TMI Tax Updates - e-Newsletter
May 14, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Refund of Service Tax cannot be denied to the appellant as HC has decided the issue in Suresh K Bansal case in rem and not in personem - Tri

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Articles

1. EMPLOYER-EMPLOYEE RELATIONSHIP V/S GST

   By: Natasha jhaver

2. suo-motu CANCELLATION OF REGISTRATION

   By: DR.MARIAPPAN GOVINDARAJAN

3. RECOMMENDATIONS OF GST COUNCIL (27th MEETING)

   By: Dr. Sanjiv Agarwal

4. Importing Battery Scrap... (HS Code: 8424900) 

   By: Kishan Barai

News

1. Customs and Postal Department hold First ever Joint Conference to deliberate on streamlining imports and exports by post; To cater to the SMEs and to boost the Make in India program, Customs Department proposes new simplified procedures for exports through India Post

Notifications

Customs

1. 40/2018 - dated 11-5-2018 - Cus (NT)

Central Board of Indirect Taxes and Customs assigns the functions of the proper officer

2. 39/2018 - dated 11-5-2018 - Cus (NT)

Appoints the Officers in Commissionerate of Customs (Audit)

GST - States

3. 006/2018-GST - dated 9-5-2018 - Assam SGST

Assignment of functions to proper officers.

4. FTX.56/2017/229 - dated 5-5-2018 - Assam SGST

Notifies the date from which E-Way Bill Rules shall come into force.

5. FTX.56/2017/Pt-III/093 - dated 3-5-2018 - Assam SGST

The Assam Goods and Services Tax (Second Amendment) Rules, 2018.

6. FTX.56/2017/237 - dated 3-5-2018 - Assam SGST

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

7. 005/2018-GST - dated 29-3-2018 - Assam SGST

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

Circulars / Instructions / Orders

GST - States

1. 09/2018-GST - dated 9-5-2018

Clarification on issues related to furnishing of Bond / Letter of Undertaking for Exports

2. 02/2018-GST - dated 5-5-2018

Incidence of GST on providing catering services in train.

3. 01/2018-GST - dated 5-5-2018

Extension of date for submitting the statement in FORM GST TRAN-2 under rule 117(4)(b)(iii) of the Assam Goods and Services Tax Rules, 2017.

DGFT

4. 07/2015-2020 - dated 11-5-2018

Amendments in Appendix 3B of the Foreign Trade Policy 2015-20.

5. TRADE NOTICE NO 06/2018-19 - dated 11-5-2018

Laying down of modalities for import of Pigeon Peas (Cajanus cajan)/Toor Dal, Moong /Urad dal for the fiscal year 2018

Highlights / Catch Notes

GST

• Natural Ester Dielectric Fluid (Envirotemp FR3) classified under GST Schedule II, incurs 12% IGST for transformer use.

  Case-Laws - AAR : Applicability of GST - Classification of goods - Natural Easter Dielectric Fluid (Envirotemp FR3) - soyabean oil has to be modified or adapted for use in the transformers - Envirotemp FR3 falls under Serial no. 27 of Schedule II - taxable at the rate of 12% IGST (i.e. 6% CGST and 6% SGST) - AAR
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• Interest on Short-Term Loans by Del Credere Agents Exempt from GST, Says Authority for Advance Rulings.

  Case-Laws - AAR : Exemption from GST - Whether an amount charged as interest on transaction based short term loan given by the Del Credere Agent (DCA) to buyers of material is exempt from tax in terms of the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017? - Held Yes - AAR
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Income Tax

• Assessee's Deduction Claim Denied Due to Non-Compliance with Section 57(iii) of Income Tax Act.

  Case-Laws - AT : The claim of assessee for allowing deduction of expenses against income from other sources is not allowable because the assessee has not established that the expenses are allowable u/s. 57(iii) of IT Act. - AT
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DGFT

• DGFT Issues Guidelines for Importing Pigeon Peas, Moong, and Urad Dal for 2018 Fiscal Year.

  Circulars : Laying down of modalities for import of Pigeon Peas (Cajanus cajan)/Toor Dal, Moong /Urad dal for the fiscal year 2018
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• Enhanced Rates for MEIS Items in Foreign Trade Policy 2015-20 to Continue Beyond June 30, 2018.

  Circulars : Amendments in Appendix 3B of the Foreign Trade Policy 2015-20. - The rates for items under MEIS Appendix 3B / Service categories in Appendix 3D which were enhanced in the Mid Term Review are continued beyond 30.06.2018.
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Service Tax

• Railway Wagon Cleaning Exempt from Service Tax; Railway Building Cleaning Subject to Tax Under Commercial Category.

  Case-Laws - AT : Service tax on cleaning service cannot be levied on cleaning of railway wagons and coaches - However, in respect of railway buildings, premises, the same will be covered under the category of cleaning of commercial or industrial buildings and premises thereof and hence liable to payment of service tax under the Cleaning Service - AT
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• Flat Buyer Wins Service Tax Refund Based on Precedent in Suresh Kumar Bansal Case; Judgment Applies Broadly to All Buyers.

  Case-Laws - AT : Refund of service tax claimed by the recipient of services (buyer of flat instead of builder) - Composite contract in relation to construction of complex - Claiming of the benefit of the judgment, in the caes of Suresh Kumar Bansal [2016 (6) TMI 192 - DELHI HIGH COURT], cannot be denied to the appellant as the same was rendered “in rem” and not “in personem”. - AT
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• Flat Buyer Claims Service Tax Refund; Judgment Applies Broadly, Not Limited to Specific Parties Under Delhi High Court Ruling.

  Case-Laws - AT : Refund of service tax claimed by the recipient of services (buyer of flat instead of builder) - Composite contract in relation to construction of complex - Claiming of the benefit of the judgment,[2016 (6) TMI 192 - DELHI HIGH COURT], cannot be denied to the appellant as the same was rendered “in rem” and not “in personem”. - AT
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Central Excise

• CENVAT Credit Allowed for Construction Services Completed Before April 1, 2011 Amendment Restriction.

  Case-Laws - AT : CENVAT credit - construction service - the embargo of not allowing the Cenvat credit on construction service was brought to the definition of input service with effect from 1.4.2011, the work completed prior to such effective date will not be governed under the amended definition of input service - credit allowed - AT
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Case Laws:

• GST

• 2018 (5) TMI 810
  Applicability of GST - Classification of goods - Natural Easter Dielectric Fluid (Envirotemp FR3) - soyabean oil has to be modified or adapted for use in the transformers - falling under Sr. no. 27 of Schedule I or Serial no, 27 of Schedule II of Notification No. 1/2017 - Rate of GST would be 5% or 12% (i.e. 2.5% / 6% each of CGST and SGST) Held that: - The product before us is described as "Envirotemp FR3". The packing of the product describes "Envirotemp FR3 Fluid" as Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus. The product, as informed, is made up of refined soya beans oil after mixing some additives with the same. Various processes are involved in the manufacture of the impugned product. In step 6, some additives are added. But the applicant has not informed the details of these additives. In step 9, there is addition of some chemicals and again, the applicant has preferred not to divulge the details. To have a correct understanding of the product which would aid in ascertaining the correct classification, the applicant was asked to give a report from a recognized Laboratory - the test report also gives no details of the additives and chemicals which are added while manufacturing the impugned product. The information as per website of applicant is that certain ingredients in the form of additives and chemicals are added to vegetable oils to make them function as a substitute for mineral oil in transformers and other apparatus. The impugned product with the processes undergone to produce the end product of coolant for transformer does not remain vegetable oil per se. In the present case, we have a final product which is a transformer coolant. Though the Test Report shows the percentage of the chemicals to be 1% or the vegetable oils to be at 98.5% would not mean that a new commodity has not been produced. We have seen above an extract from an article that while there are data and international standards galore for mineral oils, there are as yet no IEC standards addressing the composition or testing of the natural ester oils with their different chemical composition. Each manufacturer has his own set of ingredients to obtain a coolant for transformer. That is precisely the reason that the applicant has not preferred to divulge the details, Thus, by addition of the needful additives and chemicals, we have different transformer coolants made from vegetable oils, each with their different chemical composition. The requirement of retaining the original fundamental structure would not be possible by the use of the additives and chemicals. The product is not being sold as a modified vegetable oil but as the product which is resulting from the adaptation of the vegetable oils to obtain a coolant for a transformer - the impugned product would not be covered by the part 1 of Heading 1518. Part 2 of Heading 1518 - Held that: - This part covers inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of the Chapter 15 - The present product is a preparation from vegetable oil. It is derived from soya bean oil. In addition, it is inedible. Therefore, it could very well be covered by the description "inedible preparations of vegetable oils'. There is no specific description which covers a "Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus". We are not in doubts that entry 90 of Schedule I of the Notification No. 1/2017- Central / State Tax (Rate) would not cover the impugned product - It is felt that the description "inedible preparations of vegetable oils' perfectly fits the impugned product and hence, the entry 27 of Schedule II of the N/N. 1/2017- Central / State Tax (Rate) which covers the aforesaid description would be applicable. Ruling:- Envirotemp FR3 falls under Serial no. 27 of Schedule II of Notification No. 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the MGST Act, 2017 and Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 issued under the CGST Act, 2017 is taxable at the rate of 6%.

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• 2018 (5) TMI 809
  Exemption from GST - amount charged as interest - Whether an amount charged as interest on transaction based short term loan given by the Del Credere Agent (DCA) to buyers of material is exempt from tax in terms of the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017? - Held that: - the extension of loan by the applicant (DCA) to the customers is a transaction separate from the transaction of supply of goods by the principal to the customers against consideration wherein the applicant (DCA) also gets the commission from the principal - the interest received by the applicant is consideration towards loan extended to the customers and such interest is not towards the payment of consideration for supply of goods by the principal to the customers, which is a separate transaction. As per Sl. No. 27 of the table to N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services) is exempt from payment of Goods and Services Tax - As in the transaction of extension of loan by the applicant, the consideration is received by way of interest, the same is covered by Sl. No. 27 of the table to N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, and hence exempted from payment of Goods and Services Tax. Ruling:- Service provided by M/s. Shreenath Polyplast Pvt. Ltd. by way of extending short term loans in so far as the consideration is represented by way of interest, is covered under Sl. No. 27 of the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 and N/N. 12/2017-State Tax (Rate) dated 30.06.2017, and hence exempt from payment of Goods and Services Tax.

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• Income Tax

• 2018 (5) TMI 808
  Income accrued in India - technical service charges payable to the foreign company in Germany constitute - Fees for technical services - whether constitutes business profit of the foreign company and that the same was not taxable in India? - PE in India - Indo German DTAA - Held that:- In the facts of the present case in terms of the DTAA, payments made to Lufthansa may not be liable to tax in India in terms of Article III of the DTAA, yet their taxability in terms of Article VIIIA of the DTAA, as there exists a ‘Fee for Technical Services’ clause in the Agreement, was not examined in proper perspective. In the present case, the issue of technical fee has to be examined from the point of view of Article VIIIA introduced by the amending protocol, which to the extent it is relevant In the absence of the agreements and a fuller discussion by the ITAT which seems to have decided only on the applicability of the AAR’s ruling in Tehniskil (Sendirian)[1996 (4) TMI 491 - AUTHORITY FOR ADVANCE RULINGS], this Court is of opinion that the appeals need to be reconsidered and specific findings rendered in the context of Section 9 (1) (vii) and provisions of the DTAA. The appeals are allowed to the extent that the impugned orders are set aside; the issue is restored to the file of the ITAT which shall now proceed to hear the cases and render its findings in the light of the provisions of DTAA and the other provisions of the Act, in accordance with law. ITAT’s final order shall be made within six months. The questions of law are answered accordingly.

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• 2018 (5) TMI 807
  Addition u/s 68 - Held that:- In the present case, the balance-sheets or the accounts of the applicants for shares were not furnished by the assessee. On the contrary, the assessee purported to rely on similarly-worded affidavits apparently produced from the persons whose existence was doubted at every stage by the authorities. It is curious that 21 share applicants would write identical letters to the two proprietorship concerns of the principal person in control of the assessee and his wife on the same date and such persons would require the amounts standing to their credit in the proprietorship concern to be made over as share application money to the assessee company and all such 21 applicants would leave Calcutta within a few years of applying for such shares. The authorities below drew the appropriate conclusions from the facts as evident therefrom.

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• 2018 (5) TMI 806
  Addition u/s 68 - assessee not liable to establish source of the source or the credit worthiness of the source of the source - Held that:- A clear cut finding and accordingly the ground relating to addition of 28 lakhs of the assessee has been dealt with while deciding Revenue's appeal, and deletion of 12 lakhs was confirmed. In respect of unsecured loan taken by the assessee from Shree Shyam Polymers, this depositor has shown meagre income in his return, no interest is provided and appellant has failed to prove identity and creditworthiness of this depositor. This depositor, who is a director in appellant company has shown income of only 1,49,301/- in its return and capital is only 9,27,309/- and in these circumstances creditworthiness of depositor is not proved for giving a credit of 16,39,960/-. The learned Authorities also found that huge cash deposits were seen in bank account of M/s. Shree Shyam Polyers in Citi Bank account No.0-000449-547 before making cheque payments to appellant - assessee which raises serious doubts on the genuineness of these transactions. On due consideration of the aforesaid and findings recorded by the learned Appellate Authority which is based on appreciation of evidence on record and documents filed by the appellant, no case is made out to interfere with the well reasoned order passed by the ITAT. No substantial question of law

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• 2018 (5) TMI 805
  TDS u/s 194A - disallowance of interest u/s 40(a)(ia) for non deduction of tax at source - Held that:- The provisions of section 40(a)(ia) can be invoked to make a disallowance for non deduction of tax at source only while computing income under the head “profits and gains of business or profession”. Since the assessee during the year under consideration had no business income and the interest expenditure in question was claimed by him under the head ‘Income from other sources’, we find merit in the contention of the learned counsel for the assessee that the disallowance made by the A.O. and confirmed by the Ld. CIT(A) on account of interest by invoking section 40(a)(ia) is not sustainable. - Decided in favour of assessee Addition on account of interest on bank accounts - Held that:- This issue is accordingly restored to the file of the A.O. with the direction to verify the claim of the assessee that the amount of interest in question has already been brought to tax in the hands of M/s. Anand Vinayak Coalfield Ltd. and if it is found to be correct, the addition made in the hands of the assessee on account of same income is liable to be deleted as the same would otherwise result in double addition. Ground treated as allowed for statistical purposes Deemed dividend under section 2(22)(e) - Held that:- The nomenclature by the assessee alone cannot determine the exact nature of relevant transactions and it is required to be ascertained from the facts and record.T herefore, set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the A.O. for deciding the same afresh in the light of the decision of Tribunal in the case of Smt. Gayatri Chakraborty (2015 (11) TMI 1009 - ITAT KOLKATA) after verifying the exact nature of transactions from the relevant facats and record. Ground treated as allowed for statistical purposes.

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• 2018 (5) TMI 804
  Scope of section 144 proceedings - Best judgment assessment - undisclosed income including the sum received as fee from students allegedly swindled by its ex-director - Held that:- As quote this tribunal Third Member decision in Pragati Engineering Corporation vs ITO [2012 (12) TMI 1 - ITAT, LUCKNOW ]considering all the relevant law to affirm both the lower authorities’ action proceeding u/s 144 of the Act against the assessee therefore. Learned counsel has also quoted many judicial precedents about ambit and the scope of section 144 proceedings in specific circumstances. The same are found to be not applicable in peculiar facts and circumstances before us since the assessee had failed to submit any response on its part in producing the relevant books of account forming foundation of its documents filed before the Assessing Officer who had no other option but to finalise the relevant assessment as per law. We therefore see no reason to accept assessee’s instant former substantive ground. The same is accordingly rejected. Addition on swindled cash - Held that:- We find that there is no question about the fact that the assessee had not recorded the income received from students despite the same having duly received in the relevant previous year. There is no quarrel therefore so far as the receipt of the sum in question is concerned. Coming to the alleged swindling of its ex-director, we find that the assessee’s claim does not satisfy the basic conditions of a note being put up in the relevant schedule based on a reasonable assumption as per books as held in Chainrup Sampatram vs CIT [1953 (10) TMI 2 - SUPREME Court]. We thus see no reason on facts to interfere with both the lower authorities findings making the impugned addition of 2,45,00,000/- on account of assessee’s failure in proving that Shri Mitra had swindled cash sum of 70 lakhs and the other amount of 1,75,00,000/- (supra). The assessee fails in its latter substantive ground as well.

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• 2018 (5) TMI 803
  Unexplained cash credit - unexplained source of source of loan received - non appearance of creditors on summon orders - Held that:- In ‘Kalyan Memorial’ (2009 (7) TMI 874 - ITAT AGRA) AO held that the creditworthiness of the creditors was not proved. The Third Member Bench of the Tribunal held that when the particulars regarding Income Tax Assessment and bank accounts had been filed, the initial burden on the assessee stood discharged and no material had been brought by the Department to show that what was explained by the assessee was not the correct state of affairs; that if any sum is found credited in the accounts of the creditors, the creditors may be examined to explain the credits; and that so far as regards the source of the deposit in the account of the assessee. In the present case the creditors chose not to appear in response to the summons, but they filed replies, again filing the documents filed by the assessee. Now, for the non-appearance of its creditors, the assessee cannot be faulted. If the AO was not satisfied with the creditors’ replies, it was well within his powers to ensure their presence. This, however, was not done and the matter was decided against the assessee, holding that the assessee could not prove the source of the source of the loans received by it. This is not tenable in law - Decided in favour of assessee.

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• 2018 (5) TMI 802
  Addition u/s 68 - additions on the basis of seized documents - Held that:- AO in his personal assessment proceedings did not make any addition on this account yet the Director of the company had affirmed under oath in writing that such loans were already considered by the Assessing Officer and therefore, the Assessing Officer should have examined the assessment records of Director instead of holding that such verification was not coming out from assessment order. We further find that Assessing Officer in the case of the assessee and in the case of Director were same therefore, expression of ignorance by the Assessing Officer is not valid. No infirmity in the order of CIT(A) with respect go ground No. 1 raised by Revenue and we dismiss the same. Addition u/s 68 - transfer of cash from office to house - Held that:- The assessee during the appellate proceedings and before the Assessing Officer had explained that the cash belonging to the group was retained by the Director Shri W. H. Siddiqui who used to keep the amount in safe custody at his home. The debits and credits appearing in the ledger account are nothing but the transfer of cash from office to house and vice versa. Had AO considered debits appearing in the ledger account before the dates of credits, no addition would have been called for. We further find that assessee had explained and reconciled each and every entry in excess of 50,000/- recorded in the impounded documents. The details of explanation made by the assessee to Assessing Officer is placed at paper book pages 15 to 18 but Assessing Officer instead of accepting the reconciliation, chose to make the addition and which learned CIT(A) has rightly deleted. Addition on account of interest paid in cash - Held that:- This amount of interest related to interest on amount of 3,34,000/- which the Director of the assessee had owned up and for which we have already decided in favour of assessee. The Director of the company in the same affidavit had also owned up the payment of interest on such loans. The learned CIT(A) has also noted that Shri W. H. Siddique has filed affidavit accepting the interest on loan which was paid by him in his personal capacity from whom the unsecured loan was obtained. Violation of provisions of section 40A(3) - Held that:- The appellant company as withdrawals have been made from the account of a group concern. We further find that a major portion of disallowance u/s 40A(3) relates to details in the ledger account marked as A-52. These debits have already been held to be transfer of cash from office to house of Director. The Assessing Officer made the additions on account of debits in the ledger account u/s 40A(3) of the Act whereas the credits in the ledger account have been added as additions u/s 68. CIT(A) has rightly appreciated the facts and has rightly allowed the relief. In view of the above, we do not find any infirmity in the order of learned CIT(A) therefore, ground is No. 4 is dismissed. Addition u/s 69C - Held that:- As regards the expenses recorded in the books of Drosia Interiors, the learned CIT(A) has made a categorical finding that such expenses have been booked in the books of that company therefore, we do not find any infirmity in the order of learned CIT(A) to that extent. However, the further relief given by CIT(A) to the extent of 16,54,555/- in the form of project expenses, needs verification at the end of the Assessing Officer who would check as to whether project expenses debited under the above said head matches with the entries in the impounded document. For the limited purpose of examination by AO, we direct Assessing Officer to verify the above expenses from the impounded documents and decide accordingly. Estimation of income from projects - Assessing Officer had made this addition on the basis of application of 5% profit on total cost of construction - Held that:- CIT(A) has deleted this addition by holding that the method of valuation of work-in-progress was consistent and therefore, he has rightly held that there was no justification in estimating the profit @5% on the work-in-progress. The assessee had just capitalized the work-in-progress and had not earned any income from it as the assessee had not made any sales which fact is verifiable from copy of profit loss. In view of the above, this ground is also dismissed.

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• 2018 (5) TMI 801
  Disallowance u/s 14A - as per assessee he has not earned any dividend income and has not claimed any exemption - Held that:- Hon'ble Madras High Court in the case of Redington (India) Ltd., Vs. Addl. CIT [2017 (1) TMI 318 - MADRAS HIGH COURT] have held that the disallowance u/s. 14A cannot be made where there is no exempt income during the relevant assessment year. Therefore, we set aside the order of Ld.CIT(A) and direct the AO to delete the addition made by him. Ground is allowed. Weighted deduction of expenditure u/s. 35(2AB) - Held that:- CIT(A) directed the entire amount to be allowed without noticing the said difference. Since there is a mistake in the direction of CIT(A), we modify the same and direct the AO to allow the amount to the extent of 100% u/s. 35(1) as directed in AY. 2008-09 and balance of the claim is to be disallowed. AO can modify the order accordingly. No reason to interfere with the direction to allow the amount which was not certified by the DSIR to be considered for allowance u/s. 35(1). With reference to weighted deduction, we have already modified the direction of the CIT(A) in assessee’s appeal. In view of that, ground of Revenue is partially allowed. In nut shell, assessee is entitled to claim uncertified amount at 100% u/s 35(1) and the excess claim of weighted deduction to that extent is to be disallowed. AO is ordered accordingly. Disallowance of 25% amounting on WDV - Held that:- As fairly admitted that the order of CIT(A) is in compliance to the order of the ITAT in earlier year and the matter is pending before the Hon'ble High Court as far as this claim is concerned. Since the order is in compliance to the order of ITAT in earlier year, we do not find any reason to interfere with the direction of CIT(A). In view of that Ground No. 4 is rejected. Claim u/s. 10B - Held that:- The claim of 10B will be considered allowed and the demand if any cannot be claimed from assessee. Since the order of CIT(A) is in tune with the findings of the ITAT in earlier year, there is no need to interfere with the said order. Ground of Revenue on this issue stands rejected.

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• 2018 (5) TMI 800
  Foreign exchange fluctuation gain disallowance - Held that:- The impugned foreign exchange fluctuation gain had arisen from difference in exchange rate at the time of booking of the export followed by its realisation. We note that in case Principal CIT vs Asahi Songwon Colors Limited [2017 (12) TMI 814 - GUJARAT HIGH COURT] has deleted a similar disallowance by terming corresponding gain to be business income only by following its earlier order in CIT vs Priyanka Gems [2014 (3) TMI 938 - GUJARAT HIGH COURT]. There is no legal or factual exception pointed during the course of hearing at the Revenue’s behest. We therefore see no merit in the impugned disallowance. The same stands deleted.- Decided in favour of assessee. Disallowing 10B deduction on account of profit on sale of import licence - Held that:- We notice herein as well that this tribunal coordinate bench in DCIT vs Narendra Tea company (P) Ltd [2017 (5) TMI 1215 - ITAT KOLKATA] has adjudicated the very issue against the Revenue stating as per the computation made by the Assessing Officer himself, there is no dispute that export incentive incomes have been treated by the Assessing Officer as business income. - the undertaking is eligible for deduction on export incentive received by it in terms of provisions of Section 10B(1) read with Section 10B(4) of the Act Sub-section (4) of section 10A/10B of the Act is a complete code providing mechanism for computing the “profit of the business” eligible for deduction u/s. 10B - Decided in favour of assessee.

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• 2018 (5) TMI 799
  Disallowance of interest expenditure - assessee has given interest free funds and advances and share capital to various sister concerns - interest bearing funds have been diverted by the assessee towards non-interest-bearing loans and advances - Advances not utilized for business purposes - direct nexus of the borrowing made by the appellant to the interest free advances given to some of the parties - Held that:- Advances even if it is presumed that they are not given by the assessee for the business purposes they do not exceed the funds available with the assessee without interest. Investment made by the assessee in Gaursons Realtech Pvt Ltd of 53.22 crores and advance of 79.65 crores totaling to 132.87 crores is given by the assessee for the purpose of the business of the assessee and no disallowance of interest on these advances can be made. The advance of 85944137/- is interest beaing advance on which interest has been charged and therefore, it cannot be included in the interest free advances given by the assessee. A sum of 52.36 crores given to holding company of the assessee M/s. Gausons India Ltd for acquiring plot of land from Ghaziabad Development Authority cannot also be included for the purpose of interest disallowance for the reasons given by us above. Even otherwise the above amount of advance of 52.36 crores coupled with other advances of 8.5 crores are far less than the interest free funds available with the assessee. Thus no disallowance of interest could be made - Decided in favour of assessee

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• 2018 (5) TMI 798
  Unaccounted stock - Gross turnover computation - rejection of books results - N.P. determination - Held that:- As in the case of gold bar weighing 1 kg, which was not found during the survey operation, which has been also made a basis for estimating the grows turnover. There is no clear cut finding that it was not a part of the valuation made by the valuer at the time of survey. The other issue considered for rejection of books of account and estimating the gross turnover and gross profit is sale of gold bar of 507.610 gms. The payment claimed to have been made by cheque but the sale was not entered into the books of account. Considering all we are of the view that the assessee has already disclosed substantial unaccounted stock in its return of income which takes care of the various discrepancies noted in the books of account. Considering the totality of facts and circumstances, we are of the view that at least the addition to the tune of 10.00 lacs need to be sustained and gross turnover is estimated at 10,42,62,598/- This addition is sustained as addition to net profit and after considering the fact that all expenses related to such income have been debited in P&L account and allowed. Accordingly, the ground of assessee’s appeal is partly allowed and ground of revenue’s appeal is dismissed. Addition on account of value of excess stock - Held that:- CIT(A) has granted relief by passing a speaking order. The stock was valued by registered valuer. AO has not accepted the same without any basis. The assessee has separately shown labour income(Gadhai/Majduri) from both the premises. The difference of gadhai/majduri have been debited in P&L account. Thus, no separate addition is required to be made for such income. Similarly the A.O. has invoked the concept of ‘hallmark jewellery’ without any basis. There is no contrary material on record against the order of the ld. CIT(A), therefore, the same is hereby upheld.

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• 2018 (5) TMI 797
  TPA - advancing interest free loans - CUP method adoption to make addition - Held that:- Advancing interest free loans must not necessarily be deemed to be an interest earning activity and an activity to capitalise the opportunity cost for investing in new territories. Since the funds were raised for the purpose of investment in subsidiaries and on the fact that these funds were interest free and ultimately, shares were allotted, we are of the opinion that no adjustment need be made, on the CUP method adopted by the AO/TPO, even if the transaction is considered as one that of international transaction. For all the reasons stated above, we are of the opinion that no adjustment is required in the impugned year. The orders of the DRP are accordingly modified and adjustment made by the TPO stands deleted. Disallowance u/s.10B - Assessee filed return on 31-10- 2008 whereas the due date for filing return was 30-09-2008 - return was uploaded belatedly - The reason given is that the computer got infected and it took some time to set it right so that assessee could upload the entire data - Held that:- The reasoning for delay given is supported by a certificate from a computer specialist, who attended to the problem. Since the audit was completed on 02-09-2008 which was not doubted by the Revenue, there is no reason why assessee should postpone the uploading of the return, when all the information was ready. Therefore, the explanation given that the computers got infected is a reasonable explanation given in the circumstances. We are of the opinion that the delay in filing the return is not an intentional delay but beyond the reasonable control of assessee. Also assessee was also claiming deduction in earlier years and following the principles laid down in the case of Visu International Limited Vs. DCIT [2011 (7) TMI 1161 - ITAT HYDERABAD], the deduction u/s. 10B cannot be denied in the subsequent year without a valid reason. - Decided in favour of assessee. Disallowance u/s 36(1)((v)/(va) - contribution to PF - Held that:- There is no distinction between employee’s and employer’s contribution to PF/ESI, when the total contribution is deposited on or before the due date of furnishing of return of income u/s 139(1) of the IT Act then, no disallowance can be made towards employee’s contribution alone. Accordingly, we agree with assessee’s contentions and therefore set aside the order of AO and DRP on the issue and allow the ground. AO is directed to allow the amounts. Even otherwise, if the amount is not allowed as deduction, the same will be added to the income of the unit thereby deduction u/s. 10B may get allowed, if the disallowed amounts pertain to the unit eligible for deduction. Looking at either way, assessee will be entitled for the deduction. Accordingly, grounds are allowed. Disallowance of 100% depreciation on Pollution control equipment - Held that:- What sort of evidence is required to establish that these are used in controlling the pollution is not specified by the DRP. Assessee categorized certain equipment as pollution control equipment, the nature of the equipment is to be examined in the context of the business operations of assessee. Since this aspect has not correctly appreciated by the AO or DRP, we are of the opinion that this issue requires re-examination by the AO. In case of any disallowance of depreciation, AO is also directed to examine whether such equipment is used and claimed in the unit claiming deduction u/s. 10B and if so, any disallowance thereon would increase the profits of the unit so that assessee may be entitled to higher deduction u/s. 10B. Disallowance of excess depreciation on assets purchased - Held that:- Even though the DRP has mentioned that assessee-company had shares in the said unit, it did not specify whether the shareholding was before the purchase of machinery or after the purchase of machinery, which makes a lot of difference. At the time of transaction, whether they are sister concerns or not is not established on record. Moreover, assessee is objecting to the contention that these are sister concerns. In view of that, we are of the opinion that this issue requires re-examination by the AO. In case of any disallowance on this issue, AO is also directed to examine whether the machines are utilised for the purpose of business of the unit eligible for deduction u/s. 10B and if so, the profits of that unit would increase correspondingly. The deduction u/s. 10B also may have to vary accordingly. With these observations/directions, the grounds on this issue are set aside to the file of AO for fresh examination. Disallowance of depreciation on computers - Held that:- Since the evidence was not furnished before the AO/DRP to establish that assessee has purchased computes and software, it is necessary to examine the transaction of purchase and sale in the hands of those companies, stated to be group concerns by the AO and clear finding should be given whether these transactions of sale of computer software are recorded by those companies and if so, the nature of purchase of computers and software by that company. Therefore, we are of the opinion that this issue also required to be examined by the AO afresh.

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• 2018 (5) TMI 796
  Deduction u/s 80IA - on steam unit of CCGPS Plant by considering it as separate industrial undertaking or enterprise - Held that:- The course adopted by the Assessing Officer for shifting a portion of expenses incurred by gas unit to the steam unit was not permissible in law and, therefore, cannot be approved. Consequently, the order of the CIT(A) confirming the above action of the Assessing Officer is set aside and the Assessing Officer is directed to allow deductions under sections 80-I and 80-IA without allocating any expenditure of gas unit to steam unit. Revenue entitled to ask for revival of the appeal - Approval from Committee on Disputes[COD] - Addition on account of incentives paid to various State Electricity Boards (SEBs) under the terms of one time settlement scheme on account of income tax recoverable from SEBs and provision of deferred tax - Held that:- In the present case, it is not in dispute that the COD vide minutes dated 21.12.2009 has not permitted the CBDT to pursue the issues raised in Ground Nos. 2, 4 & 5, of the appeal before the ITAT. It is also clear from the office memorandum dated 04.02.2013 that no public sector undertakings may reopen those cases in which clear decisions have been issued by the COD prior to 17.02.2011. Therefore, the department ought not to have filed the appeal on these issues. Dismiss these grounds of the appeal of the department with the rider that the revenue will be entitled to ask for revival of the appeal on the happening of the events as directed by the Hon’ble Jurisdictional High Court in CIT-V Vs Rural Electrification Corp. Ltd. [2014 (1) TMI 1238 - DELHI HIGH COURT] - Decided against revenue

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• 2018 (5) TMI 795
  Deduction allowable u/s 57 (iii) - expenses allowed against income from capital gain in the present year or later year - deduction not allowable against income from other sources - Held that:- It is seen that there is no claim regarding any expenses specified in clause (i) of section 57 i.e. commission or remuneration to banker or any other person for the purpose of realising dividend or interest income because the assessee has claimed deduction on account of PMS charges, Salaries, Professional charges, vehicle maintenance, travel, computer maintenance, printing and stationery, telephone charges and bank charges. Hence no deduction is allowable in the present case under clause (i) of section 57. The nature of expenses in dispute in that case are noted by the Tribunal in the form of a table and from the same, it is seen that the expenses claimed in that case were regarding the personal expenses of Directors, travelling expenses of others, Motor car expenses, security charges, printing and stationery, staff welfare, flowers and plants, AGM expenses, Board meeting expenses, miscellaneous expenses, rent paid, subscription to club, Interest on purchase of car, legal expenses etc. Hence it is seen that as per the nature of expenses involved in that case, the expenses were in relation to the fulfilling the requirements of company law to have directors and to have AGM, Board meeting and to maintain the office etc. which are necessary for fulfilling the legal requirements of a company under the Companies Act. Hence we hold that this Tribunal order is also not applicable in the present case because the assessee in the present case is not a company and therefore, there is no such legal compulsion to incur the expenses which are claimed in the present case. Hence we find that the claim of assessee for allowing deduction of expenses against income from other sources is not allowable because the assessee has not established that the expenses are allowable u/s. 57(iii) of IT Act. - Decided against assessee.

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• 2018 (5) TMI 794
  Revision u/s 263 - disallowance u/ 14A - apportionment of expenditure in relation to the income not forming part of the total income - Held that:- It was immaterial if dividend income was actually earned or not, which, rather, may be a consideration where the shares, as in the present case, are held to retain control over the investee company, i.e., for strategic reasons, as was the case with regard to the investment by Maxopp Investment Ltd. – one of the assessees in that case. [2018 (3) TMI 805 - SUPREME COURT OF INDIA] The related expenditure has to be reckoned on an expansive basis, i.e., as attributable thereto. The constitutionality of r.8D, providing for rules of apportionment of both direct and indirect expenditure, stands already upheld by the Hon’ble High Court in Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Earlier, in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (2017 (5) TMI 403 - SUPREME COURT OF INDIA), with reference to the language of section 14A, the title of which is itself clarificatory, the Apex Court clarified that income must not be includible in the total income, so that once this condition is satisfied, the expenditure incurred in earning the same cannot be allowed to be deducted. The AO in the present case has clearly failed to apply the law in the matter, which gets reiterated time and again by the Hon'ble Apex Court. We find no merit in the assessee’s case. We, accordingly, uphold the impugned order, both on the aspect of lack of inquiry by the assessing authority, as well as his non-observance of the Board Circular 5/2014, which we have found to be in consonance with the law as explained by the Apex Court. The impugned order being after the date of amendment (by way of Explanation 2) to section 263, i.e., 01.06.2015, the same is an equally valid ground for the exercise of revisionary power u/s. 263. It is this power, i.e., to deem an order as erroneous in-so-for as it is prejudicial to the interests of the Revenue, that stands conferred w.e.f. 01.06.2015. That is, the law, w.e.f. 01.06.2015, deems an order as so, where any of the circumstances specified is, in the opinion of the competent authority, satisfied. It has nothing to do with the date of the passing of the order deemed erroneous, or the year to which it pertains. Being a part of the procedural law, the provision shall have effect from 01/06/2015 (also refer CWT v. Sharvan Kumar Swarup & Sons [1994] 1994 (9) TMI 2 - SUPREME Court). - Decided against assessee.

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• Customs

• 2018 (5) TMI 793
  Misdeclaration of imported goods - goods which were fully fitted air-conditioner, but declared as part of air-conditioner - whether the decision of the sanctioning authority can be interfered by some external agency and owing to the pressure of the external agency, the sanction order without any new material could be issued? - Held that: - power of review is possible only when there is a provision explicitly under law. As far as the order according sanction is concerned, once it is rejected, it could not be reviewed without any fresh material. The sequence of communication which has been referred would clearly indicate that what was expressed by the Commissioner of Customs vide his letter dated 13.08.2013 is not an order but only an opinion. Nowhere it is stated that he had applied his mind and arrived at a conclusive decision for not according sanction or refusal to accord sanction. Whereas in the subsequent communication dated 30.08.2013, this Court could see that the competent authority has stated after applying his mind, consider that prima facie case has been made out against the petitioner to accord sanction to prosecute. This expression is conspicuously absent in the earlier communication dated 13.08.2013. This Court hold that on the factual matrix, there is no two sanction orders passed by the same authority, without any material. The earlier communication is only a letter of opinion seeking further course of action has been expressed. Whereas, the second communication is the order issued after complete exercise of application of mind. Therefore, this Court find no merits in the writ petition - petition dismissed - decided against petitioner.

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• 2018 (5) TMI 792
  Provisional release of goods - Section 110A of the Customs Act - Held that: - Upon compliance of the twin conditions, in accordance with the stipulations of the respondent Department, the goods shall be released provisionally within a period of one week from the date, on which, the petitioner complies with the above twin conditions - Since the goods have been detained and since the DRI has taken up the case for investigation, it goes without saying that the petitioner is entitled to a certificate for waiver of demurrage and the detention charges from the date of detention till the date of release - petition disposed off.

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• 2018 (5) TMI 791
  Smuggling - Absolute confiscation of red sanders - illegal export - confiscation of pin insulators used to conceal the red sander wood for illegal export, with imposition of redemption fine - confiscation of Indian currency being the sale proceeds of the contraband goods - imposition of penalties. Held that: - The DRI has carried out elaborate investigation into the working of the entire syndicate comprising of Sh. A. T. Maideen, Sh. C. Sekhar and Sh. N. C. Chalathambi who were engaged in the illegal export of red sanders wood. The DRI officers have recorded the statement of Sh. A. T. Maideen on several consecutive dates i.e. 27th, 28th and 30th November, 2011. From the record we find that he has retracted only the statement recorded on 27.11.2011 but not the other statements - It is settled position of law that the retracted statement does not lose its relevance as evidence in departmental proceedings unless sufficient materials are available to take on record, that such statement has been forcibly taken from the accused. In his statements Sh. Maideen has given the detailed account of the modus operandi orchestrated by him in league with Sh. Sekhar, Chalathambi and others. According to the modus-operandi admitted, red sanders was purchased by Sh. A. T. Maideen from Andhra Pradesh and supplied to Sh. N. C. Chalathambi and Sh. Sekhar and stored at their godown at Delhi. From such godown the contraband is illegally exported through various ports - It is further seen that the syndicate has been carrying out such illegal export repeatedly and Sh. A. T. Maideen has also been booked in earlier smuggling cases and imprisoned under COFEPOSA repeatedly - The Indian currency of 8.5 lakhs has been admitted to be the sale proceeds and illegal exported goods. The impugned orders are upheld - appeal dismissed - decided against appellant.

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• Service Tax

• 2018 (5) TMI 788
  Validity of Show Cause Notice demanding service tax - Maintainability of petition - Jurisdiction - Mega Exemption Notification dated 20.06.2012 - renting of immovable property service - Held that: - what is being sought to be taxed is the renting of immovable property and not for excavation work. Therefore, if any remittance being made by the Contractor who has excavated the earth for the purpose of renting of immovable property, will not absolve the petitioner from the proposal made in the SCN. The jurisdictional issue, which is pointed out by the learned Additional Advocate General is not purely a jurisdictional issue as it primarily involves adjudication of facts. The writ petition is not maintainable and it is premature, for the reason that the impugned order in the writ petition is only a SCN and not an order for the petitioner to be aggrieved - petition dismissed being not maintainable.

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• 2018 (5) TMI 787
  Liability of service tax - Cleaning Services - Management, Maintenance, Repair Services - Cargo Handling Services etc. - Held that: - service tax levy of cleaning service cannot be levied on cleaning of railway wagons and coaches, as has been held by the Tribunal in the case of M/s R. K. Refreshment and Enterprises Pvt. Ltd. and Another - However, in respect of railway buildings, premises, the same will be covered under the category of cleaning of commercial or industrial buildings and premises thereof and hence liable to payment of service tax under the Cleaning Service - Since the adjudicating authority has clubbed both the categories and raised demand of service tax amounting 72,51,533/- under Cleaning Service, we direct the original authority to bifurcate the demand and confirm the same only to the extent of the cleaning activity of railway premises. Cleaning and house-keeping of railway running rooms, washing and cleaning of bed sheets, pillow covers etc. - adjudicating authority has demanded the service tax on these services under the category of management, maintenance or repair service - Held that: - it cannot be readily observed whether the services falling under this category were proposed for classification under management or maintenance service. Hence, we direct the adjudicating authority to uphold the demand of service tax under this category if the same was proposed for classification, in the show cause notice under the category of cleaning service. Water tightening of wagons in monsoon season, maintenance of passenger amenities, running maintenance, repair, replacement of defective carriage watering hydrants and provisioning maintenance of water etc. - Held that: - We uphold the service tax demand in respect of the three categories under the maintenance, management or repair service - since this involves interpretation and classification of the service into different categories, penalties set aside. Supply, maintenance and supervision of mechanised machineries to be used for cleaning of various railway stations - Held that: - the service is to be considered as supply of tangible goods service only in those cases which do not fall within the ambit of VAT. The adjudicating authority is directed to verify the claim of the appellant that VAT applicable to the transaction have been paid. Appeal allowed by way of remand.

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• 2018 (5) TMI 786
  Penalties u/s 76 and 78 - manpower recruitment agencies - period 16.6.2005 to 9.9.2005 - invocation of section 80 - Held that: - the Tribunal in the case of M/s. Jashbhai M. Parmar Versus Commissioner of Central Excise Vadodara [2013 (4) TMI 627 - CESTAT AHMEDABAD], has considered the fact that the definition of manpower recruitment services had undergone change twice, after its introduction in the statute on 16.6.2005 and by appreciating that the entire tax was deposited along with interest, the Tribunal set aside the penalty imposed upon the appellant. There is no positive evidence brought on record by the Revenue showing any mala fide on the part of the appellant - penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 785
  Recovery of interest - Section 73 of Finance Act - time limitation - Held that: - in absence of invocation of the proviso to Section 73 of the Act, the Service Tax or the interest demand should be confined only to the normal period of one year - In this case, since the SCN was issued beyond one year from the date of payment of the short fall service tax amount, the same is barred by limitation of time. The interest demand cannot sustain on the ground of limitation - Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 784
  Refund of service tax paid to the builder - refund claimed by the recipient of services (buyer of flat) - refund application filed was rejected on the ground that the respondent was not the petitioner before the Hon’ble Delhi High Court [2016 (6) TMI 192 - DELHI HIGH COURT] - Held that: - composite contract in relation to construction of complex, should not be subjected to levy of service tax on the service defined under Section 65 (105) (zzzh) of the Act. In other words, who so ever provides such service, which is composite in nature, shall not be liable to pay service tax Claiming of the benefit of the judgment,[2016 (6) TMI 192 - DELHI HIGH COURT], cannot be denied to the appellant as the same was rendered “in rem” and not “in personem”. - Refund cannot be denied - decided against Revenue.

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• 2018 (5) TMI 783
  Refund of service tax paid to the builder - refund claimed by the recipient of services (buyer of flat) - refund application filed was rejected on the ground that the respondent was not the petitioner before the Hon’ble Delhi High Court [2016 (6) TMI 192 - DELHI HIGH COURT] - Held that: - composite contract in relation to construction of complex, should not be subjected to levy of service tax on the service defined under Section 65 (105) (zzzh) of the Act. In other words, who so ever provides such service, which is composite in nature, shall not be liable to pay service tax Claiming of the benefit of the judgment,[2016 (6) TMI 192 - DELHI HIGH COURT], cannot be denied to the appellant as the same was rendered “in rem” and not “in personem”. - Refund cannot be denied - decided against Revenue.

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• 2018 (5) TMI 782
  Short payment of service tax - demand alongwith interest - It was observed by the Officers of Service Tax Department that as the head office (Unit-I) had no balance in its Cenvat account, it cannot pay Service Tax from the said account and is required to pay the same in cash - Held that: - proceedings initiated against the appellant for recovery of the wrongly availed /utilized cenvat credit by the authorities below is proper and justified. Since the appellant had deposited such amount subsequently, it is liable to pay interest for the days of delay in payment / reversal of the cenvat amount - Time limitation - Held that: - the appellant had never voluntarily disclosed its modus operandi adopted to the Department. Since the Department gathered the information upon investigation into the matter, the show cause proceedings initiated by the Department will not be hit by the bar of limitation. Penalties u/s 76 and 78 - Held that: - Since penalties cannot be imposed simultaneously under the said statutory provisions, the penalty imposed under Section 76 has to be set aside - Since the entire disputed amount of Cenvat Credit was reversed before issuance of show cause notice and the appellant had reflected the transactions in the ST-3 returns, as per the amended provisions of Section 78 of the Act, the penalty should be reduced to 50% of the quantum of penalty confirmed by the authorities below. Appeal allowed in part.

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• 2018 (5) TMI 781
  Penalty u/s 78 - case of appellant is that since on the date of issuance of the SCN, there was no outstanding liability against the appellant towards the Service Tax and interest demand - Held that: - the matter has not been properly adjudicated inasmuch as, the submissions of the appellant has not at all been considered. Thus, the matter should go back to the original authority for recording of specific findings with regard to eligibility of Cenvat Credit to the appellant. The adjudicating authority should properly analyze the provisions of Section 78 for arriving at a conclusion whether, in the eventuality, when the entire adjudged amount had been deposited before the issuance of show cause notice, can penalty be imposed under Section 78 of the Act. He should also discuss imposition of penalty under Section 77 of the Act. The matter is remanded to the original authority for deciding the issue afresh - appeal allowed by way of remand.

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• Central Excise

• 2018 (5) TMI 780
  Extended period of limitation - suppression of facts - section 11A(1) of the Central Excise Act, 1944 - Whether the CESTAT erred in confirming the duty invoking the extended period of limitation when the finding on suppression by the CESTAT falls way short of the requirements of proviso to section 11A(1) of the Central Excise Act, 1944? Held that: - There is a reference to the declarations made by the appellants for the years 1987-­88 to 1994­-95. In reply, a legislative history of classification of articles of plastic has been set out. It was pointed out in the reply that majority of the demand has been raised in respect of goods classified as battery parts. It was contended in the reply that so called battery parts are nothing but filters. It was contended that the same are made wholly out of plastic by using plastic granules. The appellants never declared manufacture or clearance of Plastic Spill, Proof Vent Plugs, Microporous Vent Plugs, Aqua Trap Vent Plugs etc. in their declarations. As regards clubbing, the Appellate Tribunal held that the appellants in these appeals are two different manufactures, but finished goods are produced using the machinery and product facilities in the unit of the appellant in appeal no. 196 of 2005. We must note here that even in the reply of the appellants in both the appeals to the show cause notice, this factual allegation is not disputed. Therefore, it was rightly held that the clearances are required to be aggregated in terms of the Notification No.1/93­CE. - on the aspect of clubbing, it is not possible to find fault with the finding. There is a specific allegation in the show cause notice that the goods actually manufactured were not declared which amounts to willful suppression of material facts with the intention of evading the duty on Battery parts. The show cause notice is based on what was revealed in the visit of the Preventive Section to the factories and investigation carried out thereafter. The Appellate Tribunal held that it was not merely a question of wrong classification, but it was a case of suppression. Appeal dismissed - decided against appellant.

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• 2018 (5) TMI 779
  SSI exemption - clubbing of clearances - independent entities or not? - Held that: - even though the owners are related but there is no mutuality of interest in the working of three firms - clubbing of clearances not sustainable. Benefit of N/N. 75/87 - Suppression of facts - Time limitation - Held that: - the appellants had no incentive to evade the duty since whatever duty paid by the appellant is available as Modvat Credit to the buyers of the appellants. Further there was no suppression on the part of the appellants since they have filed declarations at the beginning of their operations with the department. Therefore, there was no suppression with intention to evade the duty, hence the demand is barred by limitation. Appeal allowed on merits as well as on limitation.

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• 2018 (5) TMI 778
  CENVAT credit - common input service credit was used for dutiable goods as well as the exempted service of trading - appellant did not file declaration under Rule 6(3A) - Rule 6(3)(i) of CCR - Held that: - It is seen that Rule 6(3)(i) has been amended w.e.f. 01.06.2015 providing for reversal of 7% of the value of exempted service. The period involved in the present case is from July, 2011 to March, 2016. The requirement of reversal of an amount under Rule 6(3)(i) including the value of exempted service i.e. trading will arise only after the date of such amendment. For the period prior to 01.04.2015, there is no requirement of reversal of credit @ 7% of exempted service. This position has been clarified by the CBEC vide their Circular dated 07.12.2015. For the period prior to 01.04.2015 there is no requirement under Rule 6(3)(i) for any reversal of credit of input services availed for clearance of input as such - It has been submitted that on the value of inputs cleared as such, the reversal on the value of goods as required under 3(5) has already been made. This aspect needs to be verified inasmuch as no details have been given on such reversed. In respect of reversal of credit of input services, for the period subsequent to 01.04.2015, it is the submission of the appellant that proportionate credit reversal for input services has already been made even though the requirement of exercising an option as required under Rule 6(3A) has not been done by the appellant. The failure to exercise option is only a procedural requirement and may be overlooked since proportionate reversal of input services has already been made - demand set aside. Reversal of CENVAT credit - clearance of waste and scrap in the form of floor sweeping as well as discarded packing material - invocation of Rule 6(3) of CCR - Held that: - the scrap of packing material cannot be said to have arisen during the course of manufacture of final products. Consequently, the mischief of Rule 6(3) will not be attracted - demand set aside. Appeal allowed in part - part matter on remand.

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• 2018 (5) TMI 777
  CENVAT credit - input service distribution - Department was of the view that the appellant has not taken input service distributor registration and that appellant ought to have distributed the credit proportionate to the turn-over of the other units - Held that: - The said issue is decided in the case of Dashion Ltd. [2016 (2) TMI 183 - GUJARAT HIGH COURT], where it was held that there is nothing in the Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. The decision in Dashion Ltd. has been accepted by the Department vide its Circular dated 16.02.2018 referred by the Ld. Counsel for the appellants. In such an event, the demand cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 776
  Clandestine removal - sponge iron - Revenue entertained a view that the sponge iron received by the present appellant, in a clandestine manner, was further used by them in the manufacture of ingots and TMT bars, which were cleared by them without payment of duty - Held that: - apart from the ledger of M/s Shilpy Steels, Revenue has not made further investigations. No statement of the Production Manager or any other employee of the appellant stands recorded by the Revenue so as to indicate manufacture of the final product. Further, there is no identification of the buyers to whom the said alleged clearances were made. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 775
  Clandestine removal - demand based upon the evidence collected from one M/s. Kamdhenu Ispat Ltd. - Held that: - Inasmuch as, the other appeals of the Revenue, in identical circumstances and linked to the said evidence collected from M/s. Kamdhenu Ispat Ltd. stand remanded, by following the same, I remand the present appeal also to the original adjudicating authority - appeal allowed by way of remand.

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• 2018 (5) TMI 774
  CENVAT credit - denial on the sole ground that during the relevant period, their head office was not registered as ISD - Held that: - Hon’ble Gujarat High Court in the case of CCE vs. Dashion Ltd. [2016 (2) TMI 183 - GUJARAT HIGH COURT] has held that there is nothing in the Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted - credit cannot be denied - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 773
  CENVAT credit - rent-a-cab services - extended period of limitation - Held that: - in the case of Marvel Vinyls Ltd. Vs. CCE, Indore [2016 (11) TMI 1126 - CESTAT NEW DELHI], it was held that the exclusion clause is in respect of input services of renting of the motor vehicle which is not a capital good and does not include the renting of cab services entirely. Inasmuch as for recipient of the rent-a-cab service, the question of capital goods will not arise, the exclusion will not apply. On going through the Tribunal’s decision in the case of Marvel Vinyls Ltd., I note that the same was also in the context of recipient of the services. As such, the said decision is at all four corners of the facts of the present case and is fully applicable. Appeal dismissed - decided against Revenue.

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• 2018 (5) TMI 772
  Penalty u/r 26 of CER - receipt of invoices without receipt of goods - Held that: - penalty u/r 26 can be imposed in two situations. Under subrule (1), the penalty is imposable on the person who deals with the goods which is liable for confiscation - In the present case, it is the case of the department that the appellant has not received the input. Therefore, there is no question of dealing with the goods - penalty under sub-rule (1) of Rule 26 is not applicable. Penalty under sub-rule (2) is imposable only on the person who issues the invoice. The appellant does not fall under the category of the person mentioned in sub-rule (2). The invoice was issued by M/s. Ambe Vaishno Steels Pvt. Ltd. Penalty under Rule 26 can be imposed only on the natural individual person and not on the artificial person or company because the goods is handled by natural living person and not by an artificial entity. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 771
  CENVAT credit - input services used in wind mill for generation of electricity - Held that: - the Tribunal in the case of the appellants, M/s. Mangalam Cement Ltd. Versus C.C.E., Jaipur-I [2017 (8) TMI 1096 - CESTAT NEW DELHI] has held that Service Tax paid on input services, used in the wind mill for generation of electricity, will be available as Cenvat credit - Revenue has assailed the impugned order on the ground that this decision has been appealed against before the Hon’ble Rajasthan High Court and thus, the said order cannot be considered for allowing the Cenvat benefit to the present respondent. Since, the decision passed by the Tribunal has not been stayed or over-ruled by the higher judicial forum, the views expressed by the Tribunal regarding entitlement of Cenvat credit cannot be disturbed at this juncture, for deciding the issue differently. Appeal dismissed - decided against Revenue.

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• 2018 (5) TMI 770
  CENVAT credit - appellant is manufacturing both dutiable, as well as, exempted excisable goods - Rule 6 of CCR - Held that: - It is an admitted fact on record that the appellant had exported the business auxiliary service and availed the service tax exemptions for such exportation - Sub-rule (7) of Rule 6 of the Cenvat Credit Rules was inserted with effect from 01.07.2012, providing for non-inclusion of the value of service, which was exported. Since the authorities below have not specifically discussed the applicability of sub-rule (7) of Rule 6 of the Cenvat Rules to the facts and the circumstances of the present case, the matter should go back to the original authority for a proper fact finding - appeal allowed by way of remand.

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• 2018 (5) TMI 769
  Refund of service tax paid - rejection on the ground of nexus - N/N. 17/09-ST dated 07.07.2009 - Held that: - N/N. 17/09-ST dated 07.07.2009 provides that the claim for refund shall be filed within one year from the date of exportation of the goods - In this case, it is an admitted fact on record that the refund applications were filed by the appellant beyond the stipulated period of one year i.e. date of export of the goods - refund rightly rejected - appeal dismissed - decided against appellant.

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• 2018 (5) TMI 768
  Clandestine removal - validity of statement of Shri Manoj Sharma - summon issued u/s 14 of the Central Excise Act, 1944 - Held that: - On perusal of the statement of Shri Manoj Sharma, it reveals that he had never retracted such statement and did not contest the issue, stating that such statement was recorded under any duress or pressure - Since the statement is a voluntary one, furnished by the responsible authorised officer of the assessee-appellant, the charges levelled against the appellant in the original as well as the impugned order can be sustained - appeal dismissed - decided against appellant.

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• 2018 (5) TMI 767
  CENVAT credit - input services - GTA service - outdoor catering service - rent a cab service - telephone service - Held that: - it is an admitted fact on record that period of dispute is from 2005- 2006 to 2007-2008 and the appellant was governed under the un-amended definition of input service (effective upto 31/03/2008). Under the un-amended definition of input service, since “clearance of final product from the place of removal” was specifically finding place therein and that the appellant had removed the goods from its factory, the same should be considered as place of removal for the purpose of consideration of eligibility to the Cenvat benefit - credit allowed. CENVAT credit - Outdoor catering services - bus hiring services - rent-acab service - telephone services - Held that: - Tribunal in various decisions has allowed the Cenvat credit of service tax paid on those services, holding that those services are also be considered as input service, even after the amendment of definition under Rule 2 (l) w.e.f. 01/04/2011 - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 766
  CENVAT credit - input services - rent a cab - insurance premium - maintenance & insurance of motor vehicles - subscription of membership - denial on account of nexus with the manufacture of HDPE woven bags by the appellant - Held that: - in respect of the disputed taxable services, this Tribunal in the case of M/s. S.K.D. Lakshmanan Fireworks Industries Versus CE, ST, Tirunelveli [2015 (12) TMI 1102 - CESTAT CHENNAI], has held that the services have no nexus with the manufacture of final product and accordingly, upheld the order passed by the Commissioner (Appeals) - credit not allowed - appeal dismissed - decided against appellant.

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• 2018 (5) TMI 765
  CENVAT credit - construction service - Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that: - The invoice issued by the contractor shows that the same was issued prior to 1.4.2011 and it is obvious that the description of work mentioned in the said invoice was completed prior to 1.4.2011 - Since, the embargo of not allowing the Cenvat credit on construction service was brought to the definition of input service with effect from 1.4.2011 by N/N. 3/2011-CE (NT), the work completed prior to such effective date will not be governed under the amended definition of input service. Under the unamended definition of input service (effective up to 31.3.2011), there were no restriction imposed for not taking Cenvat credit on the construction service. Thus, the credit should be allowed to the appellant. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (5) TMI 764
  Jurisdiction of the civil court - Refund of sales tax - the firm not applied for provisional registration - Whether in view of Sec.22 of the Orissa Sales Tax Act, the civil court has jurisdiction to entertain and decide the suit for refund of sales tax under the said Act ? Held that: - Any dealer or person, as the case may be, may, in the prescribed manner appeal to the prescribed authority against such order. In the instant case, neither there is any order of assessment or order directing payment of interest or order imposing penalty. Thus, Sec.23 cannot be pressed into service. Under Section 9 C.P.C., the courts have subject to certain restrictions, jurisdiction to try suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred - In view of the same, both the courts perfectly justified that the civil court has jurisdiction to entertain the suit - the question is answered in affirmative. This Court observes that for a paltry amount, the plaintiff is running from pillar to post since 1983. No litigant has a right to unlimited drought on the Court time and public money in order to get his affairs settled in the manner as he wishes. Easy access to justice should not be misused as a licence to file misconceived or frivolous petitions. Appeal dismissed with cost of 25,000/-.

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• Indian Laws

• 2018 (5) TMI 790
  Direction to call for the records - Dishonor of cheque - Section 138 of Negotiable Instruments Act - Held that: - the petitioners though received the notice dated 27.12.2008 as is evidenced by the postal acknowledgments cards, did not issue any reply denying their liability - In the instant case, the complaint is very clear as to the role played by the 1st accused. The other allegations levelled by the petitioners are disputed facts. Inherent powers cannot be invoked to quash a complaint on a disputed questions of fact - petition dismissed.

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• 2018 (5) TMI 789
  Cognizance of offence - Cheque bounced - petitioners filed a motion seeking discharge on the grounds that the complaints are premature for the reason that the same have been filed before the expiry of the stipulated period of (15) days, as provided under the Statute, for making payment from the date of the receipt of the said notice - Held that: - the learned counsel representing the respondents admitted that the respondents have erred in law in filing the complaints before the expiry of the period detailed in Section 138(C) of the Negotiable Instruments Act, 1881 - that the respondents have erred in law, the complaints in all the three cases having been filed before the period stipulated under Section 138(C) of the Negotiable Instruments Act, are held to be premature and, therefore, the orders impugned passed on the dates 20th, 24th & 20th of April, 2017, respectively in all these complaints and the proceedings emanating therefrom are quashed - petition disposed off.

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