TMI Tax Updates - e-Newsletter
June 6, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Valuation - maintenance & repair service - cost of consumables & spares used in providing maintenance service to be included in gross value

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Articles

1. INTERPRETATION OF CENTRAL GOODS AND SERVICES TAX (CGST) ACT (PART-8) (Meaning of Important Terms)

   By: Dr. Sanjiv Agarwal

2. PRE-DEPOSIT OF DEMAND BEFORE APPEAL IN SERVICE TAX

   By: Dr. Sanjiv Agarwal

News

1. PM reviews progress towards beginning of GST on July 1

2. GOODS AND SERVICES TAX RULES, 2017 - MISMATCH FORMATS

3. GOODS AND SERVICES TAX RULES, 2017 - GOODS AND SERVICE TAX PRACTITIONER FORMATS

4. GOODS AND SERVICES TAX RULES, 2017 - RETURN FORMATS

5. Mizoram may not be able to fully implement the GST on July 1: Minister

6. Rupee trims initial gains, still up 8 paise

7. Leading Importers and Exporters participate in the Mango Buyer Seller Meet

8. RBI Reference Rate for US $

Notifications

Income Tax

1. 42/2017 - dated 2-6-2017 - IT

Due date for furnishing TDS certificate in Form 16 (for salaries) will be 15th Day of June - Income-tax (10th Amendment) Rules, 2017

Indian Laws

2. G.S.R. 514(E) - dated 1-6-2017 - Indian Law

Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017.

Money Laundering

3. 2/2017 - dated 1-6-2017 - PMLA

Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017

Highlights / Catch Notes

Income Tax

• TDS Form 16 for Salaries Due by June 15 as per Income-tax (10th Amendment) Rules 2017.

  Notifications : Due date for furnishing TDS certificate in Form 16 (for salaries) will be 15th Day of June - Income-tax (10th Amendment) Rules, 2017 - Notification
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• Income Return Without Audit Report Deemed Non-Existent; No Penalty u/s 271B Due to Delayed Audit.

  Case-Laws - AT : Non est Return of income as filed without the audit report - delay in statutory audit - Auditors have to be appointed by the Registrar of Societies and therefore, is beyond the control of the assessee - No penalty u/s 271B - AT
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• Income Tax Act Section 153C Notice Quashed for Non-Searched Individual; Satisfaction Note by DCIT Challenged.

  Case-Laws - AT : Since notice u/s 153C of the Act is always issued by the AO of the other person and not by the Assessing Officer of the searched person, the sentence that “notices are hereby issued” indicate that the above satisfaction note has been recorded by the DCIT in the capacity of the Assessing Officer of other person - Proceedings quashed - AT
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• Notional income from vacant self-occupied property taxed; Section 23(2) benefit denied due to non-relocation for work.

  Case-Laws - AT : Addition on account of Notional income from House property from a house kept vacant for self occupation - the owner of the property was not staying at other place due to his employment, business or profession carried out at other place. - assessee was not allowed to avail benefit of section 23(2) of the Act, irrespective of the fact whether the property was residential or commercial - AT
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• Cash Payments to Truck Drivers Not Disallowed u/s 40A(3) if Conditions Met, Payees Identifiable.

  Case-Laws - AT : Disallowance u/s. 40A(3) - payment made to the truck drivers in cash - Where cash payments are made under bonafide conditions and no doubt is raised over genuineness of the payments and the payees are identifiable; no disallowances u/s. 40A(3) is warranted. - AT
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• Civil Employee Entitled to Gratuity and Leave Encashment Exemption Under Income Tax Act Section 10(10)(i.

  Case-Laws - AT : Addition on account of arrears of gratuity and leave encashment - claim of exemption - the assessee is found to be an employee holding a civil post under a State, the provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for the amount under consideration - AT
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• Software License Payments Non-Taxable; Not Royalties u/s 9(1)(vi), No TDS Liability Per Section 195.

  Case-Laws - AT : TDS u/s 195 - payment towards software purchase - the purchase agreement payment made to acquire the software license does not fit into the definition of royalty and non-taxable as per 9(1) (vi) of Income tax act - No TDS liability - AT
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Customs

• Anti-dumping duty imposed on Flexible Slabstock polyol imports after comprehensive evaluation confirms final recommendation.

  Case-Laws - AT : Imposition of ADD - import of Flexible Slabstock polyol - The final recommendation of imposition of definitive AD Duty on import of subject goods of subject country has been arrived at after due consideration of all relevant factors - Levy of anti dumping duty confirmed - AT
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• Non-Basmati Rice Export Banned Due to 21% Mixed Varieties, Violating Foreign Trade Policy and Customs Rules.

  Case-Laws - AT : Export of prohibited goods - non-Basmati Rice - the presence of other rice is of the order of 21% to 22.8%. Since the export goods do not satisfy the terms of the FT policy, they are not allowed for export and hence become prohibited goods and hence are liable for confiscation. - AT
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Service Tax

• Court Rejects Appellants' Claim of Composite Contract; 45% Allocated for Maintenance, 55% for Operation Fee.

  Case-Laws - AT : When the appellants themselves have vivisected the contract by apportioning 45% towards maintenance charges and 55% as operation fee, the contention raised by them that it is a composite contract is only to be brushed aside. - AT
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• Service Tax Case: Consumables and Spares Must Be Included in Gross Value for Maintenance Services Taxation.

  Case-Laws - AT : Valuation - maintenance and repair service - cost of consumables and spares used in providing maintenance service to be included in gross value - AT
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• Tax Authorities Cannot Reclassify Already Taxed Services Under Different Categories, Even for Pre-June 2007 Non-Taxable Services.

  Case-Laws - AT : Having accepted the taxability for providing a specific service, it is not open to the tax authorities to claim its share in the form of a levy under a different head merely because 'renting of immovable property service' was not taxable prior to 1st June 2007. - AT
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• Service Tax Payments Made for Specific Past Liabilities; Self-Initiated Refund Not Permitted Under These Circumstances.

  Case-Laws - AT : Refund - wherever the appellant have deposited the service tax, the same has been against the past liability. Such payment is made by the appellant, on being informed during the course of enquiry, by the officers. The same is towards specific past liabilities towards service tax, not a lump sum deposit of undeterminable tax liability - no suo moto refund is possible in such a scenario - AT
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• Refund Claim Exempt from Limitation Period Due to Deposit Under Protest in Ongoing Litigation, Per Section 11B.

  Case-Laws - AT : Refund claim - nature of amount deposited at the instance of department - period of limitation - Since the litigation was going on therefore the amount deposited by the appellant will be deemed to be under protest and no limitation as prescribed under Section 11B will be applicable. - AT
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Central Excise

• Manufacture of Foots Oil and Wax under Tariff Items 27129090 and 27122090 Not Considered Manufacturing Per Excise Rules.

  Case-Laws - AT : Manufacture - manufacture of Foots oil, Pressed Wax and Pressed Paraffin Wax classifiable under Tariff item No.27129090, 27122090 of Central Excise Tariff Act - whether the process amounts to manufacture or not? - Held No - AT
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• Appellant Entitled to CENVAT Credit on Duty-Paid Goods Exported, Per Rule 16 Decision.

  Case-Laws - AT : CENVAT credit - appellant have received the duty paid files from the other unit and thereafter the same was exported along with own manufactured files - whether the appellant are entitled for the cenvat credit on the duty paid goods received and resold for the purpose of export in terms of Rule 16? - Held Yes - AT
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Case Laws:

• Income Tax

• 2017 (6) TMI 185
  Maintainability of appeal - monetary limit - Held that:- Recently, the CBDT in its Circular No.21/2015 dated 10th December, 2015 have revised the monetary limit to 10 lakhs from 4 lakhs to file the appeal before the Tribunal by the Revenue. On scrutiny of appeal filed by the revenue, it is found that the total tax demand is below the prescribed limit of 10 lakhs. The CBDT also clarifies that this instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunal. Considering the above CBDT Circular, we found that this appeal of the revenue is not maintainable as the tax effect in this appeal is below 10 lakhs. Accordingly, we dismiss the appeal of the revenue.

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• 2017 (6) TMI 184
  Rejection of books of account - G.P. addition - Held that:- CIT-A has given a finding that the gross profit rate for assessment year 2008 - 09 was 17.47% while the gross profit in the assessment year 2009-10 is 17.43%. Hence there is a very negligible fall in the gross profit which doesn't warrant any adverse inference. Furthermore learned CIT-A has given elaborate finding on all the adverse findings of the assessing officer. Finding of the CIT-A are convincing and do not require any interference on our part. Furthermore even after rejecting the books of account the assessing officer has not found it suitable to make any addition of gross profit ratio. He has made an addition of lump sum amount of 50 lakh. Learned CIT-A is quite correct that when the gross profit ratio compares favourably with the past data no addition for gross profit is warranted, much less an ad hoc addition of 50 lakh. This addition has been solely based upon conjecture and surmises have rightly been found by the learned CIT- A to be not sustainable. Even thereafter in the above order learned CIT-A has sustained some addition /disallowance being expenditure of 2,33,214 under section 40 (a)(ia). No infirmity in order of learned CIT-A. - Decided against revenue

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• 2017 (6) TMI 183
  Allowability of business expenditure - Held that:- The assessee is in the business of hiring taxis based on the calls received at the call centre and transferred to taxis at various destinations, which is popularly referred to call taxi services. From a perusal of the miscellaneous expenses it appears that the expenditure like taxi meters, printer for taxi meters, IVH ( to receive data from call centre) MDT which receives data from IVH etc, are included in the miscellaneous expenditure. The business model of the assessee is that the assessee hires cars owned by third parties and the assessee is not the owner of the cars. Therefore the aforesaid accessories which are required to render call taxi services cannot said to be items of capital expenditure. They are installed in the taxi owned by a third party. Therefore these items of expenses have to be regarded as revenue expenditure. We are of the view that the expenses in question cannot regarded to be as capital expenditure. Nevertheless allowability of expenses in question u/s 37(1) of the Act is also dependent on the condition that these expenses were incurred by the assessee for the purpose of business of the assessee. We therefore set aside the order of CIT(A) and remand the question to the AO for fresh consideration with a liberty to the assessee to file evidence to show incurring of these expenses by the assessee. We may also add that the accounting treatment given by the assessee in the books of accounts will not be decisive in the matter. With these observations, we allow the appeal of the assessee for statistical purposes.

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• 2017 (6) TMI 182
  Revision u/s 263 - CIT directing the AO to make proper enquiries in respect of the receipt of share capital - no enquiry was conducted - Held that:- It is relevant to mention that we have disposed of more than 500 cases involving same issue through certain orders with the main order having been passed in a group of cases led by Subhlakshmi Vanijya Pvt. Ltd. vs. CIT [2015 (8) TMI 174 - ITAT KOLKATA ] to hold that the contention of the ld. AR that since the AO of the assessee-company is not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment by the Finance Act, 2012 w.e.f. A.Y. 2013- 14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable. In the present case is a glaring example of not making relevant enquiry, which amounts to `no enquiry’ and hence it becomes a case of non-application of mind by the AO. The very fact that no enquiry was conducted or no proper enquiry was conducted in the required circumstances, is sufficient in itself to invoke the provisions of section 263. - Decided against assessee.

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• 2017 (6) TMI 181
  Addition u/s 40(a)(ia) - whether the amendment made by Finance Act, 2012, in respect of the Provisions of Sec.40(a)(ia) which is effective from 01.04.2013 is retrospective in nature? - Held that:- The issue in this appeal is covered in favour of the Revenue by the decision of the Hon'ble Supreme Court in the case of Palam Gas Service vs. CIT (2017 (5) TMI 242 - SUPREME COURT ) wherein the decision of the Special Bench in the case of Merilyn Shipping & Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) and the Hon'ble Allahabad High Court decision CIT vs. Vector Shipping Services Ltd reported [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] had been reversed weehein held When the entire scheme of obligation to deduct the tax at source and paying it over to the Central Government is read holistically, it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid. - Decided in favour of revenue

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• 2017 (6) TMI 180
  Non est Return of income as filed without the audit report - delay in statutory audit - Held that:- As the assessee has filed the return of income on the basis of provisional accounts and the AO has rejected the books as not reliable and disallowed the loss claimed by the assessee. AO has therefore, relied upon the return of income, but has not allowed the loss claimed. In such circumstances, it is not open to the CIT (A) to hold the returns of income as non-est particularly when the assessee, though a Govt. Agency, had no power to appoint the auditors by itself. The assessee has explained the reasons for delay in audit of accounts which is clearly beyond the control of the assessee. Therefore, the delay cannot be attributable to the assessee. In view of the same, we set aside the order of the CIT (A) and remit the issue to the file of the AO with a direction to recompute the income of the assessee on the basis of the audited accounts of the assessee, if they are available now. Penalty levied u/s 271B - Held that:- We find that the assessee being a Govt. organization and a Registered Society, has to abide by the rules framed under the Societies Act. As per the said Act, the Auditors have to be appointed by the Registrar of Societies and therefore, is beyond the control of the assessee. We are satisfied that the assessee was prevented by reasonable cause for not getting its accounts audited u/s 44AB of the Act within the prescribed time. Therefore, we set aside the penalty levied by the AO and confirmed by the CIT (A). Disallowance u/s 43B - disallowance of interest payable - Held that:- We find that in the case before us, the Govt. has sanctioned the loan to the assessee for payment to the employees who have opted to retire under the VRS. It is therefore, not covered under any of the clauses of section 43B of the Act, nor is the interest payable to the Institutions mentioned in the clauses. It is not fee or tax paid by the assessee. In view of the same, we see no reason to interfere with the order of the CIT (A).

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• 2017 (6) TMI 179
  ALP addition in respect of transaction relating to interest on advance for investment - assessee has given advances to its AE’s - Held that:- Since the assessee has not carried/submitted any comparative study before finalizing the LIBOR rate, we find it appropriate to direct the AO to follow the direction of DRP to compute the interest rate at LIBOR + 200 points. Accordingly, ground raised by the assessee and revenue are dismissed. ALP addition in respect of transaction relating to corporate guarantee - Held that:- As decided in case of Four soft Ltd. [2011 (9) TMI 634 - ITAT HYDERABAD ] the corporate guarantee is very much incidental to the business of the assessee and hence, the same cannot be compared to a bank guarantee transaction of the Bank or financial institution. In view of this matter, we hold that no TP adjustment is required in respect of corporate guarantee transaction done by the assessee company. The amendment to section 92B by the Finance Act, 2012, this amendment can only be prospective and not retrospective as held in the case of Siro Clinpharm Pvt. Ltd. [2016 (5) TMI 633 - ITAT MUMBAI ]. This provision is applicable from AY 2013-14 onwards. Hence, addition of corporate guarantee in this AY is deleted. Accordingly, the ground raised by the assessee is allowed Disallowance u/s 14A - Held that:- Since the assessee has not received any exempt income during the year, we direct the AO/TPO to delete the addition made on this count. - Decided in favour of assessee.

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• 2017 (6) TMI 178
  Adjustment of cash seized at the time of search against the advance tax liability - Held that:- is an undisputed fact that cash of 2.55 crore was seized on 06/08/2010. It is also an undisputed fact that Assessee vide letter dtd 28/09/2010, addressed to CIT(C) had requested for adjusting of seized cash against the advance tax liability for AY 2011-12. It is Revenue’s case that the seized cash cannot be adjusted against advance tax liability in view of the amendment made to Section 132B by insertion of Explanation 2 by Finance Act 2013, wherein it is stated that “existing liability” does not include advance tax payable. On the issue as to whether the insertion of Explanation 2 to s.132B by Finance Act 2013, is prospective or retrospective, we find that the Co-ordinate Bench of Ahmedabad Tribunal in the case of Kanishka Prints(2013 (7) TMI 14 - ITAT AHMEDABAD ) has observed the amendment made of s.132B by insertion of Explanation 2 is prospective and is applicable from 1st June 2013. Thus cash seized at the time of search be adjusted against the advance tax liability and as per ld. Authorised Representative submission the credit for it be given from the date of its request made to CIT(C) for adjustment of cash. We thus direct accordingly. In the result, the grounds of Assessee are allowed.

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• 2017 (6) TMI 177
  Assessing Officer's power to refer the matter of valuation to the DVO for the valuation of fair market value as on 01.04.1981 - Held that:- This matter controversy has already came before the ITAT in the Assessee’s own case for the AY.2008-09. It is noticed that it is not a matter to curtail the power of the AO but it is necessary for the AO to arrive at conclusion that the value of the property declared by the Assessee is less than the fair market value. When there is no reason to forward the matter to the DVO then forwarding the matter does not itself justifiable. The CIT(A) has passed the order on the basis of the finding of the ITAT in the Assesse’s own case. We found nothing material to deviate the finding of the CIT(A) on this issue therefore, in the said circumstances we are of the view, that the CIT(A) has passed the order judiciously and correctly which is not required to interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the Assessee.

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• 2017 (6) TMI 176
  Eligibility to deduction u/s 10A - whether brought forward unabsorbed depreciation and business losses of the Assessee was not liable to be set-off earlier to the set off claim of the assessee’s unit u/s.10A? - Held that:- Using the old machines nowhere disentitled the assessee to raise the claim u/s 10A of the Act and it is also held that the claim of the assessee is entitled to be set off u/s.10A of the Act earlier to the claim of brought forward unabsorbed depreciation and business loss. Technivision Ventures Ltd. Undoubtedly, the claim of the Assessee for deduction u/s 10A accepted. Thereafter, an application for giving effect to the order was filed in which brought forward unabsorbed depreciation and business loss was allowed subsequently to set off the claim of deduction u/s. 10A of the Act. See The Commissioner of Income Tax-10 Versus Black & Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT ] and Commissioner of Income Tax Vs. Yokojawa India [2016 (12) TMI 881 - SUPREME COURT] - Decided against revenue

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• 2017 (6) TMI 175
  Income from undisclosed sources under the head ‘income from other sources’ - Held that:- There is uncontroverted finding that the assessee furnished the cash summary and the assessee withdrew 1,85,82,000/- from the said bank up to the end of Financial Year relevant to Assessment Year 2008-09 and the amount of 10 lakh from M/s Trance Ocean Agencies, where the assessee is a partner. The cash was withdrawn at regular interval as the assessee was to purchase agricultural land. The Ld. Commissioner of Income Tax (Appeal) has also considered the observation made in the assessment order and the submissions made by the assessee and thereafter deleted the addition of 99,32,000/- in respect of bank Account No.23110165033 in the Standard Chartered Bank. This account was jointly maintained with his brother Shri Snehal J. Mehta, thus, considering the totality of facts and the circumstances mentioned in the impugned order and also narrated before us, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal). Cash deposited in the Standard Chartered Bank - addition on account of alleged undisclosed interest income - Held that:- We deem it appropriate to examine the factual matrix whether the assessee, during the relevant period, in fact, withdrew the amounts and if it was withdrawn whether it was used for any other purposes. This aspect has not been examined by the Department. The assessee is directed to examine the factual matrix and after providing due opportunity of being heard decide afresh in accordance with law.

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• 2017 (6) TMI 174
  Validity of assessment completed under section 153C - satisfaction note was not recorded by the Assessing Officer in the capacity of Assessing Officer of searched person - Held that:- Assessing Officer has recorded that in terms of provision of section 153C of the Act, notices are hereby issued u/s 153C for AY 2003-04 to 2008- 09 in the case of M/s. ANG Corporate Consultant Private Limited (old name of the assessee). Since notice under section 153C of the Act is always issued by the Assessing Officer of the other person and not by the Assessing Officer of the searched person, the sentence that “notices are hereby issued” indicate that the above satisfaction note has been recorded by the DCIT Central circle 17, New Delhi in the capacity of the Assessing Officer of other person. The heading of this satisfaction note also supports this view. The above fact coupled with the fact of non-availability of satisfaction note on the record of the searched persons, Sh. BK Dhingra and Smt. Poonam Dhingra led us towards the conclusion that the satisfaction note was not recorded by the DCIT, Central circle 17, New Delhi, in the capacity of a Assessing Officer of searched person, which is one of the essential requirement for invoking jurisdiction under section 153C of the Act and in absence of which proceedings initiated under section 153C of the Act are not validly initiated. Accordingly, we quash those proceedings. - Decided in favour of assessee.

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• 2017 (6) TMI 173
  Addition u/s 68 - Held that:- In the present appeal, the Assessing Officer or the Ld. CIT-A, in their orders has not given finding whether the credits in question pertain to the year under consideration or pertain to earlier years. In our view, if the credits in question pertained to earlier years, no addition could have been made in the year under consideration. In the facts and circumstances of the case, we feel it appropriate to restore the issue to the file of the Assessing Officer for verification, whether the amount added under section 68 of the Act are opening balances of the creditors and if that is so, then directed to decide the issue in view of our finding above. If the credits pertain to the year under consideration, then the action should be taken in terms of section 68 of the Act, following the finding of the Tribunal in the case of M/s. Gupta Metal Sheet Pvt. Ltd. (2016 (4) TMI 504 - ITAT DELHI). It is needless to mention that assessee shall be afforded reasonable opportunity of hearing. Accordingly ground of the appeal is allowed for statistical purpose.

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• 2017 (6) TMI 172
  Addition on account of Notional income from House property from a house kept vacant for self occupation - Entitlement for the benefit of the section 23(2) - Held that:- In the instant case, the property was not occupied by the owner and therefore, provision of section 23(2)(a) of the Act are not applicable. The provision of section 23(2)(b) of the Act are also not applicable, as the owner of the property was not staying at other place due to his employment, business or profession carried out at other place. In the circumstances, the assessee was not allowed to avail benefit of section 23(2) of the Act, irrespective of the fact whether the property was residential or commercial Weather the assessee was running retail shop ? - Held that:- The assessee has not filed property tax return form for the year under consideration. The only evidence relied by the Revenue, is the affidavit of the assessee filed before the Municipal Corporation of Delhi. No other evidences as to the structure of the building of commercial nature, in relevant period has been brought on record. No evidences have been filed by the assessee for expenditure in respect of change of a structure from residential to commercial in the year under consideration. The affidavit was filed on 29/06/2007, which is corresponding to the assessment year 2008-09. In the affidavit, the assessee has claimed that she was running retail shop in the premises. No period has been specified since when the assessee was running shop. In our opinion, from this affidavit it cannot be presumed that the assessee was running retail shop in the year corresponding to the assessment year 2007-08 i.e. the assessment year in consideration. In absence of any other evidences to support that the property was commercial in the year under consideration, the contention of the Assessing Officer and Ld. CIT-A, cannot be accepted. Estimation of monthly rent - Held that:- CIT-(A) has not held in clear terms, whether the property was residential or commercial and he has not given any basis for estimating monthly rent of 1,80,000/-. The rent has been estimated in the ad-hoc manner, which cannot be permitted in law. In the circumstances, we feel it appropriate to restore issue to the file of the Assessing Officer to make enquiries as deemed fit and decide afresh – whether during the year, property in question was residential or commercial and determine the annual lettable value, for which the property could be let out in the year under consideration, on the basis of documentary evidences, like rent deed of surrounding area etc. It is needless to mention that assessee shall be afforded sufficient opportunity of hearing on the issue in dispute. Accordingly, the grounds No. 1.2 to 1.4 of the appeal are allowed for statistical purposes.

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• 2017 (6) TMI 171
  Estimation of profit in respect of IMFL business carried by the assessee - Held that:- The coordinate bench of the Tribunal in the case of Tangudu Jogisetty (2016 (7) TMI 379 - ITAT VISAKHAPATNAM) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. In view of the above we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. Unexplained loan creditors - Held that:- The assessee has not filed evidence because the loan creditors are uneducated people. It appears to me that the explanation given by the assessee cannot be accepted for the reason that if at all assessee borrowed some loans, he has to submit all the details before the Assessing Officer and if Assessing Officer is not satisfied on any details, assessee has to make an appeal for admitting those details. In this case, the assessee has not made any attempt neither before the Assessing Officer nor before the ld.CIT(A). Before me, he simply submits that he has not submitted all the details of loan creditors because loan creditors are illiterates. This is not a ground to admit the additional evidence, therefore, prayer made by the assessee for admission of additional evidence is rejected. As the assessee has not filed any evidence neither before the Assessing Officer nor before the ld.CIT(A), even before the Tribunal thus addition confirmed - Decided against assessee.

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• 2017 (6) TMI 170
  Disallowance u/s. 40A(3) - payment made to the truck drivers in cash - Held that:- The assessee has sufficiently explained the circumstances under which the payments have been made to the truck drivers in cash. The Assessing Officer made disallowance by taking a pedantic view of the cash transactions. Where cash payments are made under bonafide conditions and no doubt is raised over genuineness of the payments and the payees are identifiable; no disallowances u/s. 40A(3) is warranted. Thus, in view of the facts of case and various decisions discussed above, we do not find any error in the findings of Commissioner of Income Tax (Appeals) in deleting disallowances made by the Assessing Officer u/s. 40A(3) of the Act. - Decided in favour of assessee. Disallowance u/s. 69C - Held that:- First Appellate Authority has deleted the addition after seeking comments of Assessing Officer on reconciliation statement filed by the assessee. The Assessing Officer has not made any adverse comments or has raised any doubt over the reconciliation statement filed by the assessee in the remand report. The Commissioner of Income Tax (Appeals), accordingly deleted the addition. The ld. DR has not been able to controvert the findings of Commissioner of Income Tax (Appeals) on this issue. We do not find any merit in the ground raised by the Department assailing the findings of Commissioner of Income Tax (Appeals) in deleting the said addition. - Decided in favour of assessee.

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• 2017 (6) TMI 169
  Assumption of jurisdiction u/s.153C - non incriminating material found during the search and seizure Held that:- AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record, which is not sustainable in the eyes of law. See M/s GLOBAL REALTY CREATIONS LTD., (FORMERLY KNOWN AS M/s HIGHLAND DEVELOPERS PVT. LTD.) Versus DCIT, CENTRAL CIRCLE-12, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI [2017 (4) TMI 470 - ITAT DELHI] - Decided in favour of assessee.

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• 2017 (6) TMI 168
  Addition on account of arrears of gratuity and leave encashment added u/s 10(10)(iii) and 10(10AA)(iii) - Held that:- Identical issue relating to the gratuity, having similar facts has already been adjudicated in case of Dharam Jeet Dahiya Vs ITO, Ward-1, Hisar [2017 (6) TMI 165 - ITAT DELHI] wherein held as the assessee is found to be an employee holding a civil post under a State, in considered opinion, the provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for the amount under consideration. Once a case falls under clause (i) of section 10(10), the same cannot be brought within the purview of clause (iii) of section 10(10). Therefore, hold that the assessee is entitled to exemption u/s 10(10)(i) in respect of gratuity amount received and leave encashment. - Decided in favour of assessee.

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• 2017 (6) TMI 167
  TDS u/s 195 - payment towards software purchase - non deduction of tds - Held that:- As gone through the clauses of the License agreement of the Section 14 of the Copyright Act and observe that the assessee is not authorized to do any of acts mentioned in the Copyrights Act. The Indo US treaty also excluded the computer soft ware from the definition of Royalty in the treaty. Thus we are of the considered opinion that The Company has merely been provided the access to the copyrighted software and not right to use the copyright embedded in the software. In other words, the Company is not permitted to make copies or make alternations to the software. The assessee has purchased software for the purpose of internal use and the same cannot be held as payments towards royalty. As per the terms and conditions of the purchase agreement payment made to acquire the software license does not fit into the definition of royalty and non-taxable as per 9(1) (vi) of Income tax act. Therefore, we hold that the payment towards software purchase is not royalty within the meaning of non-taxable u/s.9(1)(vi) of Income Tax Act and not liable for deduction of tax at source, accordingly, we set-aside the orders of the lower authorities allow the appeal of the assessee.

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• Customs

• 2017 (6) TMI 215
  Benefit of exemption under Sl. No. 125 of N/N. 20/1999-Cus - denial on the sole ground that the imported scrap is used in the basic oxygen furnace and not in the electric arc furnace - Held that: - Sl. No. 125 of N/N. 20/1999-Cus., dated 28.02.1999 grants exemption to melting scrap of Iron or Steel for use in electric arc furnace, induction furnace or for melting in hot blast cupola or for supply to a unit for use in electric arc furnace, induction furnace or for melting in hot blast cupola. The imported melting scrap has either been used directly in the electric arc furnace or has been used in such furnace indirectly after passing through the processing in the basic oxygen furnace - the portion of the scrap initially charged in the basic oxygen furnace will also be eligible for import at concessional rate of duty inasmuch as it has indirectly found its way into electric arc furnace. The appellant will be eligible for the concessional rate of duty under Customs N/N. 20/99 dated 28.2.99 - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 197
  100% EOU - Refund of CENVAT credit - input services - deemed exports - CA Service - Courier Service - Internet Telephony service - Advertising Agency Service - Banking and Other Financial Services - Held that: - deemed exports are eligible for credit on par with physical exports - all these services fall in the definition of input services as held by various decisions - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 196
  100% EOU - procurement of 'ascorbic acid' without payment of duties (including anti-dumping duty) - permission granted by Development Commissioner for addition to the list of goods to be manufactured and exported by M/s Suprapti Plastics Ltd - Held that: - It is abundantly clear that the goods cleared into the domestic tariff area were not such as were entitled to be cleared at the concessional rate of duty available to Export Oriented Units. Therefore, the clearance has been of goods that were not in conformity with the permission granted under the Foreign Trade Policy. Consequently, the goods are liable for confiscation - there is no flaw in the demand for duty and in imposition of penalty. M/s Vishal Export Overseas Ltd was the beneficiary of the availment of concessional rate of duty as well as the escapement of anti-dumping duty. In the absence of any evidence to show that the transaction was a bona fide one, the imposition of penalty on them is not invalid. The roles of S/Shri Prashant Tanna, Ajay Tanna and Pradeep Mehta have been elaborated in the impugned order and no evidence has been led to controvert these findings. M/s Pet Plastics was also able to clear goods into the Domestic Tariff Area (DTA) without payment of full duties that were otherwise applicable. No evidence is brought on record to show that this was a bona fide transaction. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 195
  Misdeclaration of goods - substitution of high-quality 'cut and polished diamonds' with those of inferior quality to the extent of 1184.61 carats, the attempt to remove 1095.43 carats of 'cut and polished diamonds' - non-accountal and illicit removal of capital goods from the said unit - Held that: - the records are not available for verification. However, the data document submitted by the appellant can be subject to computation for arriving at the stock of goods-in terms of cut, clarity, caratage - Without an appropriate finding on this aspect, we are hamstrung in rendering justice in accordance with law. The adjudicating authority is directed to complete this process within three months - appeal allowed by way of remand.

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• 2017 (6) TMI 194
  Imposition of ADD - import of Flexible Slabstock polyol - rate of duty - Rule 5 of the AD Rules - normal value in Singapore - the DA has determined the normal value for Singapore based on the international prices of raw material. The appellant also have specifically submitted that the DA should use international prices of major raw material such as PO and ethylene oxide as the only responding producer from Singapore failed to provide complete details of the cost of the raw material of their related parties - Held that: - it is not the contention of the appellant that the export price of PO from Singapore was not reliable or not representing the international prices of the said product. Neither there is a contention that export price of PO from Singapore is not comparable with the import price from Saudi Arabia. The profitability of DI has declined clearly showing injurious impact of dumped imports from the subject countries on the price of the DA. The DA concluded that the domestic countries has suffered material injury during the period of investigation. The magnitude of injury margin is arrived at by comparing the non-injurious price of the subject goods produced by the DI with the landed value of the export from subject countries and thereafter the injury margin has been arrived at in percentage terms. The final recommendation of imposition of definitive AD Duty on import of subject goods of subject country has been arrived at after due consideration of all relevant factors. The final findings of the DA cannot be interfered with - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 193
  Rectification of mistake - section 129A(2) of CA, 1962 - description of the authority that passed the impugned order - It is contended that the authority has been variously shown as Commissioner of Customs (Appeals), Mumbai-II and as Commissioner of Customs (Appeals), Mumbai-III. Upon scrutiny of the impugned order, it is seen that the appellate authority has described himself as Commissioner of Customs (Appeals), Mumbai-II - Held that: - we are not certain about the identity of the competent appellate authority. In view of this application for rectification mistakes, and there being no prejudice to either side, we direct the deletion of all ordinal Roman numerals with reference to the appellate authority - all references to the first appellate authority shall read as 'Commissioner of Customs (Appeals), Mumbai '. Illegality of our final order - It is alleged that the order has been issued beyond the period stipulated for issue after conclusion of hearing and without recourse to the condoning authority of the President. In our opinion, this is presumptuous on the part of the applicant-Commissioner - Held that: - As a Tribunal composed of public servants, we acknowledge that we are accountable to the citizenry at large. We, however would not submit ourselves to executive authority or to render an explanation of conduct to such executive authority. It would do well for executive authorities to limit their actions to their appropriate stations in the adjudicating hierarchy and to disabuse from them needs mind that the Tribunal is a subordinate authority who is answerable to them. The application is allowed to the limited extent of appropriate modification of the nomenclature of the first appellate authority - decided partly in favor of applicant.

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• 2017 (6) TMI 192
  Valuation - figure relating to payment of cost, freight, insurance and canalizing commission on the crude oil imported - includibility - Held that: - the apex court has settled the issue of demurrage charges in the case of CCE, Mangalore vs. Mangalore Refinery & Petrochemicals Ltd. [2016 (1) TMI 325 - SUPREME COURT], where it was held that - also reliance placed in the case of Mangalore Refinery & Petrochemicals Ltd. vs. CC, Mangalore [2015 (9) TMI 245 - SUPREME COURT] wherein the apex court has held that the quantity actually received into shore tank in port in India should be the basis for payment of customs duty - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 191
  Validity of impugned order - the learned Commissioner(Appeals) has discussed that the value has been refixed only on the basis of the value given by the appellant by producing the genuine invoice, Commissioner(Appeals) has not discussed the reasons for confirmation of differential duty in respect of the two earlier Bills of Entry - Held that: - The undervaluation has been sustained by the original authority on the basis of the invoice indicating correct valuation submitted by the proprietor of the importer himself at the time of investigation by the Revenue. As such, prima facie, the case of undervaluation appears to be sustainable - appeal allowed by way of remand.

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• 2017 (6) TMI 190
  Export of prohibited goods - non-Basmati Rice - The case of the Revenue is that the export goods contained “other rice” ranging from 21.1% to 22.84%. And hence, it has to be considered as Non-Basmati Rice, which is not allowed for export - confiscation - redemption fine - penalty - Held that: - export goods need to be 100% Basmati Rice. The test of predominance has no relevance here. The goods are freely allowed for export only if they consist of basmati rice entirely. From the test results it is evident that the presence of other rice is of the order of 21% to 22.8%. Since the export goods do not satisfy the terms of the FT policy, they are not allowed for export and hence become prohibited goods and hence are liable for confiscation. The samples were drawn in the presence of the representative of the exporter. At the request of the manufacturer duplicate samples have also been tested. However, the percentage of their rice is found to be of the order of 21-22%. The exporter or their representative did not seem to have objected to the procedure of the sampling at any stage during the proceeding. Consequently it is not open to the appellant to dispute the procedure at the stage of the appeal. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (6) TMI 189
  Scheme of Amalgamation - dispensation of the meetings of the equity shareholders, preference shareholders, secured creditors and unsecured creditors of both the Applicant Companies in respect of a Scheme of Amalgamation of the Transferor Company with the Transferee Company and their respective shareholders adhered to. Scheme allowed.

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• 2017 (6) TMI 188
  Oppression and mismanagement - Whether the Petitioner No. 1 remained absent in the meeting and ceased to continue as director as stated by the respondent? - Held that:- On the one hand, the petitioner submitted that in and around February 2010 (Para 2.3), he was suffering from unknown ailment and on the other hand, in paragraph No. XII (page 23), submitted that he was suffering from typhoid and frozen shoulder, and after partial recovery he joined the company on 25.10.2010.the petitioner nowhere annexed any medical documents in support of his contention when he was claiming to be suffered with typhoid and frozen shoulder and the Doctor advised him rest. Admittedly, the petitioner joined the office on 25.10.2010 and on the other hand, also alleged that he came to know about his removal from company website in the Month of January 2012. The own statements of the petitioner, are self-contradictory and shaky. On perusal of the pleading, it transpires that the total statements are self-contradictory and appears to be made with an intention to pressurise the Company for some collateral benefit and to interfere in the smooth running of the Company. Further, on perusal of the minutes of the meeting dated 9-7-2011, wherein the issues of retiring Directors including the petitioner, was discussed and the son of the petitioner, namely, Shri Divyendu Guha was present and the same is also admitted by the petitioner. Thus, the very statement creates shadow of doubt and unbelievable story, when admittedly, the petitioner himself expressed his desire to leave/retire from the Company and for the said purpose, negotiating with the Company. Under such situation, it will be wrong to say that the petitioner has been wrongfully removed under Section 283(1)(g) of the Companies Act, when admittedly, the petitioner has not taken any leave even after receipt of letter from the respondent(s). It is needless to mention herein that the settled proposition of law is that in fiduciary capacity within which the Directors have to act, enjoins upon them a duty to act on behalf of the company with outmost care and skill and due diligence and in the interest of the company. They have a duty to make full and honest disclosure to the Company. Whether it is a directorial complaint and no act of oppression and mismanagement is observed? - Held that:- The interest of the company as a whole is, of course, paramount and the personal interest of the minority cannot overtake the interest of the company. Thus the conduct of the majority ought to be weighed up; so as the conduct of the minority would be relevant.The company normally runs on the trust that is present among the shareholders and among the Directors, running the company. Trust that was initially present when the company was incorporated disappeared. In most of the cases, it is seldom possible to reinforce the same trust with which the person came together at the time of incorporation of the company. In situation like this, if at all warring parties were directed to run the company together, the trust that was lost would not come again. Whereby, the best part is taking part away, so that, at least, one of them could run the company. Thus it is of opinion that these party(s) may have to part ways on fair valuation, since the respondent(s) are still running the Company, the respondent(s) shall provide honourable exit to petitioner(s) on fair valuation, by giving effect to the minutes of the meeting dated 9-7-2011 marked as Annexure P6 of reply (page 77) and letter dated 18-06-2012 (page 85) of reply which document is relied upon by both sides wherein valuation of the petitioners' share was shown to have settled amicably. Further, the valuation of the property as done by Bank's approved valuer be given effect to so as to come to an end of the dispute for the interest of the Company. This order is hereby concluded, directing the respondent(s) to give effect of the fair exit as said above within three months from the date of the pronouncement of this order.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 187
  Claim of interest - whether claim falls within the term 'debt' which the respondent is liable to pay, failing which the petitioner is entitled to an order of admission in terms of section 9 of the Code and for recommending the appointment of the Insolvency Resolution Professional? - Held that:- It is never the intention of legislature under the 'Code' that the Tribunal should determine the rate of interest and grant time to the company to pay the amount as per the directions. It is clearly intended that an application filed under section 9 of the Act is either to be admitted or rejected within a period of 14 days of the receipt of the application. There is no scope of passing an interim order like the one suggested by the learned counsel for the applicant/petitioner. As the entire amount of 'debt' as per the intention of the legislature under the 'Code' having been paid by way of cheques, the instant petition is rejected. However, in case the cheques issued by the respondent are dishonoured, the petitioner would be at liberty to file a fresh petition, if so advised or take other appropriate steps in accordance with the Law. Certified copy of the order be sent to both the parties by speed post.

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• Service Tax

• 2017 (6) TMI 227
  Penalty u/s 78 - Maintenance and repair services - Failure to discharge service tax - failure to file ST-3 returns - case of appellant is that they had deposited the service tax dues and the delay is purely due to liquidity crunch - Held that: - the appellant has collected the service tax and did not deposit the same to the Government Treasury which shows that he has an intention to evade service tax - penalty upheld - decided against appellant.

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• 2017 (6) TMI 226
  Refund claim of CENVAT credit - denial on the ground that the appellants have exported the goods availing the draw back and the same should have been exported without availing the drawback because the benefit of N/N. 33/2008-ST was not available retrospectively - denial also on the ground that the appellants did not submit proper documents like invoices, copy of the agreement as entered by the exporters with the buyers and that the evidence related to non-availment of Cenvat Credit was not submitted - Held that: - the services which have been received by the appellant after the manufacture of goods are not to be included while calculating the drawback claim - the order of the Ld. Commissioner (Appeals) is not a reasoned order and is, in fact, completely non-speaking order. The matter is remanded back to the Ld. Commissioner (Appeals) to pass a fresh order after duly considering the submissions and documentation, which the appellants submits before the Ld. Commissioner (Appeals) - appeal allowed by way of remand.

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• 2017 (6) TMI 225
  Services provided for maintenance and repair of power plant - Major Maintenance Reserve (MMR) - activities of operation of power plant to produce electricity - demand of tax - whether the appellants are liable to pay service tax on the activities of maintenance and repair of power plant as well as operation charges and the MMR deposit? - Valuation - inclusion of cost of materials and consumables Services provided for maintenance and repair of power plant - taxability - Appellants had split the Operation Fee received by them as Operation Charges and maintenance charges in the ratio 55% and 45% respectively. Out of the 45%, they were deducting cost of spares and consumables used for such maintenance/repair and only on the balance amount, service tax liability was discharged - Held that: - a closer inspection reveals that such VAT was being paid by classifying the activity as Works Contract Service. We are unable to fathom the reason for the appellants having declared a different nature of activity before the VAT authorities. Be that as it may, for the purposes of the service tax law, deduction of cost of materials and consumables can be permitted only if there is a sale involved and there being no sale involved in the entire exercise, appellant has necessarily to discharge tax liability on the entire gross value of the maintenance or repair services on the full amount demarcated by them as maintenance or repair service, being 45% of the total amount paid to them - when the appellants themselves have vivisected the contract by apportioning 45% towards maintenance charges and 55% as operation fee, the contention raised by them that it is a composite contract is only to be brushed aside. Major Maintenance Reserve (MMR) - taxability - Held that: - Held that: - MMR amount is in the nature of a deposit by the appellant with the power company, a sort of guarantee and a ready reserve for the power company for any major maintenance. One such Trust and Retention of Amount agreement dated 16.12.1999 has been perused by us. This agreement is between the power company (SPCPL), the lender and the lending banks, from which it is clear that a trust has been created for this purpose between the owner company and the lending banks. In the circumstances, the MMR can by no stretch of imagination be considered as a part of the maintenance or repair fees paid or payable to the appellants. Therefore, they cannot be considered as taxable value under this head. Taxability of operation charges - it is the case of the department that the activities would fall under the category of Maintenance or Repair service as amended. Thus, the department is of the view that the activity of production of electricity in the power plant would amount to management of immovable property, as provided in sub clause (b) of Subsection (ii) of Section 65 (64) of the FA, 1994 - Held that: - The activity carried out in the power plant is not solely management of power plant, but operation of the same. The word operation is not used in the definition of Maintenance and repairservices which is relied by department as amended with effect from 16.06.2005 - it cannot be said that the appellants are doing management service for the reason that the management service is done by appellants to themselves and not to any other person - the demand of service tax on operation charges (i.e. 55% of the fees paid to the appellant) is not sustainable. Extended period of limitation - Held that: - since the appellants did not disclose the entire gross value of taxable services in the ST-3 returns and the returns reflected the value only after deduction of cost of materials, the notice issued invoking extended period is right and proper. Penalties - Held that: - there was undeniable confusion on the taxability per se, on these services, the penalties imposed in the orders impugned are set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 224
  Renting of immoveable property service - short payment of tax - Held that: - no demand has been raised for the period after 31st March 2007 when 'renting of immovable property service' was taxed for the first time u/s 65 of FA, 1994. Neither has there been any objection from the jurisdictional service tax authorities to the discharge of tax liability under this head for the period thereafter on the entirety of receipts - The payment of these taxes was well within the knowledge of the tax authorities from the date of filing of the first return after the introduction of the tax; there is no scope, therefore, for invoking the extended period to demand the tax from May 2006 onwards. The jurisdictional tax authorities have not objected to the subsequent discharge of tax liability as provider of 'renting of immovable property service - Having accepted the taxability for providing a specific service, it is not open to the tax authorities to claim its share in the form of a levy under a different head merely because 'renting of immovable property service' was not taxable prior to 1st June 2007. Alleged short-payment of tax under the head of 'maintenance or repair service' - Held that: - appellant has discharged a major portion of the tax liability on the consideration received as maintenance charges, at no stage has the appellant made a reference to this concession in its defence. It would, therefore, appear that the tax authorities have dealt with an aspect that has nothing to do with recoveries from lessees as 'maintenance charges' - appellant cannot also be faulted in making its contention that 'maintenance or repair service' are rendered to owners/possessors of immovable property and is not amenable to stretching for coverage of maintenance charges levied by owners from lessees for the purposes of meeting expenditure due to professional maintenance or repair entities - demand of alleged short-payment of tax is without any foundation and deserves to be set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 223
  Refund claim - Franchisee Service - Mandap Keeper Service - Management, Repair & Maintenance Service - case of appellant is that the Original Authority should have examined their service tax payment in total, under various taxable categories, before issue of SCN and should have adjusted the amount properly allowing the refund of excess paid wherever applicable - Section 11 B of the CEA, 1944 - Held that: - wherever the appellant have deposited the service tax, the same has been against the past liability. Such payment is made by the appellant, on being informed during the course of enquiry, by the officers. The same is towards specific past liabilities towards service tax, not a lump sum deposit of undeterminable tax liability - no suo moto refund is possible in such a scenario. However, the eligibility of the appellant, if any, wherever excess payment is proved with supporting documents, along with fulfillment of other conditions, required to be examined by the jurisdictional officer separately. Club or Association Service - Held that: - the appellants have promoted a loyalty programme for their customers and on payment of some consideration, their customers become members of such programme. The said membership entitles the customers for various discounted services in the affiliated hotels - such programmes does not lead to formation of any club or association and the members of such programme cannot be considered as a member of club or association, to be taxed under the taxable category of "club or association". Exhibition service - Held that: - the appellant permitted HSBC to display its board in their premises. There is no evidence of appellant’s holding any business exhibition and allowing HSBC as exhibitor. We find that display of an advertisement board in the premises of the appellant does not make the appellant as an organisor of a business exhibition - there is no service tax liability on such activities under business exhibition services. Extended period of limitation - Held that: - the allegation of fraud or suppression cannot be sustained in respect of the said service - the service tax liability in respect of Franchise services shall be from 18.04.2006 on reverse charge basis. However, demand shall be restricted to normal period only. No penalty is liable in respect of this demand of service tax. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 222
  Refund of service tax - drawback on export items - N/N. 41/2007-ST dated 6.10.2017 and 17/2009-ST dated 07.07.2009 - Held that: - the services, received by the exporter on which service tax has been paid, are relatable to the activities within the port, are to be considered for sanction of refund - in the appellant’s own case M/s. Shree Rajasthan Syntex Ltd. Versus C.C.E. Jaipur [2017 (5) TMI 1459 - CESTAT NEW DELHI], the Tribunal held that they are eligible for refund of service tax in respect of terminal handling charges, CHA services, banking charges and also for tax paid using cenvat credit. In respect of rejection of claim due to lack of supporting evidences with reference to GTA services, sales or purchase of foreign exchange, banking charges, it is seen that the appellants are pleading that they have complete supporting evidences, which can categorically link-up with availment of service, payment of service tax with the shipment of cargo by them. This requires verification by the sanctioning authority. Appeal allowed by way of remand.

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• 2017 (6) TMI 221
  Penalties - valuation - Commission Agent Service - bargain discounts given to the dealers - includibility - Held that: - Commission Agent Service was incorporated in Business Auxiliary Service from 01.07.2003 and remained exempted from 01.07.2003 to 08.07.2004. Considering the fact that the exemption from service tax had just been removed on the commission agent service in July, 2004 and the appellants were paying income tax on the basis of net commission fee after deducting bargain discounts, plea of bonafide belief appears to be convincing. Their bonafides are also strengthened by the fact they paid entire short levy much before the issuance of show cause notice. In the absence of evidence or basis of suppression on the part of the appellant in the revision order and there being no such finding in the Order-in-Original imposition of penalty on the appellant is not justified - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 220
  Maintainability of appeal - CESTAT has mistakenly disposed of the cross objection filed by the respondent without considering the prayer and the grounds contained therein - Held that: - the disposal of the cross objection simply with the dismissal of the appeal of the Revenue is not in accordance with the law - the application restored to the extent of restoring the cross objection of the applicant to be decided on merit subject to the cost of 10,000/- - decided partly in favor of assessee.

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• 2017 (6) TMI 218
  Penalty u/s 78 of the FA - short payment of tax - Held that: - there is no suppression of facts on the part of the appellant which attracts Section 78 of the FA - There was some computation error on account of discrepancies between the profit and loss account and the ST-3 returns, but the same was clarified by the Bank and thereafter appellant also admitted calculation mistakes and reversed the same with interest - penalty not justified - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 217
  Refund claim - nature of amount deposited at the instance of department - period of limitation - scope of SCN - amount deposited to be deemed as under protest or not - Held that: - a new case cannot be made out at the appellate level and the Department cannot travel beyond the SCN - the impugned order is not sustainable in law firstly on the ground that the impugned order has traveled beyond the SCN. In the SCN there was a proposal to reject the refund only on the ground that the entire refund claim filed by the appellant was barred by time whereas in the impugned order, the learned Commissioner (Appeals) has partially allowed the refund claim and partially disallowed the same. Since the litigation was going on therefore the amount deposited by the appellant will be deemed to be under protest and no limitation as prescribed under Section 11B will be applicable. Also, the amount deposited by the assessee to the Revenue has to be treated as deposit at the hands of the Government and hence the limitation to claim refund under provisions of Section 11B is not applicable. Appellant is entitled to refund - appellant is also entitled to interest after the expiry of three months from the date of filing the refund application which was filed on 16.05.2012 - decided in favor of appellant.

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• 2017 (6) TMI 216
  Business auxiliary service - commission to broker in foreign currency - liability of tax - Held that: - the services alleged to have been received by appellant would need to be tested for determining the liability as alleged by tax authorities and confirmed in the impugned order - there has been no such determination of the nature of service and the coverage of the transaction between the overseas entities and the appellant within the framework of the Rules - matter remanded to the original authority for reconsideration - appeal allowed by way of remand.

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• 2017 (6) TMI 166
  Maintainability of petition - pre-deposit - amended provisions of with effect from 6th August, 2014 by section 105 of the Finance ( No.2) Act, 2014 - vires of substituted section. SC dismissed the SLP against the decision in the case of Sri Satya Nand Jha, R/o Staff Quarters, Kendriya Vidyalay, Versus Union of India, through the Secretary, Ministry of Finance, New Delhi, Customs Excise and Service Tax Appellate Tribunal, Eastern Zonal Bench Kolkata [2016 (7) TMI 1307 - JHARKHAND HIGH COURT], wherein it was held that the substituted Section 35 F of the Act, 1944 is not applicable to the stay applications and appeals already preferred or pending before any appellate authority, prior to commencement of the Finance (No.2) Act, 2014 - SLP dismissed.

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• Central Excise

• 2017 (6) TMI 219
  CENVAT credit - inputs - cement, steel MS plates/MS angles and channels - denial on the ground that these inputs are used in the construction of storage tank for effluent treatment was wrong being violative of Rule 3 read with Rule 2(k) of the Rules - Held that: - the issue is squarely covered in favor of the appellant by the judgement of the Karnataka High Court in the case of SLR Steels [2012 (9) TMI 169 - KARNATAKA HIGH COURT], where it was held that the appellant is entitled to CENVAT Credit of duty paid on steel and cement used in the manufacture of storage tank and the pollution control equipment - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 214
  Manufacture - manufacture of Foots oil, Pressed Wax and Pressed Paraffin Wax classifiable under Tariff item No.27129090, 27122090 of Central Excise Tariff Act - whether the process amounts to manufacture or not? - Held that: - the Respondent imported the materials under CTH 27129090 27129090 amongst others and the Revenue also classified the processed material under the same tariff item. We find that the entire process undertaken by the Respondent-assessee is mainly a manual process and there is a marginal use of hydraulic pressure in the process. The imported Slack Wax, Residue Wax is in semi-solid form in drums. Foots Oil is part of Residue Wax or Slack Wax being lighter comes up on surface and siphoned by tilting the drums. The thinner Slack Wax called Foots Oil is thus separated. The pressure created by liquid through orifice for the purpose of exit is known as the hydraulic pressure. Basically, processed materials are emerging from the imported materials and the Revenue classified the processed material under the same Tariff Heading CTH. The Hon ble Supreme Court and the Tribunal in various decisions held that such process cannot be treated as manufacture under Section 2(f) of the CEA, 1944. The declaration before the Income Tax authorities would not determine the excisability of the goods unless it is covered under the Central Excise law. Appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 213
  CENVAT credit - duty paying invoices - bogus transaction - Held that: - no goods were supplied from M/s AIPL to M/s AKI. The fraud, suppression and willful mis-declaration are writ large on the nature of these transactions - Inescapable conclusion from the evidence and findings of Commissioner is that M/s AIPL had no melting furnace, the electricity consumption was not commensurate with production shown by the Excise Department and they did not manufacture any copper ingots/copper scrap on their on account. Penalty u/r 25 of CER, 2002 - Held that: - considering the fraud and willful suppression and mis-declarations done by M/s AIPL as elaborated in preceding paragraphs, the penalty on M/s AIPL is fully justified. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 212
  Refund claim - appellant supplied the berths to various organs of the Railway as well as various state transport authorities, their invoice values were reduced by them after deducting the amount on account of liquidated damages - price variation clause - Held that: - the issue in whether the amount deducted by the buyer on account of liquidated damage should be allowed as deduction on transaction value has been settled by this Tribunal in the case of Victory Electricals Ltd. [2013 (12) TMI 81 - CESTAT CHENNAI], where it was held that The value payable in a case where liquidated damages is applied would therefore be the consequent value and this would constitute the "transaction value". - the appellant are entitled to refund on merits. The burden is on the appellant to produce necessary evidence that the incidence of duty has not been passed on by the appellant to any person - appeal allowed by way of remand.

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• 2017 (6) TMI 211
  Whether the present issue is hit by limitation as claimed by the appellant or the contention of the original authority that the same is not hit by limitation is tenable? Held that: - ld. original authority has recorded that the appellant had submitted information vide their letter dated 11.02.2005 and since the information was available with Revenue as on 11.02.2005 and further that information about dying of grey yarn was submitted to the authority by the appellant as early as 13.08.2004, the contention in the show cause notice that the information was suppressed from the department is not established to be true. Therefore, the said SCN is hit by limitation - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 210
  Suo moto refund - Interest - whether the appellant could suo-moto take the credit of 4,52,673/- on 31.1.2012 reversed earlier on 4.11.2010 towards payment of interest? - Held that: - he issue has been settled by the Larger Bench of this Tribunal in BDH Industries Ltd's case [2008 (7) TMI 78 - CESTAT MUMBAI], where it was held that there is no provision under CEA/CER allowing suo moto taking of credit/refund without sanction by the proper officer - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 209
  Job-work - benefit of N/N. 214/86 dt. 25.03.1986 - clearance of chenille yarn without payment of duty - The contention of the appellant is that they received the duty paid inputs under Rule 4(5)(a) of the CCR, 2002, and thus, they were therefore not required to pay duty while sending the goods back to Principal Manufacturer - Held that: - the issue in this case is no longer res integra and is covered by the judgment of this Tribunal in the case of Dhana Singh Synthetics Pvt. Ltd. Vs. CCE, Vapi [2015 (11) TMI 38 - CESTAT AHMEDABAD], where it was held that Duty on inputs used in the manufacture of final products cleared without payment of duty for further utilisation in manufacture of final product, which were cleared on payment of duty by principal manufacturer, on job work basis not hit by provisions of Rule 57F of erstwhile Rule - demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 208
  Confiscation - penalties - It has been alleged that the appellants procured non-duty paid raw coal and had not paid clean energy cess and central excise duty under the provisions of Clean Energy Cess Rules 2010 and the CEA, 1944 - Held that: - it is clearly apparent on the face of the record, that the appellants purchased the raw-coal without payment of Central Excise Duty and Clean Energy Cess. So, the confiscation of the goods from the premises of the purchaser is justified. Penalties - Held that: - There is no record that the purchaser had any knowledge, that the duty and cess were not paid on the raw-coal. In other words, it appears that the appellants purchased the goods under the cover of Central Excise Invoice. So, imposition of penalty on the appellants is not justified. Section 34 provides that whenever confiscation is adjudged under this Act or the Rules made thereunder, the Officers adjudging it should give the owners of the goods option to pay in lieu of confiscation, such fine, as the Officer thinks fit. So, the Adjudicating Authority should have exercised the discretion to give option to pay fine as provided under Section 34 of the Act, 1944 - the Adjudicating Authority is directed to assess the fine in lieu of confiscation under Section 34 of the Act, 1944. Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 207
  Valuation - the appellant had sold goods manufactured by them at different prices at their factory gate and also through consignment agents in Kerala - The department entertained the view that the factory gate price is to be adopted as normal price in terms of Section 4 of the Central Excise Act as it stood at the relevant time - whether there can be different values for the same goods manufactured when they are sold in wholesale at the factory gate and at depots to different classes of buyers as provided by section 4 of the Act? - Held that: - wholesale dealers of a particular region can constitute a separate class of buyers. When sale at factory gate is to one class of such buyers and sale from depot, to which stocks has been transferred, takes place to another class of buyers, ex-factory price charged cannot be the relevant normal price for assessing duty on those goods - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 206
  Utilization of Additional Excise Duty (AED) credit - the Revenue took the view that such utilization of credit accrued prior to 1.3.2003 is not in order and proceeded to raise demands for reversal of such AED - Held that: - It stands clarified by CBEC vide their circular dated 6.3.2003 that credit availed prior to 1.3.2003 can be used for making payment of CENVAT duty after 1.3.2003. In the subsequent revised circular dated 30.9.2003, it has been clarified that such benefit of utilization after 1.3.2003 will not be extended to the goods received prior to 1.3.2003 but the credit on which availed was on or after 1.3.2003. The entire credit of AED (GSI) disputed in the present case has been availed prior to 1.3.2003. Consequently, we are of the view that the Circular dated 30.9.2003 will have no application to the present facts of the case. Appeal rejected - decided against Revenue.

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• 2017 (6) TMI 205
  CENVAT credit - M.S. Angles, Channels, Structures, Coils, Components and also rebar coil, TNT bar, TMT Cables and M.S. Rebars - denial on the ground that these items do not fit into the definition of 'capital goods' under Rule 2(a) of the CCR - Held that: - the impugned order denying the cenvat credit on the impugned goods which were used for laying of the foundation on which the machineries were installed is not sustainable in law in view of the decisions of the Hon'ble High Court of Madras in the case of India Cement [2015 (3) TMI 661 - MADRAS HIGH COURT], where credit availed on similar items used for fabrication of structural to support various machineries are allowed - credit allowed - decided in favor of assessee.

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• 2017 (6) TMI 204
  Penalty - denial of CENVAT credit - Outdoor Catering Services - Held that: - there was no direction by the Tribunal to impose penalty as the appellant was under a bona fide belief that he is entitled to the CENVAT credit on outdoor catering service - during the relevant time, there were conflicting decisions and the assessee had a bona fide belief that he is entitled to CENVAT credit on outdoor catering service. When the issue relates to interpretation of law, imposition of penalty is not justified - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 203
  CENVAT credit - appellant have received the duty paid files from the other unit and thereafter the same was exported along with own manufactured files - whether the appellant are entitled for the cenvat credit on the duty paid goods received and resold for the purpose of export in terms of Rule 16? - Held that: - whether any activity is carried out or otherwise if the activity does not amount to manufacture, the credit is admissible in terms of Rule 16 of Cenvat Credit Rules, 2002 - even though the appellants have not carried out any activity but the goods were cleared as such they are entitled for the cenvat credit in terms of Rule 16 - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 202
  Liability of interest - credit in respect of input used in the manufacture of non dutiable goods which was subsequently reversed - whether in terms of Rule 14 interest is chargeable from date of taking credit or from utilization of the credit? - Held that: - the issue has been considered in case of Ind-Swift Laboratories Ltd [2011 (2) TMI 6 - Supreme Court], wherein Hon'ble Supreme Court interpreting Rule 14 held that as per term 'taking credit or utilization' in both cases interest is chargeable therefore as per the Hon'ble Supreme Court ruling interest is chargeable from the date of taking credit - As regard the penalty of 50,000/-, it is observed that against huge amount of Cenvat credit of 1,92,86,034/- adjudicating authority by giving substantial relief penalty imposed is only of 50,000/- which in my view is very reasonable and does not require any interference - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 201
  Penalty u/r 15(2) of CCR 2004 - reversal of CENVAT credit - suppression of facts or not? - Held that: - the appellant reversed the CENVAT credit on being pointed out by the audit party along with interest and also informed the department about the same before the issue of SCN. In such a situation, as per Sub-section (2B) of Section 11A, the adjudicating authority should not have issued the SCN - in the SCN as well as in the impugned order, nothing has been brought on record to show that there was deliberate suppression of facts with malafide intention to evade payment of duty - the imposition of equal penalty under Rule 15(2) of the CENVAT Credit rules is not sustainable in law - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 200
  CENVAT credit - inputs - case of the department is that since inputs they used within the factory on loan licence basis has been sold to principle, ownership stands transferred therefore appellant is not entitle for the Cenvat credit in respect of such inputs - Held that: - for the purpose of allowing credit criteria laid down in Cenvat provisions is that input should be duty paid, should be used in the manufacture of the final product and final product is cleared on payment of duty - In the present case this criteria stand fulfilled - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 199
  Penalty u/r 25 of the CER, 2002 read with Section 11AC of the Act - appellant have defaulted payment of monthly duty - they have paid the duty belatedly alongwith interest during the period October, 2007 to January, 2008 - Held that: - there is absolutely no suppression of facts, fraud, collusion etc on the part of the appellant. Accordingly, there is no mens rea - Rule 8(3) is self contained Rule wherein provision is made regarding the delayed payment of duty, according to which the assessee at most required to pay interest for the delayed period. Therefore in absence of any ingredient of Section 11AC exist in the fact of the present case, penalty u/s 11AC cannot be imposed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 198
  100% EOU - refund claim - denial on account of nexus - Held that: - the original authority has failed to establish the main parameter of whether CENVAT credit on which refund has been sanctioned related to the inputs used in the manufacture of goods exported - this case needs to be remanded back to the original authority who will decide afresh the refund claims of the appellant after considering the fact of inputs declared by the appellant having been used in the manufacture of final product exported - appeal allowed by way of remand.

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• Indian Laws

• 2017 (6) TMI 186
  Default by Educational Trust - Maharaji Educational Trust had taken a loan of approximately 75 crores from Housing 480 crores by now and make payment otherwise they will have to face the consequences. Not only that, they have taken the money from HUDCO but from other incumbents i.e. SGS Constructions also but not interested in making payment in spite of running several institutions. It is made clear that in case the Educational Trust wants to run institutions, they are bound to make payment and as they are liable to pay, they should pay in all fairness all sums which they have borrowed sans any ifs and buts. It is what is expected of them. Otherwise courts will have to step in and take action in case dues remain unpaid and bottlenecks are created by one way or the other in realization of dues. It is not only startling but also shocking to note that a giant institution which is imparting education to about 3000 students involving manpower of about 700 personnel is finding it difficult to pay the loaned amount and is coming up with lame excuses to shirk its responsibility. Thus we direct as under : (1) That Educational Trust is directed to settle scheme of repayment with HUDCO within one month and to start payment of dues w.e.f. month of June, 2017. (2) On failure of Education Trust as per aforesaid direction or in case of default it would be open to HUDCO to sale approximately 43 acres of the land which was mortgaged with it to realize its dues in the legally permissible manner. (3) In case the proceeds from sale of approximately 43 acres of land are not sufficient to satisfy the dues of HUDCO, it would be open to sale property No.1 to 5 or its part which may be necessary for realization of the outstanding dues. (4) However, 21 acres of property which has been obtained in exchange from Awas Parishad cannot be sold. It is only in the circumstance if Arbitrator disallows the claim of SGS Constructions for purchase of 21 acres of said property can be sold not otherwise. That too if dues of HUDCO remain outstanding after sale of approximately 43 acres of land out of Item No.6 mortgaged initially and property item No.1 to 5 which are under mortgage. Let the Arbitrator also expedite the matter and decide the proceedings as far as possible within two months.

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