TMI Tax Updates - e-Newsletter
May 28, 2019

Case Laws in this Newsletter:

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

Articles

1. GST ON CONSTRUCTION OF APARTMENTS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Draft notification to amend the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Feedback and suggestions be sent to [email protected] or [email protected], within 30 days i.e by 26.06.2019

2. Auction for Sale (Re-Issue) of Government Stocks

Notifications

Customs

1. 23/2019-Customs (N.T./CAA/DRI) - dated 27-5-2019 - Cus (NT)

Appointment of CAA by Pr. DGRI

2. 22/2019-Customs (N.T./CAA/DRI) - dated 27-5-2019 - Cus (NT)

Appointment of CAA by Pr. DGRI

Circulars / Instructions / Orders

Income Tax

1. F No 370149/230/2017- Part (3) - dated 27-5-2019

Task Force for drafting a New Direct Tax Legislation-Extension of term

Highlights / Catch Notes

GST

• Real Estate Firm Penalized for Not Passing Increased ITC Benefits to Home Buyers, Violating Section 171 CGST Act.

  Case-Laws - NAPA : Profiteering - sale of a built up house - DGAP's Report revealed that the ratio of ITC to the taxable turnover post GST period increase from 0.61% to 3.45% i.e net benefit of 2.84% - the benefit of ITC was not passed to home buyers and collected extra amount with more GST on the additional amount - violation u/s 171 of the CGST Act, 2017 and committed an offence u/s 122(1)(i) - liable for penalty - directed state to monitor passing of benefit to to all the eligible buyers
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Income Tax

• Court Finds No Unexplained Cash Credit u/s 68; Transactions Genuine, No Additional Tax Liabilities for Assessee.

  Case-Laws - AT : Unexplained cash credit u/s 68 - No cash was found to be deposited prior to the date of the issue of cheques proves that the assessee has not purchased cheques by paying cash - banks have responded to the notice by furnishing the Articles & Memorandum of Association, bank opening forms etc. clearly demonstrated that all the companies have fulfilled KYC Norms of banks - identity capacity and genuineness established beyond doubts - no addition
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• Court Remands Case on 1981 Land FMV for Capital Gains Tax; AO Lacks Evidence on Valuation Method.

  Case-Laws - AT : Capital gain on sale of land - FMV as on 1/4/1981 - AO has not given any evidence that how the FMV has been determined by him - AO may decide the whole issue either by referring the matter to the DVO for determining the FMV or accepting the value shown by the assessee - matter remanded
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• Order u/s 254 on Land Sale Gains Recalled for Clarity on Business Income vs. Capital Gain Assessment.

  Case-Laws - AT : Rectification u/s 254 - Gain on sale of land - ambiguity found in the order which nowhere clearly speaks about the fact that the gain arising out of selling of flat is liable to be assessed as business income or long term capital gain - order recalled
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• Taxpayer Avoids Penalty u/s 271(1)(c) for Short-Term Capital Gains; Architect's Valuation Partly Accepted by CIT(A).

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessee had not withheld any relevant information regarding the short term capital gains from the AO which was based on the valuation report of an architect which was partly accepted by the Ld. CIT (A) - there is no factual finding that the assessee had furnished any inaccurate particulars while bifurcating the value between land and buildings while computing STCG - no penalty
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• Reassessment Quashed: No New Material Justifying Reopening u/s 147; Prior Section 143(3) Proceedings Not Referenced.

  Case-Laws - HC : Reassessment u/s 147 - reasons recorded without referring assessment u/s 143 (3) explains why the reasons for re-opening the assessment does not advert earlier proceedings particularly questionnaires issued by the AO specifically on the issue of the loan from PACL - all the material regarding the transaction with PACL was already available - no fresh tangible material - reassessment quashed
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• Section 68 Addition on Share Capital Deemed Unsustainable Due to Lack of Monetary Exchange Evidence in First Business Year.

  Case-Laws - AT : Addition u/s.68 - share capital & premium - Nothing on record suggest any money got exchanged between the assessee and the investor - as per Ld. AO’s finding, the impugned AY was the initial year of business operation of the company and therefore, it is difficult to accept that the assessee accumulated huge unaccounted money which was ploughed back in the shape of share capital / share premium - addition not sustainable
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Customs

• Misdeclaration of Prime Quality Steel Plates as Scrap Leads to Confiscation and Penalties for Importer.

  Case-Laws - AT : Misdeclaration of value of imported goods - goods imported was primarily steel plates of prime quality but was misdeclared as Heavy Melting Scrap - Confiscation and penalty sustained.
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• Court Sets Aside Order Due to Unraised Fee Objection During Hearing; Dismissal on Technicality Inappropriate.

  Case-Laws - HC : Maintainability of revision petition - short payment of the requisite fee - objection not having been pointed out at the time of hearing of the petition on merits, ought not to have led to the petition’s dismissal on such technical ground - order passed by the Revisionary Authority is set aside
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Service Tax

• Society Maintaining Mosque Liable for Service Tax on Property Rentals, Not Recognized as Religious Body.

  Case-Laws - AT : Renting of Immovable Property - Merely because the appellant, being a society, is maintaining the Mosque will not turn them into a religious body, though the same may be a charitable organization. The renting activity is not being done by the Mosque but the same is being undertaken by the society, which itself is not a religious body.
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• Service Tax Refund on Exports Exceeds 0.25% FOB Value; No Additional Conditions Allowed by Commissioner.

  Case-Laws - AT : Refund of service tax paid - exports - Since the Appellants refund claim was for more than 0.25% of the FOB value of exports, there was no need for self-certification - Commissioner cannot impose its own conditions.
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• Exporter Entitled to Service Tax Refund for Goods Exported via MMTC Ltd, Affirms Ownership Rights.

  Case-Laws - AT : Refund claim - Exporter or not - export being made through M/s MMTC Ltd. due to restriction who stands indemnified of all claims, damages etc, of the foreign buyer and/or vessels owner in respect of exports to be made through them and M/s S. K. Sarawagi & Co. Pvt. Ltd. (appellant), the owner of the goods - refund to the appellant is rightfully sanctioned for the service tax paid in terms of the services utilized in the export of goods
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Central Excise

• Appellant Entitled to Refund of Unutilized CENVAT Credit Due to Factory Closure, No Opportunity to Use Accumulated Credit.

  Case-Laws - AT : Refund of unutilized CENVAT Credit - closure of factory - Appellant were eligible for refund of the accumulated cenvat credit as once the factory is closed, there is no place for utilizing accumulated cenvat credit.
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• CENVAT Credit Penalty Non-Reducible Even After Pre-Show Cause Payment, Per Proviso to Section 11A.

  Case-Laws - AT : CENVAT Credit - Penalty - even though the amount is paid before issuance of show cause notice as per the proviso to Section 11A invoked, penalty cannot be reduced nor waived.
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• Is Installing Retail Visual Identity at Petrol Pumps a Manufacturing Process Under Central Excise Law?

  Case-Laws - AT : Process amounting to manufacture or not - fabrication and installation of Retail Visual Identity Elements (RVI) at the petrol pumps different companies - the status of the Appellant is that of supplier of raw material to various job workers who had actually manufactured the goods.
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• CENVAT Credit Allowed for Registered Motor Vehicles as Capital Goods under CENVAT Credit Rules, 2004.

  Case-Laws - AT : CENVAT Credit - capital goods - motor vehicles - dumpers and tippers are once registered with the Motor Vehicles Department they cannot cease to be motor vehicles thereafter - the specific inclusion of dumpers and tippers as capital goods under CCR, 2004 excluded goods falling under Chapter 87 of the Central Excise Tax Act - cenvat credit allowable
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• CENVAT Credit Denial Deemed Unjustified: Insufficient Investigation on Manufacturer's Operations in Jammu, Says Commissioner Report.

  Case-Laws - AT : CENVAT credit - investigation conducted at CCE, Merrut - Without investigation, it cannot be held that the Jammu based manufacturer were not manufacturing during the impugned period - entries of vehicles at the toll barriers certified that the movements of raw material and finished goods - report of Jurisdictional Commissioner to CC show that allegation is based on assumption and presumption - cenvat credit can’t be denied
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• Amendment to Rule 4(1) CENVAT Credit Rules: No Time Limit for Pre-Amendment Imports and Deemed Manufacture.

  Case-Laws - HC : CENVAT Credit - Amendment to Rule 4 (1) CCRs prescribing a time limit for claiming Cenvat Credit will not apply to the consignments where the import took place prior to the date of the amendment and the deemed manufacture also happened prior to the amendment -the CVD will have to be adjusted against the CE duty settled as will the service tax paid on the input services
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Case Laws:

• GST

• 2019 (5) TMI 1448
  Profiteering - sale of a built up house located in Eldeco Country project launched by the Respondent in Sonipat, Haryana - benefit of input tax credit was not passed on - contravention of section 171 of CGST Act, 2017 - HELD THAT:- From the perusal of the facts of the DGAP s Report it is revealed that the ratio of ITC to the taxable turnover during the pre GST period was to the extent of 0.61% as compared to post GST period of 3.45% thus, there was net benefit of 2.84% of ITC to the Respondent. Based on this net benefit and the amounts collected from the home buyers during the post GST period, an amount of 41 82,198/- has been computed as the profiteered amount as per Annexure-15. The Respondent has raised no objection against the computation of the above amount made by the DGAP vide Annexure-15 and hence it can be relied upon - as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, the profiteered amount is determined as 41,82,198/- which includes 2,83,026/- in respect of the Applicant No. 1. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 directs that the Respondent shall reduce the prices to be realised from the buyers of the flats commensurate with the benefit of ITC received by him as has been discussed above. The profiteered amount of 41,82,198/- paid along with interest is for the period July 2017 to August 2018, and in case any benefit of ITC which accrues subsequently shall also be passed by the Respondent to all the buyers failing which the Applicant No. 1 will be at liberty to file fresh application for grant of ITC benefit which may accrue to him. Though the Respondent did not deny that the benefit of ITC had accrued to him and he had to necessarily pass on the same to the home buyers as per the provisions of Section 171 of the CGST Act, 2017, the benefit of ITC was passed on by him only in the month of February 2019. He had not only collected extra amount from the buyers but also compelled them to pay more GST on the additional amount realised. The above act of the Respondent appears to be deliberate and conscious violation of the provisions of Section 171 of the CGST Act, 2017. Hence he has committed an offence under Section 122 (1) (i) of the CGST Act, 2017 and therefore he is liable for imposition of penalty under the provisions of the above section. The Authority as per Rule 136 of the CGST Rules, 2017 directs the Commissioner of CGST/SGST, Haryana to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is passed on to all the eligible buyers. A Report in compliance of this order shall be submitted to this Authority by the Commissioners CGST/SGST, Haryana within a period of 4 months from the date of receipt of this order.

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• Income Tax

• 2019 (5) TMI 1447
  Reopening of assessment u/s 147 - original assessment u/s 143(3) and the re-opening beyond four years - non-application of mind by the AO - HELD THAT:- The assessment order does not itself discuss the details furnished by the Assessee, the fact remains that all the relevant materials were indeed disclosed by the Assessee before the AO. Also, the details of how the sum of 40 crores was disbursed appears to have been disclosed by the Assessee in a letter dated 2nd February, 2013 written by it to the AO in response to the questionnaire issued to it on 27th November, 2012. In the present case all the material that was necessary for the AO to form an opinion regarding the transaction involving the Assessee and PACL was already available with the AO. There was no fresh tangible material on the basis of which the AO could have formed an opinion about any taxable having escaped assessment during the AY in question - the reasons recorded by the AO for re-opening the assessment do not refer to the above facts. It merely repeats the language of Section 147 that there was a failure by the Assessee to disclose fully and truly all material facts necessary for the assessment. The Court is, therefore, satisfied that the jurisdictional requirement of the first proviso to Section 147 proviso has not been satisfied in the present case. Assessee is right in his submission about the mistakes committed even in the proforma accompanying the reasons recorded which notes that the exercise was being undertaken in terms of clause (b) to Explanation 2 to Section 147 which would mean that the original assessment was under Section 143 (1) of the Act. The fact is that the original assessment was under Section 143 (3) of the Act. This perhaps explains why the reasons recorded for re-opening the assessment does not advert to what transpired during the original assessment and in particular the questionnaires issued to the Assessee by the AO specifically on the issue of the loan from PACL. The learned counsel for the Assessee is justified in his submission that this also reflects non-application of mind by the AO, and the superior officer who approved the re-opening, to the relevant materials. Notice for reopening quashed - Decided in favour of assessee.

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• 2019 (5) TMI 1446
  Addition u/s. 14A r.w.rule 8D - HELD THAT:- As far as disallowance of interest expenses under Rule 8D(2)(ii) of the Rules is concerned, it has been held in the case of CIT vs Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] that where interest free funds and overdraft and loans taken are available with an assessee, then a presumption would arise that the investments would be out of the interest free funds generated or available with the assessee, if the interest free funds were sufficient to meet the investments. In the case of Principal CIT vs Rasoi Ltd. [ 2017 (2) TMI 863 - CALCUTTA HIGH COURT] . In view of the aforesaid legal position we direct the Assessing officer to examine the assessee`s own funds and reserves and if the AO finds that the interest free funds were sufficient to meet the investments, no disallowance would be made under Rule 8D(2) (ii) of The Rules. As far as Rule 8D(2)(iii) of the Rules is concerned, it has been held in the case of DCIT vs REI Agro Ltd. [ 2013 (5) TMI 582 - ITAT KOLKATA] that it is only the investment which yielded tax free income that should be considered for working out the average value of investment while applying the Rule 8D(2)(iii) of the Rules. This order of the tribunal has been confirmed by the decision of Hon ble Calcutta High Court . [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT] . We direct the AO to exclude investments which had not yielded any exempt dividend income during the previous year while working out the average value of investments for the purpose of applying Rule 8D(2)(iii) of the Rules. Addition on account of interest paid to loan creditors - HELD THAT:- Assessee has furnished the relevant details i.e confirmation of bank statement, ROC details before the AO . Neither the AO nor the CIT(A) has considered the same. We note that details as filed by the assessee have not been considered in any of the two proceedings i.e. neither before the AO nor before the ld.CIT(A). Therefore, we deem it fit and proper in this peculiar facts and circumstances that larger interest of justice would be served in case ld. AO decides the entire issue once again taking into consideration the details which already submitted by the assessee before him. We also direct the assessee to submit the evidences/explanation to prove its boanfide. Ground no. 2 raised by the assessee is allowed for statistical purpose

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• 2019 (5) TMI 1445
  Penalty u/s 271(1)( c) - Addition u/s 40(a)(ia) - HELD THAT:- Admittedly, the quantum addition has been deleted by the ITAT. Thus, penalty does not survive on this addition. The AO is directed to give the appeal effect to the Assessee in this regard. Addition of short term capital gain in the instant case it cannot be said that the assessee had withheld any relevant information regarding the short term capital gains from the AO. The claim of the assessee was based on the valuation report of an architect which was partly accepted by the Ld. CIT (A) also. There is no factual finding by the AO that the assessee had furnished any inaccurate particulars while bifurcating the value between land and buildings while computing short term capital gains. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. Penalty deleted - decided in favour of assessee.

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• 2019 (5) TMI 1444
  Rectification u/s 254 - Gain on sale of land - business income or long term capital gain - HELD THAT:- We found ambiguity in the order which nowhere clearly speaks about this fact that the gain arising out of selling of flat is liable to be assessed as business income or long term capital gain. Therefore, in the said circumstances, we are of the view that the issue is liable to be recalled and is liable to be decided afresh in the interest of justice. Accordingly, we recalled the issue for deciding the afresh. Accordingly, the present miscellaneous application is hereby allowed accordingly.

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• 2019 (5) TMI 1443
  Reopening of assessment u/s 147 - as alleged no notice has been served on the assessee - service of notice made in the hands of the Hindu undivided family of the assessee - sale of land by Hindu undivided family - HELD THAT:- The notices were sent at the address which is mentioned in the sale deed. Assessee did not file any return of income nor mentioned the PAN in the sale deed. The return filed by the assessee are also for Ay 2011-12 and not Ay 2008-09. AO did not have any mechanism to find out who is the person who has sold the land. The only source of information is the copy of the sale deed and address mentioned there in , notices / communication were sent. It is not the claim of the assessee that in sale deed wrong address is mentioned. Therefore, the argument of the assessee that no notice has been served on the assessee is rejected. Further with respect to the claim of the assessee that the land belongs to the Hindu undivided family and not in the status of individual is also dealt with by the learned CIT-A wherein he held that in the documents submitted by the assessee for the sale of land, it is nowhere mentioned that the assessee has sold the above land in the name of Hindu undivided family. Further in all the documents the names of all the appellant s including Sri Dalel Singh is mentioned in their individual capacity only. Further the enquiry report also names the appellant s in their individual capacity only. We reject the claim of the assessee that capital gain is chargeable to tax even if it is at all in the hands of the Hindu undivided family. As we already rejected the argument of the assessee that land belongs to the Hindu undivided family and not to the assessee in his individual capacity, all the arguments of the assessee with respect to the service of notice not made in the hands of the Hindu undivided family of the assessee is also rejected. Capital gain on sale of land - adoption of the estimated market value as on 1/4/1981 - HELD THAT:- According to the provisions of section 2 (22B) the fair market value in relation to a capital asset means the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date i.e 01/04/1981. AO has not given any evidence that how the fair market value has been determined by him, we reject the fair market value adopted by the AO of INR 1,650,000 per acre as on 1/4/81. It is also true that assessee has also not produced before the lower authorities any evidence with respect to FMV of the land as on 1/4/1981. We set aside this issue back to the file of the learned assessing officer to determine the fair market value of the impugned property as on 1/4/81 by giving an opportunity to the assessee to first show the cost of acquisition of the asset and fair market value of the asset. Then at the option of the assessee any one of them can be taken as cost of acquisition of the asset for indexation. If the AO is not satisfied with the fair market value of the asset shown by the assessee as on 1/4/1981, then the learned assessing officer may decide the whole issue either by referring the matter to the district valuation officer for determining the fair market value or accepting the fair market value shown by the assessee and then decide the computation of the capital gain on sale of the above land in accordance with the provisions of the law. Accordingly ground number 4 of the appeal of the assessee is set aside to the file of the learned assessing officer with above direction.

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• 2019 (5) TMI 1442
  Unexplained cash credit u/s 68 - unsecured loans additions - HELD THAT:- No cash was found to be deposited prior to the date of the issue of cheques to the assessee company. This conclusively proves that the assessee has not purchased cheques by paying cash to the lender companies. Since, the banks have responded to the notice by furnishing the Articles of Association, Memorandum of Association, bank opening forms of the lender companies which clearly demonstrated that all the companies have fulfilled KYC Norms of banks. Therefore, the identity of these lender companies have been established beyond doubts. The genuineness of the transaction can be safely concluded as all the transactions have been done through proper banking channel. The source of funds are clearly established from the financial statements of these lender companies irrespective of their meager income or nil income. The assessee has discharged the onus cast upon it by the provisions of section 68 of the Act and, therefore, we do not find any reason to interfere with the findings of the CIT(A). - Decided against revenue.

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• 2019 (5) TMI 1441
  Disallowance u/s.14A r.w.r. 8D - HELD THAT:- We find that the assessee has not earned any exempt income during the year under consideration. Thus this grievance of the assessee has to be allowed following the judgment of the Special Bench of the Tribunal in the case of Cheminvest Ltd. Vs. CIT 2009 (8) TMI 126 - ITAT DELHI-B] which has been affirmed by the Hon ble High Court of Delhi [ 2015 (9) TMI 238 - DELHI HIGH COURT] - Decided against revenue Disallowance of EPF ESI-contribution - belated deposits after the grace period - HELD THAT:- Though the coordinate bench [ 2018 (5) TMI 1882 - ITAT DELHI] has decided this issue in favour of the assessee but now with the decision of Hon ble High Court Delhi in the case of Bharat Hotels Limited [ 2018 (9) TMI 798 - DELHI HIGH COURT] the same has to be decided against the assessee and in favour of the revenue since the Hon ble High Court has held that employees contribution provident fund and ESI contribution has to be deposited within the grace period and since in the present case the deposit have been made after the grace period the same cannot be allowed. - Decided in favour of revenue Claim of deduction u/s.10 A and 80 IB - HELD THAT:- As decided in assessee s own case it cannot be said that the eligible units had borrowed funds from the Head Office - the debtors of the eligible units were realized by the Head Office and accordingly, necessary entries were passed through Head Office account. Considering the factual matrix exhibited in the statement of account, it can be stated that the eligible units have not borne any financial charges and therefore, no allocation of financial charges is to be made between these eligible units. Thus not necessary to remit the matter to the Assessing Officer for verification once again. - Decided against revenue

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• 2019 (5) TMI 1440
  TP Adjustment - selection of MAM - TNMM v/s CUP - TPO rejected TNMM adopted by assessee for ALP determination and made adjustment in respect of commission segment business by adopting margin of profit for trading with non-AE of assessee - HELD THAT:- TNMM is most appropriate method under such circumstances instead of CUP. Considering fact that assessee is a low risk service provider and that there is no change in FAR from assessment year 2003-04 to 2018-19 as has been observed by this Tribunal in preceding assessment year, we do not find any reason to deviate by adopting any other method other than TNMM. Respectfully following view taken by this Tribunal in preceding years, we remand the issue back to file of Ld. TPO to examine and benchmark international transaction by adopting TNMM as most appropriate method by taking Berry ratio as PLI, as has been approved by Hon ble High Court. Needless to say that assessee shall be granted proper opportunity as per law. Issue raised by assessee in the appeal for assessment year 2012-13 stands allowed for statistical purposes.

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• 2019 (5) TMI 1439
  Addition u/s.68 - unexplained cash credit - as per AO assessee has failed to discharge the burden to substantiate the creditworthiness of the shares investors and genuineness of the transactions - CIT-A deleted the addition - HELD THAT:- In the present case, so far as the identity of the investors, their creditworthiness genuineness of the transactions is concerned, we find that all the investors were having Permanent Account number and were duly filing their Income Tax Returns. The audited financial statements were placed on record. The share applicants had confirmed the investments. It is the finding of Ld. AO that the investment in the shape of share capital as well as share premium was made by these entities out of their respective unsecured loan / reserves / other liabilities / share premium account which contradicts / negate the stand of AO that the entities were showing meagre profits and had no source to make the stated investments. Nothing on record suggest that any money got exchanged between the assessee and the investor entities which flew back in the shape of share capital / share premium. Another pertinent observation to be made is that as per Ld. AO s finding, the impugned AY was the initial year of business operation of the assessee company and therefore, it is difficult to accept that the assessee accumulated huge unaccounted money which was ploughed back in the shape of share capital / share premium. It is undisputed fact that the transactions have taken place through banking channels which is evident from the bank statements of the assessee as well as share applicants as placed on record. The entirety of facts would convince us to form an opinion that the assessee was successful in establishing the fulfilment of primary condition of Section 68. Justification of share premium - We find that the assessee, in its investment note, adopted Discounted Cash Flow method to arrive at the valuation of shares. Be that as the case may be, we are of the considered opinion that quantum of premium was matter between assessee company issuing the shares and investor entities and the payment of high premium, in itself, could not be the basis of making addition in assessee s hand unless there was any illegality or restriction, under law, towards receipt of high share premium. Our view is in line with the decision of Pr.CIT Vs. Chain House International Pvt. Ltd. [ 2019 (2) TMI 1213 - SC ORDER] wherein it has, interalia, been held that It was the prerogative of the Board of Directors to decide the quantum of premium and it was the wisdom of the shareholders whether they wanted to subscribe to the shares at such a premium. Another aspect of this is that the provisions of Section 56(2)(viib) were applicable only with effect from 01/04/2013 and the same were not applicable during impugned AY. - Decided in favour of assessee.

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• 2019 (5) TMI 1438
  Addition u/s 68 - unexplained cash credits brought into the assessee firm by partners - additional income was disclosed by the partners before the Income Tax Settlement Commission - additional income offered by the partners would be sufficient to cover the introduction of capital / credits in the partners account - HELD THAT:- When an assessee records credit in the name of third party in its books of account, it must prove not only the identity of the creditors, the capacity of the creditors to advance money, but also the genuineness of the transaction. The onus of proving the source of a sum of money found to have been received by the assessee is on the assessee itself. When the nature and source of the receipt cannot be satisfactorily explained by the assessee, it is open for the Revenue to hold that it is the income of the assessee - burden lies with the assessee to show that the income is from a particular source. In the instant case, for all the assessment years, the A.O. has examined the creditworthiness of all the partners and has categorically found that the partners did not have sufficient withdrawals on matching dates of introduction of capital / current account credits. We also notice that the A.O. had given due credits for source when there was matching withdrawal / explanation by partners CIT(A) was of the view that the partners of the assessee-firm had disclosed substantial additional income before the Income Tax Settlement Commission and that would be sufficient to cover the introduction of capital / credit in their current account. We have perused the order of the Settlement Commission dated 23.06.2014. There are variations in the additional income computed by the Income Tax Settlement Commission and the details of the additional income that was furnished by the learned AR before the Tribunal. AO also did not have the benefit of Income Tax Settlement Commission s order (The assessment order was completed on 28.03.2014, whereas the Income Tax Settlement Commissioner s order was dated 23.06.2014). Since the A.O. did not have the benefit of Income Tax Settlement Commissioner s order and for a proper examination of availability of funds with the partners of the assessee-firm for making investments in assessee-firm, necessary the matter needs to be remanded to the A.O. for fresh consideration. The assessee is directed to furnish the orders of the Income Tax Settlement Commission and also cash flow statement to prove that there the disclosure made before the Income Tax Settlement Commission towards unexplained income was directly invested in these funds as their respective capital and there should be direct nexus between the disclosure made by the assessee before the Settlement Commission and the investment in these firms. - Appeals filed by the Revenue are allowed for statistical purposes.

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• 2019 (5) TMI 1437
  Bogus expenditure - CIT-A restricted addition to 15% - HELD THAT:- This issue in dispute is squarely covered by the decision of the coordinate bench in assessee s own case for AY 2008-09 following the decision therein, we uphold the order of the CIT(A) in directing the AO to disallow the expenditure to the extent of 15% out of the total expenditure and dismiss the grounds raised by the revenue on this issue.

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• 2019 (5) TMI 1425
  Disallowance of bank charges paid for processing of the working capital loan - HELD THAT:- Issue covered by the judgment of this Court in The Principal Commissioner of Income Tax-3, Ludhiana v. M/s Malwa Industries Ltd., Ludhiana 2015 (9) TMI 1361 - PUNJAB AND HARYANA HIGH COURT] Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Issue covered by the decision of this Court in Commissioner of Income Tax, Jalandhar-I, Jalandhar v. M/s Max India Limited [ 2016 (11) TMI 1012 - PUNJAB AND HARYANA HIGH COURT].

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• 2019 (5) TMI 1424
  Penalty u/s 271(1)(c) - addition pertaining to advertisement, marketing and promotion expenses which was a transfer pricing adjustment - HELD THAT:- Hon ble Delhi High Court in assessee s own case for assessment year 2010-11 [ 2018 (9) TMI 1761 - DELHI HIGH COURT] has dismissed the department s appeal and has held that there were no good grounds and reasons to treat advertisement and sales expenses as a separate and independent international transaction in the case of the assessee. The Hon ble High Court held that the revenue had erred in not treating this activity as a function performed by the assessee who was engaged in marketing and distribution. Undisputedly, the assessee is engaged in marketing and distribution of Mary Kay products in India and the observation of the Hon ble Delhi High Court in assessment year 2010-11 in assessee s own case would apply mutatis mutandis in this year also. Once it is held that AMP expenditure is not an international transaction, the transfer pricing adjustment would have no feet to stand. Even though in the year under consideration, the assessee has accepted the addition in this regard in the quantum proceedings, the fact remains that such addition was not sustainable in view of the observation of the Hon ble Delhi High Court in assessee s own case that the AMP expenditure was not to be considered as a separate international transaction. Respectfully following the judgment of the Hon ble Delhi High Court in the assessee s own case for assessment year 2010-11 on identical facts, we hold that the AMP expenditure could not have been treated as a separate international transaction and, therefore, the penalty imposed on such transfer pricing adjustment is not sustainable. - Decided in favour of assessee

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• 2019 (5) TMI 1423
  Rectification u/s 254 - Computation of disallowance u/s 14A - Hon ble Bench has held that the investment in art gallery and in subsidiary company should be excluded but has not mentioned about the exclusion of shares held as stock in trade, therefore, there is a mistake apparent on record, hence, the order required to be rectified to this extent that the share held as stock in trade required to be excluded while calculating the disallowance u/s 80D(2)(iii) - HELD THAT:- On appraisal of the finding, we noticed that the matter of controversy has been adjudicated on merits. Any change on merits nowhere comes with the provisions u/s 254(2) of the Act, 1961. Moreover, required rectification would tantamount review of the appeal which is not permissible in accordance with law. Taking into account, all the facts and circumstances, we are of the view that the present miscellaneous application nowhere deserves to be allowed, therefore, we dismissed the miscellaneous application

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• Customs

• 2019 (5) TMI 1436
  Maintainability of revision petition - petition was dismissed on the ground of short payment of the requisite fee - whether the Respondent Revisionary Authority was justified in dismissing the Petitioner s revision petition against the order of the Commissioner of Customs (Appeals) only on the ground of short payment of the requisite fee? HELD THAT:- This Court is of the view with the objection not having been pointed out at the time of hearing of the petition on merits, ought not to have led to the petition s dismissal on such technical ground - the impugned order dated 4th September 2018 passed by the Revisionary Authority is set aside. Petition disposed off.

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• 2019 (5) TMI 1422
  Misdeclaration of value of imported goods - goods imported was primarily steel plates of prime quality but was misdeclared as Heavy Melting Scrap - The only ground on which appellant tried to plead innocence regarding such mis-declaration about the description of goods was that it purchased the same on high sea sale and filed Bill of Entry on the basis of invoice raised by the exporter but there was no bar on the appellant for personal inspection before finalisation of purchase - HELD THAT:- No irregularly can be noticed in the order passed by the Commissioner of Customs (Imports) when appellant itself admitted the examination report concerning the quality of goods imported. Confiscation - Imposition of penalty - omission committed or not - appellant had contended that no act or omission was proved against the appellant that would result in confiscation under Section 111(m) and Section 119 of the Customs Act and imposition of penalty under Section 112(a) of the Customs Act, 1962 - HELD THAT:- As found from the Commissioner order s and from the case record, 28,000 Kg. HR M S plates valued at 11,20,000/- (re-determined) were misdeclared for which those were liable for confiscation under Section 111(m) of the Customs Act, 1962 and HR M S plates of 81,780 Kg. valued at 11,49,826/- were camouflaged that made the goods liable for confiscation under Section 119 of the Customs Act, 1962. No plausible explanation was offered by the appellant to refute those findings for which appellant-importer was also imposed with penal action under Section 112(a) of the Customs Act - confiscation and penalty upheld. Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 1421
  Imposition of penalty u/s 112 of CA - Validity of SCN - HELD THAT:- Ld. Commissioner has given contrary findings on the issue of penalty that in Para 47 he stated that penalty is not imposable and at the same time in Para 49 (a) and (b) he is taking a U turn stating that respondent is not liable to penalty under Section 112 of the Customs Act. Therefore, there is clear error in the order-in-original in so far as the Commissioner did not impose penalty on both the appellants. As per findings of the Commissioner, he concluded that recovery of interest under section 28AB of the Customs Act, 1962 is not warranted in this case. However, despite giving this finding, he has not passed any order in Para 50 in respect of proposal for demand of interest made in the show cause notice. It is incumbent on the Commissioner to pass an order on each and every proposal made in the show cause notice and he cannot be silent in the operating portion of the order on any of the proposal made in the show cause notice. Therefore, on this count also, there is a clear error in the order. Since there are contrary findings on imposition of penalty under Section 112 and there is error inasmuch as no order was passed on the interest, the matter needs to be remanded for passing a fresh order only on the issue of penalty under Section 112 of the Customs Act and on the interest under Section 28AB - appeal allowed by way of remand.

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• Corporate Laws

• 2019 (5) TMI 1420
  Production of report filed under Rule 9 of the Companies (Court) Rules, 1959 read with Section 497(6) of the Companies Act, 1956 - voluntary winding up - HELD THAT:- After considering the final statement of accounts, the final return Annexure C and the requirement of Section 497(6) of the Act having been fulfilled, the said return is taken on record and it is directed that the company under liquidation shall stand dissolved. Application allowed.

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• 2019 (5) TMI 1419
  Restoration of name of an assessee company in the Register of ROC, Gujarat, Ahmedabad - the name was struck on such ground that the Respondent No. 2 company did not file its statutory returns e.g. financial statements since its incorporation with the ROC, Gujarat, Ahmedabad HELD THAT:- The assessing officer (ITO) as well as the Competent Authority of the Department are of a considered view that it is a case of escapement of income. In support of their decision, the appellant has annexed copies of relevant documents with the present memo of appeal. The name of such companies not to be deregistered when some legal/ administrative action against it has been initiated or being contemplated - In the present matter, it is undisputed position that the income tax department has already taken a conscious/ administrative decision against the Respondent No. 2 company on alleged escapement of income from assessment during the relevant financial year, hence, its name ought not to be removed. It would be just and proper to restore the name of the company M/s. Swaroop Health Care Pvt. Ltd. In the register maintained by the Registrar of Companies, Ahmedabad so as to enable the Income Tax Department to initiate or to proceed with its statutory action/ proceedings in respect of the assessee company (R-2) and further to give an opportunity to other regulatory authorities to take Judicial/ Legal actions in accordance with Law in respect of the Respondent Company - appeal allowed.

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• 2019 (5) TMI 1418
  Stay of the operation of order dated 15.03.2019 - HELD THAT:- The order dated 15.03.2019 modifying the interim order passed earlier shall remain in abeyance for a period of seven working days from today. Copy of this order be supplied to the learned counsel for the petitioner/applicants Dasti under the signatures of Court Officer.

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• 2019 (5) TMI 1417
  Oppression and Mismanagement - stay of proceedings pending before the Tribunal - whether this Appellate Tribunal should modify or make variations of the interim order passed on 12th December, 2018? - HELD THAT:- The Appellant has not prayed for any interim relief in appeal. The order dated 12th December, 2018 was passed by this Appellate Tribunal as it was alleged by the learned Senior Counsel for the Petitioner that they have issued notice on 24th October, 2018 with regard to sale of Chembur Land , which Appellant Company intend to sell. From the record, we also find that the Company is a Real Estate business of construction to the allottees. If the interim order dated 12th December, 2018 is allowed to continue, it would result in stopping the entire business and operations of the Appellant Company as not only immovable assets, even the movable assets of the Appellant Company cannot be dealt with in normal course of its business - Such power having vested with the Tribunal, this Appellate Tribunal can also pass interim order in the interest of the Company. Taking into consideration the fact that the interim order dated 12th December, 2018 if allowed to continue, it will result in stopping the entire operations and business of the Appellant Company, as Company in normal course cannot sell or allot properties to the allottees, which will affect the business of the Company, we modify the interim order dated 12th December, 2018 and direct the parties not to sell the Chembur Land of the Company without prior permission of this Appellate Tribunal or till the final decision of these appeals whichever is earlier. The order dated 12th December, 2018 is recalled and stands modified.

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• Insolvency & Bankruptcy

• 2019 (5) TMI 1416
  Direction for the promoters/directors of the Corporate Debtor to co-operate in completion of Corporate Insolvency and Resolution Process/Liquidation process of Corporate Debtor - section 19 of Insolvency and Bankruptcy Code - HELD THAT:- It is worth to note that there are no submissions produced on record by the Respondents. The Respondents despite service of notice by the Applicant for the Miscellaneous Application in hand, chose neither to file any reply nor to appear before this Bench. Affidavit of service has been produced on record by the Applicant. It is informed by the Ld. Counsel for the Applicant that Mr. Anil Kathuria was present on the hearing of 04.06.2018 but he chose to stay silent on this application. Hence, it can be said that the respondents have nothing to say in their defence. The Applicant has made out its case that the respondents were indulged in preferential, fraudulent and undervalued transactions. The conduct of the Respondents since the initiation of Corporate Insolvency and Resolution Process was unacceptable and not satisfactory to this Bench. The Erstwhile IRP also reported and recorded the same in the 1st CoC meeting about the non co-operation by the Respondents/Promoters/Directors. Hence, in respect of the prayer of the Applicant seeking co-operation from ex promoters/directors of the Corportae Debtor, an order is passed under section 19(3) of the I B Code on the ex promoters/directors to comply with the instructions of the liquidator and to co-operate with him in collection of information and management of the Corporate Debtor and now in completing the liquidation proceedings as well. Application allowed.

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• Service Tax

• 2019 (5) TMI 1435
  Refund claim - N/N. 52/2011 dated 30.12.2011 - Exporter or not - HELD THAT:- The assessee is in appeal before the Tribunal on the ground that all the conditions are satisfied under Notification No.52/2011 and also as per the clarification issued by the CBEC, vide Circular No. 104/4/2008 dated 12.05.2008 (Para 4.1) being satisfied by the appellant/assessee and the export being made through M/s MMTC Ltd. which was the statutory provision in the Trade Policy Schedule-II, SL. 80 and the money is realized after the export of the goods. The service tax paid in terms of the services utilized in the export of goods to be claimed as refund was rightfully sanctioned. It is apparent that M/s MMTC Ltd. stands indemnified of all claims, damages etc, of the foreign buyer and/or vessels owner in respect of exports to be made through them and M/s S. K. Sarawagi Co. Pvt. Ltd. (the appellant herein), the owner of the goods, is not allowed to export directly under Section 2 (20) of the Customs Act, 1962 as well as under the definition of exporter in the Foreign Trade Policy, 2009-14 under Chapter 9.26. The Role of M/s MMTC Ltd. is only like an intermediary because of the restriction imposed in the Foreign Trade Policy Schedule-II, SL. 80 which states that the Manganese Ore can only be exported through MMTC Ltd. The restriction imposed in respect of Manganese Ore is governed by Section 3 of the Import and Export (Control) Act, 1947. The role of M/s MMTC Ltd. in the export of Manganese Ore is a compulsion to be observed by the appellant/assessee and it is not by choice which has led to the present dispute. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1434
  Club or Association Service - membership fee/subscription fee - mutuality of interest - whether the Federation of Andhra Pradesh Chamber of Commerce Industry (FAPCCI) is liable to pay service tax on membership fee/subscription fee collected by them from their members during the period 01.10.2005 to 30.09.2008? HELD THAT:- The Federation of Andhra Pradesh Chamber of Commerce Industry is a not for profit company registered under Section 25 of the Companies Act, 1956 - The case is similar to the cases of SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 [ 2013 (7) TMI 510 - GUJARAT HIGH COURT ] or RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2012 (6) TMI 636 - JHARKHAND HIGH COURT ] inasmuch as the organisation is formed out of mutuality of interest and services are rendered by the appellant to its members and the members pay subscription fees. The appellant is not liable to pay service tax for the entire period in dispute - demand of interest and imposition of penalties also do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1415
  Taxability - Refund of service tax paid - construction and maintenance services provided to Government of India / Ministry of defence - Mega Exemption Notification No.25/2012-ST dated 20th June, 2012 - HELD THAT:- The appellants were providing Commercial/Industrial Construction Services to Military Engineering Services (MES). It admittedly is a unit of Ministry of Defence, Govt. of India. MES is observed to be Construction Maintenance agency for Indian Army. We, therefore, opine that the Construction/ Maintenance Services of MES since being linked to the structures/buildings, which are not to be used for commercial purposes but for Ministry of Defence, any service rendered to MES is not taxable. Mega Exemption Notification No.25/2012-ST dated 20th June, 2012 - HELD THAT:- Mega Exemption Notification No.25/2012-ST dated 20th June, 2012 had exempted the services as that of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance renovation or alteration of a civil structure when provided to a Governmental authority from the ambit of service tax. However, said exemption was recalled vide the Notification No.6/2015 dated 1st March, 2015 whereafter the services provided even to Government were leviable to service tax, therefore the same was borne by MES which Service Tax component was deposited by the appellant with the Service Tax Department. By virtue of Section 102 of Finance Act, 2016 incorporating the aforesaid entry No.12A that the services provided by the appellant to MES became exempted retrospectively from 01.04.2015 itself. This observation is sufficient to hold that the intention of the Government had always been to exempt the services being provided to anyone other than commerce industries business or profession i.e. the services provided to Government to remain exempted from the levy of service tax. No doubt for any amendment, which is substantive in nature the same has to be applied prospectively. The refund claim was initiated by the appellants/ the service providers on the request of the service recipient i.e. MES, Ministry of Defence, which is none other than the Government of India - There is a clear declaration in the form of Affidavit as was annexed with the refund claim that since the amount of service tax prayed to be refund has been reimbursed to the appellants/ applicants by the service recipient/ MES that they acknowledged to return the same to MES after the amount is sanctioned and disbursed. Since the service recipient is none other than the Government of India, rejection of refund claim which is liable to be refunded, but the refund claim is rejected only on the ground that the service recipient/ the Department of Government of India has born the burden of said service tax, will ultimately cause the loss to the Exchequer of the said Department of Government of India. The proceedings are placed back before the Assistant Commissioner of Central Excise Service Tax, Central Excise Service Tax Division, Jodhpur (Rajasthan) directing that without disturbing the findings and observations on the allowability of the refund claim he shall reconsider the claim - also not the petitioner, but the MES to pursue the refund claim. MES shall join as co-applicant. If so done within one month, the Competent Authority shall decide the applications within one month thereafter. Appeal allowed by way of remand.

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• 2019 (5) TMI 1414
  Classification of services - Works contract service or Construction of commercial or industrial complex? - entire activity of construction took place during the financial year 2005-2006 - non-payment of service tax liability - demand of interest and penalty - HELD THAT:- On perusal of the concerned work order, we find that it involved both the supply of goods and material as well as element of service and labour. It is also a matter of record that the work order was awarded to the appellant on 21.6.2005 and same was to be completed within a period of four months. Thus, it is very clear that the activity undertaken by the appellant was prior to 01.06.2007 when the Works Contract service came to be enacted by the Finance Act, 1994. So far as the classification of work under Composite Work Contract is concerned, the matter is no longer res integra as it has been already decided by the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] where it has been laid down that in case any contract involve both transfer of property and goods along with element of service and labour, same will qualify to be classified as Works Contract service and since Work Contract service have came in existence from 01.06.2007 and the construction activity undertaken by the appellant was prior to 01.06.2007. The activity of the appellant qualifies to be classified as Works Contract Service and since the Works Contract service was not taxable prior to 01.06.2007, we do not find any merit in confirming the service tax demand against the appellant. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1413
  Classification of services - Renting of Immovable Property Services or not - renting of shops located in the Masjid precincts - extended period of limitation - penalty - HELD THAT:- For the period prior to June, 2012, the provision of Section 65(90a) of the Finance Act, 1994 defines renting of immovable property and exclude renting of immovable property by a religious body or to a religious body. The running of shops in the Mosque premises are being done by the society, which cannot be considered to be a religious body. Merely because the appellant, being a society, is maintaining the Mosque will not turn them into a religious body, though the same may be a charitable organization. The renting activity is not being done by the Mosque but the same is being undertaken by the society, which itself is not a religious body. There are no merits in the contention of the learned advocate that the appellant s society being engaged in religious activities would get excluded from the definition of Renting of Immovable Property . Mega Exemption Notification No.25/2012 dated 20/06/2012 provides exemption from service tax to services provided by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of charitable activities. As such, it is seen that the exemption stands granted to the entity registered under Section 12AA of the Income Tax Act. Extended period of limitation - demand stands raised for the period 2009-10 to 2013-14 by way of issuance of a show cause notice dated 29/02/2015 - HELD THAT:- Admittedly the issue involved is a bona fide issue of interpretation inasmuch as the appellant being a charitable organization could have been under a bona fide belief that no tax liability would arise against them. Revenue has not produced any positive evidence to show that such tax liability was not being discharged by the appellant with a mala fide intent to evade payment of duty - In the absence of any evidence, it can be held that the demand would be hit by bar of limitation - penalty also not justified. However a part of the demand would fall within the limitation period for which purpose the matter is remanded to the Original Adjudicating Authority for quantification of the demand falling within the limitation period. Appeal allowed by way of remand.

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• 2019 (5) TMI 1412
  Refund of service tax - refund was rejected on the ground that the service provider might have taken the cenvat credit and in such case whether service provider has followed the Rule 6 of Cenvat Credit Rules 2004 in respect of exempted services provided by him - HELD THAT:- The observation of the lower authority is absolutely irrelevant for the reason that as regard assessment of the service provider it is Jurisdictional Officer who should take care of any such non-compliance on the part of service provider, therefore, on that ground appellants refund, who are not concerned about the availment of cenvat credit and compliance of the Rule 6, therefore, on this ground refund could not have been rejected. The matter needs to be reconsidered by the original authority - appeal allowed by way of remand.

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• 2019 (5) TMI 1411
  Levy of service tax - sale of internet cards for enabling the buyer to excess the internet - demand under Section 73 (1) or under Section 73 (A) of Finance Act, 1994? - HELD THAT:- Firstly, there is no proposal in the SCN to recover the amount under Section 73 (A) the same cannot be invoked subsequently, either in adjudicating order or in the appellate order. Moreover during the relevant period Section 73 (A) was not in force, therefore, in any circumstances the Commissioner (Appeals) should not have invoked under Section 73(A). There is no appeal by the Revenue against setting aside of demand under Section 73 (1). The demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1410
  Interpretation of statute - Notification No.1/2006-ST. - abatement of service tax - CENVAT Credit - input services - HELD THAT:- It is apparent that the appellant can avail Cenvat Credit for all services except those which are used for providing the services specified in Notification No. 1/2006-ST. In the instance case, the appellant have admittedly availed CENVAT credit of Telephone services, Repair and maintenance (telephone lines laundry, air conditioning, etc), Internet caf , contract services (Security services), Technical consultancy service (services used running hotel), Advertisement services, rent a hotel counter service etc. It is apparent that the services Like Telephone services, Repair and maintenance services, Technical consultancy service, contract services, Advertising services or in the nature of common inputs services. The Said services have direct or indirect nexus with all the activities undertaken by the hotel. Also there are no merit in the claim of appellant they have not availed the credit of input services used in provision of mandap keeping services. Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 1409
  Recovery of service tax short paid - Excess of service tax paid - adjustment of excess paid service tax with short paid service tax -Applicable rate of tax - extended period of limitation - HELD THAT:- The Appellant has paid Service Tax of 77,56,170.69/- in excess in some months during 10/2000 to 03/2004 as they were not able to estimate their correct Service Tax liability and to be on the safer side, they used to pay Service Tax provisionally which were never less than Service Tax actually payable by them, which were adjusted by them during subsequent months. The Tribunal in the Appellant s own cases in THE GENERAL MANAGER, M/S BHARAT SANCHAR NIGAM LIMITED VERSUS CCE, RAIPUR AND VICE-VERSA [ 2014 (6) TMI 768 - CESTAT NEW DELHI] and in the case of M/S. THE GENERAL MANAGER, TELECOM, BSNL VERSUS CCE, RAIPUR [ 2014 (10) TMI 419 - CESTAT NEW DELHI] and in the case of BSNL VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2011 (7) TMI 946 - CESTAT, NEW DELHI] have allowed adjustment of excess Service Tax paid against short payment of Service Tax. Applicable rate of tax - HELD THAT:- The services were provided by the Appellant during 10/2000 to 13-05-2003 when the rate of tax was 5% whereas, the value of taxable services were received during 14-05-2003 to 03/2004 when the rate of tax was 8%. It is well settled that the rate of tax shall be the rate as applicable on the date of provision of taxable services and not the date of receipt of value of such taxable services. Extended period of limitation - HELD THAT:- The demand in the instant case is barred by limitation as for the self same period, the Ld. Commissioner vide the earlier adjudication order dated 30-03-2007 has held that the Appellant has been regularly filing ST-3 returns and reflecting payment of Service Tax and that there is no suppression of fact or intent to evade payment of duty - demand barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1408
  Refund of service tax paid - exports made during the period December 2010 to May 2012 - N/N. 17/2009 dated 07.07.2009 and 52/2011 dated 30.12.2011 - HELD THAT:- In view of the amendment to definition of port services, all services provided within the port area are classified as port services Further, there is no such condition prescribed in the notification which requires the service provider to be authorized by the port - Since the Appellants refund claim was for more than 0.25% of the FOB value of exports, there was no need for self-certification. The conclusion of the Ld. Commissioner (Appeals) that the certificate is a general open ended certificate is erroneous and not tenable, especially when the notification is silent w.r.t the format in which the certificate has to be submitted. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1407
  CENVAT Credit - GTA Services - period 01.01.2005 to 30.11.2005 - HELD THAT:- There is no dispute that appellant are truck owner and they received amount of freight from the Goods Transport Agency who arrange the transportation for consignor or consignee. The appellant did not issue any consignment note. Admittedly, the consignment notes were issued by the Transport Agency M/s. Shri Balaji Transport Company, M/s. New Sharma Transport Company etc. In these facts, the appellant did not qualify as Goods Transport Agency and service tax demanded under Goods Transport Agency service is not legal and proper - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (5) TMI 1433
  CENVAT Credit - bogus purchase of raw material - Lead Ingots - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. SLP dismissed.

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• 2019 (5) TMI 1432
  CENVAT Credit - import of ceramic tiles between June, 2010 and January, 2014 - CCESC declined to permit adjustment of the duty already paid and Cenvat Credit - amendment to the Rule 4 of the CCRs with effect from 11th July, 2014 - Cenvat credit after 6 months of the date of issue of any of the documents in Rule 9 (1) - HELD THAT:- There is substance in the contention of the learned counsel for the Assesses in both the cases that the above amended provision cannot be given retrospective effect - As explained in EICHER MOTORS LTD. VERSUS UNION OF INDIA [ 1999 (1) TMI 34 - SUPREME COURT] the rule of lapse of credit lying with it unutilized on the date of amendment, cannot be applied to the goods manufactured prior to the date of the amendment. This is based on the principle that the right to adjustment of tax on final products accrues to an Assessee on the date when they paid the tax on the raw materials and that right would continue until the facility available thereto gets worked out. In the present case, the credit accrued when CVD was paid on finished goods deemed to be cleared from home consumption when the dealers sold the goods at higher price by altering the MRP. The right to the Cenvat Credit accrued on the very day when the inputs were received. Consequently, in the present case, the Court is satisfied that the Amendment to Rule 4 (1) CCRs prescribing a time limit for claiming Cenvat Credit will not apply to the consignments in the present case where the import took place prior to the date of the amendment and the deemed manufacture took place when the MRP was altered, which also happened prior to the amendment. In other words, the CVD paid by the BRCPL will have to be permitted to be adjusted against the CE duty settled as will the service tax paid on the input services. Validity of order - non signature of all member who has heard the matter - HELD THAT:- It is indeed true that the CCESC which heard the settlement application of the GCPL comprised of three members. Therefore, an order passed by just two of them, would obviously be unsustainable in law. Appeal disposed off.

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• 2019 (5) TMI 1431
  CENVAT credit - benefit under N/N. 56/2002-CE dated 14.11.2002 availed - it was alleged that J K based units are not purchasing raw material, so there is no question of manufacture of finished goods by J K based units, the goods manufactured were sold to UP based manufacturers who in turn partially exported their finished goods and partially sold in domestic market - demand confirmed on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of manufacture by the Jammu based manufacturer. HELD THAT:- The investigation was not conducted at the end of the Jammu based manufacturer and whole case has been based on the investigation conducted at Commissioner Central Excise, Merrut-II. Without investigation, it cannot be held that the Jammu based manufacturer were not manufacturer during the impugned period. Moreover, the entries of vehicles at the toll barriers also certified that the movements of raw material and finished goods. Further during the period of investigation itself, the Jammu based manufacturer were allowed continue their activity by procuring inputs from UP based supplier and selling goods manufacturing to their buyer/appellant. During the course of investigation, itself shows that the allegation is only on the basis of the assumption and presumption, therefore, it cannot be held that the appellants were not manufactured the goods during the impugned period. The Jammu based manufacturer were manufacturer during the impugned period and paid the duty on the goods manufactured by them. Consequently, the cenvat credit can t be denied to the recipient of goods M/s Fine Organics - the allegations against the appellants are based on assumption presumption which is not sustainable - penalty also not imposable. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1430
  Process amounting to manufacture or not - fabrication and installation of Retail Visual Identity Elements (RVI) at the petrol pumps different companies - demand of central excise duty alongwith penalties - Extended period of limitation - scope of SCN - HELD THAT:- The Appellants were issued two show cause notices in which Central Excise duty in which the Appellants were considered as manufacturers of branded goods (RVIs) for M/S IOCL. The first show cause notice was issued under extended period of limitation. Though in various show cause notices the Appellants were considered manufacturers of the RVIs but no evidence were bought on record as to in which manufacturing premises of the Appellants the said RVIs were manufactured. In reply to the show cause notice the Appellants furnished documents in their support establishing that the entire work of fabrication of RVI elements were got done from the various job workers. The Commissioner in his order has though conceded that the Appellants are liable to pay Central Excise duty even though they did not have any manufacturing premises, as the onus to prove the principal to principal relationship between them and the jobs worker were upon them which have not been fulfilled by them. Scope of SCN - HELD THAT:- We do not find the findings of Commissioner to be legal, as the Commissioner was legally bound to confine his findings with respect to charges levelled in the show cause notices. As we have already noted that in the show cause notices proceeded on the allegations that it is the Appellants who had manufactured the RVI elements. Hence the Commissioner could not travel beyond the scope of the allegations levelled in the show cause notices. Whether the Appellants could be considered as a manufacturer of the goods in terms of Section 2(f) of the Central Excise Act 1944? - HELD THAT:- The Appellants have brought sufficient evidence on record that the job workers were independently fabricating the various components on RVI elements. The Appellants were issuing TDS certificates to all the job workers. Some of the job workers were even registered with the service tax department. Further, it has also been accepted by the Commissioner that the Appellant were not having manufacturing premises - the job workers were fabricating the components of RVI independently and hence they are to be considered the actual manufacturers in terms of Section 2(f) of the Central Excise Act - We agree with the submissions of the Ld. Counsels that the status of the Appellant is that of supplier of raw material to various job workers who had actually manufactured the goods. Double taxation - HELD THAT:- We agree with the submission of the Ld Counsel that on the same activity department can t demand tax twice. We take note of the fact that the some of the Appellants were registered with service tax department under the category of work contract service - once the activities of the Appellants have been held to be falling under the works contract service under the Finance Act, 1994 and hence central excise duty cannot be demanded or confirmed treating the same activity to be a manufacturing activity, that too for the same period. Whether the Commissioner could rely upon the statements of four witnesses? - HELD THAT:- The Commissioner has relied upon their statements to come to the conclusions that the RVI items were in fully manufactured condition in the factory of the vendor itself. According to these statements completed RVI elements were transported to the sites and erected/installed with the help of nuts, bolts and screws. Fabrication work involving welding was not permitted at site - the Commissioner has erred in relying upon the statements of four witnesses which were not tested on cross examination. Whether the RVI elements which were cleared from the units of the job workers in fully manufactured conditions and became subject to payment of excise duty or whether the various components became integral part of the building/fascia or in other words the final RVI elements came in to existence at site only? - HELD THAT:- The RVI elements were dispatched as components from the workshops of the job workers and not in fully manufactured condition, and RVI elements came into existence only as a part of permanent structure at site only. In any event we have already held that the Appellants can t be treated as a manufacturer of RVI elements in terms of section 2(f) of the Act. Extended period of limitation - HELD THAT:- It is not a case where the department could invoke extended period of limitation due to various reasons. Firstly the Appellants were registered with the service tax department in respect of works contract service w.e.f 6.10.2007. Secondly, the Appellants were not having any manufacturing unit but for a few and were getting the components of RVI fabricated on job works basis. Thirdly, we have already held that fully manufactured RVI elements came into existence at site only - All these facts are sufficient to come to a definite conclusion that there is no willful suppression or misstatement of facts by the Appellants. Hence extended period of limitation is not available to the department. The impugned orders are not sustainable and so is the case for imposition of penalties on the appellants - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1429
  Classification of goods - Potato Flakes - while the assessee has claimed the classification under Chapter 20, Revenue seeks to classify the same under Chapter 11 of the Central Excise Tariff Act - HELD THAT:- Commissioner (Appeals) vide his impugned order set aside the order by relying upon the earlier order of the Tribunal in the case of same assessee, accepting the assessee s stands of classification under Chapter No.20 - there is no justifiable reasons to interfere in the impugned order of Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2019 (5) TMI 1428
  CENVAT Credit - service tax paid on supply of tangible goods and services (renting of poclainers and tippers) - period of dispute is April 2012 to June 2012 - extended period of limitation - HELD THAT:- The show cause notice covered the period April 2012 to June 2012 but was issued on 09.02.2015 well beyond the normal period of limitation. There is nothing in the show cause notice to show that the appellant has committed any fraud or had colluded or had mis-stated any facts or suppressed facts. There is an allegation that they have contravened the provisions of the act or rules but there is not even a mention that such contravention was done with an intent to evade payment of duty - the extended period of limitation cannot be indicated and the entire show cause notice is time barred and needs to be set aside on this ground alone. CENVAT Credit - capital goods or not - motor vehicles - HELD THAT:- The appellant could not have availed cenvat credit on the service tax paid on the hire charges for the vehicles in question. Usually, dumpers and tippers which are registered as motor vehicles and there is no contrary indication in the records. Once they are registered with the Motor Vehicles Department they cannot cease to be motor vehicles thereafter. The specific inclusion of dumpers and tippers as capital goods under Cenvat Credit Rules, 2004 excluded goods falling under Chapter 87 of the Central Excise Tax Act. The demand is time barred - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1427
  CENVAT Credit - Rule 4(7) of CCR, 2004 - Whether the appellant is entitled to take Cenvat Credit on Input Service Distributor (ISD) invoice received from their Head Office which was issued after 01.09.2014 beyond the period of six months from the date of the input invoices? - HELD THAT:- It is not in dispute that as manufacturer, the appellant have availed Cenvat Credit within six months from the date on which they received the ISD invoices which are one of the documents specified in Rule 9(1). The Head Office of the appellant who are registered as ISD have availed Cenvat Credit beyond the period of six months - there is no restriction has been placed on availment of Cenvat Credit by ISD during the relevant period under this proviso. The appellant is entitled to avail Cenvat Credit and therefore, the impugned order is unsustainable - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1406
  CENVAT Credit - input services - outward GTA service - HELD THAT:- It is found from the purchase order there is no dispute that the supply of excisable goods is on FOR basis, the freight is already included in the assessable value on which excise duty was discharged. With this fact the appellant become entitled for the cenvat credit on the outward GTA service - credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1405
  CENVAT credit - input services - outward GTA service - condition of sale on FOR basis - HELD THAT:- From the purchase order there is no dispute that the supply of excisable goods is on FOR basis, the freight is already included in the assessable value on which excise duty was discharged. With this fact the appellant become entitled for the cenvat credit on the outward GTA service - Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1404
  Refund of unutilized CENVAT Credit - closure of factory - rejection on the ground that the claim is not admissible on merits in terms of Section 11-B of Central Excise Act, 1944 read with rule-5 of Cenvat Credit Rules, 2004 as the refund is available only in case of export of final products or intermediates without payment of duty under bond or letter of undertaking - HELD THAT:- The appellant factory was closed down its production activity since October 2015 and they were filing NIL return. The jurisdictional Superintendent has also certified that since October 2015, there is no production and the appellants are filing NIL return - The Appellate Commissioner should have considered the above facts and should have applied the reasoning that when there is no production and the Appellants have sold/ cleared the machinery and capital goods itself that means that they have closed down their production and the factory is lying closed. The appellant s are eligible for refund of accumulated amount of modvat / cenvat credit - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1403
  CENVAT Credit - duty paying documents - time limitation - Credit taken on input services during the months of November 2014 and December 2014 of an amount of 21,29,851/- beyond the period of six months from the date of issue of invoices - HELD THAT:- The allegation in the show cause notice with respect to invocation of extended period of limitation is that the assessee has suppressed the fact that they have availed CENVAT Credit on the invoices in contravention to Rule 9(1) of CCR 2004 on the department inasmuch as they did not indicate so in their ER.1 returns. They have also not provided copies of the invoices along with returns. Thus, there was a suppression of fact and extended period of limitation is invoked. It is a well settled principle that to allege suppression, it must be shown that something which has to be disclosed by the assessee has not been disclosed. In this case, there is no requirement in the E.R 1 returns to give invoice wise details of CENVAT Credit availed. There is also no requirement of providing copies of invoices along with E.R 1 returns. Therefore, it cannot be held that the appellant had suppressed the facts from the department - Violation of rule 9(1) is established but there is no evidence of intent to evade. Therefore, the extended period of limitation cannot be invoked. There is no doubt that there was contravention of Rule 9(1) as it stood during the period but apart from the allegation that there was an intent, there is nothing in the entire show cause notice to show for support of this allegation of malafide intention. Therefore, in the show cause notice itself, I find that there is no ground to invoke the extended period of limitation. Imposition of penalty - HELD THAT:- Since the element necessary for invoking the extended period of limitation was absent in the show cause notice itself, no penalty can be imposed upon the appellant. Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 1402
  CENVAT Credit - common input services which is used for both dutiable and exempted final products - reversal of proportionate credit attributed to exempted products - demand on interest and penalty - HELD THAT:- There is no contest of demand of Cenvat credit, hence the same is upheld. Penalty - HELD THAT:- The demand was raised for the extended period as there is suppression of facts on the part of the appellant therefore, in terms of decision of the Hon ble Apex Court in the case of UOI vs. Dharamendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] , even though the amount is paid before issuance of show cause notice as per the proviso to Section 11A invoked, penalty cannot be reduced nor waived. Demand of Interest - HELD THAT:- The interest can be charged in case where Cenvat credit is taken wrongly and also utilized. Only for availment of Cenvat credit without utilization thereof, interest cannot be demanded - In the present case, the appellant though availed Cenvat credit but have not utilized till the date of reversal, therefore, interest is not chargeable. Hence demand of interest is set-aside. Appeal allowed in part.

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• 2019 (5) TMI 1401
  CENVAT Credit - input services or not? - repair activity on the imported machine - HELD THAT:- It is fact that appellant imported machine, brought in the factory, dismantled and reassembled the same. This does not amount to manufacture and the appellant has never given details of their activity and the process carried out by them. Dismantling of the machine and reassemble of machine does not amount to manufacture. In terms of Rule 16, the Cenvat credit is admissible on any goods brought in the factory for any reason including various processes subject to condition that if the activity does not amount to manufacture the appellant is required to pay duty equal to the Cenvat credit availed at the time of receipt - Only in case of manufacture the assessee is required to pay duty on the assessable value. In the present case, the activity does not amount to manufacture, the appellant is required to pay duty equivalent to the Cenvat credit availed. However, the appellant have discharged duty on transaction value therefore, the appellant is liable for payment of duty for the differential amount - The impugned order demanding entire Cenvat credit is not correct and legal - The demand of Cenvat credit should have been confined only for the differential amount. Penalty under Rule 15 of Cenvat Credit Rules read with Section 11AC of Central Excise Act, 1944 - HELD THAT:- Since the demand is reduced to differential amount, between the demand raised by the lower authority and the amount already paid by the appellant at the time of removal of the goods, the penalty under Section 11AC shall also stand reduced equal to the differential duty demand and not equal to the total demand confirmed - Since the duty demand is re-determined, therefore the appellant is also entitled for option to pay 25% of the penalty subject to condition if the differential duty, interest and 25% penalty is paid within one month from the date of this order. Appeal allowed in part.

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• 2019 (5) TMI 1400
  CENVAT Credit - input services - Supply of Tangible Goods service - Painting Services used for painting - Commercial or Industrial Construction Service - HELD THAT:- The supply of Tangible Goods is in respect of hiring of Forklift which is used within the factory of production for handling of raw materials and finished goods. As per this use, it is clear that hiring of Forklift is in relation to manufacturing activity of final product and therefore, service tax paid on hiring of Forklift is admissible for Cenvat credit. Painting Service and Commercial or Industrial Construction Service - HELD THAT:- The same is not for a new construction but only for repair and maintenance of the existing factory and plant and machinery. Therefore, the same is covered under modernization and renovation of existing building and plant and machinery and the service of painting, repair of factory building/ plant and machinery is admissible input service in terms of definition of Input Service. It is also observed that some of the invoices, in respect of which the Cenvat credit was denied, are for Annual Maintenance Contract for repair of Air Conditioners installed in the factory. There is no specific allegation regarding these service, otherwise also Annual Maintenance Contract for repair is in relation of manufacturing activity of final products. Hence, it is admissible for Cenvat credit. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 1426
  Time Limitation for the purpose of proceeding with the assessment - Section 28 of the HGST Act, 1973 - delay in filing appeal - condonation of delay - HELD THAT:- There is a delay in filing the appeals ranging from 62 days to 245 days for which no satisfactory explanation has been given by the learned State counsel. The issue involved herein stands concluded by the decision of this Court in VATAP No.130-2017 titled as Excise and Taxation Commissioner, Haryana vs. M/s. Frigoglass India Pvt. Ltd. and anr [ 2019 (5) TMI 1178 - PUNJAB AND HARYANA HIGH COURT ], wherein it has been held that any assessment in respect of assessment year prior to 2002-03 shall be beyond limitation after 31.03.2006. The appeals are dismissed both on merits as well as on the ground of delay.

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