TMI Tax Updates - e-Newsletter
May 25, 2018

Case Laws in this Newsletter:

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

Articles

1. Goods sent on Job Work – Input Tax Credit

   By: CA Akash Phophalia

News

1. Two Held for Fraud Under GST Act in Delhi

2. 5th India CLMV Business Conclave held at Phnom Penh, Cambodia on 21-22 May 2018

3. Fifteenth Finance Commission constitutes a High Level Group to examine the strengths and weaknesses for enabling balanced expansion of Health Sector

4. RBI Reference Rate for US $

5. Commerce Minister Releases Strategy Paper on Computer Software and Electronics Exports

Notifications

Companies Law

1. F. No. 05/17/2017-IEPF - G.S.R. 472(E) - dated 22-5-2018 - Co. Law

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Third Amendment Rules, 2017.

Customs

2. 46/2018 - dated 23-5-2018 - Cus

Seeks to amend notification No. 50/2017- Customs dated 30.06.2017

3. 45/2018 - dated 23-5-2018 - Cus

Seeks to increase tariff rate of basic customs duty (BCD) on Walnuts in shell [0802 31 00 ] from 30% to 100% and increase tariff rate of basic customs duty (BCD) on Protein concentrates and textured protein substances [2106 10 00] from 30% to 40% by invoking section 8A (1) of the Customs Tariff Act, 1975.

4. 45/2018 - dated 24-5-2018 - Cus (NT)

Customs Audit Regulations, 2018

5. 44/2018 - dated 24-5-2018 - Cus (NT)

Amendment in Notification No. 40/2012-Customs (N.T.) dated 02.05.2012

DGFT

6. 08/2015-2020 - dated 24-5-2018 - FTP

Amendment in Para 3.08 (b) of Chapter-3 of FTP 2015-2020

GST - States

7. S.O. 181 - dated 14-5-2018 - Bihar SGST

Waiving Late Fee for GSTR 3B Oct-2017 to April-2018

8. G.O. Ms. No. 50 - dated 18-4-2018 - Tamil Nadu SGST

Tamil Nadu Goods and Services Tax (Fourth Amendment) Rules, 2018

Circulars / Instructions / Orders

VAT - Delhi

1. 04/2018 - dated 18-5-2018

instructions are issued for strict observance by all concerned

2. 05/2018 - dated 18-5-2018

Instructions are issued for strict observance by all concerned

DGFT

3. 11/2015-2020 - dated 24-5-2018

Enhancement in rate of rewards for MEIS Sl no. 207, HS Code 07122000

4. Policy Circular No. 07/2015-20 - dated 23-5-2018

Clarification on the term 'Duty' under Sl. No. 3 of Appendix- 3A of Foreign Trade Policy 2015-2020

Highlights / Catch Notes

Income Tax

• Court Limits Tax Authority: Bank Account Attachments Allowed Only in Rare, Exceptional Cases Under Strict Guidelines.

  Case-Laws - HC : Recovery of tax dues - Withdrawal of amount from the petitioner’s Bank account - the power of attachment of the Bank accounts and other immovable properties can always be exercised - Withdrawal of the amount must be rare and exceptional - HC
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• Reopening Assessments: Section 147 Requires AO to Show Income Escaped, Not Confirm Additional Tax Liabilities.

  Case-Laws - HC : Reopening of assessment u/s 147 - the duty of the AO is only to primafacie establish that income chargeable to tax has escaped assessment - it would not be his duty to demonstrate with certainty that invariably upon reassessment additions would be stand - HC
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• Reopening Assessment u/s 147: AO Forms Opinion Despite No Additions in Final Order on MAT Exemption.

  Case-Laws - HC : Reopening of assessment u/s 147 - Computation of book profits u/s 115JB - MAT - if AO during scrutiny assessment notices a claim of exemptions made by the assessee having some prima facie doubt and asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition - HC
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• Penalty Confirmed for Failure to Produce Audit Report u/s 44AB; Assessee's Argument Rejected by Court.

  Case-Laws - AT : Failure to produce the books of account and audit report u/s 44AB - the contentions of the assessee that since no books of account have been prepared, therefore could not be audited is not accepted - Penalty u/s 271B confirmed - AT
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Service Tax

• Simultaneous Penalties u/ss 76 and 78 of Finance Act 1994 Not Allowed; Proviso to Section 78 Clarifies.

  Case-Laws - HC : Simultaneous penalty u/s 76 and 78 - proviso to Section 78 made it explicit which was till then implicit - simultaneous penalty under section 76 and 78 of the Finance Act, 1994 cannot be imposed - HC
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• Service Tax vs. VAT: Dispute Over Taxation on Renting Heavy-Duty Cranes for Delhi Metro Construction.

  Case-Laws - AT : Levy of Service tax - Supply of Tangible Goods Service - renting-out heavy duty cranes to various parties engaged in the construction of Delhi Metro - The levy of Service Tax on the transaction as well as levy of VAT, considering the transaction as deemed sale, will be mutually exclusive. - AT
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• Definition of "Intermediary" u/r 2(f) Excludes Main Service Providers for Tax Applicability on Foreign Referrals.

  Case-Laws - AT : Place of Provision of services - referral services to foreign universities/colleges and banks - The definition of “intermediary” as envisaged under Rule 2(f) of POS does not include a person who provides the main service on his own account - AT
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• Refund Claim Timing: Section 11B & Rule 5 CCR - Use Quarter End Date of FIRCs for Export Service Refunds.

  Case-Laws - AT : Section 11B is applicable for the purpose of computation of one year period for filing the refund claim and for export of service, the "relevant date" for the purpose of deciding the time limit for consideration of refund claim under Rule 5 of CCR will be the end of the quarter in which the FIRCs received. - AT
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• Refund Claim Time Limit Linked to Quarter-End of FIRCs Receipt per Rule 5 of CENVAT Credit Rules.

  Case-Laws - AT : The relevant date for the purposes of deciding the time limit for consideration of refund claim under Rule 5 of CENVAT Credit Rules may be taken as the end of the quarter in Which the FIRCs are received in cases where refund claims are filed on a quarterly basis. - AT
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Central Excise

• Appellant Granted CENVAT Credit for Carbon Black Feed Stock; Not Used for Electricity Generation, Credit Approved.

  Case-Laws - AT : CENVAT credit - Carbon Black Feed Stock (CBFS) - It cannot be said that appellant has procured CBFS for generation of electricity. Appellants have registered for manufacture of Carbon Black by using CBFS as input. - credit allowed - AT
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• Department Must Correct Calculation Errors in Duty Demands; Refusal to Amend is Legally Untenable.

  Case-Laws - AT : Correction of duty demanded due to error - Once the Department has accepted the mistake then it was the bounded duty of the Department to correct the calculation error, refusal to do so is not tenable under law. - AT
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• Appellant's Pre-Show-Cause Notice Credit Reversal Equals Non-Availment of CENVAT Credit, Audit Reveals.

  Case-Laws - AT : The appellant has reversed the proportionate credit relating to common input services availed by them before the issuance of the show-cause notice on being pointed out by the audit and it amounts to as if he has not availed CENVAT Credit. - AT
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• Can Basic Excise Duty Credits Cover Education and Higher Education Cess Payments? Exploring Cenvat Credit Rules.

  Case-Laws - AT : Cenvat Credit - basic excise duty can be utilised for payment of education cess/ higher education cess - AT
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• Assistant Commissioner Cannot Introduce New Grounds in De Novo Proceedings for Refund Claims from Provisional Assessment Orders.

  Case-Laws - AT : Refund - Scope of SCN - order of provisional assessment - in De novo proceedings the Assistant Commissioner cannot carve out a new ground for rejection of the refund. - AT
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Case Laws:

• Income Tax

• 2018 (5) TMI 1443
  Reopening of assessment u/s 147 - sale of immovable property - capital gain or capital loss - assessee produced purchase and sale deeds alongwith approved valuer’s report assessing the value of property - The impugned notice was issued beyond the period of 4 years - notice must be quashed on the ground of change of opinion - thus reopening of the assessment is wholly impermissible - decided in favor of assessee

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• 2018 (5) TMI 1442
  Recovery of tax dues - Withdrawal of amount from the petitioner’s Bank account - Held that - even if the Department has such powers it must be realized that the powers are drastic and would result into extremely harsh consequences to the assessee - merely because the statute authorizes the Government agency to carry out coercive recovery - it would not permit such an authority to access individual’s bank account - even without his knowledge - the power of attachment of the Bank accounts and other immovable properties can always be exercised - Withdrawal of the amount must be rare and exceptional - hence the amount already recovered from the petitioner's bank account must be returned forthwith - Decided in favor of assessee

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• 2018 (5) TMI 1441
  Reopening of assessment u/s 147 - Original Assessment was made u/s 143(3) after scrutiny - validity of notice beyond the period of 4 -years - disallowance of expenses in relation to the exempt income - Held that:- disallowance of expenditure in relation to earning tax exempt income is not valid by AO - reopening of assessment is sought to be made beyond the period of four years - also there being no element of failure of the assessee, disclosing full facts - reopening would not be permissible - Decided in favor of assessee.

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• 2018 (5) TMI 1440
  Reopening of assessment u/s 147 - As per AO share application has been received by the assessee - Held that:- In absence of any evidence on records merely on the basis of hearsay information - AO can not derive satisfaction to reopen the assessment - this being a disputed question of fact - Decided in favor of assessee.

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• 2018 (5) TMI 1439
  Whether the income generated through sale of shares should be taxed as capital gain or business income of the assessee - Held that - the declaration made by an assessee with respect to its intention in buying and selling shares would be accepted - where the assessee itself, irrespective of the period of holding the listed shares opts to treat them as stock-in-trade - the income arising from transfer of such shares would be treated as its business income - in case of listed shares held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain - then it shall be treated as capital gain - the assessee is not allowed to change his position from time to time - decided in favor of assessee

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• 2018 (5) TMI 1438
  Whether the income generated through sale of shares should be taxed as capital gain or business income of the assessee - Held that - the declaration made by an assessee with respect to its intention in buying and selling shares would be accepted - where the assessee itself, irrespective of the period of holding the listed shares opts to treat them as stock-in-trade - the income arising from transfer of such shares would be treated as its business income - in case of listed shares held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain - then it shall be treated as capital gain - the assessee is not allowed to change his position from time to time - decided in favor of assessee

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• 2018 (5) TMI 1437
  Whether the income generated through sale of shares should be taxed as capital gain or business income of the assessee - Held that - the declaration made by an assessee with respect to its intention in buying and selling shares would be accepted - where the assessee itself, irrespective of the period of holding the listed shares opts to treat them as stock-in-trade - the income arising from transfer of such shares would be treated as its business income - in case of listed shares held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain - then it shall be treated as capital gain - the assessee is not allowed to change his position from time to time - decided in favor of assessee

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• 2018 (5) TMI 1436
  Reopening of assessment u/s 147 - income has escaped assessment - Held that:- the duty of the AO is only to primafacie establish that income chargeable to tax has escaped assessment - it would not be his duty to demonstrate with certainty that invariably upon reassessment additions would be stand - the petition is dismissed.

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• 2018 (5) TMI 1435
  Reopening u/s 147 - AO indicated irregular claim of capital loss - Held that:- the AO had noticed the assessee's claim of capital loss - had called upon the assessee to justify the same - The assessee had answered such queries of the AO upon which, in the final order of assessment - the AO made no adjustment - Decided in favor of assessee

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• 2018 (5) TMI 1434
  Reopening of assessment u/s 147 - Computation of book profits u/s 115JB - MAT - notices have been issued beyond the period of four years - addition made by AO on account of subsidy grant being capital in nature - Held that:- an assessment previously framed cannot be reopened on a mere change of opinion - it is stated that power to reopening cannot be equated with review - if AO during scrutiny assessment notices a claim of exemptions made by the assessee having some prima facie doubt and asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition - hence notices quashed.

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• 2018 (5) TMI 1433
  Addition in respect of interest on non-performing assets (NPAs) - Held that:- when a particular asset is shown to be NPA - the assumption is that it is not yielding any revenue - there is no reason that the assessee be subjected to tax on the alleged notional income even if it has adopted hybrid system of accounting - hence the addition is deleted - Decided in favor of assessee.

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• 2018 (5) TMI 1432
  Failure to produce the books of account and audit report u/s 44AB - penalty proceedings u/s 271B - Held that:- P & L A/c filed by the assessee with return indicates that he was liable to get his books of account audited u/s 44AB - assessee deliberately did not get his books of account audited - the contentions of the assessee that since no books of account have been prepared, therefore could not be audited is not accepted - hence assessee is liable to penalty u/s 271B - Decided against the assessee.

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• 2018 (5) TMI 1431
  Penalty under Section 271(1)(c) - concealment of income or furnishing of inaccurate particulars of income - Held that:- The learned CIT(A) is directed to consider the additional ground and pass appropriate order on the ground after giving the assessee an opportunity of being heard - deciding only part of the appeal leads to multiplication of proceedings at different levels and forums which is not desirable - appeal stand allowed for statistical purposes

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• 2018 (5) TMI 1430
  Stay on the disputed demand - disallowance of interest expenditure - due to subsequent amendment made by the state government to the scheme of trifurcation of Maharashtra State Electricity Board, the loan liability corresponding to the impugned disallowance of interest has been taken over by the State Government from the assessee with retrospective effect - thus claim for deduction of interest expenditure while calculating the final taxable income was removed - Held that:- since the assessee has made significant payments out of the total outstanding demand - stay on the recovery of outstanding demand shall operate for a period of six months - decided in favor of assessee

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• 2018 (5) TMI 1394
  Liability to deduct TDS u/s 194H - relation between assessee and distributor - reliance upon Management Information System - Held that:- the relationship is not of agent - it is principal to principal basis - the payment is received by the company and the amount of commission is never paid to the agent or the distributor - no TDS is required to be deducted - decided in favor of assessee Management Information System is not a part of the books of accounts and could not be relied upon - Statutory Audit Report is final conclusion over the authorities - decided in favour of the assessee

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• Customs

• 2018 (5) TMI 1429
  Valuation of imported goods - old and used second hand Krupp Hydraulic Truck Mobile Crane - enhancement of value based on the printout taken from website contending for the similar machine - Held that: - except the discrepancy pointed out by the Customs Authority all other information is tallying with invoice such as make model, country, year of manufacturing etc. Therefore, the certificate cannot be brushed aside straight away. However from such discrepancy, it cannot be established that the value declared by the appellant is incorrect, even if the certificate is not considered to be authentic. The Revenue has relied upon the website printout however on comparison the details given in the website printout and the invoice of the supplier in the case of appellant’s import there are many differences. It cannot be said that the machinery shown in the crane network website and the machine imported by the appellant are same. Therefore there is absolutely no basis available with the Customs on which the value could have enhanced - the impugned order enhancing the value, demanding the differential duty and confiscating the goods has no basis and is set aside - Since the demand itself does not exist, there is no question of penalty under Section 114A. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1428
  Condonation of delay in filing appeal - relevant date - time limitation - Section 128 of the Customs Act, 1962 - Held that: - The appeals for the purpose of Section 128 ibid should have been filed within a period of 60 days from the date of payment of duty in respect of these cases. There is also a further condonable period of 30 days provided in that section - it appears prima facie that all these eight appeals had been filed before the Commissioner (Appeals) within this combined period of 90 days. This being so, the matter is required to be remanded back to lower appellate authority concerned to ascertain the veracity of the appellant’s contentions with regard to their having filed appeals within a maximum of 90 days from the ‘relevant date’ in each case - appeal allowed by way of remand.

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• 2018 (5) TMI 1427
  Condonation of delay in filing appeal - power of Commissioner(Appeals) to condone delay - Section 128 of customs Act, 1962 - Held that: - Commissioner(Appeals) does not have the power to condone the delay beyond 30 days and in the present case, the appellant was seeking condonation of 66 days of additional delay which was not within his power to condone - Hon'ble Apex Court in the case of Singh Enterprises Vs. CCE [2007 (12) TMI 11 - SUPREME COURT OF INDIA] wherein it has been held that beyond 30 days delay, the Commissioner (Appeals) has no power to condone - appeal dismissed - decided against appellant.

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• 2018 (5) TMI 1426
  Order of Prohibition - Prohibition on CHA from operation as Customs Broker within the jurisdiction of Bangalore Customs - appellant was found to have filed the export documents With Customs authorities in respect of some of the fraudulent export - Held that: - since certain violations of CBLR 2013 are evident on the part of the appellant and hence we do not think it is necessary to interfere with the prohibition order impugned in the present proceedings - Without setting aside the Order of Prohibition, we dispose of the appeal with the direction to the Commissioner of Customs, Bangalore to reconsider his decision after giving an opportunity of hearing to the appellant to produce any additional evidence to support his case.

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• Service Tax

• 2018 (5) TMI 1425
  Simultaneous penalty u/s 76 and 78 - Whether simultaneous penalties under sections 76 and 78 of the Finance Act, 1994 could have been imposed? - Held that: - issue is already covered by judgment of Division Bench of this Court in case of Raval Trading Company v. Commissioner of Service Tax [2016 (2) TMI 172 - GUJARAT HIGH COURT], where it was held that Section 76 of the Finance Act, 1994, would cover only the cases of nonpayment of service tax which are not related to fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the said Chapter or the rules made thereunder with the intent to evade payment of service tax since legislature had already provided for penalty in Section 78 in such situations. Thus further proviso to Section 78 made it explicit which was till then implicit - simultaneous penalty under section 76 and 78 of the Finance Act, 1994 cannot be imposed - appeal dismissed - decided against Revenue.

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• 2018 (5) TMI 1424
  Recovery of unpaid service tax from the petitioners - transportation services - transportation of Tur Dal - Case of the petitioners is that after introduction of service tax on transportation services to be collected through reverse charge mechanism, the Central Government had exempted such tax on transportation of specified goods under N/N. 33/2004 dated 3.12.2004 - extended period of limitation - Held that: - With issuance of exemption notification dated 27.2.2010, it is possible to argue that such exemption would be available only from the date of notification and for the period prior to notification, service tax would have to be levied. This observation would have to be confined to the normal period of limitation prescribed under section 73 of the Finance Act, 1994. Subsection(1) thereof provides that where any service tax has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded, the competent authority within eighteen months (at the relevant time. now substituted by 30 months) from the relevant date. The willful and conscious evasion of duty is the requirement for invoking the extended period of limitation. In the present case, such elements are totally missing - nowhere the non payment of tax can be corelated to fraud, collusion, willful misstatement, suppression of facts or contravention of the statutory provisions by the petitioner with the intent to evade payment of duty. The show cause notices thus which seek to levy such duty for the period beyond the normal period of eighteen months of limitation therefore, cannot survive. Petition disposed off.

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• 2018 (5) TMI 1423
  Condonation of delay in filing appeal - power of Appellate authority to condone delay - Held that: - We do not find that within the narrow compass of the jurisdiction in such kind of cases the petitioner's explanation would pass the muster - The delay is substantial as against the legislative intent that no appeal should be entertained beyond a maximum period of 90 days. The petitioner has consumed more than a year in agitating the issues - petition dismissed - decided against petitioner.

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• 2018 (5) TMI 1422
  Classification of services - Works Contract Services or Erection, Commissioning or Installation Service? - certain contracts executed by the appellant for M/s Hindustan Petroleum Corporation - the Department was of the view that the activity carried out is in the nature of installation of tanks, pumps and related jobs - Held that: - the appellant has claimed that the activities are covered under the definition of ‘Works Contract Services’. Further it is seen that during the period 2007-08 and 2008-09, the appellant has already paid Service Tax under the category of ‘Works Contract Services’ but the Revenue has sought to demand differential duty for this period by denying the abatement available under the category of ‘Works Contract Services’. The Hon’ble Supreme Court in the case of Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT] has categorically held that ‘Works Contract Service’ is a different category of service and activity falling under WCS were not liable to Service Tax prior to 01/06/2007 - demand of Service Tax for the period prior to 01/06/2007 is set aside. For the period w.e.f. 01/06/2007 the activity will be liable to Service Tax under WCS. It is further seen that the appellant also discharged the Service tax under the category of WCS for the said period, but the Revenue has denied the abatement under WCS - the appellant will be entitled to the abatement as available to WCS. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1421
  CENVAT credit - input services - Maintenance and Repair Service - On line Information - Commercial Training or Coaching Service - Scientific and Technical Consultancy Service - Erection, Commissioning and Installation Service - Consultancy Services - Held that: - the Revenue has not brought on record any ground to allege that the credit availed is in respect of ineligible input services. In the absence of any such ground, the CENVAT credit availed cannot be denied to the appellant. The circumstances in which the cenvat credit availed can be restricted or reversed is also specifically spelt out in the Cenvat Credit Rules, 2004. The restriction/ reversal of cenvat credit on the basis of the thumb rule / formula adopted by the Revenue has no legal basis. Once the cenvat credit has been availed in respect of input services falling under Rule 2(l) the same cannot be disallowed by taking recourse to any thumb Rule or formula. With effect from 01.04.2016 in Rule 6(l) of the Cenvat Credit Rules stand amended by including Explanation (iii) but such amendment cannot be extended to the prior period. Appeal disposed off.

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• 2018 (5) TMI 1420
  Levy of Service tax - Supply of Tangible Goods Service - renting-out heavy duty cranes to various parties engaged in the construction of Delhi Metro - Held that: - The facts of the present case reveal that the appellant has supplied machinery on hire along with the operators. The customer is free to make use of the equipment along with the operator for activities as per necessity - It is further evident from the record of the case that the appellant has also paid VAT/ST on the consideration received, considering the same as “deemed sale of goods.” The levy of Service Tax on the transaction as well as levy of VAT, considering the transaction as deemed sale, will be mutually exclusive. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1419
  CENVAT credit - input services used for providing taxable services as well as trading activity - Rule 6 (2) of Cenvat Credit Rules, 2004 - Held that: - Tribunal in case of Commissioner of Service Tax, Delhi vs. Machine Tools India Pvt. Ltd. [2017 (8) TMI 833 - CESTAT NEW DELHI] has held that on the “trading activity” which was not even considered even as exempted service prior to 01/04/2011, no Cenvat credit is available on any “input service” attributable to the trading activity at material time - the appellant is liable to reverse or pay back the input service credit attributable to the trading activity. Penalty u/s 78 - Held that: - appellant were aware that Cenvat credit of input services can only be availed on the taxable output service and as the “Trading Activity” was not even a taxable activity they could have resisted from availing Cenvat credit of common service inputs - benefit of section 80 not allowed - penalty upheld. Appeal dismissed - decided against appellant.

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• 2018 (5) TMI 1418
  Penalty - Liability of service tax - incentive received for use of AMADEUS systems - Held that: - taking note of the fact that the said issue was under litigation before Tribunal, the appellant was under bonafide belief that they are not liable to pay service tax - penalties do not sustain. Penalty - Liability of Service Tax - remuneration / commission received from insurance companies - Held that: - taking into consideration that the issue being an interpretational one and the Board has also issued clarifications, the penalty requires to be set aside - penalties set aside. Penalty - CENVAT credit - common inputs - Rule 6(3)(c) of CCR 2004 - extended period of limitation - Held that: - appellant contention that the demand being raised invoking extended period cannot sustain for the reason that there was no suppression of facts - when availing the credit, the appellant ought to have taken of the fact that they are availing credit on common input services for both taxable as well as non-taxable service - penalty set aside. The impugned order is set aside to the extent of setting aside the penalties on all the three issues without disturbing the demand of service tax or interest thereon - appeal allowed in part.

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• 2018 (5) TMI 1417
  Demand of service tax - referral services provided to foreign universities/colleges and banks - period post 01.07.2012 - Place of Provision Rules - export of services - case of appellant is that the appellant is not intermediary, therefore, they are not liable to pay service tax post 01.07.2012 - extended period of limitation. Whether the appellant is intermediary in terms of Rule 2(f) of POPS Rules, 2012 or not? - Held that: - As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circumstances, the appellant cannot be called as intermediary in the light of the judgment issued by the Advanced Ruling Authority in the case of Godaddy India Web Services Pvt. Ltd. [2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS], where it was held that The definition of “intermediary” as envisaged under Rule 2(f) of POS does not include a person who provides the main service on his own account - the provisions of Rule 6A of the POPS Rules, 2012 has been declared ultra virus - appellant is not liable to pay tax for referral service - decided in favor of appellant. Whether the referral services in question rendered by the appellant amount to export of service or not? - Held that: - the appellant is not an intermediary and the appellant is providing Business Auxiliary Service to their clients, who are located outside India, therefore, the services rendered by the appellant duly qualified as export of service in terms of Rule 3 of POPS Rules, 2012 - decided in favor of appellant. Extended period of limitation - Held that: - as the issue relates to the interpretation of the POPS Rules, 2012, therefore, the extended period of limitation is not invokable. Appeal disposed off.

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• 2018 (5) TMI 1415
  Refund of unutilized CENVAT credit - rejection on the ground of time limitation - Section 11B of the Central Excise Act, 1944 - rejection on the ground that the application for refund of CENVAT credit was submitted after expiry of one year from the relevant date under Section 11B of CEA - Held that: - the Commissioner (Appeals) has rightly relied upon the decision of the GTN Engineering (I) Ltd. [2011 (8) TMI 960 - MADRAS HIGH COURT] wherein it has been held that Section 11B will be applicable for the purpose of claiming refund under Rule 5 of the CCR. This issue has been considered by the Hon'ble Gujarat High Court in the case of Indo-Nippon Chemicals Co. Ltd. Vs. UOI [2002 (2) TMI 136 - GUJARAT HIGH COURT] and the Hon'ble High Court after considering the provisions of Section 11B as well as the CCR has come to the conclusion that Section 11B of the Act is applicable for the purpose of seeking of refund of CENVAT credit. There is a specific condition that the refund claims are required to be filed within the period specified under Section 11B - completely ignoring the provisions of Section 11B may not be appropriate. Section 11B is applicable for the purpose of computation of one year period for filing the refund claim and for export of service, the "relevant date" for the purpose of deciding the time limit for consideration of refund claim under Rule 5 of CCR will be the end of the quarter in which the FIRCs received. Refund is barred by limitation under Section 11B of the Act - appeal dismissed - decided against appellant.

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• 2018 (5) TMI 1414
  Refund claim - time limitation - relevant date for the purpose of computation of one year in the case of export of service in terms of Section 11B - Held that: - Larger Bench in the case of CCE&CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], after hearing of the party, has unanimously held that the relevant date for the purposes of deciding the time limit for consideration of refund claim under Rule 5 of CENVAT Credit Rules may be taken as the end of the quarter in Which the FIRCs are received in cases where refund claims are filed on a quarterly basis. Since the Larger Bench has clarified the position with regard to the relevant date for computing the period of one year, by following the ratio of the Larger Bench in the above said decision, this appeal needs to be remanded back to the original authority to dispose of the refund claim as per the decision of the Larger Bench. Appeal allowed by way of remand.

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• 2018 (5) TMI 1413
  Refund of unutilized CENVAT credit - denial on the ground of time bar as well as on lack of nexus in regard to certain services - Held that: - as far as rejection of refund on time bar is concerned, by following the Larger Bench decision in the case of CCE&CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], where it has been held that relevant date of one year for the purpose of time limit for consideration of refund under Rule 5 of CCR may be taken as the end of the quarter in which the FIRCs are received. With regard to nexus, both the services have a nexus with the output services exported. As far as inconsistency in the computation of amount eligible for refund is concerned, the original authority will examine it and will decide afresh by applying the correct formula. Appeal allowed by way of remand.

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• Central Excise

• 2018 (5) TMI 1416
  CENVAT credit - Carbon Black Feed Stock (CBFS) - Department was of the view that the appellants are not eligible for credit on CBFS which is used for generation of electricity which is wheeled out - Held that: - The process of manufacture has been explained. Undeniably, CBFS is an input used for manufacture of Carbon Black. It cannot be said that appellant has procured CBFS for generation of electricity. Appellants have registered for manufacture of Carbon Black by using CBFS as input. The judgement of Hon’ble Allahabad High Court in the case of Hi-Tech Carbon [2018 (2) TMI 819 - ALLAHABAD HIGH COURT] would be applicable to the present case, where it was held that the demand of cenvat credit on CBFS cannot sustain alleging that lean gas emerged is used for generation of steam. Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1412
  Clandestine removal - M.S. Ingots - whether the principal Commissioner in its impugned order in original dated 11.01.2018 is justified in confirming the demand of Central Excise duty of 2,56,803./- alongwith interest and penalty, in respect of clandestine removal of 80.695 the MT of M.S Ingots recovered from the appellant? - Held that: - In the impugned order nowhere it has been discussed as to how the demand of duty of 2,56,803/- is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods - There is absolute no evidence on record to show that the appellant-Ms. Ashok Ispat Udyog had cleared 80.695 MT of MS ingots and entire demand is purely based upon the statement of Sh. S.K. Pansari Prop. of M/s. Monu Steel. Only on the basis of statement of third person no demand could be made - penalty on Director also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1411
  Refund of Central Excise Duty - rejection on the ground that they have failed to provide the necessary documents and information as ordered by the Commissioner (Appeals) in his order dated 12/09/2017 - Held that: - only on the ground that the appellant has not provided the necessary documents, as ordered by the Commissioner (Appeals) in his various orders on the refund claims filed by the appellant, the appeal before Commissioner (Appeals) got rejected and the appellant is before this Tribunal against these orders of the Commissioner (Appeals). Commissioner (Appeals) is right in dismissing the appeal of the appellant as the necessary documents, which have been ordered by Commissioner (Appeals) to be presented before the Adjudicating Authority for consideration of the refund claims were not submitted by the appellant and, therefore, the appeal before this Tribunal appears to be pre-mature and deserve to be rejected with the direction that Original Adjudicating Authority will undertake a fresh denovo adjudication. Appeal allowed by way of remand.

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• 2018 (5) TMI 1410
  SSI Exemption - use of brand name - Case of the department is that the appellant is manufacturing branded goods with the brand of ‘Rastogi’ brand which belongs to some other firm - Held that: - the goods manufactured and seized under the panchnama dated 09/10/2013 as well as the various invoices issued by the appellant for supply of goods to M/s Rastogi Steel Furnishers, Jaipur does not have mention of any brand on them - the department has not put forward any worthy evidence to prove that the appellant have been using the brand Rastogi or any other brand on the products manufactured and cleared by them, which could make them ineligible for availing SSI N/N. 8/2003 benefit. The department has failed to prove that the appellant has been using ‘Rastogi’ or any other brand on their manufactured products. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1409
  Valuation - inclusion of subsidy in assessable value - Department is of the view to include such subsidy amounts in the value of the goods cleared by the appellants and demanded the differential duty - Held that: - identical issue has came up before the Tribunal in the case of M/s. Shree Cement Ltd. & other vs. CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1408
  CENVAT credit - input services - construction service - denial on account of nexus - place of removal - Held that: - with regard to the definition of input service pertains to ‘modernization, renovation or repairs of the factory qualifying as input service under the inclusive clause of Rule 2 (l) of CCR, 2004 - in the present case the assessee had availed the construction services of repair of the factory which was based on input service invoices. Thus, it is a clear case where two views are possible as observed by the ld. Asst. Commissioner. Penalty - Held that: - It is a clear case of bonafide mistake in availing Cenvat credit for which no penalty is exigible. Appeal disposed off.

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• 2018 (5) TMI 1407
  CENVAT credit - Capital goods - Depreciation availed on capital goods - Held that: - In the case of Jay Precsion products India Pvt. Ltd. [2010 (11) TMI 910 - CESTAT MUMBAI], it was held that if the assessee has availed Cenvat credit of duty paid on capital goods as well as claimed depreciation under Section 32 of the Income Tax Act, 1961 and on pointing out by the Revenue have foregone the depreciation availed under Section 32 of the Income Tax Act, 1961, in that circumstances, the assessee is entitled to avail CENVAT credit - appellant is entitled to avail Cenvat credit. Extended period of limitation - Penalty - Held that: - As the period involved in this case is 2008-2009 and from the facts of the case, it is not coming out when the audit took place, in that circumstances, the SCN has been issued by invoking extended period of limitation is not sustainable - penalty not imposable. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1406
  CENVAT credit - common input services used in manufacture of taxable as well as for trading activities - non-maintenance of separate records - Held that: - in the present case, the appellant has not maintained separate accounts for dutiable goods as well as exempted goods - Once the appellant has reversed entire credit of common input service along with interest, then in that situation, the appellant is not required to pay 6% or 7% of the value of exempted goods - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1405
  Correction of duty demanded due to error made by the Department in computation - Department though admitted the mistake in calculation but refused to correct the same on the ground that there is no provision in law - Held that: - the appellant paid the duty along with interest before the issue of SCN but due to calculation error, the appellant paid the excess duty to the extent of 1,86,463/- - the Department vide its letter dated 25.04.2017 has accepted the error but they have refused to correct the same and rather the impugned order was passed dismissing the appeal of the appellant on time-bar whereas the fact of the matter is that the assessee has filed the appeal against the letter dated 25.04.2017 refusing to correct the mistake committed by the Department. Once the Department has accepted the mistake then it was the bounded duty of the Department to correct the calculation error, refusal to do so is not tenable under law. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1404
  CENVAT credit - reversal of proportionate credit of the common input services availed during the year before the issuance of the SCN - Held that: - the appellant has reversed the proportionate credit relating to common input services availed by them before the issuance of the show-cause notice on being pointed out by the audit and it amounts to as if he has not availed CENVAT Credit. Hon'ble High Court of Karnataka in the case of Himalaya Drug Co. [2011 (2) TMI 1165 - KARNATAKA HIGH COURT] held that the provisions of Rule 6(3)(i) of the CCR would not be attracted if reversal of credit is done in respect of inputs used in the manufacture of exempted final products. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1403
  Refund claim - rejection on the ground that the assessee has availed Cenvat credit of basic excise duty for payment of Education Cess and Higher Education Cess - Whether the Respondent can utilise basic excise duty for payment of education cess/higher education cess or not? - Held that: - The issue of payment of education cess/higher education cess through basic excise duty has been decided in the case of Hon’ble High Court of Gauhati in the case of Union of India Vs. Kamakhya Cosmetics & Pharmaceutical Pvt. Ltd. [2012 (7) TMI 902 - GAUHATI HIGH COURT] wherein the Hon’ble High Court has held that basic excise duty can be utilised for payment of education cess/ higher education cess - decided in favor of respondent. Whether the Respondent is entitled to claim refund of Education Cess/Higher Education Cess paid in cash, in terms of N/N. 56/2002-CE dated 14.11.2002 or not? - Held that: - issue of refund of education cess/higher education cess has been dealt by the Hon’ble Apex Court in the case of SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], wherein the Hon’ble Apex Court held that the Education Cess/higher education cess arises on account of payment of duty, therefore, the refund claim is admissible of education cess/ higher education cess in terms of Notification No. 56/2002-CE dated 14.11.2002 - decided in favor of respondent. Whether the interest for the intervening period can be demanded/adjusted or recovered from the Respondent, without issuance of the SCN? - Held that: - the issue is of short payment of duty on the premises that as the goods had been cleared to their sister unit and they are required to pay duty as per CAS- 4, whatever the duty could have been paid by the Respondent is entitled to refund of the same - it is a revenue neutral situation, therefore, on that account also payment is of interest is not required to be adjusted by the authorities below - decided in favor of respondent. Appeal dismissed - decided against Revenue.

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• 2018 (5) TMI 1402
  CENVAT credit - inputs - DA Cylinder - Bearings - CNC Package - Motor - Plate - Fixture assembly - Held that: - the goods mentioned in Sl.No. iii to v above were removed on payment of duty and the finding of the learned Commissioner (AppeaIs) that the appellant has mentioned the invoice number on the photocopy of the Delivery Challan to mislead the Department is not supported by any evidence - the findings of learned Commissioner(AppeaIs) that the goods cleared vide Delivery Challan No.62 dt. 11/07/2013 were purchased by the appellant vide invoice No.635206 dt. 24/03/2012 is perverse as it is contrary to the material available on record. The CNC package cleared as such was purchased vide invoice No.62 dt. 10/07/2013 and the credit availed on such CNC package is 20,863/- instead of 80,084/- - the learned consultant by producing various copies of the purchase orders and invoices could link the same and has been able to prove that the goods were not removed as such but removed on payment of excise duty. Appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1401
  Recovery of erroneous refund - recovery on the premise that the zinc dross and flux skimming arising are exempted goods - Held that: - initially the appellant paid the duty and the same has been entertained at the time of sanctioning the refund claim under Notification No. 56/2002-CE and refund claim was sanctioned. The said order has not been challenged by the Revenue. In that circumstances, in the light of the decision of Priya Blue Industries [2004 (9) TMI 105 - SUPREME COURT OF INDIA], the impugned show cause notice is not maintainable - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1400
  Valuation - computation of first clearance of aggregate clearance not exceeding 3500 MTs in terms of N/N.04/06-CE dt.1.3.2006 - Held that: - The said issue has been examined by this Tribunal in the case of Ballarpur Industries Ltd. [2002 (7) TMI 653 - CEGAT, NEW DELHI] and this Tribunal has held that the learned Commissioner was in error in holding that the quantity restriction was to be computed taking into account clearances of all varieties of paper manufactured by the appellant. If the exemption is read as applicable to the clearance of all varieties of paper, it yields all unintended results. Either excluded varieties of paper also get the benefit of the exemption on the ground that they were the “first clearances” or the included varieties are denied the exemption (as in the present case) merely on the ground that they were not cleared first. Such a reading of a notification which makes it unworkable is to be avoided. In the impugned order it has been observed that the contention of the Revenue is that the assessee had intentionally cleared the exempted paper on payment of duty to encash the duty paid from Cenvat Credit from the buyer and writing paper and printing paper were the same verified on which concessional rate of duty upto the first clearance of 3500 MT. However, the said observation of the Commissioner (Appeals) is without basis and is contrary to the findings. Appeal allowed - decided in favor of assessee.

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• 2018 (5) TMI 1399
  Concessional rate of duty - Benefit of N/N. 6/2002-CE dt.1.3.2002 as amended by N/N. 48/2004- CE dt.10.9.2004 - Applicability of case of M/s.Shreyans Industries Ltd. vs. CCE, Ludhiana [2008 (5) TMI 389 - CESTAT, NEW DELHI] to the facts of present case - Held that: - it cannot be alleged that the Commissioner has not verified the facts of the case and the facts of the case are not in dispute - the Commissioner has rightly relied upon the decision of this Tribunal in the case of M/s.Shreyans Industries Ltd. vs. CCE, Ludhiana [2008 (5) TMI 389 - CESTAT, NEW DELHI], where Central Pulp & Paper Research Institute and IIT, Roar in their separate opinion have opined that the appellant’s plant appears to be suitable for pulping agricultural residues - unit of the appellants are eligible for the benefit of exemption. As the facts of this case are similar to the facts of M/s.Shreyans Industries Ltd., therefore, the respondent are entitled to avail concessional rate of duty under entry No.86A of the N/N. 6/2002-CE as amended by N/N. 48/2004-CE dated 10.9.2004. Appeal dismissed - decided against Revenue.

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• 2018 (5) TMI 1398
  CENVAT credit - export through merchant exporter - carbon black procured without payment of duty against advance license - N/N. 43/2001-CE (NT) - procedural and technical infirmities. - case of the Revenue is that appellants are not entitled to benefit of exemption N/N. 43/2001- CE (NT) for the goods exported through merchant exporters, as the appellant has not followed ARE-2 procedure - Held that: - The said notification/ Rule does not put bar that the goods cannot be exported through merchant exporters. As per Rule 19 (2) of the said Rules, any material may be removed without payment of duty from the factory of producer or manufacturer or warehouse or from any other premises for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner - The only condition is that the goods must be exported and it is immaterial that the said goods have been exported directly by the assessee or through the merchant exporters therefore, benefit of notification cannot be denied. Although the appellant has mentioned the N/N. 43/2001-CE (NT) in their application, but they are entitled to the benefit of N/N. 44/2001-CE (NT), as they exported the goods under simplified procedure without following the ARE-2 procedure, as per CBEC Circular No. 648/39/2002-CX dated 25.07.2002. CENVAT credit on carbon black procured without payment of duty cannot be denied merely on procedural lapse on the part of the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (5) TMI 1397
  Refund - Scope of SCN - order of provisional assessment - case of appellant is that the impugned order rejecting the refund of the appellant on totally new ground is not sustainable in law and is contrary to the direction of the Tribunal vide Order dated 20.05.2004 - Held that: - in a De novo proceedings both the authorities have carved out a case which was not before the Tribunal and the Commissioner (Appeals) in the earlier round of litigation. The order of provisional assessment is for all the brands of electric dry cell batteries. Subsequently the Commissioner (Appeals) vide his order dated 19.08.2004 has categorically directed the Assistant Commissioner to finalize the assessment De novo after considering the assessments in respect of all brands which were provisional in nature - Further, the Revenue has not filed any appeal against the order passed by Commissioner (Appeals) dated 19.08.2004 and the said order has become final. Therefore, in De novo proceedings the Assistant Commissioner cannot carve out a new ground for rejection of the refund. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (5) TMI 1444
  Pendency of refund - The Commissioner, DVAT is present in Court - we would request a five-member team of advocates to visit the office of the Commissioner, DVAT on 25.4.2018 at 2:00 pm for an interaction and point out difficulties on the question of refund, interest, delay etc. - In the affidavit/ status report to be filed, the Commissioner would address the issues raised by the advocates and administrative action taken.

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• 2018 (5) TMI 1396
  Security deposit - section 28(2) of the VAT Act - Recovery of tax dues - Held that: - when the Court had said that further implementation of the notices (for recovery) may be stayed, the question of predeposit would be covered by such a direction If the department had any doubt, it should have asked for clarification. At any rate, in face of such directions, condition of pre-deposit could not have been imposed. Resultantly, upon failure of the petitioner to satisfy such condition, appeal cannot be dismissed. Though expected of the petitioner in the past, there was no desired level of urgency or participation in the appellate proceedings. The appeals of the petitioner for the financial years 2010- 11 and 2011-12 involve similar issues but are placed before different appellate authorities since we are informed, in case of assessment for the assessment year 2010-11, the normal appellate authority happened to be the Assessing Officer in case of the petitioner. We would request the department to consolidate both appeals before the same Appellate authority. Petition disposed off.

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• 2018 (5) TMI 1395
  Revision of order of assessment - the petitioner was directed to produce necessary accounts - time limitation - Section 75 of the VAT Act - revisional powers of Commissioner - Reduction of tax credit - input Fuel - Branch Transfers. Held that: - In terms of clause (a) of subsection (1) of section 75 thus, the Commissioner has revisional powers which can be exercised on his own motion or under an application made to him for such purpose. He could take any order in revision passed by the officer appointed under section 16 of the Act to assist him by calling for and examine record of any such order and pass such order as he thinks just and proper. Exercise of such powers however, comes with prescription of limitation. The suomotu power for calling any record of any such order can be exercised within three years. If the same is to be exercised on a motion by the person concerned, the period of limitation prescribed is one year. There is nothing on record to suggest that in the present cases, the Additional Commissioner had called for the record of the assessment of the petitioner for the particular year within three years of the date of the order so as to enable him to exercise the revisional powers. In fact, looking to the tenor of the notice of revision it was not even possible for him to have done so. This is because the order of assessment was passed on 30.03.2013. Period of limitation would therefore expire on 30.03.2016 - the action of the Additional Commissioner calling for the record of the assessment and issuing notice for revision is beyond the period of limitation prescribed. Clause (a) of subsection (1) of section 67 of the Gujarat Sales Tax Act made pari materia provisions concerning the revisional powers of the Commissioner. Under the said section also, the Commissioner is empowered to call for and examine the record of any proceedings of the subordinate officer suomotu within three years or on an application made to him for such purpose within one year from the date of the order passed by such officer. Reliance can be placed in the case of Om Metals & Minerals Ltd. v. Assistant Commissioner of Sales Tax (Appeals) [2011 (4) TMI 1025 - GUJARAT HIGH COURT], where it was held that the impugned notice has clearly been issued after the expiry of the period of three years from the date of the order sought to be revised, that is, the period of limitation prescribed under clause (a) of subsection (1) of section 67 and as such, the same is apparently barred by limitation. The impugned notices for revision cannot be sustained, being clearly in exercise of revisional powers beyond the period of limitation prescribed - petition allowed.

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