TMI Tax Updates - e-Newsletter
April 24, 2018

Case Laws in this Newsletter:

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

Articles

• LATEST AMENDMENTS TO CGST RULES
• Advisory for shifting of RO

News

• Roll​-​out of e-Way Bill system for ​I​ntra-State movement of goods in the States / Union Territory of Arunachal Pradesh, Madhya Pradesh, Meghalaya, Sikkim and Puducherry from 25th April, 2018

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• Issues regarding “Bill To Ship To” for e-Way Bill under CGST Rules, 2017

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• Auction for Sale (Re-issue) of Government Stocks

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• Suresh Prabhu to Chair First Meeting of Think Tank on Framework for National Policy on E-Commerce

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• MSMEs will play a key role in employment generation- Suresh Prabhu

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• RBI Reference Rate for US $

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• RBI circular barring banking service for crypto-currencies challenged in HC

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• With the assent of the President of India, the Fugitive Economic Offenders Ordinance, 2018 gets promulgated; New Law lays down the measures to empower Indian authorities to attach and confiscate the proceeds of crime associated with economic offenders and the properties of the economic offenders.

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• Statement by Dr. Urjit R. Patel, Governor (On behalf of Mr. Arun Jaitley, Member, IMFC representing the Constituency consisting of Bangladesh, Bhutan, India and Sri Lanka) and Leader of the Indian Delegation to the International Monetary and Financial Committee in Washington D.C, on April 21, 2018

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• Shri Subhash Chandra Garg, Secretary, Department of Economic Affairs urged the World Bank to become more efficient in its capital management;. Calls for having a fresh look soon on IBRD transfers to IDA and efficient deployment of buffer being created now;. Welcomes an Agreement on the capital increase package – a 13 billion capital increase in IBRD and IFC together; Expressed India’s support for the shareholding review, including development of dynamic formula and the capital package

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• Shri Subhash Chandra Garg, Secretary, Department of Economic Affairs held bilateral meeting with the US Under Secretary of Treasury for International Affairs, Mr. David Malpass in Washington D.C. and discussed the need to restart the dialogue under the Economic and Financial Partnership and for greater cooperation and coordination on issues of common concern especially in the multilateral fora

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• Statement by Mr Subhash Chandra Garg, Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India

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Notifications

GST - States

• G.O.Ms.No.161 - dated 11-4-2018 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax (Seventeenth Amendment) Rules, 2017.

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• G.O.Ms.No.160 - dated 11-4-2018 - Andhra Pradesh SGST
  Amendment in the Notification No. G.O.Ms.No.585, Revenue (Commercial Taxes-II), 12th December, 2017 and amended vide G.O.Ms.No.596

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• GST/50/2017/381 - dated 29-3-2018 - Arunachal Pradesh SGST
  No e-way bill is required to be generated in respect of intra-state movement of goods within the entire State of Arunachal Pradesh.

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• 18/2018-State Tax - dated 28-3-2018 - Arunachal Pradesh SGST
  Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6.

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• 17/2018-State Tax - dated 28-3-2018 - Arunachal Pradesh SGST
  Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1

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• 16/2018-State Tax - dated 28-3-2018 - Arunachal Pradesh SGST
  Notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year,furnishing the details of outward supply of goods or services or both.

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• 15/2018-State Tax - dated 23-3-2018 - Arunachal Pradesh SGST
  Last date for filing of return in FORM GSTR-3B.

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• 14/2018-State Tax - dated 23-3-2018 - Arunachal Pradesh SGST
  Appoints the 1st day of April, 2018, as the date from which the provisions of sub-rules (ii) [other than clause (7)], (iii), (iv), (v), (vi) and (vii) of rule 2 of notification No. 11/2018 – State Tax, dated the 7th March, 2018

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• 13/2018-State Tax - dated 23-3-2018 - Arunachal Pradesh SGST
  The Arunachal Pradesh Goods and Services Tax (Third Amendment) Rules, 2018.

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• 10/2018-State Tax (Rate) - dated 23-3-2018 - Arunachal Pradesh SGST
  Amendment in the Notification No.8/2017 – State Tax (Rate), dated the 28th June, 2017.

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• S.O. 180 - dated 19-4-2018 - Bihar SGST
  E-way bill in respect of movement of goods originating and terminating in the State of Bihar shall not be required to be generated where the consignment value does not exceed Two Lac Rupees.

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• S.O. 179 - dated 18-4-2018 - Bihar SGST
  The Bihar Goods and Services Tax (Fourth Amendment) Rules, 2018.

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• 12/2018-State Tax - dated 28-3-2018 - Delhi SGST
  The Delhi Goods and Services Tax (Second Amendment) Rules, 2018.

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• 38/1/2017-Fin(R&C)(56) - dated 11-4-2018 - Goa SGST
  Notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year furnish the details of outward supply of goods or services or both in FORM GSTR-1

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• GSL/GST/RULE-138(14)/B.12 - dated 11-4-2018 - Gujarat SGST
  e-way bill for Intra State Movement.

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• 50/ST-2 - dated 19-4-2018 - Haryana SGST
  Appointment of Additional Commissioners of State Tax (Appeals).

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• 49/ST-2 - dated 19-4-2018 - Haryana SGST
  Rescind the Notification No.46/ST-2, dated the 30th March, 2018.

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• 47/ST-2 - dated 6-4-2018 - Haryana SGST
  Aggregate turnover of up to 1.5 crore rupees in the preceding financial year extend the time limit for furnishing the details or return.

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Circulars / Instructions / Orders

RBI

• RBI/2017-18/154 - dated 6-4-2018
  Prohibition on dealing in Virtual Currencies (VCs)

Highlights / Catch Notes

GST

• Procedure to issue E-way Bill - "Bill To Ship To" model under GST
  Visit to Get Source

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• Seizure of goods - E-Way Bill itself was downloaded on 07.01.2017 i.e. four days after the seizure has been made - petition dismissed - HC
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• Detention of goods - first respondent directed to complete the adjudication within one month from the date of receipt of a copy of this judgment - HC
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Income Tax

• Deduction u/s.80IC - as per AO assessee has diverted expenses pertaining to Dehradun unit being eligible unit to other manufacturing units not eligible for deduction u/s 80IC of the Act with a view to minimizing the tax liability - CIT(A) has corrected granted the relief to the assessee - AT
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• Apportionment of bad debt written off to the eligible units and registering profit of those eligible units for the purpose of allowing deduction u/s 80-IB and 80-IC, as done by the revenue authorities is unsustainable. - AT
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• Capital Gains - There was proximate link and the expenditure incurred was in furtherance and to effectuate the transfer/sale of the property and was not remote and unconnected. Expenditure of ₹ 25,00,000/-, therefore, has to be treated as expense incurred wholly and exclusively in connection with the transfer of immovable property and, hence, allowable as a deduction under clause (i) of Section 48 of the Act. - HC
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• Deemed dividend u/s 2(22)(e) - By granting advance, if the business purpose of the company is served and which is not the sum, which it otherwise would have distributed as dividend, cannot be brought within the deeming provision of treating such advance as deemed dividend. - AT
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• Entitlement to exemption u/s 10(10C) - consolidated payment made to the assessee employees under Voluntary Retirement Scheme issued by the ICICI Bank - Rule 2BA of the Income Tax Rules, 1962, cannot exceed the provisions of the Act. - HC
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• Power of the tax Recovery Officer declaring sale null and void - Scope of section 281 - It is not open to the Tax Recovery Officer to declare the said transfer/alienation as null and void as per the provisions of the Income Tax Act. - HC
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Customs

• Valuation of imported goods - value of the software is required to be added to that of the hardware inasmuch as the hardware is received pre-loaded with the software - However, the amounts paid towards the annual maintenance contract for three years, cannot be added to the transaction value of the imported goods - AT
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• Confiscation and penalty - import of Cold Rolled Non-Grain Oriented Silicon Steel Sheet - There is no deliberate breach of the quality control order and for the venial breach the provisions of confiscation and penalty are not attracted - AT
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Indian Laws

• Fugitive Economic Offenders Ordinance, 2018 gets promulgated
  Visit to Get Source

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Service Tax

• IPR Service - "Hallmark" - In the present case, "Hallmark" is not at all any intellectual property governed by any law for such right. Section 9 of Trade Marks Act, 1999 lays down that certain marks cannot be registered as a trademark - appellant are not providing any Intellectual Property Right service in terms of Finance Act, 1994 - demand set aside - AT
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Central Excise

• Classification of goods - Mentos Mint - whether goods classifiable under Chapter Sub Heading No. 1704.10, or under Chapter Sub Heading No. 1704.90? - a small percentage of gum in sugar confectionary may not be sufficient to consider the product as gum - AT
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• Substantial expansion - event the increase in employment more than 25% instead of in the plant and machinery would satisfy the condition of making new Investment - said notification does not speak about direct attribution to generation of production or machine-wise production - AT
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• Service tax or VAT - transfer of rights and privilege of export of ‘sugar quota’ - it is a transaction of ale of goods and no service is involved - demand of service tax set aside - AT
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• Area Based Exemption - N/N. 50/2003-CE - total power available with the appellant drawn from the electric company plus from the captive DG sets were sufficient for production in the new Unit-II from 30 March, 2010 - Commissioner have selectively relied upon the evidence on record, thus his findings are vitiated - AT
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Case Laws:

• GST

• 2018 (4) TMI 1143
  Release of detained goods - Section 129 of the Central Goods and Services Tax Act - Held that: - identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - the competent authority is directed to complete the adjudication provided for u/s 129 of the statutes - petition disposed off.

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• 2018 (4) TMI 1142
  Detention of goods - grievance of the petitioner concerns the delay on the part of the first respondent in completing the adjudication as provided for under Section 129 of the statutes - Held that: - the petitioner has remitted the tax and penalty demanded in terms of the notice issued under Section 129 of the statutes - first respondent directed to complete the adjudication within one month from the date of receipt of a copy of this judgment - petition disposed off.

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• 2018 (4) TMI 1141
  Seizure of goods - E-way bill not produced - Penalty - Held that: - it is clear that the E-Way Bill itself was downloaded on 07.01.2017 i.e. four days after the seizure has been made - the petitioner has equally efficacious remedy of filing an appeal against the penalty order under Section 107 of the U.P. GST Act, 2017 - petition dismissed.

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• 2018 (4) TMI 1140
  Seizure order - Section 129(1) of U.P. GST Act - seizure on the ground that the size of the wood planks were unequal - Held that: - there is no other allegation. No penalty order has been passed against the petitioner as yet - subject to deposit of security equal to the value of the goods shown in the invoice, other than cash or bank guarantee, the petitioner's vehicle and goods along with documents, which have been seized may be released forthwith - petition disposed off.

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• 2018 (4) TMI 1139
  Seizure of goods - Section 129(1) U.P. GST Act - E-Way bill not downloaded - Held that: - it has come on record that before seizure there was some problem in downloading the E-way bill. The penalty order has not yet been passed - Subject to deposit of bank guarantee, equal to the value of the tax on goods, the petitioner's vehicle and goods which have been seized may be released forthwith - petition disposed off.

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• Income Tax

• 2018 (4) TMI 1138
  Transfer u/s 2(47) - capital gain - shares owned by the appellant at NIIT were not transferred in the assessment year 1998-99 but were transferred on 05.05.1998 (Assessment Year 1999-2000) when the same were delivered by the bankers to the purchasers (Glad Investment Pvt. Ltd.) - Held that:- We reject and not take into consideration the factual contention that the transfer deeds were received by NIIT on 22nd August 1997, which contention even otherwise is rather strange, if not incongruous for Deutsche Bank AG has stated that the assessee, i.e. Arjun Malhotra, had deposited the said shares as security with the bank on 10th September, 1997 for a loan of ₹ 2 Crores which was extended to M/s GIPL. If the shares had been deposited by the assessee with NIIT on 22nd August, 1997, then the shares would not have been pledged by the assessee as security with Deutsche Bank AG on 10th September, 1997. Shares were certainly not pledged by M/s GIPL. This is undisputed. The letter purportedly dated 14th August, 1997 also appears to be back dated for the first paragraph of the letter states that “I had provided the 100,000 shares of NIIT as collateral security for grant of loan to Glad Investments. Shares are currently registered in your name”. The shares were pledged with the bank on 10th September, 1997 and this fact was acknowledged and accepted in the letter dated 17th March, 2001. Therefore, it should be accepted that the letter though dated 14th August, 1997 was in fact issued after the shares pledged were registered in the name of M/s GIPL, sometimes after 10th September, 1997. The findings recorded by the tribunal as to the date of transfer are primarily based on facts. Decided against the assessee and in favour of the Revenue. Entitled to exemption u/s 54F - Held that:- The appellant-assessee has not placed on record any document or material referred to in the impugned order or the orders of the authorities to establish and show that the conclusion drawn was wrong and contrary to material on record. In fact, had the Assessing Officer not treated the shares as transferred in the AY 1999-2000, the appellant-assessee would not have been entitled to benefit under Section 54F of the Act on sale of 100000 NIIT shares to M/s GIPL as per the findings approved and recorded by the tribunal i.e., the assessee being owner of an existing house. Substitution of the sale consideration with the market value of the shares quoted at the stock exchange - AO had on the basis of the fair market value increased the total sale consideration - Held that:- The appellant-assessee had acquired non-cumulative preference shares on transfer of 100000 equity shares of NIIT. This is not in debate or doubt. This is not the case of the Revenue that the market value of the noncumulative preference equity shares were issued by M/s GIPL were of a higher value. Non-cumulative preference shares did not have right of conversion. Non-cumulative preference equity shares were redeemed at par during the relevant period and payment of ₹ 5,00,00,000/- was received - Tribunal was not correct in holding that the market value of the shares quoted in the stock exchange on 5th May, 1998 can be taken as a basis for computing capital gains under Section 48 - Decided in favour of the assessee and against the Revenue

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• 2018 (4) TMI 1137
  Deduction to Section 48 while computing capital gains - expenditure of ₹ 25,00,000/- incurred by the assessee by way of liquidated damages paid to the first purchaser incurred in connection with the transfer of the property - whether be deducted from the sale consideration for computing the long term gain? - Held that:- There was a close nexus and connect between the payment of ₹ 25,00,000/- and the transfer of the property to the purchaser resulting in income by way of capital gains. There was proximate link and the expenditure incurred was in furtherance and to effectuate the transfer/sale of the property and was not remote and unconnected. Expenditure of ₹ 25,00,000/-, therefore, has to be treated as expense incurred wholly and exclusively in connection with the transfer of immovable property and, hence, allowable as a deduction under clause (i) of Section 48 of the Act. As we would like to clarify that ₹ 7,50,000/- which was paid by Anil Kumar Sharma and subsequently refunded, cannot be allowed as a double deduction. Refund of ₹ 7,50,000/- would mean that the earlier payment made by Anil Kumar Sharma was squared off. The assessee had in fact incurred expenditure of ₹ 25,00,000/- which was paid to Anil Kumar Sharma to forego and give up his right under the agreement to sell dated 10th April, 1989. Wherever an assessee has paid an amount under an earlier agreement-to-sell in terms of the settlement or even a court decree, the said amount would be treated as expenditure wholly or exclusively in connection with the transfer, the subject matter of capital gains. The words used in clause (i) do not permit and allow expenditure incurred wholly and exclusively on the immovable property as an expenditure to be deducted while computing capital gains. Link and connection with the transfer of a capital asset and the expenditure must be inextricable and should be established. ₹ 25,00,000/- paid by the assessee would be deducted under clause (i) to Section 48 of the Act while computing capital gains. Answer the substantial question of law in favour of the appellant-assessee and against the Revenue.

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• 2018 (4) TMI 1136
  Computing the value of Fringe benefit for the purpose of FBT - Addition on account of FBT on total expenses and not merely on expenses pertaining to employees - Tribunal deleted the addition - Held that:- In the present facts, we find that the Tribunal has rendered a finding of fact that the expenditure has been incurred to make payment to third parties. Inasmuch as, this payment nowhere arises out of the employee/employer relationship. It is a business expenditure, pure and simple as also accepted by the Assessing Officer in the Assessment Order dated 20th December, 2008 (statement annexed thereto). It is not even the case of the Revenue that payments were made to the employees and not their parties. As accepted by the Revenue that the issue in the context of the present facts, stands concluded by the decisions of this Court in Tata Consultancy Services (2015 (5) TMI 518 - BOMBAY HIGH COURT) and Lionbridge Technologies Pvt. Ltd., (2018 (4) TMI 1069 - BOMBAY HIGH COURT). - Decided against revenue

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• 2018 (4) TMI 1135
  Power of the tax Recovery Officer declaring sale null and void - attachment orders - Held that:- Tax Recovery Officer is required to examine whether the possession of the third party is of a claimant in his own right or in trust for the assessee or on account of the assessee. If he comes to a conclusion that the transferee is in possession in his or her own right, he will have to raise the attachment. If the department desires to have the transaction of transfer declared void under Section 281, the Department being in the position of a creditor, will have to file a suit for a declaration that the transaction of transfer is void under Section 281. It is not open to the Tax Recovery Officer to declare the said transfer/alienation as null and void as per the provisions of the Income Tax Act. As brought to the knowledge of this Court by the learned Counsel appearing for the appellant/writ petitioner that he also sought information under the Right to Information Act, from the Public Information Officer - the Joint Sub-Registrar, Tuticorin, as to the order of attachment by the Income Tax Officer in respect of the property concerned in registered document No.2212/2008, dated 18.06.2008 and vide communication dated 24.05.2011 bearing No.2099/mggp/2011,, the said official informed that no such document is available on file. Therefore, this Court is of the considered view that it is for the Income Tax Department, to file a suit to hold the transaction declared as null and void as per the ratio laid down by the Honourable Supreme Court of India reported in Tax Recovery Officer Vs. Gangadhar Viswanath Ranade[1998 (9) TMI 1 - SUPREME COURT]

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• 2018 (4) TMI 1134
  Garnishee order making a demand to a assessee Educational Society - College is financially crippled due to the attachment and recovery made by the respondent - Held that:- Considering the interest of the students community as well as hundreds of employees working in the College and the Society, this Court is of the view that this is a fit case for issuing certain directions. Because of the rivalry between the members of the Management the real beneficiaries shall not be deprived of their rights and the benevolent object of the Society to impart Education to the people of the Backward areas should not be defeated. Society is not represented by regularly by the Elected Office Bearers. There is an apprehension on the side of the respondent, from the past experiences, that too many persons would interfere and meddle with the matter. Permission is granted to the person named as Secretary of the petitioner Society before this Court to present an appeal and the respondent Department shall deal only with that person. No else can interfere in the matter of appeal to be filed. This order cannot be taken advantage by named Secretary in this petition for other issues or affairs of the Society and it is absolutely only in respect of filing an appeal before the respondent alone. Directions are issued to appeal shall be filed through the Secretary named in the present Writ Petition for the assessment year 2010-2011 within a period of two weeks from the date of receipt of a copy of this order.

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• 2018 (4) TMI 1133
  MAT - Adjustments to Book Profit - Provisions created for sub standard, doubtful and for loss of assets claimed as a deduction - allowability in the computation of book profits in terms of Section 115JA - Held that:- An assessee's case would fall within the ambit of Clause (c) of Section 115JA(1) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liabilities, that is, it should be for an unascertained liability. The aforementioned decision squarely covers the case on hand and the decision relied on by the ITAT in the case of Deputy Commissioner of Income Tax vs. Beardsell Ltd. (2000 (3) TMI 37 - MADRAS High Court), pertains to a case not arising in respect of a banking company. Decisions of the Hon'ble Supreme Court in State Bank of Patiala (1996 (3) TMI 128 - SUPREME Court) and HCL Comnet Systems & Services Ltd., (2008 (9) TMI 18 - SUPREME COURT) are clear answers to both the substantial questions of law, which have been framed for consideration. - Decided in favour of the assessee.

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• 2018 (4) TMI 1132
  Entitlement to exemption u/s 10(10C) - consolidated payment made to the assessee employees under Voluntary Retirement Scheme issued by the ICICI Bank - Held that:- The impugned notice specifies the sum of ₹ 1,83,954/- for the assessment year 2004-2005. As per Section 10(10C) of the Act, the individual is entitled to exemption upto ₹ 5,00,000/-. Hon'ble Supreme Court in Chandra Ranganathan & Ors. vs. Commissioner of Income Tax [2009 (10) TMI 498 - SUPREME COURT OF INDIA] as well as Bombay High Court Commissioner of Income Tax vs. Koodathil Kallyatan Ambujakshan [2008 (7) TMI 259 - BOMBAY HIGH COURT] have categorically held that the retiring employees are eligible for exemption under Section 10(10C) of the Act. Rule 2BA of the Income Tax Rules, 1962, cannot exceed the provisions of the Act. Therefore, the demand made by the Income Tax Department is per se illegal and is not sustainable any further. - Decided in favour of assessee.

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• 2018 (4) TMI 1131
  Entitlement to exemption u/s 10(10C) - consolidated payment made to the assessee employees under Voluntary Retirement Scheme issued by the ICICI Bank - Held that:- The impugned notice specifies the sum of ₹ 1,83,954/- for the assessment year 2004-2005. As per Section 10(10C) of the Act, the individual is entitled to exemption upto ₹ 5,00,000/-. Hon'ble Supreme Court in Chandra Ranganathan & Ors. vs. Commissioner of Income Tax [2009 (10) TMI 498 - SUPREME COURT OF INDIA] as well as Bombay High Court Commissioner of Income Tax vs. Koodathil Kallyatan Ambujakshan [2008 (7) TMI 259 - BOMBAY HIGH COURT] have categorically held that the retiring employees are eligible for exemption under Section 10(10C) of the Act. Rule 2BA of the Income Tax Rules, 1962, cannot exceed the provisions of the Act. Therefore, the demand made by the Income Tax Department is per se illegal and is not sustainable any further. - Decided in favour of assessee.

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• 2018 (4) TMI 1130
  Rejecting registration u/s 12AA - denying of approval u/s 80G - part of the donations received from the donors have not been routed through Income & Expenditure Account but directly taken to the Balance Sheet - donation received throughout the year have been deposited in Bank account during demonetization period amounting to more than ₹ 1,00,000 with no reasonable explanation - Held that:- Going by the specific words in section 12AA what is germane to the issue is only as to the genuineness of the Trust and its activities. We note that there is no such finding in the impugned order of the ld. CIT(Exemption) that activities of the trust were not genuine. As per provisions of section 12A and 12AA we hold that the grounds raised by the ld. CIT(E) (Registering Authority) for rejecting of registration to the assessee trust cannot be sustained and ld. CIT(Exemption) ought to have examined whether activities of the trust are charitable in nature or not - direct the ld. CIT(Exemption) to examine the genuineness of the Trust and its activities and objectives and adjudicate the issue in accordance with law - Decided in favour of assessee for statistical purposes.

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• 2018 (4) TMI 1129
  Apportionment of bad debt written off to the eligible units - registering profit of eligible units for the purpose of allowing deduction u/s 80-IB and 80-IC - Held that:- Perusal of the bad debts written off would show that all the debts pertained to assessment year 2002-03 and earlier Financial Years. The units for which deduction u/s 80-IB and 80-IC were claimed by the assessee, came into existence only in F.Y. 2004-05. Bad debts written off which was claimed as deduction did not pertain to any of the units for which the assessee claimed deduction u/s 80-IB and 80-IC. Apportionment of bad debt written off to the eligible units and registering profit of those eligible units for the purpose of allowing deduction u/s 80-IB and 80-IC, as done by the revenue authorities is unsustainable. The apportionment is directed to be deleted. Ground No.3 raised by the assessee is allowed. Apportionment of residual cost - Held that:- The allocation done by the assessee on the basis of number of employees who are directly linked with the factory operation is more logical. The residual cost is incurred at the head office and is not capable of being identified with any of the units which are running by the assessee. It is only because of this difficulty that the Assessing Officer and the assessee resorted to allocation of residual cost. When it comes to allocation of residual cost, it cannot be done arbitrarily. The allocation should have due regard to the efforts put at the head office level to be eligible. That can be done only by allocation on the basis of number of employees linked to factory operation divided by total number of employees into corporate office into sales of the eligible units divided by total sales. This allocation of residual cost done by the assessee was logical - Decided against revenue

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• 2018 (4) TMI 1128
  Disallowance u/s 40A(3) - payments to Truck drivers not under prescribed limit - cash payment exceeding ₹ 20,000/- - Held that:- The assessee has discharged its onus by submitting that the payments at ₹ 9,47,220/- made to other persons was below the prescribed limit mentioned in section 40A(3) of the Act and the ld. DR for the Revenue could not bring any evidence on the report to show that the said amount was paid by the assessee in violation of section 40A(3) of the Act. Therefore, based on the factual position explained above, we delete the addition - Decided in favour of assessee Disallowance of interest on borrowed fund - assessee provided interest free advance to related business entities/concern - sufficiency of own funds - Held that:- Hon’ble Bombay High Court in the case of Reliance Utilities (2009 (1) TMI 4 - BOMBAY HIGH COURT) wherein as held that if there were funds available, both interest-free and overdraft and/or loans taken, then a presumption would be that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. In the assessee’s case presumption was established considering the fact that assessee has its own capital at ₹ 1,23,06,344/- whereas the interest free advances were given to the tune of ₹ 11,41,000/-. As presumed that these interest free advances have been given out of its own capital and hence, no disallowance should be made. - Decided in favour of assessee

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• 2018 (4) TMI 1127
  Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. Thus imposition of penalty cannot be sustained. See Jeetmal Choraria Versus A.C.I.T. [2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.

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• 2018 (4) TMI 1126
  Relief @ 100% by way of deduction u/s.80IC - as per AO assessee has diverted expenses pertaining to Dehradun unit being eligible unit to other manufacturing units not eligible for deduction u/s 80IC of the Act with a view to minimizing the tax liability - CIT(A) granted the relief - Held that:- As decided in assessee's own case pertaining to AY 2009-10 [2018 (4) TMI 1118 - ITAT KOLKATA] AO could not point out any defects in the books of account maintained separately for the Dehradun unit and during remand proceedings when the Form 10CCB was produced before the AO, he could not point out any fault. There was no material to allege that there was shifting of expenses of eligible unit to non-eligible unit so that higher deduction can be claimed for 80IC unit at Dehradun. The Dehradun unit had new machineries and there were excise exemption also and thus, the profits generated at Dehradun unit cannot be termed as unnatural without any material to suggest the other way; and taking into consideration the results of the previous year also we do not find any infirmity in the order of the ld. CIT(A) directing AO to allow deduction under section 80IC of the Act on the net profit of the Dehradun units as declared by the assessee after reducing the misc. income as taken in the P&L Account - Decided against revenue Disallowance of commission expenses - Held that:- It is settled proposition of law that the expense disallowed in respect of unit eligible for deduction under Chapter VI-A then the deduction will be available on the enhanced amount of profit i.e. disallowance made by the Authorities Below. CIT(A) has given a clear-cut finding that the consolidated profit and loss account was given along with separate profit and loss account of Dehradun unit DR has not advanced any argument against the finding of Ld. CIT(A). In view of the above, we are of the view that even the amount of Commission expenses of ₹ 5 crores is disallowed then the assessee would be eligible for deduction u/s. 80IC of the Act for the enhance amount. No reason to interfere in the order of Ld. CIT(A). - Decided against revenue

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• 2018 (4) TMI 1125
  Addition on account of Excessive Business Expenditure Claimed - assessee explained that the said amounts have been written off as the same has become irrecoverable- Held that:- The claim of the assessee is genuine and correct. The assessee produced PAN No. of the parties and all evidences on record to prove identity of three parties and genuineness of the transactions, therefore, the deduction claimed as business loss suffered by the assessee out of the transaction for purchase of land is wholly justified. Ld.CIT(A), therefore, correctly deleted the addition. - Decided in favour of assessee

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• 2018 (4) TMI 1124
  Penalty u/s 271(1)(c) - addition u/s 41 - on specification of charge - defective notice - Held that:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. Thus imposition of penalty cannot be sustained. See Jeetmal Choraria Versus A.C.I.T. [2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.

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• 2018 (4) TMI 1123
  Penalty u/s 271(1)(c) - expense falls u/s 37 or section 35 - Held that:- There is no doubt as to the nature of the expense and it is not the case of the Revenue that this particular expense could be capitalized. Therefore, at best, this expenditure had to be amortized for a period of 5 years which the assessee did not do and the assessee explains that in view of AS 26, they have debited this particular expense to the profit and loss account. We fail to understand how this explanation is not a bonafide one. We are unable to find that there is either any concealment of income or furnishing of inaccurate particulars thereof and it is only basing on the information furnished by the assessee in their financials but mistake committed by the assessee is detected. Mere disallowance of any expense does not amount to concealment of income or furnishing of inaccurate particulars thereof as is held by the Hon’ble Apex Court in the case of Reliance Petro Products Ltd. (2010 (3) TMI 80 - SUPREME COURT) - Decided in favour of assessee

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• 2018 (4) TMI 1122
  Disallowing of provisions(s) of five year warranty provision - whether provision made on as scientific and systematic basis? - Held that:- The assessee admittedly is a manufacturer of air conditioner cooling units. It appears to have provided for two kinds of warranties i.e. five years and one year. Case file suggests that the above latter warranty represents service charges paid to dealers which has gone unrebutted from Revenue side. Former five year warranty provision appears to be cost of compressor replacement in the event of the same being turning out to be a defective one. The assessee’s computation seems to be based on some products of model-wise number of units sold and per unit rate of five year warranty provision for the impugned assessment years. Coupled with this, it has also filed before us a detailed compilation chart of the impugned warranty provisions as well as sales figures of finished goods from financial year 2004- 05 to 2010-11 relevant amounts involved in two types of warranties DR fails to controvert the fact that the assessee has been following consistent method in creating similar warranty provision in subsequent assessment years as well. Relevant assessment order in such a case dated 30.04.2015 for assessment year 2011-12 indicates that there is no such disallowance made at the Revenue’s behest. The assessee is assessed at the same rate throughout. All the above narrated facts therefore make it crystal clear that the assessee has satisfied the relevant conditions for claiming the impugned warranty provisions as deduction Ad-hoc 10% disallowance on various expenditure being stores and spares, expenses on service operators and salary, wages and staff welfare expenses - Held that:- Assessee had produced all the relevant bills/vouchers in the first round of lower appellate proceedings (supra). The relevant issue is that on normal business expenditure wherein the Revenue has not made out any case of challenging its genuineness. We afforded sufficient opportunity to the learned Departmental Representative to rebut the CIT(A)’s above extracted findings under challenge deleting the impugned ad hoc disallowance in absence of any question of allowability as well as genuineness. There is no such cogent material on record to uphold the Assessing Officer’s conclusion therefore. - Decided in favour of assessee

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• 2018 (4) TMI 1121
  Addition on account of Long Term Capital Gain on sale of mining lease - assessee's ownership of such capital asset - transfer u/s 2(47) - assessees are legal heirs of late Shri Kailash Chand Mangal who has leasehold rights of the mines in question and as per the family arrangement as well as will the ownership of the mining rights were given to Shri Sunil Agarwal [uncle of the assessee] - Held that:- In view of the admitted position by all the assessees that the real owner the mining rights is Shri Sunil Agarwal and the Revenue has not challenged that finding of the ld. CIT(A) in case of Shri Sunil Agarwal we do not find any substance or merits in the appeals of the Revenue in case of Shri Sanjay Managal and Shri Vijay Mangal. Assessment of capital gain - transfer of rights - Held that:- Though the mining rights per se are not transferred being subject to the renewal of the lease however, by virtue of the agreement dated 10.06.2010 the assessee has transferred and surrendered his rights in the said asset as on the date of agreement and is bound to transfer the leaseholds rights in favour of M/s J.K. Cements whenever the same are renewed by the Government. Hence, this agreement dated 10.06.2010 has definitely transfer a right in favour of the M/s J.K. Cements and relinquished right on the part of the assessee as he cannot transfer these leasehold mining rights in favour of any other persons then M/s J.K. Cements. The amount of ₹ 25 lacs received by the assessee for execution of the said agreement would be the income of the assessee. This consideration was received in relation to the rights in a capital asset therefore, the said amount is liable to be assessed as capital gain as considered by AO. Direct the AO to assess the capital gain in the hand of the assessee Shri Sunil Agarwal by considering ₹ 25 lacs as a consideration subject to allowable other deductions being cost of acquisition which we will deal with in the Cross Objection of the assessee. Disallowance of expenses u/s 57 - Held that:- AO as well as ld. CIT(A) decided this issue for want of any documentary evidence in support of the claim that the expenditure was incurred for earning the income from other sources. Nothing has been produced before us to show that the said alleged expenditure incurred by the assessee for earning of income from other sources accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Cost of acquisition of the capital asset being the Fair Market Value (FMV) as on 01.04.1981 - Held that:- As per provisions of Section 55(2)(a)(b) r.w.s. section 55(3) assessee has exercised his option that the cost of acquisition of the capital shall be the fair market value as on 01.04.1981 then, the cost of acquisition of capital asset of the previous owner becomes irrelevant for the purpose of computing the capital gain. The previous acquired the leasehold rights prior to 01.04.1981 therefore, the fair market value of the property as on 01.04.1981 has to be considered as cost of capital asset for the purpose of sections 48 and 49 - we direct the AO to compute the capital gain after allowing the cost of acquisition being the fair market value as on 01.04.1981. Once, this benefit is allowed against the capital gain in the year under consideration, the same will not be allowed at the time of transfer of the leasehold rights on renewal by the government.

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• 2018 (4) TMI 1120
  Addition On account of commission income on providing accommodation entries - rates of commission charges - Appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department - Held that:- Beneficiaries claimed these expenses as deduction while computing their income and also claimed VAT as set off while filing their income tax and VAT returns. Beneficiaries in turn paid cash to the assessee over and above the Bill + VAT amount his commission too. According to seized documents, the assessee is found charging commission income from 1.50 % to 3.85 %. The seized documents indicating commission rates are for a limited period. Assessee has minimum commission rates of 1.50% and also maximum amount of Commission is 3.85%. Rates of commission also varies as per the period in which the bogus bills are required. Rates are generally higher in the last months of closing of the year. No infirmity in the order of the ld CIT(A) in confirming the addition adopting rates of commission @ 2% and VAT @ 4 % totaling to 6 % . Further, the assessee has not shown any payment of VAT charged by him from the parties to whom the accommodation entries were provided, therefore the sum of 4 % VAT along with the commission of 2 % is chargeable to tax as income of the assessee. It is apparent that if assessee provides the bogus bill of ₹ 100/- then assessee charges 4% VAT thereon and receives the consideration of ₹ 104/-. The assessee is required to pay ₹ 4 to the state govt towards the VAT collected by him. During the course of search, no such evidences were found where the assessee has paid VAT to the state govt and no evidences have been produced during the assessment proceedings. No infirmity in the order of the lower authorities in not allowing the credit for VAT. To justify the addition of commission income for accommodation entry @6% the ld Assessing Officer and ld CIT (A) has correctly assumed the rate of 2% commission for providing bogus purchase bills and 4% for the VAT. In view of this we reject the ground of the assessee for granting deduction of VAT from his income. We also find no reason to reduce the commission income from 2%. With respect to the claim of the assessee that there is an expenditure also involved in these business and therefore, the commission income is required to be computed only at 0.76% also deserves to be rejected. The assessee has not shown any proof of such expenditure and no such proof were found in search proceedings. It was also not shown that what kind of expenditure assessee was incurring and to whom he was paying such expenditure. We confirm the order of the ld CIT(A) in confirming the addition on account of commission income on providing accommodation entries. In view of this, we reject ground No. 2 of the appeal of the assessee. Unexplained investment - Held that:- No reason to disagree with the order of the lower authorities and the order of the ld CIT(A) where the reasons given were adequate to confirm this addition. in the result ground No. 3 of the appeal of the assessee is dismissed. Unexplained investment in the immovable properties - Held that:- The seized papers during the course of search which are incorporated by the AO in his assessment order clearly shows about the investment made by the assessee in the immovable properties. In view of this we do not find any reason to interfere in the order of the lower authorities and confirm the order of the ld CIT(A) in confirming the addition on account of unexplained investment in immovable properties by the assessee. In the result ground of the appeal of the assessee is dismissed.

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• 2018 (4) TMI 1119
  Deemed dividend u/s 2(22)(e) - Differentiation between loans and advances received for business purposes or for any other purposes - Held that:- Delhi High Court I CIT vs Raj Kumar (2009 (5) TMI 17 - DELHI HIGH COURT) held that a trade advance which is in the nature of money transacted to give effect to a commercial transaction would not fall within the ambit of the provisions of Section 2(22)(e) of the Act. The Bombay High Court in CIT vs Nagin Das M. Kapadia (1988 (12) TMI 89 - BOMBAY High Court) held that business transactions are outside the purview of Section 2(22)(e) of the Act. The words “loans or advances” can be applied to loans or advances simplicitor and not to those transactions carried out in the course of business. In the course of business between the company and a shareholder, the company may be required to give advance in mutual interest. There is no legal bar in having such transaction. By granting advance, if the business purpose of the company is served and which is not the sum, which it otherwise would have distributed as dividend, cannot be brought within the deeming provision of treating such advance as deemed dividend. Thus such advances cannot be a subject matter of section 2(22)(e) - Decided in favour of assessee

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• 2018 (4) TMI 1118
  Deduction u/s. 80IC denied to unit at Dehradun - disallowance on proportionate basis - assessee did not produce the Form 10CCB and has not kept the separate books for the unit at Dehradun - CIT(A) has allowed the claim of the assessee and directed the AO to allow deduction u/s 80IC on the net profit of the Dehradun units as declared by the assessee after reducing the misc. income as taken in the P&L Account - Held that:- AO could not point out any defects in the books of account maintained separately for the Dehradun unit and during remand proceedings when the Form 10CCB was produced before the AO, he could not point out any fault. We also note that there was no material to allege that there was shifting of expenses of eligible unit to non-eligible unit so that higher deduction can be claimed for 80IC unit at Dehradun. The Dehradun unit had new machineries and there were excise exemption also and thus, the profits generated at Dehradun unit cannot be termed as unnatural without any material to suggest the other way; and taking into consideration the results of the previous year also we do not find any infirmity in the order of the ld. CIT(A) which warrants our interference Addition under the head Misc. expenses - Held that:- A sum of ₹ 14,58,007/- was on account of tax against stock transfer. The assessee was asked to explain the nature of such payments and since the assessee failed to offer any satisfactory explanation for the same, the assessee’s claim for such expenses were not allowed by the Ld. CIT(A) and, therefore, he deducted the said amount from the total misc. expenses claimed of ₹ 17,36,842/- and directed the AO to allow only ₹ 2,78,838/-. Against the said order of Ld. CIT(A) the Ld. DR was unable to point out any defect or infirmity which need our interference. Therefore, we are not inclined to interfere with the order of the Ld. CIT(A) and we confirm the same. Claim in respect to custom duty and entry tax - Held that:- As the entire amount was paid during the year itself and there was no outstanding at the year end and thus, the Ld. CIT(A) held that disallowance u/s. 43B of the Act also does not arise. - Revenue appeal dismissed

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• Customs

• 2018 (4) TMI 1117
  Provisional release of goods - Section 110A of the Customs Act - petitioner claim that are these not prohibited and also no issues including issues pertaining to intellectual property rights pertains - Held that: - the conditions imposed in the impugned order can be slightly modified - This is so because the goods, which are permitted for provisional release, have already been scrutinized by the Department and it appears that the except for the prohibited goods and except for the goods where there are violations with regard to intellectual property rights, the Department is willing to release the same. The power under Section 110A of the said Act is to make a delicate balance between the importer of the goods and the Revenue. Taking into consideration the fact that the Bill of Entry was filed in June 2017 and that the respondent himself is willing to provisionally release the goods, this Court is inclined to dispose of the writ petition by modifying the conditions imposed in the impugned order. Petition allowed in part.

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• 2018 (4) TMI 1116
  Confiscation - redemption fine - penalty - import of Cold Rolled Non-Grain Oriented Silicon Steel Sheet - whether the appellant have been rightly visited with confiscation of the imported Cold Rolled Non-Grain Oriented Silicon Steel Sheet (CRNO) in coil imported under bill of entry dated 12 August, 2015 valued at ₹ 11,68,474/- under Section 111(d) have been rightly made alongwith redemption fine, allowing of re-export and further penalty of ₹ 75,000/- under Section 112 (a)(b)(i) of the Act? Held that: - there is no test report that the goods did not confirm to the BIS standard. It is a case of venial breach of the “Steel and Steel Products (Quality Control) Second (Amendment) Order, 2014 dated 31 March, 2014”. The goods did not bear the requisite mark or sticker. Further the bona fide of the appellant is evident on the face of the record as they offered to re-export the goods, on the clearance being object to for domestic consumption. There is no deliberate breach of the quality control order and for the venial breach the provisions of confiscation and penalty are not attracted - Confiscation and penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1115
  Valuation of imported goods - ‘Server’ and certain related items - rejection of declared value - Customs authorities noticed that the value declared for the imported goods appears low and further that the invoice attached was from the third party - Held that: - It is seen that the importer has declared only a fraction of the correct value of the imported goods. Consequently, mis-declaration on the part of the importer stands established and hence, goods are liable for confiscation under Section 111(l),(m) of the Customs Act, 1962. The seven items were mentioned in the two invoices out of which the value of the software is required to be added to that of the hardware inasmuch as the hardware is received pre-loaded with the software - However, the amounts paid towards the annual maintenance contract for three years, cannot be added to the transaction value of the imported goods inasmuch as such payment is towards post import service. Matter remanded to the adjudicating authority with the direction to add the value of software to that of the hardware and charge Customs duty accordingly - appeal allowed by way of remand.

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• 2018 (4) TMI 1114
  Penalty u/s 112 of CA on the customs officer - it was alleged that they had abetted in illicit clearance of goods under seizure without out of charge order - Held that: - this Tribunal has considered the allegation against the respondents on the similar investigation and dropped the proceedings in the case of CC, Amritsar Versus Shri Parminder Jit Singh, Inspector and others [2013 (7) TMI 377 - CESTAT NEW DELHI], where it was held that when the disciplinary proceedings against the respondents under CCS (CCA) Rules have been dropped, the proceedings for imposition of penalty against them under Section 112 (a) of Customs Act, 1962 which are based on the same charges and the same evidence, would also not survive. Penalties do not survive - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1113
  Import of restricted item - natural rubber - case of Revenue is that that natural rubber could be imported only through the port of Kolkata and Vishakhapatnam and also that natural rubber was not allowed for importation without payment of duty for 100% EOU scheme - Held that: - Id. Commissioner has held that the test report relied upon by the original authority was not in respect of the goods in question and that the samples from the goods in question were not drawn and sent to the laboratory and that the original authority has relied upon test report in respect of samples drawn from some other consignment - also the SCN was clearly time-barred. There is no ground raised by Revenue to argue as to how the finding of Id. Commissioner (Appeals) in the impugned order-in-appeal is not sustainable - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1112
  Refund of CVD with applicable Education Cess - Original authority had rejected the refund claim on the ground that the appellant has availed CENVAT credit of the refund of the CVD which is sought to be refunded by the appellant - Held that: - appellants had issued a letter to the jurisdictional authority requesting to clarify the fact of initial availment of credit by the appellant and the reversal of the fact. There was no response from the jurisdictional authority - If the appellant has availed credit definitely they are not eligible to refund of the same. The fact whether the appellant has reversed the credit requires to be verified - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (4) TMI 1111
  Contravention of Scheme sanctioned by BIFR - application to NCLT for appropriate orders - Held that:- Since the company has contravened the Scheme sanctioned by BIFR, petitioner has to make an application to the NCLT for liquidation order of the company. The records and proceedings in this matter be transferred to NCLT, Mumbai and petitioner will be at liberty to take out an appropriate application to NCLT for appropriate orders as required under the provisions of IBC. Subsection (4) of Section 33 provides that “on receipt of an application under subsection (3), if the Adjudicating Authority comes to a conclusion that the company has contravened the provisions of the resolution plan or sanctioned Scheme and in view of the order, resolution plan will include the sanctioned Scheme to BIFR, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clause (b) of sub-section (1) of Section 33 - Registry to transfer the papers to NCLT within four weeks from today.

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• FEMA

• 2018 (4) TMI 1110
  Violation of the declared FDI Policy - Held that:- Enforcement Directorate has taken action against the violators. The Enforcement Directorate has also filed a counter affidavit pointing out that it is inquiring into e-commerce entities which are guided by self gain or motive other than in public interest and that the Bangalore Zonal office of the answering respondent had initiated enquiries against ten (10) e-commerce entities and in 5 out of these 10 of those enquiries, investigations are reported to be underway. Charge-sheets have been prepared in 4 out of 5 cases in which investigation has been completed and the same are pending consideration. Besides that, enquiries were also initiated against Firstcry.com and Infibeam.com by the Mumbai and Ahmedabad offices respective of the answering respondent and the same are under progress. Therefore the respondents are conscious of their responsibilities and are taking action for violation of the applicable FDI Policy. The required action upon completion of the investigation would have to abide by the procedure prescribed by law.

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• Service Tax

• 2018 (4) TMI 1144
  Valuation - inclusion of Passenger Service Fee (PSF) and Airport Taxes in assessable value - Held that: - Tribunal in the case of Austrian Airlines [2017 (9) TMI 625 - CESTAT NEW DELHI], has held that the P.S.F. and Airport Taxes should not be considered as a part of the taxable service provided by the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1109
  Payment of interest in installments - extension sought on the ground that there is a deficit in working capital due to additional investment in the new project - Held that: - the petitioner has not challenged the order passed by the first respondent on merits. They are ready and willing to comply with the direction of payment of interest liability. They seek four months' time to pay the balance of interest liability - taking note of the fact that the additional amount of service tax as settled by the first respondent to the tune of ₹ 63,13,770/- and penalty to the tune of ₹ 1.80 lakhs have already been paid, this Court is inclined to grant time to the petitioner to settle the balance of interest liability - petition allowed.

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• 2018 (4) TMI 1108
  CENVAT credit - iron and steel items which were used for fabrication and erection of telecommunication towers - cabs used for official duties of the employees - Held that: - Larger Bench of the Tribunal in the case of Tower Vision India Pvt. Ltd. Vs. Commissioner of Central Excise [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] has held that the assessees are not eligible for such credit on the MS steel, angles and other items used for construction of towers etc. - credit not allowed. Rent a cab service - Held that: - rent a cab service has been availed by the appellant for their employees to undertake the official trip which is relatable to their output telecommunication services - credit allowed. Penalties - Held that: - the dispute involved was subject matter of various decisions and finally was referred to a Larger Bench of the Tribunal for resolution - penalty set aside. Appeal allowed in part.

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• 2018 (4) TMI 1107
  Penalty - Tour Operator's service - tax paid on being pointed out - Held that: - there could be a bonafide belief on the part of the appellant not to pay the tax - In the absence of negative findings to reflect upon the malafide, the penalty imposed in respect of the second client is not sustainable - appeal allowed.

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• 2018 (4) TMI 1106
  IPR Service - "Hallmark" - Held that: - In terms of Section 65 (105) (22r) taxable service means any service provided to any person, by the holder of Intellectual Property Right, in relation to intellectual property service - In the present case, "Hallmark" is not at all any intellectual property governed by any law for such right. Section 9 of Trade Marks Act, 1999 lays down that certain marks cannot be registered as a trademark. The "Hallmark" only signifies that the products which are hallmarked are in conformity to the standards under the Hallmarking Scheme. The appellant are not providing any Intellectual Property Right service in terms of Finance Act, 1994 and there is no merit in the impugned orders - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1105
  Liability of interest - reversal of excess accumulated and unutilized credit - Held that: - the issue stands considered by the Hon’ble Karnataka High Court in the case of Commissioner, LTU, Bangalore Vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], wherein it was held that in case the credit availed stands reversed, without utilization, no interest liability would arise - demand on interest set aside - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1104
  Business Auxiliary Service - appellants are engaged in job work of shearing, bur removing, welding, straitening, cutting etc. of sheet metal supplied by various clients - Held that: - sizing of goods or on behalf of the client was specifically brought in only with effect from 16.06.2005. Admittedly, the appellant was not engaged in the production of any goods - Processes undertaken are specifically covered with effect from 16.06.2005/-. Liability of tax - processing of goods on behalf of 100% EOU - N/N. 8/2005 - Held that: - the scope of N/N. 8/2005 has been examined where the Tribunal in Interplex Electronic India Pvt. Ltd. Vs. CST, Bangalore [2013 (5) TMI 451 - CESTAT BANGALORE] - EOU are exporting the goods under bond and as such it was held that the appellant assessee who is doing process on behalf of EOU are eligible for the said exemption - exemption allowed. Appeal allowed.

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• 2018 (4) TMI 1103
  Classification of services - Maihar Cement Ltd. have been sent to them, the goods i.e. Cement for sale on consignment basis - whether the service classifiable under GTA Service or under clearing and forwarding service? - Held that: - the appellant is neither the service provider nor the service receiver for the transaction of transportation of goods or a GTA under dispute. That the transportation service is provided by some third agency and the receiver of service is the principal-namely Maihar Cement Ltd. Thus, no Service Tax liability arises under the Scheme of the Act and the Rules on the appellant/assessee, who is the consignment agent of Maihar Cement Ltd. - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1102
  CENVAT credit - service tax paid on various services availed by them before the registration of their Unit - Held that: - in the case of M/s. mPortal India Wireless Solutions (P) Ltd., Vs Commissioner of Service Tax [2011 (9) TMI 450 - KARNATAKA HIGH COURT], it was held that Registration not compulsory for refund - credit allowed. CENVAT credit - Rent-a –Cab Services and Air Travel Services, utilised by the appellant for their employees travel purposes - Held that: - for the period subsequent to the one involved in the present appeal Commissioner (Appeals) has extended the benefit to assessee in the case of M/s. SCIO inspire Consulting Services (India) Pvt. Ltd., Chennai [2017 (4) TMI 943 - MADRAS HIGH COURT] - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1101
  Short-payment of service tax - Club or Association Services - case of the department is that the respondents are liable to pay service tax on the subscription amount collected from its members - Held that: - Hon'ble High Court of Jharkand in the case of M/s. Ranchi Club Ltd. [2012 (6) TMI 636 - Jharkhand High Court] had analysed the issue and held that the club is formed on the principle of mutuality and, therefore, any transaction of the club with its members is not a transaction between two parties and, therefore, not subject to levy of service tax - demand set aside - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1100
  Refund of CENVAT credit - time limitation - refund claim filed after the expiry of 60 days provided in the N/N. 41/2007-ST - Held that: - Tribunal in the case of M/s. Knitex Textiles Pvt. Ltd. Vs Commissioner of Central Excise, Mumbai [2015 (3) TMI 1102 - CESTAT MUMBAI] has taken into consideration a subsequent Notification No. 17/2009-ST, dated 07.07.2009, which extended the period for filing refund claims to one year and has observed that the exports undertaken prior to 07.07.2009 and the refund claims being filed within one year would be covered by the notification. The case of respondent is that some of the claims would fall within the time-limit of one year as prescribed in the subsequent N/N. 17/2009-ST, dated 07.07.2009 - the matter remanded to the original authority for deciding the refund claim afresh - appeal allowed by way of remand.

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• 2018 (4) TMI 1099
  Valuation - includibility - whether the value of Sim Card would become a part of the Telephone Services being provided by the appellants? - Held that: - the issue is no more res integra and stands decided in the case of M/s. Idea Mobile Communication Ltd. Vs Commissioner of Central Excise & Customs, Cochin [2011 (8) TMI 3 - SUPREME COURT OF INDIA] maintained clearly that the amount received by the service provider towards Sim Card will form part of the taxable value for service tax - demand upheld. Extended period of limitation - penalty - Held that: - it is not a case invoking the extended period of limitation - as regards penalty, the issue was under litigation before authorities and as such it cannot be said that there was any malafide on the part of the appellants - penalty not warranted. Appeal allowed in part.

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• 2018 (4) TMI 1098
  Renting of Immovable Property service - Video Production Agency - the appellants contended that they are in no way concerned or connected with the activities of the firm who are primarily engaged in the production of video and as such do not fall under the definition of such services - Held that: - Admittedly, in the present case, the appellants have simplicitor rented out their premises and in no way provided their services to the tenant for recording of the video and in other activities connected with the recording - the service of giving the studio on rent would fall under the category of Renting of Immovable Property Service , which came on the statute book with effect from 01.06.2007 and the appellants have been rightly discharging their liability accordingly. Extended period of limitation - Held that: - the said fact of renting of studio was brought to the notice of Revenue and there is no evidence indicating any malafide intention on the part of the assessee - extended period not invocable. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1097
  Man-power Recruitment and Supply Agency Service - impugned order held that the activity is execution of specific job or payments are made with reference to job and accordingly, there is no tax liability for supply of man-power - Held that: - there is no arrangement for pure supply of labour. This is substantially true in respect of at least some of the work, where the nature of work is identified and the payment is linked to per metric tonne - Supervision work is paid on lump sum basis. There is no reference to number of labourers or duration of their work. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1096
  Penalty u/s 78 - intent to evade not present - revenue neutral situation - Foreign Agent Commission Services received in India - Held that: - Apart from the fact that the entire situation was revenue neutral, we find lack of evidence to reflect upon the appellant's malafides - penalty set aside. Demand of service tax with penalty - commission received from foreign principals, for promoting their products in India - Held that: - Tribunal's decision in the case of M/s. Gap International Sourcing (India) Pvt. Ltd. Vs Commissioner of Service Tax, Delhi [2014 (3) TMI 696 - CESTAT NEW DELHI] lays down that the said activity would get covered under the Export of Services Rules - demand with penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1095
  Penalty - Construction of Residential Complex Services - present appeal is from 16.06.2005 to 30.06.2006 - Held that: - The act of immediate compliance of law by the appellant by paying the service tax when the lapse was pointed out to them is enough to prove that there is no intention to evade or avoid the payment of service tax on the part of the appellant - penalties set aside by extending benefit of section 80 as also by observing that there was no intention to evade payment of duty - penalty set aside - appeal allowed.

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• 2018 (4) TMI 1094
  Technical Testing and Analysis Services - testing customers software - liability of service tax - Held that: - The testing of Information Technology Software was specifically brought under the category with effect from 16.05.2008 - The period is prior to 16.05.2008 and as the testing of Information Technology Software was specifically brought under the category with effect from 16.05.2008, there is no justifiable reason to uphold the demand. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (4) TMI 1093
  SSI Exemption - denial on the ground that the manufacture of goods taking place in unit, located in a notified area of HSIDC, Ambala Cantt - Held that: - during the impugned period, the unit of the respondent was located in Village Rampur, Ambala Cantt. which was a Rural area - this is brought out by the certificates issued by Municipal Corporation, Naib Tehsildar and Village Sarpanch - benefit cannot be denied - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1092
  Substantial expansion - N/N. 1/10 CE dated 06.02.2010 - respondent increased their employment more than 25% - case of Revenue is that there should be an increase of more than 25% in the production capacity of the respondent-assessee - Held that: - the notification stipulates that there should be investment and that the investment should be directly attributable to generation of employment. The said notification does not speak about direct attribution to generation of production or machine-wise production - the ground taken by the Revenue is contrary to spirit of the notification - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1091
  Refund of education/ higher education cess - Revenue is of the view that education cess/ higher education cess is not duty, therefore, in terms of N/N. 56/2002-CE dated 14.11.2002, they are not entitled to claim refund of self credit of the same - Held that: - the issue of refund of education cess/ higher education cess has been settled by the Hon’ble Apex Court in the case of M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA] wherein it has been held that education cess/ higher education cess arising on account of duty payable by the appellant - refund allowed. Refund of excess duty paid - Held that: - the excess amount paid by the appellant is not towards duty, in that circumstance, refund claim or self credit of said amount cannot be demanded in terms of section 11A of the Central Excise Act, 1944 - refund cannot be rejected. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1090
  Classification of goods - Mentos Mint - whether goods classifiable under Chapter Sub Heading No. 1704.10, or under Chapter Sub Heading No. 1704.90? - Held that: - the basis for confirmation of demand was order-in-original dated 31.03.2009 passed by Commissioner of Central Excise, Chennai - the said order was not found to be sustainable by this Tribunal through its said final order [2013 (8) TMI 773 - CESTAT CHENNAI] - a small percentage of gum in sugar confectionary may not be sufficient to consider the product as gum - impugned order-in-original not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1089
  Refund of education/ higher education cess - appellant enjoying area based exemption under N/N. 56/2002-CE dated 14/11/2002 - Held that: - Hon’ble Supreme Court in the case of SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA] held that the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - refund allowed. Valuation - includibility - outward freight up to the place of delivery - Held that: - Hon’ble Supreme Court in CCE, Nagpur vs. Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] held “under no circumstances can the buyer’s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case” - there is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - decided against appellant. Appeal allowed in part.

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• 2018 (4) TMI 1088
  Maintainability of appeal - when two notification are available, which one will be applicable to the appellant - N/N. 56/2002-CE dated 14.11.2002 and N/N. 01/2010-CE dated 06.03.2010 - Held that: - higher judicial forums including Apex Court held that, when two Notifications were available to the assessee-Respondents, they can opt to avail either one of them and the same cannot be denied. In the grounds of appeal, there is no substantial issue either on fact or on law was raised to persuade us to interfere with the said findings in the impugned order - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1087
  SSI Exemption - use of brand name - allegation in the show cause notice is that the brand name RIAT was registered in the name M/s. Riat Machine Tools, which was a family concern - Held that: - In terms of the family settlement deed, M/s. Riat Machine Tools relinquished their right to use the said trade mark on Centreless Grinding Machines and Surface Grinding Machines, if manufactured by them - main ground of the department is that the above family settlement deed was not mentioned in show cause notice nor mentioned during three statements of the proprietor of the respondent but was produced afterwards before the adjudicating authority as well as first appellate authority. As rightly held by the Commissioner (Appeals), the terms of the family agreement have clearly ruled out any scope of indicating a connection between the goods manufactured by the respondents bearing the Brand Name RIAT and M/s. Riat Machne Tools, who were also be user of the same Brand Name but on different goods. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1086
  CENVAT credit - credit availed without actual receipt of goods - it was alleged that M/s ASRM have diverted best quality of goods - Held that: - demands are not sustainable against the appellants by denial the cenvat credit on the inputs procure by them without any corroborative evidence - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1085
  Area Based Exemption - N/N. 50/2003-CE - establishment of a new unit (Unit II) by appellant - denial on the ground that Greenply did not commence commercial production (in Unit II) on or before 31st March 2010 and hence not eligible for the exemption - Clause-a of Para-2 of the Notification. Held that: - what is required in terms of Clause-a, is that the new industrial unit should have commenced commercial production not later than 31st day of March 2010 - all the produced documents are undisputed and part of the records of the court below, clearly establish that the Unit-II of the appellant for manufacture of MDF Board etc., had commenced commercial production before 31st of March 2010. The appellant is eligible for exemption for a period of 10 years for its Unit-II with effect from 30 March, 2010 - not only commercial production was commenced on 30 March, 2010, the appellant have also made clearances of MDF board on 31 March, 2010, to Raghuraji Agro Industries Pvt. Ltd. Further the stock of MDF boards with appellants brand were found at the premises of the said Raghuraji Agro Industries Pvt. Ltd. during follow-up investigation and drawl of Panchnama on 21 June, 2010. The verification report of the Superintendent of Central Excise Mr. A.K. Ashthana also supports the commencement of commercial production and that production was going on when he visited during the middle of April 2010 when semi-finished goods were being converted into finished goods - Further it is evident that the total power available with the appellant drawn from the electric company plus from the captive DG sets were sufficient for production in the new Unit-II from 30 March, 2010. Further, installation of plant and machinery have been completed much before 31 March, 2010 which is not disputed and supported by the intimations given to the Department in the month of March 2010 prior to commencement of commercial production. The learned Commissioner have selectively relied upon the evidence on record, thus his findings are vitiated - the appellant is entitled for exemption under the Notification No. 50/2003 – CE for its new Unit–II for a period of 10 years from 30 March, 2010 - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1084
  CENVAT credit - supplementary invoices - Rule 9(1)(b) of Cenvat Credit Rules, 2004 - Held that: - the present proceedings have been initiated by way of sequel to the proceedings initiated at Pondicherry in the case of RK Industries and Hindustan Unilever Ltd. As the proceedings at the end of RK Industries and Hindustan Unilever Ltd. stands settled, the allegations against this appellant also do not stand as to any irregularity in taking of Cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1083
  CENVAT credit - 'Acmesole Sole 2183', 'Indole' etc., which are their finished goods and not their input - Rule 16 of Central Excise Rules 2002 - Held that: - though under Cenvat credit Rules, Cenvat credit is allowed only on input but under special provision of above Rule 16, the Cenvat credit is allowed even on the finished goods only on the condition that at the time of re-issue of such finished goods the assessee is required to pay appropriate excise duty. There is no dispute on payment of duty on the re-issue of the goods on which credit was taken, therefore in terms of Rule 16, respondent is entitle for the Credit - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1082
  CENVAT credit - excavation of Lignite from mine for its further transportation upto the weigh bridge where the lignite was weighed - Lignite is further used in the generation of electricity, which is exempted - Held that: - The Lignite is raised from the mines, but the same is transported upto the crusher and it is finally weighed at the weigh bridge and on such quantum of Lignite, the Central Excise duty is paid - the assessee-Respondents will be entitled to the credit of Service Tad paid on such mining and transportation upto the point of weigh bridge - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1081
  Service tax or VAT - transfer of rights/privileges - whether the transaction being transfer of rights and privilege of export of sugar quota by the respondent assessee on receipt of consideration, whether the same is a service or goods? - Held that: - in view of the ruling of Hon ble Supreme Court in the case of Vikas Sales Corporation [1996 (5) TMI 363 - SUPREME COURT OF INDIA], which have been reaffirmed by the Hon'ble Supreme Court in Yasha Overseas and others [2008 (5) TMI 43 - SUPREME COURT], the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1080
  CENVAT credit - inputs/capital goods - Shape section/MS Angle/Channel/Girder/plate (7208/7216), M.S. Column, H.R. Coils, H.R. Cobbler Plates, CR Sheets, Steel Bars, M.S. Bar, etc - Held that: - the items in dispute are either components of capital goods or inputs which have been used in manufacture of capital goods, which are further used in the factory of the appellant for manufacture of dutiable goods like sugar and molasses etc. - the appellant is entitled to CENVAT Credit - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (4) TMI 1079
  Revision of assessment - inter-state sales - defective C-Forms - principles of natural justice - Held that: - If it is found in a given case that the C-Forms produced by a dealer are defective, it is incumbent upon the assessing authority to provide the dealer an opportunity to cure the defects before the same are rejected and assessment is completed on that basis - SCN vitiated for non-compliance of the principles of natural justice - petition allowed.

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