TMI Tax Updates - e-Newsletter
June 30, 2017

Case Laws in this Newsletter:

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

Articles

• Linking of PAN card with AADHAR CARD – why litigation -unnecessary dispute must be avoided – in fact PAN of non-individual assessee should be linked with AADHAR of specified or designated persons of other non-individual assessee
• PROPER OFFICER

News

• Naidu asks political parties not to politicise GST

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• Don't skip midnight GST launch tomorrow, FM urges opposition

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• FinMin starts notifying provisions of GST acts, amends rules

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• Jaitley turns down demands for deferring GST rollout

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• Cong not to attend special midnight meeting on GST

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• Release of mid-term Foreign Trade Policy Review in September, 2017

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• MIS Report on Export Promotion Schemes 2017 of DGFT

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• Notice inviting comments on amendments to Companies (Specification of Definitions Details) Rules, 2014

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• RBI Reference Rate for US $

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• GST - Rate of Tax on Goods and Services with Exemption, Reverse Charge, Concessional Rate etc.

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• Cabinet approves recommendations of the 7th CPC on allowances

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Notifications

Customs

• 59/2017 - dated 29-6-2017 - Cus (NT)
  Amendment in Notification no. 131/2016-Customs (N.T.) dated 31.10.2016 relating to AIRs of duty drawback

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• 58/2017 - dated 29-6-2017 - Cus (NT)
  Customs, Central Excise Duties and Service Tax Drawback (Amendment) Rules, 2017

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• 57/2017 - dated 29-6-2017 - Cus (NT)
  Re-export of Imported Goods (Drawback of Customs Duties) Amendment Rules, 2017

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DGFT

• 13/2015-2020 - dated 28-6-2017 - FTP
  Amendment in export policy for export of chemicals listed under SCOMET Category 1C of Appendix 3 of Schedule 2, ITC(HS) Classification of Export and Import Items

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GST

• 17/2017 - dated 28-6-2017 - CGST Rate
  Categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator (ECO)

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• 16/2017 - dated 28-6-2017 - CGST Rate
  Specialised agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under CGST Act

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• 15/2017 - dated 28-6-2017 - CGST Rate
  Supplies not eligible for refund of unutilized ITC under CGST Act

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• 14/2017 - dated 28-6-2017 - CGST Rate
  Supplies which shall be treated neither as a supply of goods nor a supply of service under the CGST Act

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• 13/2017 - dated 28-6-2017 - CGST Rate
  Categories of services on which tax will be payable under reverse charge mechanism (RCM) under CGST Act

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• 12/2017 - dated 28-6-2017 - CGST Rate
  List of Exempted supply of services under the CGST Act

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• 11/2017 - dated 28-6-2017 - CGST Rate
  Rates for supply of services under CGST Act

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• 10/2017 - dated 28-6-2017 - CGST Rate
  CGST exemption for dealers, dealing in buying and selling of second hand goods, operating under Margin Scheme

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• 09/2017 - dated 28-6-2017 - CGST Rate
  Exempting supplies to a TDS deductor by a supplier, who is not registered, under section 11 (1)

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• 08/2017 - dated 28-6-2017 - CGST Rate
  CGST exemption from reverse charge u/s 9(4) - Exempted till 30-9-2018

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• 07/2017 - dated 28-6-2017 - CGST Rate
  Exemption from CGST supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers notified under section 11 (1) and section 55 CSD

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• 06/2017 - dated 28-6-2017 - CGST Rate
  Refund of 50% of CGST on supplies to CSD under section 55

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• 05/2017 - dated 28-6-2017 - CGST Rate
  Inverted duty structure - Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54(3)

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• 04/2017 - dated 28-6-2017 - CGST Rate
  Reverse charge on certain specified supplies of goods u/s 9(3)

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• 03/2017 - dated 28-6-2017 - CGST Rate
  Concessional CGST rate for supplies to Exploration and Production notified under section 11 (1)

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• 02/2017 - dated 28-6-2017 - CGST Rate
  Exemption on intra-State supplies of goods from the whole of the central tax leviable u/s 9 of CGST

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• 01/2017 - dated 28-6-2017 - CGST Rate
  CGST Rate Schedule u/s 9(1) - notifying rates of CGST @ 2.5%, 6%, 9%, 14%, 1.5% and 0.125% on Supply of Goods

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• 01/2017 - dated 28-6-2017 - GST CESS
  Seeks to appoint the 1st day of July, 2017, as the date on which all the provisions of Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017) shall come into force

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• 02/2017 - dated 28-6-2017 - GST CESS Rate
  To notify the rates of compensation cess on supply of specified services

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• 01/2017 - dated 28-6-2017 - GST CESS Rate
  Rates of goods and services tax compensation cess under Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017) notified

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• 06/2017 - dated 28-6-2017 - IGST
  Seeks to prescribe rate of interest under IGST Act, 2017

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• 05/2017 - dated 28-6-2017 - IGST
  Seeks to notify the number of HSN digits required on tax invoice

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• 04/2017 - dated 28-6-2017 - IGST
  Seeks to notify IGST Rules, 2017

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• 14/2017 - dated 28-6-2017 - IGST Rate
  Categories of services the tax on inter-State supplies of which shall be paid by the electronic commerce operator

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• 13/2017 - dated 28-6-2017 - IGST Rate
  Specialised agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under IGST Act

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• 12/2017 - dated 28-6-2017 - IGST Rate
  Supplies not eligible for refund of unutilized ITC under IGST Act - construction of a complex, building, civil structure or a part thereof

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• 11/2017 - dated 28-6-2017 - IGST Rate
  Supplies which shall be treated neither as a supply of goods nor a supply of service under the IGST Act

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• 10/2017 - dated 28-6-2017 - IGST Rate
  Categories of services on which integrated tax will be payable under reverse charge mechanism (RCM) under IGST Act

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• 09/2017 - dated 28-6-2017 - IGST Rate
  Exemptions on supply of services under IGST Act

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• 08/2017 - dated 28-6-2017 - IGST Rate
  Rates for supply of services under IGST Act

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• 03/2017 - dated 28-6-2017 - IGST Rate
  Concessional rate of IGST on inter-State supplies of certain goods

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• 02/2017 - dated 28-6-2017 - IGST Rate
  Absolute Exemption from IGST on inter-State supplies of goods

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• 01/2017 - dated 28-6-2017 - IGST Rate
  IGST Rate Schedule u/s 5(1) - notifying rates of IGST @ 5%, 12%, 18%, 28%, 3% and 0.25% on supply of goods.

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• 03/2017 - dated 28-6-2017 - UTGST
  Seeks to appoints the 1stday of July, 2017, as the date on which the provisions of sections 6 to 16, 18 to 20 and 23 to 26 of Union Territory Goods and Services Tax Act, 2017 (14 of 2017)shall come into force

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• 17/2017 - dated 28-6-2017 - UTGST Rate
  Categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator (ECO)

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• 16/2017 - dated 28-6-2017 - UTGST Rate
  Specified agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under UTGST Act

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• 15/2017 - dated 28-6-2017 - UTGST Rate
  Supplies not eligible for refund of unutilised ITC under UTGST Act

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• 14/2017 - dated 28-6-2017 - UTGST Rate
  Supplies which shall be treated neither as a supply of goods nor a supply of service under the UTGST Act

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• 13/2017 - dated 28-6-2017 - UTGST Rate
  Categories of services on which union territory tax will be payable under reverse charge mechanism (RCM) under UTGST Act

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• 12/2017 - dated 28-6-2017 - UTGST Rate
  Exemptions on supply of services under UTGST Act

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• 11/2017 - dated 28-6-2017 - UTGST Rate
  Rates for supply of services under UTGST Act

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• 10/2017 - dated 28-6-2017 - UTGST Rate
  UTGST exemption for dealers operating under Margin Scheme notified under section 8 (1)

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• 09/2017 - dated 28-6-2017 - UTGST Rate
  Exempting supplies to a TDS deductor by a supplier, who is not registered

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• 08/2017 - dated 28-6-2017 - UTGST Rate
  UTGST exemption from reverse charge upto ₹ 5000 per day under section 8 (1)

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• 07/2017 - dated 28-6-2017 - UTGST Rate
  Exemption from UTGST supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers notified under section 8 (1) and section 55 CSD of CGST Act

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• 06/2017 - dated 28-6-2017 - UTGST Rate
  Refund of 50% of UTGST on supplies to CSD under section 55 of CGST Act

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• 05/2017 - dated 28-6-2017 - UTGST Rate
  Specified supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54 (3) of CGST Act

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• 04/2017 - dated 28-6-2017 - UTGST Rate
  Reverse charge on certain specified supplies of goods under section 7(3)

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• 03/2017 - dated 28-6-2017 - UTGST Rate
  2.5% concessional UTGST rate for supplies to Exploration and Production notified under section 8 (1)

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• 02/2017 - dated 28-6-2017 - UTGST Rate
  UTGST exempt goods notified under section 8 (1)

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• 01/2017 - dated 28-6-2017 - UTGST Rate
  UTGST Rate Schedule u/s 7(1) notifying rates of UTGST @ 2.5%, 6%, 9%, 14%, 1.5% and 0.125% on Supply of Goods

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Case Laws:

• Income Tax

• 2017 (6) TMI 1126
  Reopening of assessment - reason to believe - reliance upon the Assistant Valuation Officer's report - Held that:- In view of the principle of law laid down in Kelvinator of India Ltd.'s case (2010 (1) TMI 11 - SUPREME COURT OF INDIA) a wrong or erroneous opinion is not a good ground for reopening the assessment, this would be contrary to the jurisdictional requirement and mandatory pre-conditions which should be satisfied. Erroneous decision can be corrected by resort to exercise of power under Section 263 of the Act, 1961 which is the most appropriate remedy. The said power can also be exercised if the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. Thus, in the present case, if the order passed by the Revenue is perused, recourse to Section 263 of the Act, 1961 can certainly be made which the Assessing Officer did not do and proceeded to reopen the assessment under Section 147 of the Act, 1961 by issuing notice under Section 148 of the Act which does not satisfy the jurisdictional pre-requirement for exercise of jurisdiction under Section 147. Therefore, unreservedly and unhesitatingly of the opinion for the reasons mentioned herein-above that the order passed by the Assessing Officer under Section 147 of the Act, 1961 seeking to reopen the assessment already made is without jurisdiction and without authority of law and the order disposing of the preliminary objections is also not in accordance with law. Consequently, the order finally passed making reassessment is also contrary to law. Proceeding for reassessment under Section 147-148 cannot be initiated on the basis of report of the Assistant Valuation Officer - Decided in favour of assessee.

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• 2017 (6) TMI 1125
  Eligibility for deduction u/s 80IA - Whether the profit earned during the Assessment Year 200910 would be entitled for deduction under Section 80IA(5) of the Act without deducting the losses, which were absorbed in the earlier years? - Held that:- No error committed by the Tribunal in allowing the deduction of the profit u/s 80IB(5) of the Act without deducting the losses of the earlier years. See Velayudhaswamy Spinning Mills P. Ltd. & Sudan Spinning Mills (P). Ltd. [2010 (3) TMI 860 - Madras High Court] wherein held that only losses of the years beginning from the initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of assessee, can be looked into.

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• 2017 (6) TMI 1124
  Exempt income computed u/s 14A addition while computing book profit u/s 115JB - Held that:- We answer the question referred to us in favour of assessee by holding that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule SD of the Income-tax Rules, 1962. Applicability of section 14A - Held that:- We hold that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. As far as argument relating to meaning to be ascribed to the phrase 'shall not' used in Rule 8D(2)(iii) is concerned, the Revenue's contention is that it refers to those investments which did not yield any exempt income during the year but if income would have been yielded it would have remain exempt. There is no dispute that if an investment has yielded exempt income in a particular year then it will enter the computation of average value of investments for the purposes of Rule 8D(2)(iii). The assessee's contention that if there is no certainty that an income, which is exempt in current year, will continue to be so in future years and, therefore, that investment should also be excluded, is hypothetical and cannot be accepted. The matter is restored back to the file of AO for recomputing the disallowance u/s 14A in terms of above observations. Thus, revenue's appeal is dismissed and assessee's cross-objection, on the issue in question, stand allowed for statistical purposes, in terms indicated above. Addition u/s 94(7)- Held that:- No reason to interfere with the order of ld. CIT(A) because ld. CIT(A) has only referred the matter to AO for verifying the revised computation u/s 94(7) with reference to record date and not with respect to date of receipt of dividend. We do not find any infirmity in the order of CIT(A) on this issue. Addition made as assessee did not charge any interest from loanees - Held that:- No reason to interfere in the order of ld. CIT(A), because the issue that only real income and not notional income is taxable, is no more res-intgra particularly when no interest was paid by assessee on its borrowings. We, therefore, confirm the order of ld. CIT(A). This ground is dismissed.

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• 2017 (6) TMI 1123
  Deduction under section 80-IA - Held that:- Assessee had correctly claimed the deduction under section 80-IA of the Act relying upon the decision in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT [2010 (3) TMI 860 - Madras High Court]. Assessing Officer's view that since the Revenue was on appeal against the decision of the Hon’ble Madras High Court in the case Velayudhaswamy Spinning Mills P. Ltd (supra) before the Hon’ble Apex Court, he need not follow that decision is not correct as he did not realize that mere filing of the SLP before the Apex Court is not a valid ground for not following the judgment of the Hon’ble Madras High Court. Further, it is not the case of the Revenue that the judgment of the Hon’ble Madras High Court in the case Velayudhaswamy Spinning Mills P. Ltd (supra) is stayed by the Hon’ble Apex Court. - Decided in favour of assessee. Addition made on account of depreciation claimed - assessee has purchased a second hand windmill - AO has observed that the claim of the cost of the windmill was excessive and in the place of actual cost paid by the assessee, adopted the WDV of the asset - invoking Explanation 3 to subsection (1) of section 43 - Held that:- Once the Assessing Officer was of the opinion that the assessee has purchased the second hand windmill at a higher cost, then the burden to prove the fair market value is on the Assessing Officer. In this case, estimation of fair market value by the Chartered Engineer and Registered Valuer is very much available before the Assessing Officer. Moreover, the authorities below have not made any exercise to determine the fair market value of the windmill and they have simply adopted the WDV of the windmill in the hands of Shri K.N. Muthaiah as the cost of the windmill for the purpose of calculating depreciation. We are of the considered opinion that the Explanation 3 to section 43(1) of the Act is applicable if the assessee claims enhanced cot as the actual cost and the Assessing Officer is able to show that the cost claimed by the assessee is more than the market value of the asset. Thus, the Assessing Officer has no reason to invoke the Explanation 3 to section 43(1) of the Act. There is no prohibition or connected parties to carry arms' length transactions where real value of them transferred is paid. Law frowns on fraudulent transaction carried to hoodwink the Revenue. Having held that the assessee has shown enhanced cost of assets, the Assessing Officer under Explanation 3 to section 43(1) of the Act has to determine the "actual cost" to assessee which can only mean arm's length value or real value or worth of assets transferred.- Decided in favour of assessee.

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• 2017 (6) TMI 1122
  Nature of land sold - LTCG - agricultural land - Held that:- Land was not actually or ordinarily used for agricultural operations on or around the relevant time of sale. It is also to be seen that the income returned from agricultural operations carried on in the land was just for namesake and does not have any proportion to the efforts usually that would have been made by a true agriculturist. At the time of sale of land also no agricultural activities were carried on by the assessee. When the basic nature of the land itself found to be nonagricultural, the arguments regarding status of the property, whether within metropolis or outside the limit of the metropolis, is irrelevant. A non-agricultural property, whether inside the municipality or outside the municipality or even in a remote village is a “capital asset” and transfer of the same may generate income liable for capital gains taxation. In the facts and circumstances of the case, we set aside the order of the Commissioner of Income-tax(Appeals) on this point and restore the order of the Assessing Officer. - Decided in favour of revenue.

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• 2017 (6) TMI 1121
  Depreciation on hardening and tempering furnace disallowance - penalty u/s. 271(1)(c) - Held that:- In any case of the matter, that depreciation for the first year is subject to the condition of user is unexceptional, being also implicit in the assessee’s contention, as made before us, i.e., of the furnace having been subject to trial production and, thus, ‘used’, and it’s claim at 50%, which is only on being put to use for a period less than 180 days during the relevant year. The assessee’s claim, in fact, is not a wrong or erroneous claim, much less bona fide, but a false claim. The assessee itself states the claim for depreciation on the same plant for the following year as having been made at the base rate of 25%, applicable to general plant and machinery, further underscoring the impugned claim to be without basis. The withdrawal of the claim cannot under the circumstances be regarded as voluntary. The assessee, accordingly, is liable for penalty u/s. 271(1)(c) on the entire claim for depreciation on the relevant plant and machinery, i.e., for ₹ 140.56 lacs, i.e., including the claim to the extent stated as withdrawn. - Decided against assessee. Disallowance of deduction under section 80-IB - Held that:- The assessee in our view had a reasonable basis to stake a claim for deduction u/s. 80IB in the manner it does, i.e., at ₹ 277.66 lacs. No ground for levy of penalty for furnishing inaccurate particulars of income is in our view therefore made out. We decide accordingly, confirming its deletion.- Decided against revenue.

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• 2017 (6) TMI 1120
  Revision u/s 263 - Held that:- Commissioner invoked the provisions of section 263 of the Act as he was not satisfied with the assessment order passed by the Assessing Officer without making any inquiry himself and dismissing the explanation of the assessee without any reasoning and the Commissioner jumped to the conclusion that the Assessing Officer either failed to carry out any inquiry or the conclusion, which naturally flows on the facts and circumstances of the case, has not been drawn. This allegation in the notice as well as in the impugned order makes it clear that while issuing notice and invoking the provisions of section 263 even the Commissioner himself was not sure whether it is a case of no inquiry or inadequate inquiry. It is a well accepted proposition that if the Commissioner has ignored the exercise undertaken by the Assessing Officer during the assessment proceedings and without making any inquiry, dismissing the explanation of the assessee and jumped to the conclusion, that the Assessing Officer failed to carry out any inquiry, then these findings are not sustainable in the light of the ratio of the decision of the Hon'ble Delhi High Court in the cases of Jyoti Foundation (2013 (7) TMI 483 - DELHI HIGH COURT) and D.G. Housing Projects Ltd. (2012 (3) TMI 227 - DELHI HIGH COURT ). Thus, we are inclined to hold that the Commissioner has wrongly invoked the provisions of section 263 of the Act for issuing notice and passing the impugned order. - Decided in favour of assessee.

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• 2017 (6) TMI 1119
  Cancelling the registration granted u/s 12A - invoking the provisions of section 12AA(3) - non charitable purposes - Held that:- Based on unverified and unproven allegations and complaints it cannot be held that appellant’s act of receiving donation through banking channel was malafide or not genuine. We also find that the donations received from SFWHP were actually utilized for charitable purpose and therefore we find that the activities of the assessee were conducted in accordance with the objects of the trust. For the reasons set out in the foregoing therefore we hold that the Ld CIT was not justified in cancelling the registration in exercise of powers u/s 12AA(3). We accordingly cancel the Ld CIT’s order dated 05.08.2016 passed u/s 12AA(3) and restore the registration u/s 12A of the Act to the assessee Trust with effect from F.Y. 2011-12. - Decided in favour of assessee.

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• 2017 (6) TMI 1118
  Revision u/s 263 - order erroneous or prejudicial to the interests of the revenue - Held that:- AO himself had conducted enquiry by obtaining requisite information and details with regard to each of the expense enumerated by the Ld CIT in his SCN. We find that in response to requisition u/s 142(1), the assessee had furnished details & explanations and the documents on record disproved the Ld CIT’s charge in the SCN that enquiry was not conducted. We further find that even before the Ld CIT, the assessee had furnished the same explanations and details which have been ignored and/or brushed aside by the Ld CIT by making general observation that no supporting evidences were furnished despite opportunity. We however find that no specific document or evidence was specified by the Ld CIT in his order which he had expected or required the assessee to produce but which the assessee failed to produce at the stage of revision. The assessment has been set aside by the Ld CIT only with a view to give the AO one more opportunity of conducting roving enquiry without establishing in any specific manner as to how AO’s assessment order dated 28.03.2014 was erroneous in so far as prejudicial to the interest of the Revenue. In our considered opinion, by setting aside the assessment and directing the AO to pass fresh order of assessment, the Ld CIT has merely given the AO a second inning which is not the aim and object of Section 263 of the Act. For the reasons discussed in the foregoing therefore, we hold that the order u/s 143(3) passed by the ITO, Ward 12(3), Kolkata was not erroneous in so far as prejudicial to the interests of the revenue for the reasons set out in the CIT’s order u/s 263 of the Act - Decided in favour of assessee.

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• 2017 (6) TMI 1117
  Nature of land sold - long term capital gains - treatment as agricultural land sold - Held that:- The land was not actually or ordinarily used for agricultural operations on or around the relevant time of sale. It is also to be seen that the income returned from agricultural operations carried on in the land was just for namesake and does not have any proportion to the efforts usually that would have been made by a true agriculturist. At the time of sale of land also no agricultural activities were carried on by the assessee. Assessing Officer has conclusively established that the lands sold by the assessee in the previous year relevant to the assessment year under appeal for a consideration of `11,66,00,000/- were not agricultural in nature, but, on the other hand, they are non-agricultural land. Therefore, it definitely comes under the category of “capital asset”. Accordingly, the gains arising out of transfer of that capital asset is exigible to capital gains tax. When the basic nature of the land itself found to be nonagricultural, the arguments regarding status of the property, whether within metropolis or outside the limit of the metropolis, is irrelevant. A non-agricultural property, whether inside the municipality or outside the municipality or even in a remote village is a “capital asset” and transfer of the same may generate income liable for capital gains taxation. - Decided in favour of revenue

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• 2017 (6) TMI 1116
  Addition on capital contributed by partner of the firm - Held that:- Partner having admitted that he has made the impugned deposit with the assessee firm out of the amount received as gift, it is the partner and not the firm who is liable to be taxed by treating the said amount as undisclosed income even if the claim of gift said to have been received by him is rejected. See Commissioner of Income-tax Versus Metal & Metals of India [2006 (11) TMI 630 - HIGH COURT OF PUNJAB & HARYANA]. Thus delete the addition made in the hands of the assessee firm. Addition being unsecured loan raised by the firm from Smt. Anu Anand - Held that:- Considering explanation of the assessee in the light of the order of the Division Bench of the Tribunal in the case of Shri Vivek Jolly (2012 (11) TMI 1216 - ITAT CHANDIGARH) explanation of the assessee is accepted that creditor has withdrawn the amount of ₹ 2 lacs and ₹ 5 lacs in February,2006 which were available to her for making re-deposit in the same bank account. The Assessing Officer has not brought any evidence on record to prove that the amounts so withdrawn by the creditor in February,2006 have been utilized or spent anywhere else. Therefore, explanation of the assessee is accepted that the creditor has credit worthiness to advance a sum of ₹ 5,01,750/- to the assessee. Therefore, no addition can be made of this amount treating the same to be unexplained credit. Accordingly, orders of the authorities below are set aside and addition of ₹ 5 lacs is deleted.

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• 2017 (6) TMI 1115
  Reopening of assessment - reason to believe - AO jurisdiction to issue notice - permission from competent authority - Held that:- In the present case, notice under section 148 have been issued by ACIT, Circle 1(1) Chandigarh on 27.03.2007 after expiry of four years from the end of the relevant assessment year, therefore, the satisfaction of the Joint Commissioner of Income Tax on the reasons recorded by the Assessing Officer that it is a fit case for issuing of such notice is required, however, in the present case, no satisfaction on such reasons recorded by the Assessing Officer have been obtained from the JCIT. In the notice under section 148, the approval from the Commissioner of Income Tax, Chandigarh is mentioned and in another satisfaction, the Addl. CIT accorded his approval on 26.03.2008 after issue of notice under section 148 which is wholly null and void. The Assessing Officer, therefore, did not have jurisdiction to issue notice under section 148 without obtaining the approval and sanction of the Jt. CIT. - Decided in favour of assessee.

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• 2017 (6) TMI 1114
  TDS u/s 194J - disallowance u/s. 40(a)(ia) - non-deduction of tax on MICR charges paid to Clearing House, i.e., expenses paid by various branches of the assessee, J & K Bank Ltd. - Held that:- CIT(A), while deleting the disallowance, has observed that MICR charges representing “Magnetic Ink Charter Recognition”, are cheque clearing charges. It is an undisputed fact that the machine involves recognized numeric data printed with magnetic charged ink. This is done with the help of ultraviolet rays, which scans the genuineness of the cheques. Apparently, human intervention is not required in MICR clearing of cheques, which involves examining technical data, analyzing them and making them useful for subsequent use. MICR clearance of cheques is possible only by a mechanized system, considering that the processing is of cheques in bulk. A similar situation had presented before the Hon’ble Supreme Court in the case of ‘CIT vs. Bharti Cellular Ltd. (2010 (8) TMI 332 - Supreme Court of India) following which it was, that the ld. CIT(A) held the provisions of section 40(a)(ia) of the Act not to be attracted. The ld. CIT(A) followed his own order in the assessee’s case for A.Ys. 2007-08 and 2009-10 in deleting the disallowance.- Decided against revenue Addition in respect of disallowance of depreciation on wooden partitions - Held that:- Assessee to be entitled to 100% depreciation, observing that the structure in the form of wooden partition was purely a temporary wooden structure on a rented premises, giving no advantage of enduring nature; and that similar disallowances have been deleted in the assessee’s own cases for A.Ys. 2005-06 to 2009-10. Addition u/s.40(a)(ia) on account of short TDS as reported in Annexure “J” of the Tax Audit Report of the assessee bank - Held that:- Section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40{a)(ia) of the Act. Accordingly, we confirm the order of CIT (A) allowing the claim of assessee and this issue of revenue's appeal is dismissed. Non-deduction of tax on interest paid to Jammu Development Authority - Held that:- It has not been disputed that Jammu Development Authority stands incorporated by the J & K Development Act, 1970. C.B.D.T. Notification no.3439, dated 27.10.1970, issued, in pursuance of the provisions of section 194A(3)(f) of the Act, provides that no tax was required to be deducted on interest on deposit paid to a Corporation incorporated under a State Act. The position is not any different so far as regards J.D.A. incorporated under the said State Act, too. Therefore, the provisions of section 194A of the Act are not applicable, due to which, the provisions of section 40(a)(ia) are also not attracted. Disallowance u/s. 14A - Held that:- Before invoking Rule 8D of the IT Rules and making additional disallowance, the AO was required to record his satisfaction as to the incorrectness of the claim of the assessee; that in the year under consideration, the bank had shown that the investments, from which income had been earned, stood treated as stock in trade rather than investment; that the assessee had not claimed exemption on this income; that as such, the assessee had offered its income and had not considered the income to be part of its total income; that therefore, section 14A of the Act was not applicable and it could not have been invoked; that had the assessee claimed this income exempt, it was exactly the same as in the earlier years, in which years, it was held that in view of the assessee’s own funds, no disallowance of interest cost could have been made and that in view of the fact that management cost is fixed, whether or not this is exempt income as earned, there cannot be any management cost relating to this exempt income earned; and that a similar disallowance has been deleted by him [the ld. CIT(A)] in the assessee’s case for A.Y 2009-10. Disallowance on account of prior period expenditure - TDS laiability - Held that:- merely passing a debit entry of these expenses in the books of account, would not be sufficient for claiming the deduction in the present account in the concerned year and then also, the deduction would not be admissible, unless tax has been paid on such amount; and that the proviso to section 40(a)(ia) makes it clear that if tax has been deducted in the subsequent year and paid, then deduction would be allowed in that year. It may be important for accounting purposes, passing of a debit entry in the books of account, concerning the expenses in the year in which the expenses were incurred, for the purposes of section 40(a)(ia) of the IT Act, it is not determinative of the deductibility – particularly the year thereof. In view of the above, the grievance raised by the assessee is quite justified and it is accepted as such. The CIT(A)’s order is reversed. The addition is deleted.

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• 2017 (6) TMI 1113
  Validity of reopening of assessment - reasons to believe - Held that:- In the absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped assessment is one lac rupees or more, the notice issued u/s 148 of the Act beyond four years of the end of the relevant assessment year, is invalid. This ratio, in my considered opinion, is applicable to the present case with full force and the ld. CIT(A) has erred in holding that the decisions in both these cases are distinguishable. For the foregoing discussion, respectfully following the decisions “in Mahesh Kumar Gupta” (2013 (4) TMI 444 - ALLAHABAD HIGH COURT) and “Amar Nath Agarwal” (2014 (10) TMI 8 - ALLAHABAD HIGH COURT ), finding force in the grievance raised by the assessee in this regard, the same is accepted. The CIT(A)’s order on this issue is reversed. The notice issued u/s 148 of the Act and all proceedings pursuant thereto, culminating in the order under appeal, are held to be null and void-ab initio. - Decided in favour of assessee.

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• 2017 (6) TMI 1112
  Deduction u/s 80IA - percentage of profits will be 30% OR 43.50% returned by the assessee - Held that:- CIT(A) confirmed the action of AO in holding that provisions of section 80-IA(10) are applicable. However, she held that profit of the assessee be determined by applying N.P. rate of 30% as against N.P. rate of 43.5% claimed by the assessee, thereby allowing the deduction u/s 80IC at ₹ 25,65,237/-. Taking into consideration all the factual aspects of the case, it is well establishes that there is sufficient material to establish the close of nexus between the assessee and M/s. Fairdeals in manipulating the profit to claim higher rate of deduction u/s 80IA of the Act. The major part of raw materials were purchased from sister concern M/s. Fairdeals and total sales were also made to it. Such arrangements have been made to inflate profit of assessee and claim higher 80IC deductions and avoid the tax payments. In my considered view, the ld. CIT(A) was fair enough to give sufficient relief to the assessee and there is no further scope for any giving any relief to the assessee. Thus the appeal of the assessee is dismissed.

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• Customs

• 2017 (6) TMI 1097
  Redemption of goods - Whether the first respondent was justified in upholding the levy of redemption fine having concluded that the imported goods were indeed Heave Melting Scrap and therefore, not liable to confiscation? - Held that: - it is quite clear that the Tribunal, both in the first and in the second round, returned a finding of fact that an incorrect declaration had been made inasmuch there was misdescription of the subject goods. The only concession, that the appellants obtained was with regard to the end use benefit provided via the Notification No.83/90, and since the appellants had furnished the end use certificate, which indicated that they had ultimately used 2275 Metric tons of scrap, as prescribed, that benefit was given to the appellants. The net effect of the said benefit was that 2275 Metric tons of scrap was amenable to a concessional rate of duty of 5% as against 20%. The subject goods were, thus, as held re-rollable scrap. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 1096
  Smuggling - red sander logs - allegation against the appellant is that, he had master minded the smuggling of 538 red sander logs which had an approximate value of ₹ 80 Lakhs in the grey market - confiscation - penalty - claim of appellant was that it was only his intention to smuggle which was not put into action - Held that: - The fine distinction between preparation and attempt , is in the given facts and circumstances of the case, not a distinction which is sustainable for the reason that the record shows that, the appellant had taken actions which demonstrate that the intent to smuggle the subject goods out of the Country had been put into action. There was, thus, according to us, a clear attempt to smuggle the subject goods out of the Country, which is evident from the following surrounding facts. Preparation, in our view, is a state of mind, which obtains prior to its manifestation in the form of concrete steps, which are taken to give shape to a plan which germinates in the mind, in the first instance. Once a concrete shape is given to a plan in the form of steps taken on ground, clearly an attempt to smuggle would have been made, as was the case in the instant matter. The appellant miserably failed to prosecute his case, diligently, before the Tribunal. The Tribunal, in our opinion, rightly, after granting adequate opportunities to the appellant, took the decision to decide the matter on merits - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 1095
  Refund claim - rejection on the ground that appellant could not furnish the required evidence - Held that: - once the Hon’ble High Court of Kerala in its order dated 12.11.2014 had specifically given direction that on producing identity and account details refund shall be effected to the petitioner within a period of four weeks and after the judgment of the Kerala High Court the appellant has produced the certificate obtained from the Padi Village Office, Government of Kerala and also an affidavit clarifying that Mohammad Shaheed, Sahid M and Sahid Mohammad are one and the same person. Moreover, his identity was never in dispute from the very beginning even during investigation. His statement was recorded and he is appearing before the officers of the custom and this reason has been coined by the original authority only for the purpose of denial of rightful claim of refund. Now since the appellant has clarified about his identity also, therefore there is no reason left for the respondent to deny the refund claim - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 1094
  Refund of unutilized CENVAT credit - bank charges - technical testing charges - freight inward charges - import freight charges - telephone and internet charges - service charges - denial on the ground that the inputs in respect of which credit of service tax is claimed as credit are not utilized in or in relation to the manufacture of goods exported - Rule 5 of CCR, 2004 - Held that: - in the appellants own case Jeans Knit (P.) Ltd. Versus Commissioner of Customs, Bangalore [2010 (11) TMI 123 - CESTAT, BANGALORE], these services have been held to be input services and refund has been allowed - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 1093
  Refund claim - excess amount of education cess paid by them on DTA clearances during the period from June 2006 to September 2007 - Held that: - The issue which is involved in the present appeal has been settled by the Larger Bench by this Tribunal in the case of Kumar Arch Tech Pvt. Ltd. vs. CCE [2013 (4) TMI 482 - CESTAT NEW DELHI], where it was held that the education cess and S&H cess would be chargeable only once under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 on the sum of basic customs duty and Additional customs duty - Since in this case also, the learned Commissioner (A) has held that assessee is not liable to pay Education Cess third time, the issue is squarely covered in favor of the assessee by Larger Bench decision of this Tribunal - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 1092
  Jurisdiction - power of Directorate of Revenue Intelligence (DRI) to issue SCN - Held that: - similar issue has come up before this Tribunal on many earlier occasions also. The Tribunal remanded the cases to the original adjudicating authority - appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 1090
  Insolvency and Bankruptcy proceedings - moratorium applicability - Held that:- Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. Hence, Shri Devendra Padamchand Jain, having IP Registration No. IBBI/IPA-001/IP-00224/2016-17/1551 dated 13th January, 2017 and residing at A-43, Prime Plaza, Opposite DLA School, Bodakdev, Ahmedabad, is appointed as “Interim Insolvency Resolution Professional” who filed Form-2 and Certificate of Registration issued by the Insolvency and Bankruptcy Board of India. This Adjudicating Authority also directs the Corporate Applicant to make a public announcement in terms of Clause (b) of sub-section (1) of Section 13 of the Code.

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• 2017 (6) TMI 1089
  Petition under Insolvency & Bankruptcy Code - Held that:- Certain conditions precedent for “Admission” of a Petition under I & B Code are required to be accomplished. On due consideration of the totality of the circumstances as well as the background of the case, this Bench is of the opinion that the Petition deserves “Admission” under the I & B Code. As a result the provisions of Section 7 and Section 8 of The Code shall come into operation, which prescribes that “Financial Creditor” and “Operational Creditor” are entitled to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. Once the Petition is admitted the process of 'Moratorium' as prescribed under Section 14 of The Code shall come into operation i.e. prohibition of institution of suit, transferring/alienating any asset of the Corporate Debtor, prohibition of foreclosure of recovery including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of any Security Interest Act. The appointment of proposed Interim Resolution Professional viz, Mr. Vipul K Choksi is confirmed, who shall perform the duties as assigned under Section 18 of The Code. He is directed to inform the progress of the Resolution Plan and the compliance of the direction such as Public Announcement to this Bench on or before 28th of June, 2017. The Petitioner shall also act upon under the provisions of Section 13 by making a public announcement to comply the provisions of Section 15 of The Code.

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• Service Tax

• 2017 (6) TMI 1111
  Validity of SCN - petitioner submits that the SCN on the face of it, is based on incorrect facts - Held that: - This Court would be slow to exercise its jurisdiction under Article 226 of the Constitution of India in the matter, assailing the showcause. It is not the case of the petitioner that the Authority does not have jurisdiction to issue the SCN. The grievance of the petitioner is based on the factual matrix. The petitioner has an opportunity to file reply to the showcause notice and raise all possible contentions available to the petitioner. The Authority is bound to consider the reply filed by the petitioner and objections raised by the petitioner - petition dismissed - decided against petitioner.

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• 2017 (6) TMI 1110
  Jurisdiction - power of tax authorities to collect tax from recipient of service - Whether the Tribunal was correct in allowing the appeal of the revenue after holding that the amount of refund claimed by the appellant herein was collected without the authority of law but such collection was not unconstitutional by an improper consideration? - Held that: - the tax Authorities had acted beyond their jurisdiction. The tax Authority, being creature of statute, had no jurisdiction to collect tax from the recipient of service, prior to the date of amendment of the Statute, which, admittedly, was brought about on 18.04.2006 - however, the levy could be construed without authority of law but not unconstitutional - decided in favor of Revenue. Whether the Tribunal was correct in traversing beyond the scope of appeal filed by the revenue, which only contested the application of the period of limitation under the Limitation Act as against the one provided under Section 11B of the Central Excise Act made applicable to the provisions of the Finance Act, 1994? - Held that: -, the Tribunal, in the instant case, was exercising powers, as a creature of the statute and therefore, could not have granted any relief to the Appellant/ Assessee, having regard to the nature of its jurisdiction. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 1109
  100% EOU - refund of unutilised CENVAT credit - Rule 5 of CCR, read with N/N. 5/2006-CE dated 14.3.2006 as amended - rejection on the ground that as per FIRCs, the payment is received in Indian rupees and hence Rule 3(2)(b) of Export of Service Rules, 2005 is not satisfied - case of appellant is that realisation is in foreign exchange so as to protect from the exchange rate fluctuations for which their bankers had been instructed by them to convert foreign exchange realisation into Indian rupee and credit to their account. Held that: - this issue has been considered by various Benches of the Tribunal and it has been held consistently held that merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Service Rules, 2005. Since the Indian rupee is received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, the receipt of Indian rupee shall be treated as convertible foreign exchange. Further, it is also clearly certified in the FIRC issued by the Standard Chartered Bank that remittances are in convertible foreign exchange. Reliance placed in the case of Commissioner of Service Tax, Mumbai Versus M/s PMI Organization Centre Pvt. Ltd. [2015 (12) TMI 414 - CESTAT MUMBAI], where it was held that It is clear that payment received in Indian Rupees for which FIRC issued by the bank and payment is routed through foreign bank qualifies the condition of payment 'convertible foreign exchange', therefore on this ground refund cannot be rejected. Payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 1108
  100% EOU - CENVAT credit - utilization - whether the Cenvat credit earned in their 100% EOU which had got common Service Tax number alongwith their other business of providing service of installation, etc in the unbonded premises, whether Service Tax have been rightly discharged from the Cenvat credit so taken? - Held that: - the issue herein is squarely covered as pointed out by the counsel for the appellant, by order of a single member of this Tribunal (Myself) in Elcomponics Sales Private ltd v/s Commissioner of Service Tax, Noida [2016 (10) TMI 874 - CESTAT ALLAHABAD] wherein under similar facts and circumstances, it was held that there is no such restriction for utilisation of the Cenvat credit by a manufacturer, being 100% EOU under the Cenvat Credit Rules - appeal allowed. Courier Service/GTA Service - demand of service tax - Held that: - although it was the case of the appellants that they have discharged proper service tax, at the time of the transaction during the relevant period 2008-09 and 2009-10 but could not produce the relevant documents at the time of adjudication during the year 2013 and accordingly the said demand was confirmed in absence of complete and corroborative documents available with the appellant - demand set aside. Penalties - Held that: - there is no contumacious conduct or suppression on the part of the appellant and as such we set aside all the penalties imposed vide the impugned orders. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 1107
  Composite works contract - whether the service tax for the period 2004-05 to 2008-09 have been rightly demanded invoking the extended period under the category of construction service/commercial and industrial construction service under the admitted facts that the appellant have executed a composite work with materials in the nature of works contract? - Held that: - the contractee namely BPCL have deducted Sales Tax/VAT, on the material component, at source and issued tax deduction certificate under the State Vat Act. In view of these facts it is crystal clear that the appellant have done works contract which was not taxable prior to 1 June, 2007. Further, from the SCN it is found that there was no proposal to confirm the demand under the category of ‘work contract’ for the period 1 June 2007 and thereafter - the work done by the appellant is not classifiable under ‘construction service’ or 'commercial and industrial construction service'. Accordingly, the SCN is not sustainable - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (6) TMI 1106
  Condonation of delay in filing appeal - Section 35 of the Central Excise Act - Held that: - decision in the case of SINGH ENTERPRISES Versus COMMISSIONER OF C. EX., JAMSHEDPUR [2007 (12) TMI 11 - SUPREME COURT OF INDIA] relied upon where it was held that there is complete exclusion of Section 5 of the Limitation Act and the Commissioner does not have power to condone the delay after the expiry of 30 days - The Commissioner as such did not have jurisdiction to condone the delay of 30 days - petition dismissed - decided against petitioner.

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• 2017 (6) TMI 1105
  Recovery of MODVAT credit - effect of amendment in rate of credit - Furnace oil - The Appellant/Assessee availed of MODVAT credit in respect of "specified duty", by relying upon N/N. 5/94-CE (NT), dated 01.03.1994. The Notification dated 01.03.1994 was, however, amended, by N/N. 14/97-CE(NT), dated 03.05.1997. The net effect of the said amendment was that the credit on inputs, which, inter alia, included Furnace oil was restricted to "10% ad valorem" - Whether the demand for recovery of MODVAT credit with interest as per N/N. 14 of 1997 CE(NT) dated 03.05.1997 read with Section 87 of the Finance Act, 1997 and Rule 57-I of the Central Excise Rules and Section 11A of the Central Excise Act for the period 23.07.1996 to 28.02.1997 is justified? Held that: - the assertion made on behalf of the Appellant/Assessee that neither the later notification dated 03.05.1997, whereby, the credit was restricted to 10% ad valorem, nor the provisions of Section 87 would impact the Appellant/Assessee, is a submission, which, in our view, is completely unsustainable - As a matter of fact, based on the restriction brought about by the latter notification, i.e., notification dated 03.05.1997, the Appellant/Assessee, in its reply dated 26.03.1998, had indicated to the Department that it had "expunged" credit amounting to ₹ 2,54,701/- for the period spanning between 03.05.1997 and 19.06.1997. In this behalf, the Appellant/Assessee had given reference to the notification dated 03.05.1997. Therefore, in our view, the Appellant/Assessee cannot contend to the contrary, as it would be inconsistent with the record obtaining in the case. A careful comparison of Section 51(2)(d) of the Finance Act, 1982, with Section 87(2)(c) of the Finance Act, would show that, while, in the latter, a time frame of ninety (90) days from the date of enactment of the Bill is provided, as the period, within which, recovery of excise credit is required to be made, no such period has been provided in the former. Section 51(2)(d) of the Finance Act, 1982, simply, states that recovery shall be made of all such duties of excise, which have not been collected, or, those, which have been refunded, but ought to have been collected, or, even those that would not have been refunded, in case, amendments made, as referred to in Sub-section (1) of Section 51, had been in force at all material times - under clause (c) of Sub-section 2 of Section 87 of the Finance Act, apart from providing a period within which, recovery is to be made, it is also indicated that in case of non-payment of such excise credit, within the prescribed period, the same would be recovered with interest at the rate of 18% per annum. The interest, as per the said provision, would run from the date immediately following the expiry of the prescribed period of ninety (90) days. The interest, in effect, is payable from that date, till the date of recovery of excise credit. One cannot, but hold that Section 11A of CE Act, would have no application, while, construing the impact of Section 87 of the Finance Act - the recovery sought to be made is time barred, is unsustainable and is, accordingly, rejected. Section 87 of the Finance Act impacts not only the notification dated 03.05.1997, operable with retrospective effect, i.e., from 23.07.1996, but also validates any action or, thing taken or done or purported to have been taken or done on or after 23.07.1996, but before 03.05.1997. Appeal dismissed - decided against appellant-assessee.

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• 2017 (6) TMI 1104
  MODVAT credit - whether, the appellant was entitled to Modvat credit on spares, components and accessories of machines, i.e., capital goods, falling under Heading 84.74 of the Central Excise Tariff Act, 1985, for the period, spanning between 23.07.1996 and 31.08.1996? - Held that: - the issue raised in the appeal, is, squarely covered by the judgment of the Division Bench rendered in India Cements Limited V. Commissioner of Central Excise, Trichy [2013 (8) TMI 576 - MADRAS HIGH COURT], where it was held that Commissioner Of Central Excise, Jaipur Versus M/S Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], in the background of the circular issued by the Government of India has held that the benefit of modvat credit under Rule 57Q would be applicable to all components, spares and accessories of the specified goods, irrespective of their classification under any chapter heading - petition allowed - decided in favor of assessee.

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• 2017 (6) TMI 1103
  Rebate claim - rejection on the ground of time limitation - relevant date for calculation of time limitation - adjudicating authority held the view that relevant date is date of export as provided u/s.11B(B)(a)(i) of the Central Excise Act, 1944 - The appellant company paid duty between 11.11.2008 and 15.11.2008 for the export of goods. Thereafter, the appellant paid additional duty of ₹ 15,000/-. As per Notification dated 30.6.2008, claim was made by the appellant on 27.11.2009 before the Assistant Commissioner of Central Excise under Section 11B of the Central Excise Act 1944 - Rule 18 of the Central Excise Rules 2002 - Section 11B of the Central Excise Act, 1944 - Held that: - the decision in the case of M/s. Mafatlal Industries Limited & Others. v. Union of India & Others [1996 (12) TMI 50 - SUPREME COURT OF INDIA], relied upon where it was held that such claims for rebate can be made only under Section 11B within the period of limitation as prescribed under the Act - the contention of the appellant that no time limit is prescribed in the notification could not be accepted in view of proviso (a) to subsection (ii) of Section 11B of the Central Excise Act. Therefore, reading of Rule 18, there is no specific relevant date prescribed in the Notification to the effect that the relevant date on which final products or goods was cleared for export. Admittedly, the goods were exported on 10.11.2008 and 15.11.2008. Thereafter, the appellant paid additional duty on 15.11.2008. The claim of rebate of duty made by the appellant company on 27.11.2009 by claiming that period of limitation is within one year under Section 11B of the Act - it is not correct to claim that the relevant date is only from the date of payment of additional duty subsequent to the goods exported by the company. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 1102
  CENVAT credit - welding electrodes used directly or indirectly in relation to manufacture of final product - Held that: - perusal of the definition of inputs under the old Rules, 1944 and Rule 2 (k) of the CCR, 2004 and also the various decisions relied upon by the appellant wherein it has been consistently held that welding electrodes used for repair and maintenance of machinery is in relation to manufacture of final product and therefore, CENVAT credit is admissible. CENVAT credit - manufacture of pig iron which are further used for repair and maintenance of plant and machinery - Held that: - reliance placed in the case of CCE vs. Alfred Herbert (I) Ltd. [2010 (4) TMI 424 - KARNATAKA HIGH COURT] wherein the Hon’ble Karnataka High Court has held that CENVAT credit in respect of goods which were used for repair and maintenance of plant and machinery is admissible - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 1101
  Refund claim - case of appellant is that they were liable to pay duty based on actual production instead of in terms of the actual capacity determined by the Commissioner - Held that: - the issue is squarely covered in favour of the Revenue by the decision of Hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH Versus M/s DOABA STEEL ROLLING MILLS [2011 (7) TMI 10 - SUPREME COURT OF INDIA], where it was held that Section 3A of the Act is an exception to Section 3 of the Act - the charging Section and being in nature of a non obstante provision, the provisions contained in the said Section override those of Section 3 of the Act. Rule 3 of 1997 Rules framed in terms of Section 3A(2) of the Act lays down the procedure for determining the annual capacity of production of the factory. It was further held that intention of Legislature is primarily to be gathered from the words used in statute. Assessee once shown to be falling within letter of law, he must be taxed however, great hardship it may appear to the judicial mind - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 1100
  CENVAT credit - input services - Canteen Service - Repair and Maintenance Service - Commissions - Labour charge-job work, etc. - Management Consultancy services - Rule 2(i) of CENVAT Credit Rules, 2004 - Held that: - appellant is entitled to CENVAT credit on canteen service, repair and maintenance, labour charges job worker, clearing and forwarding agency service, commercial coaching and training service as they are directly related to the business of the appellant - credit allowed. Management Consultancy services - Held that: - appellant has not produced the documents like Management Service Agreement as well as invoices and TR-6 challans showing the payment made towards Management Consultancy Fee before the lower authorities - case is to be remanded back to the original authority to examine the documents - matter on remand. Part matter allowed and part Appeal allowed by way of remand.

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• 2017 (6) TMI 1099
  Valuation - sale through depot/consignment agent - transportation charges - includibility - Held that: - Tribunal has held in the said case of Ispat Industries Ltd. Versus Commissioner of Central Excise, Nagpur [2003 (12) TMI 130 - CESTAT, MUMBAI] that cost of transportation from the factory gate to the depot/consignment agents which is place of removal up to the place of delivery is admissible for deduction - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 1098
  MODVAT credit - whether countervailing duty exempted by notification No.34 /97-Cus. debited in the DEPB Pass Book is eligible for modvat credit or otherwise? - Held that: - the issue has been decided against the assessee by the Larger Bench of this Tribunal in the case of Essar Steel Ltd. [2004 (8) TMI 123 - CESTAT, NEW DELHI] - the Cenvat Credit on the CVD debited in DEPB Passbook which is exempted under N/N. 34/97-Cus. is not admissible. Extended period of limitation - penalty u/s 11AC - Held that: - the issue was contentious and was referred to the Larger Bench and decided on 16.8.2004, whereas in the present case the period involved is August 2003 to November 2003, the show cause notice was issued on 9.9.2004. In this fact the suppression of fact cannot be attributed to the appellant, accordingly the proviso of Section 11A(1) cannot be invoked - the extended period is not sustainable and demand for the normal period of one year as provided under Section 11A(1) of the Act shall sustain - For the same reason that there is no suppression of fact on the part of the appellant the penalty under Section 11AC is also not imposable accordingly, the penalty imposed under Section 11AC is set aside. Appeal allowed - decided partly in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (6) TMI 1091
  Inter-state sale or local sale - Does the movement of goods/sandalwoods sold by the respondent/Forest Department in a public auction from Kerala to the appellant, who took it to the unit situated in a Special Economic Zone in Tamil Nadu, on satisfaction of the due amount and taking delivery in Kerala, constitute a transaction “in the course of export of the goods outside the territory of India” to sustain the plea of the assesee that it is not taxable by the State? - Whether it will come within the purview of Section 5 (3) of the Central Sales Tax Act [the 'CST Act' in short] to get exemption from payment of tax? Held that: - By virtue of Article 286 of the Constitution of India, no State can impose tax on the sale or purchase of goods if it takes place (a) outside the State or (b) in the course of import of the goods into, or export of the goods out of the territory of India. By virtue of Clause 2 of Article 286, the Parliament may, by law, formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Clause (1). In the law enacted by the Parliament in this regard i.e. Central Sales Tax Act - In view of the specific definition of the term “crossing the customs frontiers of India” as defined under Section 2 (ab) of the CST Act, the meanings of the terms under the CST Act have to be read and understood as attributable to the words/phrases under the Customs Act. As rightly observed by the learned single Judge, sale effected to a unit in the Special Economic Zone as such cannot be deemed to be an export for the purpose of the CST Act. The exemption under Section 7 of the Special Economic Zones Act, in relation to tax liability with reference to any enactment mentioned under the first schedule [Central Statute], can be claimed only subject to the terms/conditions/limitations as may be prescribed. As such, the benefit under Section 7, if at all any, can be claimed only on issuance of Rules in this regard, in exercise of the rule making power given under the Statute, and till such time, the provision can only remain dormant. It will get activated only on formulation of necessary rules prescribing the terms/conditions/limitations and never before. Section 5 (3) of the CST Act will not come to the rescue of the petitioner. Sub section (4) of Section 5 clearly says that the provision under sub-section (3) shall not apply to any sale or purchase of any goods; unless the Dealer selling the goods furnishes to the prescribed authority, in the prescribed manner, a declaration duly filled and signed by the Exporter to whom the goods are sold [in the prescribed form]. The appellant does not have a case that the appellant Exporter had duly filled in and signed any declaration and handed it over to the Dealer/Seller [Forest Department of the State of Kerala] and no such form has been submitted by the State/Forest Department before the first respondent to have extended the benefit under Section 5 (3) of the Act. The terms “in the State” means in the State where the State law is applicable, i.e. situated within the State of Kerala. Admittedly, in this case, the appellant does not have any business place in the State of Kerala, the unit being situated in the Madras Export Processing Zone, Thambaram, Chennai. As such, Section 6 (7) (b) of the KVAT Act does not come to the rescue of the appellant in any manner. Unlike the case of goods brought into the DFS [Duty Free Shop] situated in an International Airport and sold to the customers, the goods in the instant case (Sandalwood) exclusively belong to Forest Department/State. It is open for the owner of the goods to stipulate the terms for sale of the goods of the owner, to the extent it is within the four walls of law. Apart from the revenue to be obtained towards the value of the property to the State/Forest Department, the State is also entitled to get appropriate extent of tax as well, as in any other instance of sale, if covered by any taxable event. The sale conditions were specifically laid down so as to protect the interest of the State/Department in all respects and it was accepting such terms that the appellant had participated in the bid. The terms of the 'e-auction' notification and the special conditions by way of Exts. P5/P6 clearly indicated that it was nothing but a 'local sale'. Having purchased the goods by participating in such sale and having effected the entire payment in terms of the Tender notification/Special conditions and having taken delivery of the goods from the godown of the State/Department in Kerala, the subsequent conduct of the appellant/bidder, whether he wanted to sell it within the State of Kerala or intended to take it from this State to some other place or whether he wanted to effect some export of the product manufactured by making use of the timber/Sandalwood purchased from the Department, is of no consequence. The sale is complete in the State of Kerala and by virtue of the terms notified, agreed and accepted, it was exigible to tax under the KVAT Act, which is not a legally or factually forbidden fruit. Appeal dismissed - decided against appellant.

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