TMI Tax Updates - e-Newsletter
June 20, 2018

Case Laws in this Newsletter:

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

Articles

• INPUT TAX CREDIT (ITC) IN GST (PART-III)
• COMPOSITE SUPPLY VIS-À-VIS MIXED SUPPLY
• How to check Import or Export policy for any particular product I choose for EXIM ?

News

• Chief Ministers Subgroup Constituted to Coordinate Policy Approaches for Agriculture and MGNREGS

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• RBI Reference Rate for US $

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Notifications

Customs

• 54/2018 - dated 19-6-2018 - Cus (NT)
  Seeks to Amend Notification No. 49/2018-CUSTOMS (N.T.), dated 7th June, 2018

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GST

• 28/2018 - dated 19-6-2018 - CGST
  Central Goods and Services Tax (Sixth Amendment) Rules, 2018

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GST - States

• FTX.56/2017/Pt-II/114. - dated 31-5-2018 - Assam SGST
  Seeks to further amend the SGST Rules,2017(Fourth Amendment,2018)

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• FTX.56/2017/231 - dated 3-5-2018 - Assam SGST
  Seeks to exempt payment of tax under section 9(4) of the Assam GST Act,2017 till 30/06/2018.

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• F 10/17/2018/CT/V (31) - dated 28-3-2018 - Chhattisgarh SGST
  Date-for-Intrastate-e Waybill

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• F-10- 15 /2017/CT/V (28) - dated 23-3-2018 - Chhattisgarh SGST
  Amending the SGST Rules, 2017(Third Amendment Rules, 2018).

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• 16 /2018 — State Tax - dated 23-3-2018 - Chhattisgarh SGST
  Last date for filling of return in FORM GSTR-3B

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• 15/2018 — State Tax - dated 23-3-2018 - Chhattisgarh SGST
  Notifies the date from which E-Way Bill Rules shall come into force

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• 22/2018-State Tax - dated 28-5-2018 - Mizoram SGST
  Seeks to waive the late fee for FORM GSTR-3B

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• 21/2018-State Tax - dated 2-5-2018 - Mizoram SGST
  Notification seeks to make amendments (Fourth Amendment) to the SGST Rules, 2017.

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• 19/2018-State Tax - dated 2-5-2018 - Mizoram SGST
  Extension of date for filing the return in FORM GSTR-6

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• 17/2018-State Tax - dated 2-5-2018 - Mizoram SGST
  Seeks to prescribe the due date for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore

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• 16/2018-State Tax - dated 2-5-2018 - Mizoram SGST
  Seeks to prescribe the due dates for filing FORM GSTR-3B for the months of April to June, 2018

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VAT - Delhi

• F. No. Zone-VI/W-63/2018-19/1213-16 - dated 15-6-2018 - DVAT
  Notified for general information that Declaration ‘C’ Forms are declared to be obsolete and invalid for all purposes from the date of issue of the form i.e. 25/04/2016

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• F. No. Zone-5/W-61/Misc./2018-19/3121-3126 - dated 15-6-2018 - DVAT
  Notified for general information that Declaration Forms “C” are declared to be obsolete and invalid for all purposes with effect from the date of issuance/downloading the Statutory (‘ C’) Forms

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• F.No./Zone-VI/W-71/2018-19/114-118 - dated 14-6-2018 - DVAT
  Notified for general information that Declaration Forms “F” are declared to be obsolete and invalid for all purposes with effect from the date of issue of declaration Forms “F”.

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Highlights / Catch Notes

Income Tax

• Additions u/s 41(1) for cessation of liability - simply because the liability is outstanding for quite some years the liability does not seize to exist - mere entry in the books of accounts of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end - thus no cessation of liability in the case of the assessee.
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• Disallowance of labour charges - assessee violated the relevant statutory provision relating to PF & ESI Scheme in respect of the said workers - it would be fair and reasonable to disallow the wages of in question to the extent of 25%.
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• Disallowance of amount paid on donation and subscription - this claim is not fully verifiable in the absence of the relevant details and supporting documentary evidence - hence it would be fair and reasonable to allow the claim of the assessee on account of donations and subscriptions only to the extent of 50%
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• Scrutiny assessment u/s 143(3) - in the absence of issue and service of notice u/s. 143(2) the re-assessment made by the AO u/s. 143 r.w.s. 147 for the AY 2011-12 became null and void.
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• Deduction u/s 80P - interest received on deposits with Sub Treasury - investment in treasury/banks and earning interest on the same is part of the banking activity of the assessee’s cooperative bank THUS said income is eligible for deduction u/s 80P(2)(a)(i)
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• Disallowance of exemption u/s 54F - assessee failed to deposit unutilized funds in a capital gains account scheme before filing the return of income u/s 139(1) - reopening of assessment - Right given to the assessee u/s 139(4) cannot be lost merely because proceedings were initiated u/s 147 - assessee has filed return u/s 139(1) within the time allowed u/s 139(4) - claim allowed.
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Customs

• Liability of Customs Duty - Yellow peas - There is dispute as to the correct date on which the Entry Inwards was granted to the vessel “MV Riva Wind" - there is no malafide intention on the part of the appellant in clearing the consignments without payment of duty.
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IBC

• Corporate insolvency process - Those who will watching the proceeding such as (suspended) Board of Directors or its Partners; Operational Creditors or its representatives and Resolution Applicant(s) are not mere spectator but may express their views to the Committee of Creditors for coming to conclusion in one or other way.
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Service Tax

• BAS - At best it can be said that they have participated in promotion of the brand name of ‘Coca Cola’, ‘Pepsi’ etc. Such activities cannot be brought under ‘Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client’, appearing under ‘Business Auxiliary Service’
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Central Excise

• Classification of goods - Wrap Knit Fabric - Since the strips in the present case are of width less than 5mm, the classification of Warp Knit Fabrics made therefrom will be under CETH 6005 and not under CETH 3926 - goods rightly classified under CETH 6005.
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• Manufacture - activity of fabrication of storage tanks of various capacities - activity of converting steel sheets into the form of storage tanks amounts to manufacture - liable for classified under CETH 73090090 of the Central Excise Tariff.
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Case Laws:

• Income Tax

• 2018 (6) TMI 898
  Validity of reopening of assessment - Scrutiny assessment u/s 143(3) - notice u/s. 143(2) was not issued to the assessee which is a mandatory requirement - Held that:- AS relying upon the judgement in case of M/S. TINY GIRL CLOTHING COMPANY PRIVATE LIMITED, C/O JAYESH SANGHRAJKA & CO. LLP CHARTED ACCOUNTANTS VERSUS DCIT [2017 (12) TMI 1342 - ITAT MUMBAI] where it is said that no valid issue of notice u/s. 143(2) is served in this case and consequently the Assessment Order passed u/s. 143(3) is a nullity - thus in the instant case since the he Revenue could not prove that the notice u/s. 143(2) has been issued and served on the assessee in the case on hand before us. Therefore, in the absence of issue and service of notice u/s. 143(2) the re-assessment made by the AO u/s. 143 r.w.s. 147 for the AY 2011-12 became null and void - Decided against the revenue.

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• 2018 (6) TMI 897
  Additions u/s 41(1) for cessation of liability - Held that:- Neither the assessee nor the creditor have written off the liability from their Books of Accounts. In such circumstances simply because the liability is outstanding for quite some years the liability does not seize to exist - In the case of CIT v. Smt Sita Devi Juneja [2009 (12) TMI 34 - PUNJAB AND HARYANA HIGH COURT] considering judgment of CIT v. Sugauli Sugar Works (P.) Ltd [1999 (2) TMI 5 - SUPREME COURT] held that mere entry in the books of accounts of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end - thus we hold that there is no cessation of liability in the case of the assessee - Decided in favor of assessee. Disallowance of expenses and discount allowed by the assessee - Held that:- As additional evidences were filed along with a petition for admission of the same and in view of the additional evidences the matter may be examined afresh - hence we are of the considered view that since these additional evidences go to the root of the matter and assessee is prevented with reasonable cause in not submitting the same while completion of the assessment, we admit the additional evidences and restore the issue to the file AO for examining afresh - thus allowed for statistical purposes. Disallowance u/s. 40(a)(i) - remittance of tds - Held that:- The assessee submitted that, assessee has deducted TDS in respect of the expenditure and remitted before the due date for furnishing of return of income u/s. 139(1) and therefore no disallowance is required to be made - hence, this issue is restored to the file of the AO who shall examined afresh in the light of the latest legal position and decide in accordance with law, after providing adequate opportunity of being heard to the assessee - thus allowed for statistical purpose.

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• 2018 (6) TMI 896
  Levy of penalty u/s 271(1)(c) - furnishing inaccurate particulars of income in respect of loss claimed on account of write off of investments - claim of expenditure which was not accepted or was not acceptable to the revenue - Held that:- Assessee has furnished necessary details in respect of claim of loss on account of write off of investments in shares in return of income - assessee has claimed set off of such loss against long term capital gain derived from sale of agricultural land - the said long term capital gain has been withdrawn by filing revised statement of total income during the course of assessment proceedings. The AO made addition towards long term capital gain; however, on appeal before ITAT, the ITAT deleted addition made by the AO towards long term capital gain computed on transfer of agricultural land. Since the assessee has made a claim of set off of loss on account of write off of investments in shares against along term capital gain derived from transfer of land and such long term capital gain has been finally deleted by the ITAT, we are of the considered view that the claim made by the assessee is a bonafide claim and hence, the AO was erred in levying penalty u/s 271(1)(c) for furnishing inaccurate particulars of income - hence AO is directed to delete the penalty - Decided in favor of assessee.

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• 2018 (6) TMI 895
  Validity of reopening of assessment - disallowance of excess depreciation on building, plant and machinery and office equipment - reopening after 4 years - validity of reason to believe - Held that:- AO clearly shows that the assessment originally completed in the case of the assessee under section 143(3) was reopened by him after the expiry of four years from the end of the assessment year under consideration without pointing out that any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment and even the learned DR has not been able to dispute this position clearly evident from the reasons recorded by the AO - reopening made by him without satisfying this statutory condition is invalid being barred by limitation. - decided in favor of assessee.

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• 2018 (6) TMI 894
  Additions made u/s 40(a)(ia) - short deduction of tax at source - Held that:- In the case of DCIT vs S.K. Tekriwal [2011 (10) TMI 10 - ITAT, KOLKATA], Hon’ble Kolkata High Court has held that section 40(a)(ia) refers only to the duty to deduct tax and pay to government account also if there is any shortfall due to any difference of opinion as to the taxability of any items or the nature of payment falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s 201 but no disallowance can be made - hence following the said decision we delete the disallowance made - Decided in favor of assessee. Disallowance u/s 40(a)(ia) for failure to deduct tax at source - Held that:- the learned counsel for the assessee has not raised any material contention to show that the assessee was not liable to deduct tax at source from the relevant payment. It is thus clear that the assessee had failed to deduct tax at source from the payment u/s 40(a)(ia) - we therefore, modify the impugned order of the Ld. CIT(A) on this issue and restrict the disallowance of ₹ 1,16,51,016/ - partly allowed in favor of assessee. Disallowance of amount paid on donation and subscription - Held that:- the assessee is a construction company executing the work at different sites. On these sites, different pujas and functions are performed for which the assessee has to give donations and subscriptions - thus there is some nexus of the expenditure incurred by the assessee on donations and subscriptions to its business - this claim of the assessee is not fully verifiable in the absence of the relevant details and supporting documentary evidence - hence it would be fair and reasonable to allow the claim of the assessee on account of donations and subscriptions only to the extent of 50% - appeal of the assessee is partly allowed.

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• 2018 (6) TMI 893
  Disallowance made on account of peripheral development expenses - allowable busniss expenses - Held that:- The expenditure on peripheral development was incurred by the assessee as a part of corporate social responsibility as per the scheme framed under the Companies Act - such expenditure was incurred by the assessee even in the earlier years and the same was allowed by the A.O. even in the assessment made u/s 143(3) CSR expenditure incurred for construction of schools, electrification of schools etc. it is submitted that the said expenditure cannot be treated as capital in nature as neither the ownership of the school belonged to the assessee nor it had any control over the running of school - expenditure incurred for construction of a block by way of addition to the school building located in a village in the vicinity of mines was incurred for the benefit of its workers and general public - also explanation 2 to Section 37 inserted by the Finance Act, 2014 with effect from 01.04.2015 is not retrospective - hence we are of the view that the action of the A.O. in disallowing the claim of the assessee for peripheral development expenditure as a part of CSR was not well founded and the Ld. CIT(A) was not justified in confirming the said disallowance - thus we delete the same - Decided in favor of assessee.

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• 2018 (6) TMI 892
  Validity of reassessment proceedings u/s 147 - no notice u/s 148 on the deceased assessee or the sole legal hire of assessee - Held that:- Proper notice u/s 148 of the Act for initiating reassessment proceeding is not a mere procedural requirement but the service of the prescribed notice on the assessee is a condition precedent to the validity of any of the reassessment made u/s 147 - thus in the instant case, no notice has ever been properly served either u/s 148 or 142(1) upon the deceased assessee or his sole legal heir. Assessment Order under challenge cannot be sustained and impugned order under challenge liable to be set aside under the limb of non service/ invalid notice itself and hence, the order passed by the CIT(A) is set aside and the addition confirmed by the CIT(A) stands deleted - Decided in favor of assessee.

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• 2018 (6) TMI 891
  Additions u/s 69 - understatement of contractual receipts - undisclosed investments - Held that:- AO had treated the contractual amount as one having no material component whereas the assessee had claimed that ₹ 44,16,544/- was material component in the bill raised against the said contractee - AO had not given any finding as to why he had treated the whole contractual amount as having no material component inspite of the assessee’s said claim before him - CIT(A) observed that the identical question arose in the AY 2012-13 in assessee’s own case and since the same contract was executed in the current year for the same contractee, and that there is no other contract having been executed by the assessee, he followed the view taken by him in the AY 2012-13 and granted relief to the assessee - no infirmity in the order passed by the ld CIT(A) - thus the grounds raised by the revenue are dismissed.

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• 2018 (6) TMI 890
  TDS u/s 194A - Disallowance of interest on account of non-deduction of TDS - assessee has deducted TDS on the interest expense to all the companies except in case of individual who had filed Form 15G/15H for non-deduction of TDS - Held that:- Revenue has not proved that assessee has failed to furnish the Form 15G collected from the parties before CIT - we find support and guidance from the order of ITAT Delhi Bench in the case of Pragati Construction vs. ITO [1996 (10) TMI 127 - ITAT DELHI-A] - thus we note that assessee has filed Form 15H for the immediate preceding AY i.e. 2003-04 which was duly accepted by Ld. CIT and according no disallowance was made. We also not that assessment was framed u/s 143(3) but no disallowance on account of non-deduction of TDS u/s. 194-A r.w.s. 40(a)(ia) - hence we are inclined to reverse the order of Ld. CIT(A) - Decided in favor of assessee.

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• 2018 (6) TMI 889
  Allowability of expenditure - proof of commencement of business - Held that:- It was noted that the issue of commencement of business was already settled by the ITAT in assessee’s own case for AY 2007-08 [2013 (1) TMI 964 - ITAT MUMBAI] where it was held that business was very much in existing and, therefore, it cannot be said that there was no business activity carried out by the assessee. If by any reason in various other proceedings, where working was in pipe line and working could not be started then also the expenses claimed on these activities are to be allowed in accordance with the business activities - thus pursuant to the direction of the ITAT, the AO has accepted the assessee’s claim of commencement of business and allowed the expenditure in relation thereto - Decided in favor of assessee. Interest from ICD amounting and Interest from debenture - assessable under the head ‘Income from other sources’ or ‘Income from business and profession’ - Held that:- This incomes has been taxed as income from other sources on the ground that this interest has been earned from surplus fund lying with the company. Similar issue was also decided against the assessee in the earlier years. No infirmity in the action of the CIT(A) in holding that this income has to be taxed as income from other sources. Disallowance of expenditure u/s 57 against the income under head income from other sources - Held that:- this ground is misplaced inasmuch as the CIT(A) has directed the AO to verify this aspect as to whether finance cost pertains to the earning of the interest income and thereafter decide the issue - hence we do not find any infirmity in the direction of the CIT(A) in this regard - thus allowed for statistical purpose. Disallowance u/s. 14A - Held that:- We find that the CIT(A) has actually remitted the issue to the file of the AO to examine certain claims of the assessee and assessee should be granted adequate opportunity of being heard - thus allowed for statistical purpose.

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• 2018 (6) TMI 887
  Additions made u/s 68 - credit entry in the assessee’s bank account - cancellation of booking of flat - Held that:- All the necessary papers and confirmations in this regard have been produced by the assessee and in the remand report, the AO has also not drawn any adverse inference in this regard - thus in these circumstances, in our considered opinion, there is no infirmity in the order of the ld. CIT(A) - hence addition is deleted - Decided in favor of assessee. Additions made u/s 68 on account of repayment of loan and credit entry in assessee’s bank account - Held that:- Assessee has received the said amount from Shri Raj Basantani - the source of the receipt has been submitted to be the bank statement of Shri Raj Basantani who had been summoned u/s 131 and had confirmed the transaction. It has been explained by Shri Raj Basantani that he had received a loan of ₹ 5,93,66,151/- from the assessee in the past which has now been repaid. The source of the original assessee’s loan to Shri Raj Basantani has been submitted to be maturity of the fixed deposits in the Indian bank. All the necessary papers and documents have been found by the AO - thus we find no infirmity in the direction of the CIT(A) to delete the said addition - Decided in favor of assessee.

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• 2018 (6) TMI 886
  Disallowance of labour charges - assessee violated the relevant statutory provision relating to PF & ESI Scheme in respect of the said workers - Held that:- Assessee is a partnership firm, which is deriving income from execution of labour contract job - thus the major expenditure required to be incurred by the assessee to earn the said income was on account of labour charges - the major expenditure required to be incurred by the assessee to earn the said income was on account of labour charges - hence claim of wages of the assessee amounting to ₹ 38,68,613/- was not entirely bogus - therefore we are of the view that it would be fair and reasonable to disallow the wages of ₹ 38,68,613/- in question to the extent of 25%. The net profit of the assessee’s business after such disallowance would be little more than 10%, which in our opinion, is fair and proper - restrict the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) out of labour charges to 25% - Appeal of the assessee is partly allowed.

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• 2018 (6) TMI 885
  Disallowance of exemption u/s 54F - can the assessee be denied the exemption u/s 54F when assessee failed to deposit unutilized funds in a capital gains account scheme before filing the return of income u/s 139(1)? - reopening of assessment - Held that:- As assessee has not filed the return of income and filed the return of income only after receipt of notice u/s 148 of the IT Act but he has filed the return of income within the time allowed u/s 139(4) - As decided in KAREEMSONS PVT. LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1991 (8) TMI 28 - KARNATAKA HIGH COURT] it is a right given to the assessee u/s 139(4) by the Act cannot be lost merely because proceedings were initiated u/s 147 of the Act. Thus assessee has filed return u/s 139(1) within the time allowed u/s 139(4) - at the time of filing of return, assessee has already utilized the funds in construction of the building - therefore, as per the conditions laid down u/s 54F (4) of the Act, assessee should deposit unutilized funds in bank whereas assessee has already utilized portion of the sale consideration in construction of the house before filing return of income - hence the claim u/s 54F cannot be denied under these circumstances - Decided in favor of assessee.

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• 2018 (6) TMI 884
  Validity of re-opening the assessment u/s 147 - non independent application of mind by AO - reopening on borrowed knowledge - Held that:- The facts are similar to the facts before judgement of Hon’ble Delhi High Court in Signature Hotels Pvt. Ltd. Vs. ITO [2011 (7) TMI 361 - DELHI HIGH COURT] where it is held that there is no reference to the document or statement except the letter of the Investigation Wing, which has been quoted in the reasons. The Annexure also does not show prima facie or establishes nexus for link which discloses escapement of income. AO did not apply his own mind to the information and examined the basis and material or the information - hence following the decision of the Hon’ble Delhi High Court, we also hold that re-opening in this case also does not satisfy provisions of section 147 - also CIT(A) has held that assessee has not filed any return of income. However, when we look at the assessment order, the addition made by the AO is to the original returned income of ₹ 1,52,100/-. Therefore, this finding of the learned CIT(A) is not in conformity with the records - hence the assessment order passed by the AO holding that re-opening u/s 147 is not valid - Decided in favor of assessee.

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• 2018 (6) TMI 883
  Disallowance of deduction u/s 80P - interest received on deposits with Sub Treasury - Held that:- Assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act 1969 - following the judgement of THE KIZHATHADIYOOR SERVICE COOP BANK LTD. VERSUS THE INCOME TAX OFFICER WARD 2 KOTTAYAM [2016 (7) TMI 1405 - ITAT COCHIN] it is held that the investment in treasury/banks and earning interest on the same is part of the banking activity of the assessee’s cooperative bank. Therefore, the said income is eligible for deduction u/s 80P(2)(a)(i) - hence we are of the view that the assessee is entitled to the benefit of deduction u/s 80P(2) with regard to interest received on deposits made by the assessee with sub treasury.- Decided in favour of assessee.

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• 2018 (6) TMI 882
  Higher depreciation rate claimed on transmit complete mixer and loaders and lower loader machine - whether Assessing Officer had rightly deleted assessee’s higher depreciation claimed on both mixer as well as loader machine(s) in question? - Held that:- We find no substance in its instant plea as it has already come on record that lower appellate finding(s) have duly considered the types of plant and machinery / vehicles in light of the relevant case law deciding the very issue in assessee’s favour. There is no distinction on facts or law being pointed out in Revenue’s pleadings. TDS u/s 194A - Disallowance of interest paid to finance companies u/s. 40(a)(ia) without deducting TDS - Assessing Officer mentioned that the purchase was on basis of a hire purchase agreement and assessee is liable to deduct tax at source on interest payment - Held that:- We find that the CIT(A) has considered the entire issue in light of hon'ble apex court’s decision in “ICDS” case [2013 (1) TMI 344 - SUPREME COURT] as well as the relevant hire purchase agreement as per CBDT’s Circular 647/1993 dated 22.03.1993 deals with application of section 194 on Hire Purchase agreements. Hire Purchase is a system by which a buyer pays for a thing in regular installments while enjoying the use of it. During the repayment period, ownership (title) of the item does not pass to the buyer. Upon the full payment of the loan, the title passes to the buyer. If, directly or indirectly, it is apparent that the lessor has agreed to a permanent beneficial enjoyment of the asset by the lessee, the lessee may be treated as a hire-purchase transaction. Hire Purchase agreement is to be examined and decided whether the asset has been obtained under a true Hire Purchase agreement.

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• 2018 (6) TMI 881
  Disallowance of share issue expenditure u/s 35D - Held that:- Assessee was unable to bring any evidence to demonstrate that funds from increased share capital was used for extension of its existing industrial undertaking or spent in connection with the setting up of a new industrial unit - since the disallowance was made due to inability of the assessee to substantiate its claim, we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Interest on fixed deposit can be claimed as business income eligible for deduction u/s 80HHE - Held that:- Assessee claimed that the fixed deposits were kept for the purpose of meeting margin requirement for opening LOC and obtaining bank guarantees - assessee could not substantiate this claim before the lower authorities despite opportunities given to it - thus CIT(A) relied on the judgment in the case of Dollar Apparels vs. ITO [2007 (2) TMI 120 - HIGH COURT, MADRAS] and confirmed the disallowance - since assessee was unable to support the claim with proper evidence, we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Disallowance of prior period expenditure - Held that:- It is not disputed that the expenditure did not relate to the impugned assessment year - hence, in our opinion, the claim was rightly disallowed - we therefore find no reason to interfere with the orders of the lower authorities - Decided against the assessee. Lease rent deposits which were written off were and disallowed as expenditure - Held that:- following the decision of Delhi Bench of the Tribunal in the case of Fab India Overseas P. Ltd vs. CIT [2013 (9) TMI 301 - ITAT DELHI] where it is held that security deposits which were written off were given for a lease which never went through. The Tribunal had held that there was no binding agreement between assessee and the lessor, since the lease deed was not registered and held that security deposit written-off was a business loss. However, in the case before us, there is nothing on record to show that rental deposits written off by the assessee pertained to any lease which had not materialized - hence we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Disallowance of software expenditure - Held that:- Assessee could not furnish any evidence to show the nature of the software expenses. Assessee was unable to demonstrate whether it was paid as software licence fee or paid for outright acquisition of a software - lower authorities were justified in not allowing the claim as revenue outgo. However, we find that ld. Assessing Officer had allowed depreciation @ 25% only. Once purchase of software is considered as a capital expenditure, it has to be given the same rate of depreciation as applicable for computer. Assessee is therefore, in our opinion entitled to depreciation on the software expenditure at the rate applicable for computer for the impugned assessment year. Disallowance of expenditure as incurred for improvement of leasehold property - Held that:- assessee failed to support its claim that the expenditure was incurred for erecting a temporary structure in the leasehold property. Since the disallowance was made due to inability of the assessee to produce evidence regarding nature of expenditure incurred, we do not find any reason to interfere with the orders of the lower authorities. Ground No.4 of the assessee stands dismissed. Disallowance being gratuity payments to LIC - Held that:- It is not disputed that the payments to LIC were not a provision but made under the gratuity scheme. We are therefore of the opinion that assessee was eligible to claim such deduction. Non-exclusion of items deducted from export turnover, from total turnover while working out the eligible deduction u/s.10A - Held that:- By virtue of the judgments of Hon’ble Karnataka High Court in the case Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] exclusions made from export turnover have to be considered for reduction from total turnover also while working out deduction available u/s.10A of the Act. Accordingly, we direct the ld. Assessing Officer to rework the deduction available to the assessee u/s.10A Denial of its claim for deduction u/s. 10A for its STPI units - Held that:- Deduction u/s.10A of the Act has to be considered on stand alone basis without setting off of loss another unit. Accordingly, we direct the ld. Assessing Officer to allow the claim made by the assessee u/s.10A of the Act without setting off such loss.

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• 2018 (6) TMI 880
  Deduction u/s 10B - Disallowance of unabsorbed depreciation/losses of two exempted units from the profit of one other exempted unit u/s 10B - Held that:- An identical issue has been adjudicated in favour of the assessee in assessee’s own case in [2017 (4) TMI 1357 - ITAT DELHI] where the judgment of the Hon’ble Supreme Court in the case of CIT & Another Vs M/s Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] held that the introduction of the word ‘deduction’ in Section 10A by the amendment made by Finance Act,2003, in the absence of any contrary material, and in view of the scope of the deductions contemplated by Section 10A it has to be understood that the Section embodies a clear enunciation of the legislative decision to alter its nature from one providing for exemption to one providing for deductions. As per Section 10A, the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI - hence appeal of the department is dismissed - Thus unabsorbed depreciation of one eligible unit cannot be adjusted with the profit of the other eligible unit, while calculating the deduction available to the other eligible unit under Section 10B - Decided in favor of assessee.

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• Customs

• 2018 (6) TMI 857
  Rebate Claim - Sugar Cess - meaning of ‚duty‛ explained in the N/N. 21/2004-CE (NT) - Rule 18 of CER, 2002 - CBEC vide its circular dt. 22.1.2007 - Held that:- The Circular clarified as Since right from the beginning the objective of condition (v) was to debar the simultaneous availment of rebate of duty paid on the materials and the benefit of Advance Licence Scheme only (there was no bar in the said condition from availing of rebate of terminal excise duty paid on the export goods and the benefit of Advance License Scheme), in order to set right the anomaly, a Corrigendum was issued vide PN 9/2002, dated 29-11-2002 to provide that an exporter operating under Advance Licence Scheme could also avail of the rebate on terminal excise duty paid on the resultant export product under Rule 18 - a corrigendum was issued to N/N. 93/2004-Cus. vide Public Notice 2/2005, dated 17-5-2005 in order to restore the status quo ante i.e. the licence holder was debarred from availing of rebate of duty paid on materials used in the manufacture of export goods. The corrigendum was issued to set right an inadvertent error which occurred for the second time at the time of issuance of N/N. 93/2004-Cus. pursuant to coming into force of the new Foreign Trade Policy w.e.f. 1-9-2004. Impugned order cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 848
  Liability of Customs Duty - Non-duty paid goods - Yellow peas - N/N. 84/2017 dated 08.11.2017 - it was alleged that the goods were assessed without payment of duty and a part of the consignment was already cleared - Held that:- The goods imported by the appellant leer yellow peas enjoyed full exemption from duty before issue of Notification No. 84/2017 on 08.11,2017, Since the Bills of Entry in the present case were filed on prior entry basis, the date of Bill of Entry has to be deemed as the date of Entry Inwards granted to the vessel. There is dispute as to the correct date on which the Entry Inwards was granted to the vessel “MV Riva Wind" - there is no malafide intention on the part of the appellant in clearing the consignments without payment of duty, Under the circumstances, the terms stated by the Ld. Commissioner for provisional release of the impugned goods, which was seized is unfair. The customs authorities are directed to finalize this case as expeditiously as possible preferably within a period of three months - appeal disposed off.

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• Insolvency & Bankruptcy

• 2018 (6) TMI 905
  Corporate insolvency process - Whether the Resolution Professional is required to notice the comments of one or other Resolution Applicant(s) to decide the eligibility? - Held that:- As the resolution plans are opened and placed before the Committee of Creditors, as per Section 30(5), the Resolution Applicant(s) are entitled to be present. At this stage they may point out whether one or other person (Resolution Applicant) is ineligible in terms of Section 29A or not. If one or other objection is overruled, reasons should be recorded by the Committee of Creditors. After decision of the Committee of Creditors, the Resolution Professional is required to place the decision before the Adjudicating Authority under Section 31. The Adjudicating Authority who is required to take decision as per Section 31 of the I&B Code, can go through the reasoning to accept or reject one or other objection or suggestion and may express its own opinion/decision. Thus while we direct the Resolution Professional not to take any comment from one or other Resolution Applicant(s), if such step has been taken be ignored. Resolution Professional and the Committee of Creditors will proceed in accordance with law taking into consideration the observations as made above and decision, if any, taken by the Adjudicating Authority shall be subject to decision of this appeal

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• 2018 (6) TMI 904
  Counting the period of ‘corporate insolvency resolution process’ - period of counting the total period of 180 days + 90 days (total 270 days) - Held that:- If an application is filed by the ‘Resolution Professional’ or the ‘Committee of Creditors’ or ‘any aggrieved person’ for justified reasons, it is always open to the Adjudicating Authority/Appellate Tribunal to ‘exclude certain period’ for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion, in unforeseen circumstances. In the present case, as the corporate insolvency resolution process remained stayed for 166 days due to the interim order passed by the Adjudicating Authority on 15th September, 2017 which was vacated on 28th February, 2018, we hold that the ‘Committee of Creditors’ / ‘Resolution Professional’ rightly requested the Adjudicating Authority to exclude the period of 166 days for the purpose of counting the total period of 270 days. Considering the stage of corporate insolvency resolution process, we direct the Adjudicating Authority to exclude 166 days for the purpose of counting the period of corporate insolvency resolution process and thereby allow the Resolution professional / Committee of Creditors further 166 days with immediate effect (i.e. 8th May, 2018) to complete the corporate insolvency resolution process.

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• 2018 (6) TMI 872
  Corporate insolvency process - Whether in terms of Section 24(3)(c) of I&B Code, the Resolution Professional is required to give notice to ‘Operational Creditors’ or their representatives to attend the meeting of Committee of Creditors? - Held that:- Intention of the legislature is clear that the Committee of Creditors while approving or rejecting one or other resolution plan should follow such procedure which is transparent. Those who will watching the proceeding such as (suspended) Board of Directors or its Partners; Operational Creditors or its representatives and Resolution Applicant(s) are not mere spectator but may express their views to the Committee of Creditors for coming to conclusion in one or other way. For the reason aforesaid we are of the view that the Committee of Creditors should record reasons (in short) while approving or rejecting one or other resolution plan.

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• 2018 (6) TMI 859
  Corporate Insolvency Resolution Process - maintainability of application - neither the applicants were covered by definition of expression ‘financial creditors’ nor the claimed amount could be regarded as ‘financial debt’- Held that:- While resisting the admission of the petition learned counsel for the Corporate Debtor has raised the argument that for finalization of joint proposal with various customers the matter is also pending before Hon’ble Delhi High Court, Mediation Centre, New Delhi wherein after several rounds of discussion held with various investors a proposal to complete the project has been formulated and mediation process is going on daily basis. We are afraid that we cannot accept the pending mediation process as a basis for rejecting the prayer for triggering the Corporate Insolvency Resolution Process in respect of the Corporate Debtor. There is no provision in the Code which might create such a bar. We reject the aforesaid objection. We have taken notice of the averments made in the interveners’ applications and the order passed by Learned Chief Metropolitan Magistrate, Tis Hazari Court, New Delhi. At the outset it is pertinent to point out that the order dated 23.12.2017 [Annexure-II (colly)] shows that between the applicants/interveners and the Directors of the Respondent-Company, mediation process is going on. As we have already observed in preceding para that the pendency of the mediation process between the Directors of the Respondent-Company and the applicants/interveners would not cause any impediment with regard to initiation of Corporate Insolvency Resolution Process because under Section 7 of the Code the pendency of a mediation process is no bar to the admission of the petition and initiation of Corporate Insolvency Resolution Process. We proceed to entertain the petition and leave the applicants/interveners to choose their remedy in accordance with law.

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• 2018 (6) TMI 858
  Corporate insolvency process - existence of dispute - Held that:- We find that in reply to demand notice under section 8(2) of the ‘I&B Code’, the ‘Corporate Debtor’ by letter dated 22nd August, 2017 intimated that in terms of the agreement the amount has been paid. The ‘Corporate Debtor’ also mentioned the defects and the counter claim. In view of the aforesaid ‘existence of dispute’, we are not inclined to interfere with the impugned order passed by the Adjudicating Authority. The appeal is accordingly dismissed.

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• 2018 (6) TMI 853
  Resolution process initiated at the instance of the Resolution Professional - Whether the resolution professional exceeds his power in appointing professionals, outsourced the work in violation of circular No. IP/003/2018 issued by the IBBI and incurred exemplary cost in violation of any of the provisions of the Code and Regulations and circular? - Held that:- Truly all the cost he spent out of resolution process must be ratified by the CoC and in the case in hand the CoC seen responsible for fixing or rather approving the cost which according to us is at an unreasonable rate. No doubt it gives an additional financial burden to a sinking company which is under resolution. Who has to bear this cost? None other than the corporate debtor. If the RP has taken too much care he could have very well avoided so many appointments. When he was asked why he appointed 22 representatives to monitor the corporate debtor he would say that when he took over the company the management and workmen were not responsive to provide information and to ascertain the correctness of the information he appointed them. The above said discussions leads to a conclusion that ld. RP not taken any care to ensure that such resolution costs are not unreasonable as per Regulation 27. So also not strictly followed Reg. 21(3) of IBBI(IRP for Corporate Persons) Regulations, 2016 in respect of issuing notice of meetings and in violation of the circular outsourced most of his works to his interested persons. This point is answered accordingly. Whether non-consideration of revised offer of resolution applicant Ultra Tech amount to violation of any of the provisions of the I&B Code and Regulations and against the objects of the Code? - Held that:- The revised offer of the Ultra tech is to be considered by the CoC and non-consideration of the revised offer is found not legally sustainable and is against objective of maximization of value as provide in the Code and is in violation of the provisions of the Code and Regulations as discussed above. This point is answered accordingly. Whether there is any discrimination against the unsecured financial creditors at par with other financial creditors and the Resolution Plan submitted for the approval is contrary to the scheme of the I&B Code 2016? - Held that:- Any resolution applicant who can satisfy the claim of EARC and IDBI can get an approval of its plan by a majority of votes share is a fact brought to our notice and no consideration of very similar financial creditors at par with IDBI add strength to the submission of the ld. Counsel for the above referred Banks that practice of allotment of claim is not based on any concrete basis or norms. So no doubt it amount to discrimination against the above refereed two banks. In the above said view we find some force in the argument advanced on the side of the Banks and satisfied that the plan under dispute requires modification. This point is answered accordingly. Whether the resolution professional ignored any of the operational creditors claim and not honoured their claims as alleged by the Operational Creditors? - Held that:- Here in this case one unsecured creditors was given a haircut up to 90% another given 27% haircut and one another given no haircut. In the case of operational creditors whose claims not go beyond one crore is offered no haircut, operational creditors whose dues vary form 1 crore to 5 crores given a haircut of 40% or 1 crore which ever is higher. Operational creditors dues very from 5 Crores to 10 crores 25% of 2 crores and if it exceeds 10 crores 5% of 2.5 crores. The above said factors only adds strength to the contentions of creditors that their claims not considered strictly by the RP in accordance with the Code and Regulations. So the contention that the plan submitted for approval does not contravene any of the provisions of the law for the time being in force is found not true. We do not find any reason to doubt its bona fide. In the interest of healthy trade competition why not its claim is considered?. No valid answer other than stressing on the timeline as specified in the Process Document and evaluation matrix offered. In view of the above said discussion we are unable to hold that there is no discrimination among the creditors who are equal and reduction offered to the operational creditors too is not in accordance with the regulations and within the objective of the Code. Order - The period of duration of litigation on account of CA 227/18 and other applications filed after the date of CA 227/2018 stands excluded. The CIR Process is to be concluded expeditiously before 24.06.2018. (ii) The resolution professional is directed to accept the revised offer quoting the bid amount ₹ 1021.70 crores from UltraTech within 3 days from the date of this order and place it along with the resolution plan of Ultra Tech before the CoC. (iii) The CoC is directed to consider the revised offer along with the resolution plan of Ultra Tech by giving an opportunity to have hearing if any for further modification is found necessary and to take appropriate decision bear in mind the object of the Code. (iv) The CoC is also directed to reconsider the resolution plan of RPPL, if the resolution applicant is willing to raise the offer above the offer of Ultra Tech to be placed before it by the RP along with the resolution plan of Ultra Tech. (v) RP is also directed to comply the provisions of the Code and regulations in submitting the revised offer before CoC and in issuing notice to the director of the suspended board of the corporate debtor and notice also is to be issued one among the operational creditor who filed the above referred application as a representative if the requirement of section 24 (3)(c) of the Code is satisfied.

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• 2018 (6) TMI 852
  Corporate insolvency process - whether 1st Respondent does not come within the meaning of ‘Financial Creditor’ in terms of Section 5(7) and Section 5(8) of the I & B Code? - agreement for sale of flat reached between ‘Corporate Debtor’ and the 1st Respondent - Held that:- 1st Respondent - flat buyer accepts that the total amount has been paid back by the Appellant. The terms of settlement have been brought on record. Learned Counsel for the 1st Respondent also failed to show that the 1st Respondent had informed one month in advance from the date of the agreement, to the ‘Corporate Debtor’ that he intended to continue with the booking/holding of the flat in question. In view of the fact that the 1st Respondent has failed to prove that he comes within the meaning of ‘Financial Creditor’ of the ‘Corporate Debtor’, the order passed by the Adjudicating Authority cannot be upheld. For the reasons aforesaid, we set aside the impugned order dated 09.02.2018 passed by the Adjudicating Authority in (IB) 19(ND) 2018. The 1st Respondent having paid the total dues, we direct the Adjudicating Authority to close the proceeding.

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• 2018 (6) TMI 851
  Corporate Insolvency Resolution Process - whether the Applicant answers the description of “Financial Creditor” and “Financial Debt”? - Held that:- The inflows and outflows are distanced by time and there is a compensation for time value of money. It is significant to notice that in order to satisfy the requirement of this provision, the financial transaction should be in the nature of debt and no equity has been implied by the opening words of Section 5(8) of the I&B Code. It is true that there are complex financial instruments which may not provide a happy situation to decipher the true nature and meaning of a transaction. Essentially in the case in hand 'Assured Returns' is associated with the delivery of possession of the aforementioned properties. The classical transaction which would cover the definition of financial debts is illustrated in sub-clause (a) of sub-section (8) of Section 5 i.e. the money borrowed against the payment of interest. Ld. Counsel of Applicants has been able to show material on record or otherwise that it is a financial transaction in which a debt has been disbursed against the consideration for the time value of money and he being the Financial Creditor is entitled To trigger the insolvency process against the respondent in accordance with Section 7 of the I&B Code. The petition filed by the applicant / financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Resolution Process and declare a moratorium and public announcement as stated in Section 13 of the I&B Code, 2016. The moratorium is declared for the purposes referred to in Section 14 of the Insolvency and Bankruptcy Code, 2016.

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• 2018 (6) TMI 850
  Corporate insolvency procedure - Held that:- Corporate Debtor availed three credit facilities from the Respondent total amounting to ₹ 23,25,00,000/-. Total outstanding amount as on 31.07.2017 was ₹ 15,95,00,000/- when the Corporate Debtor declared NPA-07.09.2013 in December, 2015 quarter. There being the debt and Corporate Debtor having defaulted to pay the amount, we are not inclined to grant any relief in this appeal. The appeal is accordingly dismissed.

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• 2018 (6) TMI 849
  Corporate insolvency process - application rejected on the ground that the application is barred by limitation - Held that:- Principle for triggering an application under Section 10 of the ‘I&B Code’ cannot be made applicable as the ‘Corporate Applicant’ does not claim money but prays for initiation of ‘Corporate Insolvency Resolution Process’ against itself, having defaulted to pay the dues of creditors. In so far it relates to filing of claim before the ‘Insolvency Resolution Professional’, in case of stale claim, long delay and in absence of any continuous cause of action, it is open to resolution applicant to decide whether such claim is to be accepted or not, and on submission of resolution plan, the Committee of Creditors may decide such question. If any adverse decision is taken in regard to any creditor disputing the claim on ground of delay and laches, it will be open to the aggrieved creditor to file objection before the Adjudicating Authority against resolution plan and for its necessary correction who may decide the same in accordance with the observations as made above - case is remitted to the Adjudicating Authority, Mumbai Bench to consider the application under Section 9 of the ‘I&B Code’ preferred by the Appellant after notice to the ‘Corporate Debtor’.

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• Service Tax

• 2018 (6) TMI 899
  Business Auxiliary Services - amounts received from M/s Coca Cola Ltd. under the heads ‘Sales Target Incentive’ - Held that:- From the activities undertaken by the appellant, it is evident that they have not acted towards marketing and promotion or sale of goods produced by their client. At best it can be said that they have participated in promotion of the brand name of ‘Coca Cola’, ‘Pepsi’ etc. Such activities cannot be brought under ‘Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client’, appearing under ‘Business Auxiliary Service’ - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 879
  Service of notice - Time Limitation - Erection, commissioning and installation - Section 37 C (2) of the Central Excise Act, 1944 - Held that:- The Order-in-Original dated 26.12.2011 was despatched by the Department through registered post. The Commissioner (Appeals) has taken the view that the Order has been properly served complying with the provisions of Section 37C - The appellant has not brought to our notice by means of any coherent evidence that the Order was never served upon him prior to 07.01.2013. The appellant has not bothered to appear before the original Adjudicating Authority also. In the facts and circumstances of the case, Show Cause Notice was served personally upon the appellant. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 878
  Classification of Services - appellant was required to hire hydraulics escalators for removal of over burden, load the same into trucks/dippers and transport the same to the centralized gypsum grinding units at Rawla - whether the services fall under the category of Cargo Handling Services? - Held that:- The adjudicating authority has proceeded with the adjudication of the case and appears to have examined only the contract/agreement executed by the appellant with RSMML - the matter is required to be remanded to the Adjudicating Authority for re-examination of the issue in its entirety by considering not only the contract executed with RSMML but also the claim of the appellant that bulk of the activity has been carried out for other cement companies for mere transportation of their goods - appeal allowed by way of remand.

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• 2018 (6) TMI 856
  Classification of Services - Business Auxiliary Service or Recovery Agent Service - appellant was a proprietary concern and was functioning as outsourcing agency for banks/ financial institutions - case of appellant is that they are not a commercial concern and therefore being an individual is not liable to pay service tax during the relevant period, prior to 1.5.2006 - Time Limitation - Held that:- In the present case, though appellant is a proprietary concern cannot be said that it is not a commercial concern. The name of the appellant itself reflects that it is not an individual but a commercial concern. The activity of the appellant herein is not solely or merely verification of credentials of prospective customers but appellants were also engaged in other activities like preparation of invoices / Bills, collection / recovery of installments from the defaulters / borrowers of the bank etc. These activities are nothing but providing incidental or auxiliary services to HDFC Bank in collecting the overdue installments etc. from the customers of HDFC and would definitely fall within the ambit of Section 65 (19)(iv) of the Finance Act prior to 10.09.1994 and Section 65 (19) (vii) after 10.09.2004 - the activities of the appellant would constitute BAS during the period of dispute and not recovery agent‟s service. Extended Period of Limitation - Held that:- The appellants had been providing these services from the period from which BAS was brought into the tax net, i.e. w.e.f. 01.07.2003. However, they did not discharge service tax and had suppressed the value of such services with intent to evade tax - even after taking registration on 02.04.2004, appellants did not pay service tax or file returns disclosing the value of these services provided by them - extended period rightly invoked. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 854
  Condonation of Delay of 47 days in filing appeal - time limitation - Held that:- The legislature intended the appellant authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days, which is the normal period of preferring appeal - the appeal is rightly rejected - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 847
  Valuation - inclusion of installation charges in assessable value - Demand of service tax on the whole composite amount (value of goods + installation charges) - Held that:- The appellant has discharged central excise duty on the whole amount. This being so, the differential demand of service tax confirmed on the basis that for a short period of three months i.e., from 8.12.2008 to 28.212009, the rate of service tax being higher than excise duty appears to be totally unsound application of fiscal statutory provisions. It does not find sustenance either under Central Excise or the Finance Act, 1994 - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (6) TMI 888
  Refund claim - provisional assessment - denial on the ground of unjust enrichment - whether unjust enrichment is applicable in the case of provisional assessment during the relevant period? - Held that:- The duty paid is pertaining to the period December 1998. The same was paid on 05.06.1999. The assessment was provisional during the relevant period. There was no provision of unjust enrichment in the case of provisional assessment under Rule 9B. This express provision brought into the statute w.e.f 25.06.1999 by inserting the Sub-Rule (5) of Rule 9B of Central Excise Rules, 1944. Tribunal’s Larger Bench in the case of Commissioner of Central Excise & Service Tax vs. M/s Panasonic Battery India Co Ltd, [2014 (4) TMI 576 - CESTAT AHMEDABAD] has held that for the duty paid during the provisional assessment and consequential refund on finalization, the provision of unjust enrichment is not applicable before 25.06.1999. Unjust enrichment is not applicable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 877
  CENVAT credit - common input services for manufacturing as well as trading activity - demand of 6% of the value of the said trading activity, in terms of provisions of Rule 6 (3)(i) of CCR - Held that:- The appellants took a categorical stand before the lower authorities that they have reversed the proportionate credit of tax relatable to the trading activity, thus, not having any legal obligation to pay 6% of the value of said service - when the proportionate credit relatable to exempted services/ goods stand reversed by assessee, the effect of the same would be, as if no credit was ever availed. In such a scenario, there would be no requirement on the part of the assessee to pay a particular percentage of the value of service / goods - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 876
  CENVAT credit - maintenance and repair service - royalty - denial on the ground that the said services were not used exclusively by the appellant in or in relation to their plant at Shahjahanpur but also related to other plants of Videocon group situated at different locations in India / or other manufacturers - Held that:- Revenue has filed the present appeal in a mechanical manner without due application of mind. Infact, it no where stand contended by the Revenue that earlier order has been appealed against by them - there is no infirmity in the impugned order - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 875
  Service Tax Credit - denial on the ground that same has been availed on the basis of photo copy of the invoices and the appellant has failed to produce the original copies - Held that:- The credit of service tax paid on various services tax is available to the assessee subject to the conditions that the said services are duty paid services and stand utilized in the manufacture of their final product - The availment of the credit on the basis of original invoices is only a procedural requirement and irregularity in respect of that would not result in denial of substantial right, if otherwise available - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 874
  SSI Exemption - Scope of Rural Area - existence of unit in rural area - N/N. 8/2003-CE dated 1.3.2003 - It is submitted by the respondent manufacturer that admittedly the unit of the respondent falls outside the peripheral limit of cantonment area as such village Derathu falls under definition of rural area - whether the location of the factory of the manufacturer i.e. the Derathu village falls within the municipal limit of Nasirabad cantonment? Held that:- In a plethora of cases, it has been stated by various judicial pronouncements that where, the language is clear, the intention of the legislature is to be gathered from the language used. It is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain - The Commissioner (Appeals) has rightly adjudicated upon the controversy holding that village Derathu does not fall within the cantonment area in as such is well covered under the definition of rural area for which the notification is very much applicable - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 873
  Clandestine removal - validity of RUD (relied upon documents) - The whole case of the department is based upon statement of Sh. Shivji Gupta dated 26.03.2008 - Cross-examination of witesses - uncorroborated statements - necessary infrastructure to manufacture copper ingots or rods from copper cathode - diversion of goods - burning loss - CENVAT credit on copper cathode denied - benefit of N/N. 56/2002-CE dated 14.11.2002 - Penalty - Difference of opinion - majority order. As held by Learned Member (Technical), the re-appraisal of evidence, i.e., the statement of Shri Shivji Gupta is required with regard to other corroborative evidences and as such the matter needs to be remanded? - Held that:- Ld. Member (J) has observed that only the statement dated 30/08/2010, which was in compliance with the provisions of Section 9D can be considered, but Ld. Member (T) has observed that the matter may be remanded for examination of the statement viz-a-viz corroborative evidences - In the facts and circumstances of the case the statement dated 26/03/2008, which has been alleged to have been obtained under duress, cannot be relied to support the allegations against JVIPL as well as GRPL. I agree with the findings of Ld. Member (J) in this regard. Whether as held by learned Member (Technical) the statement of Shri V. K. Mittal is admissible as evidance by way of corroborative evidence, even in absence of cross examination? - Held that:- hri V.K. Mittal, partner of M/s Veekay General Industries, happens to be a competitor of JVIPL, and in his statement dated 08/09/2010, has stated that copper cathods could be cut into pieces using hand cutter. But Shri Mittal did not turn up for cross examination. M/s JVIPL have countered such statement by means of Chartered Engineers Certificate who has opined otherwise - Shri Mittal’s statement cannot be admitted as evidence at face value since he is a partner of a competitor. The statement does not appear to have been admitted by the adjudicating authority as per the provisions of Section 9D and since the appellants were not extended the opportunity of cross examining him - the statement is not admissible as held by Member (Judicial). As held by learned Member (Technical) that the issue of burning loss in support of the allegation of diversion of copper cathode, needs reappraisal? - Held that:- Burning loss in the case of an induction furnace arises for a variety of reasons and differences in burning loss cannot ipto facto support the allegation of diversion of copper cathode. The argument advanced that the burning loss is more in respect of JVIPL since they have an open furnace appears to be reasonable - no adverse inference can be drawn due to difference in burning loss in the two factories. Whether as held by Member (Judicial), in view of undisputed report of Commissioner, Jammu dated 25.05.2010, bassed on 'Plant Based Checks', JMWIPL, Jammu have also used copper scrap in addition to copper cathode, hence allegation of Revenue as to diversion of cathode by JVIPL & GRPL does not stand, and appeals are rightly allowed? - Held that:- The Commissioner (Jammu) who is the Jurisdictional Commissioner in respect of JMWIPL who has sent his report 25/05/2010 in which, after investigating into the affair of JMWIPL, has recorded the fact that JMWIPL have used both copper scrap as well as copper cathode. He has based the report on the observations recorded in the records of JMWIPL by Jurisdictional Central Excise Officers as well as the officers of District Industries Centre who have attested the receipt of various raw materials in the said unit - thus, the undisputed report of Commissioner (Jammu) dated 25/05/2010 where the above observations are found, negates the allegations of Revenue about the diversion of cathode by JVIPL and GRPL. Majority order:- In view of agreement with the decision of Ld. Judicial Member by the third Member, the impugned orders are set aside and appeals are allowed.

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• 2018 (6) TMI 871
  Valuation - inclusion of additional consideration of sales tax collected from the buyers and retained by them to the extent of sales tax liability - Held that:- Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 870
  Valuation - inclusion of amount of VAT paid on subsidy in assessable value - Held that:- Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that the incentive is in the nature of the subsidy which have been received from the State Government and therefore such subsidy cannot be considered as an additional consideration - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 869
  Extended period of limitation - case of Revenue is that the Appellant did not provide the documents, hence the extended period is invokable - Held that:- Earlier also the Tribunal has remanded back the matter to consider the time bar issue, we find that the lower authorities should have considered the fact that the demand has been made on the basis of documents which were seized by the revenue way back in 95 and 96. Clearly the show cause notice raising demand for the period March ’95 to Nov’ 95 made vide Show cause notice dt. 10.08.99 is time barred - The revenue had issued show cause notice for the earlier period and therefore there was no reason to delay the issue of subject show cause notice in the given facts. The demand is squarely time barred - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 868
  Dutiability on Waste - benefit of N/N. 6/2006 – CE dt. 01.03.2006 - demand of duty on plastic waste contained in plastic granules and HDPE/ PP Ropes - Held that:- The issue involved is squarely covered by the Tribunal order in case of M/s Bommilda Filaments Ltd. [2007 (9) TMI 140 - CESTAT, BANGALORE], where it was held that Exemption to Plastic ropes under N/N. 6/02 cannot be denied by saying that intermediate products are exempt from duty. There is no dispute that duty paid granules were used in manufacture and therefore the ratio of the judgment of Tribunal would apply to the present case - In case of plastic granules manufactured by the Appellant from waste plastic, the same is exempted from duty and there is no condition in terms of serial No. 73 of the N/N. 6/2006 – CE dt. 01.03.2006 that the waste should be duty paid. Extended period of limitation - Held that:- The issue involved is of interpretation and therefore the demands made by invoking extended period of limitation are not sustainable. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 867
  Clandestine Removal - electrical transformers - non-existence of corroborative evidences - Held that:- It has nowhere been established by the Department that the electrical transformers supplied by the appellant to M/s AVVNL were non-duty paid and clandestinely removed - the appellant has not or the requisite capacity to manufacture the required number of electrical transformers for which they have got an order of supply from M/s AVVNL, Ajmer. For meeting the supply order, the appellant have been purchasing electrical transformers from M/s Rajasthan Transformers & Electricals, Jaipur who have been clearing the same on payment of appropriate central excise duty. For establishing a case of clandestine manufacture and clearance the Department need to be have proved that the appellant have been purchasing certain raw materials for manufacture of such a huge number of transformers which have been supplied by the appellant to M/s AVVNL without payment of duty - there are not enough evidences to prove the charges of the show cause notice. The supply of transformers made by the appellant were of duty paid electrical transformers received by them from M/s Rajasthan Transformers & Electricals, Jaipur and there is no evidence to prove that there has been any clandestine manufacture, clearance and thereby evasion of central excise duty - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 866
  Classification of goods - Wrap Knit Fabric - Revenue was of the view that the Warp Knit Fabric will be rightly classifiable not under CETH 6005, but under CETH 39269099 as an article of plastic - Benefit of N/N. 30/2004 dated 09.07.2004 (Sl. No. 15) - Held that:- After perusal of the Section Note I(g) and (h) of Section Xl as well as the complementary note in Chapter 39, it can be concluded that the width of the tapes will determine the classification of the goods made out of such tapes. If the width of the tape made out of HDPE, LDPE, LLDPE, etc., is less than 5mm, the fabrics made out of such tapes will merit classification under Chapter 60 as a textile material, whereas, if the strips are of the width more than 5mm, such goods will go out of the purview of the Textile Section and will be considered as an article of plastic falling under Chapter 39 - Since the strips in the present case are of width less than 5mm, the classification of Warp Knit Fabrics made therefrom will be under CETH 6005 and not under CETH 3926 - goods rightly classified under CETH 6005. Once the goods are classified under CETH 6005, they become entitled to the benefits of the Notification No. 30/2004 dated 09.07.2004 (Sl. No. 15) subject of the conditions prescribed therein. Main conditionality is that the Appellant should not have availed CENVAT Credit on inputs. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 865
  Valuation - bearings sold to distributors and stockists - Department was of the view that during the period of dispute, the various types of bearings manufactured and cleared for use in the automobile industry are liable for payment of excise duty on MRP basis in terms of Section 4A - Held that:- It is seen that the issue whether ball bearings will be covered by the above description was a matter of doubt in the field which came to be clarified by the Board circular dated 16.12.2008. The ball bearings manufactured by the appellant will fall within the notification and hence appellant is liable to payment of duty under Section 4A on the said goods. Extended period of limitation - Held that:- When there were doubts in the field as well as even in the minds of the departmental officers whether such goods will be covered within the entry in the notification, the allegation of suppression made against the appellant cannot be sustained - invoking the extended time limit under Section 11A is to be set aside and demand restricted to that falling within the normal time limit. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 864
  Adjustment of short paid duty with excess paid duty - Held that:- Identical issue has came up before the Tribunal in the case of M/s. Godrej Consumer Products Ltd. vs. CCE & ST, Indore [2017 (12) TMI 1091 - CESTAT NEW DELHI], where an identical issue has been considered by the Tribunal in the case of Essar Steel India [2016 (9) TMI 1175 - CESTAT NEW DELHI], in which the Tribunal held that duty paid in excess in certain months has been availed as credit by sister unit hence, cannot be adjusted towards short payment also not tenable - appeal allowed - decided in favor of appellant-assessee.

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• 2018 (6) TMI 863
  Manufacture - activity of fabrication of storage tanks of various capacities - Held that:- From the nature of the work in the appellant s factory, it is evident that the appellant has undertaken the activity of manufacture i.e. activity of converting steel sheets into the form of storage tanks. Storage tank is commodity which is liable for payment of excise duty under CETH 73090090 of the Central Excise Tariff. Consequently, the liability of excise duty on the tanks fabricated by the appellant is established and hence the same is sustained. It is also argued that such storage tanks are embedded to the earth and hence no duty is payable - Held that:- Liability for excise duty is to be determined on the basis of the activity carried out in the appellant s factory and not on the basis of the use of such products after clearance from the factory. Inasmuch as the storage tanks have arisen in the factory of the appellant, the liability for payment of excise duty gets fastened on the appellant. The arguments regarding the tanks being not marketable is also to be discarded since the tanks are in fact procured by the customer i.e. IOCL/ HPCL even though in the form of job work contract. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 862
  CENVAT credit - input services received and used elsewhere other than the appellant’s premises - Rule 2 (l) of the CCR, 2004 - Held that:- Reliance placed in appellant own case MURUGAPPA MORGAN THERMAL CERAMICS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, CHENNAI-III [2017 (2) TMI 15 - CESTAT CHENNAI], where it was held that Non-registration as ISD should not deprive the assessee of substantial benefit of credit - matter back to the original authority for denovo consideration - appeal allowed by way of remand.

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• 2018 (6) TMI 861
  Demand of Interest on Differential Duty - finalization of provisional assessment - Held that:- The entire differential duty including cess as applicable amounting to ₹ 95,94,137/- was paid on 30.04.2010 itself much before the finalization of assessment which is dated 07.09.2010 and therefore there was no duty payable by the appellant consequent to the determination of duty payable on finalization of provisional assessment. It is a settled position of law that when there are diametrically opposite decisions of High Courts are available, then, with highest respects, it is construction which favours the assessee must be adopted. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 860
  CENVAT Credit - input services - Sales Commission - Held that:- Identical issue has came up before the Tribunal in the case of CCE & ST, Jaipur I/ Alwar vs. M/s. Bhagwati Kripa Paper Mills Pvt. Ltd. & others [2018 (4) TMI 1163 - CESTAT NEW DELHI], where it was held that CENVAT credit is admissible on the services of the sale of the dutiable goods on commission basis - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 855
  Refund of Excise duty paid - provisional assessment - amount paid twice by mistake on certain items on the billings made to M/s. Reliance Petrochemicals - denial on the ground of unjust enrichment - Held that:- he period is prior to 25.6.1999 when Rule 9B(5) was introduced in Central Excise Rules, 1944 making the concept of unjust enrichment applicable for provisional assessment also - Rule 9B will be applicable only for provisional assessment made after 25.6.1999 - refund cannot be denied - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 902
  Validity of Assessment Order - TNVAT Act - denial of Input Tax Credit - Stock Variation - Penalty u/s 27(3) of the Act - whether the manner in which the impugned Assessment made is legally sustainable? - Held that:- The only reason given by the respondent for denying the Input Tax Credit on the said amount is that their selling dealers have not paid the tax collected from the petitioner into the Government Treasury. Thus, it is not on account of the default committed by the petitioner, but even as per the demand of the respondent, it is on account of the fact that petitioner's selling dealer has not remitted the tax collected into the Government Treasury. This cannot be a reason for reversing the Input Tax Credit, as held by this Court in Sri Vinayaga Agencies Vs. Assistant Commissioner (CT), Vadapalani [2013 (4) TMI 215 - MADRAS HIGH COURT] - denial of credit unsustainable. Stock variation - The respondent has failed to take note of any of the objections filed by the petitioner in their reply dated 10.01.2018 - Held that:- The respondent merely proceeded on the basis that the defects were admitted during the course of inspection. This finding is illegal and not sustainable - The respondent, being a statutory authority, is bound to consider the objections filed by the petitioner and the documents produced, examine the correctness of the same and then take a decision - the finding with regard to the second issue set aside. Penalty u/s 27(3) of the Act - Held that:- The respondent should bear in mind the legal principle, which has been evolved in various decisions and as to when and under what circumstances, penalty would be attracted - in the absence of any specific reason recorded by the authority, attributing mens rea to the petitioner, the question of levy of penalty or making equal time addition does not arise - penalty set aside. Petition allowed.

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• Indian Laws

• 2018 (6) TMI 903
  Jurisdiction - appropriate forum to decide the issues concerning the mortgaged/secured property - Restrain the Bank from proceeding with the auction of the subject flat stood - Held that:- Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, clearly bars filing of a civil suit - For, no civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine and no injunction can be granted by any Court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act. The respondent Nos.5 and 6 would, however, contend that crucial aspects have been glossed over by the DRT and DRAT including the effect of admitted position that respondent No.5 is in possession of the subject property and also having custody of the original share certificate and few receipts issued by the Society - it is appropriate to relegate the parties before the High Court by setting aside the impugned judgment and leaving all questions open, to be decided by the High Court on its own merits and in accordance with law. Appeal allowed by way of remand.

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• 2018 (6) TMI 901
  Principles of Natural Justice - non-appraisal of evidences on record - dishonor of cheque - Money Lending Business - Held that:- The learned trial Court has not appraised the entire evidence on record in a wholesome and harmonious manner apart therefrom the analysis of the material on record by the learned trial Court, suffers, from, a gross perversity or absurdity of mis-appreciation and non appreciation of evidence on record - appeal allowed.

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• 2018 (6) TMI 900
  Jurisdiction - whether the Court in such like cases can set aside the judgments of conviction and sentence where the petitioner has been charged under Section 138 of the Act? - Held that:- Since, the petitioner has already paid the entire compensation amount, therefore, quashing of the complaint initiated at the instance of complainant/respondent No.1 would be a step towards securing the ends of justice and to prevent abuse of process of the Court. This is not a case wherein the offence for which the petitioner has been charged can ‘stricto sensu’ be termed to be an offence against the State. Therefore, this is a case where the continuation of criminal case against the petitioner would put the petitioner to great oppression and prejudice and extreme injustice would be caused to him by not setting aside the impugned judgments of conviction and sentence - This court is not powerless in such situation and adequate powers have been conferred upon it not only under sections 397 read with Section 401 or Section 482 Cr.P.C. but also under Section 147 of the Act for accepting the settlement entered into between the parties and to quash the proceedings arising out of the proceedings, which have consequently culminated into a settlement. This is a fit case to exercise the powers not only under Sections 397, 401 and Section 482 of the Code, but even under Section 147 of the Act - the petitioner is acquitted of the offence under Section 138 of the Act - petition allowed.

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