TMI Tax Updates - e-Newsletter
April 26, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Power to issue SCN u/s 74(3) of GST Act can't be exercised for expanding or enlarging the liability arising out of SCN issued u/s 74(1) - HC

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Articles

1. Merchant Export Procedure

   By: Praveen Nair

2. FINAL GST RETURN

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. NITI Aayog to Open Applications for Atal New India Challenge

2. Suresh Prabhu chairs first meeting of think tank on framework for National Policy on E-commerce

3. Cabinet approves Minimum Support Prices for Raw Jute for 2018-19 season

4. First International SME Convention concludes Digital Trade Desk to be set-up by Ministry of MSME

5. Cabinet approves Long Term Agreements for supply of iron ore to Japan and South Korea through MMTC Limited

6. RBI Reference Rate for US $

7. India signs loan agreement with World Bank for US$ 125 million for “Innovate in India for Inclusiveness Project”

8. P.P. Chaudhary in St. Vincent and Grandines, calls on Prime Minister Ralph Gonsalves

Notifications

Customs

1. 23/2018 - dated 24-4-2018 - ADD

Seeks to impose definitive anti-dumping duty on imports of Methyl Ethyl Ketone or MEK originating in, or exported from China PR, Japan, South Africa and Taiwan

DGFT

2. 05/2015-2020 - dated 25-4-2018 - FTP

Amendment in Para 1.05(b) of Foreign Trade Policy 2015-2020

3. 04/2015-2020 - dated 25-4-2018 - FTP

Amendment in import policy of Peas under Chapter 7 of the ITC (HS) 2017, Schedule - I (Import Policy)

GST - States

4. Va Kar/GST/04/2018-S.O. No. 035 - dated 17-4-2018 - Jharkhand SGST

Rescinds the notification S.O 33 - State Tax, dated the 31st March 2018.

5. Va Kar/GST/18/2017-S.O. No. 034 - dated 13-4-2018 - Jharkhand SGST

Constitutes the Jharkhand Authority of Advance Ruling.

6. 10/2018 - dated 11-4-2018 - Karnataka SGST

United Nations Organisation or any Multilateral Financial Institution and Organisation notifies the specified persons as the class of persons who shall make an application for refund of tax paid by it on inward supplies of goods or services or both.

7. 09/2018 - dated 11-4-2018 - Karnataka SGST

Seeks to prescribe the due date for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore

8. 01-E/2018 - dated 11-4-2018 - Karnataka SGST

Extend the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6

9. 01-D/2018 - dated 11-4-2018 - Karnataka SGST

Extend time limit for furnishing the details of outward supplies in FORM GSTR-1

Circulars / Instructions / Orders

GST - States

1. GST-02/2018-19 - dated 16-4-2018

Procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances

2. GST-03/2018-19 - dated 16-4-2018

Instructions regarding procedure for recovery of arrears under the existing law and reversal of inadmissible input tax credit

DGFT

3. Trade Notice No. 04/2018 - dated 25-4-2018

Eligibility of IT enabled Services under Appendix 3D of the Services Exports From India Scheme of the Foreign Trade Policy 2015-20

4. Trade Notice No. 03/2018-19 - dated 25-4-2018

Applicability of provisions of Para 2.20 of HBP, 2015-20 on Advance Authorisations issued under 2009-2014, FTP- reg.

5. TRADE NOTICE NO. 01/2018-19 - dated 18-4-2018

Amendment of IEC

Highlights / Catch Notes

GST

• Court Orders Return of Coerced GST Cheques Collected by Authorities from Petitioners; No Justification Found.

  Case-Laws - HC : Recovery of GST - Departmental authorities collected three cheques under coercion - there does not appear to be any justification of the departmental authorities to collect and the petitioners to voluntarily give cheques for the said amount - Department is directed to return the cheques - HC
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• High Court Rules GST Sub-section 74(3) Cannot Expand Liability Beyond Initial Show-Cause Notice Scope for Same Period.

  Case-Laws - HC : SCN u/s 74 of the GST - second and subsequent SCN - powers under sub-section (3) of section 74 cannot be exercised for expanding or enlarging the liability arising out of show-cause notice under sub-section (1) from the same period - HC
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• Goods Vehicle Detained Under KGST & CGST Acts for Missing Documents; High Court Directs Appeal to Appellate Authority.

  Case-Laws - HC : Release of detained vehicle alongwith goods - KGST Act - CGST Act - no documents were carried by the driver/person in-charge of the goods vehicle at the time of interception - petitioner relegated to the Appellate Authority without expressing any opinion on the merits - HC
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• Court Orders Portal Update for Compliance with Pre-March 2018 GST Transition from KVAT for Registration Applications.

  Case-Laws - HC : Migration from KVAT to GST - Application for registration - respondents directed to make appropriate changes in the portal so as to enable the petitioner to comply with the statutory requirements for the period prior to 09.03.2018 - HC
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Income Tax

• Reopening Tax Assessment Needs Section 151 Sanction; Assessee Can Verify Compliance with Revenue's Condition.

  Case-Laws - HC : Reopening of assessment - sanction u/s 151 - a condition precedent to issue the reopening notice - Assessee is entitled to ask the Revenue whether or not, the condition precedent for reopening the assessment has been met - HC
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• Business Entertainment Expenses Allowed: Client Meals and Club Memberships Permitted Without Allegations of Improper Conduct.

  Case-Laws - AT : Entertainment expense - providing foods to clients and customers as a part of business courtesy - membership in the club on behalf of assessee-company - There is no allegation of the AO that the above expenses have been incurred by assessee in unauthorized manner - Irrespective of the amount, expenses allowed. - AT
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• Notice by Affixture Challenged: Income Tax Inspector Failed to Follow Section 282 Procedure, Validity Questioned.

  Case-Laws - AT : Validity of notice - service of notice by affixture by the ITI - the ITI, who was deputed by the Assessing Officer, has not followed the procedure prescribed u/s 282 of the Act which in turn refers to the modes contained in Rules 17 to 20 of Order V of CPC. - AT
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• No Penalty Imposed for Non-Compliance with Section 92E Due to Reasonable Cause u/s 271BA.

  Case-Laws - AT : Levy of penalty u/s 271BA - failure to comply with the provisions of section 92E - not filing the audit report electronically - There was a reasonable cause on part of the assessee for not filing the audit report electronically - No penalty - AT
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• Commission and Ex-Gratia Payments to Director-Shareholders Allowed as Expenditure Under Income Tax Act Sections 36(1)(ii), 37(1.

  Case-Laws - AT : Addition on account of amount paid to Directors of the company as commission and exgratia - allowable expenditure u/s 36(1)(ii) as well as section 37(1) - AO has not established that such commission or exgratia paid to directors, who are also shareholders, was payable as profits or dividend of the company - No additions can be made - AT
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• No Penalty Imposed for Tax Non-Payment Due to Severe Financial Hardships u/s 221(1) and 140A.

  Case-Laws - AT : Penalty u/s 221(1) - default in paying Self Assessment tax u/s 140A - was passing through severe financial hardships during the above period which is a sufficient and reasonable cause for non payment of tax - No penalty - AT
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• Assessing Officer can make best judgment assessment if documentation for Section 11 exemption is missing.

  Case-Laws - AT : Exemption u/s. 11 - best judgment assessment - Power of AO - The law, it may be clarified permits him to draw adverse inferences, as admissible under the circumstances, where the relevant material is not produced before him - AT
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• Charitable Trust for Swimming and Sports Facilities Qualifies for Tax Exemption u/s 11 of the Income-tax Act 1961.

  Case-Laws - AT : Exemption u/s 11 - charitable trust - promotion of swimming - providing sports facilities to general public without restriction to any caste, creed, religion or profession is eligible for exemption u/s 11 of Income-tax Act, 1961. - AT
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Customs

• Challenge DFIA Scheme Directly; Avoid Intervening in Others' Petitions for Duty-Free Import Authorization.

  Case-Laws - HC : Duty Free Import Authorization (DFIA) Scheme - If the applicant is aggrieved by the application of the Duty Free Import Authorization Scheme to the parties like the petitioner on the ground that it would allegedly affect its business, the appropriate remedy for the applicant would be to challenge the Duty Free Import Authorization Scheme and not to be an intermeddler in a petition where the applicant, who wishes to avail the Duty Free Import Authorization Scheme has sought for the authorization - HC
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• Court Rules Accused's Statements Involuntary Due to Prolonged Detention in Customs Office Overnight.

  Case-Laws - HC : Validity of statement - voluntary or not - both the accused were detained in the office of the Customs for whole night and thus, the contention of the Appellant that the statements were voluntary and were not influenced by the authorities cannot be accepted - HC
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• Customs Detains Sri Lankan Areca Nuts Over Origin Doubts; 100% Duty Bank Guarantee Called Excessively Harsh.

  Case-Laws - AT : Detention of goods - areca nuts imported from Sri Lanka - the doubt raised by the Customs authority regarding the country of origin prima facie should not exist - The condition of bank guarantee for an amount of 100% duty is very harsh - AT
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• Appeal for Equitable Treatment After Penalties Imposed for Fraudulent Shipping Bills Under Focus Product Scheme License.

  Case-Laws - AT : Focus Product Scheme - licence was issued against the fake shipping bills - Penalty - Appellants are entitled to get the relief on the principle of equity before the law - AT
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• Customs Rejects Declared Value of Imports Due to Insufficient Details by Importer; Transaction Value Not Accepted.

  Case-Laws - AT : Valuation of imported goods - rejection of declared value - In the absence of necessary details, the Customs authorities cannot be faulted for not having accepted the transaction value. - AT
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• Dispute Over Valuation Method for Imported Carbide Tips: Customs Challenges Declared Value Data.

  Case-Laws - AT : Valuation - enhancement of value of imported goods - carbide tips - DOV data cannot be confirmed the basis of the value of authorised carbon tips and all different specifications imported by the respondent - AT
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• Appeal Restored After Adjournment Request Misplaced by Registry Before Hearing Date.

  Case-Laws - AT : Restoration of appeal - request for adjournment by fax and speed post - Registry failed to place the same on the date of hearing in the appeal folders - appeal restored - AT
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Indian Laws

• Sugar Export Subsidies Include Manufacturers and Sellers, Even When Sold to Exporters in India.

  Case-Laws - HC : Export subsidy on export of sugar - there is no exclusion of the manufacturers and sellers of sugars, like respondent- BSSKL, merely because their sale of sugar is to an exporter like BASL, who has exported such sugar out of India. - HC
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Service Tax

• Demand Overturned: SCN Lacked Details on Cable Services Performed Near India's Coastline, Within 12 Nautical Miles.

  Case-Laws - AT : Management, Maintenance and Repair Services (MMRS) - POPOS Rules - part of cable system lies within 12 nautical miles of land mass of India - in the SCN it is nowhere appearing as to how the services were performed in India - demand set aside - AT
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• CENVAT Credit Transfer Allowed: No Specific Documents Required for Centralized Bank Registration Approval Under Statute.

  Case-Laws - AT : CENVAT credit - transferring credit lying at various branches to the zonal office of the bank upon approval of centralized registration - There is no statutory requirement of specified documents for transferring credit available with the multiples registrations to centralized registration - credit cannot be denied - AT
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• High Court Dismisses Petition Challenging Jurisdiction in Service Tax Case; Summons Quash Request Deemed Unmaintainable.

  Case-Laws - HC : Jurisdiction for investigating the service tax matter - centralized registration - the writ petition was not maintainable to quash the summons and dismissed the writ petition. - HC
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• C&F agency services outside India exempt from service tax u/r 3(ii) of 2006 Taxation Rules.

  Case-Laws - AT : C&F agency service - Place of provision of service - since services have been wholly performed outside India, the activity will not be exigible to service tax by virtue of Rule 3 (ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - AT
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Central Excise

• Larger Bench to Consider Cash Refund of Unutilized CENVAT Credit After Factory Closure and Registration Surrender.

  Case-Laws - HC : Cash Refund of unutilized CENVAT credit - closure of factory and surrendered registration certificate - It will be more appropriate if the questions are considered by the larger bench - HC
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• Valuation Dispute: Inclusion of Free Materials in Assessment; Revenue-Neutral Outcome as Duty is Claimable via Cenvat Credit.

  Case-Laws - AT : Valuation - inclusion of free of cost material - Any duty paid by the appellant will be available to the principal manufacturer as Cenvat credit, since the entire manufactured goods are returned to them - the entire exercise is Revenue neutral. - AT
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• Electrical Control Panels and Single-Phase Submersible Pumps Classified Under Heading 85.37 as Independent Goods in Excise Case.

  Case-Laws - AT : Classification of 'control panels' cleared along with 'single phase submersible pumps' - electrical control panels are classifiable under Heading 85.37 as independent goods - AT
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• Excise Duty Refund on Construction Materials for Tsunami Rehab Hinges on Completion Certificate Timeline.

  Case-Laws - AT : Refund of excise duty paid on steel and cement used in the construction of houses - Tsunami rehabilitation project - Since such Certificate can be obtained only after completion of the construction, the time would start running only when the said Certificate has been issued to the respondent. - AT
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• Jetty Considered Part of Factory, CENVAT Credit Allowed Under Central Excise Act Section 2(e.

  Case-Laws - AT : CENVAT credit - the jetty put up by the appellant was part of the premises and the same should be considered as falling within the scope of section 2(e) “factory” as defined under the Central Excise Act, 1944 - credit allowed - AT
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Case Laws:

• GST

• 2018 (4) TMI 1292
  Supply of branded as well as unbranded goods - non-payment of tax - the departmental authorities collected three cheques for a total amount of Rs. 19,74,886/- under coercion - whether this act of Department to collect post-dated cheques during raid permissible? - Held that: - The action of the department cannot be countenanced. It has been held by this Court and other High Courts of the country that the practice of collecting post-dated cheques under coercion during raid is not permissible means of collection of revenue particularly, when no tax demand has been confirmed or crystallized - In the present case, there does not appear to be any justification of the departmental authorities to collect and the petitioners to voluntarily give cheques for the said amount - Department is directed to return the cheques. Validity of second SCN - second impugned SCN also pertains to the same period and same demand of unpaid taxes only the figure now proposes is Rs. 1,29,13,928/- - could the department have issued such a notice in purported exercise of powers under section 74(3) of the CGST Act? - Held that: - powers under sub-section (3) of section 74 cannot be exercised for expanding or enlarging the liability arising out of show-cause notice under sub-section (1) from the same period - Essentially, sub-sections (1) and (3) of section 74 are envisaged to cover separate periods - the respondents are wholly incorrect in issuing a fresh show-cause notice for the same period of July 2017 to 20.02.2018, which notice was already issued under sub-section (1) of section 74 of the Act. Attachment of Bank Accounts of petitioners - no reason given for such attachment - Held that: - Under sub-section (1) of section 83, the competent authority has power of provisional attachment, where during pendency of any proceedings under the Act he is of the opinion that for the purpose of protecting the interest of government revenue, it is necessary so to do. Such provisional attachment could be of any property including the bank account of the taxable person - In the present case, nothing is demonstrated by the department either in the orders of attachment or in the affidavit filed before us. The reason why exercise of such drastic power of attachment of bank accounts was necessary - attachments are set aside, in the absence of reasons for attachment. Petition allowed.

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• 2018 (4) TMI 1291
  Release of detained vehicle alongwith goods - KGST Act - CGST Act - detention of goods on the ground that the invoice and other documents not produced - grievance of the petitioner that despite the full tax amount pertaining to the tax invoice submitted before the second respondent has been deposited, no vehicle/conveyance and goods are released till date - Held that: - It is an admitted fact that no documents were carried by the driver/person in-charge of the goods vehicle at the time of interception of the goods vehicle on 08.03.2018. The ownership of the goods as well as quantum of penalty levied are also in dispute. These are all the factual disputes to be adjudicated before the Appellate Authority. This Court deems it appropriate to relegate the petitioner to the Appellate Authority without expressing any opinion on the merits of the case - appeal allowed by way of remand.

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• 2018 (4) TMI 1290
  Migration from KVAT to GST - Application for registration - subsisting grievance of the petitioner concerns their inability to comply with the requirements in terms of the statutes for the period from 01.07.2017 to 09.03.2018 - Held that: - the writ petition is disposed of directing respondents 1 and 2 to make appropriate changes in the portal so as to enable the petitioner to comply with the statutory requirements for the period prior to 09.03.2018 also, within ten days - petition disposed off.

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• Income Tax

• 2018 (4) TMI 1295
  Disallowance of loss made on account of transactions in derivatives - bogus loss - client's code and name modification initiated - Held that:- As decided in assessee's own case for the A.Y 2009-10 [2017 (6) TMI 1211 - ITAT KOLKATA] that modifications are permitted by NSE and such modification carried out within the prescribed time limit provided by NSE. Indeed the client's code and name were modified in respect of transactions claimed by assessee. However, on perusal of record. We find that the impugned transactions were carried out through banking channel and all the supporting evidence such as contract note, payment of STT were filed at the time of assessment proceedings. We also find that Ld. CIT(A) confirmed the order of AO on the basis of his guess-work as evident from his appellate order saying “there is a possibility that the modifications might have been made to accommodate the appellant as the broker of the appellant was a sister concern." The details furnished by the assessee in respect of transactions giving rise to the loss were exactly matching with the details furnished by the NSE. In none of the case Authorities Below have brought on record where any mismatch is found between the books of the assessee and the confirmation received from NSE. Had there been any manipulation in the impugned loss then it could have been revealed from the confirmation received from NSE. Therefore, the modifications in the client's name and code cannot justify the impugned loss as bogus and the impugned loss claimed by assessee is genuine loss - Decided in favour of assessee

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• 2018 (4) TMI 1293
  Denial of exemption u/s 11 - Activities of the appellant are commercial in nature - Subscription received; Sale of publications; Fafai Journal; Workshop Bangalore Seminar; and Directory receipts - proof of charitable activity - Held that:- The holding of the seminar at Bangalore and the other activities of the assessee trust, viz. receipt of subscriptions from the members, sale of publications, Fafai Journal, holding of workshops & conferences, directory receipts were incidental to and in furtherance of the main object of securing the advancement and development of the Fragrance and Flavours industry in India. The aforesaid activities of the assessee trust are neither in the nature of trade, commerce or business, nor an activity rendered in relation to any trade, commerce or business. The activities of the assessee trust are not with any motive to earn profit, which though we are not oblivious would not conclusively determine as to whether an activity is in the nature of a trade, commerce or business, but then, the same undoubtedly remains a crucial factor for characterising an activity, as one. The generation of the surplus in its hands was merely a by-product of its main object, which had incidentally resulted in the course of furtherance of its dominant object, viz. advancement and development of the Fragrance and Flavors industry in India. We are further of the view that as the international seminar at Bangalore was held by the assessee for the very first time, and the assessee was neither holding such type of seminars by way of a regular and systematic activity, nor for the general public at large, therefore, on the said count also the same can safely be held as not being in the nature of a commercial activity - Decided in favour of assessee.

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• 2018 (4) TMI 1289
  Reopening of assessment - sanction u/s 151 - a condition precedent to issue the reopening notice - Held that:- It is settled position that reopening of an assessment is an exceptional power vested in the Assessing Officer to unsettle, settled issues/ assessment. Therefore, the exercise of such a power can only be done as the AO fulfilling the conditions precedent for issuing the notice. The notice of reopening has to be issued within the time provided for reopening notice (date of service is immaterial). The Courts have held the date of handing over to the postal authorities, would be considered as the date of issue. The sanction under Section 151 is also a condition precedent to issue the reopening notice. Assessee is entitled to ask the Revenue whether or not, the condition precedent for reopening the assessment, i.e. date of posting of the notice and a copy of the sanction order from the superior authority as provided under Section 151. This attitude of not supplying copy of the necessary sanction to the Petitioner when asked for, is not justified in the least. This is more so as it would be open to the Petitioner also to challenge that the Sanctioning Authority had not applied his mind while granting the sanction, making the reopening notice bad.

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• 2018 (4) TMI 1288
  Addition u/s 14A r.w.r. 8D - Held that:- The said provision cannot be applied to any assessment year prior to Assessment Year 2008-09, the department plea has to fail. Hence, no question of law arises

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• 2018 (4) TMI 1287
  Reopening of assessment - non application of mind by AO - information received from the DIT (Investigation) - Held that:- No information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. Material is not further linked by any reason to come to the conclusion that the Assessee has indulged in any activity which could give rise to reason to believe on the part of the AO that income chargeable to tax has escaped Assessment. This reason that the recorded reasons even does not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. The reasons clearly shows that the Assessing Officer has not applied his mind to the information received by him from the DDIT (Inv.). The Assessing Officer has merely issued a reopening notice on the basis of intimation regarding reopening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that reopening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction. The view taken by the impugned order of the Tribunal cannot be found fault with. This view of the Tribunal is in accordance with the settled position in law.

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• 2018 (4) TMI 1286
  Revision u/s 263 - claim for deduction under Sections 80 HHC (4B) and 80 IB - mandate exclusion of the deduction allowed under Section 80 IB of the Act while quantifying the deduction under Section 80 HHC of the Act - Held that:- Where two views are possible and the income tax officer has taken one view with which the Commissioner of Income Tax does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the income tax officer is unsustainable in law. Admittedly, the order of assessment was passed on 29.12.2002, much prior to the decision in SCM Creations [2008 (3) TMI 223 - MADRAS HIGH COURT] which was rendered in the year 2008, and the decision in the case of General Optics (Asia) Ltd. (2008 (12) TMI 191 - MADRAS HIGH COURT), which was rendered in the year 2009. The assessing officer interpreted the provisions and passed the order of assessment. The view taken by the assessing officer is clearly supported by the decision of the High Court of Madhya Pradesh in the case of J.P.Tobacco Products (P) Ltd., vs. Commissioner of Income Tax [1996 (8) TMI 29 - MADHYA PRADESH High Court] and Commissioner of Income Tax vs. Nima Specific Family Trust (2000 (12) TMI 87 - BOMBAY High Court). In J.P.Tobacco Products (P) Ltd. (supra) it was held that for the purpose of computing relief, relief granted under Section 80 HH cannot be deducted from the gross total income. In Nima Specific Family Trust (supra), it was held that Section 80HH(9), only talks about priority and does not refer to quantum of deduction as was the case under Section 80J(1); where assessee is entitled to deduction under Section 80HH as well as Section 80-I, deduction of 20 per cent of same profits has to be allowed first under Section 80HH and then a further deduction of 20 percent of same profits has to be allowed under Section 80-I subject to overall limit under Section 80A(2). The view taken by the assessing officer was a plausible view. If it results in loss of Revenue, it cannot be treated as prejudicial to the interest of Revenue for the purpose of invoking the power under Section 263 of the Act. - Decided in favour of assessee.

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• 2018 (4) TMI 1285
  Transfer Pricing - Expenditure incurred by the Appellant on AMP - Whether was an international transaction for the purposes of adjustment under Chapter X of the Act? - Held that:- As both parties are broadly agreed that there are subsequent developments in law, which the Tribunal should consider while deciding the second round of appeal before it. The Tribunal is at liberty to adjudicate the issues arising in the second round of appeaL interalia with regard to AMP as an international transaction to determine the Arm Length Prince under Chapter X of the Act

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• 2018 (4) TMI 1284
  Application for stay of the disputed demand - reduction of 20% deposit - Held that:- The appeal proceedings are separate and distinct from recovery proceedings and further proceeded to hold that 20% of the disputed demand has not been deposited in accordance with the guidelines dated 31-7-2017 and passed the order dated 7-3-2018. It is quite vivid that the application for stay of demand has not been considered in the manner it was required to be considered and dealt with. Deposit of 20% of the disputed demand has been made condition precedent for hearing the application for stay which is not contemplated either under the Act of 1961 or the CBDT guidelines dated 29-2-2016 modified by the office memorandum dated 31-7-2017. It is only when the competent authority is of the opinion that the assessee has made out a case for grant of interim relief, stay can be granted subject to deposit of 20% of the disputed demand. Likewise, there is a further clause in the circular for reduction of 20% deposit if the petitioner makes out a case, it has also not been considered. In straightway, direction of deposit of 20% of the disputed demand has been made which is not the correct way of deciding the application for stay of the disputed demand. Set aside and the matter is remitted to the competent authority to consider afresh the matter

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• 2018 (4) TMI 1283
  Maintainability of appeal under Section 260-A - substantial question of law - Held that:- To be substantial a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. The question is whether the explanation given by the appellant assessee for cash deposits in his personal bank account was substantiated by materials and/or evidence on record. The Appellate Commissioner, in substance, held that there were no materials to explain the deposits. It cannot possibly be held that is any substantial question of law is involved in this appeal. The appeal cannot be entertained and the same is dismissed

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• 2018 (4) TMI 1282
  Revision u/s 263 - determining the total loss after making certain adjustments to the loss declared by the assessee - change in share holding of the assessee-company by more than 51% of the voting power - Held that:- While the legal ownership might have changed, the ownership/control/voting power of the assessee-company continues to be beneficially held by the same owner. This inevitably means that the cause for issuance of notice under s.263 ceases to exist. We find considerable merits in the plea on behalf of the assessee that section 79 has not application in the absence of change in beneficial voting power. This being so, we see no error in the order of the AO on this score. This apart, once these facts were brought to the notice of Pr.CIT, the Pr.CIT ought to have appreciated the case of the assessee objectively in perspective and could not shrink his sacrosanct obligations and resort to simply set aside a completed assessment on non-existent ground. Thus, the prerequisites of section 263 are not satisfied. We also do not visualize any merit in the plea on behalf of the Revenue about the lack of enquiry on the factual aspects. In the absence of any change in the beneficial ownership, we are unable to comprehend the nature of enquiry sought by the Pr.CITin this regard. Hence, we are disposed to hold that the action of the Pr.CIT is devoid of sanction of law. - Decided in favour of assessee

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• 2018 (4) TMI 1281
  Assessment u/s 153A - Addition of bogus purchases - Held that:- Enquiry could not be completed by the authorities below as notices u/s 133(6) returned unserved, inspector gave adverse report after verification and also assessee could not produce these parties before the AO, but, however, the entire alleged bogus purchases could not be added as was done by the authorities below keeping in view ratio of decision of Hon’ble Supreme Court in the case of Kachwala Gems (2006 (12) TMI 83 - SUPREME COURT) We direct the AO to disallow 12.5% of the alleged bogus purchases and accordingly depreciation shall be re-worked by the AO after such disallowance. The claim of the assessee for revenue expenditure shall also be accordingly reduced to the tune of additions sustained by us to the tune of 12.5% of the alleged bogus purchases. - Decided partly in favour of assessee.

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• 2018 (4) TMI 1280
  Disallowance of interest - diversion of funds from interest bearing borrowings and earning less interest than paid - Held that:- As per assessee major borrowing were from LIC which was on the interest rate @9% p.a. and it is only at fag-end of the year in January 2009, the borrowings were made from Kotak Mahindra Bank Limited on the interest rate @10.5% p.a. which cannot be benchmarked in the manner done by the AO to disallow the differential interest @1.5% for the whole year on the total deposit advanced to the subsidiary company namely Whistling Woods International Limited. Secondly, it is the claim of the assessee that the amounts were advanced keeping in view commercial expediency and no disallowance is warranted. Thus contentions of the assessee requires verification by the AO as it required investigation of facts. In our considered view, the matter need to be set aside and restored to the file of the AO for fresh adjudication of the issue on merits in accordance with law. Disallowance of miscellaneous expenses - Held that:- All these expenses were duly included while computing fringe benefit tax liability and due fringe benefit tax was separately paid by the assessee on these expenses. It is also not the grievance of the Revenue that these expenses were not incurred wholly and exclusively for the purposes of the business of the assessee. Under these situations it was incumbent on the Revenue to have come out with specific disallowance by going through each of the expenses to come to the conclusion that these expenses were not incurred wholly and exclusively for the purposes of the business or were bogus expenses which has not been done by the authorities below rather an adhoc disallowance has been made by the authorities below on certain assumptions which is not sufficient to fasten tax liability in the instant case. Thus disallowance as was made by the AO and as confirmed by learned CIT(A) is not sustainable and is hereby ordered to be deleted. Additions made owing to difference in AIR statement - Held that:- The assessee has filed American Express Bank Credit Card statements in paper book filed with the tribunal. The assessee has filed an application for admission of additional evidence under Rule 29 of Income-Tax (Appellate Tribunal) Rules, 1963, wherein affidavit dated 20-11-2012 of Mr. Puneet Agarwal is filed wherein he has owned up these American Express Bank Credit Card attributable to his personal payments having no connection with the assessee. These additional evidences goes to the root of the matter and needs to be admitted in the interest of justice. CIT(A) ought to have admitted these additional evidences in the interest of substantial justice and thereafter adjudicated on merits. we are of the considered view, that this issue need to be restored to the file of the AO for de-novo adjudication of the issue on merits in accordance and admit evidences and explanations submitted by the assessee in its defence. Disallowance of foreign travelling expenses - Held that:- The assessee could not establish by way of cogent evidences that these expenses claimed to be incurred towards foreign travel expenses for visiting foreign countries by Mr Subhash Ghai, Chairman and Director as well by Sh. Rahul Puri were incurred wholly and exclusively for the purposes of the business of the assessee and under these circumstances we hold that the assessee could not establish that all ingredients of provisions of Section 37(1) stood complied with. Addition to be confirmed Disallowance u/s 14A r.w.rule 8D - Held that:- As assessee indeed utilised interest bearing borrowed funds for making investments in securities. Thus, this disallowance of interest expenses as was made by the AO and confirmed by learned CIT(A) u/s 14A r.w.rule 8D(2)(ii) to the tune of Rs. 9,04,440/- stood deleted. So far as disallowance of expenditure being 0.5% of the average investments by invoking Rule 8D(2)(iii) r.w.s. 14A we hold that the disallowance of expenditure in relation to the earning of exempt income is to be made by the AO u/s 14A r.w.r. 8D(2)(iii) as keeping in view decision in the case of Maxopp Investment Limited (2018 (3) TMI 805 - SUPREME COURT OF INDIA) as no justification is brought on record by learned counsel for not sustaining the additions on this ground. The assessee fails on this ground.

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• 2018 (4) TMI 1279
  Addition on account of entertainment expense - providing foods to clients and customers as a part of business courtesy - membership in the club on behalf of assessee-company - Held that:- Genuineness of the expense cannot be doubted. Similarly considering the volume of business of assessee, in terms of its clients, number of sites we are of the view the expenses claimed by assessee have been incurred only in connection with assessee’s business. We also do not agree with the finding of AO that the assessee being a Central Govt. PSU does not require to provide hospitability services to its clients. It is because in any organization, the expenditure are incurred for attending clients meetings etc., these expenses are unavoidable in all the organization be it private organization or Government PSU. There is no allegation of the AO that the above expenses have been incurred by assessee in unauthorized manner. Therefore, we are of the view that above expense deserves to be allowed. - Decided in favour of assessee Addition on account of contribution to employees PF - Held that:- There is no doubt the payment that the payment for the employee provident fund was made before the due date of furnishing the return of income as specified under section 139(1) of the Act. Thus the same cannot be added to the total income of the assessee in view of judgment of Hon'ble jurisdictional High Court in the case of CIT v. M/s Vijay Shree Limited [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Decided in favour of assessee Addition on account of Leave Travel Concessions (LTC) - Held that:- There is no doubt that assessee has made a reference during the hearing before Ld. CIT(A) to the report of actuarial valuation but same has not been placed in the paper book filed before us. Assessee has not produced the copy of the report of actuarial valuation for the LTC. Therefore, we are inclined to remit the matter back to the file of AO for fresh adjudication in accordance with law as well as after considering the principle laid down by Hon'ble Supreme Court in the case of Rotork Controls India (Pvt) Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA) as discussed above. It is also directed to assessee at liberty to produce necessary documents including the actuarial valuation report. The AO shall pass a speaking order in terms of above. Revenue’s ground is allowed for statistical purpose. Allowing deduction of the expense incurred on tools & tackles by 1/5th instead of 15% depreciation as per the provision of Section 32 - allegation of AO is that there is no concept of claiming deduction under the Act on deferred revenue basis / useful life of inventory - Held that:- Assessee has correctly amortized the expenditure incurred on tools and tackles inventory over a period of 5 years. The period of 5 years was decided on the basis of technical report evaluated by the Engineering Department. Ld. DR has not brought any defect in the technical evaluation report of Engineering Department. Therefore, we are inclined to upheld the order of Ld. CIT(A).

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• 2018 (4) TMI 1278
  Levy of penalty u/s. 271D and 271E - violation of the provisions of Section 269SS and 269T - Held that:- Assessee has taken the amount from brother and father in cash. There is also no dispute that the repayment has also been made in cash Shri Bhupendrabhai Patel was also an employee of the assessee and his salary was also credited in the same account where the impugned acceptance/repayment of cash was found and is akin to current account. The amount of Shri Bhadresh Patel is also akin to current account. Considering the nature of business of the assessee and its business exigencies, the immediate requirement of cash cannot be ruled out. Further, the relationship of the persons with the assessee also establishes the genuineness of the transaction. Considering the facts in totality, we do not find this to be a fit case for the levy of penalty u/s. 271D & 271E of the Act. - Decided in favour of assessee

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• 2018 (4) TMI 1277
  Reopening of assessment - validity of notice issued - service of notice by affixture by the ITI - Held that:- It cannot be assumed that the notice was sent by speed post before deputing the ITI. Therefore, we confine ourselves to the claim of the Assessing Officer with regard to service of notice by affixture by the ITI. The report of the ITI clearly shows that the ITI has not made any enquiry with the neighbours or with some responsible person in the locality but claims to have made enquiry with “bystanders” but their names are also not mentioned. Section 282 of the Income Tax Act, 1961 prescribes the mode of service. In the instant case, apart from not filing an affidavit from the serving officer, there is no mention of the ITI with regard to the person who has identified the house and the person in whose presence the notice was affixed. In otherwords, the ITI, who was deputed by the Assessing Officer, has not followed the procedure prescribed u/s 282 of the Act which in turn refers to the modes contained in Rules 17 to 20 of Order V of CPC. The earliest letter issued by the Assessing Officer is in 2015 which was beyond the time prescribed u/s 148 / 149 of the Act. Therefore, the initiation of proceedings is invalid in law so as to assume jurisdiction under the Income Tax Act. Accordingly, the order passed, consequent to the improper issuance of notice by the Assessing Officer, does not have stand in the eye of law. - Decided in favour of assessee.

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• 2018 (4) TMI 1276
  Disallowance of interest u/s. 36(1)(iii) - CIT-A allowed the claim - as per AO Assessee has made investments and given loans and advances of Rs. 205,20,21,046/- to the subsidiaries - Held that:- As the company has advanced a loan of Rs. 205,20,21,046/- in the subsidiary companies. These details were available before the AO and he proceeded to make the disallowance of interest of Rs. 5,33,01,263/- brushing aside the crucial evidences placed on record. AO was rightly directed by the ld. CIT(A) to delete the disallowance of interest of Rs. 5,33,01,263/- made by the AO u/s. 36(1)(iii) of the Act, which does not need any interference on our part - Decided against revenue

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• 2018 (4) TMI 1275
  Levy of penalty u/s 271BA - failure to comply with the provisions of section 92E - not filing the audit report electronically - scope of amendment - reasonable cause for non compliance - Held that:- For the year under consideration i.e, AY 2012-13, pursuant to the amendment in the Rules, being the procedural law, the assessee was required to file the audit report electronically. There was apparently no such requirement to file the audit report electronically all these years where the electronic filing of returns has been specified. Given the said consistent position in law and the fact that the amendments have been brought in for the first time starting the year under consideration, the bonafide of the assessee cannot be doubted and we agree with the assessee that the said amendment in the procedural law has missed the attention of the assessee and there was a reasonable cause for such non-compliance by way of non-filing of audit report electronically. There was a reasonable cause on part of the assessee for not filing the audit report electronically and the penalty levied under section 271BA is hereby directed to be deleted. within the stipulated time - Decided in favour of assessee.

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• 2018 (4) TMI 1274
  Addition on account of amount paid to Directors of the company as commission and exgratia - allowable expenditure u/s 36(1)(ii) as well as section 37(1) - CIT-A allowed the claim - Held that:- AO has not established that such commission or exgratia paid to directors, who are also shareholders, was payable as profits or dividend of the company, therefore, the same cannot be disallowed u/s 36(1)(ii) of the Act. There is no change in the present assessment year also, therefore, we are expected to follow the orders of earlier years, resultantly, we find no infirmity in the conclusion drawn by the Ld. CIT(A), consequently, this ground of the Revenue is dismissed. Addition on account of profit received on sale of car - as per AO section 50(1) clearly state that any receipt arising from the transfer of short term capital asset shall be deemed to be the capital gains - CIT-A deleted the addition - Held that:- The block of asset was perused by the Ld. CIT (A) and finally it was found that the assessee has deducted the sale value of the vehicle from the written down value of the concerned block of asset and duly complied with the provision of the Act and, therefore, claimed lesser depreciation on such block in the year. We find no infirmity in the conclusion drawn by the Ld. CIT (A) more specifically when the assessee correctly computed short term capital gain as Rs. Nil in the case of depreciable asset as per the provision of section 50 of the Act. - Decided against revenue

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• 2018 (4) TMI 1273
  Penalty u/s 271(1)(c) - addition based on documents unearthed during the course of survey - unaccounted cash payments - Held that:- Certain vouchers prepared and signed by the employees was found in survey, there was no authentic evidence to establish that the assessee had made cash payments. The persons to whom such payments were made were neither cross examined nor proper investigation made. No concrete finding by the revenue as to whether the assessee had made any cash payment which is unaccounted. Since the assessee has offered an explanation with respect to the documents found during the course of survey, the onus have shifted on the Revenue to establish it otherwise. Further the assessee has not admitted for any addition as proposed by the Revenue. Therefore the entire addition is made based on presumptions and assumptions from certain documents unearthed during the course of survey proceedings by rejecting the explanations offered by the assessee without any basis. In these circumstances, though it may be a fit case for addition, we are of the considered view that the penal provisions of Section 271(1)(c) of the Act would not be applicable in the case of the assessee. - Decided in favour of assessee

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• 2018 (4) TMI 1272
  Section 206AA overriding the provisions of Section 90(2) - whether in cases of the payments made to non-residents, what is the rate of tax to be applied, whether it is as per Section 206AA or as per the provisions of DTAA? - Held that:- Section 206AA of the Act does not override the provisions of Section 90(2) of the Act and that in the cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per Section 206 AA of the Act because the provisions of the DTAAs were more beneficial. The orders of the authorities below cannot be sustained Direct the deletion of the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs. Appeals are allowed accordingly.

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• 2018 (4) TMI 1271
  Penalty u/s 221(1) - default in paying Self Assessment tax u/s 140A - sufficient and reasonable cause for non payment of tax - Held that:- We find from the records placed before us that the assessee throughout the period commencing from 01.10.09 to 31.03.10 have negative flow of funds as is apparent from fund flow and cash flow statement as reproduced. AO has granted four installments to the assessee of Rs. 8,50,000/- each which were cleared by the assessee along with interest from its account with Standard Chartered Bank which was paid out of the overdraft facility availed from the bank. Looking to the facts and circumstances of the case in totality, we are of the considered view that the assessee was passing through severe financial hardships during the above period which is a sufficient and reasonable cause for non payment of tax. See ITO vs. Devsons (P) Ltd. (2007 (10) TMI 323 - ITAT DELHI-D ) wherein held that penalty imposed before expiry of period granted to the assessee to make the payment of tax was not valid and more so when assessee had shown financial difficulties and has made a reasonable offer for making the payment in installments. - Decided in favour of assessee

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• 2018 (4) TMI 1270
  Stay of demand extension - Held that:- Stay order was extended from time to time, that matter was partly hard on 19/02/2018, that the next date of hearing is 02/04/2018. A fit case for staying the demand for a further period of six months or till the disposal of the appeal by the Tribunal whichever is earlier. Application, filed by the assessee for extension of stay of demand, stands allowed.

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• 2018 (4) TMI 1269
  Addition to excess collection of sales tax - accrual of income - Held that:- What was collected by the assessee was already deposited with the Sales Tax Department and there was confusion regarding the sales tax rate. The assessee collected 4% instead of 2%. The entire amount collected was deposited with the Sales Tax Department, therefore, nothing retained by the assessee. Hence, treating the same as trading receipt does not arise, therefore, the CIT(Appeals) has rightly deleted the addition. Additional sales tax collected by the assessee - assessment of income - Held that:- CIT(Appeals) correctly found that the excess sales tax at the rate of 4% was collected by the assessee and the same was remitted to the Government account. The CIT(Appeals) also found that the sales tax collected and paid was not reflected in the Profit & Loss account. In those circumstances, this Tribunal is of the considered opinion that the excess sales tax collected and remitted to the Government account cannot be construed as income of the assessee. Disallowance u/s 40A(2)(b) - whether the standard of service maintained by the assessee is on par with the market rate which is otherwise available in the market? - Held that:- It is necessary for the Assessing Officer and the CIT(Appeals) to ascertain from market what is the reasonable rate that could have been paid by the assessee for similar service to the third parties. In the absence of any such examination, this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, orders of both the authorities below are set aside and the disallowance made by the Assessing Officer under Section 40A(2)(b) of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and bring on record the market rate of similar laundry service provided in the locality and thereafter decide the issue afresh

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• 2018 (4) TMI 1268
  Maintainability of the claim for exemption u/s. 11 - best judgment assessment - Held that:- In the present case we abstain from doing so considering that the assessee is a charitable organization. AR would before us assure us that the assessee shall cooperate in the set aside proceedings. Surely, if the assessee could furnish explanation/material(s) before the first appellate authority, what prevents it from doing so before the assessing authority? Where the assessee so does, adducing the relevant materials, AO shall frame a regular assessment on merits in accordance with law. Where not, i.e., despite the assurance before us, the AO may frame a best judgment assessment on some valid basis, both on facts and as well in law, drawing legitimate inferences, i.e., in accordance with law. The law, it may be clarified permits him to draw adverse inferences, as admissible under the circumstances, where the relevant material is not produced before him (refer, inter alia, Metal Box Powder Co. Ltd. v. CIT [2002 (7) TMI 63 - MADRAS High Court] - Appeal of the revenue is allowed for statistical purposes

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• 2018 (4) TMI 1267
  Denying exemption u/s 11 - assessee is a charitable trust engaged in the activity of promotion of swimming - Held that:- The Hon’ble Bombay High Court in the case of DIT vs Goregaon Sports Club ( 2012 (4) TMI 214 - BOMBAY HIGH COURT) held that providing sports facilities to general public without restriction to any caste, creed, religion or profession is eligible for exemption u/s 11 of Income-tax Act, 1961. We are of the considered view that the assessee is eligible for exemption u/s 11 of the Income-tax Act, 1961. Therefore, we direct the AO to allow exemption u/s 11 of the Act. - Decided in favour of assessee.

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• 2018 (4) TMI 1266
  Addition u/s 68 as unexplained cash credit - discharge of initial burden of proof - Held that:- From the jumbled set of transactions of receiving and payment of substantial amounts from/to the third parties, specifically keeping in view the manner in which their proper recording in the books of account of the assessee had been given a go by, thus does not inspire much of confidence, but then we cannot also loose sight of the fact that the documentary evidence placed on record by the assessee substantially supports his claim. We thus restore the matter back to the file of the A.O for fresh adjudication of the issue under consideration. The A.O shall during the course of the set aside proceedings make necessary verifications from the aforementioned parties, viz. (i). M/s A.V. Forging Pvt. Ltd.; (ii). M/s Equichem Enterprises; (iii). M/s Shree Ganesh Enterprises ; and (iv). M/s Astec Life Sciences Pvt. Ltd., and shall re-adjudicate the issue.

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• 2018 (4) TMI 1265
  Revision u/s 263 - adoption of cost of improvement - indexed cost of improvement grant - Held that:- AO has taken the cost of improvement at Rs. 15,11,000/- in the year 1998-99 as supported by the valuation report of the registered valuer. With respect to grant of indexed cost of improvement, considering the amount of Rs. 15,11,000/- pertaining to construction of shops in 1998-99, the Assessing Officer himself has recorded this fact in the assessment record and the relevant computation we have already reproduced above. With respect to the amount of Rs. 3.40 lakhs towards expenses on transfer i.e., dalali expenses, Assessing Officer has allowed the said claim after going through the documents and after being satisfied about the claim. The assessee’s issue is squarely covered in his favour by the decision of Hon'ble Supreme Court in the case of CIT Vs. Max India Ltd.(2007 (11) TMI 12 - Supreme Court of India). Thus this is not a fit case for revision as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee.

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• 2018 (4) TMI 1264
  Levy of penalty u/s 271(1)(c) - Non specification of charge - defective notice - Held that:- When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two. We, therefore, respectfully following the order of the Hon'ble Andhra Pradesh High Court in the case of Principal CIT-1, Vishakapatnam vs. Smt. Baisetty Revathi (2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT), hold that initiation of proceedings under section 271(1)(c) of the Act is not valid and accordingly quash the penalty. - Decided in favour of assessee.

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• 2018 (4) TMI 1263
  Determination of income for taxable purpose u/s 44BB - computation of gross receipts - service tax element inclusion in gross receipts - Held that:- as decided in assessee's own case [2012 (9) TMI 564 - ITAT DELHI] Service tax collected by the assessee shall not form part of the gross receipts for the purpose of determining income for taxable purpose u/s 44BB. Also See Income-tax vs. Mitchell Drilling International Pvt. Ltd. [2015 (10) TMI 259 - DELHI HIGH COURT] - Decided in favour of assessee

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• 2018 (4) TMI 1262
  Disallowance of write off of outstanding loan and interest - whether CIT(A) was justified in upholding the treatment of interest income earned during the year as income from other sources instead of business income? - Held that:- It is prerogative of the assessee to charge or not to be charge interest on certain loans. Anyway in case if the revenue alleges that the interest from loan given to certain parties were not for the purpose of business of the assessee, then the law provides alternative remedy of proceeding against the assessee u/s 36(1)(iii) by resorting to disallowance of interest. Admittedly it is not done so in the instant case. This action of the ld. AO itself goes to prove that he accepted the lending activity as part of the business of the assessee, wherein the interest paid has been allowed as business expenditure by the AO. AO all along had been treating the business income only under the head income from business but strangely for the year under appeal, had classified the same as income from other sources. Since, we have already held that the lending activity has been carried out by the assessee only as part and parcel of its normal course of its business, the interest income offered thereon should be assessed only under the head income from business. Write off of bad debt would be squarely allowable as deduction u/s 36(1)(vii) read with Section 36(2) and the ld. AO is directed accordingly to grant the same. The interest income accrued on loans need to be taxed only under the head income from business and not income from other sources. - Decided in favour of assessee.

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• Customs

• 2018 (4) TMI 1261
  Duty Free Import Authorization Scheme - issuance of the authorization - Held that: - as they appear to have completed all the formalities for the issuance of the authorization and almost 17 such authorizations had been issued in favor of the petitioner on similar set of facts - since a strong prima facie case is made out by the petitioner, we direct the respondents to issue the necessary authorizations in favour of the petitioner only on the condition that the petitioner furnishes an undertaking that the petitioner would be liable to pay the customs duty in case it ultimately fails in the writ petition. Permission for intervention in the writ petition - Held that: - If the applicant is aggrieved by the application of the Duty Free Import Authorization Scheme to the parties like the petitioner on the ground that it would allegedly affect its business, the appropriate remedy for the applicant would be to challenge the Duty Free Import Authorization Scheme and not to be an intermeddler in a petition where the applicant, who wishes to avail the Duty Free Import Authorization Scheme has sought for the authorization - application dismissed. Application dismissed.

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• 2018 (4) TMI 1259
  Smuggling - Gold - It is the complainant's case that both the accused knowingly concerned in respect of said gold biscuits in the fraudulent evasion of duty chargeable thereon and prohibition imposed under Customs Act committed an offence punishable under Section 135(1)(a) of the Customs Act, 1962 - statements recorded under Section 108 were concluded - whether the statements were voluntary or were made under coercion - Held that: - all panchanamas were concluded at 6.30 p.m. on 8.1.1988. Statements as recorded would hardly require 3 to 4 hours. In fact Mrs. Mane submitted statements were recorded after concluding house search panchanama. Question is why accused were detained in office for whole night ? Why Appellant could not clarify at what time statements of accused under Section 108 of the Customs Act were recorded ? As informed accused were arrested on 9.1.1988 at 10 a.m. i.e. next day. In these circumstances, it can be safely concluded that both the accused were detained in the office of the Customs for whole night and thus, the contention of the Appellant that the statements were voluntary and were not influenced by the authorities cannot be accepted. Both the statements recorded under Section 108 of the Customs Act, 1962 were not voluntary statements inasmuch as there is evidence on record of P.W.2 to show that both the accused were detained in the office of the Customs for whole night and on the second day, i.e., 9.1.1988 at 10.00 a.m. they were shown arrested and produced before the learned Magistrate. Thus even though statement under Section 108 carry substantive evidentiary value, such statements in the case in hand are of no assistance to the Prosecution - There is no other evidence on record, except such statements. Appeal dismissed.

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• 2018 (4) TMI 1258
  Extension of time for issuance of SCN - Section 110 of the Customs Act, 1962 - whether the order passed by learned Principal Commissioner for extension of time limit for issuance of show cause notice in respect of seized goods is legal and correct or otherwise? Held that: - As per proviso to sub-section (2) of Section 110, the Principal Commissioner of Customs or Commissioner of Customs is empowered to extend the period of six months for issuance of show cause notice in respect of the seized goods for a period not exceeding six months on sufficient cause being shown. The investigation was undergoing. Since the same was not concluded, the show cause notice could not be issued within the prescribed period of six months. Thereafter a show cause notice was issued on 29.6.2017 proposing extension of time limit for issuance of show cause notice - sufficient cause was shown for extending the time limit - the extension of time limit of further six months for issuance of show cause notice in respect of seized goods does not appear to be illegal. Appeal dismissed - decided against appellant.

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• 2018 (4) TMI 1257
  Unconditional release of goods - areca nuts imported from Sri Lanka - case of appellant is that the learned Commissioner, without any basis, seized the goods and put a condition of bank guarantee for 100% of the duty amount - principles of natural justice - Held that: - the Ministry of Commerce has confirmed that two certificates of origin dated 16.10.2017 were issued. Therefore, the doubt raised by the Customs authority regarding the country of origin prima facie should not exist. The facts in the case of Shiv Ganga Polypet [2018 (2) TMI 1139 - CESTAT MUMBAI] are different inasmuch as the doubt of the Customs authority regarding the country of origin could not be removed whereas in the present case, after initiation of the enquiry, the Department of Commerce, Government of Sri Lanka, issued a verification certificate, and the doubt was removed. The condition of bank guarantee for an amount of 100% duty is very harsh - the amount of bank guarantee reduced to 20% of the duty amount and bond amount confirmed for 100% value of the goods - appeal allowed in part.

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• 2018 (4) TMI 1256
  Seizure of imported goods - high value Integrated Circuits (IC) - mis-declaration of description of goods - Held that: - there is no factual finding of the adjudicating authority with respect to factual disputes and allegations made in the SCN - if the department is unable to provide documents as requested by the appellants as per the earlier orders of the Tribunal and the High Court, the adjudicating authority may decide the matter on the basis of the documents available before him. Hence, it is appropriate to remand the matter to the adj. auth. in the interest of justice - appeal allowed by way of remand

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• 2018 (4) TMI 1255
  Focus Product Scheme - it was found by the Department that the licence was issued against the fake shipping bills - Penalty - Section 129A(iii) of the Customs Act, 1962 - Held that: - similar consignment was imported by M/s Singh World Versus CC, New Delhi [2017 (5) TMI 858 - CESTAT NEW DELHI], where it was held that appellants have purchased the licence from the market for import of the goods being the vigilant buyer and penalty not warranted. As the facts and circumstances are identical in the instant case and, more particularly, the license is common for both the consignments imported by them, the assessee - Appellants are entitled to get the relief on the principle of equity before the law. Penalty set aside - appeal allowed - decided in favor of appellant-assessee.

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• 2018 (4) TMI 1254
  Refund of SAD - rejection on the ground that invoice did not contain the endorsement as required under para 2(b) of notification declaring that no Cenvat credit is admissible on the SAD paid - Held that: - The said issue stands covered by the decision in the case of Chowgule & Company Pvt Ltd Vs CC & CE [2014 (8) TMI 214 - CESTAT MUMBAI (LB)], where it was held that Condition relating to endorsement on the invoice was merely a procedural one and the purpose and object of such an endorsement could be achieved when the duty element itself was not specified in the invoice. Since the object and purpose of the condition is achieved by non-specification of the duty element the mere non-making of the endorsement could not have undermined the purpose of the exemption - rejection of refund claim on this ground is unjustified and requires to be set aside. Refund claim also rejected on the ground that description of the goods in the Bill of Entry does not match with the description of goods in the sales invoice - Held that: - The mere mention of grades of plastic granules in the sales invoice cannot be a ground to deny the substantive benefit of refund, when there is no dispute that appellant has sold the very same goods that have been imported - issue stands covered by the decision in the case of CC, Chennai vs Shri Ram Impex India (P) Ltd. [2013 (11) TMI 1354 - CESTAT CHENNAI], where it was held that There is no condition in the Notification that the Bill of Entry number should be mentioned in the sale invoice - refund to be allowed. Refund also rejected on the ground that appellant has not produced the consignment sale agreement copy - Held that: - When there is no dispute to the discharge of VAT/Sales Tax, the department cannot reject the refund claims, stating that there is no evidence to show that the liability to pay sales tax is fixed on appellant as per agreement - refund cannot be rejected. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1253
  Valuation of imported goods - Used Power Press, Johns, APRX 100 MT Elec/Hyd Operation, Remote Hyd Power pack, Rotating 1100 MM Die Auto INDX (Complete Set) - purchase through e-auction - rejection of declared value - It appeared to the Custom House that the price of the machinery when worked out per ton basis was much than the price per ton of Heavy Melting Scrap imported from Australia during that period which was in the vicinity of AUD 400/ton. Held that: - there are no details in the e-auction invoice of the age, year of manufacture or other serial / identification numbers that would normally be expected to be made available for such machinery. Even gross weight of the machinery is not indicated in the invoice, though, from the inspection report of the Chartered Engineer, it emerges that the gross weight is as much as 27500.00 kgs. In the absence of such particulars, the Customs authorities cannot be faulted for not having accepted the transaction value. The fact that the declared value of the goods was much lower than per/ton value of industrial scrap imported from the same country, though not an approved method for arriving at the transaction value, is nonetheless an indicator of the grossly low value of the imported goods as declared - transaction value cannot be accepted - appeal dismissed - decided against appellant.

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• 2018 (4) TMI 1252
  Valuation - enhancement of value of imported goods - consignment of 21880 pcs. of carbide tips - contemporaneous imports - Held that: - Unless the department adduces evidence of a contemporaneous imports price from a manufacturer of carbide tips for goods of the same specifications, the enhancement in value cannot be made in their case. In the instant case, the invoices is based on specification of the tips. Therefore, the DOV data cannot be confirmed the basis of the value of authorised carbon tips and all different specifications imported by the respondent Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1251
  Restoration of appeal - request for adjournment by fax and speed post - Held that: - It must have been an omission on the part of the Registry to place the same on the date of hearing in the appeal folders - the appellant has to be given a chance to contest the case on merits - appeal restored.

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• Corporate Laws

• 2018 (4) TMI 1249
  Winding up petition - unable to pay the debt - limitation period - Held that:- We cannot dismiss the stand taken by the company that petitioner has not even made out a prima facie case that there is a debt. So far as the issue of limitation is concerned, in the reminder letter dated 4th February 2015, copy whereof is at Exh.'D' to the petition, it is stated that petitioner had raised Thirty bills between 31st January 2011 to 29th September 2012 but the statement of outstanding annexed is only of 27 invoices. There have been three payments made by the company. Going in the reverse order, the payment made on 3rd December 2015 for Rs. 3,00,000/, according to company, is towards the last invoice dated 29th September 2012 which was for Rs. 3,30,000/and the payment made on 19th December 2015 for Rs. 1,65,000/was towards the 26th invoice mentioned in the list dated 19th July 2012 for Rs. 1,65,000/. The amount paid on 16th December 2014 of Rs. 2,56,779/if accepted as an adhoc payment, still some of the invoices raised will be barred by limitation. If one considers the statement of outstanding filed by petitioner, invoice at Sr.No.1 was due on 1st April 2011 and the invoice at Sr.No. 11 was due on 13th December 2011 and these payments have been made beyond the three years period. Therefore, we cannot dismiss the stand of respondent as moonshine since claims under the invoices may be barred by limitation and cannot conclude that there is a debt and company is unable to discharge its debt. - Petition dismissed.

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• 2018 (4) TMI 1248
  Validity of EOGM - defective notice - forfeiture of shares questioned - Held that:- Notice has to be construed in a realistic business-like manner and if it satisfies the essence of section 173(2) of the Companies Act, the meeting should not be invalidated on the technical ground that the notice has not complied with section 173(2) of the Companies Act. The court further observed that ‘if the shareholder is aware of the material facts pertaining to the transaction to be carried out at the meeting, he cannot reasonably complain of any insufficiency of notice’. Thus, the decision taken in the light of para 8 of the Articles of Association by the majority of the shareholders of the 1st Respondent in EoGM held on 08-12-2011 does not appear to have been suffering from any illegality. The sole object of filing the petition by the petitioner is to stop the forfeiture of 2,967 shares held by her in the 1st Respondent Company, and the petitioner did not refund Rs. 8 Lakhs paid to Vanika Vaisya Trust through Cheque No.8107 dated, 07-12-2001 from the accounts 1st Respondent Company. The petitioner has not come with clean hands for seeking reliefs under Sections 111, 397, 398, 402, 403, 406, 408, 237 read with Schedule XI of the Companies Act, 1956. Therefore, the petitioner a not entitled to any of the reliefs prayed for. This view is fortified with the ruling given in Sri Kanta Datta Narasimharaja Wadiyar v. Venkateshwar Real Estates (P.) Ltd. [1989 (4) TMI 268 - HIGH COURT OF KARNATAKA] wherein it has been held that one who seeking equitable relief must come with clean hands and good conduct, failing which he would constitute a gross abuse of the process of Court and is not entitled for any relief under Sections 397 & 398 of the Companies Act, 1956

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• Service Tax

• 2018 (4) TMI 1246
  Refund of service tax paid - denial on the ground of time limitation - refund claim filed on 7th March 2016 for the services exported by him for the quarter January 2015 to March 2015 - Section 11B of CEA - Held that: - Larger Bench of the Tribunal in the case of CCE & ST, Bengaluru Service Tax-I Vs Span Infotech India Pvt Ltd [2018 (2) TMI 946 - CESTAT BANGALORE] has settled the law wherein it is held that for the refund under Rule-5 of CENVAT Credit Rules 2004, relevant date for limitation has to be from end of the quarter in which FIRC is received - refund is not time barred - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1245
  Maintainability of appeal - appeal dismissed on the ground of limitation - condonation of delay in filing appeal - Held that: - the statutory appeal is required to be filed in case of service tax matter under Section 85 of the Finance Act, 1994 within a period of three months before the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) can condone the delay by further period of three months. The present appeal was filed by the appellant beyond the statutory period of three months but within the condonable period - the delay in filing the appeal before the Commissioner (Appeals) is condoned - Matter remanded for deciding the issue on merits. Appeal allowed by way of remand.

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• 2018 (4) TMI 1244
  Management, Maintenance and Repair Services - POPOS Rules - Definition of INDIA - revenue has contended that part of cable system lies within 12 nautical miles of land mass of India and hence the service of MMS has been partly performed in India and hence taxable - demand was set aside on the ground that it has not been established in SCN by any cogent evidence or by way of statement of any person that the MMS Service has been performed in India. Held that: - in the SCN it is nowhere appearing as to how the services were performed in India by M/s Flag telecomm. Even the notice does not define as to what restoration services were performed. It has only been assumed that the restoration work has been performed in India - when the allegation of the show cause notice itself does not lead to the conclusion that M/s Flag has carried out any restoration work in India, in that case there cannot be any service tax liability on the Appellant. Part demand pertains to period prior to 18.04.2006 i.e the date on which Section 66A was enacted in Finance Act, 1994. Since there was no provision to charge service tax on services received from outside India, there cannot be any demand even on merits on services received before 18.04.2006. Once the demand under the category of MMRS itself has held to be not sustainable, in that case the subject demand is also not sustainable. The whole issue involved is revenue neutral. Even assuming that if the service tax was payable, the same was available to the Respondent as cenvat credit. Time limitation - Held that: - the nature of services was in the knowledge of the revenue since 2008 as appearing in the regular correspondence with the revenue. In such case when the facts were in the knowledge of the department there is no ground to raise demand by invoking extended period of limitation - demand is time barred. Demand not sustainable - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1243
  Classification of services - services of shifting and transportation of the coal for M/s Western Coalfields Ltd from pitheads to railway sidings - whether classified under Cargo Handling service or under GTA Services? - Held that: - an identical issue has come up before the Tribunal in the case of M/s Associated Builders & Contractors V/s CCE, Jabalpur [2018 (4) TMI 848 - CESTAT NEW DELHI], where reliance placed in the case of Commissioner of Central Excise And Service Tax, Raipur Versus Singh Transporters [2017 (7) TMI 494 - SUPREME COURT], where it was held that a mine is not to be understood necessarily in respect of pit-heads of the mining area or the excavation or drilling underground, as may be, but also to the peripheral area on the surface. The said definition has no apparent nexus with the activity undertaken and the service rendered. The service to be classified under GTA service - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1242
  GTA service - composite agreement - The claim of the appellant is that as per agreement, the transportation, packing, loading and unloading services are separate, for which independent charges were recovered - Held that: - Tribunal in the case of Jain Carrying Corporation V/s CCE, Jaipur 2014-TIOL-3069-CESTAT-DEL observed that where in the composite agreement, services are mentioned differently then each service will have to be charged separately for the purpose of Service Tax - The Tribunal observed that when by the composite agreement, three different services were awarded to the appellant then admittedly, the services falling under different Clauses separate. But fact remains these judgments were delivered before the date when the negative list came into existence i.e. 1st July, 2012. Hence by following the ratio laid down in the above mentioned cases we uphold that prior to 01/07/2012 the services, though mentioned in a composite agreement, will have to be treated differently as they were mentioned separately and along with the table of the charges - After 01/7/2012 the issue will have to be examined afresh by the adjudicating authority but by providing reasonable opportunity to the appellant. Valuation - reimbursement of bill expenses - Held that: - In the show cause notice, the service tax was demanded on ‘reimbursable expenses’ under Rule 5(1) of the Service Tax (Determination Value) Rules, 2006 from the Appellant. But fact remains that Rule 5(1) has been assailed before the Hon’ble Supreme Court in the case of Union of India and Anr V/s M/s Intercontinental Consultants and Technocrats Pvt. Ltd. 2018-TIOL-76-SC where the said Rule was declared ultra vires to the Section 67 of the Finance Act, 1994 - When the said provision has been declared ultra vires then no demand can be raised - demand set aside. Utilisation of CENVAT credit - credit utilised for payment of Service Tax - Held that: - the authority will have to examine the genuineness of the Cenvat Credit of Rs. 3.71 Cr. Only. In this regard, it is evident that Service Tax on storage and warehousing charges was being paid prior to VCES period and also declared and paid during VCES period through declaration, which has been held as correct in the impugned order - penalty also not leviable. Personal penalty on Directors - Held that: - When the service tax liability is remanded then the question of levy of the personal penalty on the directors is also remanded to the adjudicating authority for adjudication. Appeal allowed in part.

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• 2018 (4) TMI 1241
  CENVAT credit - there are separate registration on account of some branches - main ground on which cenvat credit was denied is lack of proper document for transferring credit lying at various branches to the zonal office upon approval of centralized registration - Held that: - appellant is a public sector undertaking Bank, no individual interest is involved - The fact remains that the documents were available in the books of account and as mentioned no individual interest is involved. There is no statutory requirement of specified documents for transferring credit available with the multiples registrations to centralized registration - credit cannot be denied - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1240
  Penalty u/s 78 - commission paid to sales agents outside India - reverse charge mechanism - Held that: - the issue of taxation in respect of commission paid to foreign agents was the subject matter of litigation before various fora till the constitutional validity of section 66A of the Act was upheld with effect from 18.4.2006 - there was reasonable cause for the failure of the appellant to discharge tax liability and hence the provisions of section 80 of the Act will be attracted - penalty set aside - appeal allowed.

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• 2018 (4) TMI 1239
  C&F agency service - Place of provision of service - the said service was received by the appellant from foreign agents - reverse charge mechanism - POPOS Rules - Held that: - since services have been wholly performed outside India, the activity will not be exigible to service tax by virtue of Rule 3 (ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1238
  Composite works contract - abatement under N/N. 15/2004-ST dt. 10.06.2004 - Revenue entertained a view that such abatement is not available to completion and finishing services - period involved is July 2005 to September 2006 - Held that: - The admitted fact is that work orders are for execution of composite works contract involving supply of materials involving payment of VAT and provision of labour. As such, these contracts cannot be subjected to tax liability prior to 1.6.2007 as held by the Apex Court in the case of L & T Ltd. [2015 (8) TMI 749 - SUPREME COURT] - As such, the whole demand in the present proceedings are not legally sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1237
  Services of re-rubberisation of rollers - whether the said activity would amount to manufacture or would be taxable under Management, Maintenance or Repair Service? - benefit of N/N. 14/2004 dated 10.9.2004 - Held that: - The appellant is engaged in re-rubberisation of old and used rubberized roller for use in printing industry and therefore fully exempt by the said Notification - reliance placed in the case of M/s. Neotech Products Pvt. Ltd. Appellant (s) Versus CC5CE&ST, Hyderabad-IV [2016 (11) TMI 56 - CESTAT HYDERABAD] - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1236
  Penalty u/s 77 and 78 - Reverse Charge Mechanism - foreign commission agent service - Held that: - Admittedly, the reverse charge tax liability on the appellant will arise only w.e.f. 18.4.2006. However, dispute with reference to applicability of tax liability on reverse charge mechanism was highly contentious - it is not tenable to invoke ingredients of Section 73 (1) proviso to demand service tax for extended period and also to confirm penalties on the appellants. Appellant shall be liable to service tax for the normal period with applicable interest - extended period and penalty set aside - appeal allowed in part.

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• 2018 (4) TMI 1235
  CENVAT credit - denial on the ground that the credit availed prior to registration - Held that: - the said issue is settled in favour of the assessee by the Karnataka High Court decision in the case of M/s. mPortal India Wireless Solutions (P) Ltd., Vs Commissioner of Service Tax [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that Registration not compulsory for refund - as, the matter has already been remanded by Commissioner (Appeals), we may keep the said remand as open remand and direct the original adjudicating authority to decide the issues afresh.

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• 2018 (4) TMI 1234
  Business Auxiliary services - Job-Work - process of electroplating - N/N. 8/2005-ST, dated 01.03.2005 - Held that: - it is clear that the appellant-assessee is a job worker, undertaking the electroplating work on the goods which were returned to the principal manufacturer, who in terms of the said notification is liable to discharge Central Excise Duty, if any payable on the same at the time of final clearance - the appellant-assessee cannot be brought under service tax liability - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1232
  Jurisdiction for investigating the service tax matter - centralized registration does not mention any place other than Chennai- transfer of files pertaining to the petitioner's case to the Jurisdictional Authorities/ Officers, viz., the respondents 3 and 4 for further proceedings - Circular No.1056/05/2017-C.X. dt. 29.07.2017 - Held that: - It is settled position that summons cannot be quashed or injuncted and this court in the case of Commissioner of Customs, Calcutta v. M.M.Exports [2007 (3) TMI 265 - SUPREME COURT OF INDIA] held that the writ petition was not maintainable to quash the summons and dismissed the writ petition. The respondents 1 and 2 have categorically stated that investigation is being carried out and the petitioner was carrying on business in Mumbai and in the Centralised Registration Certificate the Mumbai office was not registered - further, the Circular referred by the petitioner does not make it mandatory for investigation to be transferred to a different location. It is for the investigating authority to take a decision in the matter and it is not for the court under Article 226 of the Constitution of India to issue such a direction in this regard, especially, when the factual matrix appears to be that the petitioner was carrying on business within the jurisdiction of the respondents 1 and 2 - the prayer sought for by the petitioner cannot be granted - petition dismissed.

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• Central Excise

• 2018 (4) TMI 1294
  Valuation - inclusion of VAT in assessable value - appellants were allowed to collect the VAT/sale tax from the customers as per the tariff and retain the same, only 1% of the VAT collected will have to be paid to the state exchequer - whether the VAT which has been collected and retained by the appellant to the extent of 99% (as 1% deposited with the state exchequer) is to be added to the assessable value for determining the Central Excise duty payable? - Held that: - To promote industrial development in the north-east India, the Union Govt. as well as State Governments have launched various schemes. As per the Industrial Policy, where the Central Govt. has given exemption from the payment of excise duty vide Notification No.20/2007 dated 25.04.2007. At the same time, the State Governments have also given the benefit of incentives under the VAT/Sales Tax and also from Central Sales Tax. These schemes vary from State to State, but the spirit is the same i.e. to promote the industrial development in the area. For maintaining uniformity and consistency in the law, it is expected that all the appeals will have to be decided in a similar manner which is lacking in the present case - matter remanded to the Adjudicating Authority to decide the issues de novo, but by providing reasonable opportunity to the appellants - appeal allowed by way of remand.

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• 2018 (4) TMI 1233
  Cash Refund of unutilized CENVAT credit - closure of factory and surrendered registration certificate - Section 11B of CEA - the view taken by the Division Bench of this Court in the case of the COMMISSIONER OF C. EX., NASIK Versus JAIN VANGUARD POLYBUTLENE LTD. [2010 (6) TMI 171 - BOMBAY HIGH COURT], not agreed upon, where it was held that revenue cannot be allowed to take different view when question raised identical to previous case. - It will be more appropriate if the questions are considered by the larger bench - Matter referred to Larger Bench to decide the issue: - (a) Whether cash refund is permissible in terms of clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs? - (b) Whether by exercising power under Section 11B of the said Act of 1944, a refund of un­utilized amount of Cenvat Credit on account of the closure of manufacturing activities can be granted - (c) Whether what is observed in the order dated 25th January 2007 passed by the Apex Court in Petition for Special Leave to Appeal (Civil) No. CC 476 of 2007 (Union of India vs Slovak India Trading Company Pvt Ltd) can be read as a declaration of law under Article 141 of the Constitution of India? Matter referred to Larger Bench.

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• 2018 (4) TMI 1231
  Clandestine removal - shortage of raw material - CENVAT credit on Billets - Held that: - as the due date for payment was not yet to come, the allegation of clandestine removal of goods on these invoices is not substantiated and accordingly the demand of Rs. 3,36,510/- is set aside. The admitted fact is that the appellant had deposited the amount of Rs. 13,46,036/- before the issue of Show Cause Notice (+) further Rs. 3,17,381/- towards penalty and further Rs. 24,000/- towards interest - the appellant is entitled to concessional rate of penalty of 25% of Rs. 7,49,210/-, charged under the provisions of Section 11AC(1)(c) of the Act. Appeal allowed in part.

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• 2018 (4) TMI 1230
  Valuation - The raw materials are supplied by the principal manufacturer BIL to the appellants. After carrying out the manufacturing activity, the goods are cleared back to BIL who used such goods for further manufacture at their end - Rule 10 A (i) and (ii) of the Central Excise Valuation Rules - Held that: - Since this is not a case of the principal manufacturer immediately selling the goods manufactured by the appellants, Rule 10A of the Central Excise Valuation Rules will have no application in the facts of the present case. The landed cost of the raw materials at the appellant’s premises will include the cost of freight and insurance from the principal manufacturer to the appellant. But the appellant has claimed that the value taken by the principal manufacturer for payment of duty on the raw material includes the cost of such freight and insurance - the correct landed cost of the raw materials will need to be worked out with the support of the certificate of the authorized/qualified Cost Accountant. Revenue neutrality - Held that: - Any duty paid by the appellant will be available to the principal manufacturer as Cenvat credit, since the entire manufactured goods are returned to them - the entire exercise is Revenue neutral. Extended period of limitation - Held that: - the allegation of suppression made by the Revenue is not sustainable - demand of duty made by invoking the extended period set aside. Matter remanded to the original adjudicating authority for denovo adjudication after obtaining the cost of the raw materials duly supported by a CA Certificate - appeal allowed by way of remand.

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• 2018 (4) TMI 1229
  Valuation - inclusion of free of cost material supplied to appellant - Held that: - the ratio laid down in the judgment of the Apex court in International Auto [2005 (3) TMI 132 - SUPREME COURT OF INDIA] will apply to the facts of the appeal in hand, where it was held that According to the Modvat scheme, it is the Modvat of such final product which would have to include the cost of the inputs and in respect of which Modvat credit could be taken at the time of clearance of the final product - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1228
  Classification of goods - 'control panels' cleared along with 'single phase submersible pumps' - The assessee claims that they should be treated together with pumps sets, classified under heading 8413 - whether to be classified under heading 8537 or under heading 8513? - Held that: - The control panel is not intended to contribute to a clearly defined function of the pump sets - the control panel mainly manages the power supply as per the requirement to effectively operate the submersible pump sets. The control panel is not functionally contributing to main operation of liquid pumping. The assertion of the learned counsel in this regard is misplaced. The issue in hand is covered by the decision in the case of RC. PROJECTS & SYSTEMS LTD. Versus COMMISSIONER OF C. EX., BANGALORE [2005 (1) TMI 448 - CESTAT, BANGALORE], where it was held that There is a specific heading for electric control panels and in terms of Note 2(a) of Section XVI, the electrical control panels are classifiable under Heading 85.37 Rule (1) of the Rules for the Interpretation of the Schedule also provides that classification shall be determined, according to the terms of heading and any relevant section or Chapter notes. The product merits classification under heading 8537. Appeal dismissed - decided against appellant-assessee.

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• 2018 (4) TMI 1227
  CENVAT credit - capital goods - Pallets, storage racks, conveyor system and certain steel tubes, angles and flats used to make steel cover of welding area for safety - Held that: - the pallets and storage racks are essential items for safekeeping and further use of raw materials, components and semi-finished goods or finished goods before they are either processed or cleared out of factory. These can be considered as essential items involved in the manufacturing process - credit allowed. Conveyor belts - Held that: - conveyor belts are essential in the manufacturing process - it is the use of the product which will determine the eligibility rather than the nature of the product as it enters the factory. It is nobody's case that the conveyor belt is not connected to manufacturing process - credit allowed. Steel tubes, angles and flats - Held that: - the steel tubes, angles and flats on which credit was availed were used to create a steel cover around welding machine for industrial safety. The operation of welding machine is connected to such safety measure - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1226
  Recovery u/s 11D of the Central Excise Act, 1944 - it was alleged that the appellant has quoted prices inclusive of excise duty and collected the excise duty and therefore the excise duty shall be payable u/s 11D - Held that: - In order to attract recovery of section 11D, the amount has to be collected as excise duty. There is no evidence to show that the appellants have indicated any excise duty separately and collected the same from the buyer. In the absence of such situation, the provisions of section 11D is not attracted - demand do not sustain - appeal allowed.

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• 2018 (4) TMI 1225
  Valuation - related party transaction - Held that: - two of the buyers were private limited companies. As juristic person they cannot be held to be “relative of the respondent firm” - the original authority did not examine as to the category in which these two private limited companies can be considered as interconnected to the respondent firm. The overreaching control, mutuality of interest, financial control by way of share holding pattern etc., has never been discussed. The respondent all along submitted that the value of their sale is based on commercial consideration. These are normal transaction value as per the market conditions. There is no question of rejection as there are no value reduction by any extraneous situation. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1224
  CENVAT credit - For import and receipt of ethylene through sea, they have put up a jetty in Karaikal Port along with all connected facilities - denial on the ground that these are located in the unregistered premises and further they have no direct role in the manufacturing process of excisable final products - Held that: - the appellant have put up jetty and connected facilities in the sea near Karaikal Port only to facilitate the receipt and transfer of their essential raw materials ethylene to bring it to the factory for further manufacture. Apparently, such handling and receipt of essential raw materials is to be considered as part of integral manufacturing process. Tribunal in Finolex Industries Ltd. Vs. Commissioner of Central Excise, Pune [2003 (5) TMI 102 - CESTAT, MUMBAI] examined a similar dispute and held that the jetty put up by the appellant was part of the premises and the same should be considered as falling within the scope of section 2(e) “factory” as defined under the Central Excise Act, 1944. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 1223
  CENVAT credit - duty paying documents - documents on which credits were taken where addressed to a non-registered address - ISD invoices, where there are no evidences that such services were actually services used for taxable manufacturing or output service - Held that: - these services were in fact used for setting up of Semmankuppam facility can very well being established by supporting evidence like work order, invoices raised by the service provider linked to such work order, payment of tax by the appellant on such invoices and linking all these documents to the effect to satisfactorily establish that these input services were in fact used for setting up of Semmankuppam facility - The fact that these services were in fact used for setting up of Semmankuppam facility and the services were indeed availed by the appellant can be verified with supporting document - matter on remand. Credit can be availed by the service recipient if the documents issued contain all the essential requirement of Rule 9 of CENVAT Credit Rules, 2004. In fact, the said rule provides for certain discretion to the jurisdictional Assistant Commissioner which can also be exercised to such satisfaction of the conditions. Credit also denied on the ground that the appellant did not pay the full consideration for the services received - Held that: - appellant submitted that for certain service providers they have retained some portion of the invoice amount as security, however, they have paid the full tax shown in the invoice. This requires verification of original documents with supporting evidence. CENVAT credit - input services - tour operator services - maintenance service - construction of helipad etc. - denial on the ground of nexus - Held that: - appellant submitted that these are essentially to link their manufacturing operation. They can establish the same with supporting evidence - matter requires reconsideration. Appeal allowed by way of remand.

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• 2018 (4) TMI 1222
  Refund of excise duty paid on steel and cement used in the construction of houses - N/N. 32/2005 dated 17.08.2005 - Time limitation - Held that: - One of the condition for claiming refund as per the notification is to furnish a Certificate issued by the district Collector with regard to the completion of the house/project - Since such Certificate can be obtained only after completion of the construction, the time would start running only when the said Certificate has been issued to the respondent. Refund not hit by time bar - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (4) TMI 1221
  Works Contract - Deduction u/r 3(2)(l) of the KVAT Rules 2005 - labour and like charges - whether respondent No.1 i.e., the Prescribed Authority is justified in concluding the reassessment proceedings rejecting the claim of the petitioner to deduct the labour and other like charges under Section-3(2)(l) of the KVAT Rules? - Held that: - It is only for the reason that no books of accounts were produced before the Prescribed Authority, the reassessment proceedings are concluded under Rule-3(2)(m) of the KVAT Rules - It is the contention of the petitioner that notwithstanding the voluminous size of the books of accounts maintained by the petitioner, they are willing to place the same before respondent No.1-Prescribed Authority and to that effect the rectification application has already been filed relating to the tax period April’2009 to March’2010, which is pending consideration. It cannot be said that the petitioner has not maintained the books of accounts or not willing to produce the books of accounts. As such, relegating the petitioner to avail the alternative remedy by filing an appeal cannot be justified - Matter is remanded to the Prescribed Authority, respondent No.1 to reconsider the matter afresh after providing an opportunity to the petitioner to produce the books of accounts - petition allowed by way of remand.

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• 2018 (4) TMI 1220
  Stay order - furnishing of Bank Guarantee or security deposit - Held that: - At the time, when the Appeal Petition was entertained, 75% of the disputed tax has already been remitted by the petitioner. Therefore, this Court is of the view that the interest of the Revenue has been sufficiently safeguarded and to safeguard further interest of the Revenue, the petitioner can be directed to file a bond for the remaining tax and penalty - petition allowed in part.

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• 2018 (4) TMI 1219
  Penalty u/s 12(3)(b) of TNGST Act - contention of the assessee is that the liability on the sales of special import licence is not yet a settled issue and that under bonafide belief only they have not reported this turnover - suppression of facts with intent to evade not present - Held that: - In Indira Industries Vs. State of Tamil Nadu, [2014 (5) TMI 305 - MADRAS HIGH COURT], this Court considered a question, as to whether, levy of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, was justifiable, particularly, when there was no suppression pointed out by the Revenue that the Claim of the assessee related only to concessional rate of tax. This Court held that When the turnover assessed under the assessment order is drawn from the books of accounts and no reference to any specific concealment of the turnover in the accounts made, the question of invoking Section 12(3)(b) would not arise. Penalty cannot sustain - Tax Case Revision Petition is dismissed.

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• 2018 (4) TMI 1218
  Revision of assessment order - levy of additional sales tax - synthetic woven fabric - the turnover was assessed treating the synthetic woven fabric as plastic product - assessee claimed that the goods sold by the respondent-assessee are synthetic woven fabric and hence, they are eligible for exemption - whether assessee is liable to tax exemption or not? - Held that: - Tax exempted goods, listed in Schedule III of Tamil Nadu General Sales Tax Act, 1959, include tobacco, sugar, cotton and woolen fabrics, handloom cloth and few other commodities. Besides, conditional exemption, effected through special notifications, is also accorded to the sale/purchase of a number of goods by certain persons or institutions. In M/s. A. R. Plastic Pvt. Ltd., Gurgaon v. State of Haryana [2015 (10) TMI 210 - PUNJAB & HARYANA HIGH COURT], the Punjab and Haryana High Court, while considering the question, as to whether in the facts and circumstances of the present case, HDPE/PP Woven Fabric is Artificial silk and therefore falls within the ambit of Entry 51 of Schedule B of Haryana VAT Act, 2003, held that HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and is exempted from payment of tax. Both the appellate authority and the Tribunal have analyzed the facts to arrive at a conclusion in favor of the assessee. In fact, the Assessing Officer himself has allowed exemption, on sale of goods in question in the previous years and subsequently also, which the Tribunal has taken note of - The Tribunal has rightly held that the sale of synthetic woven fabric, would fall under item 8(ii) of Part A of Third Schedule and eligible for exemption. Tax case revision dismissed - decided against Revenue.

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• Indian Laws

• 2018 (4) TMI 1260
  Export subsidy on export of sugar - denial of subsidy on the ground that the respondent-BSSKL had sold such sugar to the exporter M/s. Bannari Amman Sugars Limited (BASL) who had imported the raw sugar under the Advance Licence scheme and therefore under SDF Rule 20, such Export Subsidy was not admissible to the Respondent - Gazette Notification dated 21.06.2002 including clause 20 in Chapter-IX of the said Gazette Notification Held that: - From a bare reading of the said Gazette Notification announcing the said export subsidy scheme, there is no exclusion of the manufacturers and sellers of sugars, like respondent- BSSKL, merely because their sale of sugar is to an exporter like BASL, who has exported such sugar out of India. On the contrary, such export of sugar by domestic manufacturers through other Exporters is clearly covered by the said Scheme and the very purpose of this scheme is to encourage such exports and to reduce the cost burden, to defray the internal transport charges out of such export subsidy. The respondent, like BSSKL squarely falls within the scope of words of “domestically manufactured sugar with a view to promoting its export for such period as it deems proper” under Clause-20. The reason assigned by the Government of India in the impugned order Annexure-A dated 09.04.2013 for denying the said export subsidy is that the export of entire quantity of 8130 MTs sugar was made under Advance License and the export of sugar made under Advance License is not admissible for grant of export subsidy under SDF Rule 20, is not at all a tenable reason borne out from the relevant clause SDF 20 or any other clause of the Notification - The said Scheme does not make any such distinction or discrimination in the matter. On the one hand, the Central Government cannot compel a person to sell the sugar to an exporter and on the other hand, deny the export subsidy to it, which is clearly envisaged in the export subsidy scheme itself and there is no such exclusion in the same as is sought to be made out in the impugned order Annexure-A dated 09.04.2013. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 1247
  Payment of balance of sales consideration alongwith interest - auction - petitioner sought some more time to make the full and final payment and assured that all outstanding payment shall be settled on or before 10.2.2017 - whether Rule 9(4) of the Rules which stood amended w.e.f. 4.11.2016 will govern the auction process which stood initiated on 2.11.2016 or the said auction process is to be governed by the Rules which were in vogue as on the date when the said auction process was put into motion by way of issuance of an advertisement? Held that: - Sub Rule (4) of un-amended Rule 9 thus, inter alia, provided that the balance amount of purchase shall be paid by the purchaser to the authorized officer on or before 15th day of confirmation of the sale of immovable property or such extended period as may be agreed upon in between the parties. The embargo of maximum of three months was not there in the un-amended Rules. This embargo has been created by the amended Rules which have come in force w.e.f. 4.11.2016. It is settled principle of law that a process put into motion has to be taken to its logical conclusion as per the Rules which were in vogue at the time when the process was initiated and even if there is subsequent change in the Rules, then also the process which already stood initiated has to be completed as per old Rules itself. Amendments are always prospective until and unless the language of the Rule itself envisages that the amendment is sought to be retrospective - In the present case, it is not in dispute that the amendment so incorporated in Sub Rule (4) of Rule 9 (supra) was introduced w.e.f. 4.11.2016. Thus the amendment itself makes it clear that the same is prospective and not retrospective. Whether the act of respondents No.2 and 4 of forfeiting the amount so deposited by the petitioner and thereafter subjecting the property to re-auction is arbitrary or not? - Held that: - Respondent-Bank rather than permitting the petitioner to deposit the balance amount, of course along with interest for the delayed period, went ahead to re-auction the property. Now the reauction was slated for the month of May, 2017 i.e. subsequent to the month in which petitioner had assured respondents No.2 and 4 that he shall be paying the entire purchase amount to the bank - the act of the respondent-bank forfeiting the amount deposited by the petitioner and initiating fresh steps for reauctioning the property in issue is arbitrary. Petition allowed - Petitioner is directed to deposit the balance purchase amount with respondents No.2 and 4 along with interest as per communication dated 31.12.2016 as calculated upto 30.4.2017 on or before 15.12.2017 - decided in favor of petitioner.

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