TMI Tax Updates - e-Newsletter
June 19, 2019

Case Laws in this Newsletter:

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

Articles

1. Analysis of treatment of sales promotion scheme under GST

   By: Sandeep Rawat

2. EXPECTATIONS OF ALCO-BEVERAGES INDUSTRY ON GST FROM NEW GOVERNMENT

   By: Dr. Sanjiv Agarwal

News

1. PM meets key secretaries in run up to Budget

2. Government of India compulsorily retires 15 Senior Officers of the Indian Revenue Service (C &CE) with immediate effect

3. CCI begins Market Study in E-Commerce in India, findings expected at end of August

4. Commerce Minister Holds Meeting With E-Commerce and Tech Companies

Notifications

Customs

1. 43/2019 - dated 18-6-2019 - Cus (NT)

Proper officer for Customs (Supplementary Notice) Regulations, 2019

2. 42/2019 - dated 18-6-2019 - Cus (NT)

Customs (Supplementary Notice) Regulations, 2019.

GST - States

3. 921-F.T. - dated 3-6-2019 - West Bengal SGST

Corrigendum 2 to Notification No.552-F.T dated 29.03.2019

Circulars / Instructions / Orders

GST - States

1. CCTs Ref. No.CCW/GST/74/2015 - dated 4-6-2019

In continuation of the proceedings on proper officers issued earlier-The Deputy Commissioner (Audit), Vijayawada-II Division shall be the “Proper Officer” (for entire state) for registering E- commerce operator(s).

GST

2. GST TRADE NOTICE No. 03/2019 - dated 30-4-2019

Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (ROD) number 05/2019 Central Tax dated 23.04.2019

3. GST TRADE NOTICE No. 02/2019 - dated 30-4-2019

Clarification in respect of utilization of input tax credit under GST

4. GST TRADE NOTICE No. 01/2019 - dated 2-4-2019

Clarification in respect of transfer of input tax credit in case of death of sole proprietor

Highlights / Catch Notes

GST

• Court to Decide Legality of Goods and Vehicle Seizure Notice u/s 130; Hearing Set for June 19, 2019.

  Case-Laws - HC : Seizure of goods alongwith vehicle - Legality and validity of the notice issued u/s 130 of the Act - on the issue, whether Section 129 would apply or Section 130 could straightway be invoked by the authorities - will be heard on 19th June 2019 along with bunch of petitions
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• Public Funded Institution Faces 18% GST on Aluminum Alloy Due to Lack of Ministry of Defence Certification.

  Case-Laws - AAR : GST rate on public funded institution read with Notification No. 47/2017 - since applicant is public funded institution on which Notification is applicable in respect of supplies made to them on goods specified in the column no.(3) of the table at concessional rate @ 5% not the other goods - the certificate issued by Ministry of Defence has not certified that “Aluminum Alloy” is used in the research of recipient, hence not covered under the Notification - GST @ 18 %
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• Profiteering in Flat Bookings: ITC Benefit Calculation Methodology and Penalty u/s 122(1)(i) CGST Act Explained.

  Case-Laws - NAPA : Profiteering - benefit of Input Tax Credit on booking of Flat - the right methodology would be to take into account the ITC ratio to the turnover and accordingly arrive at the benefit of ITC to be derived by the Respondent - the DGAP has correctly analysed the ITC ratio as 2.66% and applying this ratio to the payments made on or after 01.07.2017 the profiteered amount is determined - SCN issued for penalty u/s 122(1)(i) of the CGST Act
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• Second-Hand Goods GST: Value of Supply Based on Price Difference Per Rule 32(5) if No ITC Claimed.

  Case-Laws - AAR : Classification of second hand goods - value of supply - GST Rate - Rule 32(5) of CGST Rules - If assessee not availed ITC on purchase of second hand goods the value of supply shall be the difference between the selling price and the purchase price and tax liability will have to be discharged accordingly
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Income Tax

• India AS-2: FIFO and Weighted Average Methods Valid for Closing Stock Valuation; AO's Preference Incorrect. No Legal Issue.

  Case-Laws - HC : Valuation of closing stock - India AS-2 - The FIFO method, which the AO preferred, is one of the Accounting Standard 2 method. However, equally the weighted average method is also a recognized mode for valuing the stock - The AO’s opinion that the assessee had adopted inconsistent approach was not correct - no substantial question of law arises
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• CIT Must Reevaluate Section 80G(5)(vi) Application on Merits Despite Previous Rejection; Case Sent for Reconsideration.

  Case-Laws - AT : Approval u/s 80G(5)(vi) - fresh application rejected on ground that applicant has not filed any appeal before the Tribunal against the rejection of earlier 80G application - once the trust while making a fresh application has submitted all the required documents, the CIT should have decided the application on merit - remanded
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• No Penalty for Voluntary Income Disclosure Before Assessment; Revised Return Filed Within Time Limit u/s 139(5.

  Case-Laws - AT : Penalty u/s 271(1)(c) - income voluntarily offered before commencement of assessment proceedings - the time limit for furnishing the revised return of income u/s 139(5) did not expired and assessment u/s 143(3) was still in the process of completion hence assessee was legally entitled to file the revised return of income - not liable for paying penalty on the income duly disclosed in the revised return
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• Unrealized Rent Deduction Allowed u/s 23, Rule 4 for Computing Annual Value in Income Tax Act.

  Case-Laws - AT : Computation of the annual value u/s 23 - unrealized rent - as per Explanation to Section 23 r.w. Rule 4 of the IT Rules, irrecoverable unrealized rent while computing the annual value u/s 23 is required to be reduced from the chargeable annual value and it is not necessary that unrealized rent should be related to the same year - deduction allowable
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• Foreign Referral Fee Not Taxable in India Under Article 7 DTAA; No TDS Deduction Required per Section 195.

  Case-Laws - AT : TDS u/s 195 - referral fee paid to a foreign concern, in USA for introducing clients - not in the nature of Managerial services,Technical services or Consultancy fees - payment entirely constituted its business profits in USA within the meaning of Article 7 of the India-USA DTAA and in the absence of any PE the said amount could not be brought to tax in India - No obligation to deduct TDS - no disallowance
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• Reassessment Quashed: Section 147 Invalid Due to Unauthorized Notice u/s 148(1) by Non-Jurisdictional Officer.

  Case-Laws - HC : Reassessment u/s 147 - validity of notice - reasons for reopening the assessment have been recorded by the jurisdictional AO viz. the Dy. CIT, Circle 2, Jamnagar but the impugned notice u/s 148(1) has been issued by the ITO, Ward 2(2), Jamnagar who had no jurisdiction over the petitioner, and hence, such notice was bad on the account of having been issued by an officer who had not authority in law to issue such notice - notice and reassessment quashed
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• Taxpayer's Deduction for New House Construction u/s 54F Accepted; Timing Not Disputed by Department.

  Case-Laws - AT : Deduction u/s. 54F - claim in respect of the additional floors added to the new house - it is not the case of the department that the claim of the assessee is for an extension outside the permitted time limit - new house was purchased and the construction of additional floors was on such new house purchased by the assessee and this new house building purchased by the assessee has been accepted as eligible for deduction u/s. 54F
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• Income from Services Taxable in India under India-Finland DTAA; Article 12(5) Exception Not Applicable.

  Case-Laws - AT : Income accrued in India - testing and other services - exception curved out to Article 12(5) of the India-Finland DTAA that when the fees is paid for technical services which are performed within a contracting state does not apply as the payment in question was made for the test results which were used within India. though the process of testing may have been conducted outside India but the payment in question is not for the process but was for the results of testing - taxable in India
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• Deduction Eligibility Confirmed u/s 10AA: Foreign Exchange Loss Disallowed, Converts to Business Income, Section 80A(5) Not Applicable.

  Case-Laws - AT : Deduction u/s 10AA - It is only account of disallowance of the forex loss u/s 37(1) that the returned loss stood converted into positive business income for the relevant year and as a consequence, the assessee became eligible to claim deduction - Statutory bar provided in Section 80A(5) did not operate as there was no “failure” on the assessee’s part to claim deduction - deduction allowable
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• Income Tax Registration Restored: CIT's March 2014 Order Not Subject to Section 12AA(4) Provisions Effective October 2014.

  Case-Laws - AT : Registration u/s 12AA - Legislature by insertion Section 12AA(4) as a ground for cancellation of registration for violation of section 13 w.e.f 01.10.2014 - provisions of section 12AA(4) have no application for passing impugned order of the CIT dated 28.03.2014 - CIT was required to satisfy the then existing conditions u/s 12AA(3) in order to cancel the registration - registration restored
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• Trust's Registration Cancellation Under Sec 12AA Overturned; CIT's Claims of Non-Genuine Activities Dismissed.

  Case-Laws - AT : Registration u/s 12AA - the activities of a trust or institution are not genuine or the activities are not being carried out in accordance with the objects of the trust or institution - CIT has wrongly invoked section 12AA(3) in as much as the requisite conditions contained therein are not fulfilled - cancellation order set-aside
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Customs

• New Customs Regulations 2019: Streamlined Processes, Revised Documentation, and Stricter Compliance for International Trade Stakeholders

  Notifications : Customs (Supplementary Notice) Regulations, 2019.
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• Regulations Define Roles of Proper Officers for Customs Duties and Enforcement, Aiming to Streamline Trade and Compliance.

  Notifications : Proper officer for Customs (Supplementary Notice) Regulations, 2019
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• Gujarat's Livestock Export Ban u/s 4(1)(b) Annulled; State Lacks Authority on Export Matters.

  Case-Laws - HC : Notification relating to prohibition on the export of Livestock - section 4(1)(b) of the Gujarat Essential Commodities and Cattle (Control) Act, 2005 - State Government does not have any power to directly prevent exports, export and import being a subject falling in the Union List - impugned notification has been issued in colourable exercise of powers to do indirectly what cannot be done directly - deserves to be struck down
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• Board Grants One-Year Extension for Petitioners' Letter of Approval, Aligning with Decision on 28 Plastic Recycling Units.

  Case-Laws - HC : Renewal and extension of the petitioners’ Letter of Approval(LA) - once the report of the DC stating that the petitioners are similarly situated to the other two units which were granted extension of LA by the Board, the Board had no option but to grant extension of the LA - granted extension of its LA for a period of one year as extended by the Board in respect of 28 plastic recycling units
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• Petitioner allowed to amend shipping bills for MEIS benefits after online filing error; NOC to be issued by DGFT.

  Case-Laws - HC : Benefit under the MEIS scheme - inadvertently omitted to select 'Yes' in the online platform at the time of filing of the shipping bills - Respondents are directed to permit the writ petitioner to make necessary amendments and to issue NOC to enable the petitioner to claim the benefits under MEIS scheme from DGFT
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Corporate Law

• Company's Name Struck Off by West Bengal ROC for Inactivity; Restoration Request Denied Due to Lack of Operations.

  Case-Laws - Tri : Restoration of the name of the company in the ROC - It can be seen from the financial statements, the bank statements and other documents brought on record by the appellant-company that it was neither carrying on any business nor in operation when its name was struck off by the ROC, West Bengal - no restoration
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IBC

• Appellate Tribunal lacks authority to rule on individual salary claims during CIRP; employees should contact Resolution Professional.

  Case-Laws - AT : Release of salary of employees of ‘Corporate Debtors’ during CIR Process - individual claim of each of the employee cannot be decided by this Appellate Tribunal however liberty is hereby given to the individual aggrieved employee to approach the RP(s) showing that they are working but have not been paid the basic salary - RP may verify their payment during CIRP
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• CIRP Unaffected by CFO's Criminal Case; Insolvency Code Prevails Over Other Laws, Section 7 Proceedings to Continue.

  Case-Laws - AT : CIRP - pendency of the Criminal Case relating to misappropriation of the funds by the CFO of the CD and the employees of the Banks - the Bank is a separate entity from the individual employees - The ‘I&B Code’ being a complete Code will prevail over the other Acts and no person can take advantage of the pendency of the case to stall I&B proceeding filed u/s 7
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• Application Under Insolvency Code Challenged for Lack of Shareholder Approval; Board Authority Upheld per Article 127(xii.

  Case-Laws - AT : Validity of application filed u/s 10 of the I&B Code - petition filed without approval of shareholder - under Article 127(xii), the Board of Directors have been empowered to pass any order for winding up and/or presenting a petition for winding up of the Company - the matter was placed before the AGM in August, 2018 which approved the decision for filing the application - no merit in appeal
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Central Excise

• Cash Refunds for Unutilized CENVAT Credit Pre-2004 Not Supported by Transitional Provisions Under Cenvat Credit Rules, 2004.

  Case-Laws - HC : Cash refund - unutilized CENVAT credit on inputs - transfer of credit for the period prior to 2004 to Cenvat Credit Rules, 2004 scheme - transitional provision does not enable us to hold that the amount of un-utilised Cenvat Credit can be refunded in cash.
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• NCCD Recognized as Excise Duty, Eligible for Exemption Benefits Under Notification.

  Case-Laws - SC : Liability of National Calamity Contingent Duty (NCCD) - NCCD is in the nature of excise duty and is, thus, entitled to the benefit of the exemption notification
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VAT

• Rajasthan Rule 17(20) Overruled: State Cannot Cancel Valid Form-C Declaration, Conflicts with Central Sales Tax Act Sections.

  Case-Laws - HC : The State has no authority to frame a rule providing for cancellation of validly issued declaration form/form-C - Rule 17(20) of the Rajasthan Rules is declared ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act.
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• Dealers Can Hold Separate Registrations Under GST and CST Acts for Goods, Benefiting from Reduced Tax Rates.

  Case-Laws - HC : If a dealer is dealing in goods falling within the ambit of the GST Act as well as the CST Act, it is always permissible for him to hold separate registrations under both the Acts in respect of such goods. Therefore, a dealer who is registered under the GST Act can also be registered under the CST Act in respect of commodities which fall within the ambit of the expression “goods” as defined under section 2(d) thereof for getting the benefit of reduced rate of tax under section 8 of the CST Act.
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• Assessee Submits Form-C Post-Assessment for Concessional Tax Rate; Potential Revision of VAT/Sales Tax Assessment Possible.

  Case-Laws - HC : Concessional rate of tax - Form-C - certain Forms submitted by an assessee post completion of assessment order, can certainly be looked into and there can be revision of the assessment on the basis of Forms submitted post assessment, subject of course to scrutiny of the Forms.
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• Petitioner to Submit Representation for "C" Forms on Natural Gas; Commissioner Must Respond in 2 Weeks Per Law.

  Case-Laws - HC : Non-issuance of C-Forms - directed Petitioner make a representation to Commissioner of State tax for setting out its case/claim for the issuance of “C” Form on purchase of natural gas from Gujrat who will dispose the same in accordance with law within two weeks from the date of its representation - delay in opening of the online portal will not extend the time for the Commissioner to deal the application
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Case Laws:

• GST

• 2019 (6) TMI 822
  Classification of second hand goods - GST Rate - Rule 32(5) of Central Goods and Service Tax Rules, 2017 - Paintings bought from individual collectors and connoisseur - Old Cars, old jewelers and Old watches - Antique jewellery, watches and books - Collectibles and Memorabilia - Whether Applicant is dealing in second hand goods and tax is to be paid on the difference between selling price and purchase price as stipulated in Rule 32 (5) of CGST Rules. 2017? - HELD THAT:- The applicant only deals with, and auctions those second hand or used goods which have been bought by them. In Other words they are trading in such goods and the auction is just a medium to sell the goods. It is not that they are auctioning the goods belonging to someone else and get only fees for performing the auction - This kind of situation has not been covered under the GST laws and applying the principles of Rule 32 (5) of the CGST, Rules we find that the value of supply shall still be the difference between the selling price and the purchase price and tax liability will have to be discharged accordingly. Classification of goods - Rate of tax - Antique jewellery - Antique Watch - Antique Book - Collectibles and Memorabilia - whether classifiable under HSN Code 9706 or otherwise?. Paintings bought from individual art collectors - HELD THAT:- The applicant has requested for classification of paintings bought from individual art collectors. Chapter 9701 of the GST Tariff, 2017 covers Paintings, drawings and pastels, executed entirely by hand, other than drawings of heading 4906 and other than hand-painted or hand-decorated manufactured articles; collages and similar decorative plaques . If the said paintings as mentioned by the applicant answer the description of item mentioned in Heading 9701, then the goods will be covered under this Heading and will attract a rate of 12%. Paintings cannot be treated as used and therefore the applicant must pay GST of 12% on the sale value, if their goods answer the description of Heading 9701. Old Cars - HELD THAT:- For the applicant to avail the benefit of lower taxes under the said Notification, the conditions mentioned therein must be fulfilled. Except submitting that they are dealing in Old cars, they have not submitted any other details. It is also seen that the provisions of Rule 32(5) of CGST Rules are applicable to them, subject to the conditions of the Notification No. 08/2018 CT (Rate) dated 25.01.2018 being satisfied by them. Old Jewellery - HELD THAT:- The provisions of Rule 32(5) of CGST Rules are applicable to them in respect of old jewellery which are purchased by them. Antique jewellery of age exceeding 100 years - HELD THAT:- Tariff item 9706 00 00 covers Antiques of an age exceeding 100 years . Antique jewellery of age exceeding 100 years will fall under this tariff item and will be liable to tax @ GST. The provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. Old watches - HELD THAT:- Wrist watches, pocket-watches and other watches, including stop-watches, with case of precious metal or of metal clad with precious metal fall under Heading 9101 of the GST Tariff and Wrist watches, pocket-watches and other watches, including stop-watches, other than those of Heading 9101 fall under Heading 9102 of the said Tariff. The rate of GST is 18% and the same is applicable even to Old Watches, however with the benefit of the provisions of Rule 32(5) of CGST Rules i.e tax will be paid on the difference between sale price and purchase price considering such watches are second hand goods. Antique watches of age exceeding 100 years - HELD THAT:- Tariff item 9706 00 00 covers Antiques of an age exceeding 100 years . Antique watches of age exceeding 100 years will fall under this Tariff item and will be liable to tax @ 12% GST. The provisions of Rule 32(5) of CGST Rules will not be applicable to them in this case. Collectibles - HELD THAT:- The applicant has submitted that collectibles fall under Residuary Entry - Serial No. 453 of Schedule III - i.e. Goods which are not specified in Schedule I, Il, IV, V or VI. If the collectible is a watch then it will fall under the specific heading of watches. The Residual Entry mentioned above is only applicable to goods which are not specified in Schedule I, Il, IV, V or VI. The details of collectibles has not been mentioned by the applicant and in the absence of specifics the question cannot be answered. Collectibles (Books) - HELD THAT:- In the subject case the goods, if it is in the form of printed books, newspapers, pictures, etc. will fall under the various sub headings of Chapter 49 of the GST Tariff as the case may be. The Residual Entry mentioned above is only applicable to goods which are not specified in Schedule I, II, IV, V or VI. The specific details and description of collectibles (books) has not been mentioned by the applicant and in the absence of specifics the question cannot be answered. Antique Books - HELD THAT:- Such articles will be covered under Tariff item 9706 00 00 only they are exceeding 100 years of age. If the antique books are under 100 years of age then they will be classified under the appropriate heading of the GST Tariff. Antique books of less than 100 years of age, if it is in the form of printed books, newspapers, pictures, etc, will fall under the various sub headings of Chapter 49 of the GST Tariff as the case may be. Since the specific details and description of collectibles (books) has not been mentioned by the applicant, in the absence of specifics the question cannot be answered. Collectibles/Memorabilia (Articles such as clothing, sporting equipment s, books, autographs, photographs and such other items) - HELD THAT:- In absence Of specifics this question cannot be answered.

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• 2019 (6) TMI 821
  GST rate on public funded institution read with Notification No. 47/2017 dated 14.11.2017 - Classification of supply of goods - Whether the Material Aluminium Alloys (HSN.76012010) can be supplied under Govt. N/N. 47/2017 dated 14.11.2017? - HELD THAT:- The transaction is a supply of Aluminum Alloy . We have no doubt that the recipient of the supply i.e. GTRE , is a Government Public Funded Research Institution - the applicant has supplied Aluminium Alloy having HSN Code No.76012010, which is not a Scientific and technical instrument, apparatus, equipment, or accessories, parts, consumables and live animals (experimental purpose); or computer software, Compact Disc-Read Only Memory (CD-ROM), recorded magnetic tapes, microfilms, microfiches or Prototypes, the aggregate value of prototypes The recipient is a public funded institution and Notification No. 47/2017 is applicable in respect of supplies made to them but only goods specified in the column no. (3) of the table in the Notification are liable for concessional rate of tax @ 5%. Thus goods other than those mentioned in the said Notification are not to be liable for concessional rate of 5% tax, except the goods having originally been held as a 5% in the schedule entries. The said certificate has not certified that Aluminum Alloy supplied by applicant is used in the research of recipient and is covered under the said Notification. The goods i.e Aluminum Alloy having HSN Code No.76012010, supplied by the applicant to GTRE is not eligible for concessional rate of GST and Notification No. 47/2017, IGST (Tax) dt .14.11.2017, is not applicable to the transaction undertaken by the applicant. The subject supply will be liable as per rate prescribed in Schedule of GST Act i.e. @ 18 %. The notification is thus not applicable for the supply of goods.

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• 2019 (6) TMI 815
  Seizure of goods alongwith vehicle - Legality and validity of the notice issued by the department under Section 130 of the Act - HELD THAT:- There are many petitions pending on this issue, more particularly, whether Section 129 would apply or Section 130 could straightway be invoked by the authorities. The principal issue will be decided by this Court along with the other petitions, which are pending. However, we direct the authorities to release the conveyance as well as the goods on the writ depositing an amount of 1,44,180/with the department. On deposit of the said requisite amount, the conveyance as well as the goods shall immediately be released. Post the matter for further hearing on 19th June 2019 along with other allied petitions. Direct service is permitted.

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• 2019 (6) TMI 812
  Release of seized goods - perishable commodity Groundnut - HELD THAT:- The writ applicant has been able to make out a strong prima facie case to have some interim order in his favor at this stage. Taking into consideration the fact that the goods in question i.e. groundnut is a perishable commodity we direct the authorities to release the vehicle as well as the goods at the earliest on the writ applicant depositing an amount of 1,60,000/- with the concerned authority at the earliest. The issue shall be looked into on the returnable date along with the allied matters. Let NOTICE be issued to the respondent returnable on 19th June, 2019 .

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• 2019 (6) TMI 810
  Interpretation of statute - Sections 129 and 130 of the GST Act - Release of seized goods alongwith the vehicle - HELD THAT:- Ultimately, if the liability is fixed in accordance with the stance of the Department, then an amount of 1.36 lakh would be payable. This would be an approximate figure. We propose to pass an order directing the officials of the Department to release the Trailor as well as the goods at the earliest on the condition that an amount of 1.50 lakh is deposited by the writ applicant with the concerned Department by dayaftertomorrow, i.e. 12.06.2019. Once the amount is deposited, the officials shall immediately release the vehicle and the goods. The vehicle bearing registration No.HR38Q7370 as well as the goods, i.e. plywood, detained/seized under the purported exercise of powers under Sections 129 and 130 of the CGST Act shall be released immediately upon deposit of 1.50 lakh with the concerned Department. Post this matter for further hearing on 19.06.2019.

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• 2019 (6) TMI 763
  Profiteering - booking of Flat No. 0702, Block-F, in the Respondent s project Laurel Heights - benefit of Input Tax Credit not passed on by way of commensurate reduction in the price - contravention of section 171 of CGST Act - HELD THAT:- The Respondent has himself admitted that there has been benefit of ITC derived and the benefit has been passed on by him to all his customers with whom agreements were entered on or before 30.06.2017. According to him the benefit has been computed at 9/per sq. ft. and based on this calculation he has passed on benefit of 22,83,426/- to 221 flat buyers. To arrive at this derived benefit the Respondent has provided worksheet (annexure-I to his reply) showing that the pending work orders with his sub-contractors were renegotiated and were reduced by 49,85,249/- which works out to 9/- per sq. ft. However no documents have been submitted to establish the credentials of the worksheet filed by him. The DGAP has correctly analysed the ITC ratio as 2.66% and applying this ratio to the payments made on or after 01.07.2017 the profiteered amount is determined as 99,20,246/-. This amount includes profiteered amount of 18,563/- to be paid to the Applicant No. 1 and 80,37,392/- to all the other 231 buyers. The Respondent has also to pass on the benefit of profiteered amount of 18,64,290/to the land owner who will in turn pass on the benefit to his buyers. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project Laurel Heights in contravention of the provisions of Section 171 (1)(i) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realisation than what they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the provisions of the above Section - a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 122 of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.

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• Income Tax

• 2019 (6) TMI 816
  Revision u/s 263 - as per CIT assessee was not eligible to claim depreciation at the rate of 50% on a new motorcar purchased in accordance with sub-clause (VI) of clause III of Part A of the New Appendix I of the Act - Tribunal cancelled order u/s. 263 - HELD THAT:- No error, not to speak of any error of law could be said to have been committed by the Tribunal in passing the impugned order. The issue raised in the present Tax Appeal is squarely covered by a decision of this Court in the case of Commissioner of Incometax vs. Arvind Jewellers [ 2002 (7) TMI 50 - GUJARAT HIGH COURT] . No interference is warranted.

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• 2019 (6) TMI 813
  Delayed payment of employee s contribution in respect of P.F. ESIC - whether the due date for payment of employee s contribution in respect of P.F. ESIC shall not be determined on the basis of the month to which such salary and wages of employees are related? - HELD THAT:- As decided in CHECKMATE FACILITY ELECTRONIC SOLUTIONS P. LTD. case [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] this issue covered against the assessee wherein it is categorically held that after deducting the employee s contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee s contribution to the fund arises. The expression within fifteen days of the close of every month therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee s contribution and to deposit the same in the fund. - Decided against assessee.

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• 2019 (6) TMI 799
  Reopening of assessment u/s 147 - reasons recorded by DCIT whereas notice issued by ITO - Notice issued by an officer other than the officer who recorded the reasons for reopening - curable defect u/s 292B - HELD THAT:- It was not possible for the jurisdictional AO viz. the Dy. CIT to issue the notice u/s 148 on or before 31. 3. 2018 as migration of the Permanent Account Number was not possible within that short period. Therefore, the Income tax officer has issued notice u/s 148 instead of the jurisdictional Assessing Officer. Thus there is an admission on part of the first respondent that the Dy. CIT, Circle 2, Jamnagar who had jurisdiction over the petitioner had not issued notice u/s 148 but it is the Income tax officer, Ward 2(2), Jamnagar, who did not have any jurisdiction over the petitioner, in respect of the present case, who had issued such notice. As held in case of Hynoup Food Oil Industries Ltd. [ 2008 (7) TMI 192 - GUJARAT HIGH COURT] it is the officer who records the reasons who has to issue the notice u/s 148(1) whereas in the present case the reasons have been recorded by the jurisdictional AO, whereas the notice u/s 148(1) has been issued by an officer who did not have jurisdiction over the petitioner. Since the notice u/s 148 is a jurisdictional notice, any inherent defect therein cannot be cured u/s 292B. In the facts of the present case, while the reasons for reopening the assessment have been recorded by the jurisdictional Assessing Officer viz. the Dy. CIT, Circle 2, Jamnagar, the impugned notice u/s 148(1) has been issued by the Income Tax Officer, Ward 2(2), Jamnagar who had no jurisdiction over the petitioner, and hence, such notice was bad on the count of having been issued by an officer who had not authority in law to issue such notice. As a necessary corollary it follows that no proceedings could have been taken u/s 147 in pursuance of such invalid notice. In the aforesaid premises, the impugned notice u/s 148(1) as well as all the proceedings taken pursuant thereto cannot be sustained. - Decided in favour of assessee.

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• 2019 (6) TMI 797
  Benefit of exemption u/s 10(26B) - reason as assigned to decline benefit is that the main object for the incorporation of the Corporation does not indicate that it is for promoting the interest of Scheduled Castes or the Scheduled Tribes or backward classes - HELD THAT:- A perusal of the objects of the appellant Corporation would disclose that the same has not been set up exclusively for Scheduled Castes or the Scheduled Tribes or backward classes even among the police personnel. If the provision in Section 10(26B) is taken note, the exemption that could be claimed is only when the institution or association has been established and formed for promoting the interest of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. In that circumstance, even if the contention as put forth on behalf of the appellant that the Appellate Tribunal has noticed that 98% of the population of Arunachal Pradesh comprises of Scheduled Tribes, that alone does not provide for any benefit to the appellant herein. Further the notifications dated 20.03.1995 and 27.8.1997 though provide for reservation in recruitment keeping in view Article 16 of the Constitution of India, that by itself cannot indicate that the Corporation has been set up for the benefit of the Scheduled Tribes. As the appellant Corporation was set up for the benefit of police personnel in Arunachal Pradesh, in the name and style of Arunachal Police Housing and Welfare Corporation Limited, for the purpose of formulating and executing housing scheme for the benefit and welfare of the employees of the Police Department, Government of Arunachal Pradesh. In that view, it is not set up for the purpose of the general population, but limited to a particular class of employees of the Government of Arunachal Pradesh and in such circumstance, all persons of the Police Department cannot be considered as belonging to Scheduled Tribe, even if the reservation policy for recruitment is kept in view. Therefore, in such circumstance, the benefit of the provision, as referred to, would not be applicable to the present case.- Decided against assessee.

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• 2019 (6) TMI 792
  Excessive disallowance u/s 14A r.w. Rule 8D(2)(iii) - HELD THAT:- Identical issue has been adjudicated by Delhi Special Bench in the case of ACIT vs. Vireet Investment (P.) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] wherein held that investments not yielding any income during the year has to be excluded while calculating the average investments and the disallowance has been to be worked out only thereafter on the basis of investment actually yielding tax free income. We therefore find substantial merit in the case of the assessee. We also observe that the assessee was entitled to claim revision of disallowance notwithstanding higher disallowance suo motu made in the return of income in the light of the decision of CIT vs. Pruthvi Brokers and Shareholders P. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] . We accordingly set aside the order of the CIT(A) and direct the AO to restrict the disallowance MAT computation - Excessive adjustments on account of disallowance u/s 14A under special provisions of Section 115JB - HELD THAT:- In the light of decision of Special Bench in Vireet Investment (supra) and in view of findings given by the co-ordinate bench in assessee s own case concerning AY 2012-13 we find substantial merit in the plea of the assessee to restrict the adjustments in respect of disallowance relatable to exempt income notwithstanding higher adjustments made by the assessee. AO is directed to redo the computation of book profit u/s 115JB of the Act accordingly. The second issue is accordingly resolved in favour of the assessee. Computation of the annual value u/s 23 - Disallowance of bad debts in respect of unrealized rent - HELD THAT:- We find that the issue is squarely covered in favour of the assessee in view of the express statutory provision in terms of Explanation below Section 23 r.w. Rule 4 of the IT Rules, 1962. The Explanation clearly provides for deduction of unrealized rent while computing the annual value under s.23 of the Act. Rule 4 expounded the aforesaid Explanation whereby the unrealized rent lost as irrecoverable is required to be reduced from the chargeable annual value. It is not necessary that unrealized rent should be related to the same year. We therefore find merit in the plea of the assessee on this issue as well. The issue is thus resolved in favour of the assessee.

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• 2019 (6) TMI 791
  Penalty u/s 271(1)(c) - Income voluntarily offered by the appellant before commencement of assessment proceedings - non specification of charge - HELD THAT:- From perusal of the above show cause notices we find that the Ld.A.O has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Now whether such type of notice which does not speak about the specific charge leveled against the assessee is valid and tenable in the eyes of law needs to be examined. As relying on SHRI VARAD MEHTA VERSUS DCIT 1 (1) , BHOPAL [ 2018 (12) TMI 1091 - ITAT INDORE] the alleged notice issued u/s 271(1)(c) of the Act dated 31.12.2013 is invalid, untenable and suffers from the infirmity of non application of mind by the Assessing Officer. Since we have held the notice u/s 274 of the Act as invalid, the subsequent proceeding u/s 271(1)(c) of the Act is thus held void ab initio. Quantum of penalty levied on the assessee - case selected for scrutiny through CASS - HELD THAT:- The time limit for furnishing the return of income as per Section 139(5) of the Act for the Assessment Year 2011-12 was one year from the end of the assessment year or the date of completion of the assessment, whichever occurs earlier. So as on 31.3.2013 one year from the end of Assessment Year 2011-12 did not expired and assessment u/s 143(3) of the Act was still in the process of completion. Therefore the assessee was legally entitled to file the revised return of income. The assessment proceedings u/s 143(3) were completed on 31.12.2013 and the Ld. A.O has duly considered the revised return. In these given facts and circumstances of the case holding the assessee liable for paying penalty u/s 271(1)(c) on the income duly disclosed in the revised return of income before the completion of the assessment proceedings, is not justified and the same deserves to be deleted. - Decided in favour of assessee.

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• 2019 (6) TMI 790
  Penalty u/s 271(1)(c) - defective notice - as argued show cause notice issued u/s 274 without containing the specific charge as to whether the assessee was guilty of having concealed particulars of income or having particulars of such income is defective - HELD THAT:- The notice issued u/s 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion in the case of BIJOY KUMAR AGARWAL [ 2019 (6) TMI 721 - CALCUTTA HIGH COURT] as relied on the decision of Amrit Foods vs Commissioner of Central Excise UP [ 2005 (10) TMI 96 - SUPREME COURT as well as DR. MURARI MOHAN KOLEY [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] - Decided in favour of assessee.

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• 2019 (6) TMI 789
  Penalty u/s 271(1)(c) - quantum additions not adequately substantiated - HELD THAT:- From the above observations of CIT(A) it is clear that he has not decided the issue relating to the levy of penalty u/s 271(1)(c) rather he has considered the submissions relating to the quantum addition. He had also not discussed the alternate explanation given by the assessee which was directed to be considered vide earlier order [ 2017 (11) TMI 1831 - ITAT CHANDIGARH] . We deem it appropriate to set aside the impugned order to the file of the CIT(A) to be decided afresh in accordance with law and as per the directions given by the ITAT in above mentioned order. - Appeal of the Assessee is allowed for statistical purposes.

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• 2019 (6) TMI 788
  Penalty levied u/s 271(1)(c) - concealment of income with regard to the bogus share application money received by the assessee u/s 68 - HELD THAT:- Undisputedly, coordinate Bench of the Tribunal [ 2016 (11) TMI 589 - ITAT DELHI] deleted the addition made u/s 68 of the Act. In these circumstances, the penalty levied by the AO and confirmed by ld. CIT (A) is not sustainable in view of the law laid down in K.C. Builders Anr vs. ACIT [ 2004 (1) TMI 7 - SUPREME COURT] because when the addition made in the assessment order on the basis of which penalty for concealment is levied have been deleted there remains no basis at all for levying the penalty - Decided in favour of assessee.

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• 2019 (6) TMI 787
  Penalty u/s 271(1)(c) - claiming wrong exemption u/s 54F on construction of first floor of property at Sainik Farms - CIT (A) sustaining penalty in order passed the Appellate Order ex-party - HELD THAT:- In the instant case, not only the notice issued to the assessee under section 274 read with section 271(1)(c) is defective but AO has not even made himself satisfied at the time of making disallowance / addition in assessment order if the assessee has furnished inaccurate particulars of income or has concealed particulars of his income rather to be on the safer side he has invoked both the limbs of section 271(1)(c). This is not merely a case of serving a defective notice under section 274 read with section 271(1) on the assessee rather it is a case of non-application of mind on the part of the AO to make himself satisfied as to under which limb of section 271(1)(c) of the Act, he is going to initiate/levy the penalty on the assessee and as such, decision of Sundaram Finance Ltd. [ 2018 (10) TMI 1451 - SC ORDER] relied upon by the ld. DR for the Revenue is not applicable to the facts and circumstances of the case. The facts of this case is covered by Hon ble Apex Court in case of CIT vs. Reliance Petro Products Pvt. Ltd. . [ 2010 (3) TMI 80 - SUPREME COURT] wherein it is held that merely making claim which is not sustainable in law by itself would not amount to furnishing of inaccurate particulars of income Coordinate Bench of the Tribunal in case cited as Shri D. Harindran vs. ITO [ 2016 (9) TMI 1462 - ITAT CHENNAI] decided the identical issue in favour of the assessee in the light of the decision of Rajasthan Spinning and Weaving Mills [ 2009 (5) TMI 15 - SUPREME COURT] and CIT vs. Gem Granites [ 2013 (11) TMI 1375 - MADRAS HIGH COURT] by holding that even if it is considered that the claim made by the assessee u/s 54/54F is incorrect, it would not tantamount to furnishing of inaccurate particulars of income Referring to ledger account of capital work-in-progress qua construction of residential property for claiming deduction u/s 54 the assessee has claimed deduction u/s 54 for raising construction of house bonafidely qua which the AO has taken different view that it does not amount to construction of house rather it is renovation/interior designing. In the face of the ledger account of capital work-in-progress brought on record by the assessee, when we examine the assessment order it is nowhere mentioned by the AO that at any point of time, he has visited the property in question or the property claimed to have been constructed by the assessee was not having sanctioned site plan. Rather AO proceeded to reject the claim of the assessee on the basis of imagination that the construction claimed by the assessee amounts to renovation/interior designing. - Decided in favour of assessee.

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• 2019 (6) TMI 786
  Approval u/s 80G(5)(vi) read with Rule 12AA - rejection of approval as applicant has not filed any appeal before the Tribunal as the earlier 80G application was rejected vide the said office order dated 31.03.2016 - HELD THAT:- Assessee was granted registration u/s 12AA vide order dated 10.09.2015. The earlier application for approval u/s 80G was rejected vide order dated 21.03.2016 on the ground that receipt and payment account which was specifically asked was not furnished. The applicant trust while making a fresh application has submitted all the required documents in February, 2017 which was not at all taken cognizance by the Commissioner of Income Tax (Exemption). The Commissioner should have taken cognizance about the documents placed before him and after going through the documents should have decided the application on merit, but Commissioner failed to do so. Therefore, matter may be restored to the file of the Commissioner of Income Tax (Exemption) for taking cognizance of the application along with the documents submitted by the applicant trust and after going through the appropriate order may be passed accordingly. Therefore, appeal of the applicant trust is partly allowed for statistical purpose.

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• 2019 (6) TMI 785
  Addition u/s 14A - assessee made suo-moto disallowance - HELD THAT:- AO while making the disallowance has given a finding that investment in shares and securities have been made out of borrowed funds. It is the submission of the assessee that no borrowed funds have been utilized for making the investment and no new investments have been made during the year. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the files of the Assessing Officer with a direction to verify the records properly and decide the issue as per fact and law after giving a reasonable opportunity of being heard to the assessee.- Decided in favour of assessee for statistical purpose.

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• 2019 (6) TMI 784
  Approval for exemption u/s 80G - applicant society has been accorded registration u/s 12AA by CIT, Rohtak vide order dated 01.04.1997 - HELD THAT:- The contention of the ld. AR for the applicant society that all these facts are required to be taken care of at the time of scrutiny assessment and in the earlier years, clean assessment has been framed, is not tenable as no such document has been placed before the ld. CIT (A) nor before the Tribunal in the form of paper book. Even the documents specifically called for by the ld. CIT (E) discussed in the preceding paras have not been supplied so as to satisfy ld. CIT (E) as to the mandatory requirements for according approval u/s 80G of the Act. By now all these documents must be ready with the applicant society, so to meet with the ends of justice, applicant society who is claiming that it is into charitable activities since 1994 must be given an opportunity to produce all documents discussed in the preceding paras before ld. CIT (E). So, the case is remanded back to ld. CIT (E) to decide afresh after providing an opportunity of being heard to the applicant society. Appeal filed by the applicant society is allowed for statistical purposes.

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• 2019 (6) TMI 783
  TDS u/s 195 - referral fee paid to a foreign concern, in USA for introducing clients to the assessee - income deemed to accrued or arisen in India - disallowance u/s 40(a)(i) for non deduction of tds - PE in India - HELD THAT:- As the facts involved in the case before us i.e pertaining to taxability of referral fees paid by the assessee to the foreign concern, for the services rendered by it abroad, are more or less similar to the facts as were there in the case TOSHOKU LIMITED (AND ANOTHER APPEAL) [ 1980 (8) TMI 2 - SUPREME COURT] we respectfully follow the same and conclude that the referral fees received by the foreign concern in the case before us, cannot in so far clause (i) to Sec. 9(1) is concerned, be held, to have deemed to accrued or arisen in India . As regards clause (ii), clause (iii) and clause (iv) of Sec. 9(1), it is observed that as the same are in context of income by way of (i). salaries earned in India; (ii) income by way of salary payable by the government; and (iii). dividend paid by an Indian company, respectively, therefore, the same are not relevant in the backdrop of the facts involved in the case before us. Managerial services - As the foreign concern was only rendering its services abroad for referring or introducing customers to the assessee, and was not rendering managerial advice or management services, therefore, the referral income received by the said foreign agency from the assessee cannot be held to have been received by it for rendering any managerial services. Technical services - As the foreign agency viz. Newmark Company Real Estate Inc., New York, USA, was only rendering referral services to the assessee, and was not undertaking or performing any technical services where special skills or knowledge relating to a technical field were required, therefore, it can safely be concluded that the referral fees received by the foreign agency from the assessee was not towards technical fees. Consultancy fees - As the foreign agency by using its skill, business acumen and knowledge which was acquired by it for its own benefit, was only referring customers to the assessee, therefore, it cannot be said that it was providing any consultancy services to the assessee. No obligation was cast upon the assessee to deduct tax at source on the amount was paid to the foreign concern viz. Newmark Company Real Estate Inc., New York, USA, towards referral fees, for the reason viz. (i) that, as the services rendered by the foreign concern for introducing a client did not did not make available any technical knowledge, experience, skill, know-how or processes to the assessee, therefore, the same did not fall within the realm of Fees for included services as envisaged in Article 12 of the India-USA, DTAA; and (ii). that, as the aforesaid payment made to the foreign concern for the services which were rendered entirely in USA, constituted its business profits within the meaning of Article 7 of the India-USA DTAA, therefore, in the absence of any Permanent Establishment ( PE ) of the said foreign concern in India, the said amount could only be brought to tax in USA. Even as per Sec. 90(2) of the Act, in pursuance of the beneficial provisions of the India- USA DTAA, as the referral fees received by the foreign concern was not taxable in India, therefore, no obligation was cast upon the assessee to have deducted any tax at source on the said payment. Accordingly, for the said reason also no disallowance u/s 40(a)(i) of the referral fee was called for in the hands of the assessee. - Decided in favour of assessee.

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• 2019 (6) TMI 782
  TP Adjustment - ALP adjustment towards interest on receivables from AEs - HELD THAT:- As relying on assessee s own case [ 2019 (4) TMI 672 - ITAT HYDERABAD] the assessee has submitted the no need to charge interest on receivables as the average collection period of the assessee is less than that of the comparable average We direct the AO/TPO to verify the submissions of the assessee and if the average collection period is less than the industry average, there is no need to make any TP adjustment. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2019 (6) TMI 781
  Registration u/s 12AA - jurisdiction of the CIT vested in section 12AA(3) in cancelling registration - CIT cancelling the registration w.e.f A.Y. 2001-02, originally granted to the assessee u/s. 12A of the Act dated 22.01.1979 - HELD THAT:- In the present case, the case sought to be made out by the Commissioner is that the violation carried out by the assessee would lead to denial of exemption u/s. 11 13 and, therefore, the pre-requisite of section 12AA(3) is satisfied. Commissioner records that the violation of section 11 13 would result in forfeiture of exemption not only for the year in which such transactions occur but also for the years when such arrangement continues to be in force. In our considered opinion, such an approach of the CIT is quiet misdirected and is inconsistent with the legal position on the subject contemplated u/s. 12AA(3) so as to cancel registration already granted. On the preliminary point itself, we find that the impugned order of the CIT cancelling the registration u/s. 12AA(3) is bereft of a valid jurisdiction. Violation of section 13 - The situation sought to be covered by section 12AA(4) revolves around the manner in which activities are carried out, including a case where the income or property of the trust is applied for specific persons like author of trust, trustees, etc; or investment of funds in prohibited modes, etc. The aforesaid are areas, which are contained in section 13 which disentitles an assessee from the exemptions contained in section 11 and 12. Violation of section 13 is also sought to be covered by the Legislature by insertion of sub-section (4) to section 12AA as a ground for cancellation of registration. So however, the said provision is effective from 01.10.2014. Pertinently, we are dealing with the impugned order of the CIT dated 28th March 2014 and, therefore, the provisions of section 12AA(4) inserted w.e.f. 01.10.2014 would have no application. In fact, the insertion of section 12AA(4) of the Act on a subsequent date reinforces the legal position noted by us in earlier paras that in the impugned case what the Commissioner was required to satisfy the then existing conditions contained in section 12AA(3) in order to cancel the registration. Thus, the impugned reasons advanced by the CIT do not give him jurisdiction to invoke section 12AA(3) at the relevant point of time. Therefore, we conclude by holding that having regard to the facts and circumstances of the case the CIT has wrongly invoked section 12AA(3) in as much as the requisite conditions contained therein are not fulfilled - we set-aside the order of the CIT and restore the registration originally granted to the assessee u/s. 12AA on 22.01.1979 - Decided in favour of assessee.

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• 2019 (6) TMI 780
  Deduction u/s 10AA - AO disallowed the exchange fluctuation loss while assessing the appellant s business income but relying on the decision of Goetze India Ltd [ 2006 (3) TMI 75 - SUPREME COURT] denied the benefit of corresponding deduction claimed u/s 10AA observing that such claim was not made in the return of income or in the revised return - AO also denied the benefit of the capitalization of exchange fluctuation loss and consequent higher claim of depreciation on the same ground - HELD THAT:- In the light of the identically worded provisions of Section 32AB(5) and Section 10A(5), we are of the considered view that the ratio laid down in the judgment of the Hon ble Calcutta High Court in BERGER PAINTS (INDIA) LTD. (NO. 2). [ 2002 (2) TMI 97 - CALCUTTA HIGH COURT] is applicable with equal force in considering allowability of claim u/s 10A(5) read with Section 10AA(8). In the present case it is an admitted position that in the course of assessment the appellant had filed audit report in Form 56F when the revised computation of total income was furnished before the AO. Once this fact is not in dispute then following the ratio laid down in the foregoing judicial precedents, it is to be held that the deduction u/s 10AA could not be denied for non-filing of the audit report in Form 56F along with the return of income.The first material objection of the lower authorities denying the claim of deduction u/s 10AA therefore fails. Applicability of provisions of Section 80A(5) - We find that the disallowance, made in the appellant s case, was in terms of Section 37(1) and therefore as per the Circular No. 37/2016, the amount disallowed was required to be taken into consideration for determining the profits qualifying for deduction u/s 10AA. For the reasons set out in the foregoing therefore, we are of the considered view that there was no contravention of Section 80A(5) because there was no failure on the assessee s part to claim deduction permissible u/s 10AA while filing it s return. On the contrary we are of the view that having regard to the peculiar facts of the appellant s case, the assessee could not have legally claimed any deduction u/s 10AA in the return of income filed electronically. It is only account of disallowance of the forex loss under Section 37(1) that the returned loss stood converted into positive business income for the relevant year and as a consequence, the assessee became eligible to claim deduction. We also note that the AO per se did not dispute or object to the assessee s claim on merits but it was rejected only on technical grounds. We are of the considered view that there is no estoppel in law and an assessee cannot be denied a rightful deduction to which it is eligible unless there is specific bar in law from claiming such deduction. Statutory bar provided in Section 80A(5) did not operate as there was no failure on the assessee s part to claim deduction u/s 10AA but it was a case where the deduction became claimable only as a result of disallowance proposed in the assessment. Deduction u/s 10AA was not admissible because profit assessed by the AO was consequent to the disallowance of forex loss and therefore did not tantamount to profit derived from export of article or thing - the current year s operating business income assessed by the AO had nothing to do with the forex loss incurred in the capital transactions and the profits assessed by the AO in the impugned assessment solely represented profits derived from export of articles or goods manufactured at SEZ undertaking. In view of this factual position, merely because in the original return, deduction for forex loss was claimed, did not lead to conclusion that the consequent to the disallowance of forex loss, basic character or nature of the resultant profit was any thing other than profit of the eligible business. We therefore do not find any merit in the CIT(A) s finding denying the benefit of deduction u/s 10AA on merits. We direct the AO to grant deduction u/s 10AA with reference to the business income assessed by him in respect of the profits derived by the appellant from its undertaking located at SEZ in Dahej, Gujarat. - Decided in favour of assessee.

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• 2019 (6) TMI 777
  Income accrued in India - income earned from sale of designs and drawings to Indian customers - addition in nature of royalty under the provisions of the Act as well as under the DTAA - India-Finland DTAA - PE in India - HELD THAT:- Copies of other Agreement for sale of drawings and designs have also been placed on record. A perusal of the same demonstrates that the designs and drawings, in question, are not embedded in the plant and machinery. They are separate items which were sold to the assessee. The fact that these were sold outside India is not disputed. Similar issue was decided in OUTOTEC GMBH AND OUTOTEC INDIA PVT. LTD. VERSUS DEPUTY DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION) -2 (1) , KOLKATA [ 2015 (6) TMI 609 - ITAT KOLKATA] we hold that the income from sale of designs and drawings cannot be classified, either as royalty or as FTS. The income has to be considered as business income and as the assessee does not have PE in India, it cannot be brought to tax in India. - Decided in favour of assessee. Taxability of income from testing and other services - HELD THAT:- In the case on hand, the income in question becomes taxable as royalty or fees for technical services, is deemed to arise in the contracting state where the payer is a resident of that contracting state, which is in India, in our case. The income, in question, is also taxable in India as the right or property for which the royalty was paid, is used within India and hence, it is deemed to arise in India, i.e. the state in which the right or property is used. Referring to Assessee s argument that the technical services of testing is performed outside the country, i.e. in Finland and hence cannot be taxed in India in view of the exception curved out to Article 12(5) of the India-Finland DTAA exception in question is, when the fees is paid for technical services which are performed within a contracting state, then the income therefrom is deemed to accrue or arise within the state in which the services were performed. In our view, this Clause does not apply as the payment in question was made for the test results which were used within the contracting state, India. It may be true that the process of testing may have been conducted outside India. But the payment in question is not for the process but was for the results of testing which is used in India. The argument of the ld. D/R that these services were availed in India and hence are taxable in India has to be upheld. Hence, we agree with the finding of the Assessing Officer as upheld by the DRP on this issue. Ground of the assessee is dismissed.

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• 2019 (6) TMI 776
  Deduction u/s. 54F - claim rejected in respect of the additional floors constructed - addition as capital gains income - HELD THAT:- As per the provisions of section 54F, either the new asset is purchased or constructed within the time limit specified. Observation of CIT(A) cost of purchase and cost of construction of additional floors both cannot be considered for the purpose of allowing deduction u/s. 54F is not valid in the light of this judgment BB. SARKAR VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL IV [ 1981 (5) TMI 21 - CALCUTTA HIGH COURT] . Regarding the delay in starting of the construction of 2nd and 3rd floors, it is seen that such delay is explained by giving proper reasons by saying that the assessee was having health problem of himself and apart from that, both of his daughters as noted above had some problems. There is one more objection of CIT(A) that if this is allowed then the purchase cost of new asset can be indefinitely increased through extension / additions to the new asset - addition to the new asset can only be made during the prescribed period and not after that and this is not the case of the department that the claim of the assessee is for an extension outside the permitted time limit - none of the objections of CIT(A) is valid and hence, hold that the claim of the assessee for deduction u/s. 54F in respect of the amount incurred by the assessee for construction of 2nd and 3rd floors should also be allowed. In the present case, new house was purchased and the construction of additional floors was on such new house purchased by the assessee and this new house building purchased by the assessee has been accepted as eligible for deduction u/s. 54F. Hence in my considered opinion, this Tribunal order in [ 2009 (5) TMI 563 - ITAT MADRAS-C] is not applicable in the facts of present case - Decided in favour of assessee

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• 2019 (6) TMI 775
  Addition u/s 68 treating part of the unsecured loans as unexplained - HELD THAT:- The assessee has fully explained the loan received by it by furnishing the confirmation, ITR and bank statement of creditors. CIT(A) confirmed the addition to the extent of immediate cash deposited in their bank account. However, while doing so he has not brought any evidence to prove that the cash amount deposited in the bank account of these persons belongs to assessee. Thus, in the absence of anything to establish that the cash amount deposited in the bank account of the creditors flew from the assessee, part of the cash credits cannot be treated as unexplained income of the assessee. Assessee has explained identity of loan creditor, genuineness of loan transaction as well as availability of funds in the creditor s account. During the A.Y. 2010-11 and 2012-13 under consideration, the assessee is not required to prove source of the source. See ARAVALI TRADING CO. VERSUS INCOME-TAX OFFICER [ 2007 (1) TMI 567 - RAJASTHAN HIGH COURT] Accordingly, we do not find any merit in the addition so confirmed by the ld. CIT(A). Similarly, in the A.Y. 2012-13, CIT(A) confirmed the addition of 1.00 lac U/s 68 by holding that source of giving loan to this extent is by cash deposit. However, while doing so he has not brought any evidence to prove that the cash amount deposited in the bank account of these persons belongs to assessee. Thus, in the absence of anything to establish that the cash amount deposited in the bank account of the creditors flew from the assessee, part of the cash credits cannot be treated as unexplained income of the assessee more particularly when assessee has repaid the loan in subsequent years. - Decided in favour of assessee.

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• 2019 (6) TMI 774
  Exemption u/s 10(14) - assessee has received fixed conveyance allowance and conveyance expenses - assessee argued allowances are fixed allowances and paid by the employer after being satisfied that the amounts were spent wholly for the purpose of carrying out the duties - AO is of the opinion that the assessee is failed to prove the conditions laid down in section 10(14), therefore, the claim of the assessee is disallowed - HELD THAT:- Exemption claimed by the assessee needs favourable consideration. As decided in THOTA SRINIVASA BABU AND AVADHANULA SRINIVASA RAO VERSUS ITO, WARD-1, PALKOL [ 2018 (11) TMI 552 - ITAT VISAKHAPATNAM] unless a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority. If, in such matters, filing of the accounts and vouchers/receipts are insisted upon to claim exemption under section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure and would serve no useful purpose but on the contrary it would be counter-productive. Exemption claimed by the assessee has to be allowed.

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• 2019 (6) TMI 772
  Non-consideration of remand report by CIT(A) - HELD THAT:- We have noted that after recording the contents of remand report and the reply/objection of assessee, the ld. CIT(A) proceeded to adjudicate the various other grounds of appeal raised by assessee. In our view, the ground of appeal raised by Assessing Officer/revenue has no leg to stand that remand report was not considered by CIT(A). In the result, ground no.1 of the appeal is dismissed. Addition on account of fixed asset - failure to produce the original copy of bills for purchase of asset for verification of genuineness - CIT(A) deleted the entire addition holding that AO has given his remand report to justify the high pitch assessment - HELD THAT:- AO has specifically brought out the discrepancies in acquisition of various assets. The Assessing Officer has only accepted that invoices regarding furniture fixtures are verifiable. Therefore CIT(A) is not justified in deleting the entire addition without specifying as to how the assets were put to use either before the date of purchase or installed within three days from shipping USA to Gurgaon, India. Thus, this ground of appeal is resorted to the file AO to consider the issue afresh after verification of the facts and the evidences about the acquisition of the asset and pass the order in accordance with law. Revenue s ground of appeal is allowed for statistical purpose. Adhoc disallowance @ 25% of various expenses - salary, contribution to various funds, Training Seminar, Travelling Conveyance, Facilities Maintenance, Utility Account Expenses, Freight Expenses and Recruitment Relocation Expenses - revenue submits that during the assessment, the assessee has not substantiated the expenses nor furnished any documentary evidence to substantiate the expenses - HELD THAT:- We have noted that the AO has not disputed the genuineness and admissibility of expenses rather disputed that quantum of the expenses. AO during the remand report has not sought such explanation about the quantum of expenses from the assessee and in the remand report insisted to sustain the addition. In our view, without specifying the genuineness of expenses, the adhoc disallowance is not justified. Addition on account of Business Promotion Advertisement Expenses, Legal Professional Fees and Outsource Service Cost Expenses - CIT-A deleted the addition - HELD THAT:- For legal professional expenses, the Assessing Officer in his remand report stated that assessee submitted part wise details of legal Professional expenses incurred during the year along with the details of TDS. The assessee also furnished the all invoices of parties having major amounts. On verification of invoices and TDS, the Assessing Officer tried to justify the payment due to short deduction of TDS. The Assessing Officer has not doubted the genuineness of professional expenses. No adverse material was brought on record by Assessing Officer. Therefore, in absence of genuineness of legal and professional expenses, the 100% disallowance is not justified. For business promotion expenses assessee under this head, claimed expenses relating to the gift item. The assessee furnished invoices of parties having major amounts and invoices on sample basis for other parties. The Assessing Officer objected the allowance on the ground that no nexus of business activities and that business expediency have not been established and recommended 20% of disallowance. AO not doubted the genuinity and the identity of the recipient. AO has not examined the percentage of expenses vis- -vis the business turnover of the assessee. The items on the assessee made expenses for business promotion consist of Pen holders, Printed folders, Leaflets, Pens, Mugs, Black Mugs and Boxes. In our view the assessee has made genuine business promotion expenses and the disallowance was not justified. For outsources service cost assessee furnished the details of training program and the breakup and details of the expenses along with the details of the participants, venue and date. The assessing officer suggested disallowing 25% of such expenses. We have seen that when the activity of the training program and the genuineness of the expenses is not doubted by the assessing officer no disallowances of such training of outsource service cost is justified. Assessee has paid the expenses to its associated enterprises, whose identity is not in dispute. AO was not justified in making such disallowance. - Decided in favour of assessee.

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• Customs

• 2019 (6) TMI 811
  Benefit under the MEIS scheme - Amendment in shipping bills - Benefit under Merchandise Exports from India Scheme (MEIS) - the petitioner had inadvertently omitted to select Yes in the online platform and omitted to mention/declare in the shipping bill that they intend to claim benefit under the MEIS scheme - HELD THAT:- The issue in the case of M/S. PASHA INTERNATIONAL VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT/DEPUTY COMMISSIONER OF CUSTOMS (EXPORTS) , THE JOINT DIRECTOR GENERAL OF FOREIGN TRADE [ 2019 (2) TMI 1187 - MADRAS HIGH COURT] is applicable to the facts of the present case where it was held that petitioner shall produce the said NOC before the 4th respondent and seek the benefits from the 4th respondent. Respondents are directed to permit the writ petitioner to make necessary amendments - First respondent is directed to issue a No Objection Certificate ( NOC for brevity) to enable the petitioner to claim the benefits under any MEIS scheme from DGFT - petition disposed off.

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• 2019 (6) TMI 806
  Maintainability of petition - alternative remedy of appeal - HELD THAT:- There is an efficacious alternative remedy available from the impugned order dated 9th May, 2017 to the Commissioner of Customs (Appeals) - The petitioner s grievance with regard to the merits of the impugned order including non-granting of cross-examination would be considered by the Commissioner of (Appeals) and adjudicated upon. It does not warrant interference of this Court in its extraordinary jurisdiction. However, while we dismiss the petitions, we make it clear that in case the petitioner does file an appeal before the Commissioner (Appeals) within a period of three weeks from today, the Commissioner (Appeals) would entertain the appeal on its own merits as the time spent in prosecuting these petitions before this Court has to be excluded. Petition disposed off.

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• 2019 (6) TMI 800
  Renewal and extension of the petitioners Letter of Approval - permission to petitioner to function within the Special Economic Zone (SEZ) for manufacture of plastic bags etc. out of plastic waste/scrap - HELD THAT:- It is the Central Government which would frame the policy and the Board would be bound by the directions of the Central Government which are to be given in writing. The fact that sub-section (5) of section 9 of the SEZ Act specifically provides for policies to be framed by the Central Government means that the general provisions contained in sub-section (1) of section 9 would not include the power to take policy decisions. Therefore, the Board while discharging its duties and functions, is bound by the policies framed by the Central Government, but has no power to frame policies on its own. The Board, therefore, is not a policy making body but only an implementing one. In view of the fact that the petitioners are similarly situated to the other two units which were granted extension of Letter of Approval by the Board, the Board had no option but to grant extension of the Letter of Approval to the petitioners, it has now come up with a totally new case by taking shelter behind rule 18(4) of the SEZ Rules, reading into it a policy decision to phase out units which were already established in the SEZ and the petitioners case is the first case for implementing such so called policy. It appears that the new stand adopted by the Board for not considering the case of the petitioners, is presumably to wriggle out of the above order passed by this court. Considering the manner in which the petitioners case has been either deferred or rejected on one ground or the other, while similarly situated parties have been granted extension of Letter of Approval, it appears that the Board for reasons best known to it is not inclined to grant approval to the petitioners without any valid reasons for such refusal - the decision of the Board taken in its meeting held on 5th October, 2018 rejecting the request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste scrap, suffers from the vice of being discriminatory, arbitrary and capricious and flies in the face of the order dated 8th May, 2018 of this court, and cannot be sustained. Petition allowed - decided in favor of petitioner.

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• 2019 (6) TMI 798
  Applicability of Notification dated 14.12.2018 issued by the State Government - section 4(1)(b) of the Gujarat Essential Commodities and Cattle (Control) Act, 2005 - prohibition on the export of Livestock - HELD THAT:- It is evident that under the guise of exercise of powers under section 4(1)(b) of the Cattle Control Act, the State Government in effect and substance seeks to prevent export of livestock from Tuna Port. This fact is further fortified by the fact that the communication to strictly implement the provisions of the Cruelty to Animals Act and the Transport of Animals Act has been issued only to the Superintendent of Police, Kutch (West). It is not as if in the ordinary course animals would be being transported only in Kutch district, except that insofar as export of livestock is concerned it is only from Tuna Port that such exports take place in the State of Gujarat. Therefore, when it is only the Superintendent of Police, Kutch (West) is instructed to take steps to ensure strict compliance of the provisions of the Transport of Animal Rules by setting up a number of check posts (though neither the Prevention of Cruelty to Animals Act nor the Transport Rules envisage setting up of check posts) and to keep a round the clock vigil, it is evident that the object behind such instructions is to create hurdles in the export of livestock from Tuna Port. Right from August, 2018, under one pretext or the other, the State authorities have been attempting to prevent export from Tuna Port; the communications addressed by the Chief Minister to the Central Minister as well as the letter of the Director of Animal Husbandry which show that both have requested that exports may not be permitted till ACQS facilities are provided; it is only the Superintendent of Police Kutch (West) who has been instructed to set up check posts to ensure compliance of the provisions of the Prevention of Cruelty Act and the Animal Transport Rules; all of which make it manifest that the object behind the issuance of the impugned notification as well as the impugned communications is to prevent export from Tuna Port as the State Government does not have any power to directly prevent exports, export and import being a subject falling in the Union List, this court is of the considered view that the impugned notification has been issued in colourable exercise of powers to do indirectly what cannot be done directly. This court is of the opinion that the impugned notification does not meet with the requirements of section 4(1)(b) of the Cattle Control Act as it has not been issued on the ground that it is expedient or necessary to do so for maintaining the supply or increasing the supply of cattle of for securing equitable distribution and availability at fair prices of cattle - The impugned notification, therefore, clearly has been issued in colourable exercise of powers and deserves to be struck down. Petition allowed.

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• 2019 (6) TMI 796
  Warehousing of goods - grant of license to operate as a private bonded warehouse - HELD THAT:- Similar issue decided in the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 [ 2017 (3) TMI 1534 - GUJARAT HIGH COURT] where it was held that the revival of proceedings after a long gap of ten to fifteen years without disclosing any reason for the delay, would be unlawful and arbitrary and would vitiate the entire proceedings It is manifestly clear that the authorities kept the show cause notice in call book for 14 years and thereafter, resurrected and the impugned orders dated 28.07.2017 and 24.01.2018 confirmed the demand came to be passed without considering the written submissions of the petitioners - the action on the part of the authorities to keep the show cause notice for long period and thereafter, reviving it to confirm the order of demand as has been held in various decisions resulted in infraction of the principles of natural justice rendering the show cause notice as well as consequent order vitiated. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 778
  Condonation of delay in filing appeal - proper reasons for delay not produced - HELD THAT:- The delay had occurred because of uncontrolled reasons and because of an honest mistake on the part of the appellant . The delay has not been explained at all. What were the uncontrolled reasons have not been stated. No satisfactory explanation has been offered by the Appellant for condoning the delay. The condonation of delay application is, accordingly, rejected - COD application dismissed.

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• 2019 (6) TMI 765
  Maintainability of appeal - non-prosecutIon of the case - HELD THAT:- It is presumed that the appellant is not interested in pursuing the appeal. Hence the appeal is dismissed for non-prosecution.

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• Corporate Laws

• 2019 (6) TMI 770
  Restoration of the name of the company in the Register of Companies - default in submitting the returns from the financial year ending March 31, 2014 onwards - HELD THAT:- It can be seen from the financial statements, the bank statements and other documents brought on record by the appellant-company that it was neither carrying on any business nor in operation when its name was struck off by the Register of Companies, West Bengal. There is no just reason to restore the company s name on the Register of Companies. Since the company seems to be not an active company and not carrying on the business for which it was incorporated, the appeal is liable to be dismissed.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 771
  Validity of application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 - it was alleged that application in Form 6 under Section 10 of the I B Code was filed without the decision of the shareholders - HELD THAT:- In the present case under Article 127 (xii) the Board of Directors have been empowered to pass any order for winding up and/or presenting a petition for winding up of the Company. The prior approval of the shareholders in the AGM has been substituted by the amendment made on 6th June, 2018, which is not applicable in the present case as it was admitted earlier in May, 2018. This apart, we find that subsequently the matter was placed before the AGM in August, 2018 which also approved the decision for filing the application under Section 10 of the I B Code. In absence of any merit, the appeal is dismissed.

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• 2019 (6) TMI 767
  Initiation of Corporate Insolvency Resolution Process against the Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - allegation is Applicant Bank s involvement in defrauding the Corporate Debtor - HELD THAT:- An application under Section 7 being an independent proceeding has nothing to do with the pendency of the Criminal Case relating to misappropriation of the funds by the Chief Financial Officer of the Corporate Debtor and the employees of the Banks. The Bank which is the Financial Creditor is a separate entity from the Chief Financial Officer of the Corporate Debtor or the individual employees of the Bank(s), if any, involved. The pendency of the investigation or trial cannot be a ground to refuse an application under Section 7 if the application is complete and there is a debt and default. The I B Code being a complete Code will prevail over the other Acts and no person can take advantage of the pendency of the case to stall Insolvency and Bankruptcy proceeding filed under Section 7. Appeal dismissed.

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• 2019 (6) TMI 766
  Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 9 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government - The Operational Creditors have not proposed the name of IRP, therefore, Mr. Swaminathan Venkatraman is appointed as IRP, whose name appears in the Panel of Insolvency Professionals recommended by the IBBI. The IRP shall file the declaration disclosure statement in the Registry of NCLT, Chennai Bench, within two working days from the date of the receipt of this Order. The IRP is directed to take charge of the Respondent Corporate Debtor s management immediately. He is also directed to cause public announcement as prescribed under Section 15 of I B Code, 2016, within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed. The IRP shall comply with the provisions of Sections 13(2), 15, 17 18 of I B Code. The directors of the Corporate Debtor, its promoters or any person associated with the Management of the Corporate Debtor are/is directed to extend all assistance and cooperation to the IRP as stipulated under Section 19, so that he could discharge his functions under Section 20 of the I B Code, 2016. Application admitted - moratorium declared.

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• 2019 (6) TMI 764
  Release of salary in favour of employees of the respective Corporate Debtors - Corporate Insolvency Resolution Process - HELD THAT:- Learned counsel appearing on behalf of the employees representatives submit that a number of working employees have been paid the salary but the Dearness Allowance etc. have not been paid. In some cases even the basic salary has not been paid. However, as individual claim of each of the employee cannot be decided by this Appellate Tribunal, we give liberty to the individual aggrieved employee to approach the Resolution Professional(s) with representation showing that they are working but have not been paid the basic salary. In such case, the Resolution Professional(s) may verify from the record as to whether such employee is working during the Corporate Insolvency Resolution Process or not and paid wages or not. Appeal disposed off.

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• Service Tax

• 2019 (6) TMI 795
  Recovery of Refund already allowed with interest and penalty - Excess utilisation of CENVAT credit on Service Tax beyond the limit of 20% - extended period of limitation - HELD THAT:- In the instance case Appellants had utilised the CENVAT credit on the tax paid on the services extended by it which was subsequently held by the Hon ble High Court not included in the category of the definition of services as prevailing them and the activities carried out by the Appellant was not tobe equated with mining service which was included in the taxable entry w.e.f. 1-6-2007 - Going by the Order-in-Original of refund application number ST/58/11 it can very well be noticed that documents of the Appellant including copies of ST-3 returns for the relevant period April to September 2007 along with ST-2, Invoice reflecting amount of Service Tax charged, Service Tax paid through CENVAT credit were produced before him and he analysed/ scrutinised the same and allowed the refund claim of the Appellant partly as well as refused a part of it on the basis of his assessment and analyse of claim of the refund. Extended period of limitation - HELD THAT:- Putting the Appellant under notice that it had wilfully suppressed the fact of excess utilisation of CENVAT credit way back in 2007 would bring an inference that Appellant had knowledge of such order to go in its favour in 2010, appears illogical and beyond once s comprehension. Therefore, invocation of extended period in making duty demand against utilisation of CENVAT credit which had become excessive subsequent to such payment is irrational, contrary to the law and without any legal basis - in the instant case, when no suppression etc. is made out, extended period is not invocable and therefore interest on duty cann t also be enforced. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 794
  Penalty u/r 15 (3) of the Cenvat Credit Rules, 2004 and section 78 of FA - CENVAT Credit - reversal of credit in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT:- It is a matter of record that before the Audit party visited the appellant between 27.10.2010 to 02.11.2010, the appellants have already reversed back the cenvat credit amounting to 50,25,246/- in compliance to the requirement of Rule 6(3) of Cenvat Credit Rules, 2004 and same was reflected in the financial accounts including the balance sheet for financial year 2009-2010. It was only on comparison of balance sheet and the ST 3 returns which have been filed by the appellant that the Audit party pointed out that the reversed back amount of Cenvat credit has not been shown as reversed back in their ST 3 return for the relevant period. The appellant while filing ST 3 return for period covering October, 2010 to March, 2011, which was filed on 25 April, 2011, the reversal of Cenvat credit amounting to 50,25,246/- had properly been reflected in the ST 3 return. Equal amount of penalty under Rule 15 (3) of the Cenvat Credit Rules, 2004 - HELD THAT:- The intention of the appellant have never been to misuse the cenvat credit or evade service tax on account of same and therefore, primarily we feel that since they have already reversed the cenvat credit and have also paid interest, there was no need to issue show cause notice left aside invoking the provisions of Rule 15 (3) of the Cenvat Credit Rules, 2004 for imposition of equal amount of penalty. Penalty u/s 78 - HELD THAT:- The facts in this matter indicate that the appellant on its own reversed back the cenvat credit and has reflected the same in their financial books of accounts. There have also been correspondence between the officers of the Department and the appellant which indicate that the appellants have always having credit in their account much more than what was required to be reversed and if such credit have been reversed on its own by the appellant, it will amount to non-taking of the cenvat credit. Since the original amount of credit was already reversed as the assessee had claimed that they always had credits in accounts much above the required amount, the credits in a way have not been utilized by the assessee. The penalty under section 78 of Finance Act, 1994 read with Rule 15(3) of Cenvat Credit Rules, 2004 is not imposable in the facts of this matter - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 793
  Jurisdiction - It is the case of the Department that the respondent had rendered Intellectual Property Rights Services on which they had not discharged the Service Tax - scope of SCN - HELD THAT:- The Adjudicating Authority, in the impugned order, observed that the assessee produced a Chartered Accountant s certificate certifying that the amount has been received in foreign currency. Thereafter, the Department referred the matter to Director (Cost) who confirmed the receipt of foreign exchange, but was unable to link it to the exports item wise. The assessee clarified that this was because the income for the services which were rendered were received during the next financial year in some cases. The demand raised in the Show Cause Notice alleging that the remuneration for the IPR Services were not received in foreign currency unsustainable and unsubstantiated. Appeal dismissed - decided against Revenue.

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• 2019 (6) TMI 779
  Commercial or Industrial Construction Service - demand of service tax - HELD THAT:- The issue has reached a finality as the lower authority has confirmed the demand and the appellant has not contested it before the first appellate authority and has in fact already paid substantial amount of the demand. Liability of service tax - Management, Maintenance or Repair Service - services rendered by them in re-laying the surface of the roads - HELD THAT:- This circular clarifies that when the nature of road itself gets changed, it amounts to construction of a new road. Re-laying of roads, filling pot holes etc., would amount to maintenance or repair activities - the respondent s activity of removing the gravel and laying the surface of the road with their similar material amounts to Maintenance and repair of the road. However, in view of the retrospective amendment vide Section 97 of the Finance Act 1994, w.e.f. 28.05.2012, the services rendered with respect to Maintenance or Repair of roads from 16.06.2005 to 26.07.2009 is not chargeable to service tax and if any amount was collected as service tax on this ground, the same has to be refunded - no service tax is chargeable under Management, Maintenance or Repair service. Appeal dismissed - decided against appellant.

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• 2019 (6) TMI 773
  Non-payment of service tax - Works Contract Services - Revenue is of the view that the appellant is liable to pay service tax in terms of N/N. 9/2009-ST dt.3.3.2009 - HELD THAT:- As the appellant has provided services to SEZ unit and in terms of section 26 of Special Economic Zone, 2005, the appellant was not required to pay service tax. Accordingly, in terms of Notification No.9/2009 dt.3.3.2009, the appellant is not required to pay service tax. Therefore, the demand of service tax raised against the appellant is set aside - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 769
  Commercial Training and Coaching services - non/short payment of service tax - HELD THAT:- It is only in response to the show cause notice the assessee took the stand that the notebook was written under duress. The first appellate authority was wrong in holding that the contents of the letter dated 18.10.2008 were retracted at the first available opportunity. In fact, the retraction was made after about a year and can only be considered as afterthought. The first appellate authority confirmed part of the demand to the extent assessee agreed to pay and rejected the rest which is not correct. If he was of the opinion that the entire demand was based on no evidence whatsoever, he should have set aside the entire demand. There is no rationale in confirming one part of the demand and rejecting another part of it only on the ground that the assessee agreed to pay one and not the other when the entire demand is based on the same evidence. Therefore, we find that the order of the first appellate authority is liable to be set aside. The demand of the service tax, interest and penalties as imposed by the lower authority stand restored - Appeal allowed - decided in favor of Revenue.

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• 2019 (6) TMI 768
  Service of order - Time Limitation - appeal was dismissed solely for the reason that it was filed beyond the period stipulated in Section 85 (3)(A) of the Finance Act, 1994 - HELD THAT:- Sub-Section (2) of Section 37C provides that every order issued under the Act shall be deemed to have been served on the date on which the order is tendered or delivered by post or courier - In the instant case, there is nothing on the record to indicate that the order was either tendered to the appellant or sent by registered post with acknowledgment due or by speed post with proof of delivery or by courier. The Commissioner, therefore, could not have drawn any assumption, but the order passed by the Commissioner reveals that not only did the Commissioner assume that the order was sent to the appellant by one of the modes prescribed under Section 37C, but also assumes that it was served upon the appellant within 7 days of the passing of the order. Such an inference drawn by the Commissioner is perverse. Appeal allowed.

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• Central Excise

• 2019 (6) TMI 820
  Cash refund - unutilized CENVAT credit on inputs - clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 - Section 11B of the said Act of 1944 - time limitation - vires of declaration of law under Article 141 of the Constitution of India - HELD THAT:- Section 11B(1) clearly says that a person claiming refund has to make an application for refund of such duty before the expiry of the period prescribed and in such form and manner. The application has to be accompanied by such documentary or other evidence as the applicant may furnish to establish that the amount of duty of excise, in relation to which such refund is claimed, was collected from or paid by him and incidence of such duty had not been passed by him to any other person. The later provision enabling the claiming of refund is now worded differently. We have reproduced it and now it is only when the proviso is attracted that the amount of refund can be paid over to the applicant or else it has to be credited to the fund. Even earlier, the amount used to be credited to the fund, but the proviso says that instead of being credited to the fund, it can be paid to the applicant if such amount in this case is relatable to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made. The crucial words are that the refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act . If the excisable goods are not used as inputs in accordance with the rules made, to our mind, there is no question of any refund. A perusal of this rule indicates that where any input or input service is used in the final product, which is cleared for export etc. or used in the intermediate product cleared for export or used for providing output service which is exported, then, the Cenvat Credit in respect of the input or input service so used shall be allowed to be utilised by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service. Whether for any reason, such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitation as may be specified by the Central Government by a notification. The transitional provision that any amount of credit earned by a manufacturer under the Cenvat Credit Rules, 2002, as they existed prior to the 10th September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002 as they existed prior to 10th September, 2004 and remaining un-utilised on that day shall be allowed as Cenvat Credit to such manufacturer or provider of output service under these rules, and be allowed to be utilised in accordance with these rules. This is how the transitional provision enables carrying forward of the un-utilised Cenvat Credit. That is a distinct contingency altogether. That transitional provision does not enable us to hold that the amount of un-utilised Cenvat Credit can be refunded in cash. We answer the questions of law framed against the assessee and in favour of the Revenue. Needless to state that the order of the Hon ble Supreme Court in the case of Slovak India [ 2007 (1) TMI 556 - SC ORDER] cannot be read as a declaration of law under Article 141 of the Constitution of India.

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• 2019 (6) TMI 807
  Lack of Jurisdiction - violation of principles of natural justice - Circular dated 01.10.2003 - HELD THAT:- A perusal of the impugned order reveals that the Adjudicating Authority has held that this Hon ble Court has left the jurisdiction issue open. A perusal of the earlier order of this Hon ble Court and more particularly Paragraph 4 therein, makes it clear that the learned Adjudicating Authority has understood the order of this Hon ble Court correctly and the Adjudicating Authority is correct in understanding that this Court has left the issue of jurisdiction open - the Adjudicating Authority has embarked upon the issue of jurisdiction and has relied on the latest circular dated 10.03.2017 bearing a reference 1053/02/2017-CX (F.No.96/1/2017-CX.I). In sum and substance, there are three aspects with regard to jurisdiction. First aspect is that this Hon ble Court has left open the issue in the earlier order. Second aspect is that there is a latter circular dated 10.03.2017 which says that where the matter is remanded to an Authority, the adjudication process shall be done by the Authority in the same rank who passed the order prior to remand notwithstanding any violation in order. The third aspect is Section 12E of CE Act. In the light of there being no dispute that Additional Commissioner i.e., Respondent No.1, being superior to the Joint Commissioner and in other words, Joint Commissioner being subordinate to the Additional Commissioner, Section 12E was also followed . Owing to these aspects, the campaign of the writ petitioner with regard to jurisdiction comes to an end. Violation of principles of natural justice - Alternative remedy - HELD THAT:- There is no dispute or disagreement between the two learned counsel before this Court that there is an alternate remedy to the writ petitioner by way of statutory appeal to the Commissioner (Appeals)-II, Newry Towers No.2054-I,II Avenue, Anna Nagar, Chennai 600 040. This Court is unable to convince itself in the facts and circumstances of this case that there is lack of jurisdiction on the part of first respondent and that there is violation of NJP. This is a fit case to relegate the writ petitioner to alternate remedy of filing an appeal to Commissioner (Appeals)-II, Newry Towers No.2054-I,II Avenue, Anna Nagar, Chennai 600 040 - petition disposed off.

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• 2019 (6) TMI 805
  Classification of goods - Eco Bath Wipes - whether the aforesaid product i.e., Eco Bath Wipes has to be classified under CETH 34029091- washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents or under CETH33073090- Other bath preparations others ? - case of appellant is that petitioner in assailing the impugned SCN is that, the same has been issued without conducting retest - principles of natural justice. HELD THAT:- It is submitted that the request for retest which has been made by the writ petitioner vide the aforesaid letter dated 08.02.2017, which has been sent to the jurisdictional Superintendent will be forwarded to the jurisdictional Assistant Commissioner of Central Excise and a retest will be conducted. Writ petitioner also, on instructions, undertakes to pay the prescribed fee forthwith. Besides paying prescribed fee all other attendant requirements which are necessary for retest shall be adhered to by the writ petitioner. A copy of the retest report will be furnished to the writ petitioner, as expeditiously as possible and the writ petitioner shall thereafter send his reply to the impugned SCN - The aforesaid exercise of retest shall be completed as mentioned supra as expeditiously as possible , but in any event within two months from the date of receipt of a copy of this order. The same shall be served on the writ petitioner within three (3) weeks there from and the writ petitioner shall send his reply to the impugned SCN within 30 days from the date of service of the retest report. The retest has to be done in accordance with the Basic Excise Manual which has been relied on. Thereafter, respondent shall take a decision on the impugned SCN within 30 days from the date of receipt of reply to the show cause notice (as per calendar drawn up supra) in accordance with law - petition disposed off.

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• 2019 (6) TMI 762
  Liability of National Calamity Contingent Duty (NCCD) - benefit of exemption notification - HELD THAT: -The issue is decided in the case of BAJAJ AUTO LIMITED VERSUS UNION OF INDIA OTHERS [ 2019 (3) TMI 1427 - SUPREME COURT] where it was held that the NCCD is in the nature of excise duty and is, thus, entitled to the benefit of the exemption notification - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (6) TMI 819
  Non-issuance of C-Forms - Circular No. 47T of 2017 dated 11th July, 2017 - HELD THAT:- After the withdrawal of the impugned Trade Circular No. 47T of 2017 dated 11th July, 2017, the officers of the sales tax would not be constrained by the above circular in interpreting sections 2(d) and 8(3) of the Central Sales Tax Act, 1956. It would be appropriate that the Petitioner make a representation to Respondent No. 2 Commissioner of State tax with copy to its assessing officer being Dy. Commissioner of State (E-635) setting out its case/claim for the issuance of C Form on purchase of natural gas from Gujrat. This representation would be made by the Petitioner on or before 18th June, 2019. The Respondent No. 2 and/or Dy. Commissioner of State Tax (E-635) will dispose of the representation on merits after hearing the Petitioner in accordance with law within two weeks from the date of the Petitioner filing its representation. Mr. Sonpal, learned counsel for the Respondents state that in case Sales Tax portal for making application in Form C qua the Petitioner is opened then the Petitioner s would be informed of the same. The Petitioner will then file its representation online. It is made clear that the delay in opening of the portal will not extend the time for the Commissioner Sales Tax to deal with the Petitioner s application. Mr. Patkar seeks leave to withdraw the Petition. The Petition is allowed to be withdrawn.

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• 2019 (6) TMI 817
  Levy of VAT - grant of permissive use of the brand name - Maharashtra Value Added Tax Act, 2002 - HELD THAT:- We are informed that the Revenue has filed an appeal before the MAHYCO MONSANTO BIOTECH (INDIA) PVT. LTD., (FORMERLY KNOWN AS MAHYCO MONSANTO BIOTECH (INDIA) LTD) , SUBWAY SYSTEMS INDIA PVT LTD VERSUS UNION OF INDIA OTHERS [ 2016 (8) TMI 717 - BOMBAY HIGH COURT] and is also awaiting consideration by the Hon ble Apex Court - Mr. Dada, learned Senior Counsel states that the tax involved in both the petitions have been paid and they seek no interim reliefs. Mr. Dada, on instructions, states that an affidavit to the above effect would be filed within a period of one week from today.

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• 2019 (6) TMI 809
  Validity of assessment order - TNVAT, 2006 - Principles of natural justice - lack of jurisdiction - alternate remedy - HELD THAT:- A perusal of the impugned order reveals that the respondent has not given personal hearing to the writ petitioner notwithstanding the specific and categoric direction in this regard in the earlier aforesaid order made by another Hon ble Single Judge. It is, in the considered view of this Court is, unfortunate. This order is being passed with the hope that such a situation and predicament does not occur in days to come. Be that as it may, a perusal of the impugned order also reveals that the writ petitioner has an appeal remedy by way of appeal before the Appellate Deputy Commissioner (ST) (East), Greams Road, Chennai - 06. It emerges clearly that in the instant case, there has been violation of NJP. It is not only violation of NJP, but it is violation of NJP on the teeth of specific directions of this Court in the aforesaid previous order ie., order directing the respondent to give an opportunity of personal hearing - there is no difficulty in exercising writ jurisdiction and interfering with the impugned order notwithstanding alternate remedy in the instant case. Petition disposed off.

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• 2019 (6) TMI 808
  Deemed assessment under Section 22(2) of TNVAT Act - Levy of penalty u/s 27(3) of TNVAT Act - HELD THAT:- It follows as an inevitable sequitur that the impugned assessment orders in each of the writ petitions levying 150% penalty under Section 27(3) under TNVAT Act deserve to be set aside. Matters are remanded back to the third respondent for fresh consideration for redoing the assessment - petition allowed by way of remand.

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• 2019 (6) TMI 804
  Validity of assessments under TNVAT Act - it was alleged that the turnover reported by the petitioner in the returns and the turnover prepared by the petitioner s Auditor are not in tandem and that there is variation in numbers - HELD THAT:- The respondent dropped proceedings under two heads and held as against the petitioner with regard to only one head, this Court is of the considered view that it would be appropriate to relegate the writ petitioner to appeal remedy which is admittedly available to the petitioner. If the petitioner chooses to file an appeal before the appellate authority against the impugned order, the appellate authority shall hear and dispose of the same in a manner known to law, uninfluenced by and untrammelled by any of the observations that have been made in this order. Whatever is contained in this order are only for the purpose of disposal of the instant writ petitions and the Appellate Authority shall dispose of the appeal on its own merits and in a manner known to law if the petitioner chooses to avail the same - Petition disposed off.

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• 2019 (6) TMI 803
  Concessional rate of tax - Form-C - CST Act - interstate trade or commerce - revision of the assessment on the basis of Forms submitted post assessment - HELD THAT:- With regard to exemption to a dealer under the CST Act for sale made in the case of interstate trade or commerce to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, re-engineering, packaging or for use as packing material or packing accessories in a unit located in any SEZ, the same is contained in Sub Section (6) of Section 8 of CST Act. Sub Section (6) of Section 8 of CST Act was inserted in the CST Act vide Act 20 of 2002, which is Finance Act. It was inserted with effect from 11.05.2002. The applicability of Sub Section (6) of Section 8 of CST Act and exemption on submission of Form I subject of course to scrutiny of Form I, by the Assessing Officer is not in dispute. Revenue is not disputing the principle and ratio laid down in East Coast Bearings case [ 2018 (3) TMI 681 - MADRAS HIGH COURT] . The principle in very simple terms is that certain Forms submitted by an assessee post completion of assessment order, can certainly be looked into and there can be revision of the assessment on the basis of Forms submitted post assessment, subject of course to scrutiny of the Forms. It is also to be noted that there are no other attendant issues or facts, which impact this exercise in the instant case. Respondent assessee shall examine Form I submitted by the petitioner assessee on 13.02.2019 and pass assessment order afresh. If it entails revision of assessment order already made on 31.8.2017, the same shall be done. The impugned order is set aside - petition allowed.

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• 2019 (6) TMI 802
  Power to review or keep in abeyance an order passed by it on the ground of seeking guidance from the superior authority - HELD THAT:- In the facts of the present case, it is an admitted position that the second respondent firstly granted amendment of the registration certificates of the petitioners by including High Speed Diesel as commodity; and thereafter has kept them in abeyance for the purpose of obtaining guidance of the higher authority. In the considered opinion of this court, there being no power vested in the authority to review its order under section 7 of the CST Act or to keep such order in abeyance, the stand of the second respondent in the impugned letters dated 27.2.2019 informing the petitioners that their on-line applications had been approved through oversight and that High Speed Diesel would be included in CST commodity after obtaining guidance of the higher authority cannot be countenanced even for a moment - Impugned order cannot be sustained. CST Registrations of dealers other than those dealing in the specified goods would automatically become inactive - HELD THAT:- When the legislature wants to provide for automatic cancellation of the registration granted under an enactment, it is expressly provided in such enactment. Since no such provision has been made in the CST Act, no such intention can be read into it and consequently, upon the coming into force of the Taxation Laws (Amendment) Act, 2017 whereby the definition of goods in the CST Act came to be amended, CST registrations of dealers other than those dealing in the specified commodities would not become inactive automatically. Benefit of reduced rate of tax - Whether a dealer who is registered under the Goods and Services Tax Act cannot also be registered under the CST Act, when the CST Act requires a person who deals in or claims usage of the goods specified thereunder to be registered under that Act for getting the benefit of reduced rate of tax under section 8 thereof? - HELD THAT:- If a dealer is dealing in goods falling within the ambit of the GST Act as well as the CST Act, it is always permissible for him to hold separate registrations under both the Acts in respect of such goods. Therefore, a dealer who is registered under the GST Act can also be registered under the CST Act in respect of commodities which fall within the ambit of the expression goods as defined under section 2(d) thereof for getting the benefit of reduced rate of tax under section 8 of the CST Act. Petition allowed - decided in favor of petitioner.

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• 2019 (6) TMI 801
  Vires of Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 - cancellation of C forms - Rajasthan VAT Act - Reduced rate of tax - HELD THAT:- The CST Act came into force on 05.01.1957 and has throughout substantially retained Section 13 in its original form, which invests the States with the power to frame Rules. The Central Act did not confer any authority on the States to frame the Rules empowering them to cancel the declaration form/C-Form once issued. This has been taken to so mean by all other State except the State of Rajasthan, which perhaps is the only State providing so in sub-rule (20) in Rule 17 of the Rajasthan Rules on 14.07.2014, i.e., more than 61 years thereafter. This provision is apparently not only contrary to the provisions of Section 8(4) but also Section 13(1)(d), 13(3) and (4)(e). As would be seen from the Central Sales Tax Rules framed by different States, which have been produced by the petitioner for perusal of the court during the course of argument, no other State has any such provision in their Rules, like the one which is impugned in the present writ petition, i.e., Rule 17(20) of the Rajasthan Rules, conferring unto itself power for cancellation of validly issued declaration form/C-Form. The obligation of a registered dealer selling the goods to another registered dealer to avail the benefit of tax provided under Section 8(1) is only confined to furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom he sells the goods. Such declaration should contain the prescribed particulars in the prescribed form and manner. Proviso to Section 8(4) stipulates that the selling dealer has to furnish such declaration within the prescribed time or within such further time as the authority may, for sufficient reason, extend. Rule 12 of the Central Rules provides a form of declaration, the particulars to be contained therein, the period within which it has to be furnished, consequence of loss of the declaration form, and the course to be adopted in that event. The State has no authority to frame a rule providing for cancellation of validly issued declaration form/form-C - Rule 17(20) of the Rajasthan Rules is declared ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(e) of the CST Act. The communications dated 20.11.2017 and 30.11.2017 sent by the respondent no.3 to the VATO Ward-17, New Delhi, with regard to cancellation of C Form, are declared illegal and consequently quashed and set aside. The cancellation of C Forms made vide order dated 07.12.2017 is also quashed and set aside. Petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2019 (6) TMI 818
  Dishonor of Cheque - section 138 of NI Act - rebuttal of presumption under Section 139 of the Act - HELD THAT:- It was found that the bus was purchased by the complainant from the original vendor and the matter was under process for transferring the ownership in favour of the complainant. That being the position, while the petitioner being aware of such condition/stipulation in the agreement and he has already made part payment towards purchase of said vehicle cannot be permitted to raise the plea that the complainant being not owner of the vehicle is not entitle to get the remaining part of the amount. By his conduct itself the petitioner now estopped from raising such plea only to frustrate the claim of the complainant. The accused petitioner has miserably failed to rebut the presumption under Section 139 of the Act and the learned trial court has on due appreciation of entire matter on record has came to a proper finding about the guilt of the accused. There appears no irregularly in the order passed by the court below. While maintaining the sentence under Section 139 NI Act the same is converted to a fine of twice the cheque amount i.e. 3,70,000/- in default SI for six months. Amount of fine be given to the complainant as compensation. The complainant is hereby directed to deposit the amount before the trial court within a period of two months from today.

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• 2019 (6) TMI 814
  Recovery of money payable - compliance of provisions of Order 37 Rule 2 CPC - HELD THAT:- In the present case, offer has not only been accepted but the contract has also been acted upon between the parties, as the goods were supplied as per demand of defendant and by making part payments against thereof, defendant has also acknowledged the completion of contract. The payments made by defendant have been reflected in the ledger account/running account of defendant maintained by the plaintiff, copies whereof, establishing the payments made by defendant and outstanding amount yet to be paid by the defendant, are on record. Amount involved in present case pertains to business transaction and definitely, by withholding the payment due to plaintiff which may have been utilized by plaintiff in the business of plaintiff for non-availability of funds to be poured in the business activities so as to grow further. Therefore, the plaintiff is also entitled for interest @ 12% per annum on the amount to be recovered from the defendant. The suit of the plaintiff succeeds.

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