TMI Tax Updates - e-Newsletter
June 19, 2018

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Slump sale between related parties- Taxability and Valuation under GST

   By: Balasubramanian Natarajan

2. APPLICABILITY OF REVERSE CHARGE MECHANISM TO UNREGISTERED PERSON

   By: DR.MARIAPPAN GOVINDARAJAN

3. NEW ADVANCE RULINGS IN GST

   By: Dr. Sanjiv Agarwal

News

1. GST leads to Formalization of Economy and Widening of Tax Base

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

3. Global Trading System Must Include Services Trade: Suresh Prabhu

4. Commerce Minister releases study report on Indian pharma exports to China

5. RBI Reference Rate for US $

6. Fourth Governing Council Meeting of NITI Aayog Concludes

Notifications

GST - States

1. 15A/2018-State Tax - dated 2-5-2018 - Mizoram SGST

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

2. 14/2018-State Tax - dated 2-5-2018 - Mizoram SGST

Amending the SGST Rules, 2017(Third Amendment Rules, 2018).

3. 12/2018-State Tax - dated 13-4-2018 - Mizoram SGST

Second Amendment (2018) to SGST Rules

Circulars / Instructions / Orders

Customs

1. 19/2018 - dated 18-6-2018

Electronic sealing - Deposit in and removal of goods from Customs bonded Warehouses

Highlights / Catch Notes

Income Tax

• Penalty u/s 271(1)(c) Not Applicable When AO Accepts Revised Return Filed u/s 153A.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - Once the AO accepts the revised return filed u/s 153A, the original return under Section 139 abates and becomes non-est - assessee has voluntarily admitted the unexplained expenditure and AO has accepted the same - No penalty can be levied.
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• Conversion Charges to Municipal Corporation Are Revenue Expenses, Not Disallowed, Offering No Enduring Benefit to Assessee.

  Case-Laws - AT : Disallowance for conversion charges paid to the Municipal Corporation - when necessary expenditure has been incurred by making payment to the MCD, it cannot be of any enduring benefit to the assessee - charges have been paid by the assessee for regularization of his existing business thus revenue in nature.
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• Assessee's Revision Application Denied by CIT; Still Eligible to Appeal Before CIT(A) u/s 264 of Income Tax Act.

  Case-Laws - AT : Right to file an appeal before CIT(A) where the application for revision u/s 264 rejected by the CIT - Notwithstanding unsuccessful effort of the assessee in the revisional proceeding, still the assessee can file an appeal - thus assessee invoked revisional jurisdiction u/s 264 of the Act, it cannot constitute a bar for invoking the appellate jurisdiction.
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• Reopening u/s 147 Upheld for Escaped Income Tax; AO Authorized for Further Inquiries on Related Issues.

  Case-Laws - AT : Validity of reopening u/s 147 - the escaped income for which proceedings were initiated were brought to tax. AO has power to make enquiry on other issues also and the issue of commission was already being enquired.
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Customs

• Confiscation Order Overturned: Substantial Compliance with Registration for Imported Lead Acid Batteries Saves Penalty.

  Case-Laws - AT : Import of Lead Acid Batteries - The appellant being the actual user and the lead batteries have been imported not for the purpose of sale, the condition of filing the registration certificate, though not applicable in toto, has been substantially complied by them. - Order of confiscation and penalty set aside.
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• Mis-declaration of Defibrillators' Serial Number Not Intentional; Exemption Benefit Allowed for Import Duty.

  Case-Laws - AT : Mis-declaration of imported goods - Import of D. C. Defibrillators’ (DCD) with Standard Accessories - The wrong serial number of notification mentioned during filling of Bill of Entry was not intended. In such case it was not an intentional act of evading duty. - Benefit of exemption allowed.
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• Import Violations: Asphalt Hot Mix Plant Seized for Non-Compliance, Penalties and Confiscation Confirmed.

  Case-Laws - AT : Import of Asphalt Hot Mix Plant - since the conditions of the notification were not complied with and from the facts of the case it is very clear that the same were never intended to be complied with, the impugned order confirming demand, penalties and confiscation of goods has been rightly passed.
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• Undeclared gold jewelry subject to confiscation but can be cleared with duty under liberalized policy.

  Case-Laws - AT : Absolute Confiscation - Gold jewellery in question was not declared - Since it is not prohibited item, in terms of the liberalized policy, jewellery can be brought and cleared on payment of duty.
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Service Tax

• University Degree, Diploma, and Vocational Courses Exempt from Service Tax as per Notification No. 9/2003-ST.

  Case-Laws - AT : Classification of services - During the relevant period not only the degree/ diploma courses recognized by the University were exempted from Service Tax, but even the Vocational courses were also exempted in terms of N/N. 9/2003 – ST dt. 20.06.2003.
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• Service Tax Applicable on Bed Roll Supplies to Southern Railways' Upper-Class Passengers Under Customer Care Services.

  Case-Laws - AT : Business Auxiliary Service - appellants herein were providing bed rolls to upper class railway passengers of Southern Railways as per contracts awarded to them by the latter - the activities carried out by the appellant will definitely come within the scope of “Customer Care Services” provided on behalf of the “client” and hence will be exigible to service tax
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• Appellant Not Liable for Service Tax on Camp Supply; Demand Under "Supply of Tangible Goods Service" Not Applicable.

  Case-Laws - AT : As, camp as such is not supplied by the appellant and the same was already at the site of client. Thus, service tax demand on supply of camp cannot be taxed under “supply of tangible goods service”
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• Rajasthan Housing Board Work Order Deemed Composite Contract; Service Tax Applicable from June 1, 2007, Under Works Contract Service.

  Case-Laws - AT : The work order issued by the Rajasthan Housing Board for construction of Residential houses by the appellant is a composite contract, which involves both supply of materials and for construction of the houses. - Thus, irrespective of the classification of the services, service tax will be leviable under Works Contract Service only w.e.f. 1.6.2007
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• Milk Job Work Activities Classified as Manufacturing Under CETA Chapter Note 6; Exempt from Service Tax.

  Case-Laws - AT : Business auxiliary services – job work – as per the Chapter note 6 of the CETA, since the activities in relation to milk such as Labelling Or re-labelling of containers or repacking from bulk back to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture, it will not be subject to service tax.
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• Service Tax Demand Overruled: Appellant's Accurate Records Prevent Extension of Limitation Period in Tax Dispute.

  Case-Laws - AT : Extended period of limitation - The appellant have made proper compliances by maintaining proper books of accounts, recording all the transactions and also filed their periodical returns, which have not been found to be untrue by the revenue - Demand of service tax by extending period of limitation is not applicable.
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• Refund Denied: CENVAT Credit Claim Rejected Due to Late Debit per Notification No. 05/2006-CE (NT) Condition 2(h).

  Case-Laws - AT : Refund of CENVAT credit - N/N. 05/2006 – CE (NT) lays down that the amount claimed as refund of CENVAT amount should be debited before applying for the Refund and the appellant had not done so. They have debited the amount, but much later and thereby they violated the condition 2(h) of the notification - Refund was rightly rejected.
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• District Supply Officer's document not a consignment note; appellant not a Goods Transport Agency for service tax purposes.

  Case-Laws - AT : GTA service or not - The document issued by District Supply Officer conveying the goods transported cannot be construed as a consignment note to render the Appellant to be a ‘goods transport agency.’ - Services not covered under GTA services.
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• No Service Tax for Builders on Flats Exchanged for Land Share, Exempted Under Tri-Partite Agreement.

  Case-Laws - AT : Construction of residential and commercial complex - Tri-partite Agreement - there cannot be any service tax liability in respect of the construction of flats provided by the appellants to the erstwhile 45 flat owners in lieu of their relinquishing their undivided share of land.
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• Joint Property Owners Can Individually Avail SSI Exemption of Rs. 10 Lakhs for Rent as per Notification 8/2008.

  Case-Laws - AT : Renting of immovable property - joint ownership - SSI exemption - Clubbing of clearances - each individual owner is entitled to avail the benefit of threshold limit of ₹ 10 lakhs under N/N. 8/2008 dated 01/03/2008.
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Central Excise

• CENVAT Credit: Education and Higher Education Cess Cross-Utilization Limited by Rule 3(7)(b); Authorities Can't Amend Law.

  Case-Laws - AT : CENVAT credit of Education and Secondary & Higher Education Cess - cross-utilisation in terms of provisions of Rule 3(7)(b) of Cenvat Credit Rules, 2004 - quasi-judicial authorities cannot step in the shoes of the legislature and cannot fill the lacuna, if any.
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• Penalty Imposed u/r 25 for Offsite Storage Unjustified Due to Procedural Non-compliance with Rule 4(4).

  Case-Laws - AT : Penalty u/r 25 of CER - storage of goods outside factory premises - imposition of penalty on the sole ground of non-observing of procedural requirement of Rule 4(4) cannot be appreciated.
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• CENVAT Credit Rights Intact After Exceeding SSI Exemption Limit; Rule 4(1) Cannot Restrict Entitlement.

  Case-Laws - AT : CENVAT credit - Rule 4(1) of CCR - entitlement of credit after crossing the SSI Exemption limit - the appellant right to avail the credit at the time of coming out of the exemption scheme cannot be curtailed down by adopting Rule 4(1) of the Cenvat Credit Rules.
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• Company Faces Duty Demand for Concealed Cone Yarn Clearance, Fails to Disprove Allegations of Clandestine Removal.

  Case-Laws - AT : Appellant company was not manufacturing or clearing any hank yarn and was clearing cone yarn clandestinely. The appellant has not put forward even slightest evidence to establish that they have not indulged in clandestine removal of cone yarn. - Demand of duty with interest and penalty confirm.
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• 'Ramco Super Plaster' Classified as "Value Added Cement" Under "Other Cement," CETA Subheading 2523 2990.

  Case-Laws - AT : ‘Ramco Super Plaster’ is nothing but a “value added cement” meriting classification as “Other Cement” in CETA sub heading 2523 2990.
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• Single Ply Jute Yarn Ruled Marketable and Subject to Excise Duty; Excisability Confirmed for Internal Use Products.

  Case-Laws - AT : Excisability/marketability - single ply jute produced by the appellant and captively consumed in the manufacture of multiple fold hank jute yarn - whether the single ply yarn produced by the appellant is marketable and thereby liable to excise duty or not? - Held Yes
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• Recombinant Erythropoietin (r-EPO) Ruled Out as 'Blood Fraction' or Hormone for Central Excise Classification.

  Case-Laws - AT : Classification of manufactured goods - recombinant erythropoietin (r-EPO) - The impugned product is not a ‘blood fraction’. Neither is it a hormone.
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• Removal of MRP Stickers Isn't Manufacturing Under Central Excise; No Allegations of MRP Alteration Made.

  Case-Laws - AT : Deemed manufacture - removal of MRP stickers - In the absence of any allegation of fixation or alteration of MRP, it cannot be said that, manufacture has taken place.
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Case Laws:

• Income Tax

• 2018 (6) TMI 841
  Penalty under Section 271(1)(c) - whether the Assessee is guilty of concealment of income, which is deliberate - Additional income declared by the assessee by filing revised return consequent to notices u/s.143(2) and 142(1) - factual matrix - 'substantial question of law' - Held that:- There is no debatable question of law of substance necessary for determining the rights of the parties in the case. This is just a case where the question as to whether the assessee is liable to be mulcted with penalty under Section 271(1)(c) of IT Act in the given fact scenario / conduct needs to be answered. Therefore, we have no hesitation whatsoever in holding that the proposed questions of law are definitely not substantial questions of law. We are of the view that they may not even qualify as pure questions of law as they are all turning heavily on facts. We have held elsewhere in this judgment that the factual findings returned by the CIT and ITAT are held to be conclusive as we are sitting in Section 260A of the IT Act. Assessee is not guilty of deliberate concealment of income and is not liable to be mulcted with penalty under Section 271(1)(c) - Decided in favour of assessee.

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• 2018 (6) TMI 840
  Doctrine of Merger - Issue of notice u/s 148 - disallowance of interest paid to banks - revision u/s 263 - Chnage of opinion - Held that:- It can be construed to be 'Change of Opinion' only when the same issue dealt with in reassessment is raised again in proceedings u/s 263 - thus relying upon the judgement in Sat Pal Aggarwal's case (COMMISSIONER OF INCOME-TAX VERSUS SAT PAL AGGARWAL [2007 (2) TMI 104 - HIGH COURT, PUNJAB AND HARYANA] where it is held that reassessment proceedings and thereafter invocation of jurisdiction by Commissioner under Section 263 of the IT Act were on the same set of grounds - hence we agree with the conclusion of the learned single Judge that this is not a case of change of opinion u/s 263. Whether for the purpose of computing the period of limitation envisaged u/s 263(2), the date of order of assessment or that of the reassessment, is to be taken into consideration? - Held that:- As per the Alagendran Finance case (COMMISSIONER OF INCOME-TAX VERSUS ALAGENDRAN FINANCE LTD. [2007 (7) TMI 304 - SUPREME COURT] it is clear that when a notice u/s 263 raises new issues, which are not subject matter of the re-assessment proceedings, then the two year period contemplated under 263(2) would begin to run from the date of assessment and not from the date of re-assessment - hence reckoning date of the impugned notice for the purpose of Section 263(2) is not the date of re-assessment being 30.12.2016, but the date of scrutinizing the assessment i.e, 25.02.2015 - hence the impugned notice issued by the Revenue dated 16.08.2017 is set aside as being hit by limitation u/s 263(2) - therefore the notice is quashed.

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• 2018 (6) TMI 839
  Disallowance of 50% of management charges u/s 44C - treatment as Head Office expenditure - Held that:- While deciding identical issue in case of assessee’s Group Company M/s. Lloyd’s Register Asia (India Branch Office), in AY 2005–06, the Tribunal [2015 (6) TMI 423 - ITAT MUMBAI] has held that management charges paid to the Head Office do not come within the purview of section 44C - thus following the aforesaid decision of the Co–ordinate Bench, we delete the 50% disallowance made out of management charges u/s 44C - Decided in favor of assessee. Applicability of 40(a)(i) on payment of management charges - Held that:- Following the judgement of decision of the Hon'ble Delhi High Court in CIT v/s Herbalife India International Pvt. Ltd. [2016 (5) TMI 697 - DELHI HIGH COURT] it is held that provisions of section 40(a)(i) of the Act are not applicable to payment of management charges - Decided in favour of the assessee. No interest under section 234B of the Act is chargeable - Decided in favour of the assessee.

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• 2018 (6) TMI 838
  Reopening of assessment - reason to believe - unexplained investment - Held that:- For reopening assessment, AO is required to form a prima facie belief that income chargeable to tax has escaped assessment. In the instant case, the AO has got the information from the CBI, the other investigating agency, that certain investment was made by the assessee through Shri Navneet Kumar Singhania, local cash carrier in the Jagati Publications and this investment was not declared by the assessee in the returned income. Therefore, the information received by the AO is sufficient to form a belief that income chargeable to tax has escaped assessment. Thus, we confirm the order of the CIT(A) upholding the validity of the reopening of the assessment. Entire addition is on the basis of the statements of the assessee and Shri. Navneet Kumar Singhania recorded by the CBI. Before the AO, assessee has specifically denied such statements recorded by the CBI and has sought cross-examination of Shri. Navneet Kumar Singhania which were not afforded to the assessee. It was also not made clear to us by the Revenue authorities as to whether on account of statements recorded by the CBI, any criminal proceedings were initiated against the assessee and Shri. Navneet Kumar Singhania under any other Act and what was the result thereof. Except such statements, the AO has not brought anything on record to establish that assessee had made such investment in Jagati Publications through Shri. Navneet Kumar Singhania and the same was not declared in its return of income. In the light of these facts, we are of the considered opinion that addition cannot be made in the hands of the assessee in the absence of the relevant evidence - decided in favour of assessee.

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• 2018 (6) TMI 837
  Validity of reopening u/s 147 - Disallowance of Commission payment - Held that:- The commission paid to the same / similar parties was already disallowed in later years and the same was also got confirmed by the ITAT. Thus, there is no merit in the contentions that commission amount is eligible for deduction - thus we find that there is no merit in the contentions of assessee on the issue of reopening and also disallowing the claim of commission - hence AO has correctly exercised his jurisdiction in enquiring about the commission payments and disallowing the same - Decided against the assessee. Disallowance of deduction u/s. 80IB - whether AO has exercised his powers wrongly - Held that:- the proceedings u/s. 147 were initiated, as assessee withdrew the 80IB claim in later years and filed revised return for this year and paid taxes. To regularise the same, AO has initiated the proceedings and assessee has accepted the same - AO accordingly disallowed the deduction claimed u/s. 80IB and accepted the revised return filed in response to the notice u/s. 148. Thus, the escaped income for which proceedings were initiated were brought to tax. AO has power to make enquiry on other issues also and the issue of commission was already being enquired in AY. 2008-09 - thus we do not find any reason to hold that AO has exercised his powers wrongly. - Decided in favour of revenue

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• 2018 (6) TMI 836
  Correctness of exemption claimed u/s 10(38) - LTCG on sale of shares - A.O disallowing the exemption claimed u/s 10(38) and treating the same as unexplained cash credit - whether the purchase of shares are bogus? - Held that:- the facts are mutatis mutandis identical in the case of SMT. SARITA DEVI, AND SMT. NITIKA KUMARI VERSUS INCOME TAX OFFICER WARD-14 (5) , HYDERABAD [2017 (5) TMI 1111 - ITAT HYDERABAD] treating the transactions as bogus, since the very basis for reopening the assessment was not provided to the assessee nor an opportunity was given to cross-examine the socalled Mr. Chokshi AO who conducted survey operation on assessee, much prior to filing of return, did not find any transaction of bogus nature and the f act that the Long Term Capital Gain was accepted do indicate that the transactions are genuine and cannot be held to be ‘sham’ on the basis of so called statement of Mr Mukesh Choksi on 16-01- 2013. The genuineness of statement itself cannot be accepted - There is no basis for treating the said transactions as not genuine. Considering the documents placed on record and the case law relied, we have no hesitation in directing the A.O. to accept the long term capital gains and short term capital gains declared - hence we dismiss the appeals filed by the Revenue and allow the cross objections filed by the assessee.

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• 2018 (6) TMI 835
  Right to file an appeal before CIT(A) where the application for revision u/s 264 rejected by the CIT - Revisional jurisdiction of Commissioner - Whether the assessee can file an appeal before the appellate authority - Held that:- Following the judgment of Madras High Court in COMMISSIONER OF INCOME TAX VERSUS D. LAKSHMINARAYANAPATHI [1998 (12) TMI 12 - MADRAS HIGH COURT] it is held that even though for invoking revisional jurisdiction, it is a pre-condition that the appellate jurisdiction should not have been invoked. There is no bar for filing appeal when the assessee has invoked revisional jurisdiction. Notwithstanding unsuccessful effort of the assessee in the revisional proceeding, still the assessee can file an appeal - thus assessee invoked revisional jurisdiction u/s 264 of the Act, it cannot constitute a bar for invoking the appellate jurisdiction Penalty levied u/s 221 for default in payment of self assessment tax - good and sufficient reason for default - Held that:- Assessee admittedly paid the tax belatedly along with interest under Section 234A, 234B and 234C of the Act - When the assessee has availed overdraft facility from the bank and exceeded the limit sanctioned by the bank and the assessee has no liquid cash to make the self assessment tax, this Tribunal is of the considered opinion that there is a good and sufficient reason for not making payment of self assessment tax. Therefore, in view of the second proviso to Section 221, there cannot be any levy of penalty - Decided in favor of assessee.

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• 2018 (6) TMI 834
  Disallowance for conversion charges paid to the Municipal Corporation - whether capital expense or revenue expense - Held that:- Conversion charges as well as parking charges paid by the assessee are necessary charges without which the assessee cannot run the business - relying on the judgement in case of DCIT vs. Haldiram Products Pvt. Ltd. [2013 (12) TMI 1151 - ITAT DELHI] where it is held that when necessary expenditure has been incurred by making payment to the MCD, it cannot be of any enduring benefit to the assessee - charges have been paid by the assessee for regularization of his existing business thus revenue in nature - Decided against the revenue. Disallowance on account of repair and maintenance - Held that:- Addition cannot be made on the basis of assumption that purchase of marbled has not been utilized particularly when books of accounts of the assessee have been accepted by the AO - even the evidence adduced by the assessee to prove the repair and maintenance, has, also not been disputed but the addition has merely been made on the basis of surmises - hence CIT(A) rightly deleted the addition - Decided against the assessee. Disallowance on account of business promotion expenses - Held that:- When we examine Business Promotion Expenses of 23,46,918/- claimed by the assessee in the light of the facts that the assessee has given turnover of more than 190 crores with returned income of 4,97,47,060/- and further in the light of the fact that in AYs 2008-09 32.33 lacs and 29.11 lacs respectively, the disallowance has rightly been deleted - Decided against the Revenue.. Disallowance u/s 40A(2)(b) for Fabrication Charges paid to the sister concern - Held that:- The disallowance cannot be made merely on the basis of estimation particularly when there is no fall in the G.P. Rate or Net Profit Rate which is more than the preceding year - AO has not collected any evidence to prove evidence from the prevailing market that expenditure incurred/claimed by the assessee were excessive or unreasonable with regard to the fair market value of the services - thus CIT(A) has eighty deleted the disallowance - Decided against the revenue. Disallowance of Production Incentives - Held that:- We are of the considered view that when the assessee has not brought on record the complete details of production incentives and the criteria for granting the incentive has not been provided to the AO. The same cannot be allowed - thus to enhance the sale production incentives need to be given by the assessee to its employees but the same cannot be allowed at the mere asking of the assessee - hence we set aside this issue to the AO to decide afresh on filing details/evidence by the assessee to prove the fact that the production incentive has been paid to employees under the policy formulated by the assessee - Decided in favour of revenue

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• 2018 (6) TMI 833
  Levy of penalty u/s 271(1)(c) - non specification of charge - non striking of inappropriate words - Held that:- Penalty is deleted by making reliance in case of JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [2017 (12) TMI 883 - ITAT, KOLKATA] wherein it is held that show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - in these circumstances, we are of the view that imposition of penalty cannot be sustained - we, therefore, hold that deletion of penalty by the Ld. CIT(A) against the imposition of penalty by the AO in the present case is to be sustained - the order of Ld. CIT(A) is hereby confirmed - Decided against the revenue.

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• 2018 (6) TMI 832
  Revision u/s. 263 by CIT - failure of AO to make relevant enquiry in respect to sale of rights in the immovable property - order erroneous and prejudicial to the interest of revenue - Held that:- Twin conditions which needs to be satisfied before exercising revisional jurisdiction u/s 263 by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue - Here AO in her assessment order has acknowledged the fact that assessee’s accountant has appeared before her several times and explained the return of income and assessee has filed various details, accounts and evidences to explain the return. In such a scenario, we cannot agree with the Ld. Pr. CIT that the AO did not issue questionnaire on this issue and thereby failed to carry out necessary inquiries or verification. So the main plank on which the ld. Pr. CIT usurped the revisional jurisdiction fails - hence the decision of the AO cannot be treated as erroneous and prejudicial to the interest of revenue as held in case of MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [2000 (2) TMI 10 - SUPREME COURT] - Decided in favor of assessee.

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• 2018 (6) TMI 831
  Disallowance u/s 40A(3) - payments made to agriculturalist - commercial expediency in making cash payments - Held that:- As relying upon case of Asst. CIT vs. R. P. Real Estate Pvt. Ltd. [2015 (7) TMI 1283 - ITAT RAIPUR] it is held that sellers being villagers had no bank accounts and therefore insisted on cash payment - The Tribunal held that payment in cash was out of business compulsion and not optional - thus payments are made to agriculturalist - The identity and genuineness of none of the parties is disputed - hence there is no disallowance - Decided in favor of assessee. Additions u/s 68 - sum credited against the sale of gold ornaments - Held that:- Assessee has submitted the necessary details and receipt of the transaction - AO has not made any enquiry or verification regarding the documents shown - he has himself noted that since the period of time barring was approaching, necessary verification could not be done - thus we agree with the CIT(A) that addition has been made on surmises and conjuncture without cogently rebutting the evidence submitted by the assessee - thus there is no infirmity in its order - hence appeal of revenue is dismissed.

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• 2018 (6) TMI 830
  Deduction u/s 80P(2)(a)(i) - assessee were doing the business of banking and therefore in view of the insertion of the provisions of section 80P(4) the assessee were not entitled to the deduction u/s 80P - Held that:- Assessees in these cases are primary agricultural credit societies, registered as such under the Kerala Co-operative Societies Act - in case of ITO v. The Chengala Service Co-operative Bank Limited (2018 (4) TMI 339 - ITAT COCHIN) had categorically held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) - thus we hold that the CIT(A)’s are justified in directing the A.O. to grant deduction u/s 80P(2)(a)(i) - Decided in favor of assessee.

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• 2018 (6) TMI 829
  Validity of the proceedings and order u/s 153C on the basis of documents seized - notings in the seized documents made reference to the name of third party - Held that:- Seized documents make reference to the payments made to TIPL by the person to whom the document belonged to.the document was found from the premises of N.K.G. with whom TIPL was having business transactions. In the circumstances, if the documents seized from the custody of Sr. Officer of N.K.G referred to payments made to TIPL then the only logical inference that one can draw is that the seized document belonged to the person who had made payment to TIPL. Admittedly therefore such documents could not be presumed to be belonging to the appellant that i.e. ‘TIPL’ - thus seized documents that are pages 35 and 38 of AVR-2 did not belong to the appellant company. In the present case, the facts and material on record prove that the seized documents did not belong to the appellant company and therefore we hold that the proceedings u/s 153C could not have been validly initiated against the appellant company. Such findings of ours get support from the judgement of the Hon’ble Delhi High Court in the case of PEPSICO INDIA HOLDINGS PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX & ANOTHER [2014 (8) TMI 898 - DELHI HIGH COURT] - hence the Tribunal accordingly quashed the assessment framed u/s 153C since it was found that seized documents recovered from N.K.G. did not belong to the said assessee - Decided in favor of assessee.

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• 2018 (6) TMI 828
  Delay in payment of tds to government treasury - Disallowance u/s 40(a)(ia) on coal washing charges for non deduction of TDS - Held that:- CIT(A) observed that TDS has been remitted to the Govt. within the extended period for filing of return as vivid from the facts and in any case if disallowed this year, the assessee could have got the claim allowed in the next year on the strength of the TDS certificate as per the proviso to sec. 40(a)(ia) - thus the action of CIT(A) will in no way prejudice the Revenue - we fully agree with the reasoning and factual conclusion of CIT(A) in deleting the disallowance as made by the AO - hence the appeal of revenue is dismissed. Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - Held that:- Assessee had own surplus funds in form of equity and free reserves - thus presuming that assessee has used its own funds for investment and not the borrowed funds for investment. We hold that the assessee has got sufficient own funds to make the investments and when that point is not in dispute, no disallowance could be made u/s 14A - reliance is place on the judgement of THE COMMISSIONER OF INCOME TAX VERSUS RELIANCE UTILITIES & POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] where it is held that investments were from interest free funds available with assessee - thus CIT(A) rightly directed disallowance @ .5% on the dividend earning scrip - Decided partly in favor of assessee. Disallowance u/s 14A r.w.r. 8D for the purpose of computing book profit u/s 115JB - Held that:- he issue is squarely covered by the decision of Hon’ble jurisdictional High Court in the case of CIT Vs. Jayshree Tea & Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT] where it is held that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A - thus respectfully following the orders we restore the matter to AO to calculate the book profit u/s. 115JB - assessee’s appeal is allowed for statistical purpose. Disallowance on account of provision for leave encashment u/s 43B(f) - Held that:- the matter is restored back to the file of AO for adjudication as per the decision of M/S. S.R. BATLIBOI & CO. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-54, KOLKATA. [2012 (3) TMI 585 - ITAT KOLKATA] - restore this issue back to the file of the AO for adjudication to await the final outcome of the Hon’ble Apex Court in M/s. Exide Industries Ltd. case [2009 (5) TMI 894 - SUPREME COURT ] and thereafter decide this issue - hence the appeal of assessee is partly allowed for statistical purposes.

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• 2018 (6) TMI 827
  Levy of penalty u/s 271(1)(c) - additions made on the basis of evidence in the seized material - Held that:- Once the AO accepts the revised return filed u/s 153A, the original return under Section 139 abates and becomes non-est - thus, for the purpose of levying penalty u/s 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee u/s 153A, and not vis-a-vis the original return u/s 139 - here assessee has voluntarily admitted the unexplained expenditure of 3.4 lakhs and declared the same in the revised return of income filed in response to the notice u/s 153A, which was accepted by the AO and made the assessment accordingly - hence concealment of income or furnishing of inaccurate particulars of income does not arise in this case and hence, penalty levied u/s 271(1)(c) is hereby cancelled - Decided in favor of assessee.

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• 2018 (6) TMI 826
  Disallowance u/s 14A - whether disallowance can be made in a year in which no exempt income has been earned or received by the Assessee? - Held that:- following the decision of the Hon’ble Delhi High Court in the case of Cheminvest Limited vs. Commissioner Of Income Tax [2015 (9) TMI 238 - DELHI HIGH COURT] has held that if no dividend income is earned during the year, no disallowances u/s 14A is warranted - no error in the finding of the Ld. CIT(A) on the issue in dispute and accordingly, uphold the same - Decided against the revenue. Disallowance u/s 37(1) - advertisement and publicity expenditure - Deferred revenue expenditure or revenue expenditure - Held that:- Assessee entered into an agreement with the “Municipal Corporation of Delhi” (MCD) for maintaining and operating public urinals in lieu of “OOH” advertisement media display on operation maintenance and transfer basis - pursuance of the said agreement, the assessee incurred an expenditure and claimed as revenue expenditure - thus relying upon the decision in the case of City Financial Consumer Finance Ltd [2011 (3) TMI 622 - DELHI HIGH COURT] where it is held that the assessee has not claimed for spread of the expenditure over the concession period - hence do not find any error in the order of the Ld. CIT(A) and therefore appeal of revenue is dismissed.

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• 2018 (6) TMI 825
  Disallowance u/s 14A r.w.r. 8D - Held that:- There is no doubt that purpose for which shares are held is not relevant and expenditure corresponding to the non-taxable income has to be disallowed proportionately. In view of the above, we feel it appropriate to restore this issue to the file of the Assessing Officer for determining proportionate disallowance of expenditure under section 14A of the Act following the decision of the Hon’ble Supreme Court in the case of Maxxop Investment Limited (2018 (3) TMI 805 - SUPREME COURT OF INDIA). It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Disallowance under section 14A to the book profit under section 115JB - Held that:- Computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962 - addition under clause (f) of Explanation 1 to section 115JB of the Act need to be determined without resorting to computation provided in section 14A read with Rule 8D of the Rules. Accordingly, we restore the issue in dispute to the file of the Assessing Officer for deciding in accordance with law after providing adequate opportunity of being heard to the assessee. Not granting TDS credit - Held that:- In the instant case, the assessee has not presented before us details of each TDS amount, credit of which has not been allowed by the Assessing Officer. In view of circumstances, we restore this issue to the file of the Assessing Officer and direct him/her to verify and allow the claim of the TDS in view of our direction above. We also direct the assessee to produce original copies of TDS certificates for verification along with one photocopy of said certificates before the Assessing Officer within 3 months of receipt of this order. The Assessing Officer may verify genuineness of the TDS certificates and allow the credit of the TDS amount accordingly Error in tax computation form - arithmetical error - Held that:- We are agreed with the Ld. counsel that Assessing Officer has committed mistake in transporting amount of profit under section 115 JB of the Act from assessment order to tax computation form. We, accordingly, direct the Assessing Officer to rectify the mistake and re-compute the tax liability of the assessee accordingly. This ground of the appeal is accordingly allowed for statistical purposes.

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• 2018 (6) TMI 824
  Eligibility to deduction u/s 80P(2)(a)(i) - assessee bank getting the deposit from non members - Held that:- As in earlier A.Y.2009-10 [2012 (7) TMI 1067 - ITAT DELHI], the Tribunal decide this issue in favour of the assessee Assessing Officer in the present assessment year also not pointed out how income would generate to the assessee by taking deposits from non-members. The direct source of income is ultimately from the credit facility provided to its members or from sale of seeds agricultural implements etc. contemplated in section 80P(2)(a)(iv). The calculation made by the AO is on hypothesis only - The net income generated to the assessee is only from its members. On the deposits, it will pay interest which would be its expenses and would be set off against the total income generated from the credit facility. It has not income on the deposits from the non-members rather it must have paid interest on such deposits. Accrued Interest on NPA - shown in balance sheet as accumulated balance of previous years and also such income was not earned by the bank since the borrower account was defined as “NPA” account and interest on such account cannot be accounted for as income - Held that:- As decided in ACIT vs. The Rohtak Central Cooperative bank [2015 (4) TMI 366 - ITAT DELHI] overdue interest not realized during the year and credited to suspense interest account cannot be taken to be the income of the assessee. CIT(A) has thus rightly deleted the addition in question. The same is upheld. There is no substance in the contention of the Ld. DR that the assessee was having no objection to this addition, since we find that it was an alternative submission of the assessee before the AO. - Decided against revenue

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• Customs

• 2018 (6) TMI 823
  Absolute Confiscation - Gold jewellery in question was not declared - whether the Gold Jewellery will be allowed to be re-exported - non-prohibited item - Held that:- It is not the Revenue’s case that the gold jewellery in question is prohibited item. In terms of the liberalized policy, jewellery can be brought and cleared on payment of duty. The only offence on the part of the respondent is that the jewellery in question was not declared by them thus making it liable to confiscation subject to the provision of Section 125 of the Customs Act, which allow confiscation of the goods and consequent redemption subject to payment of redemption fine and penalty - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 822
  Benefit of N/N. 21/2002-Cus dated 01.03.2002 - import of Asphalt Hot Mix Plant - construction and maintenance of PMGSY Road in Raibareli and Barabanki district in the state of Uttar Pradesh - goods imported not used for intended purpose - violation of import conditions - Penalty - Held that:- As per the conditions of the exemption notification, an importer can claim the benefit of exemption provided they are named as sub-contractor for construction of road. Even this condition was not satisfied. It clearly shows that the appellant never complied with the conditions of the exemption notification and has knowingly violated the conditions - since the conditions of the notification were not complied with and from the facts of the case it is very clear that the same were never intended to be complied with, the impugned order confirming demand, penalties and confiscation of goods has been rightly passed. Penalty on Shri V. S. Rao, Chief Manager (F A) - Interest u/s 114A - Held that:- Shri V. S. Rao was only concerned with the taxation matter to the extent of availing benefit of exemption notification and was not concerned/ connected with the decision to use machine and his role in violation of condition is also not visible, he cannot be burdened with liability of penalty - the issue of penalty u/s 114A on interest arising due to confirmation of demand has not been addressed by the adjudicating authority while imposing penalty u/s 114A. It is appropriate to remand back the matter of imposition of penalty on interest under section 114A to the adjudicating authority. Appeal allowed by way of remand.

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• 2018 (6) TMI 821
  Principles of Natural Justice - non-grant of personal hearing - case of appellant is that the impugned order has been passed without giving them a copy of the test report of the samples drawn from the imported goods and without granting them cross examination - Held that:- A perusal of the show cause notice shows that no reliance has been placed on the test report. While it is mentioned that samples were drawn, but there is no mention of any testing done and test report obtained - The case of the appellant is that the test report has not been supplied to them. However, when test report not a relied upon document if supplied or not supplied becomes immaterial. Revenue has not relied on the test report for establishing its case. Also, sufficient evidence has been produced by Revenue to establish that the goods were indeed misdeclared by the appellant with intention to evade customs duty. The appellant is liable to pay duty, interest and also liable for imposition of penalty - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 820
  Mis-declaration of imported goods - D. C. Defibrillators’ (DCD) with Standard Accessories - N/N. 21/2002-Cus dated 01.03.2002 - mentioning of wrong serial number of notification - case of Revenue is that the goods has been mis-declared by showing them for internal use whereas on going through the catalogue of the imported goods it was observed that the goods are for external use - demand of Differential duty - Confiscation - Penalty - Held that:- It is not in dispute that the imported goods are exempted i.e eligible for concessional rate of duty under the said notification albeit under different serial number than cited by the CHA in Bill of Entry and the Appellant is eligible for the exemption. The wrong serial number of notification mentioned during filling of Bill of Entry was not intended. In such case it was not an intentional act of evading duty. The Commissioner (Appeals) has denied the exemption available to external DCD on the ground that the DEC certificate was not produced at the time of importation of goods - Held that:- The identity and nature of goods is not in dispute. Even though assuming that the duty exemption certificate was not produced at the time of clearance due to lapse on the part of the CHA but the fact remains that the appellant are eligible for the exemption which is not in dispute. In such case even if the certificate is produced belatedly, the same cannot be made ground to deny the benefit of exemption to hospital. The appellants are eligible for exemption in terms of Sr. No. 362 of N/N. 21/2002 dated 01.03.2002. Further, there is no ground to confiscate the goods or to impose the penalty - The case is remanded back to the adjudicating authority to extend the benefit under the subject notification and order for differential duty, if any - appeal allowed by way of remand.

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• 2018 (6) TMI 819
  EOU/STP/EHTP scheme - import of Lead Acid Batteries - non-production of registration certification issued by the Ministry of Environment and Forest, Govt. of India to permit clearances - Held that:- Only a person who imports lead acid batteries for the purpose of sale is required to furnish a certificate as provided under section 5 - The appellant has obtained certificate and intimated the department by filing a copy of the same. The appellant being the actual user and the lead batteries have been imported not for the purpose of sale, the condition of filing the registration certificate, though not applicable in toto, has been substantially complied by them. The confiscation as well as penalty imposed is unwarranted and require to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 818
  Quantum of penalty u/s 114 of CA - The original authority had imposed penalty of 8,500/- under section 114 of the Customs Act, 1962 which was enhanced to 3,74,786/- by Commissioner (Appeals) - export of 24 cartons of goods of “goat finished upper leather” - it was reported that the samples do not satisfy the norms as there was absence of protective coating - Held that:- Only in a few items the defect of not having protective coating was detected. The appellant has sought return of the goods for reprocessing the same for the purpose of exporting. It is explained by the appellant that the defect occurred due to mistake at the end of the job worker. The appellant ought to have ensured that the goods fulfilled the conditions as per the Public Notice. The appellant cannot shift the blame on the job worker. Taking note of the entire facts, the imposition of penalty of 3,74,786/- is on the higher side - penalty reduced to 8,500/- - appeal allowed in part.

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• 2018 (6) TMI 817
  Smuggling - eletronic goods - prohibited goods - personal baggage or not? - goods imported in Commercial Quantity - Baggage Rules - Absolute Confiscation - Penalty - Held that:- There can be no doubt that the quantity of 1100 numbers of 1 GB RAMs, 201 numbers of 2GB RAMs, 50,227 numbers of Kingston 2 GB SD Micro Memory cards and 7097 numbers of PQ1 2 GB SD memory cards can by any stretch of imagination be considered as a normal personal baggage brought by a passenger into India - such quantities imported by the passenger can have only to be treated as trade quantities, hence the impugned goods cannot be considered as a bonafide passenger baggage. These goods are listed in the notified goods for the purpose of section 123 of Customs Act, 1962, hence they would take on the colour of prohibited goods. Absolute Confiscation upheld - penalty upheld - appeal dismissed - decided against appellant.

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• Insolvency & Bankruptcy

• 2018 (6) TMI 846
  Corporate insolvency process - eligible debt - Held that:- As admitted factual position thus emerges that the ‘Debt’ as defined U/s 3(11) of The Code under consideration have been classified as “Non-Performing Asset” by the Consortium of Banks, listed hereinabove and there was a “Default” as defined U/s 3(12) of The Code of non-payment. Therefore, the basic requirement of Admission of an Application under Section 7 appears to be fulfilled for initiation of Corporate Insolvency Resolution Process ( CIRP ) . The Financial Creditor has furnished several evidences to establish the existence of the “Financial Debt” and sufficient record to establish the occurrence of “Default”. Rest of the conditions being satisfied, this Petition deserves “Admission”. Upon “Admission” of the Application it is hereby pronounced the declaration of “Moratorium” as mandated in Section 14 of The Code. The declaration of Insolvency Process and commencement of “Moratorium” shall be made by Public Announcement immediately as prescribed U/s. 13 read with Section 15 of The Code

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• 2018 (6) TMI 845
  Initiating Corporate Insolvency Resolution Process - existence of operational debt - Held that:- Here in this case the applicant claim refund of an advance with interest at 24% p.a. Admittedly there is no purchase agreement enabling the applicant to claim refund of advance in the case of failure of supply of materials or in case of shortfall of materials received by the applicant on account of the purchase orders issued by the applicant. The claim of the applicant does not fall with in the definition of operational debt and hence the applicant is not an operational creditor as alleged. Much argued on the side of the respondent that the applicant who signed the application had no authority on the date of filing the application and the authorisation produced along with rejoinder is a deliberate attempt to mislead the facts regarding resolution not taken on the date as shown in the resolution annexed with the original application. Being found that this application is not maintainable as the applicant is not an operational creditor and this application is liable to be dismissed

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• 2018 (6) TMI 844
  Insolvency Resolution Process - outstanding debt - satisfaction of the ingredients as provided under section 9(5) (i) of the Code - Held that:- The operational creditor succeeds in proving that the application is complete, that there is no payment of the unpaid operational debt, that the demand notice has been delivered by the operational creditor, that no notice of dispute has been received by the operational creditor and that there is no disciplinary proceeding pending against the resolution professional, this application is liable to be allowed. The applicant in the case in hand succeeds in proving all the ingredients of section 9 (5)(i) of the Code, and further proves failure on the side of the Corporate Debtor in clearing the debt due to the Operational Creditor, even after receiving the demand notice under section 8(1) of the Code. The application filed by the operational creditor under section 9 of the Insolvency & Bankruptcy Code, 2016 deserves to be admitted

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• 2018 (6) TMI 843
  Insolvency Resolution Process - discrepancies in the xerox copy of the account furnished - whether the handwritten additions and omissions are against the specific provisions of The Bankers’ Books Evidence Act, 1891 and therefore, such an account is liable to be rejected? - Held that:- A certified copy of entry in a banker’s books is to be regarded as prima facie evidence in all legal proceedings with regard to the existence of such entry. As evidence of the matters, transactions and accounts therein recorded in every case. It has come on record that a certificate of entries in a banker’s books in accordance with the Banker’s Books Evidence Act, 1891 has been placed before us as Annexure A-VIII. There is a record of default available with the Central Repository of Information on Large Credits (CRILC) as per its asset classification report of the Corporate Debtor dated 16-06-2017.N o serious dispute with regard to the amount payable has been raised before us. Therefore, we find no substance in the aforesaid argument and reject the same. Mr. Naveen Jain is not authorized to sign the pleadings and file the application before us has also lost its sheen because with the rejoinder a copy of the certificate dated 26-03-2018 issued by the Financial Creditor under Bankers’ Books Evidence Act, 1891 and a copy of the Board Resolution of the Financial Creditor dated 06-12-2008 along with special power of attorney dated 11-08-2017 in favour of Mr. Naveen Jain have been placed on record. The filing of the aforesaid documents completely answer the objections raised by the Corporate Debtor. It is evident that by virtue of special power of attorney dated 11-08-2017 Mr. Naveen Jain has been authorized to file such like application before any Court/Tribunal. Accordingly, we find that the aforesaid objection is frivolous and is devoid of merit. Accordingly, the same is rejected. Corporate Debtor has various claims and litigations pending against the public sector undertakings like National Highways Authority of India, Railway and many others. It has filed arbitration proceedings and those proceedings are likely to result in payment of huge amounts. We are afraid that we cannot accept the pending claim petition as a basis for rejecting the prayer for triggering the Corporate Insolvency Resolution Process in respect of the Corporate Debtor. There is no provision in the Code to create such a bar. Accordingly, we reject the aforesaid objection.

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• 2018 (6) TMI 842
  Corporate insolvency resolution process - allegations against the resolution professional for not preparing Information Memorandum within 14 days of the first meeting of the COC as required by Section 25 (2) (g) of the Code - obligation on the ex-personnel of the corporate debtor, its promoter or any other person associated with the ex-management including ex-directors to extend all assistance and cooperation to the interim resolution professional - Held that:- The limit of two years imposed on Resolution Professional for presenting it before COC creates no right in the ex-management to deny any information prior to two years. This provision is couched in the language which requires performance of duties by interim resolution professional / resolution professional. It does not clothe the Ex-Directors with a right to withhold information beyond period of two years. Therefore, the attempt to escape from furnishing of information is wholly against the letter and spirit of the provisions of the Code. We have distinct impression that all this is being done to avoid furnishing of vital information necessary for CIR process. Sometime people think that attack is the best defence as has been done here. The allegations against the resolution professional are bald and lack substance. There is no supporting material to consider such allegations seriously. Therefore, we reject the stance taken by the Ex-Directors-respondents. As a sequel to the above discussion, this application is allowed. The resolution professional shall take possession of the whole record which is stated to be available at House No.22422, Bhagu Road, Bhatinda, where the record has been shifted from the registered office after it was sold by the financial creditor under Section 13 of the SARFAESI Act

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• Service Tax

• 2018 (6) TMI 814
  Refund of CENVAT credit - export of services - rejection on the ground that they had not debited the CENVAT credit amount from their books of accounts at the time of making the claim as required - It is further alleged that the refund claim amount was not reflected in the Service Tax returns filed by the appellant during the relevant period and the general ledger of the assesse to show that the duty has been debited cannot be considered as evidence, it being a private record. Held that:- It is clear that N/N. 05/2006 – CE (NT) lays down that the amount claimed as refund of CENVAT amount should be debited before applying for the Refund and the appellant had not done so. They have debited the amount, but much later and thereby they violated the condition 2(h) of the notification. The Adjudicating Authority had, therefore, rejected the refund and the First Appellate Authority has upheld the Order-in- Original and rejected the appeal - It was a technical mistake which has been rectified by the debit entry made later. The Rule or the notification does not provide the flexibility to the officers or the Tribunal to relax condition 2(h) of the notification. Refund rightly rejected - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 813
  Business Auxiliary Service - recovery of the Service Tax allegedly not paid by the appellant - Rate of tax - Held that:- The rate of Service Tax has been reduced w.e.f 25/02/2009 and hence the appellant will be entitled to lower rate from that date - claim of appellant allowed. Service tax on Commission - case of appellant is that Service Tax amounting to about 5 Lakhs will not be payable since this pertains to the Commission amount for work done in 2008-09 to 2009-10 which has not been actually received by the appellant - Held that:- we are unable to accept the claim of the appellant especially since the same is not supported by any documentary evidence - demand set aside. Appeal allowed in part.

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• 2018 (6) TMI 812
  Refund of unutilized CENVAT credit - Export of services - Rule 5 of Cenvat Credit Rules, 2004 readwith N/N. 27/2012-CE (NT) dated 18/06/2012 - Held that:- The exporter has fulfilled the substantial conditions of the N/N. 27/2012-CE (NT) readwith Rule 5 and therefore the refund for accumulated Cenvat credits under Rule 5 of the Cenvat Credit Rules, 2004 need to be refunded to them - Since substantial condition of Rule 5 and N/N. 27/2012-CE (NT) has been fulfilled by the exporter namely M/s Xander Advisors India Pvt. Ltd. refund is to be allowed - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 811
  Refund of service tax paid - services used in the export of their various export consignments - denial on the ground that the appellant/assessee is not registered with the Export Promotion Counsel which is the basic requirement under the Provision 2 (i) (B) of the N/N. 17/2009-ST dated 07/07/2009 readwith Section 11B of CEA 1944 - Held that:- Since, the required registration-cum-membership certificate has been produced before us and we find a mention of the same in para (viii) of the order-in-appeal dated 28.3.2014/19.3.2014 which proves that the appellant has fulfilled the condition of N/N. 17/2009 dated 07/07/2009 with regard to registration is concerned - matter remanded back to the Original Adjudicating Authority i.e. Assistant Commissioner to re-adjudicate the matter with the direction that he will consider the registration with the Federation of Indian Export Organization RCMC No. 527/07-08 dated 08/11/2007 (renewed subsequently up-to-date) and undertake a fresh adjudication of the refund claim of the appellant after giving him the proper opportunity of hearing - appeal allowed by way of remand.

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• 2018 (6) TMI 810
  Renting of immovable property - joint ownership - SSI exemption - Clubbing of clearances - threshold limit of 10 lakhs under SSI exemption N/N. 8/2008 dated 01/03/2008 in each case - Held that:- The ownership title of the property which is on lease with M/s ICICI Bank Ltd. is individually in the name of the four appellants who has entered into a joint lease agreement with the tenant namely M/s ICICI Bank Ltd. and the amount of rent on monthly basis has also been received by them separately and individually - As per the Income Tax Act all the four appellants who are recipient of the rent proceeds have to show their income in the individual name and has to pay rent under the Income Tax Act, 1962 accordingly. The SSI exemption N/N. 8/2008 dated 01/03/2008 (previously 6/2005 dated 01/03/2005) shall be available for individual owner of the above property for considering the taxable value of the service received by the individual owners - clubbing of value of service (rent in this case) of all the four individual co-owners of property is legally not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 809
  Clearing and Forwarding Agency Service - whether the appellant-assessee, a Clearing and Forwarding agent have been rightly subjected to demand of additional Service Tax as short paid? - Held that:- The appellant is not liable to service tax on the ground that the payments they have received on the pure agent basis by way of reimbursement of expenses incurred on behalf of the principal - the appellant is liable to pay service tax on the amount of remuneration/commission received from the Principal for the services provided, which will also include the amount of 5% given by the Principal on the expenses as pure agent. Matter remanded to the adjudicating authority for the limited purpose of recalculation of tax payable - appeal allowed by way of remand.

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• 2018 (6) TMI 808
  Jurisdiction - security agency service - cum-tax benefit - whether impugned adjudication order passed by Commissioner, Raipur which also determines liability for their office at Nowrozabad within Bhopal jurisdiction, whether the demand to that extent is without jurisdiction? - Held that:- So far the demand raised in the impugned order relating to Bhopal Commissionerate, of the Amlai office of the appellant, in respect of services in the state of M.P. is concerned, the said demand hit for jurisdiction, and accordingly set aside. Cum-tax benefit - Held that:- The gross amount taken by Revenue for raising the demand, in the facts and circumstances, the element of services tax was included and accordingly we hold that the appellant is entitled to cum-tax benefit for calculation of service tax liability. Valuation - quantification of taxable value on the receipt basis - Held that:- Tax demanded on gross value of bill raised, during the financial year, which is apparently erroneous, as tax was required to be demanded and/or calculated on receipt basis, as per applicable law till 31/03/2011 - gross demand raised is set aside - matter remanded to the Original Adjudicating Authority for recalculation of demand on receipt basis with respect to the services provided under the Raipur Commissionerate. Penalties - Held that:- There is no case for deliberate default on the part of the appellant as they have disclosed their turnover and liability towards service tax in their balance-sheet - Further there is no case by Revenue that there has been diversion of funds from the business of the appellant for non-business use - penalties set aside. Appeal allowed in part and part matter on remand.

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• 2018 (6) TMI 807
  Levy of Service Tax - certain receipts by the appellant, a dealer of motor vehicles, for the disputed period, under the fact that they have filed their ST-3 returns periodically and paid the admitted taxes - extended period of limitation - Held that:- The appellant have made proper compliances by maintaining proper books of accounts, recording all the transactions and also filed their periodical returns, which have not been found to be untrue by the Revenue. Hence, there is no case of contumacious conduct on the part of the appellant. Accordingly, the demand for the extended period of limitation is not sustainable. The appellant have claimed that certain receipts which were earlier being shown under the category of Authorized Service Station have been in the later years 2010–11 and 2011–12 disclosed under the head ‘Business Auxiliary Service’. Accordingly, matter remanded for the normal period to the Original Adjudicating Authority with the direction to hear the appellant considering the explanation and the supporting documents Appeal allowed in part and part matter on remand.

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• 2018 (6) TMI 806
  Classification of services - Appellant is engaged in conducting various courses some of which are approved by the AICTE or by “Education Institute of American Hotel and Lodging Institute” (EL – AHLA) or by International Air Transportation Institute (IATA) - whether the services would be taxable under the head commercial coaching and training services or otherwise? - Held that:- During the relevant period not only the degree/ diploma courses recognized by the University were exempted from Service Tax, but even the Vocational courses were also exempted in terms of N/N. 9/2003 – ST dt. 20.06.2003. In case of courses run by Appellant in MOU with the EI-AHLA, the Appellant has provided the list of students who on completion of course were employed with the Hotels and Hospitality Industry. If a course enables the student to acquire the knowledge and skills which enables them to seek employment or undertake self employment directly after such training or coaching, the said course will be covered by the vocational training and eligible for the exemption. The Appellant institute is providing both theoretical as well as practical training in the filed of hotel, tourism, airlines, travel agencies and tour operators. In case of courses run under the authorization of IATA, we find that the said courses also are job oriented in nature. The GDS FARE and Ticketing is run under the affiliation of IATA which is body with Global recognized operations and such affiliation makes the students acquire skills and training to acquire employment. There is no doubt that the courses run by the Appellant institute are thus providing vocational knowledge and training and cannot be made liable for service tax during the impugned period. There is no hesitation to hold that the courses run by the Appellant institute clearly fall under the vocational training and are eligible for exemption from service tax in terms of N/N. 9/2003-S.T., dated 20-6- 2003 and 24/2004-S.T., dated 10-9-2004 - the demand and penalty against the Appellant are not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 805
  Construction Services - Sub-contract - The revenue has carried out an investigation and it was revealed that the respondent had belatedly filed ST-3 return for the period 2005- 06 to 2009-10, the payment of service tax too was made after considerable delay along with interest - Held that:- the sub-contractor is independent service provider, the service provided by the sub-contractor is an input service for the respondent and when such service is billed by the respondent to their client the respondent comes into the shoes of service provider and his service even though it is received from the sub-contractor, shall be treated as fresh output service according to that sub-contractor as well as the respondent being main contractor are independently liable for payment of service tax - the matter needs to be remanded to Adjudicating Authority as whether demand can be dropped on the ground of revenue neutrality. Penalty u/s 76 77, and 78 - Held that:- From the plain reading of above section 80 it can be seen that the penalty can be waived under section 80 only in those case where there is sufficient cause for non payment of service tax. The section 80 does not provided wavier of penalty only when Service Tax is paid before issuance of Show Cause Notice therefore for waiver of penalty some more circumstances need to be looked into - the issue needs to be reconsidered. Appeal allowed by way of remand.

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• 2018 (6) TMI 804
  Business Auxiliary Services - manufacture - whether the activities undertaken by the appellant on behalf of the other party amounts to manufacture or not? - whether they get covered under the exclusion clause of Section 65 (29) being an activity to manufacture and thus entitled for exemption from payment of service tax under Business Auxiliary Service? Held that:- Clause (iv) of Section 65 (19) of the Finance Act, 1994 provides that service in relation to production or processing of the goods for or on behalf of a client is covered under the business auxiliary service. However, the definition of business auxiliary service specifically excludes any activity which amounts to manufacture within the meaning of Section 2 (f) of the Central Excise Act, 1944 from levy of service tax - The Chapter IV of Central Excise Tariff Act, where milk and milk products are classified has a specific mention under Chapter Note 6 of Chapter 4 that in relation to products of this chapter labeling or relabeling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture . Since the activity of manufacture, is excluded from the scope of classification and levy of service tax under business auxiliary service, the activity undertaken by the appellant are not leviable to service tax under business auxiliary service. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 803
  Construction of complex Service - contention of the appellant was that each residential unit being a standalone unit and there will be no building or buildings constructed by them having more than 12 units/flats they do not fall under the taxable category of construction of complex service - whether service tax under the category construction of complex as defined under Section 65 (30) (a) readwith Section 65 (105) (zzzh) readwith Section 65 (91a) of the Finance Act, 1994 has been rightly demanded? Held that:- The issue herein is squarely covered in favour of the appellant by the ruling of Hon’ble Supreme Court in the case of Macro Marvel projects Ltd. [2008 (9) TMI 80 - CESTAT, CHENNAI], where it was held that service tax under the category construction of complex is leviable only in case if construction of a building or buildings having more than 12 units - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 802
  Refund claim - rejection on the ground of unjust enrichment and time limitation - Commercial & Industrial Construction Services - Held that:- The chartered accountant’s certificate alone cannot be relied upon in the absence of any corroborative evidence to rule out the doctrine of unjust enrichment. - The appellant did not produce on record any document to show that they revised their bills or refunded them the element of service tax received by the appellants during the course of rendering the taxable service. Appellant’s bank statement, sale invoices or any other documentary evidence in their favour that they have not collected the element of service tax from their service recipients, have not been brought on record either before the Adjudicating Authority or before the Commissioner (Appeals) or before this Tribunal - matter remanded back to the Adjudicating Authority for denovo adjudication on all issues including the issue of limitation, after hearing the appellant - appeal allowed by way of remand.

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• 2018 (6) TMI 801
  Business Auxiliary Services - appellant acted as an agent of ICICI Prudential Life Insurance Limited and ICICI Housing Finance Limited and for service rendered, received commission - Extended Period of Limitation - Held that:- It is evident from the facts of the case that the service provided by the appellant is not falling within the category of Insurance Business but is covered by the definition of BAS. Consequently, the plea taken by the appellant that the service tax involved therein has already been paid by the insurance company under reverse charge basis under Rule 2(1)(d) of the Rules is rejected. Extended period of limitation - Held that:- It is seen that the appellant has failed to file the necessary service tax returns and have suppressed from the Department, that they were rendering the service during the disputed period. Consequently, there is no reason to interfere with the finding of the lower authorities that the demand can be raised under the extended period of limitation. Penalties u/s 76 and 78 - Held that:- the recent judgment of the Tribunal in the case of Ramawat Construction Co. [2017 (5) TMI 705 - CESTAT NEW DELHI] is application to the facts of the present case in which it has been held that the penalties under both Sections 76 and 78 are liable to be imposed - penalties upheld. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 800
  Construction of residential and commercial complex - Tri-partite Agreement - non-payment of tax on Construction of 45 flats, which were entitled to the Flat Owners, in lieu of their relinquishing the undivided share of land in favour of the appellant - Department took the view that the appellant is required to discharge service tax in respect of the 45 flats allotted to erstwhile owners on the basis of sale price of remaining 30 flats - Held that:- There cannot be any tax liability on the appellants for the period prior to 1.7.2010, namely, when the amendments were caused in the relevant provisions relating to the construction of residential complex in the Finance Act, 1994. This is the view as clarified by the CBEC in their Circular No.151/2/2012-ST dt. 10.02.2012 - there cannot be any service tax liability in respect of the construction of flats provided by the appellants to the erstwhile 45 flat owners in lieu of their relinquishing their undivided share of land. Identical issue decided in the case of VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [2018 (5) TMI 889 - CESTAT HYDERABAD], where it was held that the amount attributable to the consideration received by appellant in the form of land rights from the land owner stands included in the value of villas sold to prospective customer which would mean that whatever consideration was received by the appellant in form of developmental right was considered in assessable value. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 799
  Classification of services - construction of residential houses and other related works - case of Revenue is that the activities provided by the appellant should be taxed under “construction of complex service” upto 31.05.2007 and under “works contract service” w.e.f. 1.6.2007 - Penalty - Held that:- The fact is not under dispute that the work order issued by the Rajasthan Housing Board for construction of Residential houses by the appellant is a composite contract, which involves both supply of materials and for construction of the houses. Thus, irrespective of the classification of the services, service tax will be leviable under Works Contract Service only w.e.f. 1.6.2007 - categorization of the service under “construction of complex service” in the adjudication order cannot be sustained. Time Limitation - Period from 1.6.2007 to 30.09.2010 - Held that:- There were confusion during the relevant time with regard to proper classification of the service. Since the Department has not specifically brought out any evidence showing the classification motive of the appellant, in defrauding the government revenue, the extended period of limitation cannot be invoked for confirmation of the adjudged demand and the demand should be confined to the normal period. Penalty - Held that:- Since the issue involves interpretation of statutory provisions, the penalty cannot be levied against the appellant. The matter is remanded to the Original Authority for quantification of the service tax demand, which should be payable by the appellant within normal period of limitation - appeal allowed by way of remand.

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• 2018 (6) TMI 798
  Demand of Service Tax - Supply of tangible goods Services - Held that:- “Supply of camp used for residence of labourers” cannot be considered as a taxable service under the “supply of tangible goods service”. Inasmuch as, camp as such is not supplied by the appellant and the same was already at the site of client. Thus, service tax demand on supply of camp cannot be taxed under “supply of tangible goods service” - the facts as contended by the appellant can only be verified by the adjudicating authority - matter on remand. Renting of immovable property Service - appellant submits that the amount debited towards such service in the Cenvat Credit Account has not been considered by the Original Authority while adjudicating the dispute - Held that:- The matter remanded to the Original Adjudicating Authority for proper factual finding where the amount in question has been debited by the appellant from its CENVAT credit account. If the amount has already been debited, as given by the appellant, the demand should be on such account, which should be dropped by the Original Authority. Supply of Manpower Services - appellant contended that they have deposited service tax amount towards such category of service - Held that:- Since there is no specific finding with regard to payment made by the appellant, at this juncture, this matter should also be remanded to the Original Authority for necessary verification. Commercial , while the demand has been confirmed under the taxable category of “Site Formation Service” - Scope of SCN - Held that:- The adjudicating authority has travelled beyond the scope of SCN inasmuch as it had proposed for confirmation of demand under ‘CICS’, whereas the demand was confirmed under “Site Formation Service” in the adjudication order. Change in classification of service in the adjudication order is not proper and justified - demand set aside. Penalty - suppression of facts - Held that:- Since the Original Authority has invoked the proviso to Section 73 (1) of the Finance Act, 1994 and imposed penalty under Section 78 of the said Act, mere non-mentioning the word “suppression” will not deprive the Revenue, in any manner, for which the appeal cannot be preferred before the Tribunal - decided against Revenue. Appeal disposed off.

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• 2018 (6) TMI 797
  Refund claim - relevant date - What should be the relevant date for filing the refund u/r 5 / N/N. 27/2012-CE(NT) dated 18.6.2012? - Held that:- As per the Larger Bench decision in the case of Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], it was held that in case of refund under Rule 5, the relevant date is the end of the quarter wherein the FIRC is received - In the facts of the present case, the refund for the period October 2012 to December 2012, the refund was submitted on 30.9.2013, which shows that the refund was filed within one year from the end of the quarter. Therefore, it is well within the prescribed time as provided under Section 11B of the Central Excise Act - refund allowed. Refund claim - export of services - input services - general insurance services - real estate agent’s services - stock broker services - online information and data access or retrieved services - club or association services - sponsorship services - nexus with export of services - Held that:- All the services disputed by the Commissioner (Appeals) are admissible input services, hence the credit is available. The adjudicating authority, without issuance of SCN as regards the admissibility of the input service, rejected the refund which is not permissible, but the Revenue is of the view that the credit is not admissible. The first step is to a show cause notice invoking Rule 14 of the Cenvat Credit Rules, 2004 for denial of the cenvat credit. Then only the refund can be rejected which was not done. Obviously the refund cannot be rejected by disputing the admissibility of the input services. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 796
  Refund claim - Services rendered outside India - Place of Provision of Services Rules - rejection on the ground that since M/s Holtech International has taken registration on 02/07/2015 at Wakad, Pune, hence as per definition of service recipient in Rule 2 (i) of PPS Rules, the location of service recipient is premises for which such registration has been obtained i.e India - Rule 6 A of Service Tax Rules - Held that:- The office of M/s Holtech International situated in USA is different establishment from its project office in India - In the present case it is the US establishment of M/s Holtech International, USA who has availed the services from the Appellant and therefore the services rendered by Appellant would clearly fall under the category of Export of Service in terms of Rule 6 A of Service Tax Rules, thereby making them eligible for refund claimed by them - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 795
  Penalty u/s 77 and 78 - Cable Operator Service - It emerged that the amounts declared in the ST-3 returns were much lower than that paid to the link operator and the subscription collected - Held that:- The appellants were brought into the service tax net by the Finance Act, 2002 w.e.f 16.08.2002 by the introduction of Section 65 (22) read with Section 65 (105)(zs) of the Finance Act, 1994 - In absence of any specific evidence for the department, collection amount as voluntarily disclosed by the appellant should have been accepted. There is no allegation of suppression in the SCN. Reliance placed in the case of Polimer Cable Network Vs. CCE, Salem [2018 (2) TMI 402 - CESTAT CHENNAI], where it was held that in respect of an assessee neither receiving television signals nor involved in distribution of such signals, but merely being an intermediary between MSO and franchisees (Local Cable Operator), and entertained bona fide belief of non-leviability of tax on them as Cable Operator, penalty not imposable under Sections 77 and 78 of Finance Act, 1994. The penalties imposed on the appellants under Section 76, 78 and 78 of the Finance Act, are set aside without disturbing the demand and interest - appeal allowed.

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• 2018 (6) TMI 794
  Real Estate Agent Service - the appellant has rendered non–binding investment advisory service to its holding company - demand of service tax - Held that:- Upon perusal of the Advisory Service Agreement, dated 10.03.2009 between the appellant and its holding company, i.e., IHM, it is seen that the appellant is required to render investment advisory services in connection with investment opportunities in India. It is clear that such services have been rendered relating to various companies engaged in the business of real estate - the demand of Service-Tax under Real Estate Agent Service is not justified. Manpower Recruitment or Supply Agency Service - reverse charge mechanism - employer-employee relationship - Department took the view that the amounts paid to the expatriates are to be considered as consideration for manpower supply and liable to Service-Tax, on reverse charge basis - Held that:- Some of the payment letters issued by the appellant to the expatriates which make it clear that such expatriates will be employees of the appellant during the period of their assignments to the appellant. Further, the Income-Tax returns filed by the expatriates clearly shows the appellant as their employer and Income-Tax has also been paid for the amounts received by the expatriates in India, under the category of salary - there can be no levy of Service-Tax under the category of manpower supply since the expatriates were enjoying the employee-employer relationship with the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 793
  Management, Maintenance or Repair Service - it was alleged that the appellant has artificially bifurcated the value of service part and cost of materials as 70% and 30% - The department was of the view that division of contract so that the payment of VAT is made on 70% of the maintenance charges and discharge of service tax only on 30% is incorrect - Held that:- It is not disputed that the appellant has discharged sales tax/VAT on the 70% of the value being the cost of materials. It is also admitted that such supply of spares is necessary for provision of services. When VAT has been discharged by the appellant on 70%, the contract being a composite contract and VAT/Service Tax being mutually exclusively, the further demand of service tax on the amount for which VAT has been paid by the appellant cannot sustain - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 792
  Commercial Coaching or Training Service - appellants are engaged in running a Spoken English Language Coaching Center along with personality development in the name of “ZEAL” - Levy of Service Tax - Held that:- The personality development course conducted by the appellant includes developing effective communication, ability to interact with people, English Language speaking skills, personal grooming and Dining Etiquettes, Interview and Group Discussion Training, Presentation Skills and Body language etc. These are intended to develop overall skills of the students in order to facilitate them to obtain employment. As per the definition of “Vocational Training Course” if it intends to help the candidates / trainee to obtain self-employment directly or under the employer would quality as ‘vocational training’. The Tribunal in the case of Mariya Computer Systems [2017 (1) TMI 37 - CESTAT NEW DELHI] has analyzed the issue and held that such course would fall under the category of ‘vocational training’ and would be eligible for exemption. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 791
  Advertising agency service - The appellants were providing services of display of bus panel advertisements etc. directly to clients or other agencies, Directorate of Advertisement and Visual Publicity (DAVP), Govt. organizations etc. without discharging service tax liability on service charges realized and without filing periodical ST-3 returns - Held that:- There cannot be demand of service tax liability in respect of the value of the services provided to other advertising agencies and hence that part of the impugned order which upheld the said demand is required to be set aside. Penalty - Held that:- The issue in dispute was very much mired in litigation as evidenced by the litigations on the issue - the imposition of penalties in this case is unjustified and requires to be set aside. Appeal allowed in part.

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• 2018 (6) TMI 790
  Classification of services - transporting Food grains under a contract - appellant submits that their activity were not only restricted to mere transportation of the goods but will also include loading and unloading of the food grains - whether the activity carried out by appellant is covered under the head GTA Service or under the head Cargo Handling Services? - Held that:- The Appellant has been appointed Food grains Transport contractor for transportation of goods from one place to another. The Appellant is engaged in transportation of food grains under the PDS (Public Distribution Scheme). The goods are transported on direction of District Supply officer and are under his control. There is no consignor and consignee in such case - During the transportation stage, the Appellant does not acquire any lien on the goods which is implicit in the issue of a consignment note. The document issued by District Supply Officer conveying the goods transported cannot be construed as a consignment note to render the Appellant to be a ‘goods transport agency.’ Services not covered under GTA services - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 789
  Valuation - Manpower Recruitment and Supply Agency Services - inclusion of reimbursable expenses - amounts received towards reimbursable expenses during the period March 2007 and June 2007 - Held that:- The appellant is engaged in providing manpower recruitment and supply agency service. It is not in dispute that the appellant has made such payments on behalf of the client M/s. Subiksha Trading Services. In the contract, it has been stated that while paying wages, the appellant has to deduct PF / ESI etc. as applicable and remit the same to the authorities concerned - Merely because the liability to deduct is cast upon the appellant, it cannot be said that these expenses are not reimbursable expenses when the client later reimburses the same to the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 788
  Banking and Financial Services - Failure to pay Service Tax - fees paid to the overseas service provider - Reverse Charge Mechanism - SCN issued by invoking Extended period of limitation - sub-section (3) of section 73 of FA - Held that:- The assessee had failed to pay the service tax only due to the bonafide belief that M/s. ICICI Hong Kong being a financial institution functioning overseas and belonging to ICICI based in India, and the overseas bank not being of foreign origin, the provision of section 66A are not applicable. That therefore they are not liable to pay service tax under reverse charge mechanism - the provisions of section 66A(2) of the Act provides that in case of permanent establishment in India and permanent establishment in a country other than India, such permanent establishments should be treated as separate persons for the purpose of the said Section. Therefore, on being pointed out, the assessee has discharged their service tax liability. Penalty rightly set aside - appeal dismissed.

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• 2018 (6) TMI 787
  Business Auxiliary Service - appellants herein were providing bed rolls to upper class railway passengers of Southern Railways as per contracts awarded to them by the latter - Department took the view that the said activity would be in the nature of a customer care service provider on behalf of the Railways - whether the appellant by performing these services namely, supply of bed rolls to passengers travelling in A/c III Tiers and in other higher classes and charges thereof collected by appellant from railways, will fall under the mischief of “Customer Care Service” provided to the Railways as taxable under “Business Auxiliary Service”? Held that:- The Railways are indubitably the “client” of the appellant since they perform the said customer care service on behalf of the railways. In the event, the activities carried out by the appellant will definitely come within the scope of “Customer Care Services” provided on behalf of the “client” and hence will be exigible to service tax under “Business Auxiliary Service” as defined under Section 65 (19) of the Finance Act, 1994. Demand upheld - appeal dismissed - decided against appellant.

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• Central Excise

• 2018 (6) TMI 786
  CENVAT credit - inputs - Revenue entertained a view that inasmuch as goods were not received in the factory on or after first day of March 2001, the appellant would not be entitled to avail the credit of the same, in terms of the new provisions of Rule 57AB introduced vide N/N. 6/2001-CE(NT) - Held that:- When the inputs were received in the assessee’s factory in Jan. and Feb. 2001, they were admittedly entitled to avail the credit of duty paid thereon. Had they taken the credit in Jan. and Feb, itself, there would have been no objection by the Revenue. In fact, the said inputs were duly entered by them in their input records and it was only taking of credit which was deferred. As such, it can be seen that it is a case where the appellant had earned the credit and has become entitled to the same and only making entries in RG-23A Part-II were delayed/left. As such, it is a case of correction of records and has no bearing on the appellant’s entitlement to take credit. The amended provisions talks about taking of credit in respect of inputs received on or after 1.3.2001 inasmuch as National Calamity Contingent Duty was imposed for the first time with effect from 1.3.2001 and in respect of inputs received prior to the said dates, no credit of such duty would have been available to the assessee. The assessee cannot be denied the credit in respect of inputs received by him prior to 1.3.2001, especially when he was within his rights to avail the credit in respect of said inputs and could have availed the same immediately on receipt of the goods prior to 1.3.2001 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 785
  Valuation - removal of MRP stickers - Revenue entertained a view that such removal of MRP sticker amounts to manufacture, in terms of Section 2(f) of Central Excise Act, 1944 which provides a deeming provision of manufacture - labelling/relabelling not done - Held that:- There is no allegation that any new MRP sticker were affixed to the goods in question - Admittedly, the provisions of Section 2(f)(iii) provides deemed manufacture definition only when the goods are labelled or relabelled or MRP is altered, which itself establishes the fact of a fixation of MRP on the goods. In the absence of any allegation of fixation or alteration of MRP, it cannot be said that, manufacture has taken place. Appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 784
  Penalty u/r 26 of CER - allegation against the appellants are that they have facilitated the fraudulent availment of Cenvat credit to the main noticee viz. M/s Ujala Electricals Ltd. - period involved in this case is from 2005-2006 to 2008-2009 - Held that:- The penal provision under sub-rule 2 of Rule 26 was not there in existence for the period 2005-2006 and 2006-2007 and only available for the period after 1.3.2007 - the penalty cannot be imposed for the period prior to 1.3.2007, the date on which sub-rule (2) was inserted in Rule 26 of Central Excise Rules, 2002 vide Notification No. 8/2007-CE(NT) dated 1.3.2007 for issuing invoices without delivery of goods and also for abetting in issuing such invoices. These aspects need to be relooked into by the ld. Adjudicating authority - appeal allowed by way of remand.

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• 2018 (6) TMI 783
  CENVAT credit - Rule 4(1) of CCR - entitlement of credit after crossing the SSI Exemption limit - Revenue entertained a view that inasmuch as Rule 4(1) allowed availment of credit only within a period of six months from the date of issuance of the documents, the appellants were not entitled to avail the credit on the basis of more than six months old bills of entry - Principles of harmonious construction and interpretation of rule - Held that:- Admittedly, the appellants were not in a position to avail the credit immediately on receipt of the goods or within a period of six months from the issuance of bills of entry, as long as they were working under the small scale exemption notification. Their right to avail the credit would arise only on crossing the exemption limit. Such right specifically stands extended to them by the provisions of Rule 3(2) of the Cenvat Credit Rules and cannot be extinguished by making reference to Rule 4(1). It is also well settled principle of interpretation that a particular provision of law should not be interpreted in a manner so as to render the other provision as inapplicable or ineffective. Substantive right provided under the law cannot be denied by referring to other provision, if such substantive right is otherwise available to an assessee. By adopting the principles of harmonious construction and interpretation of rule, the appellant right to avail the credit at the time of coming out of the exemption scheme cannot be curtailed down by adopting Rule 4(1) of the Cenvat Credit Rules - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 782
  Clandestine removal - the entire case of the Revenue is based upon the sole factor that M/s. Vishal Packaging Industries could not establish that during the relevant period, they had entered into an agreement with either M/s. V K Enterprises and M/s. Tambi Powerloom Ltd. - Held that:- This factor by itself cannot lead to conclusion that present appellant had cleared PET bottles in the guise of PET preform without payment of duty - It is well settled law that allegations and findings of clandestine removal are required to be made on the basis of positive evidence and cannot be upheld merely on doubts. There is virtually no evidence on record to show as to who were the transporters and buyers of clandestinely cleared bottles - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 781
  Clandestine removal - goods found short - Revenue entertained a view that such short found goods have been cleared by them without payment of duty - Held that:- There is no inventory issued by the officers for the purpose of stock taking of goods. Admittedly, such huge stock lying in the factory cannot be weighed and the fact of shortage or excess cannot be arrived at unless the inventories are prepared. There is no explanation of the Revenue as to how such huge stock was weighed. Further, the fact that the appellant had also sent their semi finished product to their job worker has a bearing on merits of the case. Hon’ble Allahabad High Court in the case of CCE vs. Meenakshi Casting [2011 (8) TMI 896 - ALLAHABAD HIGH COURT] has held that shortages held at the time of stock taking cannot lead to the inevitable conclusion of clandestine removal of the final product in the absence of any corroboratory evidence - Admittedly, in the present case, Revenue has not produced any evidence to establish clandestine activity of the assessee. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 780
  SSI Exemption - Confiscation of the raw material, packaging material as also semi finished and finished goods found in the appellant’s factory - seizure on the ground that the same was not entered in the statutory record - penalty - Held that:- Admittedly the appellant are working under the small scale exemption limit and there is no evidence to reflect upon the fact that the appellants were not entering the goods with an any malafide intention - confiscation with redemption fine and penalty not justified - appeal allowed.

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• 2018 (6) TMI 779
  Clandestine Removal - The entire case of the Revenue is based upon the records recovered from M/s Monu Steels and M/s. Kailash Traders and based upon the statement of the representative of M/s Monu Steels and M/s. Kailash Traders - Held that:- The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - It stand held in all these judgements that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Penalty on M/s Kailash Traders in terms of Rule 26 of CER 2002 - it was alleged that he has supplied the unaccounted raw material to the appellant, which has been further used by them for manufacture of their final product cleared clandestinely - Held that:- The allegation was based upon the entries made in his record, without there being any corroborative evidence - there is virtually no evidence to show that such entries relate to the actual transportation and supply of the raw material to the present appellant - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 778
  Classification of manufactured goods - recombinant erythropoietin (r-EPO) - whether classified under heading no. 2937 00 of the First Schedule of the Central Excise Tariff Act, 1985 as hormones or as other blood fractions under heading no. 3002 00 of the Schedule? - extended period of limitation - penalty - Held that:- The production of the impugned goods was at a nascent stage with no precedent to assist in classifying the particular heading of the First Schedule of the Tariff that it would fall under. It is also on record that the Central Government considered the goods to be classifiable under chapter 30 of the First Schedule of the Customs Tariff Act, 1975 for assessment of duty on imports. There is no evidence of deliberate intent of evading duty and the ample scope for confusion also precludes invoking of the extended period. The impugned product is not a blood fraction . Neither is it a hormone. In the absence of a valid and acceptable alternative after discarding its classification as a blood fraction , the consequent recovery ordered by original authority, and upheld by the first appellate authority, fails to meet the test of law and must be set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 777
  Refund of Cess paid - Secondary & Higher Education Cess - time limitation - Section 11B of Central Excise Act - Held that:- There is no basic provision either in the Excise Act or under the Cenvat Credit Rules relating to the refund of the accumulated credit - In the absence of any such provision conferring jurisdiction on the Tribunal to deal with the refunds of accumulated unutilized credits, it is not possible to go beyond the legislation and to deal with the said issue. Cenvat Credit Rules allows the credit of the duty/tax paid on the inputs for further utilisation of the same in discharge of the dues on the final product. As such, it become clear that credit is admissible only for utilisation towards payment of duty on the final product of the asessee and such credit can never be encashed by the asessee. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 776
  Adjustment of the sanctioned refund claim against outstanding demands - refund of the amount of 10 lakhs which the appellant was directed to deposit as a condition of hearing their appeal, which stand deposited by them - Held that:- Admittedly, the appellant has to pay the Revenue the confirmed demands - Mere filing of appeal before the Hon’ble High Court, without there being any stay, cannot be considered as pendency of the appeal. The Tribunal being the last fact finding body, the orders passed by it have to be taken as having attained finality, unless stayed or reversed by higher appellate forum - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 775
  Penalty u/r 25 of CER - storage of goods outside factory premises - permission not obtained under Rule 4(4) of the Central Excise Rules, 2002 - Held that:- The imposition of penalty on the sole ground of non-observing of procedural requirement of Rule 4(4) cannot be appreciated - also, the penalty was originally imposed under section 11AC of the Act which stand already set aside by Commissioner (Appeals). As such, fresh imposition of penalty under Rule 25 of Central Excise Rules, 2002, in the absence of any evidence by the Revenue, cannot be appreciated - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 774
  CENVAT credit of Education and Secondary & Higher Education Cess - cross-utilisation in terms of provisions of Rule 3(7)(b) of Cenvat Credit Rules, 2004 - Held that:- The use of the expression “inserted” and “substituted” will have no bearing inasmuch as the end result of the amendments in Rule 3(7) (b) of Cenvat Credit Rule is the same, whether it has come by way of institution or substitution. Otherwise also, there is no ambiguity in the provisions of law, which are very clear. The amended provision of Rule 3(7)(b) have clearly spelt that the benefit of cross utilisation of cess and higher cess can be permitted only in respect of inputs received on or after 01.03.2015. In the absence of any ambiguity in the language used in the said rule, the assessee’s contention that the legislation intent is required to be looked into, cannot be appreciated. It is well settled law that quasi-judicial authorities cannot step in the shoes of the legislature and cannot fill the lacuna, if any. Benefit cannot be extended - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 773
  Benefit of N/N. 43/2001-CE(NT) dated 26/06/2001 - whether the export of the goods made under the provisions of Rule and Notification is only a procedural mistake or it is the non-compliance of the conditions mentioned in the Notification which would deny them the benefit contained therein? - Held that:- As the goods procured vide the annexure 45 have not been used for intended purpose, there is violation of Rule 6 of (Removal of Goods at Concessional Rate of Duty) in the instant case - this is not the only technical infraction of the conditions of the Rule, but it is non-compliance of the condition of the Rule 6 in totality - demand upheld - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 772
  Excisability/marketability - single ply jute produced by the appellant and captively consumed in the manufacture of multiple fold hank jute yarn - whether the single ply yarn produced by the appellant is marketable and thereby liable to excise duty or not? - Held that:- Appellant had an intention of marketing this yarn even if they have not actually sold any. Thus, the excisability of the product in question is established by the declaration by the assessee themselves in the classification list - singly ply jute yarn manufactured by the appellant is marketable and therefore excisable - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 771
  100% EOU - post facto approval for procurement of indigenous material - appellant procured items like ceiling panels, wall panels, window panes, thermocole under CT-3 certificate without payment of duty - demand on the ground that these items are not capital goods as envisaged in N/N. 22/2003-CE. - Held that:- The Ministry of Commerce & Industry, Office of the Development Commissioner, Visakhapatnam SEZ has specifically granted post facto approval for procurement of the indigenous material in question - Since there is no dispute as to the receipt and consumption of material and post facto approval from the Board, the impugned order on this point itself needs to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 770
  Clandestine removal - suppression of facts - excesses of finished goods - shortages of raw materials - admissibility of statement - Section 9D of CEA - Held that:- The average daily production of the appellant plant is 30–32 MT, have not been disputed by revenue. For the disputed period under consideration from 03/01/2009 to 19th February, 2009 there are 48 working days or days multiplied by said 32 MT per day, the maximum production during the said period works out to (48x32) or 1536 MT. Thus, the calculation of revenue of production of 2214.434 during the said period is erroneous and excessive, and needs to be reworked. Further, the appellant will be entitled to set of, as regards shortage of raw material– M.S. Ingots from the excess stock of finished goods, as on the date of inspection. Accordingly, the appellant shall be liable for duty towards clandestine removal, as recalculated, as per dirdections. The penalty amount on the appellants company shall be worked out accordingly - the penalty imposed on the appellant-Director appears to be excessive and the same is reduced to 2 lakhs. Even by the rule of thumb, and the production reworked out on the basis of admitted average production, there exists element of clandestine production and removal. Appeal allowed in part.

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• 2018 (6) TMI 769
  Demand of duty- Scrap - Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - Held that:- There is no doubt that the removal of defective/damaged mould is nothing but a removal of input for further processing by the job worker. Therefore, the removal is correctly covered by Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 768
  Benefit of N/N. 6/2006 – CE dt.1/3/2006 - It appeared to the department that appellants are not eligible for the notification, since the CPU without monitor does not constitute a machine namely ‘Computer’ to attract concessional rate of duty as per the notification - whether the appellants are eligible for the benefit of concessional rate of duty as per the N/N. 6/2006-CE dt.1/3/2006 (Entry No.16), when they have not cleared the monitor alongwith CPU? - Held that:- Entry No.16 applies to goods falling under CTH 8471. When the goods fall under the said classification, the appellants come within the ambit of the eligibility / application of notification. Whether the goods fall within the description of ‘Computers’ as given in the Explanation in Column 3 of the Notification? - Held that:- It is very much clear from the explanation that even if the CPU is cleared separately or cleared with monitor, mouse and keyboard together as a set, the benefit of notification would be applicable. The word used in the Explanation is ‘includes’, the Hon.Apex Court in the case of Bharat Diagnostic Centre analysed the meaning of the word ‘include’ in Notification No.63/88, wherein it was held that the said word generally enlarges the meaning of words or phrases to comprehend not only such things as they signify according to their natural import or as per common parlance, but also those things which interpretation or explanation clause declares that they shall include. In the present case, admittedly the goods fall under CTH 8471 and thus the appellants are eligible for benefit of notification. This being so, the benefit of exemption has to be then construed liberally. Even without such liberal interpretation, since the explanation uses the word ‘include’, it is very clear that although the CPU is not cleared alongwith the monitor, the goods would fall within the description of Computers as given in Column 3 of the Notification. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 767
  Classification of goods - Axxanol 77C, Axxanol 33C and Axxanol 33 - It appeared that appellants produce the products namely Axxanol 33CD and Axxanol 33 by reducing concentration of Axxanol 33C using locally purchased lab ethanol; that the resultant products are classifiable under Chapter Heading 38112900 of Central Excise Tariff Act, 1985 - whether the process of diluting imported Rust Preventive Oil AXX33C in 208 litres drums, diluting the same in concentrations of 1:9, 1:24, 1:49 would fall within the ambit of Chapter Note 9 to Chapter 38 of the First Schedule of the CETA, 1985 and hence liable to payment of Central Excise duty? Held that:- The manner of application of the product in respect of the concentration strength is either to spray or to dip the component required to be treated for anti-rusting, after which, the mineral spirit and ethanol evaporate leaving behind the concentrate in the strength that has been made into to protect the component. The functionality of the Axxanol product remains the same irrespective of dilution that it has undergone namely to protect the components or items treated from rust prevention - Chapter Note 9 is being needlessly stretched in this case by the department and in the impugned order in an attempt to bring the diluted Axxanol within the scope of product “manufactured” by the appellant. It is also to be noted that the imported Axxanol came in 208 litres drums and the diluted Axxanol also was sold in cans/drums either of 208 litres or 35 litres, depending on the requirement of the consumer. The processes carried out by the appellant in this case will not attract the mischief of Chapter Note 9 before or after 1.3.2008 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 766
  Classification of goods - Ramco Super Fine - Ramco-Tile Fix - Ramco Super Plaster - Department took the view that the product “Ramco Super Fine” is wall based putty and appears to be more correctly classifiable under CETA 3214.00 upto 27.02.2015 and 3214.9090 thereafter - Held that:- As clarified in the HSN, the products of heading 32.14 are “preparations of widely differing composition which are essentially characterised by the uses to which they are put; these preparations are usually put up in a more or less pasty form and in general they harden after application; however, some are in solid or powder forms; the products of this heading are usually applied with a caulking gun, a spatula, a trowel, a plasterer’s float or similar tools”. It is interesting to note that while the appellants have been claiming that the product is a non-refractory preparation, by virtue of the HSN clarification, we find that even non-refractory preparations also fall under the ambit of both HSN 3214 and of CETA SH 3214 - the classification of the product ‘Ramco Super Fine’ under CETA SH 3214.00 upto 27-02-2005 and 32149090 thereafter upheld and also holding that the said product is required to be assessed to duty under Section 4A of the Central Excise Act, 1944. Classification of Ramco Tile Fix - Department took the view that the product Ramco-Tile Fix appears to be classifiable under 3506.00 of CETA upto 27.02.2005 and 3506.9999 thereafter - Held that:- The product appears to be a cement-based mastic having addition of polymers to lend adhesive properties which would possibly bring it within the ambit of CETA SH 32.14. However, since there is no such proposal made in the SCN and since the attempt of the department to classify it under CETA SH 35.06 has not found favour with us, we would only set aside that part of the impugned order which has ordered classification of “Ramco Tile Fix” under CETA SH 3506.00 upto 27.02.2005 and 3506.99.99 from 28.2.2005. Classification of Ramco Super Plaster–Plastering Compound - Department took the view that the product Ramco Super Plaster–Plastering Compound is classifiable under CETA 25232990 - Held that:- Evidently, not only is Ramco Super Plaster predominantly consisting of cement upto around 75%, but also, the product is projected as a superior substitute to cement for all plaster and mortar applications. No doubt the product may have better qualities than plain cement. Nonetheless there is no gainsaying that it is still predominantly cement only upto almost 75%. Further even the literature states that it “is used the same way cement is used - there is no infirmity with the conclusions of the adjudicating authority that ‘Ramco Super Plaster’ is nothing but a “value added cement” meriting classification as “Other Cement” in CETA sub heading 2523 2990. Hence that part of the impugned order confirming classification of “Ramco Super Plaster – Plastering Compound” under CETA sub heading 2523 2990. Penalty u/s 11AC - Held that:- There is no gainsaying that the entire dispute has arisen out of a difference in interpretation vis-a-vis the classification of the new products brought out by the appellant for specific usages. This being the case, there cannot be any allegation that appellants have evaded duty by way of fraud or mis-interpretation or misstatement or suppression of facts - penalty do not sustain. Appeal disposed off.

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• 2018 (6) TMI 765
  Refund/rebate claim - rejection on the ground that the appellant had not furnished necessary documents - Held that:- appellant claims that if given a chance the assessee would be able to furnish necessary documents - both the appeals require to be remanded to the adjudicating authority for fresh decision - appeal allowed by way of remand.

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• 2018 (6) TMI 764
  Clandestine removal - Hank Yarn - it was alleged that appellant (ETM) had no facility for manufacture of hank yarn during the disputed period - it was also alleged that cleared cone yarn in the guise of hank yarn and thus evaded payment of duty - further allegations are that they did not account the entire production of cone yarn and cleared cone yarn clandestinely without payment of duty - Held that:- Though it is shown that hank yarn is cleared, it is pertinent to note that the quantity of hank yarn in stock noted in the report at the time of last stock taking and current stock taking is nil. This would only prove that stock taking was conducted there was no hank yarn at all. Appellants have merely showed in their accounts that hank yarn was cleared and these figures have been adopted in the report which was endorsed by the officer. The report certifies that it is based on figures in stock register - these document will not support the appellant in any manner, especially when the stock of hank yarn on both dates of stock taking is shown to be ‘nil’. All these evidences leads to the strong inference that appellant company was not manufacturing hank yarn during the period of dispute. Though in RG-1 the appellant accounted production in respect of cone yarn and hank yarn, the diary showed details of production of cone yarn only. Again, there were no packing labels or materials purchased by appellant for packing hank yarn. The purchase of packing materials showed purchase of labels for cone yarn only. The appellants have not been able to counter these evidences, with satisfactory explanation. The evidence unearthed by department being voluminous, it is not possible to detail each and every piece of evidence in this order. From the records, it is found that the strong probability is that appellants have indulged in clandestine clearance of yarn without payment of duty. Department has been able to establish with both documentary and oral evidence that appellant company was not manufacturing or clearing any hank yarn and was clearing cone yarn clandestinely. The appellant has not put forward even slightest evidence to establish that they have not indulged in clandestine removal of cone yarn. Extended period of limitation - penalty u/s 11AC - Held that:- the invocation of extended period is legal and proper - Department has been able to establish case laws a strong case in their favour. We therefore find no grounds to interfere with the duty demand, confiscation or the penalty imposed under 11AC of Central Excise Act, 1944 - Since equal penalty under 11AC is imposed, a further penalty of 50 Lakhs on the appellant company, each under Rule 25 and Rule 173Q is unwarranted and requires to be set aside. Appeal disposed off.

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• Indian Laws

• 2018 (6) TMI 816
  Validity of statutory demand notice dated 10.06.2016 - Held that:- In this case, in the statutory notice dated 10.06.2016, the complainant has clearly given the description of the two cheques for 5 lakhs each. Of course, the complainant has added another cheque for 2 lakhs and has totally demanded 12 lakhs from the accused. However, in the complaint and in the sworn statement, the complainant has rested his case only on the two cheques for 5 lakhs each and has not prosecuted the accused for the dishonour of the third cheque for 2 lakhs - one cannot say that the statutory notice dated 10.06.2016 is bereft of particulars for the accused to understand the nature of the allegations levelled against him. Hence, the statutory notice at hand cannot be said to be not in consonance with the requirements of the statute. Petition dismissed.

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• 2018 (6) TMI 815
  Time Limitation of filing complaint - contention of the petitioners is that since the cheques were returned on 18.12.2009 and the complaint is filed only on 18.02.2010, the complaint is barred by limitation - Held that:- The complainant has received intimation from the bank with regard to the dishonour of cheque on 18.12.2009. He has issued the first notice on 28.12.2009 and since the notice was not served to the accused, he issued another notice dated 09.01.2010. Both the notices were issued within a period of one month from the date of dishonour of cheques and the complaint is filed on 18.02.2010 - the complaint is filed within the prescribed period of limitation - petition dismissed.

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