TMI Tax Updates - e-Newsletter
June 30, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

News

1. States will get to levy additional taxes on top of 28% GST on petrol, diesel: Modi

2. GST Council to Meet On 2ist July

3. Asian countries need to work as a team to tackle the challenges of tomorrow, says Shri Piyush Goyal

4. 12th Statistics Day celebrated on 29th June, 2018

5. Calendar for Auction of Government of India Treasury Bills for the Quarter ending September 2018

6. Text of the Article by the Union Minister, Shri Arun Jaitley on “The Impact of the Government Polices on Direct Tax Collections”

7. Electoral Bond Scheme 2018

8. Suresh Prabhu launches Mobile App 'ReUnite'

9. The Directorate of Revenue Intelligence (DRI) recovers smuggled E​xotic B​irds

10. Monthly Review of the Account of the Union Government of India up to the month of May 2018 for the Financial Year 2018-19 has been consolidated and Reports published; Government of India receives ₹ 1,27,461 crore (7.01% of corresponding BE 18-19 of Total Receipts) up to May, 2018 comprising ₹ 1,02,408 crore Tax Revenue (Net to Centre), ₹ 24, 049 crore of Non Tax Revenue and ₹ 1,004 crore of Non Debt Capital Receipts

11. RBI Reference Rate for US $

Notifications

Companies Law

1. F. No. A-45011/44/2018-Ad.IV) - S.O. 3145(E) - dated 28-6-2018 - Co. Law

Seeks to amend Notification No. S.O. 1935 (E), dated the 1st day of June, 2016

Customs

2. 58/2018 - dated 29-6-2018 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

GST

3. 12/2018 - dated 29-6-2018 - CGST Rate

Seeks to exempt payment of tax under section 9(4) of the CGST Act, 2017 till 30.09.2018

4. 13/2018 - dated 29-6-2018 - IGST Rate

Seeks to exempt payment of tax under section 5(4) of the IGST Act, 2017 till 30.09.2018.

5. 12/2018 - dated 29-6-2018 - UTGST Rate

Seeks to exempt payment of tax under section 7(4) of the UT GST Act, 2017 till 30.09.2018.

Circulars / Instructions / Orders

GST - States

1. NO.11/2018-GST - dated 22-6-2018

In order to clarify the modifications to procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances

2. NO.1/2018 - dated 13-6-2018

In order to clarify the completion of scrutiny & assessment up to 30-6-2017 of all acts subsumed in gst.

3. No.CT/GST-12/2017/51 - dated 12-6-2018

Notified Guideline on Mobile Squad.

4. NO. CCT/CCW/GST/74/2015 - dated 11-4-2018

In order to generate e-waybills for Inter-State movement of goods under the Andhra Pradesh Goods and Services Tax Act and or Rules, 2017)

5. NO. CCT/CCW/GST/74/2015 - dated 11-4-2018

In order to clarify that no e-way bill is required to be generated in respect of intra-state movement of any goods.

Highlights / Catch Notes

GST

• Reverse Charge Mechanism for Supplies from Unregistered Persons Deferred Until September 30, 2018, Under IGST & CGST Sections.

  Notifications : GST on Reverse Charge Mechanism (RCM) u/s 5(4) of IGST / 9(4) of CGST - procurement of supplies from unregistered persons - levy deferred till the 30.09.2018 - See notification as amended.
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Income Tax

• Income Share Exemptions u/s 10(2A) Apply to Losses Too; Aligns with MAT Provisions in Section 115JB.

  Case-Laws - AT : MAT u/s 115JB - book adjustments - When share of income from firm is exempt u/s.10 2(A) of the Act, necessarily share of loss is also exempt - what the AO did was in accordance with Clause(ii) of the Explanation
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• Assessee Avoids Penalty for Late Filing of Annual Information Return u/s 285BA and Rule 114E.

  Case-Laws - AT : Penalty u/s 271FA - assessee failed to file Annual Information Return (AIR) within the prescribed time limit, as specified in section 285BA read with rule 114E of the Income Tax Rules - various factors caused the delay - No penalty.
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• Notice u/s 153A Sufficient; Issuing Notice u/s 143(2) Not Mandatory, Cannot Be Rectified u/s 292BB.

  Case-Laws - AT : Assessment u/s 153A - As per Section 153A, simple notice has to be given to the assessee. Thus, the contention of the Ld. AR that issue of notice u/s 143(2) within stipulated time is mandatory requirement and is not curable u/s 292BB of the Act does not find support.
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• Rental Income from Sub-Tenancy Taxed as House Property Income u/s 27(iiib) of Income Tax Act.

  Case-Laws - AT : Rental income received by the Assessee - owners of the property have allowed the assessee firm to create sub-tenancy with the regard to the premises - assessee is the deemed owner of the premises u/s 27(iiib) - to be taxed as Income from House property and not as Income from Other sources.
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• Interest Charging Errors Correctable u/s 154 of Income Tax Act; Authorities Can Adjust Interest Variations.

  Case-Laws - HC : Rectification of mistake - mistake in charging interest - error apparent on the face of record- there can be variation in charging interest, and such variation can be effected through correction u/s 154 of the Act. - it is always open for the authorities to rectify that mistake.
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• Loss Returns Filed u/s 153A Notice Deemed Valid for Carry Forward u/ss 72 and 80.

  Case-Laws - HC : Assessment u/s 153A - Whether a loss return filed within the time specified in the notice under Section 153A(1)(a) is required to be treated as a return filed in accordance with the provisions of Section 139(3) for the purpose of carrying forward of the loss in terms of Section 72 read with Section 80? - Held Yes
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• Investment Allowance Expanded: Broader Interpretation for Items in Tea and Coffee Blending Beyond Direct Manufacturing Use.

  Case-Laws - HC : Grant of investment allowance on weighing machines, computers and electrical appliances, etc. - blending of tea or coffee - The phrase “for the purpose of” has to be given some meaning. It does not always refer to an article or thing used directly in manufacture, as is the mistaken view.
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• No Notice Issued u/s 143(2); Section 292BB Doesn't Waive Requirement, Only Covers Service Defects If Unchallenged.

  Case-Laws - HC : Reopening of assessment - no notice under Section 143(2) was issued - Section 292BB of the Act does not dispense with the issuance of any notice that is mandated to be issued under the Act, but merely cures the defect of service of such notice if an objection in such regard is not taken before the completion of the assessment or reassessment.
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• Court Upholds Section 10B Deduction: Finishing Semi-Finished Garments Qualifies as Manufacturing for Export Exemption.

  Case-Laws - HC : Deduction u/s 10B denied - manufacturing / production activity in the course of export or not - finishing activity after procurement of semi-finished garments - claim of the assessee for exemption upheld.
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• Income Tax Officer Can Decide Stock Valuation Method for Accurate Real Income Calculation.

  Case-Laws - HC : Determination of real income - method of valuation of stock - where from the computation, the real income could not be properly deduced, the computation should be made in the manner determined by the Income Tax officer.
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Customs

• Amended Tariff Values Announced for Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold, and Silver Under Customs Rules.

  Notifications : Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver - Notification as amended.
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DGFT

• DGFT Declares No Supplementary Claims for Scrips Allowed Under Chapter 3 of FTP 2015-2020.

  Circulars : No supplementary claims for scrips under chapter 3 of the FTP 2015-20 would be admissible - DGFT
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Corporate Law

• New NCLT Bench Established in Jaipur; Total Benches Now 11 Under Companies Law Framework.

  Notifications : Central Government constitutes New Bench of the National Company Law Tribunal at Jaipur - Total benches increased to 11 from 10 - Notification as amended.
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Central Excise

• No need to reverse CENVAT Credit when availing exemption with CT-3 certificate; Rules provisions not applicable.

  Case-Laws - AT : Reversal of CENVAT Credit - benefit exemption notification availed - the provisions of Rules are not attracted in case in hand where CT-3 certificate has been issued - reversal of CENVAT Credit not required.
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• Refund Claim Valid Despite Late Document Submission; Filed Within One Year of Incorrect Payment, Not Time-Barred.

  Case-Laws - AT : Refund - the refund claim stands filed within one year of the amount paid wrongly, supporting documents were filed beyond the period of one year does not make the refund claim hit by limitation - refund cannot be rejected on this ground.
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VAT

• Supreme Court dismisses petition on aloe vera juice VAT classification as "processed vegetable" under Sales Tax laws.

  Case-Laws - SC : Classification of goods - aloe vera juice - the entry "processed vegetable" is of wide amplitude and would within its ambit include aloe vera juice which can only be sold upon being processed - SC dismissed the SLP
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Case Laws:

• GST

• 2018 (6) TMI 1477
  Denial of credit already accrued to the Petitioner on gold dore bar - Notification dated 17th August 2017 challenged - the decision in the the case of KUNDAN CARE PRODUCTS LIMITED, AUGMONT ENTERPRISES PRIVATE LIMITED, ZAVERI AND COMPANY PRIVATE LIMITED, SUNANDA POLYMERS, SHRI SAI VISHWAS POLYMERS, KHANDWALA ENTERPRISES PRIVATE LIMITED, DIAMOND FOREVER INTERENATIONAL, VERSUS UNION OF INDIA & ANR. [2017 (8) TMI 1142 - DELHI HIGH COURT] contested. As the present special leave petition(s) are filed against an interim order, we are not inclined to interfere with the same - SLP dismissed.

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• 2018 (6) TMI 1476
  Deferment of implementation of GST - the decision in the case of DR. KANAGASABAPATHY SUNDARAM PILLAI FOUNDER, MY “INTEGRATING SOCIETY INDIA NET” NGGO VERSUS UNION GOVT. OF INDIA, THROUGH, THE CHAIRMAN, CENTRAL BOARD OF EXCISE AND CUSTOMS “CBEC” [2017 (9) TMI 389 - BOMBAY HIGH COURT] contested SLP Dismissed.

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• Income Tax

• 2018 (6) TMI 1475
  Accounting principle being followed by the assessee bank for valuation of stock - determination of real income - Tribunal held that the assessee is not entitled to value the shares and securities which were held to be its stock in trade on the basis of the cost or market price whichever is lower as claimed in the return - Held that:- On an appreciation of the case of The United Commercial Bank case [1999 (9) TMI 4 - SUPREME COURT] it clearly appears that the court stressed on the determination of real income rather than theoretical principles of accountancy. It says that if the securities and shares were valued at cost and from that no firm conclusion could be drawn a tax payer was free to employ his own method of keeping accounts to value the stock in trade whether at cost or market price. Then it went on to say that the emphasis was on determination of real income. Again it observed that where from the computation, the real income could not be properly deduced, the computation should be made in the manner determined by the Income Tax officer. We think that the computation made by the assessee for the subject assessment year does not disclose the real income and that changing the method of valuation of closing stock to cost or market price whichever was lower would determine the income correctly.

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• 2018 (6) TMI 1474
  Deduction u/s 10B denied - manufacturing / production activity in the course of export or not - finishing activity after procurement of semi-finished garments - Held that:- The fact-finding authorities below noted the functions performed by the assessee. That the functions were performed also gets support from the finding of the Tribunal that the expenses incurred on account of the said functions performed by the assessee were reflected in the books of accounts which were verified by the AO. The Supreme Court, in the judgment in Empire Industries, held that whether there was any manufacture or not would depend on the facts and circumstances of the particular case. Considering the functions performed by the assessee on the garments, it cannot be said that such functions undertaken by the assessee do not come within the meaning of the term ‘manufacture’. Further, nothing is found from the finding on facts by the CIT (A) and the Tribunal which can be termed as perverse. At any rate, when two specialised fora found the activities involved to be a process of manufacture, this court cannot easily interfere therewith. Appeal fails. This court does not interfere with the order of the Appellate Tribunal which has upheld that the claim of the assessee for exemption under Section 10B of the Act.

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• 2018 (6) TMI 1473
  Entitlement to person issued with a notice under Rule 73 of the Second Schedule of the Income Tax Act 1961 to invoke section 438 of Cr.P.C. - recovery of the tax dues determined under section 222 of the Act - Held that:- Rule 73 specifically provides that no order for the arrest and detention in a civil prison of a defaulter could be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause as to why he should not be committed to civil prison. When a defaulter appears before the Tax Recovery Officer, he shall be given an opportunity of hearing and only thereafter, an order could be passed for detention of the defaulter in the civil prison. Therefore, the apprehension of the petitioner that on issuance of a show cause notice under Rule 73 of the Second Schedule of the Income Tax Act, he has a reason to believe that he would be arrested and detained in prison is wholly misconceived and misplaced. Thus by issuance of notice under Rule 73 of the Second Schedule of the Income Tax Act, the petitioner is not accused of committing any non-bailable offence and the said notice does not give rise to any apprehension of immediate arrest so as to invoke the jurisdiction of the Sessions Court or High Court under section 438 of Cr.P.C. Both the constituents of section 438 of Cr.P.C. are not attracted to the facts of this case. As a result, hold that the petition under section 438 of Cr.P.C. is not maintainable. Criminal petition is dismissed.

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• 2018 (6) TMI 1472
  Reopening of assessment - no notice under Section 143(2) was issued - curable defect u/s 292BB - Held that:- This is not a case where the assessing officer says that a notice had been issued and there is a contradiction thereof by the assessee. It is evident that the assessee carried the objection before the Commissioner (Appeals) and the Commissioner brushed aside the objection on the ground that it was a technicality without addressing the issue or applying his mind to such aspect of the matter. As evident from the order impugned passed by the Appellate Tribunal that no notice under Section 143(2) had, in fact, been issued in this case. In such a situation, where a notice that is mandatorily required to be issued is found not to have been issued, Section 292BB of the Act has no manner of operation. Substantial questions of law are answered accordingly as follows: (1) If the time for issuance of the notice under Section 143(2) of the Act has expired or the time for completing the reassessment proceedings under Section 153(2) of the Act has run out, the failure to issue such notice under Section 143(2) of the Act would result in the entire proceedings, including any order of assessment, to be quashed. (2) Section 292BB of the Act does not dispense with the issuance of any notice that is mandated to be issued under the Act, but merely cures the defect of service of such notice if an objection in such regard is not taken before the completion of the assessment or reassessment. In addition, it is held that in the light of the Supreme Court dictum in Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA], the view expressed in Humboldt Wedag India Pvt. Ltd [2014 (5) TMI 279 - CALCUTTA HIGH COURT] is per incuriam and, as such, not good law.

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• 2018 (6) TMI 1471
  Deduction of expenditure incurred for ‘Export Turn Over’ required to be deducted from ‘Total Turn Over’ for the purpose of computing the deduction u/s.10A - Held that:- The controversy is no longer res integra as held 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 AO to rework the deduction available to the assessee u/s.10A. See case of M/s. Tata Elxsi Ltd., vs. Asst. Commissioner of Income Tax, [2015 (10) TMI 634 - KARNATAKA HIGH COURT] affirmed by Income-tax, Central – III vs. HCL Technologies Ltd., [2018 (5) TMI 357 - SUPREME COURT]

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• 2018 (6) TMI 1470
  Grant of investment allowance on weighing machines, computers and electrical appliances, etc. - Whether blending of tea or coffee does not amount to manufacture or production of an article or thing? - provisions of section 32A applicability - Held that:- Tribunal had no jurisdiction to reopen the closed issue that blending of tea was equivalent to manufacture or production of an article, which was finally decided by it in the affirmative in favour of the assessee by its order dated 30th November, 1992 in the previous two assessment years 1981-82 and 1982-83 The wording of Section 32(A) (2) (b) (iii) is also very important. It refers to any new machinery or plant installed “for the purpose of” manufacture or production of any article or thing. The phrase “for the purpose of” has to be given some meaning. It does not always refer to an article or thing used directly in manufacture, as is the mistaken view. It refers to the use of the plant or machinery for the purpose of manufacture or production. Now “for the purpose of” has to be given a wide and liberal interpretation so as to include every article used in connection with manufacture or production not being stock-in-trade, whether employed directly or indirectly. On the mistaken notion that in order to qualify as plant a machinery had to be directly used in the manufacture of an article or thing, the tribunal has upheld the order of the authorities below refusing grant of investment allowance on weighing machines, computers and electrical appliances, etc. In any opinion they are eligible for this allowance. - decided in favour of assessee

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• 2018 (6) TMI 1469
  Disallowance in terms of Section 14A of the Act r/w 8D - Held that:- disallowance under Section 14A cannot be a wild guesswork bereft of ground realities. It has to have a reasonable and close nexus with the factually incurred expenses. It is not deemed disallowance under Section 14A of the Act but an enabling provision for assessing authority to compute the same on the given facts and figures in the regularly maintained Books of Accounts. The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the disallowance under Section 8D of the Rules. Such abdication of duty in not permissible in law. Since no such exercise has been undertaken by the assessing authority, the case calls for a remand. See Commissioner of Income Tax & Anr. Vs. Microlabs Ltd., [2016 (4) TMI 219 - KARNATAKA HIGH COURT].

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• 2018 (6) TMI 1468
  Entitlement to deduction u/s.10B -‘Deemed Export’ of goods made during the period in question through a third party - Held that:- Division Bench of this Court in the case of Tata Elxsi [2015 (10) TMI 634 - KARNATAKA HIGH COURT] reversed the order of the learned Tribunal and held in favour of the assessee that assessee were entitled to deduction u/s.10B of the Act in respect of the “Deemed Export” also and similarly following the said judgment, we have also taken a view in favour of the appellant-assessee M/s.International Stones India Pvt. Ltd., that the appellant-assessee is entitled to the benefit of deduction u/s.10B of the Act, we find that the present appellant- assessee M/s.Metal Closures Pvt. Ltd., who is also similarly situated, since the fact of “Deemed Export” made by it through a third party is not in dispute, also deserves to get the same relief and therefore, the present appeals filed by assessee deserve to be allowed.

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• 2018 (6) TMI 1467
  Assessment u/s 153A - Whether a loss return filed within the time specified in the notice under Section 153A(1)(a) is required to be treated as a return filed in accordance with the provisions of Section 139(3) for the purpose of carrying forward of the loss in terms of Section 72 read with Section 80? - Held that:- A definitive final order cannot be passed without being sure of the date of issuance of the notice under Section 153A(1)(a) and the time afforded by such notice for the assessee to file the return. For such purpose, the orders impugned passed by the Appellate Tribunal require to be set aside and the matters remitted back to the Tribunal for the Tribunal to ascertain the details as to the date of the notice and the time afforded to file the return and pass an order in the light of the views expressed herein on the questions of law and it is ordered accordingly. The first question of law for the purpose of carrying forward the loss in terms of Section 72 read with Section 80 of the Act, in a case where search operations have been conducted under Section 132 of the Act, the time to file the return within the meaning of Section 139(3) of the Act has to be regarded as the reasonable time afforded by the consequent notice under Section 153A (1)(a). When search operations are conducted under Section 132 the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.

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• 2018 (6) TMI 1466
  Rectification of mistake u/s 154 - error apparent on the face of record - mistake in charging interest - Held that:- The powers of rectification under section 154 and section 263 of the Act are different. Section 154 is not a power of review. An error being apparent on the face of record, is sine qua non. The legal contours of an error apparent on the face of the record cannot be exactly identified. In other words, an element of indefiniteness is inherent in its very nature and must be left to be determined judicially on the facts of each case As seen from the proviso to sub-section (2) of Section 220, evidently, there can be variation in charging interest, and such variation can be effected through correction under Section 154 of the Act. Therefore, we fail to countenance the assessee's contention that Section 154 of the Act is unavailable for rectifying the mistakes committed under Section 220 of the Act. Even otherwise, miscalculation of interest is, at best, an arithmetical error and it needs no elaborate cogitation or adjudication, long drawn or otherwise, to hold that there was an error committed. As to correcting a mistake committed by an authority in calculating interest on refund, it is always open for the authorities to rectify that mistake. Again, in our reckoning, the reasons assigned to our interpretation of Section 220 apply here, too - decided in favour of revenue

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• 2018 (6) TMI 1465
  Rental income received by the Assessee - sub-tenancy rent receipts from ICICI Bank - Assessed as Income from Other sources OR Income from House property - deemed ownership - Held that:- In the past years, the issue has been consistently decided by the Tribunal in favour of the assessee, starting with the lead order for assessment year 2005-06 as held that the owners of the property M/s. Vrindavan Lal Goverdhan Lal have allowed the assessee firm to create sub-tenancy with the regard to the premises and has given their premises for creating the sub-tenancy in favour of ICICI Bank, Ltd. for a period of 15 years on certain terms and conditions as detailed in their letter dated 24/11/2000 addressed to the assessee, copy thereof filed in the compilation before us. The assessee become a deemed owner· in accordance with provision of section 27(iiib) r.w.s. 269UA(f)(i) of the Act - no mistake in the order of CIT(A) in holding that the assessee is the deemed owner of the premises u/s 27(iiib) of the Act and the order of the CIT(A) is confirmed and the grounds of appeal of the revenue are dismissed.

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• 2018 (6) TMI 1464
  Revision u/s 263 - disallowance u/s 35(1)(ii) - Held that:- It is not the case of the Pr. CIT that when the contribution of 20,00,000/- was made by the assessee to M/s. SHGPH, it was not recognized u/s 35(1)(ii) so legally the AO’s action to allow weighted deduction u/s 35(1)(ii) of the Act cannot be held to be erroneous. A.O’s order dated 29.06.2016 cannot be termed as erroneous and therefore, the assumption of revisional jurisdiction of the Pr. CIT itself does not satisfy condition precedent to invoke the jurisdiction u/s 263 of the Act fails. The subsequent developments i.e. CBDT Notification rescinding the recognition for M/s. SHGPH on 15.09.2016 cannot be a ground to hold that A.O’s order on 29.06.2016 is erroneous in the light of the Explanation in section 35(1)(ii). Therefore, in any case the assumption of revisional jurisdiction of the ld. Pr. CIT itself does not satisfy condition precedent to invoke the jurisdiction u/s 263 - decided in favour of assessee.

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• 2018 (6) TMI 1463
  Addition u/s 40A(3) - cash payments made to M/s Asansol Bottling and Packaging Co. Ltd - Held that:-We find that the CIT(A) by placing reliance in assessee’s own case for A.Y.2008-09 and 2009-10 [2016 (9) TMI 813 - ITAT KOLKATA] deleted the addition made by the AO u/s 40A(3) the payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both de facto and dejure , is one of ‘Principal’ and ‘Agent’. We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. - Decided against revenue

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• 2018 (6) TMI 1462
  Assessment u/s 153A - no proper notices were issued/served - Held that:- In the present case the notice under Section 143(2) was issued to the assessee which is not the mandatory requirement under the provisions of Section 153A of the Act. As per Section 153A, simple notice has to be given to the assessee. Thus, the contention of the Ld. AR that issue of notice u/s 143(2) within stipulated time is mandatory requirement and is not curable u/s 292BB of the Act does not find support. The notice issued to the assessee has mentioned Section 143(2) but that can be treated as simple notice which has to be given under the provisions of Section 153A of the Act. Case of Ashok Chaddha vs. ITO [2011 (7) TMI 252 - DELHI HIGH COURT] to be followed - Thus, the contention of the Ld. AR that no proper notices were issued/served and the order passed is without jurisdiction and barred by limitation does not survive. - Decided against assessee Cash seized from the residence of the assessee - Facts do not inspire any confidence in the explanation of the assessee that sum of 1.07 crores found from the residence of the assessee at the time of search by police alleging him to be a Satta operator is money withdrawn from his dairy business of M/s. Naman Dairy wherein he is a partner. Thus, there is no need to interfere with the findings of the CIT(A). - Decided against assessee.

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• 2018 (6) TMI 1461
  Disallowance u/s 14A - Held that:- Addition should not be made unless and until there is a receipt of exempt income for the assessment year under consideration, and for that, we rely on the case of Cheminvest Ltd. vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT), wherein it was held that no disallowance under section 14A can be made in a year in which no exempt income had been earned or received by the assessee. The expression ‘does not from part of total income’ in section 14A envisages that there should be an actual receipt of income, which was not includible in the total income, during the relevant previous year for the purpose disallowing any expenditure incurred in relation to the said income, therefore, section 14A would not apply if no exempt income was received during the relevant previous year. That being so, we decline to interfere in the order passed by the CIT(A), his order on this issue is hereby upheld and the ground of appeal raised by the Revenue is dismissed.

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• 2018 (6) TMI 1460
  Rejection the deduction claimed u/s.80P (2)(a)(i) - Held that:- As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in assessee’s own case [2017 (12) TMI 1049 - ITAT MUMBAI] we uphold the contention of the assessee and direct the Assessing Officer to examine and consider as to whether or not the assessee’s activities are in compliance with the Maharashtra State Co-operative Act, 1960 as also the Maharashtra State Co-operative Regulations, 1961. If it is so found, then, in the absence of any licence from the Reserve Bank of India, the assessee cannot be treated as an entity falling within the restrictions imposed in Sec. 80P(4) of the Act. So however, if the findings of the Assessing Officer are to the contrary, he shall be free to take appropriate action as per law. - decided in favour of assessee for statistical purposes.

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• 2018 (6) TMI 1459
  Expenditure for repairs of existing factory building at Vapi to strengthen the beam of the existing building - Held that:- The assessee has carried repair to the existing factory building at Vapi and to strengthen the beam of the existing building. The assessee also carried out repair of boundary walls of factory at Nasik. Once this is repair, the expenditure is Revenue in nature, hence, we agree with the findings of CIT (A) and confirmed the same. This issue of Revenue’s appeal is dismissed. Foreign travel expenses - Held that:- We find the assessee had furnished all the details, including the purpose of foreign visits of the Directors, that in the earlier years details were not furnished, that because of non availability of the details disallowance was made under the head foreign travel, that facts for the year under consideration are different from the facts of the earlier year. Therefore, we hold that the order of the FAA does not suffer from any legal or factual infirmity. Decided against revenue

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• 2018 (6) TMI 1458
  Disallowance u/s 14A read with rule 8D - Held that:- Disallowance u/s 14A in this case cannot exceed than the tax exempt income as earned by the assessee during the year. So far as the contention that the assessee itself has offered disallowance in the return of income more than the exempt income earned is concerned, we note that the said issue has also been dealt with the Coordinate Bench, that is, even if the assessee under a mistake or misconception has over assessed itself in the return of income, the Tribunal can give relief to the assessee to the extent the assessee is over assessed and direct the lower authorities to tax the assessee as per the provisions of law - we uphold the contention of the assessee and direct the AO to restrict the disallowance under section 14A read with rule 8D to 40,068/-. Addition as business income on account of unreconciled AIR transactions (26AS) - Held that:- The assessee has produced the reconciliation before the CIT(A) by providing party-wise details and confirmations of transactions and the TDS deducted wrongly in respect of some transactions, but the ld.CIT(A) has not admitted these additional evidences nor sent them to the Assessing Officer for his examination. CIT(A) ought to take remand report on these additional evidences and adjudicate the issue in accordance with law, but CIT(A) neither examined himself nor he sent them to the Assessing Officer for his examination - set-aside to the file of the assessing officer. Denial of set off of brought forward business losses of the earlier assessment years - Held that:- We note that the CIT(A) has not given instruction to the AO to examine the set off of brought forward losses as per the provisions of the Act. Assessee is entitled to claim the benefit of carry forward of losses, therefore, we think it appropriate to direct the Assessing Officer to examine the claim of the assessee with regard to carry forward of business losses in accordance with law. This ground of appeal raised by the assessee is allowed for statistical purposes.

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• 2018 (6) TMI 1457
  Penalty under section 271FA - assessee failed to file Annual Information Return (AIR) within the prescribed time limit, as specified in section 285BA read with rule 114E of the Income Tax Rules - Held that:- The assessee was depending on the private agency to file the AIR report and there was also shortage of manpower and inadequate infrastructure facility in his office, and moreover, the TAN Number of the assessee was inactive, all these factors have contributed delay in filing the AIR report which were beyond his control. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. We note that considering these facts and circumstances and position of law as explained above, the penalty should not be levied. - Decided in favour of assessee.

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• 2018 (6) TMI 1456
  Penalty u/s 271(1)(c) - Held that:- It is evident that the addition in question in respect of which penalty was levied, has already been deleted by the Tribunal and the Hon’ble jurisdictional High Court - In such circumstances, when the addition itself has been deleted, the penalty levied on the same cannot survive - Decided in favour of assessee

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• 2018 (6) TMI 1455
  Section 94(8) application - allotment of additional units without any payment on the basis of holding of such units on any particular date - Held that:- As gone through the provisions of Section 94(8) of the Act and found that all the clauses under (a) to (c) have to be satisfied cumulatively for invoking the said provision. Clause (b) thereof speaks of allotment of additional units without any payment on the basis of holding of such units. In this matter such details as are furnished establish that there is always investment and redemption at very short durations and in such a situation it cannot be said that there is allotment of units without any payment merely on the basis of holding of the earlier units. We, therefore, hold that to the facts of the case on hand, Section 94(8) has no application and any addition made on that basis cannot be sustained.

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• 2018 (6) TMI 1454
  TPA - comparable selection - Held that:- Relying in assessee’s own case, we are of the considered opinion that there are no reasons brought to our notice to take a different view. We accordingly held that Hindustan Syringes & Medical Devices Pvt. Ltd. is not a suitable comparable. We, therefore, direct the learned TPO to exclude this company from the final list of the comparables. Risk adjustment - Held that:- Unless the adjustment on account of risk is quantified and working is given, it is not possible to direct the authorities below to allow the risk adjustment as pleaded by the assessee. It is not possible for us either to consider at the Tribunal level or to direct the AO to consider this aspect. Working adjustment - Held that:- Remand this ground to the file of the AO for computing the working capital adjustment only on the opening and closing balance of the working capital employed at the beginning and end of the year.

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• 2018 (6) TMI 1453
  TDS u/s 194C - Disallowance u/s. 40(a)(ia) - non deduction of tds on charges paid on shirting - Held that:- The assessee has produced copies of invoices raised by the job workers which is in the form of additional evidences filed for the first time before the tribunal and it is claimed that there was no requirement of deduction of income-tax within the provisions of Section 194C as is contained in Chapter XVII-B of the 1961 Act as it is claimed that each payment was below 20,000/- and in aggregate amount paid in the year to each of job workers was less than 50,000/- to each of the job worker and hence it is claimed that there was no requirement to deduct income-tax at source with in the provisions of the 1961 Act . The assessee did not produce these parties before the AO and as well before the learned CIT(A) . Under these circumstances in our considered view the matter need to be restored to the file of the AO for fresh adjudication Disallowance of reimbursements to custom house agents (CHA) disallowed u/s. 40(a)(ia) - Held that:- The disallowance has been made on the grounds that custom duty paid by CHA agent on behalf of the client will also get aggregated and will call for deduction of income-tax at source within the mandate of Chapter XVII-B with which we donot agree and in our considered view payment of custom duty to Government on import of goods even if paid through CHA agent by way of reimbursement will not warrant deduction of income-tax at source within provisions of the 1961 Act and no additions were warranted which we hereby order to be deleted subject to verification to a limited extent by the AO that the amount as were disallowed by the authorities below do actually constitute custom duty paid by CHA to government on behalf of the assessee on import of goods which is to be verified by the AO with reference to books of accounts maintained by the assessee Addition being refund of custom duty (SAD) receivable by the assessee from custom department as at year end - Held that:- No additions is warranted so far as refund of custom duties is concerned because it never entered Profit and Loss account and hence no addition is warranted. However, material is not placed on record to prove that no deduction whatsoever was claimed of this SAD refund by the assessee while computing income and thus for limited purposes the matter is restored to the file of the AO for verifying the contention of the assessee vis-a-vis its books of accounts that the assessee never claimed the deduction of said custom duty (SAD) component as expenses to the tune of this refund receivable amount of 6,40,888/- of additional custom duty is concerned and only net amount of custom duty paid was claimed as an expense by the assessee in its return of income filed with the Revenue. In any case learned CIT(A) has given direction to the AO for verifying the same Disallowance of purchases made u/s 40A(3) - payments to the said party from whom purchases were made by the assessee namely Flora Texculture P. Ltd. was made by assessee otherwise than through account payee cheque or account payee bank draft - Held that:- On evidence on record and keeping in view factual matrix of the case, the said payment made directly by assessee s debtor namely M/s Challenger Tradelink P. Ltd. to assessee's creditor namely M/s. Flora Texculture P. Ltd. through approved banking mode as prescribed in Section 40A(3) in settlement of inter-se transaction between debtor and creditor will not trigger provisions of Section40A(3) and hence no disallowance as was made by Revenue is warranted under these circumstances . We hereby order for deletion of the said addition

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• 2018 (6) TMI 1452
  Revision u/s. 263 - directing the AO to re-compute the taxable income of the assessee - income tax paid by a charitable trust - deduction in arriving at income available for application of charitable purposes - Held that:- Issue in the present case is no longer res integra and the consensus view among various Hon’ble High Courts are that the income tax paid by a charitable trust must be allowed as deduction in arriving at income available for application of charitable purposes. The finding and the direction given by the Ld. CIT(E) in the impugned order requiring the AO to disallow the income tax paid of 40,60,061/- as expenditure is clearly contrary to the consistent view taken by the Hon’ble High Court at Delhi, Gujarat and Andhra Pradesh and, therefore, the direction of the Ld. CIT(E) is not inconformity with the view of the Hon’ble High courts, therefore, the direction of Ld. CIT(E) is clearly unwarranted and legally not tenable, so the direction of ld. CIT(E) is invalid. As brought to our notice that AO has given effect to the impugned order of Ld. CIT(E) on 27.12.2017 and after complying with the direction of Ld. CIT(E) and after disallowing 40,60,061/- (income tax paid) still the total income is “NIL”. So we note that there is no prejudice whatsoever caused to Revenue, so even if for argument sake the Ld. CIT(E)’s contention and direction is accepted as correct, then also the twin conditions which is a condition precedent is not satisfied at all. Thus in any case, the AO’s original order dated 14.11.2014 cannot be held to be erroneous and prejudicial to the Revenue. - decided in favour of assessee.

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• 2018 (6) TMI 1451
  Addition u/s 68 - denying the claim of exemption of long term capital gain on sale of shares sold on recognized stock exchange and, eligible for exemption u/s 10(38) - Held that:- Twin conditions of section 10(38) of the Act have been satisfied in the case of the assessee. The assessee has been able to prove that she has entered into the genuine transaction of purchase and sale of shares and the sale consideration is received from broker through banking channel. The brokers have not denied the transaction with the assessee. The assessee rooted the transaction of sale of shares through recognized stock exchange after making payment of STT. In similar circumstances, ITAT SMC Bench, Delhi in the case of Meenu Goel vs ITO (2018 (3) TMI 1020 - ITAT DELHI) following the decision of Jurisdictional Hon’ble P&H High Court in the case of Pr.CIT vs Prem Pal Gandhi [2018 (1) TMI 1080 - PUNJAB AND HARYANA HIGH COURT] deleted the similar addition. Therefore, the issue is covered in favour of the assessee by the order of ITAT, Delhi Bench in the case of Meenu Goel vs ITO (supra) followed by judgement of Jurisdictional P&H High Court which is binding. There is no other material available on record to rebut the claim of the assessee of exemption claimed u/s 10(38) of the Act. - Decided in favour of assessee.

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• 2018 (6) TMI 1450
  Addition for share of loss from two firms while computing the profit of the assessee for the purpose of applying Sec.115JB - MAT - Held that:- What is excluded from total income by the above sub-section (2A) of Section 10 is the share of the partner in the total income of the firm. Share of loss in a firm is not an expenditure relatable to any exempt income and application of clause –f explanation was in our opinion incorrect. It was Clause (ii) of the explanation which was applicable. Share of loss in our opinion is nothing but share of negative income. Explanation (ii) to Section 115JB mandates reduction of income to which Section 10 applies, if such income is credited in the Profit & Loss A/c. When share of income from firm is exempt u/s.10 2(A) of the Act, necessarily share of loss is also exempt. What the AO did by adding the loss from the two firms to the profits was reducing, the negative Profit, since loss is nothing but negative profit. We are of the opinion what the AO did was in accordance with Clause(ii) of the Explanation and that the Ld.CIT(A) fell in error in relying on a wrong clause for giving relief to the assessee. Accordingly, we set aside the order of the Ld.CIT(A) and reinstate the addition made by the AO. - Decided in favour of revenue.

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• 2018 (6) TMI 1449
  Reopening of assessment - “rubber stamp” reasons based on borrowed satisfaction and are without independent application of mind - addition u/s 68 - non production of Director of shareholder company - Held that:- Mere non production of Director of share holder company ipso facto cannot justify straight adverse inference u/s 68 dehors detailed documentary evidences filed and therefore, delete the additions. - Decided in favour of assessee.

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• 2018 (6) TMI 1448
  Assessment u/s 153A - selection of assessment year - Held that:- As decided in RAJIV KUMAR VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1 CHANDIGARH, [2016 (12) TMI 1722 - ITAT CHANDIGARH] It is well settled that an assessment is to be framed for the previous year which precedes the assessment year. For the previous year 2006-07, the assessment year 2007-08, this assessment year succeeds the period of search and not precedes. From the plain language of the provisions contained in cl. (b) of sub-s(1) of section 153A of the Act, it is clear that the assessment under section 153A of the Act could have been framed for the 6 Assessment Years which precedes the assessment year 2007-08. Therefore, we are of the confirmed view that the assessment under section 153A of the Act could have been framed from the Assessment Years 2001-02 to 2006- 07 only and not for the Assessment Year 2007-08 Valuation of Inventories - addition on account of stock difference between books and found during the course of search - Held that:- A method of accounting adopted by the taxpayer consistently and regularly cannot be discarded by the departmental authorities on the view that he should have adopted a different method of keeping accounts or of valuation. Assessee firm is has adopted the valuation of inventory on average cost method / weighted cost which is a scientific method approved by ICAI in AS-2-Accounting Standard-2 –Valuation of Inventories. The assessee has also filed the copy of inventory of stock taken by search team containing pages 18 to 26 assessee's paper book. Looking into the facts and circumstances of the case and also the decision in the case of UCO Bank vs CIT[1999 (9) TMI 4 - SUPREME COURT] it is noted that there is merit in the submission of the assessee and we concur with the same - decided in favour of assessee.

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• 2018 (6) TMI 1447
  Reopening of assessment - treatment to royalty - Held that:- The assessee has disclosed all material facts relating to the issue of Royalty on which the reopening has been resorted to. The case laws relied upon by the Ld. DR , we hold, therefore merit no consideration. 20. We also find merit in the contention of the Ld.Counsel for the assessee that there was no reason at all for reopening the case on the issue of treatment of royalty expenses ,since the same had already been decided in favour of the assessee by the ITAT, before the recording of reasons for reopening the present case. In fact, the ITAT had decided the issue in the very same assessment year, which assessment order had formed the basis for reopening the case i.e A.Y 2009-10. The AO could not have any reasons to believe that income had escaped assessment when the very basis of its belief, being the assessment order of a subsequent year, had been reversed by the ITAT before the recording of reasons by the AO - the order passed under section 147 was invalid - Decided in favour of assessee

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• Customs

• 2018 (6) TMI 1446
  Release of detained goods - time limitation for issuance of notice for seizure of goods - date of commencement period of six months under Section 110(2) - Held that:- Section 110(2) of the Customs Act, 1962 contemplates a situation where any goods are seized under sub-Section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. In the present case, the parties are at variance on the date of commencement. The respondents have a particular view on the subject. They should, therefore, be afforded one opportunity to file affidavits to substantiate their point of view on the issue concerned. It would not be proper to grant an interim order directing the release of the goods - interim order refused.

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• 2018 (6) TMI 1445
  Refund of Customs duty - principles of unjust enrichment - invocation of Section 18 of the Act, prior to insertion of Section 18(5) of the Customs Act - Held that:- The controversy is no longer res integra as the co-ordinate Bench of this Court in M/s Mangalore Refinery and Petrochemicals Ltd., Vs. Commissioner of Customs, [2015 (5) TMI 768 - KARNATAKA HIGH COURT] in the case of same assessee, has already held in favor of the assessee that prior to amendment of Section 18(5) of the Act with effect from 13.07.2006, the ground of ‘unjust enrichment’ of assessee cannot be invoked for denying the refund of custom duty determined and paid under the provisional assessment under Section 18 of the Act - unjust enrichment cannot be invoked - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1444
  Confication - Misdeclaration of imported goods - The description in Bill of Entry and invoice was of Hot rolled stainless steel Plate/ Sheet cutting grade 304 stock lot and chapter heading was shown as 72192390, whereas goods were found to be 24.975 Mts and were cold rolled steel sheets/ plate cuttings - Held that:- The description of the goods and weight were not found as per the invoice enclosed and Bill of Entry filed by the Appellant. In such circumstances the goods has been confiscated on ground of misdeclaration - confiscation upheld. Redemption fine - penalty - Held that:- Looking to the fact that it is nowhere appearing from the case records and the adjudication order that the Appellant has committed deliberate act of misdeclaration, the quantum of redemption fine and penalty reduced. Appeal allowed in part.

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• 2018 (6) TMI 1443
  Valuation of imported goods - Ghana Sawn Teak - rejection of declared value - Revenue seeks to reject the declared value of “Ghana Sawn Teak” relying on the price published in Director General of Valuation data of “Sawn wood” and that of Cameroon/Malaysian origin - Held that:- Neither description of goods nor the country of origin matches and in these circumstances, rejection of declared price cannot be sustained - The appellant has shown that at the material time, similar goods i.e. teak of Ghana origin, in various forms was being sized at US$ 201-205/CBM. In these circumstances, there is no merit in the impugned order - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1442
  Refund of SAD - N/N. 102/2007-Cus, dated 14.09.2007 - Co-relation between the imported goods and the goods could not be established - appellant claimed this to be mere procedural requirement and argued that refund cannot be denied on this ground - Held that:- Refund of SAD paid on the imported goods is indeed a substantive benefit but to claim this, one must show that the imported goods are indeed sold which is the primary condition subject to which SAD refund can be sanctioned. Co-relation between the imported goods and the goods which are sold cannot be said to be a mere procedural requirement under the notification. Where there is no match, the claim is not admissible as per law settled by Hon’ble High Court of Gujarat in the case of Proflex Systems [2017 (3) TMI 216 - GUJARAT HIGH COURT]. Refund not allowed - appeal dismissed - decided against appellant.

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• Service Tax

• 2018 (6) TMI 1441
  Cargo handling service - service tax demand and penalty of identical amount u/s 78, 75A, 76 and 77 - the decision in the case of SINGH TRANSPORTERS VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2012 (7) TMI 566 - CESTAT, NEW DELHI] contested - Held that:- The decision in the above case upheld - There is no merit in the present appeal - present appeal dismissed.

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• 2018 (6) TMI 1440
  Condonation of delay of 72 days in filing appeal before CESTAT, South Zonal Bench at Chennai - Held that:- There cannot be any dispute that such a delay is condonable - the matter remanded to the Tribunal for hearing the appeal on merits - appeal allowed.

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• 2018 (6) TMI 1439
  Consulting Engineering Service - the decision in the case of SUPER SALES AGENCIES LTD. VERSUS COMMISSIONER OF C. EX., COIMBATORE [2017 (11) TMI 402 - CESTAT CHENNAI] contested - Held that:- We are not inclined to interfere with the impugned order passed by the Learned Customs, Excise and Service Tax Appellate Tribunal - appeal dismissed.

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• 2018 (6) TMI 1438
  Mining services - the appellant is described as Contractor for the mines owner and was required to undertake mining, crushing, screening and transportation of different materials from the mines making use of their technical, commercial and managerial expertise - the decision in the case of M/S. HIND METALS & INDUSTRIES (P) LTD. VERSUS COMMR. OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX [2017 (9) TMI 1326 - CESTAT KOLKATA] contested - Held that:- The decision in the above case upheld - there is no merit in the present appeal - appeal dismissed.

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• 2018 (6) TMI 1437
  Maintainability of appeal - issue relates to taxability - the decision in the case of Commissioner Versus Saint Gobain Gyproc India Ltd. [2017 (5) TMI 1575 - PUNJAB & HARYANA HIGH COURT] contested, where reliance placed in the case of COMMISSIONER SERVICE TAX VERSUS DLF GOLF RESORTS LTD. [2017 (5) TMI 402 - PUNJAB AND HARYANA HIGH COURT] where it was held that the appeal against such an order is not maintainable under Section 35G and it is maintainable only before the Supreme Court under Section 35L - Held that:- The decision in the above case upheld - SLP dismissed.

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• 2018 (6) TMI 1436
  Penalty - even before a SCN could be issued, the respondent-assessee paid the duty involved together with interest on the duty short-paid by them - the decision in the case of THE COMMISSIONER OF CENTRAL EXCISE, VISAKHAPATNAM VERSUS M/S. TIRUPATHI FUELS PVT LTD. [2017 (6) TMI 477 - ANDHRA PRADESH HIGH COURT] contested - Held that:- The decision in the above case upheld - SLP dismissed.

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• 2018 (6) TMI 1435
  CENVAT Credit - professional services used/utilised for anti-dumping representational matters - Held that:- It is an admitted fact on record that the Chartered Accountant service was used/utilized by the assessee in context with preparation of review petition for filing before the anti-dumping authorities in U.S., for the goods exported by the assessee - Since such disputed service is in context with the goods exported by the assessee, availment of Cenvat benefit on such service should be considered as input service, for the purpose of the benefit of Cenvat credit - credit allowed. CENVAT credit also sought to be denied on the ground that the head office of the assesee was not registered with the service tax department as input service distributor - Held that:- Such office of the assessee was duly registered with the Service Tax Department as input service distributor and the registration certificate was issue in its favour by the Service Tax Department on 09.01.2014. Since the Cenvat credit was distributed by such office in favour of the assesee on the basis of invoices issued by the service providers subsequently, the same should not be denied to the assesee in as much as at the time of distributing the credit, the said office of the assesee was registered with the jurisdictional service tax authorities - Credit allowed. Appeal allowed - decided in favor of assessee.

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• 2018 (6) TMI 1434
  Non/short payment of service tax - demand of service tax alongwith interest and penalty - Goods Transport Service (GTA) - Cleaning Service - Manpower Supply Service - Cargo Handling Service - Packing Service - Construction of Complex Service - Commercial and Industrial Construction Service, Maintenance and Repair Service of Immovable property. GTA Service - Held that:- It clarifies that a person to render goods transport service should be an agency meant exclusively for providing goods transport service by whatever means and for the purpose, he should be issuing a consignment note. None of the criteria is met by the appellant in the present case - the order under challenge qua confirming GTA Service Tax liability is not sustainable. Cleaning Services - Held that:- The authorities below have already reduced the demand for cleaning. At this stage, the demand is only confined to cleaning of SELO MCL i.e cleaning of loose cement either through air slide or by transportation by means to gentry and lump etc. The same is very much included in the definition of cleaning activity under Section 65 (24b) - demand upheld. Manpower Services - Held that:- No doubt the earlier word of “commercial concern” is substituted by word “person” vide an amendment dated 18th April, 2006, but still we are of the firm opinion that it does not extend to an individual person discharging any other service for which he need the manpower, because the word agency still continues in the definition and for the explanation as above under GTA service, the Services provided by the appellant herein cannot be categorized as supply of manpower by a manpower supply agency - There is no evidence that the consideration was paid separately for manpower but it is apparent that it was required for the job as was agreed to be rendered by the appellant. There can be the levy of supplying manpower services - demand set aside. Cargo Handling Service - Held that:- For any service to be called as cargo handling service the loading, unloading, packing or unpacking should be meant only and only for transport, as it is very much evident from the definition under Section 65 (23) of the Act. Not only this, such services should be provided for freight. The definitions specifically mention that mere transportation of goods will not be cargo handling - demand cannot be upheld. Packing Service - Held that:- As per the definition under Section 65 (76 b) any activity of packaging including pouch filling bottling, labeling or imprinting of packages is packaging activity till it does not amount manufacture under Section 2 (f) of the Central Excise Act - Since the loose cement is not a marketable commodity unless and until it is packed in a bag, the activity of the appellant was incidental to manufacture and as such was not a packaging service - demand set aside. Demand of Interest and Penalty - Held that:- The Provision of Section 73 (3) of Finance Act are parimateria with the provisions of Section 11 A (2B) of Central Excise Act, 1944 - Demand of interest and penalty upheld. Appeal allowed in part.

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• 2018 (6) TMI 1433
  CENVAT credit - Trading activity - common inputs/input services - Rule 6 (3) (i) of the CCR 2004 - case of Revenue is that Since trading of goods was considered as an exempted service, the appellant was required to pay an amount at the rate of 5%/ 6% of the value of exempted services in terms of Rule 6 (3) (i) of the CCR 2004 - Held that:- Tubes, flaps etc are procured by the appellant with the objective of supplying the same along with tyres manufactured by them. It is further seen that the flaps as well as tubes are packed inside the tyre and tube partially inflated to form the tyre set. From this it is evident that the tube and flap are nothing but accessories for the tyre and are cleared together with the tyre. It is nobody’s case that the tyre can be used without the tube and flap. The activity of procurement of tube/ flap and clearing the same along with tyre as sets cannot be termed to be activity of trading. Consequently, the demand made by the lower Authority in terms of Rule 6 (3) ibid cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1432
  Valuation - Inclusion of Reimbursable Expenses in assessable value - expenses like bank commission, EDI charges and bond paper charges - Held that:- The disputed expenses are only of the type which are reimbursed at actuals by the clients of the appellants. They would therefore only fall within the category of “reimbursable expenses” - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1431
  Evasion of Service Tax - Support Services of Business or Commerce - The Department was of the view that the appellants had evaded payment of service tax by not getting themselves registered under the service tax category of “Support Services of Business or Commerce” - Held that:- The supply of tangible goods as a service has been included in the taxable category of services w.e.f. 16.05.2008 by introducing necessary amendment to the Finance Act, 1994. This very fact proves that the activity, such as supply of cranes and other material handling equipments etc., were not covered in any of the taxable services previous to 16.05.2008 which were leviable to service tax and therefore, the legislature in their prudence had brought in a new category of service under the name of “supply of tangible goods” service for leviability of service tax under the Finance Act, 1994. The activity of supply of material handling equipment, such as, cranes etc., is not leviable under the category of “Support Service of Business or Commerce” and this activity has come under the scope of service tax under a category of “supply of tangible goods” w.e.f.16.05.2008 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1430
  Liability of Service Tax - incentives received from M/s Hyundai Motors India Ltd. (HMIL) and pre-delivery inspection (PDI) Charges - Held that:- The incentives are in the form of trade discounts to the appellants and hence cannot be termed as any provision of service rendered by the Appellants to M/s. HMIL. Hence there is no reason to demand service tax on the said incentive amount - demand set aside. PDI charges - Held that:- The pre-delivery inspection is conducted by the dealer on his own in respect of vehicles purchased from HMIL, while handing over the vehicles to their customers - It is undisputed that the appellant has not received any separate amount from the manufacturer / customer for the same and the cost is incurred out of their profit margin earned on trading of the vehicles. As the value of the same is already included in the value of vehicles sold, no service tax is leviable on the cost of the PDI Charges - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1429
  Condonation of delay of 630 days in filing the appeal - the delay is sought to be condoned on the ground that impugned order was delivered to Chartered Accountant, who was appearing for the appellant/applicant - Held that:- The appellant/ applicant should have been more diligent and should have been following up with his Chartered Accountant for the outcome of appeal before the 1st Appellate Authority. At the same time, the C.A. has demised and appellant was unaware of the development (as claimed in affidavit), appellant should be given an opportunity to fight his case on merits. The delay in filing the appeal before Tribunal needs to be condoned - COD application allowed.

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• 2018 (6) TMI 1428
  Valuation - inclusion of Postal and Telegraph charges collected from assessee - whether or not, the assesses are liable to pay service tax on Postal and Telegraph Charges (P & T charges) recovered from their customers/account holders? - Held that:- The claim of the assesses that the amount sought to be included in value is P& T Charges, is not disputed by the Lower Authorities nor is it disputed that such postal charges were recovered from their customer/account holders on actual basis - The claim of the assessee being these amounts are reimbursable expenses, cannot be included in the value of the consideration for rendering of the services has been upheld by the Apex Court in the case of Union of India and ANR. Vs. M/s Intercontinental Consultants and Technocrats Pvt. Ltd., [2018 (3) TMI 357 - Supreme Court of India] - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1427
  Classification of Services - Biomass availability studies - whether classified under Consulting Engineer Service or Management Consultant services? - Held that:- The respondent assessee herein has, under taken some study as also filing a report to the government organisation of Biomass availability in order to understand the capability of the particular district/village for considering Alternate Renewable Energy Resources - On glancing on the scope work as per the work order it seems that respondent has not undertaken any activities that may fall under consulting engineering services - demand set aside - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1426
  Condonation of delay of 914 days in filing appeal - Held that:- Ld. Counsel was making only oral submissions, as to there being legal complexity, as can be seen from the above reproduced application seeking for condonation of delay of 914 days and also the affidavit supporting to the application - nothing is mentioned as to the reasons for filing the appeal belatedly, accordingly, in our view there is no acceptable justification for inordinate delay in filing the appeal - COD application dismissed.

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• 2018 (6) TMI 1419
  Principles of natural justice - case of appellant is that he has no idea whether any such challans have been produced before the adjudicating authority or not but he requested that since the adjudicating authority has not dealt with the challans, therefore, this matter may be remanded to the adjudicating authority for denovo adjudication - Held that:- It is fit and appropriate, in the interest of justice, to set aside the impugned order and remand the matter to the adjudicating authority for denovo adjudication - appeal allowed by way of remand.

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• Central Excise

• 2018 (6) TMI 1424
  Denial of area based exemption - manpower recruitment agency or manufacturer of goods - benefit of notification No.214/86-CE was deniable to it not being a job worker - the decision in the case of M/S VASANTHAM ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [2014 (12) TMI 953 - CESTAT NEW DELHI] contested - Held that:- There is no merit in the present appeal - appeal dismissed on the ground of delay as well as on merits.

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• 2018 (6) TMI 1423
  Maintainability of petition - an appeal remedy was available - non compliance of the statutory requirement under Section 35F of the Central Excise Act, 1944 - Held that:- The matter involves a commercial transaction and it is not as if the petitioner was not aware of their rights. A cursory reading of the Order-in-Original dated 27.2.2009, which runs to more than 55 pages, shows that extensive search and seizure operations were conducted in the place of business of the petitioner as well as the residential premises of the partners, statements were recorded, documents were seized and after analyzing the facts, an order came to be passed. There is also a finding to the effect that the petitioner created bogus records. This Court is of the view that the petitioner has not made out any case for exercise of discretion in their favour to maintain such a belated challenge to the Order-in-Original. Such a challenge is not maintainable - petition dismissed.

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• 2018 (6) TMI 1422
  Refund in cash - payment of excise duty under protest - respondent no longer undertakes any activity requiring payment of excise duty - Held that:- In view of the fact that respondent no longer undertakes any activity requiring payment of excise duty, therefore the Tribunal took a view that no useful purpose would be served by allowing recrediting into the Modvat credit account - appeal dismissed.

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• 2018 (6) TMI 1421
  Clandestine removal - MS Ingots - third party evidences - whether the Principal Commissioner vide its impugned order dated 28.12.2017 is justified in confirming the demand of Central Excise duty of 4,65,570/- along with interest and penalty in respect of clandestine removal of 154.580 mt of M.S. Ingots recovered from the appellant M/s. Sairam Steels Pvt. Ltd., Raigarh (CG) of which the appellant-Pawan Kuram Agarwal is Director? Held that:- In the impugned order nowhere it has been discussed as to how the demand to duty of 4,65,570/- is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods and also in view of the fact that the said amount is already included in the duty demand of 6,38,05, 258/-which has been dropped in the impugned order by the ld. Principal Commissioner. There is absolutely no evidence on record to show that the appellant has cleared 154.580 MT of M.S. Ingots. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s. Monu Steel. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence on any corroborative evidence, is well settled. Only on the basis of statement of third party no demand could be made. The penalty imposed on the Sh. Pawan Kumar Agarwal, Director is also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1420
  CENVAT credit - Rule 6(3) of CCR 2004 - Job-work - whether the respondents are required to pay an amount under Rule 6(3) of CCRR 2004 in the fact that the respondents are working as job worker under N/N. 214/86-CE dated 25.03.1986? - Held that:- As per 3rd Proviso to Rule 3(1), Even though the goods manufactured under Notification 214/86- CE, the CENVAT Credit in respect of inputs used in the said goods is admissible. Therefore, Rule 6(3) shall not apply in the present case. Reliance placed in the case of STERLITE INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [2004 (12) TMI 108 - CESTAT, MUMBAI], where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1418
  Clandestine removal - principles of natural justice - Held that:- In this case, after repeated request of the appellant, no cross examination of Shri S K Panari was granted to the appellant, which is in gross violation of principles of natural justice - demand against the appellants on account of removal of goods is not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1417
  Valuation of Paper Board - case of appellant is that value of paper board for the purpose of quantification should be fixed at 12 per kg. - Held that:- SCN in para 15.1 to 15.5 has elaborately gone into the raison d’etre for adopting the value of 13 per kg. The very same invoices had been produced before the lower appellate authority who, in Para 13 of the impugned order has noted that they were invoices beyond the period of dispute. The plea of the appellant on this score is therefore found to be specious, and is therefore rejected. Cum-duty benefit - case of appellant is that as the appellant company had not collected any duty amount from UPC, the demand of differential duty may also be re-determined by extending “cum duty benefit” - Held that:- This is a case where the entire transactions were done clandestinely, right from the getting raw materials, to the production and the clearances all of which were sought to be kept away from the eye of the department - there cannot be any mitigation of the tax liability by grant of cum duty benefit. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1416
  Reversal of CENVAT Credit - Rule 3 (5) of CCR, 2004 - the main plank of the revenue is that the goods removed to EOU have been removed as such since the mixing of gases does not amount to manufacture and hence it requires reversal of credit - Held that:- The goods even if cleared as such to 100% EOU against CT – 3 certificate does not invite any reversal as removals are deemed export - Reliance placed in the case of THE COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS M/S SOLECTRON CENTUM ELECTRONICS LTD. [2014 (10) TMI 596 - KARNATAKA HIGH COURT] - appellant not liable to reverse any credit in terms of Rule 3 (5) of CCR, 2004 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1415
  Method of Valuation - Section 4 or Section 4A of CEA - Appellant defaced and removed brand name “MILTON” from insulated wares and sold them as loose articles in bulk - Held that:- There is no dispute about the facts that the goods were sold in loose form after defacing / removing the brand name of Milton from such insulated wares. The appellants as per the conditions of NOC issued by M/s. Milton had removed all the brand name/ logo/ marking and packing which could identify the product with M/s Milton. In such case the appellant was not liable to clear the goods by affixing MRP as the same were not in packed form and the requirement under SWMA, 1976 was not applicable to the appellant. Valuation u/s 4 of CEA is applicable - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1414
  CENVAT Credit - input services - GTA Services - whether in case of clearance under Section 4A, the Depot can be considered as a ‘place of removal’? - Held that:- CBEC vide letter No.137/3/200-CX dt. 2.2.2006, inter alia had clarified that in case of depot sales of goods, the credit of service tax paid on the transportation of goods up to such depot would be eligible, irrespective of the fact, whether the goods were chargeable to excise duty at specific rates or ad valorem rates on the basis of valuation under section 4 or 4A of the Central Excise Act - there should not be any doubt that eligible services availed upto the depot /RDCs by the appellant in this case would be eligible for availment of input service credit - There should not be any doubt that eligible services availed upto the depot /RDCs by the appellant in this case would be eligible for availment of input service credit. GTA services availed beyond the RDCs - Held that:- There are two different situations, one before 1.4.2008 and after that date, by virtue of amendment vide clause (ii) of Rule 2(l) by Notification No.10/2008-CE (NT) dt. 1.4.2008. By this amendment, the phrase “from the place of removal” was substituted “up to the place of removal”. The issue of whether the assessees are eligible for service tax credit in respect of the GTA services beyond place of removal has been mired in litigation for quite some time. The appellants will be eligible for input service credit in respect of GTA services availed beyond their RDCs but only upto 31.3.2008. For all services availed on or after 1.4.2008, they then by consequence cannot avail input service credit on such GTA services - the input services which have been disputed except for GTA beyond the RDCs are very much eligible services for the purpose of Rule 2(l), whether before 1.4.2011 or after that date. Penalty - Held that:- Issues relating to eligibility of cenvat credit of many of these input services were a matter of litigation. Hence the matter has to be considered as one of interpretation - penalties set aside. Appeal disposed off.

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• 2018 (6) TMI 1413
  CENVAT Credit - input services - capital goods - Marine Insurance services - Air Travel Agent’s services - capital goods cleared without being used as such - extended period of limitation - Held that:- This appeal can be disposed of only on the ground of limitation. SCN is issued on 17.05.2016 for the various transactions on availment of CENVAT credit during the period May, 2013 to March, 2015. It is undisputed that the appellants were regular in filing the monthly returns with the authorities. The Audit reports submitted by the Learned Counsel are for period January, 2013 to December, 2013 audited during the period 26.01.2014 and 28.01.2014 and audit reports for January, 2014 to December, 2014 audited on 06.01.2015 - 21.01.2015. The said audit reports did not indicate any of the allegations made in the present show cause notice. It is also seen from the said show cause notice dated 17.05.2016, the basis for issuance of show cause notice is the audit report of the CAG - It is settled law in the case of Commissioner of Central Excise, Bangalore Vs. MTR Foods Ltd., [2012 (10) TMI 165 - KARNATAKA HIGH COURT] wherein, Hon’ble High Court of Karnataka has specifically held that once returns were regularly filed and no objections raised about same in first audit by Revenue Officers and during second audit, objections raised about same, and the said returns indicated availment of CENVAT Credit Rules, the audit party accepted the same, and it is not proper to invoke the extended period. The impugned order is set aside only on the ground of limitation - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1412
  Clearance of pipes for supply of water - the pipes are used for distribution of water beyond the first storage facility - Violation of condition of notification - Benefit of N/N. 06/2002- CE as amended by N/N. 47/2002- CE - case of Revenue is that the pipes which are cleared by the respondent are used not only for the pipes for delivery of water from its source to the water treatment / supply plant and further also - Held that:- The facts in this case are not disputed i.e. respondent clears pipes availing benefit of N/N. 06/2002 - CE as amended by N/N. 47/2002 -CE; the pipes are undisputedly used for distribution of water from the storage point - reliance placed in the case of CCE., C. & ST. (A-III), HYDERABAD VERSUS IVRCL INFRASTRUCTURES & PROJECTS LTD. [2008 (12) TMI 198 - CESTAT, BANGALORE], where it was held that the Notification merely talks about the storage facilities and there is no restriction that the water should be delivered only to the first storage point - benefit cannot be denied - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1411
  CENVAT Credit - capital goods - Balance 50% credit taken in 2011-12 on MS items - Held that:- As far as the amount of 4,73,808/- is concerned this is the second instalment of 50% of the capital goods credit of the amount already allowed by this Bench in the case of M/S MARUTI ISPAT & ENERGY PVT. LTD. VERSUS THE COMMISSIONER C. CE & ST, GUNTUR [2016 (12) TMI 659 - CESTAT HYDERABAD] - credit allowed. Fresh credits on MS items and other items used for fabrication/ repairs - Held that:- In the case of M/S MARUTI ISPAT & ENERGY PVT. LTD. VERSUS THE COMMISSIONER C. CE & ST, GUNTUR [2016 (12) TMI 659 - CESTAT HYDERABAD], credit was allowed on MS Channels, MS Beams, MS Joists, HR Coils, HR Plates, Woven wire mesh etc., which are used in fabrication of capital goods - credit allowed. CENVAT credit - input services - services rendered by the architects - Held that:- It is clearly excluded in view of the definition of input service under Section 2(l) after 01.04.2011 - credit not allowed. The amount of interest and penalty get modified accordingly. Appeal allowed in part.

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• 2018 (6) TMI 1410
  Refund of Education Cess on counter veiling duty - rejection on the ground of limitation and also on the ground of unjust enrichment - Held that:- In the case in hand, the authorities have not returned or rejected the refund claims filed by the appellant which was within time - the refund claim stands filed within one year of the amount paid wrongly, supporting documents were filed beyond the period of one year does not make the refund claim hit by limitation - refund cannot be rejected on this ground. Unjust enrichment - Held that:- The appellant had filed the refund claim when he had already passed on the amount to his suppliers by raising a bill - It is also undisputed that the credit notes were issued on 10.07.2014 when the Revenue Authorities sought documentary evidence from appellant for processing the refund claims - the findings of the lower authorities on this point are correct - refund rightly rejected on this ground. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1409
  Specified goods supplied to specified institutions - Benefit of N/N. 10/1997- CE dated 01.03.1997 - Whether the appellant is entitled to benefit of the N/N. 10/1997 for the goods cleared by them or not and whether interest is imposable on the duty and whether penalty can be imposed on the appellant? - Held that:- It is not in dispute steel doors with frames were supplied and the buyer is a public funded research institution. It is also not in dispute that one of the conditions of the notification is that the institution must be registered with the DSIR Government of India and such certificate was not produced during the adjudication or appeal or even during the current proceedings - Also, the description of the goods do not match. Also, the condition of the institute being registered that DSIR was also not fulfilled - the demand is sustainable and interest thereon is payable. Penalty - Held that:- There were reasonable grounds for the appellant to be under the bonafide belief that they were eligible to avail the exemption notification - penalty set aside. Appeal allowed in part.

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• 2018 (6) TMI 1408
  Reversal of CENVAT Credit - benefit of N/N. 82/84 is availed - denial of benefit on the ground that the benefit of N/N. 82/84 is availed and exemption granted, appellant having availed CENVAT credit on common input services is required to reverse an amount equivalent to 6% of the value of the goods - Held that:- Identical issue decided in appellant own case INOX AIR PRODUCTS PVT. LTD. VERSUS CCE & ST VISAKHAPATNAM [2017 (9) TMI 500 - CESTAT HYDERABAD], where reliance was placed in the case of DHARAMSI MORARJI CHEMICAL CO. LTD. Versus COMMR. OF C. EX., RAIGAD [2010 (3) TMI 561 - CESTAT MUMBAI], where the very same rule 6 of Cenvat Credit Rules was invoked, where the Bench has held that the provisions of Rules are not attracted in case in hand where CT-3 certificate has been issued - reversal of CENVAT Credit not required - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1407
  CENVAT credit - input services - food provided to the workers outsourced by the appellant - whether or not the credit of service tax on outdoor catering services should be allowed in view of the statutory requirement under the Factories Act? - Held that:- Tribunal being a creation of law, has no power to amend, enlarge, restrict or otherwise modify the Act or Rules. This position does not change even if the appellant has an obligation under the Factories Act or any other law and Tribunal cannot enlarge the scope of CENVAT Credit Rules. The matter should be referred to Hon'ble President for constituting a Larger Bench to resolve the issue - matter referred to Larger Bench.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 1406
  Classification of goods - aloe vera juice - whether aloe vera juice is covered by the expression "processed or preserved vegetable"? - the decision in the case of THE COMMISSIONER, COMMERCIAL TAX, U.P. LUCKNOW VERSUS S/S FOREVER LIVING IMPORTS (I) PVT. LTD. [2017 (9) TMI 1303 - ALLAHABAD HIGH COURT] contested - Held that:- The decision in the above case upheld - SLP dismissed.

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• 2018 (6) TMI 1405
  Imposition of Penalty - discrepancy between e-Sugam and the Invoice with respect to value and quantity of goods - Held that:- The impugned order does not give rise to any question of law requiring consideration by this Court and the explanation furnished by the assessee appears to be plausible and the Tribunal cannot be said to have committed any error or perversity in accepting the same and setting aside the penalty in question - revision petition dismissed.

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• 2018 (6) TMI 1404
  Principles of Natural Justice - cancellation of registration of premises - KVAT Act, 2003 - main grievance of the petitioner in the present writ petition is that the impugned order was passed by the respondent without giving notice and opportunity of hearing to the petitioner and hence the same is violative of principles of natural justice - Held that:- The notice was not at all served to the petitioner as contemplated under the provisions of Section 39(1) of the KVAT Act and no opportunity was given to the petitioner either to produce books of accounts or for the hearing. The impugned order clearly depicts that the proposition notice was returned un-served by the postal authorities with remarks that “No such firm in this address”. If it is so, the authorities ought to have proceeded to apply the provisions of Rule 176 of the Karnataka Value Added Tax Rules, 2005 to serve the petitioner and the same has not been done. Though in the impugned order both office and residential addresses are given, the material does not depict that petitioner has been served either in the residential address or in office address and on that ground itself, the impugned order has to be quashed. Petition allowed.

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• 2018 (6) TMI 1403
  Issuance of ‘C’ declaration form - KVAT Act, 2003 - non-speaking order - Held that:- The material on record clearly depicts though the Commissioner of Commercial Taxes on 12.05.2008 (Annexure-G) issued clarification, still the first respondent without considering the Section 15(5)(a) of KVAT Act, 2003 has proceeded to pass the one line impugned order which is not a speaking order without reference to the clarification issued by the Commissioner for Commercial Taxes. Therefore, same cannot be sustained - petition allowed.

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• 2018 (6) TMI 1402
  Waiver of penalty u/s 53[2-B] of the KVAT Act, 2003 - penalty was waived on the ground that sufficient explanation was given by the Petitioner-Assessee for furnishing the declaration E- sugam declaration bearing No.8702212887 at a later stage - Held that:- The Tribunal in fair exercise of discretion, has found sufficient cause for delay in producing the E-Sugam declaration and setting aside the penalty - petition is devoid of merits and is dismissed.

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