TMI Tax Updates - e-Newsletter
April 25, 2018

Case Laws in this Newsletter:

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

Articles

1. SENIOR CITIZENS SAVINGS SCHEME RULES, 2004

   By: DR.MARIAPPAN GOVINDARAJAN

2. On income in India there cannot be imposition of tax twice on the same income, unless law specifically so provide- tax paid under Sikkim Income tax Manual so not taxable Under I.T.Act.

   By: DEVKUMAR KOTHARI

News

1. Notification under section 112A as inserted by Finance Act, 2018 – Seeking comments of stakeholders

2. Draft notification proposing an amendment to rule 44E, Form 34C, 34D and 34DA as per BEPS action item 5, for improving transparency in relation to tax rulings– comments and suggestions

3. Electoral Bond Scheme 2018: Sale of Electoral Bonds at Authorised Branches of State Bank of India (SBI)

4. Government of India and World Bank Signs Agreement to Improve Rural Road Network in Madhya Pradesh

5. Notwithstanding recent growth spurt, endemic structural issues need to be addressed in a time bound manner in Assam: Finance Commission

6. RBI Reference Rate for US $

Circulars / Instructions / Orders

Customs

1. 10/2018 - dated 24-4-2018

Import by EOU/EHTP/STP/BTP without payment of duty by following Rule 5 of Customs (import of Goods at Concessional Rate of Duty) Rules, 2017 — clarification regarding

Highlights / Catch Notes

GST

• Court Orders Immediate Release of Vehicle Seized for Missing E-Way Bill; Petitioner May Contest Penalty Order.

  Case-Laws - HC : Detention and seizure of goods with vehicle - non furnishing of the E-Way Bill immediately at the time of detention - The respondent is directed to release the loader/tipper without demanding any security from the petitioner forthwith leaving the order of penalty to be challenged by the petitioner if necessary - HC
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• Authority to Complete Adjudication for Release of Detained Goods u/s 129 of CGST Act.

  Case-Laws - HC : Release of detained goods - Section 129 of the Central Goods and Services Tax Act - the competent authority is directed to complete the adjudication provided for u/s 129 of the statutes - HC
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Income Tax

• No TDS on Export Order Commission to Foreign Buyers Under IT Act Section 195 if Services Outside India.

  Case-Laws - AT : TDS u/s 195 - When a sales commission has been made by the assessee company on export orders from the buyers abroad and services have not been rendered by the payee in India, no part of the said income has arisen in India - AT
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• Sales Tax Subsidy Classified as Capital Receipt: Implications for Depreciable Asset Costs and Tax Liability Under Income Tax Laws.

  Case-Laws - AT : Sales tax subsidy treated as capital receipt - nature of receipt - Whether the subsidy amount can be adjusted in the cost of depreciable assets? - AT
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• Reopening an assessment and issuing a notice in a deceased person's name is invalid and unsustainable.

  Case-Laws - AT : Reopening of assessee - notice in the name of deceased person - passing of an assessment order in the name of deceased person would not be sustainable. - AT
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• High Court Rules Trade Advances in Commercial Deals Not Deemed Dividends Under Income Tax Act Section 2(22)(e.

  Case-Laws - HC : Deemed dividend u/s 2(22)(e) - trade advances made for the commercial transactions would not be hit by section 2(22)(e) of the Act - HC
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• High Court rules goodwill received by retiring partner is a capital asset u/s 2(14) of Income Tax Act.

  Case-Laws - HC : Receipt of amount as goodwill on retirement - right of partner in the partnership firm - capital asset u/s 2(14) - extinguishment of such right in the firm - HC dismissed the revenue appeal.
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• Assessing Officer Lacked Basis to Disregard Municipal Lettable Value for Enhanced Annual Letting Value in Property Income Case.

  Case-Laws - AT : Income from house property - Municipal lettable value disregarded - enhancement made in the annual letting value - by no stretch of imagination, it can be said that the Assessing Officer had any material much less cogent at that to disregard the municipal lettable value - AT
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• Reassessment u/s 147 Challenged: No Proceedings for Errors Not Correctable u/s 154 on Share Sale Exemption.

  Case-Laws - AT : Validity of re-assessment proceeding u/s 147 - exemption claimed by the assessee u/s 10(38) of the Act on the sale of shares - Reassessment proceedings cannot be resorted after realizing that the error cannot be rectified u/s 154 - AT
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Customs

• Challenging Countervailing Duty Concession Eligibility Without Evidence Is Unsupported for Appellants in Relevant Period.

  Case-Laws - AT : Liability of CVD - the eligibility to the CV duty concession as claimed by the appellant during the material time cannot be questioned much later without any evidence. - AT
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• Lenient Approach to Customs Duty Drawbacks: Excise Invoices Not Mandatory if Commercial Invoices Provided, Retrospective Benefit Applied.

  Case-Laws - AT : Duty Drawback - fixation of brand rate - retrospective application of the beneficial circular - Only failure to produce the excise invoices and instead producing only the commercial invoices should not be a mere reason for concluding that the documents have not been produced - AT
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Indian Laws

• Seeking Stakeholder Feedback on Section 112A: Taxation of Long-Term Capital Gains on Equity Sales and Mutual Funds.

  News : Notification under section 112A as inserted by Finance Act, 2018 – Seeking comments of stakeholders
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• Proposed Amendments to Rule 44E and Forms 34C, 34D, 34DA to Boost Tax Ruling Transparency; Feedback Invited.

  News : Draft notification proposing an amendment to rule 44E, Form 34C, 34D and 34DA as per BEPS action item 5, for improving transparency in relation to tax rulings– comments and suggestions
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Service Tax

• Department Fails to Issue Show Cause Notices During Extended Limitation Period, Despite Awareness of Ongoing Activities.

  Case-Laws - AT : Extended period of limitation - it would be expected that the department would issue periodical show cause notices till the matter is finally settled - this was not done - the department cannot wash away the fact that they were well aware of the continued activities - AT
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• No Penalty Imposed for Service Tax Evasion u/s 78 Due to Prompt Payment and Lack of Intent.

  Case-Laws - AT : Penalty u/s 78 - suppression with intent to evade payment of service tax - appellant has immediately paid the amount of service tax alongwith interest - It shows that there was no positive act of suppression on the part of the appellant - no penalty - AT
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Central Excise

• No extra duty or tax on extra jar quantities if duty already paid on MRP.

  Case-Laws - AT : Free supplies - additional quantity packed in jar on which duty has been paid on MRP of the price of the Jar - On these additional supplies made free, the appellant is not required to pay duty / tax - AT
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• Boiler Installation Makes It Immovable Property, Exempt from Central Excise Duty Under Regulations.

  Case-Laws - AT : Manufacture - boiler in question emerges at site which become an immovable property, which is not excisable goods therefore, not leviable for duty. - AT
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• CENVAT Credit Ruling: No 8% Liability for Non-Maintenance of Accounts on Used Packing Materials for Exempted Goods.

  Case-Laws - AT : CENVAT credit - used packing material - exempted goods - Non maintenance of accounts as regards use of credit availed inputs which have already been used once in the packing of final products does not invite the liability of 8% (later 10%) of the sale price of exempted final products - AT
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• Subsidy for CST Not Included in Tax Assessable Value; No Justification for Inclusion Found.

  Case-Laws - AT : Valuation - CST amount subsidy is sanctioned and credited to the bank account of the appellant - There is no justification for inclusion in the assessable value, the subsidy amounts - AT
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• Tribunal Must Independently Assess Legal Findings; Not Bound by First Appellate Authority's Conclusions on Rule Interpretation.

  Case-Laws - HC : The Tribunal is not expected to endorse legal findings of the First Appellate Authority - Since the Tribunal comprises of both a Judicial Official and an Administrative Member, it is expected to apply its independent mind and particularly on the question/issue of interpretation of the Rule. - HC
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Case Laws:

• GST

• 2018 (4) TMI 1216
  Release of detained goods - comply with Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - 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 1215
  Extension of time period for filing of GST Tran-1 - despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond - Held that: - the respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - petition disposed off.

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• 2018 (4) TMI 1214
  Detention and seizure of goods with vehicle - non furnishing of the E-Way Bill immediately at the time of detention - Section 129(1) of U.P. GST Act - Held that: - the loader/tipper were duly supported by other documents including temporary registration number ensuring no possibility of evasion of tax, as provided in other matters of the similar nature. The respondent is directed to release the loader/tipper without demanding any security from the petitioner forthwith leaving the order of penalty to be challenged by the petitioner if necessary by means of an appeal under Section 107 of the U.P. GST - petition disposed off.

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• 2018 (4) TMI 1213
  Seizure of goods with vehicle - Section 129(3) of the U.P. GST Act - penalty - Held that: - petitioner has equally efficacious remedy of filing an appeal against the penalty order under Section 107 of the U.P. GST Act, 2017 - the vehicle may be released - petition disposed off.

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• Income Tax

• 2018 (4) TMI 1217
  Addition on account of bogus purchases - CIT(A) restricted the addition to the extent of 12.5% - Held that:- In respect of the goods purchased from Sai International and sold by the assessee, the assessee had shown GP rate 0.15%, however, in respect of purchases other than from Sai International, the assessee has disclosed same GP of 0.15%. Thus, it is not the case where assessee has shown lower G.P. in respect of alleged bogus purchases. In the immediately preceding Assessment Year, the GP shown by the assessee on the entire sale was 0.14%. Thus, it is clear that GP shown by the assessee during the year under consideration is better than the GP shown in the immediately preceding Assessment year. Thus we modify the order of lower authorities and direct the AO to upheld addition of 2% of bogus purchases. - Decided partly in favour of assessee

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• 2018 (4) TMI 1212
  Addition u/s 45(1) under the head long term capital gains - Whether right of partner in the partnership firm is a capital asset u/s 2(14) and retirement of partner lead to extinguishment of such right in the firm amounting to transfer u/s 2(47) giving rise to capital gains exigible to tax? - amount received as goodwill on retirement is taxable in the hands of the retiring partner as capital gain - Held that:- There is nothing on record to indicate that it was a Revenue's contention before the authorities that the amount received by the respondent was not goodwill. In fact, the submission that in the absence of goodwill being indicated in the balance sheet of the partnership firm, there could not be no goodwill available to the firm is an issue being urged for the first time before this Court. Therefore, in the absence of this issue being raised before the authorities under the Act, it will not be question arising from the case. There is nothing on record on facts to indicate that the amount received by the respondent is not goodwill. Therefore, the decision of this Court in Riyaz A. Sheikh (2013 (12) TMI 248 - BOMBAY HIGH COURT) will apply wherein held amounts received on retirement by a partner is not subject to capital gains tax - Decided against Revenue.

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• 2018 (4) TMI 1211
  Disallowance u/s 14A - Held that:- We are of the opinion that the Income Tax Appellate Tribunal should reconsider the issue after taking note of the decision of the Special Bench in case of Assistant Commissioner of Income-tax, Circle 17(1), New Delhi v. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. Accordingly, the question of law as framed is answered as above.

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• 2018 (4) TMI 1210
  Deemed dividend u/s 2(22)(e) - Tribunal confirming the view of the CIT (Appeals) opined that the amount in question was in the nature of trade advances to the assessee made by the company and not a loan - Held that:- The assessee had entered into an agreement with the company for development and consideration of the land which was owned by the assessee. Various transactions of such agreement pertain to the negotiation of sale price to be received by the assessee from the payments collected by the company. Tribunal referred to the judgement of CIT vs. Rajkumar [2009 (5) TMI 17 - DELHI HIGH COURT] and held that trade advances made for the commercial transactions would not be hit by section 2(22)(e) of the Act. - Decided in favour of assessee.

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• 2018 (4) TMI 1209
  Reopening of assessee - notice in the name of deceased person - Held that:- The assessee is not harping upon any irregularity in the notice, rather he is challenging the very jurisdiction over the assessee, on account of issuance of notice in the name of a deceased person, and further, even after coming to know about status of the assessee as a deceased, passing of an assessment order in the name of deceased person would not be sustainable. Therefore allow this ground of appeal and quash the assessment order. - Decided in favour of assessee.

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• 2018 (4) TMI 1208
  Penalty u/s 271(1)(C) - non specification of charge - Held that:- Omission by the AO to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes the penalty order liable for cancellation. CIT vs. SSA’s. Emarld Meadows [2016 (8) TMI 1145 - SUPREME COURT] followed - In the present case having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) without striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable.- Decided in favour of assessee

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• 2018 (4) TMI 1207
  Revision u/s 263 - Deduction wrongly allowed in respect of provisions for nonperforming assets, even though it was a mere contingent liability - deduction towards loss of interest rate swap was incorrectly allowed - Held that:- For provisions for nonperforming assets as out of total provision of Rs. 1114.68 lacs, a sum of Rs. 7,60,76,105/- was suo moto added back in the computation of income and a further sum of Rs. 73,46,160- was disallowed by the AO in the original assessment order dated 30.3.2005. Therefore, out of Rs. 1114.68 lacs, Rs. 834.22 lacs already stood disallowed in the original assessment order. The balance amount represented actual write off which was palpably clear from page 2 of the impugned order itself. No deduction on account of any such provision was, therefore, allowed to the assessee. Hence, there is no error or prejudice to the interest of revenue. For interest rate swap as an actual loss and only the net loss of Rs. 114.05 lacs after setting of gain of interest rate swap was claimed as deduction. However, we find that both these issues were duly examined by the AO vide Questionnaire dated 2.11.2004 to which replies dated 9.12.2004, 20.12.2004 and 6.1.2005 were furnished and, therefore, the finding of the Ld. CIT that the issues were not examined properly was not correct. CIT has not pointed out the definite and specific error in the original assessment order and observed that the inquiry made by the AO was inadequate or improper without first pointing out the error in the original assessment order passed by the AO, particularly because both the aforesaid issues were duly examined at the stage of the original assessment proceedings, hence, the impugned order is beyond jurisdiction, bad in law and void-ab-initio. - Decided in favour of assessee.

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• 2018 (4) TMI 1206
  Entitlement to deduction u/s 80P(2) - assessee is a primary agricultural credit society - Held that:- As relying on case of Chirakkal Service Co-Operative Bank Ltd. Versus CIT [2016 (4) TMI 826 - KERALA HIGH COURT] CIT(A) was justified in directing the A.O. to grant deduction u/s 80P(2) of the I.T.Act to the assessee wherein held Tribunal erred in law in deciding the issue regarding the entitlement of exemption under section 80P against the appellants. We hold that the primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption. - Decided in favour of assessee

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• 2018 (4) TMI 1205
  Disallowance made u/s. 14A - Held that:- As own funds available with the assessee is in far excess of the value of investments and hence as per the decision rendered by Hon'ble Jurisdictional Bombay High Court in the case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT), no disallowance out of interest expenditure is called for. Thus direct the Assessing Officer to delete the disallowance under rule 8D(2)(iii) out of interest expenditure. As already noticed that the assessee itself has disallowed a sum of Rs. 50,000/- under rule 8D(2)(iii). Accordingly, we direct the Assessing Officer to sustain disallowance u/s. 14A of the Act to the extent disallowed by the assessee. Addition on the basis of ITS record - Held that:- If the difference has arisen for the reason as stated by the assessee alone, then we are of the view that there is merit in the contention of the assessee. As submitted by the assessee the difference, if any, would automatically get adjusted when concerned deposits are closed. We have already noticed that neither of the parties have brought on record the details of deposits, details of accrued interest accounted by the assessee and that was uploaded by the bank, difference between both the figures etc. Any kind of decision can be taken only if these details are examined, which requires verification at the end of the Assessing Officer. If the difference has arisen on account of accrued interest on deposits kept with the banks, we are of the view that no addition is called for. Accordingly, we restore this issue to the file of the Assessing Officer with the direction to examine these details and take decision as per discussion made. Addition being the difference between income booked by the assessee and income shown in TDS certificate - AS submitted that if income of Rs. 1,24,282/- is assessed in the hands of the assessee, corresponding TDS should be given credit - Held that:- We find merit in the alternative contention of the assessee and accordingly, we direct the Assessing Officer to give corresponding TDS credit to the assessee. Addition on TP adjustment - non-collection of interest from its AE for advances made - Held that:- No correspondence exchanged between the parties that both the parties are waiving their right to collect interest/commission in view of cross services, was shown to tax authorities or to us. In the absence of any material to support the submissions, we are unable to accept the oral submissions. In any case, as submitted by learned DR, loan transactions and the agency transaction, if any, are two different transactions. Since alleged marking efforts cannot be linked to the advance given by the assessee interest free, we are of the view that the explanation of the assessee for not charging interest to its AE is not appealing. - Decided against assessee. Disallowance of mark to market loss of forward contracts - Held that:- We notice that the assessee has also revalued the underlying asset, i.e., export receivables and credited the income in the profit and loss account. The loss arising on revaluation of forward contract, in our view, deserves to be allowed. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim of the assessee. - Decided in favour of assessee.

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• 2018 (4) TMI 1204
  Disallowance u/s. 14A - reduction of disallowance voluntarily made by the assessee - Held that:- The assessee has made voluntary disallowance u/s 14A of the Act even though it did not receive any dividend income. As per the decisions rendered by various courts, no disallowance is required to be made in the absence of exempt income. Hence the assessee has filed CO with the plea to delete the voluntarily disallowance made by it, which is supported by various decisions. Accordingly we allow the CO filed by the assessee. The relief granted to the assessee in CO may reduce the assessed income, which may also go below the returned income. This issue, whether the assessed income can go below the returned income (which was urged by Ld DR), has been examined and decided in favour of the assessee by the co-ordinate bench in the case of Tata Industries Ltd (2016 (7) TMI 1011 - ITAT MUMBAI) which has followed the decision rendered by another co-ordinate bench in the case of Shri Chandrashekhar Bahirwani (2015 (6) TMI 1061 - ITAT MUMBAI)- Accordingly we direct the assessing officer to exclude the disallowance voluntarily made by the assessee also u/s 14A of the Act. - Decided in favour of assessee

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• 2018 (4) TMI 1203
  Addition u/s 41(1) in respect of M/s Suryalakshmi Garments - Held that:- The provisions of sec. 41(1) shall apply only in case of ceased trading liability. As the assessee has demonstrated that M/s Suryalaxmi Garments is having running account and the balance outstanding in its name has been paid in the succeeding years. Hence we are of the view that the provisions of sec. 41(1) shall not apply to the facts of this issue. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition relating to M/s Suryalaxmi Garments. Disallowance made out of labour charges - Held that:- As rightly held by Ld CIT(A), it cannot be said that the assessee has conclusively proved the genuineness of labour charges. A portion of the expenditure claim may be disallowed in order to take care of revenue leakages. CIT(A) has disallowed 30% of the labour charges paid to the five parties. We notice that the AO has not shown that the labour charges were not incurred at all. It is an admitted fact that the garments cannot be manufactured without incurring labour charges. Hence, disallowance of 30% appears to be on the higher side. Accordingly we modify the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance to 15% of the labour charges paid to the five parties. Disallowance made of purchases made from M/s Harsh Textiles - assessee has contended that he has produced the quantity details to prove the receipt and consumption of the cloth - Held that:- The notice issued to the said party has returned back and since the assessee could not produce the above said party before the AO, it cannot be said that the assessee has conclusively proved the genuineness of purchases. Disallowance of a portion of purchases is called for to take care of revenue leakages. As submitted that the cloth is rateable item under VAT tax - tax authorities have disallowed 25% of the value of purchases made from M/s Harsh Textiles, which we consider to be on the higher side when we consider the contentions of the assessee. We modify the order passed by Ld CIT(A) on this issue and direct the AO to restrict the addition to 5% of the value of purchases made from M/s Harsh textiles.- Appeal of assessee partly allowed.

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• 2018 (4) TMI 1202
  Addition of 12.5% in respect of alleged bogus purchases - Held that:- Considering circumstances of the case vis-à-vis gross profit and net profit declared by the assessee during the years under consideration and cases of Geolife Organics (2017 (5) TMI 1101 - ITAT MUMBAI) and Suman Gupta [2018 (4) TMI 1217 - ITAT MUMBAI] we direct the AO to restrict the addition to the extent of 2% of such alleged bogus purchases in all the three years under consideration. - Decided partly in favour of assessee.

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• 2018 (4) TMI 1201
  Levy of penalty u/s.271(1)(c) - non specification of charge - Held that:- Levy of penalty has to be clear as to the limb under which it is being levied. See Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) Omission by the AO to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes the penalty order liable for cancellation. sEE CIT vs. SSA’s. Emarld Meadows [2016 (8) TMI 1145 - SUPREME COURT] - In the present case having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of the Act dated 15.1.2014 without striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable.- Decided in favour of assessee

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• 2018 (4) TMI 1200
  Sales tax subsidy treated as capital receipt - nature of receipt - Held that:- In view of the scheme of Government of Gujarat which set up to provide employment opportunities to the unemployed youth, the subsidy is to be considered as capital receipt only. Respectfully following the case of CIT Vs. M/s. Lincon Polymers Pvt. Ltd.(2006 (12) TMI 549 - GUJARAT HIGH COURT) which directly applies to the scheme, we hereby affirm the order of CIT(A) and reject the grounds of Revenue. Whether the subsidy amount can be adjusted in the cost of depreciable assets? - Held that:- As relying on Bajaj Consumer Care Ltd., Vs. ACIT [2011 (2) TMI 1449 - ITAT HYDERABAD] we hold that order of CIT(A) to that extent is not correct and the amount of subsidy cannot be adjusted to the cost of a depreciable assets. Accordingly, we set aside the last portion of the CIT(A)’s order and direct the AO not to adjust the subsidy so received out of the cost of depreciable assets [WDV] in each of the impugned assessment years. The grounds are considered accordingly allowed. Valuation of closing stock - Excise Duty paid on finished goods inclusion - Held that:- CIT-A correctly held that Excise Duty is not leviable in the finished goods and accordingly, question of making addition of the same amount to the closing stock does not arise. See case of CIT Vs. Dynavision Ltd., [2012 (9) TMI 265 - SUPREME COURT] - Decided in favour of assessee.

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• 2018 (4) TMI 1199
  Non-deduction of TDS payment made under the head ‘Sales Commission to foreign Agents’ - Held that:- When a sales commission has been made by the assessee company on export orders from the buyers abroad and services have not been rendered by the payee in India, no part of the said income has arisen in India and as such, TDS is not required to be deductible at source and disallowance u/s 40(a)(i) of the Act made by the AO is not sustainable in the eyes of law. So, ld. CIT (A) has rightly deleted the addition made by the AO. See case of CIT vs. Eon Technology P. Ltd [2011 (11) TMI 20 - DELHI HIGH COURT] and CIT vs. Toshoku Limited [1980 (8) TMI 2 - SUPREME Court] Disallowance u/s 14A r.w.r. 8D - Held that:- As relying on Indus Valley Investment & Finance Pvt. Ltd. vs. DCIT [2015 (4) TMI 1171 - ITAT DELHI] CIT-A correctly restricted the disallowance u/s 14A read with Rule 8D(iii) to the extent of dividend income earned by the assessee company which is in accordance with the settled principles of law applicable - AO is directed to compute the disallowance accordingly. - Appeal of assessee partly allowed.

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• 2018 (4) TMI 1198
  Refusing to grant registration u/s 12AA (1)(b) r.w.s. 12A - Trust engaged engaged only for TPA members - proof of charitable activities - Held that:- The applicant trust cannot be said to be engaged only for TPA members and their employees and working for mutual benefits of its members, but its objects are certainly aimed at providing benefit to the general public in the field of insurance and health facilities. No doubt, activities of the TPA which is a trade association for TPA business for the benefits of its members and non-members, but it is established to protect the interest of TPA members and work towards developing new products related to health insurance or insurance company and to structure the TPA fees, which is like Chambers of Commerce and Industry. Thus providing services to the insurance sector, which in return benefits the public at large. Also the Commissioner (E) was not empowered to examine whether the assessee was entitled for exemption u/s 11 or 12 as this issue was required to be examined at the time of assessment. CIT has erred in rejecting the application for registration u/s 12AA filed by the assessee. - Decided in favour of assessee.

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• 2018 (4) TMI 1197
  Penalty u/s 271(1)(c) - income surrendered during the search and seizure operation - Held that:- The assessee has paid tax on the income surrendered as per statement recorded u/s 132 (4) at the time of search and seizure operation together with interest before the completion of assessment. See CIT vs. Radha Kishan Goel [2005 (4) TMI 47 - ALLAHABAD High Court] and CIT vs. Mahendra C. Shah – (2008 (2) TMI 32 - GUJARAT HIGH COURT). When the assessee has offered aggregate amount of Rs. 64,00,000/- which includes the cash seized and adjusted in accordance with the question no.10 of statement recorded u/s 132 (4) and this amount finds mention in the computation of income, the provisions contained under Explanation (5) to section 271)(1)(c) are not attracted. So, the question framed is answered in the negative. AO has failed to make out the case of concealment of income or furnishing of inaccurate particulars of such income by the assessee so as to attract the provisions contained u/s 271(1)(c) of the Act, hence penalty levied by the AO and restricted by the ld. CIT (A) is hereby deleted. - Decided in favour of assessee.

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• 2018 (4) TMI 1180
  Bogus transaction/bogus purchase - maintenance of books of accounts - not allowing the assessee to cross-examine the witness - Held that:- The assessee under consideration is maintaining proper books of account including cash book, bank book, journal register, stock register and the assessing officer has failed to bring any cogent evidence on record to establish that the purchases made from M/s Sparsh Exports Pvt. Ltd. is not properly recorded in the books of the assessee. The addition made by the Assessing Officer was purely based on the guess work and conjectures, which is not justifiable. Also not allowing the assessee to cross-examine the witness by the adjudicating authority, though the statement of those witness were made, the basis of the impugned order, is a serious flaw of law which makes the order nullity. - Decided in favour of assessee

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• 2018 (4) TMI 1179
  Validity of re-assessment proceeding u/s 147 - exemption claimed by the assessee u/s 10(38) of the Act on the sale of shares but the fact is that no STT was paid by the assessee on the sale of shares - Held that:- Assessee has furnished the details of the investment in the form of some chart as evident from the order sheet entry of the AO relating to assessment proceedings under section 143(3) of the Act. The assessee has duly disclosed its exempted income in its computation of income. As such we note that the AO initiated the proceedings u/s 147 of the Act on the basis of the materials which were available before him during the assessment proceedings under section 143(3) of the Act. From the above facts, we find that the AO at the time of original assessment had in his possession all the relevant details regarding the LTCG. Accordingly, we disagree with the view taken by the ld. CIT(A) for validating the initiation of the reassessment proceedings u/s 147 of the Act as valid. The relevant data /information was available before the AO at the time of assessment and it was duly verified. Thus, it can be inferred that the AO in the original assessment proceedings has consciously treated the LTCG as exempted income. Thus, in our considered view the initiation of proceedings u/s 147 of the Act on the same set of documents is nothing but mere change of opinion. AO initiated the proceedings u/s 147 after taking the approval from the Ld CIT for issuing notice u/s 148 of the Act. The permission was obtained by the AO on 16-08-2010 for initiating the proceedings u/s 147 of the Act whereas the proceedings u/s 154 of the Act were dropped on 18-08-2010. From the above, it is implied that proceedings were initiated and pending by the AO on the same issue simultaneously u/s 147 and 154 of the Act which is not permitted in the eyes of law. Reassessment proceedings cannot be resorted after realizing that the error cannot be rectified u/s 154 - Decided in favour of assessee.

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• 2018 (4) TMI 1178
  Benefit of deduction u/s 80P2)(a)(i) - interest received on deposits with Sub-Treasuries - whether interest received on investments with sub-treasury is liable to be assessed under the head ‘income from other sources’ or ‘income from business’ - Held that:- In view of the decision of the co-ordinate Bench of the Tribunal in the case of The Padne Service Co-operative Bank Ltd. (2018 (1) TMI 602 - ITAT COCHIN), we hold that the CIT(A) is justified in directing the A.O. to grant the benefit of deduction u/s 80P(2) of the I.T.Act in respect of interest income - Decided in favour of assessee.

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• 2018 (4) TMI 1177
  Income from house property - Municipal lettable value disregarded - enhancement made in the annual letting value - valuation was based on the expert opinion of the Government Registered valuer and market trend - rejecting the municipal lettable value by AO - Held that:- As referring to the decision of the Tip Top Typography (2014 (8) TMI 356 - BOMBAY HIGH COURT) wherein held that the municipal lettable value cannot be disregarded straight away, for disregarding the same there must be cogent and reliable material. AO must not make guess work or act on conjecture and surmise. It was also expounded that the enquiries that the Assessing Officer can make would be for ascertaining the going rate, he can make a corporative study and make analysis. Transaction of identical nature can be ascertained by obtaining the requisite details. Now we examine as to what was the cogent material available to the Assessing Officer in rejecting the municipal lettable value. We find that except for the surmise, there was no material whatsoever The said valuer had clearly mentioned that he has never visited the said property under reference. In such circumstances, by no stretch of imagination, it can be said that the Assessing Officer had any material much less cogent at that to disregard the municipal lettable value. - Decided in favour of assessee Reopening of assessment - disallowance on account of addition to rental income - case was reopened on the basis of information obtained by AO from Shri Santosh Kumar, government registered valuer - Held that:- A reading of the said information clearly shows that the said information cannot at all be said to be a information on the basis of which it can be said that there was escapement of income. The said valuer has clearly stated that this should not be construed as his report or speech. The said valuer has clearly stated that he has neither visited nor inspected the said property. Thus said report can by no stretch of imagination be said to be a cogent material warranting reopening. Earlier assessment has been done u/s. 143(3) and the lettable value returned has been accepted. Now AO is changing his opinion on the basis of that said letter. In our considered opinion, this very much amounts to change of opinion, not permissible under law. Re-assessment in this case is not valid. Disallowance u/s. 14A in the normal provisions of the Act - Held that:- No cogent reason has been submitted before us that the consultant charges paid to the auditors are not indirect administrative charges. Hence, we dismiss this ground raised by the assessee.

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• 2018 (4) TMI 1176
  Genuineness of the value assessed / adopted in respect of the building as on 01.04.1981 - value adopted by the Stamp Valuation Authority - Held that:- Assessee has taken support from the approved Valuer’s report and also the value on which the A.P. State Government has purchased the property in 1980 in near vicinity. The approved Valuer has also determined the cost of built up area by giving reasons thereof. On the other hand, the Assessing Officer has merely relied upon the report of the SRO and he had not even considered the comparable case given by the assessee which was a transaction that took place in 1980. The moment the value adopted by the Stamp Valuation Authority is questioned, it is the duty of the Assessing Officer to refer the matter to the DVO, who is a technical expert on this matter; but the Assessing Officer chooses to merely rely upon the SRO’s report which, in our considered opinion, is not in accordance with law. Thus the assessee not only mentioned about the comparable cases but also furnished approved Valuer’s report, who is a technical expert. AO merely rejected the contention of the assessee without any material to the contrary. Thus the valuation adopted by the assessee deserves to be upheld.- Decided in favour of assessee. Brokerage paid as allowable as deduction - Held that:- Admittedly there is no evidence at any stage to prove the payment of brokerage and the claim of the DR is that the assessee has not even made a claim in the return originally filed. CIT(A) assessee appears to have not pressed this ground. Thus reject Ground of the assessee by holding that the claim of brokerage paid has no legs to stand. Claim exemption u/s 54 - Claim of deduction of cost of items sold - Purchase of semi-finished property within the period of one year from the date of transfer of the property - Held that:- In so far as the purchase is concerned the same has to be made within one year from the date of transfer of the property. In the instant case, the assessee ought to have purchased a new property after October 2010 whereas the property was purchased in February 2010 as per the sale deed and the second contention of ‘construction’ does not apply to an assessee who purchases a property. Though the assessee contends that the possession was taken in December 2010 but sale deed clearly shows that the property was purchased in February 2010 itself and it is an outright purchase of residential house; therefore it cannot be said that the assessee constructed a residential house. Such being the case no infirmity in the orders passed by the Tax Authorities. Therefore Ground no.5 is rejected. Sale of the Golf equipment etc., ought to have been accepted by the Assessing Officer despite the fact that no evidence was produced with regard to the purchase of those items - Held that:- Bare perusal of the confirmation letter indicates that the assessee claimed to have sold 4 Air Conditioners for a sum of Rs. 48,000/- i.e., Rs. 12,000/- per AC. It is not stated whether it is a one tonner or 1.5 tonner. A second hand AC ordinarily do not fetch that price in 2011. Similarly it was stated that one Sony Video Recorder was sold without specifying the features etc., to appreciate as to whether the price shown therein is reasonable or not. One Refrigerator was stated to have been sold at Rs. 18,000/- whereas even new Refrigerators are available at lesser cost unless it has special features and in such case it is the duty of the assessee to mention the brand and the features therein. In the absence of any details, the argument of the assessee cannot be accepted merely on the strength of an undated confirmation letter. Claim of the assessee is rejected

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• Customs

• 2018 (4) TMI 1196
  Redemption fine - penalty - duty drawback - it was alleged that exporter had declared excess weight of the said items - Held that: - there are no grounds to set aside the redemption fine and penalty entirely - misdeclaration of value as well as the weight of the garments happened only because of the wrong advice given by the customs broker - the redemption fine and penalty is to be reduced - appeal allowed in part.

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• 2018 (4) TMI 1195
  Restoration of appeal - appeal was dismissed for non-prosecution - Held that: - taking into consideration the fact that the appellant had attempted to file application for adjournment, the appellant has to be given a chance to contest the case on merits - appeal to be restored - application allowed.

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• 2018 (4) TMI 1194
  Restoration of appeal - appeal was dismissed for non-compliance of pre-deposit - Held that: - When the Tribunal has directed to make deposit within a prescribed time, the compliance cannot be made at the will and pleasure of the appellant. The appellant before us has neither made any deposit nor made request for extension of time to comply the Order - appellant herein was given enough time for compliance of pre-deposit order but had failed to comply with the same. There is no merit in the application for restoration of appeal - ROA application dismissed.

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• 2018 (4) TMI 1193
  Principles of Natural Justice - rejection of cross-examination - misuse of advance licence / advance authorization scheme - Held that: - As the present appellant is only a co-noticee in the impugned proceedings, we do not find any reason to deviate from the decision in respect of the main protagonist in the case of M/s. Vedanta Limited Versus Commissioner of Customs, Tuticorin [2018 (1) TMI 1024 - CESTAT CHENNAI], where it was held that When the right of the appellant for cross-examination has been taken away by the said decision of the adjudicating authority, merely because the same is issued in the form of a letter and not clothed as an order, it cannot be said that the said letter / decision is not an appealable order - matter remanded to adjudicating authority.

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• 2018 (4) TMI 1192
  Liability of export duty - export of ductile iron spun pipes - N/N. 66/2008-Cus. dated 10.5.2008 - Held that: - when the export duty notification mentions tubes and pies of iron or steel, those of such tubes and pipes made up of iron or steel shall be liable to export duty. No exclusion or restriction is placed on such duty entry - A plain reading of the Notification and the description of the export goods will indicate that the appellant is liable to export duty in terms of the said Notification - appeal dismissed - decided against Appellant.

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• 2018 (4) TMI 1191
  Liability of CVD - N/N. 4/2006-CE dt. 1.3.2006 as amended - Held that: - Bills of Entry filed along with invoices contain details of goods imported. The exporters details with evidences linking up with high sea sale invoices further linked up with Bill of Entry. Hence, the import from the designated exporter who is declared as manufacturer of cement based on the details in the invoices cannot be disputed. No contrary evidence that purchase is from a trader has also been submitted by the Revenue. Concessional rate of duty - Actual user condition - the department entertaining a view that concession claimed and allowed under the said notification is not correct, initiated proceedings against all the importer-appellants/CHAs - Held that: - Though same is post-importation, actual use based condition, the assessments were finalized accepting the claim of the appellant for such concessional duty. It would appear that officers had opportunity to satisfy themselves about the actual user condition. In case of possible doubt on such fulfilment, the requirement is to resort to provisional assessment and call for post-importation actual user confirmation. This was not done in the present case which will show that the assessing officer is satisfied with the claim made by the appellants - the eligibility to the CV duty concession as claimed by the appellant during the material time cannot be questioned much later without any evidence. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1190
  Benefit of N/N. 12/2012-Cus dated 17.03.2012 - Due to the lack of facilities MMR could not be tested by the Chemical Examiner - main case of department is that the Chemical Laboratory did not have facility to conduct necessary tests for determining the MMR, the sample ought to have been sent to various other Laboratories which have the facility - Held that: - It is responsibility of the department to send the sample to a Lab which has all the testing facilities to test the required parameters which are prescribed under the notification. In the absence of such test report, the authorities below have relied upon the report given by independent surveyor. The grounds of appeal itself states that the erroneous decision came to be passed because of failure to get the sample tested at the appropriate lab. For this deficiency, the appellant cannot be saddled with burden to pay duty by denying the exemption. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1189
  Entitlement to Interest - Section 27A of the Customs Act - delay in making refund - Held that: - Hon'ble High Court of Delhi in the case of Principal Commissioner of Customs Vs Riso India Pvt. Ltd. [2015 (10) TMI 1099 - DELHI HIGH COURT] held that "the provisions in the Act concerning refunds and interest on delayed refunds, would equally apply to refund of SAD leviable under Section 3 of the CTA - the judgement of Madras High Court in KSJ Metal Pvt. Ltd. [2013 (6) TMI 148 - MADRAS HIGH COURT] which is relied upon in the Riso India judgment, has been stayed on 21-01-2005, on an identical issue in writ appeal filed by the department in the case of Radhalakshmi Metallurgicals referred to by the Revenue. Judicial propriety would require that the directions of the Commissioner (Appeals) are to be kept in abeyance till the final outcome of the issue by the jurisdictional High Court of Madras - appeal allowed by way of remand.

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• 2018 (4) TMI 1188
  Duty Drawback - fixation of brand rate - retrospective application of the beneficial circular - original authority took a view that the brand rate cannot be available to the respondents as the applications have been filed beyond the prescribed period - Held that: - the original authority, while noting that the appellants had only produced the original commercial invoices for verification however, since they have not produced the related excise invoices, it has been concluded that the relevant documents have not been produced. Only failure to produce the excise invoices and instead producing only the commercial invoices should not be a mere reason for concluding that the documents have not been produced, especially when there are other ways to verify whether duty liabilities have indeed been suffered by the respondents as claimed. Appeal dismissed - decided against Revenue.

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• Service Tax

• 2018 (4) TMI 1187
  Valuation - includibility - Passenger Service Fee (PSF) and Airport Taxes - Held that: - Passenger Service Fee (PFS) and Airport Tax are not includable in the assessable value of the services provided by them - reliance placed in the case of Turkish Airlines [2018 (4) TMI 1144 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1186
  Business Auxiliary Services - collection of Toll Tax and fee for use of highways and bridges - appellant was allowed to retain with them the amount of Toll collected in excess to Rs. 36 Crores as their commission of working as Toll Collecting Agent as terms and condition of Contract Agreement - Held that: - the issue is no longer res integra and has been settled in favour of the assessee in the judgment of this Tribunal in the case of Intertoll India Consultants Pvt. Limited [2011 (5) TMI 257 - CESTAT, NEW DELHI], where it was held that N/N. 13/2004 specifically exempts the service tax liability on such services of collection of duties and taxes levied by Government - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1185
  Jurisdiction - Revisional powers - Doctrine of Merger - Held that: - if any issue is pending in appeal, the Commissioner (Appeals) cannot exercise the revisional jurisdiction - In the present case, the appeal was filed before the Commissioner (Appeals) and the same was disposed of. Therefore, the O-in-O which was sought to be revised by the Commissioner was not in existence at the time when the SCN was issued. By doctrine of merger the O-in-O dated 15.12.2008 has merged with O-in-A No. 76/2010. The SCN dated 09.08.2010 is therefore against the provisions of law. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1184
  Penalty u/s 78 - appellant reversed the credit and deposited the service tax alongwith interest on the imported services under reverse charge mechanism and service tax along with interest on the expenses reimbursed from the subsidiary and intimated the same to the department and requested not to initiate any penal action - invocation of section 73 (3) of FA - Held that: - as the appellant has immediately paid the amount of service tax alongwith interest and the same intimated to the department and prayed not to take any coercive action. It shows that there was no positive act of suppression on the part of the appellant. In this case, from the facts it is to be ascertained whether there was any intention to evade payment of service tax by the appellant or not. As it is admitted position that in this case the service tax is to be paid under reverse charge mechanism, this is a situation of revenue neutrality. For the reimbursement of expenses recovered from the subsidiary, service tax is not payable. To allege suppression with intent to evade payment of service tax, there should be positive act on the part of the assesse with intent to evade payment of service tax - The Revenue has not given any positive evidence to evade payment of service tax. This is a situation of revenue neutrality and the service tax is not payable on reimbursement of expenses - penalty not imposable u/s 78 when the proceedings come to an end in section 73(3) of the Finance Act/ 1994. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1183
  Extended period of limitation - Clearing and Forwarding Service - Department took the view that assessee should have paid the service tax for the earlier period 1.9.2003 to 8.7.2004 also and under category of Business Auxiliary Service - validity of SCN - time limitation - Held that: - the activities of the assessee would be only under C&F service. In a situation where the department has initiated proceedings demanding service tax liability against a person for a particular period, under a particular service, in the normal course, it would be expected that the department would issue periodical show cause notices till the matter is finally settled. There is no evidence that this has been done. The appellants were continuing to function under an agreement which was identical to the earlier one when department had demanded tax liability from them under C&F service. This being so, Department should have continued to issue protective periodical show cause notice on the very same C&F service. This was not done. Time limitation - Held that: - the department cannot wash away the fact that they were well aware of the continued activities of the assessee under the very same terms and conditions which they had been pursuing earlier. This being so, the initiation of the present proceedings after a gap of time, even when the assessee was working under identical agreement, can only be said to be proceedings which are hit by limitation. Appeal allowed in toto.

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• 2018 (4) TMI 1182
  Penalties u/s 76 and 77 - Classification of services - services such as supply of infrastructure like table, chair, network, electricity, telephone etc. to the insurance companies - whether classified under insurance auxiliary service or Business Support Services - Held that: - the appellant have replied to the SCN contending that they have been appointed as corporate agent for insurance companies and therefore their activity would not fall under Business Support Service and would fall within the Insurance Auxiliary Service; that therefore it is the insurance companies that have to pay the service tax - demand of duty with interest upheld. It is clear that they have failed to pay the service tax on the bonafide belief that the activity did not fall under Business Support Service. Taking this into consideration, the penalty imposed under section 76 is unwarranted - penalty u/s 77 upheld. Demand of duty with interest upheld - penalty u/s 77 upheld - penalty u/s 76 set aside - appeal allowed in part.

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• 2018 (4) TMI 1181
  Commercial and industrial construction service - Non-payment of service tax - period involved is from 10.09.2004 to 31.3.2007 - Held that: - the issue being a works contract whether subject to service tax prior to 1.6.2007 has been settled by the judgment of the Hon’ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] - demand not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1175
  Rectification of mistake - Adjustment of the second installment of service tax - Held that: - Though it is the contention of Ms. Dessai that this document is more of a representation than an application, we cannot overlook the fact that the proprietor of the firm, a lady was suffering from cancer when she made the representation - Further more, Section 74 does not contemplate any particular format as such, empowering the Central Excise to rectify the mistake on his own and, if any mistake is brought to his notice by the Assessee. The Petition can be disposed of by directing the Respondent-Authority to decide the representation dated 20 August 2016.

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• 2018 (4) TMI 1174
  Refund of unutilized CENVAT credit - Port Services - Courier Services - GTA Services - denial of credit on the ground that the services are post removal services - Rule 5 of CCR 2004 - Held that: - the refunds were admittedly filed u/r 5 of CCR 2004. In such a scenario, it was not open to the adjudicating as also to appellate authority to go for the alternative availability of N/N. 41/2007-ST, dated 06.10.2007 and decide the issue in terms of the said notification, instead of deciding the refund claims in terms of Rule 5 under which the same were filed. Even though, the learned Advocate submits that Notification No.41/2007-ST, dated 06.10.2007 also grants relief to the assessee, inasmuch as, the period of limitation provided in terms of the said notification for filing refund claims was subsequently extended, such refunds are otherwise admissible in terms of Rule 5. Matter remanded to original authority to examine the documentary evidences in support of the refund claims - appeal allowed by way of remand.

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• 2018 (4) TMI 1173
  Valuation - inclusion of certain expenses incurred by the appellant to depute employees and other incidental expenses - Section 67 of Finance Act, 1994 - Erection, Commissioning or Installation services - Held that: - the reimbursable expenses incurred by service provider, which are reimbursed by the recipient of services on actual basis has been a subject-matter of various decisions of the Tribunal also - It is held that such expenses cannot form part of the gross value which is relatable to only services provided - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1172
  Penalty - non-discharge of liability of service tax - absence of legible copies of deposit challan s - GTA services - Held that: - the Courts below have erred in observing that the appellant have not deposited the tax and or the challan s are not legible - the appellant had deposited the service tax on reverse charge basis. The period in dispute is from August, 2006, wherein the issue of payment of service tax on GTA on reverse charge basis was highly litigated and the same was settled sometime in the year 2009(Indian National Ship Owners Association, Care) and by subsequent amendments - there is no question of charging any interest and levy of any penalty on the appellant assessee. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1171
  Rent-a-cab Operator Service - abatement claim - N/N. 9/2004 dated 09.07.2004 and 1/2006-ST dated 01.03.2006 and that under N/N. 6/2005-ST dated 01.03.2005 - Held that: - on perusal of Explanation "B" to the said N/N. 6/2005-ST dated 01.03.2005, the said explanation authorizes exclusion of consideration received towards providing service which are exempt from whole of service tax leviable thereon - after excluding 60% consideration, the aggregate value of clearance for the years 2007-08, 2008-09 and 2009-10 in the present case is within the permissible limit for the exemption under the said N/N. 6/2005-ST dated 01.03.2005, which exempts taxable service from whole of service tax leviable under Section 66 of the Finance Act, 1994. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1170
  Refund of CENVAT credit - time limitation - case of Revenue is that the claim for refund of CENVAT credit should be filed within one year from the date of invoice - Held that: - In view of the settled law that the period of limitation would be computed from the last date of the quarter to which the claim for refund pertains, the appeal of Revenue does not find sustenance and is accordingly dismissed - decided against Revenue.

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• 2018 (4) TMI 1169
  CENVAT credit - input services - cleaning activity service - mandap-keeper service - outdoor catering service - business support service - authorized service station - denial on account of nexus - Held that: - as regards cleaning services, the decision in Commissioner of Customs & Central Excise, Hyderabad III v. ITC Limited [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT], makes it amply clear that services required for maintenance of essential accommodation is a necessary business activity and not a welfare measure - credit allowed. Mandap-keeper services - Held that: - Reliance is placed upon the decision of the Hon'ble High Court of Karnataka in Toyota Kirloskar Motor Pvt Ltd v. Commissioner of Central Excise, Bangalore [2011 (3) TMI 1373 - KARNATAKA HIGH COURT] based on the principle that all activities relating to business are entitled to availment of credit - credit allowed. Outdoor catering services - Held that: - Hon'ble High Court of Bombay in Commissioner of Central Excise, Nagpur v. Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] held that credit on such services to be allowed - credit allowed. Business support services - Held that: - Reliance has been placed on the decision of the Tribunal in Commissioner of Service Tax, Bangalore v. Yodlee Infotech (P) Ltd [2015 (11) TMI 653 - CESTAT BANGALORE] which allows availment of CENVAT credit - credit allowed. Repairs and maintenance service - Held that: - the maintenance and repairs of vehicles registered in the name of the appellant should be an automatic entitlement as there could be no contention that the vehicles were not used for the purpose of business activities - Hon'ble High Court of Karnataka in Commissioner of Central Excise & Service Tax v. Mangalore Refinery & Petrochemicals Ltd [2016 (1) TMI 481 - KARNATAKA HIGH COURT] has allowed the credit on similar issue - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1168
  Penalty - short payment of service tax - Held that: - there is no rebuttal to the fact placed before the authorities below. The demand of service tax is raised on account of the different modes of accounts being maintained by the service provider and the service recipient. It is not a case of non-levy or non-payment on account of any misstatement or suppression of facts with intend to evade payment of duty - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1167
  100% EOU - Refund claim - port services - N/N. 41 / 2007-ST - refund is being denied on the ground that the taxable services that are not covered under the registration certificate of provider, are not eligible for such refund - Held that: - CBEC vide its Circular No. 112/06/2009-ST dated 12.03.2009 has clarified that Granting refund to exporters, on taxable services, that he receives and uses for export, do not require verification of registration certificate of the supplier of service. Therefore, refund should be granted in such cases, if otherwise in order. The procedural violations by the service provider need to be dealt with separately, independent of the process of refund - refund allowed - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1166
  Maintainability of application before Settlement Commission - VCES declaration - works contract service - Composition Scheme - whether Settlement Commission is the right forum to decide the issue involved in the appeal? - Held that: - though the applicant has not challenged the classification of services rendered, per se, it is apparent that the applicant having paid Service Tax under particular category at the full rate without any concession or exemption now seeks to admit a lesser tax liability for major portion of SCN period by opting for Composition Scheme leading to claim of excess payment of tax during the period from October, 2007 to March, 2012 - para 9.7 of Board's clarification dated 22-5-2007 that under the "Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 notified under Notification No. 32/2007-S.T., dated 22-5-2007 the Service Provider has to exercise an option prior to payment of Service Tax which is mandatory and clearly not a procedural lapse as claimed by the applicant. The Bench is of the considered view that Settlement Commission is not the right forum to decide upon contentious issues, by evaluating the evidences let in by the rival parties to the proceedings. Such an act would tantamount to the Settlement Commission adjudicating upon the notice, based on the submissions made by the rival parties to the proceedings. Further, in view of the complexities involved in the case, where there seems to be no convergence of views on the correct rate of tax, value on which tax is to be paid for determination of the correct tax liability, a detailed appreciation of all the facts and evidences is required, which could be best done only in departmental adjudication - It is now a well settled proposition that the Settlement Commission is not an adjudicating authority. It is only an arbitration forum where a dispute is settled in the interest of both the parties within the framework of law. The Bench, by virtue of the powers vested in it in terms of Section 32L of the Central Excise Act, 1944, made applicable to Service Tax matters under Section 83 of the Finance Act, 1994 sends the case back to the Adjudicating Authority for adjudication in accordance with the provisions of the law - matter on adjudication.

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• Central Excise

• 2018 (4) TMI 1165
  Refund claim of excess credit reversed - Rule 6(3)(ii) of Cenvat Credit Rules, 2004 - Restoration of appeal before tribunal - Whether the Appellate Tribunal is justified in rejecting the refund claim on the ground that the Appellants have correctly reversed cenvat credit in terms of Rule 6(3)(ii) of Cenvat Credit Rules, 2004 inspite of the fact that the Appellants had never opted for any option provided in the rule and followed the procedure prescribed under Rule 6(3)(ii) read with Rule 6(3)(A) of CCR 2004? Held that: - The very fact that this credit was reversed, is an option exercised ipso facto. Hence, the reversal was correct. The question of excess duty having been reversed does not arise. The Adjudicating Authority does not have to produce any evidence. Relying upon Explanation­1 to Rule 6(3), the order of the Adjudicating Authority was maintained. The Tribunal was expected, as the last fact finding authority, to render specific finding. We do not think that the case could have been disposed of even if the revenue involved was not substantial, by a mere endorsement of the Appellate Authority's finding, particularly on the interpretation of the Rule prevailing at the relevant time. The Tribunal is not expected to endorse legal findings by the Adjudicating Body/Authority and that of the First Appellate Authority. Since the Tribunal comprises of both a Judicial Official and an Administrative Member, it is expected to apply its independent mind and particularly on the question/issue of interpretation of the Rule. This has precisely not been done in the instant case. Appeal of the assessee restored to the file of the Tribunal for a decision afresh on merit and in accordance with law - appeal allowed.

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• 2018 (4) TMI 1164
  Maintainability of appeal - Non-compliance of pre-deposit - Whether in the facts and circumstances of the case, an order of the Commissioner (Appeals) dismissing an appeal for non-compliance of pre-deposit order is an appealable order in terms of Section 86 of the Finance Act, 1994? Held that: - Material on record discloses that the appeal preferred by the appellant was taken up for final disposal by CESTAT on 09.02.2017. On the said date, due to ill health of the appellant's counsel, who has his office in Coimbatore, he was incapable of appearing on the day of hearing and hence, the appellant was unable to advance their arguments before the CESTAT, and hence CESTAT passed an ex-parte order in Final Order No.40196/2017 dated 09.02.2017, wherein the appeal preferred by the appellant was dismissed as not maintainable on the ground that the first appellate authority had not considered the matter on merits. On the basis of instructions in C.No.I/10/12/2018-LG dated 27.03.2018, the department have instructed that the matter can be remitted back to the Tribunal. Matter is remitted to the Tribunal for consideration on merits.

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• 2018 (4) TMI 1163
  CENVAT credit - input services - sales commission - Held that: - identical issue has come up before the Tribunal in the case of National Engineering Industries Ltd. vs. CCE&ST, Jaipur-I [2017 (12) TMI 433 - CESTAT NEW DELHI], where reliance placed in the case of M/s Mangalam Cement Ltd. Vs. CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that CBEC vide Circular No.943/4/2011-CX. Dated 29/04/2011 has clarified that CENVAT credit is admissible on the services of the sale of the dutiable goods on commission basis - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1162
  CENVAT credit - capital goods - steel items such as angles, channels, sheets, plates, etc. for fabrication and erection of various capital goods, like boiler supporting structure, platform, stairs, grating etc. - Held that: - the cenvat credit on iron and steel material used in fabrication of supporting structure for capital goods are allowable as has been held by the Tribunal in various decisions - reliance placed in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - credit allowed. CENVAT credit - fabrication of supporting structure with the bill of material of goods prepared at the time of planning the installation of capital goods - Held that: - the assessee has produced the Chartered Engineer’s Certificate in which the details of actual usage of the iron and steel structural items in the fabrication of supporting structure of capital goods has been given - credit on the basis of Chartered Engineer’s certificate will be allowable to the appellant but not on the basis of tentative bill prepared - credit allowed. Penalty u/s 11AC - Held that: - when the entire demand of cenvat credit now stands set aside, there is no justification for imposition of any penalty under section 11 AC - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1161
  Valuation - inclusion of VAT in assessable value - Revenue was of the view that the VAT liability discharged by utilizing the investment subsidy granted in form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the CEA, 1944 - Held that: - the identical issue has already come up before the Tribunal in appellant’s own case Shree Cement Ltd. Shree Jaipur Cement Ltd. Versus CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1160
  Valuation - inclusion of subsidy received by the appellant from the State Government as per MOU in assessable value - section 4(3)(d) of the Central Excise Act, 1944 - Held that: - Tribunal consistently is taking the view that subsidy amount cannot be included in the transaction value of the product for the purpose of payment of duty. In the present case, subsidy is sanctioned and credited to the bank account of the appellant - the decision in the case of Shree Cement Ltd. Shree Jaipur Cement Ltd. Versus CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI] squarely applies to the present case, where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1159
  CENVAT credit - manufacture of dutiable as well as exempt goods - appellants were using plastic crates printed as "Coke/ Coca Cola" as transportation / packing materials for both the dutiable as well as exempted goods - non-maintenance of separate records - Held that: - The issue stands decided in the appellant s own case PEPSICO INDIA HOLDINGS PVT. LTD. Versus COMMR. OF C. EX., PONDICHERRY [2007 (4) TMI 84 - CESTAT, CHENNAI], where it was held that Non maintenance of accounts as regards use of credit availed inputs which have already been used once in the packing of final products does not invite the liability of 8% (later 10%) of the sale price of exempted final products as provided in Rule 6 of the CCR ibid - demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1158
  Penalty u/r 26 of CER - Method of Valuation - whether under Section 4 or whether under Section 4A - Held that: - There is also no doubt that the matter was mired in confusion and litigation and even now the issue is pending in the Hon’ble Apex Court - just because the appellant herein had outsourced manufacture of the products to vendors, they cannot be faulted and penalized for the allegation of improper discharge of duty liability by the latter. No justification is found for imposing penalty on the appellant herein under Rule 26 of the Rules - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1157
  Manufacture - Valuation - includibility - bought out items - case of appellant is that they are not clearing Boilers from their factory. In fact they are clearing parts from the factory and paying duty thereon - N/N. 6/2006 - CE dated 01.03.2006 - Held that: - The appellant is clearing parts from factory to the site and certain bought out items are also directly supplied to the site from various vendors, on payment of duty. It is a fact on record that boiler in question emerges at site which become an immovable property, which is not excisable goods therefore, not leviable for duty. As the Boilers on which the Revenue is demanding duty are not excisable goods therefore, the question of payment of duty does not arise. Further, bought out items have never came to the factory of the appellant and the appellant is liable to pay duty only on the goods manufactured by them. In that circumstance, for the bought items, the appellant is not required to pay duty. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1156
  Demand of duty - free supplies - additional quantity packed in jar on which duty has been paid on MRP of the price of the Jar - Section 4A of the CEA, 1944 - Held that: - identical issue decided in the case of M/s Perfetti Van Melle India Pvt Ltd Versus Commissioner of Central Excise, Delhi-III [2015 (10) TMI 1554 - CESTAT NEW DELHI] where the issue has already been decided in the favour of the appellants holding that these free supplies are within the jar and on the MRP of Jar, the appellants are correctly paying duty under Section 4A of the Central Excise 1944. On these additional supplies made free, the appellant is not required to pay duty - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1155
  Refund of unutilised CENVAT credit - matter remanded on the ground that Revenue has submitted additional grounds/ evidences which were not submitted before the adjudicating authority, in terms of Rule 5(b) of Central Excise (Appeals) Rules, 2001, therefore, matter is to be reconsidered by the adjudicating authority - Held that: - in terms of Rule 5 of Central Excise (Appeals) Rules, 2001, the additional evidences placed before the Id. Commissioner (Appeals) are not admissible and the same cannot be the ground for remand the matter back to the adjudicating authority. Refund claim - closure of factory - CENVAT credit - Held that: - at no stage, it has been questioned to the appellant that for denial of Cenvat credit which are not entitled to them. Moreover, the Revenue collected the duty from the appellant. Although the Revenue was of the view that activity undertaken by the appellant does not amount to manufacture. At the stage of filing of refund claim, Revenue cannot correct their wrong doings. The issue of non-entitlement of Cenvat credit cannot be raised at the stage of entertaining refund claim without challenging the availment of Cenvat credit. Commissioner (Appeals) was not required to consider the appeal filed by the Revenue but chose to send the matter back to the adjudicating authority, which is not permissible in law - the order of the adjudicating authority for allowing the refund claim restored - appeal allowed.

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• 2018 (4) TMI 1154
  Refund claim - education/ higher education cess - N/N. 56/2002-CE dated 14.11.2002 - N/N. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 - Held that: - the notifications in question have been examined by the Hon'ble J & K High Court in the case of Reckit Benckiser vs. UOI [2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT], wherein the Hon'ble High Court quashed the notifications in question - Therefore, in terms of Notification No. 56/2002-CE dated 14.11.2002, the appellants are entitled to claim refund/ self-credit of duty paid through PLA. The refund/ self credit cannot be restricted in terms of N/N. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 and the appellants are entitled to claim refund/self credit of duty paid through PLA, in terms of N/N. 56/2002-CE dated 14.11.2002. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1153
  Valuation - job-work - it was alleged that M/s ISGEC is selling the goods as such as the appellants have manufactured the goods in complete form, therefore, in terms of Rule 10A(ii), the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods - Rule 10A (ii) of Central Excise Valuation Rules, 2000 - Held that: - identical issue decided in the case of Suyog Engineers Pvt. Ltd., Yamuna Fabricators Versus CCE, Panchkula [2017 (10) TMI 893 - CESTAT CHANDIGARH], where it was held that on the amount on which duty have been demanded from the appellants, duty has already been paid by the M/s ISGEC on the said amount. If the duty has been demanded from the appellant, in that circumstances, it will be the case of demand of duty twice on the same product which is not permissible in law - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1152
  CENVAT credit - input services - CHA services - THC services - Cargo Handling services - C & F services - Held that: - the issue of input service credit on CHA services, THC services, Cargo Handling services and C & F services is no longer res integra and is settled in the favour of the assessee in various judgments of the Tribunal - reliance placed in the case of Kemwell Biopharma Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax, LTU [2016 (6) TMI 229 - CESTAT BANGALORE] - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1151
  Refund claim - unjust enrichment - Held that: - the only product sold and for which the consideration received by the appellant was electricity. Admittedly, the tariff of such electricity was fixed by the State authorities. The appellant had no flexibility in this regard. As such, the question of passing on the duty burden suffered in the workshop, on the goods which were captively consumed in the repair of transformers, which were again consumed in the distribution of electricity, does not arise. The appellants have been incurring losses during the material time and there is sufficient evidences to show that the tariff of electricity did not vary during the material time attributable to excise duty paid by appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1150
  Release of detained goods - execution or implementation of the Final order passed by the Tribunal - implementation pending outcome of review - Held that: - There is no express provision in the statute which empowers the Tribunal to execute the Final order passed by it disposing an appeal - When the Act does not provide for execution of Final orders passed by Tribunal, the Rules cannot be stretched to pass directions to implement the order - application dismissed being not maintainable.

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• 2018 (4) TMI 1149
  Valuation - captive consumption - N/N. 217/86-CE dated 2.4.1986 - Held that: - The description of inputs as well as final products in the above notification shows that the exemption would be eligible for inputs falling under Chapter 39 even if the finished products also fall under Chapter 39 - in the case of Narmada Plastics P. Ltd. Vs. Commissioner of Central Excise, Raipur [2000 (5) TMI 527 - CEGAT, NEW DELHI] in which the benefit of exemption was given to the captively consumed HDPE tapes under Notification No. 217/86. The appellant is eligible for the benefit of N/N. 217/86 - The demand of duty after 2.4.1986 cannot sustain and requires to be set aside - appeal allowed in part.

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• 2018 (4) TMI 1148
  CENVAT credit - input - iron and steel raw materials - Cement - period involved is from December 2007 to October 2008 and November 2008 to October 2009 - Held that: - The definition of “input” has undergone an amendment with effect from 7.7.2009 - in various decision, the jurisdictional High Court and the Tribunal held that credit availed on MS items / iron and steel used for fabrication of capital goods or support structures is eligible for credit. The fact requires verification based on the evidence produced by the appellant - matter remanded to the adjudicating authority who shall analyse the issue afresh - appeal allowed by way of remand.

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• 2018 (4) TMI 1147
  Liability of interest - Valuation - Appellant cleared automobile parts to their depots at Delhi, Mumbai and Kolkatta which were registered as manufactured locations - Section 4 of the Central Excise Act, 1944 - extended period of limitation - Held that: - It is an undisputed fact that the differential duty liability, though conceded by the assessee has been paid by them after issue of SCNs dt. 05.12.2003 and 06.05.2004 respectively in respect of the periods 09/12 to 03/13 and 04/13 to 09/13 respectively. It is evident that there has been a gap of time between the point when the differential duty liability has arisen and when it was actually discharged by the assessee - interest liability will therefore accrue and will have to be paid up by the appellant. Penalty u/s 11AC - Held that: - invocation of extended period cannot be made in periodical show cause notices. Once the ingredients which allow for invocation of extended period are not present, there can be also no question of imposition of penalty under Section 11AC. When the dispute per se is already mired in litigation there can be no imposition of penalty under Rule 25 of the CER either. Appeal dismissed - decided against appellant.

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• 2018 (4) TMI 1146
  Reversal of CENVAT credit - duty paid materials purchased by them and further cleared after some process - Revenue entertained a view that these goods on which credits were availed were not put to any manufacturing process either directly or incidental to the manufacture of the product - Held that: - neither appellant can avail the credit nor they are required to pay duty on the cleared goods. Here they have done both which apparently do not prejudice the Revenue except for legal issue. As such, this is not a case calling again reversal of credit and imposition of penalty. Once the duty is paid by the assessee treating the activity as manufacturing activity and cenvat credit is availed, there is no question of reversion of cenvat credit. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (4) TMI 1145
  Pre-deposit - Inter-state sales - failure to produce necessary documents - Held that: - after releasing 90% of the provisional refund, the authorities withheld remaining 10%, value of which comes to Rs. 30 lakhs. We may recall that the Tribunal has imposed condition of assessee depositing Rs. 60 lakhs by way of pre-deposit - considering the fact that the assessee desires to pursue its appeal against the order of assessment, which is in the nature of first appeal, the assessee is directed to deposit a sum of Rs. 30 lakhs with the State authorities by way of pre-deposit - application disposed off.

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