/N. 146/94-Cus dated 13.07.1994 - customs duty exemption to sports goods imported by National Sports Federation or by a sports person of outstanding eminence for training - petitioner's grievance is that in spite of having produced the necessary documents to show that he is a renowned shooter and entitled for exemption from Customs Duty as per the Government of India notifications, the 4th respondent detained the consignment and for six days, the consignment was withheld under one pretext or the other. Held that: - The purpose of adding the proviso to the condition b in column 3, SL.No.2 of the general exemption notification is clear. The purport and import of such inclusion by adding a provisio is to facilitate the process of acquiring the imported goods duty free. If the interpretation given by the 4th respondent has to be accepted, no emminent sportsman in this particular field would ever be able to import any of the ammunition of arms for the training purpose and he will be languishing in the corridors of Department of Youth affairs for years together for obtaining appropriate certification. This is precisely the reason for introducing the explanation to the said provision. The respondent cannot deny the fact that both the petitioners are Renowned Shooters and National Rifle Association certified so and considering the fact that one of them has done prior imports through the Bangalore Airport, the 4th respondent was not justified in denying the relief of exemption to the petitioner. Petition allowed. 2018 (3) TMI 281 Acquittal of offences - offences punishable under Section 135(1)(a) and 135(1)(b) of the Customs Act, 1962 and 5 of the Imports Exports (Control) Act, 1947 read with Sections 34 and 120-B of the Indian Penal Code - Held that: - The evidence of the P.W.3 has proved the fact that goods have been removed on 7th February, 1985 and P.W.4 in evidence asserted that these goods were deposited in the Customs Godown on 5th March, 1985. He had also produced the Register on Record. The question, that arises is, with whom the subject goods were lying between 7th February, 1985 to 5th March, 1988. The prosecution has neither answered this issue, nor clarified it by placing on record, evidence of any kind. At the same time, the evidence of P.W.1 who had inspected the goods would be relevant - Nobody knows who was in the custody of the subject goods from 7th February, 1985 till 5th March, 1985. There is no reason to hold that the trial Court has committed any error in appreciating the evidence and recording the order of acquittal against accused nos. 1 and 3 - appeal dismissed - decided against Revenue. 2018 (3) TMI 280 Revocation of Custom Duty Exemption Certificate (CDEC) - N/N. 64/88-Cus. dated 01.03.1988 - import of certain medical equipments exempt from customs duty - Held that: - Beyond a pale of doubt, the provisions relating to exemption from tax or duties have to be strictly construed and except upon satisfaction of the conditions for grant of such exemptions stricto sensu, the exemption from customs duty cannot be given by way of largesse to the beneficiaries, like Hospitals and Medical Institutions in the present case. It is all the more necessary that a strict, meticulous and complete compliance of conditions with the relevant and cogent evidence is proved beyond doubt before the concerned Authorities. A casual, cavalier or compliance by a paper formality is not enough to allow such Institutions to avail exemption under the said exemption notifications. The very purpose of such exemption will be defeated if the conditions are allowed to breached with impunity and then glossed over by a paper exercise in the name of submitting of a so-called reply furnished by the petitioner in the present case, Annexure-V dated 4.7.2014 , which does not inspire any confidence. The failure on the part of the petitioner to bring forth the said reply and the relevant data with evidence before the concerned Authority during the course of personal hearing on 5th and 6th of May 2014, speaks volumes against the petitioner-Institutions and shows the lackadaisical manner in which it sought to fortify its claim for exemption of customs duty in the aforesaid manner. The gross abuse of customs duty exemption by these Institutions and as many as 392 Institutions out of 396 given such exemption lost their CDECs, defeats the very purpose for which such exemption was given, for the avowed purpose of providing free medical aid to the poor sections of the Society. This Court does not find any illegality, perversity or arbitrariness in the impugned order passed by the respondent-Authority which could be quashed on the anvil of Article 14 of the Constitution of India - petition being devoid of merits, is dismissed. 2018 (3) TMI 279 Classification of imported goods - Video Server - classified under CTH 85177090 or under CTH 85219090? - benefit of N/N. 24/2005-CUS - Held that: - The description appearing in the catalogue clearly shows that the video servers are a device which is acts as an intermediary between the cameras and the network. In other words it receives images taken by the cameras and converts them into a digital form and feeds the same into the network - With reference to the assertion of Revenue that the said video server has memory to store the video images, the Commissioner (Appeals) has countered that the temporary storage/buffer of video image on the RAM/Memory does not make the video server recording and reproducing apparatus. The RAM of any device is meant only to assist the function of the internet circuit it cannot be treated as recording /storage device. Appeal dismissed - decided against Revenue. 2018 (3) TMI 278 Valuation of export goods - validity of advance licence - whether the appellant had overvalued the export goods and consequently obtained the advance license and whether the appellant is liable to pay redemption fine on import made by M/s Mdhu Overseas and consequent penalty, whether the appellant is liable for penalty under section 114(i) of Customs Act, 1962 for charge of over valuation of the export goods? Held that: - it was admitted by the Learned Commissioner that the goods are not available . In such a situation he should not have imposed the redemption fine as held by the Larger Bench in the case of Shiv Kripa Ispat Pvt Ltd v. Commissioner of Central Excise & Customs, Nasik (supra). Accordingly, we set aside the redemption fine of Rs. 55 lakhs. Similarly, a redemption fine of Rs. 2.5 lakhs will also not sustain since the goods were not available for confiscation and the said redemption fine is also set aside. As regards the demand of duty of Rs. 9,83,400/- from the appellant under section 28(1) of the Customs Act, 1962 and interest @ 20% under section 28AB of the Customs Act, 1962 and imposition of penalty of Rs. 9,83,400/- under section 114A upon the appellant, we find that the appellant is not importer of the goods. Penalty u/s 114(i) of the CA 1962 - Held that: - the appellant have transferred only two licences wherein the duty involvement is Rs. 2,83,400/-. As regards the 15 licences, the appellant have surrendered those licences without use thereof. Taking into consideration over all facts and circumstances of the case and the duty involved in the two license, the penalty of Rs. 25 lakhs is very harsh which needs to be reduced - quantum of penalty reduced. Appeal allowed in part. Corporate Laws 2018 (3) TMI 277 Secured creditor entitled to prefer a company petition for winding up - whether respondent Kotak Mahindra Bank shall wait till they exhaust their attempts to auction the properties mortgaged with them, recover the amount in question partly or wholly and then decide as to whether to file a company petition for winding up? - Held that:- After having a comprehensive view of the provisions and the judgments dealing with this issue, we are of the considered opinion that the secured creditors need not wait till the final outcome of the proceedings in case financier decides to proceed to enforce and realise the secured assets. The relevant provisions of the Companies Act are clear to state that to recover loan/amount advanced, the secured or unsecured creditors are entitled to approach Company Court under the provisions of the Companies Act by preferring a winding up petition. We are informed by the Counsel appearing for the respondent that so far nothing has been paid to the respondents against the loan advanced to these appellants by the respondents. In the facts, we find that the learned Single Judge exercised reasonable discretion. The view adopted by the learned Single Judge is probable one. We do not find any perversity in the view. There is no merit in the appeals. Insolvency & Bankruptcy 2018 (3) TMI 320 Corporate insolvency process - existence of operational debt - failure to make payment against procurement of paddy - Held that:- As per the invoices issued by the Operational Creditor with regard to supply of paddy to the Operational Debtor it is proved beyond doubt that ‘goods’ in terms of Section 5(21) of the Code were procured by the Operational Debtor from the Operational Creditor on various occasions. It is patent from a perusal of the VAT D-2 form (from pg. 216-220) issued by the Respondent Company that it acknowledges the receipts of 1203 quintals of paddy from the petitioner firm. For determination of the aforesaid issue it would be necessary to read the definition of the expression ‘Operational Debt’ given in Section 5(21) of the Code The definition of operational debt postulates that it is a claim, inter alia, in respect of the provision of ‘goods’ or ‘services’ including employment etc. A perusal of the invoices issued by the ‘Operational Creditor’ in the name of Operational Debtor clearly shows that ‘Operational Creditor’ has supplied paddy to the Operational Debtor on various occasions. Therefore, the debt which is due and payable by the Operational Debtor to the Operational Creditor is prima facie covered by Section 5(21). It is also evident that Operational Debtor has committed default and the amount of Rs. 32,55,653/- has remained unpaid. Thus, there is default committed on the part of the Operational Debtor within the meaning of Section 3(12) read with Section 4 and Section 9(1) of the Code, 2016. As a sequel to the above discussion, this petition is admitted. In pursuance of Section 13(2) of Code, we direct that Interim Insolvency Resolution Professional shall immediately make public announcement with regard to admission of this application under Section 7 of the Code. 2018 (3) TMI 319 Corporate insolvency process - existence of operational debt - failure to make payment against procurement of paddy - The petitioner- operational creditor is a commission agent and a middleman who used to procure the paddy from farmers to be supplied as per the demand in the open auction. - Held that:- As already observed in this case, the respondent had been making regular payments of the interest as well as the principal to the petitioner-operational creditor about three years after the transaction was completed, but raised an issue with regard to the quality-cut only after the first demand notice under Section 8 of the Code was sent. The present cannot be considered to be a case where the dispute has been raised before the receipt of the demand notice. It is not the case of the respondent that it has settled the accounts of the present transaction with the Pacca Arthias nor it is averred in defence that Pacca Arthias filed any proceedings against the petitioner nor even the respondent has taken any proceedings against the petitioner except making the regular payments and is coming up with such plea, which on the face of it, deserves to be out rightly rejected. Then no document to show that the debit notes were ever set to the petitioner nor any other communication was sent to the petitioner, who has paid the price of the paddy to the farmers from whom it was procured. This is what should be understood as correct interpretation of the term dispute, while separating grain from the chaff and to reject the spurious defence, which is merely a bluster. In view of the above, the application deserves to be admitted. 2018 (3) TMI 318 Initiation of corporate insolvency process - Whether failure to send reply to the demand notice received by one of the directors of the Corporate Debtor is fatal? - Held that:- Petitioner’s firm has some control over the respondent through 3rd petitioner and it has come out in evidence that petitioner’s firm is a party to the MOU above referred. It is a circumstance doubting the contact of Mr. Samrat Gupta who has got intimate friendship with the 3rd petitioner. So deliberate neglect on the side of him in not sending the reply to the demand notice received by him cannot be ruled out. Whether he has taken a decision reply on the basis of any decision approved by the board of directors of the respondent company is a question cannot be answered in this case. It requires larger evidence. Ld. Counsel also produced a copy of FIR at the time of final hearing. The respondent herein this case succeeded in establishing a case of certain control over the respondent company by the petitioner through the 3rd respondent. The unholy nexus between Mr. Samrat Gupta and the 3rd petitioner is probable to believe in the above said circumstance. In the above said peculiar circumstances we find failure on the side of the respondent in not sending reply is not fatal. This point is answered accordingly. Whether Corporate debtor succeeded in establishing existence of any dispute? - Held that:- There exist a genuine dispute prior to the filing of the application and before the date of issuance of the demand notice. It appears to us that the contentions taken by the respondent are not feeble, mala fide or hypothetical. Existence of MOU in between the parties and pendency of Arbitral proceedings seen not mentioned in the application. Existence of MOU is an important document produced on the side of the respondent. It deals with sharing of profits and loss between Corporate Debtor and Operational Creditor. How it would be shared or not is not a question to be answered in the case in hand. The terms in between the parties as per MOU may have some relevancy in regards the settlement of the claim in hand. Non-mentioning the above said fact is therefore amount to suppression of material facts. Thus we are inclined to reject this application. PMLA 2018 (3) TMI 276 Offence under PMLA - Attachment of property involved in money-laundering - Held that:- In the present case, defendant No.3 has challenged the order of attachment passed by the authorities in respect of the property which does not belong to him. The subject matter of the present appeal is not the prosecution launched against the defendant No.3. As we have already indicated that it will be open to the defendant No.3 to consider for applying for discharge, in case so advised. We make it clear that the learned Judge seized of the criminal case will decide the same on the basis of evidence on record and in accordance with law, uninfluenced made in the impugned orders and this order. All contentions of the parties on merits in that regard are expressly kept open. In the result, we find merit in the submission of the respondents that defendant No.3 has no locus to challenge the orders of attachment. Appeals fail and the same are dismissed. Service Tax 2018 (3) TMI 274 Voluntary Compliance Entitlement Scheme - whether in the facts and circumstances of the case, the provisions of Section 106(1) of Finance Act, 2013 debars the respondent not to take benefit of the scheme or not? - Held that: - Admittedly, for the earlier period, during the course of audit an objection was raised and respondent immediately reversed the Cenvat credit along with interest proceedings against the respondent were closed. The issue raised by the Revenue is that as the order of determination of their service tax liability, therefore, the respondent are not entitled to avail the benefit of Section 106(1) of the Finance Act, 2013. The similar issue came up before the Honble High Court of Bombay in the case of Pace Setter Business Solutions Pvt. Ltd. [2017 (4) TMI 564 - BOMBAY HIGH COURT] wherein on the identical facts the Hon’ble High Court hold that the assessee is entitled to avail the benefit of the scheme. Appeal dismissed - decided against Revenue. 2018 (3) TMI 273 CENVAT credit - common services used for taxable as well as exempted service - Rule 6 (3) (i) of Cenvat Credit Rules 2004 - whether the appellant is required to pay 6%/8% in terms of Rule 6(3) (i) of Cenvat Credit Rules, since they have availed the cenvat credit on the common input service used for taxable as well as exempted service? Held that: - though the appellant had availed cenvat credit on the common input service, out of the total credit except the credit related to the input service specified under Rule 6(5) of Cenvat Credit Rules, 2004, the entire credit was reversed before issuance of show cause notice. As per the prevailing Rule 6(3) there was a provision available for the assessee either to pay 8%/6% of the value of exempted goods or pay the proportionate credit attributed to the exempted goods. Therefore in the present case, the appellant have opted for reversal of credit attributed to the exempted goods however precautionary they have reversed the entire credit in respect of common input service used not only for exempted service but also for taxable service. This issue has been considered in detailed by this Tribunal in the case of Mercedece Benz India Pvt. Ltd. Vs. CCE, Pune [2015 (8) TMI 24 - CESTAT MUMBAI], where it was held that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. The option was available to the assessee to reverse the proportionate credit under Rule 6(3) (ii) in terms of Rule 6(3A) of Cenvat Credit Rules, 2004. Accordingly, the demand of 8%/6% in terms of Rule 6(3) (i) cannot be sustained. As regard the cenvat credit retained by the appellant in respect of input service which are specified under Rule 6(5) of Cenvat Credit Rules, 2004, the said rule provides that there is no reversal is required even though the part of the service was used for exempted service. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 272 Penalty - tax with interest paid before issuance of SCN - case of appellant is that with regard to MSEB since it was a government organisation they had a bona fide belief that service tax is not payable and, therefore, they have not charged service tax to MSEB and, therefore, not paid the same - Held that: - when the department pointed out the lapse, immediately they paid the service tax along with interest before issue of show cause notice in spite of the fact that they have not collected the same from MSEB - also, the department is unable to bring on record any evidence to show that appellant had suppressed the material facts from the department and had malafide intention to evade payment of service tax - since the appellant paid the service tax along with interest before issue of show cause notice penalty under Section 77 and 78 of Finance Act, 1994 is not to be imposed - appeal allowed - decided in favor of appellant. 2018 (3) TMI 271 Rectification of mistake - Revenue's ground is that the Refund application filed by the appellant claiming refund of excess duty paid by GAIL should have been filed with the jurisdictional authorities of GAIL rather than filing with their jurisdictional central excise authorities - Held that: - Tribunal in the case of Chambal Fertilizers and Chemicals Ltd. v. CCE, Indore [2017 (1) TMI 549 - CESTAT NEW DELHI] has dealt with an identical issue and has held that the jurisdiction to entertain refund claims lie with the excise authorities of the service provider as also of the service recipient - ROM application dismissed. 2018 (3) TMI 270 Short payment of service tax - Renting of Immovable Property - Held that: - The said service was under litigation before various High Courts and was ultimately decided by the Hon’ble Delhi High Court in favor of the Revenue - Section 80 Finance Bill, 2012 is to the effect that if an assessee deposits the entire tax within the period of six months from the date of receipt of assent of the President to the Finance Bill, 2012, the penalties would not be imposable - In the present case the entire deposits were made in the year 2010 itself. As such, no penalty is required to be imposed upon him. Interest and penalty set aside - appeal allowed - decided in favor of appellant. 2018 (3) TMI 269 Allowability of exemption for services released by Unit in SEZ - refund claim - Held that: - the issue herein is squarely covered in favour of the appellant by Single Member Bench ruling of this Tribunal in the case of Intas Pharma Ltd Vs. CST [2013 (7) TMI 703 - CESTAT AHMEDABAD], where it was held that any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ - appellant shall be entitled for the consequential benefit including the refund of service tax rejected earlier - appeal allowed - decided in favor of appellant. 2018 (3) TMI 268 Valuation - inclusion of reimbursement of expenses - electricity charges - air-conditioning charges - Held that: - demand in respect of electricity charges and air-conditioning charges being reimbursable expenses, we are of the view that these cannot be included in the total value of taxable services. As per lease deed, the respondent is under obligation to maintain common areas and provide various amenities. The amount collected as operation and maintenance charges represents charges for maintenance of the building rented out to the clients - Though, the respondent has included such charges under Renting of Immovable Property Service and is discharging service tax under such category after 1.6.2007, the issue whether they were providing any maintenance services prior to 1.6.2007 and whether these will fall under MMR services has to be looked into - the matter requires reconsideration on this aspect. Appeal allowed by way of remand. Central Excise 2018 (3) TMI 267 Demand of Differential duty - N/N. 06/2006-CE dated 01.03.2006 - Department was of the view that in respect of 160 duty paid chassis on which body was built by Unit-II, duty was required to be paid by Unit-II on the entire value of chassis + body built thereon at the time of returning the same to Unit-I. Held that: - The unit which has received the duty paid chassis from M/s Tata Motors has availed the Cenvat Credit of such duty paid before sending the same to other unit for body building. After getting the body built by the other unit and return of the same, the first unit has paid the duty on value including that of the chassis. The excise duty demand has been raised on the second unit where the body has been built - Since the second unit has not taken the credit of duty paid on the chassis, the second unit is allowed to discharge the duty without including the value of chassis. It is found that such duty has already been paid. Consequently, the demand for differential duty raised against the two units cannot be sustained. The differential duty raised in the course of audit objection has already been paid by both the units but Revenue has raised the issue that such duty has been paid after delay and hence interest is required to be paid - demand set aside - appeal allowed - decided in favor of appellant. 2018 (3) TMI 266 CENVAT credit - Department was of the view that since no Excise Duty was required to be paid on such dies on transfer to Unit-II, the Cenvat Credit availed was irregular - Held that: - there is no dispute about the payment of duty by M/s Tata Motors Ltd., which has been availed as Cenvat Credit as by Unit-II. There was no legal requirement on the part of M/s Tata Motors Ltd. to pay the CVD but the same has been paid. It is a settled law that receiver of the goods is eligible to take credit of duty paid and the correctness of the assessment and payability of the duty by the supplier of the goods cannot be opened by the Central Excise Authorities at the end of the recipient of the goods. Similar issue came up before Hon’ble Supreme Court in the case of CCE V/s MDS Switchgear Ltd. [2008 (8) TMI 37 - SUPREME COURT], where it was held that CER entitled the receipt manufacturer to avail credit of the duty paid by the supplier, so quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be challenged by revenue in charge of recipient unit. Transfer of dies from Unit-II to Unit-I on payment of duty - Held that: - there is no dispute that Unit-II has paid duty while transferring the dies to Unit-I. Admittedly, these dies have been sent for repairs and are not in the nature of capital goods for Unit-I. But Rule 16 of the Central Excise Rules, 2002 provides for return of goods to the factory for repair, remaking etc. Hence the credit cannot be disallowed only for the reason that the dies are not the capital goods for Unit-I. The appellant has submitted various documents such as material receipt notes on the part of Unit-I, purchase order details of proportion including evidence for payment of Service Tax on the transportation etc. These evidences have been ignored by the adjudicating authority. In any case the credit availed by Unit-II stands reversed when the dies were returned to Unit-II after carrying out repairs by reversal of the Cenvat Credit. Since the credit availed already stood reversed no demand can be raised against the Unit-I for repayment of the credit availed all over again. There is no justification for demanding repayment of Cenvat Credit all over again by taking the view that the credit availed was irregular - appeal allowed - decided in favor of appellant. 2018 (3) TMI 265 100% EOU - the waste generated during the manufacturing process of cotton blended yarn is cleared without payment of duty - demand of duty on the waste generated in Part-II of the unit by classifying under Chapter 55 of the Central Excise Tariff Act - Held that: - identical issue decided in appellant own case Winsome Yarns Ltd. Versus CCE Chandigarh [2017 (3) TMI 364 - CESTAT CHANDIGARH], where it was held that as predominating factor is of cotton waste, and waste is classifiable under Chapter 52 of cotton yarn manufactured in question, the duty cannot be demanded - appeal allowed - decided in favor of appellant. 2018 (3) TMI 264 Classification of goods - Building Blocks, solid and hollow pavers made of cement/concrete - whether classified under CTH 68101190 or under CTH 68109990? - benefit of N/N. 10/2003 dated 1.3.2003 - Held that: - the classification of the impugned products manufactured by the respondent has been held to be under 68101190 against the classification alleged by the department to be under 68109990 - identical issue decided in respondent own case AEON’S CONSTRUCTION PRODUCTS LTD. Versus COMMISSIONER OF C. EX., CHENNAI [2009 (6) TMI 247 - CESTAT, CHENNAI], where it was held that the assessees are entitled to the benefit of concessional rate of duty under the relevant Notifications as rightly held by the lower appellate authority - appeal dismissed - decided against Revenue. 2018 (3) TMI 263 CENVAT credit - demand on the ground that the appellants were required to file a statement of utilization of credit, payment of duty and taking of credit by 15th day of subsequent month, which were not filed - N/N. 01/2010-CE dated 6.2.2010 - Held that: - As per the said Notification, Condition 5 (d) stipulates that the appellant is required to file a statement of the total duty payable as well as the duty paid by utilization of Cenvat credit or otherwise and the credit taken on or before 15th of the subsequent month - Admittedly, the appellant did not comply with the condition of the notification. Hon’ble Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. [1991 (8) TMI 83 - SUPREME COURT OF INDIA] has held that Condition 5(d) of Notification No.01/2010-CE dated 6.2.2010 is similar to other notifications which are in the manner of procedure to be followed by the appellant wherein the appellant is required to file certain documents before a particular date. If such documents are filed with a delay, in that circumstance, it is only a procedural lapse on the part of the appellant, the benefit of notification cannot be to the appellant. Condition 5 (d) of N/N. 01/2010-CE dated 6.2.2010 is procedural in nature and for complying with the said condition with a delay cannot be fatal to the appellant - the self credit taken by the appellant cannot be denied. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 262 Penalty u/r 26 of the CER 2002 - short payment of duty - Held that: - control of manufacture quality, raw material, storage, packing proves that manufacturer is M/s Nitin Pharmaceuticals Pvt. Ltd and not the appellant. If that is the case, therefore, without coming out any instance of involvement of the appellant for short payment of duty by M/s Nitin Pharmaceuticals Pvt. Ltd., the observation made by the Ld. Commissioner (A) in paragraph 9 of the impugned order is contrary to the facts of the case. Penalty not imposable - appeal allowed - decided in favor of appellant. 2018 (3) TMI 261 CENVAT Credit - only plea put forward by the ld. counsel is that the adjudicating authority may be directed to verify the CENVAT documents and may be given benefit of the CENVAT credit in case the appellant produce documents - Held that: - In Vikash J. Shah Vs. Commissioner (Appeals) Coimbatore [2016 (2) TMI 442 - MADRAS HIGH COURT], the Honble High Court observed that the benefit of CENVAT credit ought to be given to the appellant - We direct the adjudicating authority to consider the claim of the appellant for CENVAT credit on production of documents. The said verification shall be completed within a period of three months from the date of receipt of this order. Penalty on M/s. Sri Amman Allied and Steel Industries - Held that: - Taking into consideration of the fact that equal penalty under section 11AC has been imposed and also that a penalty under Rule 26 cannot be imposed upon a company, we find that the said penalty requires to be set aside. Matter remanded to verify the plea of appellant regarding benefit of CENVAT credit - appeal allowed by way of remand. 2018 (3) TMI 260 Clandestine removal - excess of finished goods - shortage of goods - evidence obtained from computer floppies opened using unauthenticated software - Held that: - the Tribunal had clarified that Revenue has no right to use any files opened with unauthenticated software in the remand proceedings. In the denovo proceedings, the Commissioner has therefore excluded the evidence obtained from the filed opened with unauthenticated software. As seen above, in the impugned order it is discussed in detail the reason for dropping duty demand of Rs. 7,60,79,469/-. Therefore, we do not find any merit in the appeal filed by the department in E/401/2009 requesting to interfere with the dropping of the said demand of duty. Penalty - Held that: - there is no evidence that the co-noticees have directly indulged in clandestine production of clearance of excisable goods. Further that when separate penalties have been imposed on SUAS for the very same offence, there is no need to impose penalty for the same offence under Rule 26 of Central Excise Rules, 2002. Appeal dismissed - decided against appellant. 2018 (3) TMI 259 SSI exemption - clubbing of clearances - dummy units - use of common brand name - Held that: - SCN has raised separate demands against both the Respondents thus accepting the separate entity of both the firms. Clubbing of value clearance of the firms without disclosing which of the units is principal and which of the units is dummy is not sustainable as when the clearances are sought to be clubbed it has to be shown as which entity does not have separate existence and hence its clearances are to be clubbed to the clearances of principal unit. The SCN also alleged that since both the units are manufacturing goods with a common brand name (Gaylord), they are not entitled for the benefit of value based SSI exemption N/N. 8/2003-C dt 1.3.2003 - it is found that the name Gaylord is not a registered brand name of any of the units. Further none of the units has claimed the ownership on such name. In such case when the word Gaylord is part of their name, it cannot be said that the Respondents are manufacturing goods under a brand name of another person. Appeal dismissed - decided against Revenue. 2018 (3) TMI 258 Classification of goods - “green houses” in ready to assemble condition - whether classified under CTH 9406 or under CTH 8424? - Held that: - The tariff entry 9406 00 11 covers the green houses in ready to assemble sets. It stands established that the supply which has been made is for green houses in ready to assemble condition. Such goods are specifically covered under the above tariff heading - the goods cleared by the appellant are classifiable under 9406 00 11 as green houses in ready to assemble sets and liable for payment of excise duty during the period under dispute. Such Central Excise duty is required to be paid on the entire value of the green houses i.e. including the value of both the components fabricated in the factory as well as those procured from outside. However, the appellant will be entitled to the benefit of cenvat credit on goods procured from outside subject to verification of such entitlement on the basis of documents to be produced by the appellant. It is also fairly well settled that the total consideration received is to be considered as cum duty price and such benefit will be entitled to the appellant. The demand for Central Excise duty under 9406 made in the impugned order is upheld but with the modification that the appellant will be entitled to CENVAT credit subject to the verification of documents - appeal allowed in part. 2018 (3) TMI 257 Valuation of the cars manufactured and sold - acceptance of transaction value - Section 4 (1) (a) of the Central Excise Act, 1944 - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Held that: - The main elements to satisfy transaction value in terms of Section 4 (1) (a) are that such value should be for delivery at the time and place of removal; between unrelated parties and price being the sole consideration for sale and the same had not been influenced by any other consideration - The fact of the present case are that the Revenue proceeded against the appellant only on the ground that the price is not the sole consideration for sale of cars by the appellant during the material time. There is no allegation that the appellant and the buyers of the car are related persons or any consideration in money terms or non-money terms were received directly or indirectly by the appellant from such buyers. The appellant was centrally registered with large tax payer unit (LTU) during the relevant time. As such, the production clearance of the appellant in all their units should have been considered in a holistic manner - there were glaring omissions in noting certain factual details by the Original Authority. Some of the crucial submissions on facts made by the appellant were not even discussed. These are with reference to escalation in the cost due to various factors beyond the control of the appellant and also sale of same model of cars both in profit as well as in loss in the same financial year. Similarly, we also note that the appellant’s plea regarding various decisions of the Apex court on valuation and provisions of Section 4 (1) (a) were also not examined with required analysis. The appellant strongly contested the finding with specific reference to amendment to Section 4 (1) w.e.f. 14/05/2003 readwith provisions of Rule 6 and the valuation rules. This also requires clear finding. Erosion of capital - Held that: - net worth of the company is different from the capital of the company. There was no reduction in the share capital of the appellant during the material period. We note that the finding by the lower authority on erosion of capital appears to be not based on Standard accounting and commercial principles. Extended period of limitation - Held that: - there is no reason to invoke allegation of suppression, mis- representation with an intention to evade payment of duty on the part of the appellant/assessee. There is no case for such allegation - extended period not invocabe. Appeal allowed in part. 2018 (3) TMI 256 Classification of goods - motor vehicles as well as chassis fitted with engine which is also cleared at times by the appellant - motor vehicles have been described as “tipper” which have been claimed to be meant for off-road use and hence classifiable under 8704 2390. However, Revenue of the view that such vehicles are meant for off- road use and hence are to be described as “dumpers” for off-road use which are classifiable under 870410. Held that: - The Central Excise Tariff is based on the HSN Harmonised System Nomenclature. The HSN explanatory notes can serve as a useful guide in deciding the classification of the goods under the First Schedule to the Central Excise Tariff Act, 1985. The features highlighted by the appellant include limited speed as well as special earthmoving tyres. When we look at the specifications of the trucks manufactured by both the appellants, we note that such trucks are capable of maximum speed in the range of 70 to 85 km per hr. The type of wheels/ tyres which are used in the appellant’s vehicles are also of the type used on highways and not off-road tyres - such vehicles manufactured by the appellant are meant to carry loads and capable of off-loading but the same are not machines exclusively meant for off-road use. The motor vehicles manufactured by the appellants do not fall in the category of dumpers designed for off-highway use under 8704 10. They are classifiable, as claimed by the appellant under 8704 2390 as tipper trucks likewise the classification of chassis also will fall under 87060042 and not under 87060043 as claimed by the Department. Demand of differential duty - case of Revenue is that MFTPL has exported chassis fitted with engines but they paid Excise duty only @ 10% under claim of rebate whereas the applicable Excise duty during the relevant time was 10% plus specific Excise duty @ Rs. 10,000/- per chassis - Held that: - There is no dispute that the goods have been exported during the period June, 2008 to February, 2011. Admittedly, there is a short payment of duty by the appellant. However, the fact remains that if the differential duty is paid by the appellant the same will also be available to them as rebate since the goods have been exported - there is no justification for demand of duty which is set aside alongwith the interest and penalties. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 255 Applicability of Section 11AC (1)(d) of CEA - case of appellant is that said provision nowhere further applies to adjudicate the matter relatable to confiscations etc - Held that: - the conclusion of proceedings in terms of sub section (d) is provided in respect of cases mentioned in sub-section (c). Sub-section (c) relates to the evasion of duty by reason of fraud or collusion. As such it has to be held that in cases of fraud conclusion etc., the entire proceedings would get finally concluded on an assessee depositing the dues as mentioned in sub-section (d), thus not permitted further adjudication relatable to the confiscation of the goods on the vehicle etc. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 254 Clandestine removal - opportunity of cross-examination not provided - Held that: - clandestine removal is a very serious charge which requires corroborative evidence. In the instant case, the 10 buyers who have made the statement were not cross examined by the appellant though summons were issued. Prima facie this is a violation of the principles of natural justice especially when the statements were extended to all the 120 buyers. Matter remanded to the original authority to provide the opportunity of cross examination - appeal allowed by way of remand. 2018 (3) TMI 253 100% EOU - Scope of SCN - main defence put forward by the ld. counsel is that no separate SCN has been issued to the alleged dummy unit and therefore the same vitiates the entire proceedings - Held that: - the demand cannot sustain as the department has not issued SCN to the alleged dummy unit proposing to club the clearances of the same with the appellant herein - even the copy of the Order-in-Original has not been served upon the alleged dummy unit - appeal allowed - decided in favor of appellant. 2018 (3) TMI 252 N/N. 22/2003-CE - Department took the view that the exemption benefit of these notifications would only be availed in respect of goods manufactured by an assessee whereas it appeared that the impugned goods were only imported or otherwise locally procured by the appellants and supplied as such to the EOUs - Held that: - the very same goods, which are cleared by the appellant to the EOU or towards supply of ICB, when such goods are cleared to the DTA, the department has accepted the payment of duty made by the appellant on the transaction value and on such DTA clearances have not demanded debit of the corresponding amount of CENVAT credit availed in respect of those good. This fact has been taken note of by the subsequent appellate orders produced by the ld. Consultant. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 251 Valuation - physician samples - rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 - Held that: - Undoubtedly, in the impugned proceedings there has been no attempt to suggest that the valuation of the samples should be in compliance with section 4A of Central Excise Act, 1944 - in the absence of demand arising from implementation of the MRP-based assessment of samples, the authority drawn therefrom in the show cause notice leading to the present proceedings fails. As samples have to be valued under section 4 of Central Excise Act, 1944 which was recast in 2000, with corresponding changes in the valuation rules and in accordance with which rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 was made applicable-a position which remains unchanged even after the coverage under MRP-based assessment for commercial goods to samples, the basis of the show cause notice for revising the valuation method will not sustain. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 250 CENVAT credit - Revenue entertained a view that out of the total invoices issued by M/s Subhash Steels, two invoices were issued without actually supplying the material reflected therein - Held that: - admittedly the appellants have recorded the receipt of the raw materials in their Cenvat credit accounts and have shown the utilisation of the said raw material in the manufacture of the final product - appeal allowed - decided in favor of appellant. 2018 (3) TMI 249 CENVAT credit - inputs - MS scrap which was purchased/received from Simandhar Steel Movers (India) Private Ltd, a first stage dealer at Mumbai - whether under the facts and circumstances the Commissioner of Central excise is justified in holding that the proposed demand as per the SCN is not sustainable on merit under section 11 A(1) of the Act and accordingly have rightly dropped the charges in the SCN? Held that: - the respondents have discharged the onus on them in terms of rule 7(2) of CCR 2002, which provides that the manufacturer or producer taking Cenvat credit on inputs or capital goods received by him shall be deemed to have taken reasonable steps if he satisfy themselves about the identity and address of the manufacturer or supplier, as the case may be, issuing the documents specified in Rule 7, evidencing the payment of excise duty or the additional duty of customs, as the case may be, either from his personal knowledge or on the strength of a certificate issued by person with whom he is familiar or on the strength of the certificate issued by the Range Supdt. of the factory of the manufacturer or supplier. We find that there is no allegation in the show cause notice that the appellant did not knew the supplier Simandhar and/or its proper address. Even in a situation where explanation to Rule 9(3) is not attracted it would be open to an assessee to establish independently within the meaning of the substantive part of Rule 9(3) that he had in fact taken reasonable steps - the respondents had purchased the goods for the price, which included the duty element, and the same was paid by cheque. Further there is no allegation that the respondents have sourced raw material in dispute, from some other source. We also find that under the scheme of the Act and the Rules, it would be impractical to require the assessee to go behind the records maintained by the first stage dealers. The respondent under the fact of this case were found to have duly acted with all diligence in their dealings with the first stage dealers Simandhar. The SCN are presumptive and not maintainable - appeal dismissed - decided against Revenue. 2018 (3) TMI 248 Clandestine removal - It was alleged that unaccounted finished stock of aluminium ingots weighing 18,503 Kgs valued at Rs. 18,78,592/- was seized along with some documents under a panchnama - principles of natural justice - Held that: - It is seen that the show-cause notice is based on the documents recovered and panchnama made during the search of the factory. The show-cause notice also relies on the statements of Shri N.M. Surana. Other than these evidence no evidence has been relied in the show-cause notice. In these circumstances, cross examination of the investigating officers and range officers is irrelevant and has rightly been denied by the Commissioner - The investigating officers and range officers are not witnesses in the impugned show-cause notice and therefore, any cross-examination of these officers would not serve any purposes. As regards the non-supply of documents the impugned order records that the co-noticee Shri N.M. Surana had acknowledged the receipt of the impugned notices along with all the annexures thereof. In these circumstances, it is established that all the relied upon documents were furnished to the appellants and therefore, their request for supply of such documents was not correct. Appeal dismissed - decided against appellant. 2018 (3) TMI 247 Scope of SCN - CENVAT credit - inputs used in work in progress goods damaged/ destroyed in fire, flood etc. - Held that: - the issue of admissibility of Cenvat credit on inputs used in work in progress goods damaged/ destroyed in fire, flood etc. is covered by the judgment in the case of VFC industries [2016 (9) TMI 1020 - CESTAT AHMEDABAD], where it was held that the credit involved on the inputs lying in stock and destroyed in the fire before being put to use could not be allowed to the Appellant and the same is required to be paid back/reversed. As far as demand relating to credit availed on capital goods, damaged during flood, the same is not removed from the factory premises; also, the insurance company compensated for damage of the said capital goods cannot be a valid ground for reversal of the credit. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 246 CENVAT credit - construction of building or a civil structure or part thereof - laying of foundation for making of structures for support of capital goods - Held that: - to come to a clear conclusion whether the Service Tax credit availed by the appellant is hit by the amendment made to Cenvat Credit Rules with effect from 1.4.2011, it will be necessary to go through in detail the various Annual Maintenance Contracts executed by the appellant for different periods. It will also be necessary to go through, in detail, the various invoices based on which such Cenvat credits have been availed. We find that this forum will not be able to carry out such verification. The matter remanded to the adjudicating authority to carefully consider the submissions made by the appellant vis-a-vis the relevant contracts and invoices and come to a conclusion de novo - appeal allowed by way of remand. 2018 (3) TMI 245 CENVAT credit - Department has sought to disallow the credit of the duty involved in freight and insurance which the appellant has taken suo motu credit - Held that: - appellant is not entitle to take suo motu credit as per the Larger Bench decision of the Tribunal in the case of BDH Industries Ltd. v. Commissioner of Central Excise [2008 (7) TMI 78 - CESTAT MUMBAI] - decided against appellant. Scope of SCN - Revenue is in appeal on the ground that the adjudicating authority has not confined himself within the limits of the show-cause notice which is for recovery of amount of credit availed suo motu by the assessee - Held that: - The ground on which the Revenue has sought recovery of cash does not have any basis in law - the challenge to imposition of penalty on the ground of being less than the amount of credit that has been availed suo motu is questionable as the show-cause notice has not invoked the provision of Section 11A of the Customs Act, 1962 for imposition of penalty. Appeal dismissed - decided against Revenue. 2018 (3) TMI 244 Classification of goods - ‘Servo 2T Supreme’ - Held that: - When, in the instant case, the assessee-appellant is jobworker, the principal, IOCL who has accepted the chemical analysis and the composition, by merely wrong mentioning of sub-heading in the invoices cannot be changed the chance of the appellant/assessee - the classification has rightly brought under heading 3403 of the CETA, 1985 - appeal dismissed - decided against appellant. 2018 (3) TMI 243 Clandestine removal - SSI exemption - clubbing of clearances - crossing of threshold limit - Held that: - there is virtually no evidence on record to show that the manufacturing unit was indulging in clandestine activities. In the absence of any positive and affirmative evidence to confirm the above charge, the finding of Commissioner (Appeals) cannot be upheld - demand alongwith penalties set aside. Appeal dismissed - decided against Revenue. 2018 (3) TMI 242 Clandestine removal - demand primarily based upon the records seized by the visiting officers including the labour con tractor record - Held that: - in the said case of R.A. Castings Pvt. Ltd. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT], the Revenue's allegations were solely based upon electricity consumption. It was in that scenario, that the Court held that higher electricity consumption cannot be made basis for arriving at the excess production or steel ingots, In the present case, the Commissioner has himself observed that the reference to electricity consumption is only to corroborate the other evidences. Similarly, in respect of the project report and the capacity of the machine installed in the factory, he has observed that the same are corroborative evidences to the main allegations, which are primarily based upon the entries made in the packaging register and the labour contract register. Inasmuch as in the present case, the Revenue has been able to establish the procurement of the excess raw materials, excess payments made to the labourers, the excess electricity consumption and the excess installed capacity, the cumulative effect of all these evidences would lead to the inevitable conclusion that the appellants have manufactured and cleared clandestinely their final product. Appeal dismissed - decided against appellant. 2018 (3) TMI 241 Clandestine removal - excess of stock - M.S. Ingots - M.S. Scrap/ Waste - Held that: - the effect of the entire evidence on record establishes beyond doubt that the goods loaded in the truck were cleared by M/s Premier Ispat Ltd., without payment of any duty of excise and without issuing the invoices. There is no explanation either by M/s Premier Ispat Ltd. or M/s Jai Maa Sharda Enterprises as to from where the said goods were purchased or came into existence - As regards the confiscation of the same, I agree with the Iower authorities that inasmuch as the seized goods were non-duty paid their confiscation has to be upheld. However, the duty involved was to the extent of Rs. 1,15,817/-, the redemption fine from Rs. 2,79,440/- to Rs. 1,00,000/-. Clandestine removal - shortage of stock - Held that: - It is settled that the findings of clandestine removal are required to be based on the positive and tangible evidence and cannot be upheld on the basis of assumption and presumption - Reliance in this regard is made to the decision of the Hon’ble High Court of Allahabad in the case of Commissioner of Central Excise, Kanpur Vs. Minakshi Castings [2011 (8) TMI 896 - ALLAHABAD HIGH COURT] laying down that the shortages of finished goods without any evidence of clandestine removal, cannot lead to inference of evasion of duty - demand set aside. Penalty on Director - Held that: - Commissioner(Appeals) has given a finding that no specific rule stands attributed to the Director and the matter has not been investigated so as to adduce any evidence against the said assessee - there is no evidence against Shri Amit Jain, the penalty imposed upon him should have been set aside in toto. Appeal allowed in part. 2018 (3) TMI 240 Penalty u/s 11AC of CEA - clandestine removal - Held that: - Tribunal in the case of Galaxy Textile Vs. Commissioner of Central Excise, Vapi [2010 (7) TMI 516 - CESTAT, AHMEDABAD] observed that though the appellant had admitted shortages and have agreed to pay the duty thereon so as to avoid litigation but in the absence of any evidence to corroborate the allegations of clandestine removal, penalty is not imposable - penalty set aside - duty demand with interest upheld - appeal allowed in part. 2018 (3) TMI 239 CENVAT credit - whether the service tax paid on medical insurance premium for health insurance is admissible for cenvat credit or otherwise? - Held that: - the CISF employees are working for the appellant. In this fact, the service on which credit was availed i.e. medical premium for consumption is clearly excluded from the definition of input service - credit not allowed. Demand of interest - Held that: - the interest is chargeable only when the cenvat credit is taken as well as utilized therefore merely by taking credit and without utilization the interest under Rule 14 is not payable - interest is not chargeable. Appeal allowed in part. 2018 (3) TMI 238 CENVAT credit - place of removal - contention of the tax authorities is that the professional fees on which service tax liability has been discharged in 2012-13 pertains to activities beyond the place of removal and hence ineligible to be availed a CENVAT credit - Held that: - ‘Place of removal’ is an expression that is found in means in Central Excise Act, 1944 independently owing to assessment becoming liable to be determined upon clearance of goods from the factory of production. However, that expression cannot be considered as relevant for goods intended for export which are precluded from duty liability. In the context of certain services such as outward transportation, judicial interpretation shifted the ‘place of removal’ from factory to the port of export. The eligibility for incentives on completion of export formalities is consistent with the ‘place of removal’ being the port of export. Exports are the culmination of production activity and are the motive force for production. Accordingly, the denial of entitlement for CENVAT credit on the ground that there is no nexus with manufacturing activity will not sustain. Credit allowed - appeal allowed - decided in favor of appellant. 2018 (3) TMI 237 Refund claim - exempt item - bagasse - section 11D of Central Excise Act, 1944 - Held that: - The nature of waste product in the scheme of Central Excise Act, 1944 has been decided by the Hon’ble Supreme Court in Union of India v. DSCL Sugar Ltd [2015 (10) TMI 566 - SUPREME COURT] thus according a finality to the issue of liability under rule 6 of CENVAT Credit Rules, 2004 - The amount was thus not payable, and even if liable to be deposited in accordance with section 11D of Central Excise Act, 1944 for having been recovered under the guise of duty, has already been paid by debit of CENVAT credit account - refund allowed - appeal dismissed - decided against Revenue. CST, VAT & Sales Tax 2018 (3) TMI 236 Amnesty Scheme - proceedings u/s 29 of The HVAT Act, 2003 - Held that: - As per clause-8 on acceptance of the application for Amnesty, the dealer was required to withdraw all appeals within 15 days of acceptance order. Learned counsel for the petitioner contended that appeal cannot be filed against the impugned order because of clause-8 of the Amnesty Scheme. The dispute survives only with regard to liability created on the petitioner for work contract. In the impugned order, the petitioner has been held liable as a developer to a liability of Rs. 53,96,78,860/- for which the petitioner has discharged his liability by paying a lump-sum under the Amnesty scheme. The petitioner would be required to comply with the provisions of Section 33(5) of the Act only with regard to the balance payment i.e. Rs. 27,66,08,864/-. Petition disposed off. 2018 (3) TMI 235 Claiming benefit of exemption notification issued under old act even after introduction of VAT Act - Correctness of Notification dated 14th November, 2000 - only reason to deny benefit of exemption notification is that rate of tax is different between the two Act, and therefore, the notification dated 14.11.2000 is inconsistent with the Act of 2008 - Whether the Tribunal is justified in holding that notification dated 14th November, 2000 issued by the State of Uttar Pradesh is inconsistent with U.P. VAT Act, and therefore, not saved under Section 81 thereof? Held that: - A taxing statute ordinarily provides for the transaction to be taxed, the rate of tax and the incidence of tax. In an exemption notification of the kind in hand i.e. notification dated 14.11.2000, the transaction itself is exempted from liability to pay tax. The rate of tax, which otherwise would be payable, is not a relevant factor when the Government decides to exempt a transaction itself from payment of tax - In the present case, the transfer by a Bus owner to the UPSRTC of the right to use a Bus under any contract, is the goods specified in the schedule, and thus to be exempted from the applicability of tax. Such a notification would not become inconsistent only because the right of tax payable for the transaction in the Act of 2008 is different from the rates specified in the Act of 1948. In Central Indian Machinery Manufacturing Co. Ltd. Vs. State of M.P. and another, [1997 (1) TMI 549 - SUPREME COURT], a question arose regarding continuance of notification under a repealed Act on the ground that a deduction of 10% towards statutory allowance was contemplated in lieu of cost of repair etc. from the gross annual letting value. The High Court had observed that for such reasons, the notification issued under the repeal Act would not become wholly inconsistent with the new Act. Notification dated 14.11.2000, issued under the Act of 1948, is not inconsistent with the Act of 2008, and therefore, the notification would continue to subsist and would be deemed to have been issued under the Act of 2008, by virtue of Section 81(2)(a). Revision allowed - decided in favor of assessee. Indian Laws 2018 (3) TMI 314 Default in repayment of loan - suit for recovery - plaintiff’s case is that he had given a loan of Rs. 3 lakhs to the Defendant, in cash, on 1st April, 2008 which not in accordance with income tax act, hence loan amount cannot be recognized - Held that:- The categorical admission of the Defendant and the lack of any evidence to support the case of the Defendant, clearly lead to the conclusion that the Trial Court was in error in holding that the Plaintiff has not discharged his onus in proving that the loan was taken. The Receipt dated 4th September, 2008 exists and the Defendant does not deny his signatures on the same. The Plaintiff is thus entitled to a decree in his favour. The Trial Court judgment is accordingly set aside and the suit is decreed for a sum of Rs. 3 lakhs with interest @ 6% per month from the date of filing of the suit till the date of payment. 2018 (3) TMI 275 Maintainability of petition - SARFAESI Act - the contentions are raised that it is the case of the petitioners that with a mala fide intention and in collusive manner, the mortgage deed is entered between the Respondent No.1 and Respondent No.2 inter se without any intimation to the members of the Cooperative Society i.e. the petitioners - on one hand, the petitioners are claiming as bonafide purchasers for a value and on the other hand, the respondent no.1bank is claiming rights under the provision of the special statute like SARFAESI Act on the basis of the mortgage - Held that: - the balance is required to be struck between two competing claims. Therefore having regard to the provision of the SARFAESI Act, which is enacted by the Legislature with an aim to protect the interest of public financial institution like the bank, it has to be considered with balance with the principle of equality and fairness. If the provision of the SARFAESI Act are pressed into service by the respondent no.1bank, it is also obligatory for the bank to have a strict adherence to necessary procedure and cannot afford to remain indifferent, particularly when, the principle of estopppel and legitimate expectation are staring in the face that the financial institution like the bank claiming exercise of rights under the special statute like the SARFAESI Act are also under the obligation to adhere to the norms and the procedure to protect their own interest. The doctrine of estoppel and legitimate expectation would require public financial institution or the bank to have certain amount of clarity as well as procedural safeguard by evolving necessary regulatory frame work or mechanism that third party rights are not also put to such situation. It is well settled that alternate remedy is not a bar to exercise the discretionary jurisdiction under Article 226 of the Constitution of India. An application does not seem to have been filed by the respondent no.1bank with details and affidavit as provided and referred to proviso to Section 14 of the SARFAESI Act - It has also been provided in Section 13(4) of the SARFAESI Act that when the borrower fails to discharge his liability as provided in subsection (2), the secured creditor like the bank may have a recourse for the recovery of the secured debt as referred to in Section 13(4) of the Act. The mortgage qua land over which the construction has been made and the claim made by the petitioner that they have purchased bonafide could be considered on the basis of the material that could be produced before the Debt Recovery Tribunal with every detail with regard to the escrow account, which the bank was obliged to maintain and the respondent no.2 (builder) was obliged to deposit the consideration and also the Circular of the Reserve Bank of India as stated above, which the bank was obliged to follow - the matter is remanded back to the Debt Recovery Tribunal for examination of material with every detail afresh with reference to the provision of the SARFAESI Act as well as other material on the basis of which, the rights are claimed by the purchasers like petitioners as a bonafide purchasers. Petition allowed by way of remand.
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