TMI Tax Updates - e-Newsletter
July 18, 2017

Case Laws in this Newsletter:

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

Articles

• Clarity required on Export and Imports of EOU units under GST Regime.           
• CENVAT CREDIT RULES, 2017 – PART I
• GST ON HEALTH CARE – NOT TRULY EXEMPT

News

• Analysing impact of GST, input credit in telecom sector

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• I-T asks tax practitioners to register entities separately

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• Frequently Asked Questions (FAQ) on GST

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• PM hopes GST spirit prevails in Monsoon session

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• Auction for Sale (Re-issue) of Government Stocks

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• RBI Reference Rate for US $

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• English rendering of the Prime Minister’s statement ahead of the beginning of the Monsoon Session of Parliament on 17.7.2017

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Notifications

GST - States

• F-10-43/2017/CT/V (94) - dated 12-7-2017 - Chhattisgarh SGST
  Corrigendum in respect of Notification no. 2/2017 state tax (rate))

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• F-10-43/2017/CT/V (93) - dated 12-7-2017 - Chhattisgarh SGST
  corrigendum in respect of Notification no. 1/2017 state tax (rate)

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• F-10-46/2017/CT/5(90) - dated 1-7-2017 - Chhattisgarh SGST
  To notify the turnover limit for Composition Levy

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• F-10-45/2017/CT/5(89) - dated 1-7-2017 - Chhattisgarh SGST
  To Rescind notifications of exemption under VAT

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• F-10-44/2017/CT/V (87) - dated 29-6-2017 - Chhattisgarh SGST
  Amendment in Schedule (I) and Schedule (II) notified under section 9 (1)

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• F-10-44/2017/CT/5(88) - dated 29-6-2017 - Chhattisgarh SGST
  Forms -other than Registraion and Compostion Rules

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• F-10-44/2017/CT/5(86) - dated 29-6-2017 - Chhattisgarh SGST
  HSN Code in invoice

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• 02/2017-State Tax (Rules) - dated 29-6-2017 - Chhattisgarh SGST
  Rules other than Registraion and compostion rules

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• F-10-40/2017/CT/5(68) - dated 28-6-2017 - Chhattisgarh SGST
  appointed day for some provisions of certain sections under GST.

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• F-10-40/2017/CT/5(67) - dated 28-6-2017 - Chhattisgarh SGST
  Registraion and compostion rules

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• F-10-40/2017/CT/5(67) - dated 28-6-2017 - Chhattisgarh SGST
  Forms-Registraion and Compostion rules

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• 17/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator [Section 9 (5)]

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• 16/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify specialised agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under GST Act [Section 55]

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• 15/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the condition of non-availability of refund of unutilized ITC for supply of service specified in Item 5(b) of Schedule II of GST Act (construction of building, complex etc.) [Section 54 (3)]

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• 14/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the GST Act [Section 7 (2)]

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• 13/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the categories of services on which tax will be payable under reverse charge mechanism under GST Act [Section 9 (4)]

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• 12/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the exemptions on supply of services under GST Act [Section 11(1)]

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• 11/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  To notify the rates for supply of services under GST Act and value of construction services and lottery [Section 9 (1), 11(1),15(5), 16(1)]

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• 10/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  Exempts intra-State supplies of second hand goods received by a registered person,

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

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• 08/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  GST exemption from reverse charge upto ₹ 5000 per day under section 11 (1)

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

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• 06/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  Notification prescribing refund of 50% of GST on supplies to CSD under section 55

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• 05/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  Specifying supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54 (3)

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• 04/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  Notification prescribing reverse charge on certain specified supplies of goods under section 9 (3)

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• 03/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  2.5% concessional GST rate for supplies to Exploration and Production notified under section 11 (1)

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• 02/2017 State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  GST exempt goods notified under section 11 (1)

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• 01/2017-State Tax (Rate) - dated 28-6-2017 - Chhattisgarh SGST
  GST Rate Schedule notified under section 9 (1)

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• F-10-40/2017/CT/5(65 - dated 27-6-2017 - Chhattisgarh SGST
  Appointment of officers under GST

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• F-10-40/2017/CT/5(64) - dated 21-6-2017 - Chhattisgarh SGST
  Persons exemted from Registration engaged in making supply on which tax is paybale under reverse charge Section 9(3)

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• F-10-40/2017/CT/5(63) - dated 21-6-2017 - Chhattisgarh SGST
  Notifying Common Portal

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• F-10-40/2017/CT/5(62) - dated 21-6-2017 - Chhattisgarh SGST
  appointed day for some provisions of certain sections under GST.

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• 38/1/2017-Fin(R&C)(10) - dated 4-7-2017 - Goa SGST
  The Goa Goods and Services Tax (Third Amendment) Rules, 2017.

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• 38/1/2017-Fin(R&C)(01/2017-Rate) - dated 30-6-2017 - Goa SGST
  Notifies the rate of the state tax.

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• 06/2017-State Tax (Rate) - S.O. 036 - dated 29-6-2017 - Jharkhand SGST
  Entitlement to claim refund for the purpose of canteen store department under section 55 of the Jharkhand Goods and Services Tax Act, 2017

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• 05/2017-State Tax (Rate) - S.O. 035 - dated 29-6-2017 - Jharkhand SGST
  U/s 54(3) of Jharkhand Goods and Services Tax Act, 2017 notifying the goods in respect of which no refund of unutilised input tax credit shall be allowed

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• 04/2017-State Tax (Rate) - S.O. 034 - dated 29-6-2017 - Jharkhand SGST
  Reverse charge on specified supply of goods under section 9(3) of the Jharkhand Goods and Services Tax Act, 2017

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• 03/2017-State Tax (Rate) - S.O. 033 - dated 29-6-2017 - Jharkhand SGST
  Concessional rate of petroleum operations for supply of goods under section 11(1) of the Jharkhand Goods and Services Tax Act, 2017

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• 02/2017-State Tax (Rate) - S.O. 032 - dated 29-6-2017 - Jharkhand SGST
  Exempted supply of goods under section 11(1) of the Jharkhand Goods and Services Tax Act, 2017

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• 01/2017-State Tax Rate - S.O. 031 - dated 29-6-2017 - Jharkhand SGST
  Rate of tax for services under section 9(1) of the Jharkhand Goods and Services Tax Act, 2017

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• Va Kar/GST/04/2017-S.O. 030 - dated 25-6-2017 - Jharkhand SGST
  Governor of Jharkhand to appoint the Authorities

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• Va Kar/GST/07/2017-S.O. 028 - dated 20-6-2017 - Jharkhand SGST
  Jharkhand Goods and Services Tax Rules, 2017

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• Va Kar/GST/04/2017-S.O. 027 - dated 20-6-2017 - Jharkhand SGST
  Common Portal of the GST Act

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• Va Kar/GST/04/2017-S.O. 026 - dated 20-6-2017 - Jharkhand SGST
  Category of persons exempted from obtaining registration

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• Va Kar/GST/04/2017-S.O. 025 - dated 20-6-2017 - Jharkhand SGST
  The provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the Jharkhand Goods and Services Tax Act, 2017 shall come into force

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• S.R.O. No. 293/2017 - dated 28-6-2017 - Orissa SGST
  Category of persons exempted from obtaining registration

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• S.R.O. No. 292/2017 - dated 28-6-2017 - Orissa SGST
  The provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9),43 except the proviso to sub-section (9),44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the Odisha Goods and Services Tax Act, 2017, shall come into force

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• S.R.O. No. 290/2017 - dated 24-6-2017 - Orissa SGST
  Notification of Officers Under Odisha GST Act

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• S.R.O. No. 287/2017 - dated 22-6-2017 - Orissa SGST
  Notification for enforcement of Common Goods and Services Tax Electronic Portal

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• S.R.O. No. 286/2017 - dated 22-6-2017 - Orissa SGST
  Notification for Implementation of certain provisions of Odisha GST Act, 2017

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SEZ

• S.O. 2213(E) - dated 7-7-2017 - SEZ
  Central Government hereby notifies the 2.89 hectares (7.14 acres) area at Resapuvanipalem Village, Old TB Hospital Area, Visakhapatnam, in the State of Andhra Pradesh and constitutes an Approval Committee

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Circulars / Instructions / Orders

GST - States

• 06/2017 - dated 30-6-2017
  e-WAYBILL UNDER WBGST ORDINANCE, 2017

Customs

• 29/2017 - dated 17-7-2017
  Operational problems being faced by EOU in GST regime consequent to amendment in Notification no. 52/2003-Customs dated 31-3-2003

Highlights / Catch Notes

GST

• GST on legal services - Constitutional validity of Section 9(4) of CGST Act - Delhi High Court passed an order giving interim relief to the Advocates
  Visit to Get Source

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Income Tax

• TDS liability - permitting the petitioner to correct PAN of the deductee - system is programmed to permit correction only in case four digits/characters are to be changed and no more - Some anomalous situations would arise if genuine and bona fide errors are not allowed to be corrected - HC
  Visit to Get Source

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• Assessment u/s 153C - existence of satisfaction note - The satisfaction note of the AO of the Assessee, being a carbon copy of the satisfaction note of the AO of the searched person also fails to fulfill the jurisdictional requirement - all the proceedings quashed - HC
  Visit to Get Source

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• Expenditure towards higher studies expenses of the Directors of the company - simply because a director is sent abroad for further education by itself would not sufficient to establish such a claim without establishing other relevant facts and circumstances. - HC
  Visit to Get Source

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• TDS u/s 194C - Deduction u/s 40(a)(ia) - the expenditure incurred under the head ‘freight charges’ are not liable for disallowance u/s 40(a)(ia)
  Visit to Get Source

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• LTCG - Entitled to the benefit of proviso to section 112(1) on sale of equity shares of a listed company - admittedly, the assessee is a non-resident and JIL is a listed company. Therefore, proviso to section 112(1) was squarely applicable
  Visit to Get Source

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• Cess on green leaf - allowable expenditure - whether directly attributable to core agriculture activities - the amount paid as cess was held as eligible for deduction in computing the composite income under Rule 8 of I.T. Rules
  Visit to Get Source

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Customs

• Benefit of rebate on export of goods - availing the benefit of Notification No.93/2004-Cus - Once an export transaction has been used for seeking discharge of Advance Authorizations issued under the CA, the same export transaction cannot be used for seeking rebate of duty under CER, as the rebate - HC
  Visit to Get Source

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• 100% EOU - it was not possible for the respondents to make recoveries after unduly long period of time which in the present case happens to be more than seven years, that too, without any explanation for such delayed action. - HC
  Visit to Get Source

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Central Excise

• CENVAT credit - capital goods - structurals, cement, as also, iron and steel, which are used to erect foundations - whether the "user test" is applied, or the test that they are the integral part of the capital goods is applied, the Assessees, in these cases, should get the benefit of Cenvat Credit, as they fall within the scope and ambit of both Rule 2(a)(A) and 2k of the 2004 Rules. - HC
  Visit to Get Source

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• Manufacture - structures emerging during the course of erection of such chimney - whether fabrications carried out by the appellant at site of M/s.NTPC in connection with execution of the work order for erection of Chimney will be liable to Central Excise duty? - Held no - Test of marketability fails
  Visit to Get Source

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• Classification of goods - Edible preparation - It is a fact on record that the goods manufactured by the respondent are put up in unit containers. Therefore, obviously they will not fall in the category ‘others’ which includes 1901.92
  Visit to Get Source

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Case Laws:

• GST

• 2017 (7) TMI 542
  GST on legal services - Constitutional validity of Section 9 (4) of CGST Act - collection of GST on ‘reverse charge’ basis from a person registered under the CGST Act, IGST Act or DGST Act in respect of goods supplied and services received by such person from a person who has not been so registered - whether the impugned Notification No.13/2017 dated 28th and 30th June, 2016 cover all legal services not restricted to representational services rendered by legal practitioners? Whether there is any requirement of registration by legal practitioners and/or firms rendering legal services under the CGST Act or the IGST Act or the DGST Act even if they are earlier registered under the FA? Held that:- As of date there is no clarity on whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism. If in fact all legal services are to be governed by the reverse charge mechanism than there would be no purpose in requiring legal practitioners and law firms to compulsorily get registered under the CGST, IGST and/or DGST Acts. Those seeking voluntary registration would anyway avail of the facility under Section 25 (3) of the CGST Act (and the corresponding provision of the other two statutes). There is therefore prima facie merit in the contention of Mr Mittal that the legal practitioners are under a genuine doubt whether they require to get themselves registered under the three statutes. In the circumstances, the Court directs that no coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST Act, the IGST Act or the DGST Act till a clarification is issued by the Central Government and the GNCTD and till further orders in that regard by this Court. It is clarified that any lawyer or law firm that has been registered under the CGST Act, or the IGST Act or the DGST Act from 1st July, 2017 onwards will not be denied the benefit of such clarification as and when it is issued. It is further clarified that if an appropriate clarification is not able to be issued by the Respondents 1 and 2 by the next date, the Court will proceed to consider passing appropriate interim directions.

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• Income Tax

• 2017 (7) TMI 541
  Deduction u/s 80IB(4) allowed by HC [2013 (5) TMI 124 - BOMBAY HIGH COURT] - Judgment reserved. Learned counsel for both the parties may file their brief written submissions within a period of one week.

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• 2017 (7) TMI 540
  TDS liability - permitting the petitioner to correct PAN of the deductee - system is programmed to permit correction only in case four digits/characters are to be changed and no more - Held that:- In the present case, as noted, section 200A itself refers to correction statement of tax deducted at source. The intimation sent to the petitioner of shortfall in deduction of tax also referred to the possibility of correction but limited it to certain characters. In the affidavit in reply also same stand has been taken. Some anomalous situations would arise if genuine and bona fide errors are not allowed to be corrected only on the basis that such correction travelled beyond two alphabets and two numeric characters which the system would not accept. As is contended in the present case, the deductee i.e. M/s. Star (India) Pvt. Ltd. has already discharged its full tax liability. If the full effect of the department's decision is allowed, the deductee would not get the benefit of 2% of tax deducted by the petitioner and already deposited with the Government revenue. Since the PAN does not match, the deductor i.e. the petitioner would pay additional 18% which though is styled in the name of tax deducted at source, would be additional to what M/s. Star (India) Pvt. Ltd. would have paid by way of tax to the department. Essentially, “the tax deducted at source” would have to be given credit to the payee on whose behalf such tax is being deducted. In the present case, payee having already discharged its tax liability independently, such amount would remain in Government coffers not accounted for anyone's tax liability. In the result, we hold that the decision of department in not permitting the petitioner to correct PAN of the deductee in the statement of tax deducted at source was impermissible. In the present case, department shall verify the petitioner's claim of actual deduction of tax at the prescribed rate in case of M/s. Star (India) Pvt. Ltd., verify that the PAN sought to be corrected by the petitioner belongs to the said agency and that the tax was actually deposited in case of such deductor. If these questions are answered in favour of the assessee, the department shall not insist on raising higher demand from the petitioner of failing to deduct tax at source in terms of subsection( 1) of section 206AA of the Act.

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• 2017 (7) TMI 539
  Assessment u/s 153C - existence of satisfaction note - Held that:- While the documents may ‘pertain to’ the Assessee, but in the context explained above, they cannot be presumed to be documents that ‘belonged to’ the searched person. Consequently, even with regard to these documents, the jurisdictional requirement under Section 153 C (1) of the Act, of the AO of the searched person having to be satisfied that the said documents do not belong to searched person but to the Assessee, has not been fulfilled. The satisfaction note prepared by the AO of the searched person does not fulfill the legal requirement spelled out in Section 153C (1) of the Act. The satisfaction note of the AO of the Assessee, being a carbon copy of the satisfaction note of the AO of the searched person also fails to fulfill the jurisdictional requirement. No reasons are recorded for the identical conclusion in either satisfaction note that the seized documents mentioned therein belong not to the searched person but to the Assessee. For all the aforementioned reasons, the two satisfaction notes dated 13th and 19th March, 2014 issued by the AOs of the searched person and the Assessee respectively, and all proceedings consequent thereto, are hereby quashed. - Decided in favour of assessee.

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• 2017 (7) TMI 538
  Reopening of assessment - reason to believe - disallowance u/s 35D and Section 14A - Held that:- What is apparent on seeing the records of the present case is that during the scrutiny assessment, the claims of the petitioner were thoroughly scrutinized and an Assessment Order was accordingly passed on 21.12.2010. From the communications on record which were exchanged inter se between the assessee and the Revenue, it is apparent that on being satisfied with the questions that were answered by the assessee, the Revenue passed an order under Section 143(3) of the Income Tax Act and the question of Section 35D and Section 14A of the Income Tax Act stood concluded. It is apparent from “reasons to believe” that the “reasons to believe”, are nothing but mere ‘Change of Opinion’. As held by this Court in the decisions referred to hereinabove, it is not open for the Revenue to reopen the assessment in exercise of powers under Section 148 of the Income Tax Act only under the pretext of ‘Change of Opinion’. Accordingly, the notice dated 26.03.2013 issued under Section 148 of the Income Tax Act and the consequential Assessment Order dated 27.01.2014 passed by the respondents is quashed and set aside. - Decided in favour of assessee.

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• 2017 (7) TMI 537
  Additions made by the Settlement Commission under the head of 'unaccounted production' - Held that:- The factors taken into account by the Settlement Commission, which in our opinion were relevant, were that registers relating to the manufacturing unit of the company which were found, established unaccounted production, admission by the employees that the company was engaging in such unaccounted production, the number of employees at the time of search being found far in excess of what was recorded in the books of accounts and the statement of the employees that the registers for the earlier periods were destroyed under the instructions of the management. Based on such facts, if the Commission made a projection of the available figure of unaccounted production over the entire period by adopting what can, at best, be stated as a conservative figure and by recording proper reasons, it would not be possible for us to interfere with such ultimate conclusion of the Settlement Commission. Disallowance of claim of deduction under section 80IB - Held that:- The process of manufacturing jarikasab commenced from acquisition of jumbo rolls of metalized lacquered polyester film. Such raw material undergo processes which can be broadly classified into three categories before the final product of jarikasab would come into existence. The entire process was one integrated manufacturing process. By no stretch of imagination a single integrated manufacturing process can be sub-divided or bifurcated into different parts for ascertaining whether at a particular stage a new article or thing had come into existence through manufacturing process. The approach of the Settlement Commission was wholly erroneous. When a single integrated manufacturing activity is shown to bring into existence entirely new and a distinct mercantile product through the human and mechanical intervention, it was simply not open for the Settlement Commission to segregate a portion of such manufacturing process to hold that since no new marketable product came into existence, such process did not amount to manufacturing. Even within the narrow confines of our judicial review, in the order of Settlement Commission on this issue, we must intercept. This issue is therefore decided in favour of the assessee. Expenditure towards higher studies expenses of the Directors of the company - Held that:- The higher education of a partner of a firm or director of a company may have different parameters and ramification. In a case if it is aimed at improving the efficiency of the firm or the person concerned is expected to contribute better with the acquisition further knowledge, it may be open for the assessee to claim the deduction. However, simply because a director is sent abroad for further education by itself would not sufficient to establish such a claim without establishing other relevant facts and circumstances. The entire issue is factual in nature. Since no perversity is established we refuse to interfere.

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• 2017 (7) TMI 536
  TDS u/s 194C - Deduction u/s 40(a)(ia) - expenditure incurred by the assessee under the head ‘freight charges’- Held that:- As the assessee neither entered into any oral or written agreement with the assessee nor taken vehicles on regular contract basis. The assessee has taken vehicles on mere hire basis to be deployed in the places where he has undertaken transport contract with M/s. ITC Limited. The risk associated with the goods till transportation to the destination is rest with the assessee. The lorry owners/drivers had not undertaken any responsibility of risk in the goods. Therefore, we are of the view that the payments made to lorry owners are not liable for TDS as per the provisions of section 194C of the Act, consequently, the expenditure incurred under the head ‘freight charges’ are not liable for disallowance u/s 40(a)(ia) of the Act. The CIT(A) after considering relevant submissions of the assessee has rightly deleted additions made by the A.O. - Decided in favour of assessee. Computation of capital gain on sale of land - assessable under the head ‘income from business’ or under the head ‘ income from capital gains - application of the provisions of section 50C - Held that:- The income from sale of land is assessable under the head ‘income from business’, but not under the head ‘income from capital gains’. We further observed that the assessee has filed necessary evidences to prove, he had converted his capital asset into stock-in-trade, developed the said land before it was sold. The assessee has computed resultant profit from sale of the land by applying the provisions of section 45(2) of the Act. When the income is computed under the head ‘income from business’, the provisions of section 50C of the Act has no application for determination of full value of consideration for the purpose of computation of capital gain. The CIT(A) after considering the relevant provisions of the Act and also submissions of the assessee rightly directed the A.O. to delete additions made towards computation of capital gains. - Decided in favour of assessee.

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• 2017 (7) TMI 535
  Exemption claimed by the assessee under Section 11 - Held that:- The activity of the assessee cannot be considered to be business activity. It was further found that the assessee is not providing any services to any trade or commerce or industry. Therefore, the proviso to Section 2(15) of the Act is not applicable to the assessee. Tribunal is of the considered opinion that the assessee is entitled for exemption under Section 11 of the Act. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to grant exemption under Section 11 of the Act. Depreciation in respect of the assets, the cost of which was already allowed as application of income under Section 11 - Held that:- Depreciation under Section 32 of the Act falls under Chapter IV of the Act which provides for computation of total income. Section 11 of the Act falls under Chapter III of the Act which deals with income which does not form part of total income. Therefore, this Tribunal found that provisions of Section 32 of the Act cannot override the provisions of Section 11 of the Act. In other words, the provisions of Section 11 which falls under Chapter III would override the provisions of Section 32 of the Act which provides for depreciation which falls under Chapter IV of the Act. The assessee is not eligible for depreciation in respect of the assets, the cost of which has already been allowed as application of income under Section 11 of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. See The Music Academy Madras Versus The Deputy Director of Income Tax (Exemptions) , Chennai [2016 (5) TMI 165 - ITAT CHENNAI ]

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• 2017 (7) TMI 533
  Disallowance of prior period expenditure - Held that:- One point which clearly emerges is that there is no dispute insofar as the nature of the expenditure is concerned, as being relatable to the business of the assessee. It is also correct that the assessee is following the mercantile system of accounting, so however, the impugned expenses may relate to an earlier period, but they cannot be said to arise in the preceding year. Quite clearly, the expenses have arisen and crystallized during the year under consideration inasmuch as the requisite bills, details, etc. have been received by the assessee for incorporation in accounts by its Head office during the year under consideration and, therefore, the same have been rightly accounted for in the instant year. There is no controversion to the assertion of the learned representative that such practice has been consistently followed by the assessee and that such practice evens out any difference in deductibility of the total expenses over a period of time. Considering the aforesaid, we find no reason to deny the claim of assessee for deduction of the impugned expenditure.- Decided in favour of assessee.

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• 2017 (7) TMI 532
  Entitled to the benefit of proviso to section 112(1) on sale of equity shares of M/s Jagatjit Industries Ltd. a listed company - Held that:- It is evident that where the tax payable in respect of the transfer of a long term capital asset in the case of a listed company exceeds 10% of the amount of the capital gain before giving effect to the provisions of second proviso to Section 48, then such excess shall be ignored for the purpose of computing the tax payable by the assessee. In the case under appeal before us, admittedly, the assessee is a non-resident and JIL is a listed company. Therefore, proviso to section 112(1) was squarely applicable and learned CIT(A) rightly directed to Assessing Officer to give benefit of proviso to Section 112(1). We, therefore, find no infirmity in the order of learned CIT(A). The same is sustained. - Decided against revenue

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• 2017 (7) TMI 531
  Cess on green leaf - allowable expenditure - whether directly attributable to core agriculture activities which is taxable under state agriculture income tax, beyond the purview of Central Income Tax ? - Held that:- The issue is concluded by the decision in the case of CIT vs AFT Industries Ltd. (2004 (7) TMI 81 - CALCUTTA High Court) where the amount paid as cess was held as eligible for deduction in computing the composite income under Rule 8 of I.T. Rules. This issue is, therefore, decided in favour of the assessee The fact that the SLP is pending before the Hon'ble Supreme Court against the decision of the Hon'ble Calcutta High Court in respect of AFT Industries Ltd. vs CIT (supra) will not have any effect since the Hon'ble Apex Court has neither set aside the orders of the Calcutta High Court nor granted any stay. The learned counsel for the Assessee also brought to our notice the decision of the Hon’ble Supreme Court in the case of CIT Vs. M/S.Apeejay Tea Co. Ltd. [2015 (8) TMI 1260 - SUPREME COURT] wherein the Hon’ble Supreme Court has upheld view as was taken in the case of AFT Industries Ltd. (supra). In view of the above, the appeal by the revenue is dismissed.

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• 2017 (7) TMI 530
  Applicability of provisions of section 50C - valuation as determined by the Valuation Officer - computation of capital gains - Held that:- Before us ld.A.R. has submitted that certain material developments had taken place like bequeathing assessee’s share in land in favour of Dilip Sopal, City Survey Officer passing the order by replacing the name of assessee with that of Dilip Sopal, assessee obtaining stay against the inclusion of name of Dilip Sopal in place of assessee and Dilip Sopal subsequently selling the portion of land to another developer. We are of the view that the aforesaid developments are material developments which goes to the root of the matter and the entire issue needs to be re-looked into in the light of the aforesaid developments. Assessee has also placed on record the copy of the aforesaid orders, documents as additional evidences. Thus we are of the view that the issue needs to be re- examined. Appeal of the assessee is allowed for statistical purpose.

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• Customs

• 2017 (7) TMI 514
  Benefit of exemption from SAD - import of 3463.199 MTs of Vinyl Chloride Monomer - The department was of the view that since all the Bills of Entry were dated prior to 17.07.1998, the respondent is liable to pay SAD - Held that: - N/N. 02/2003 directs that no SAD is required to be paid for the goods imported during the period from 02.06.98 to 31.07.98. The Commissioner (Appeals) has rightly relied upon this Notification to allow the benefit of SAD exemption. Therefore as per the N/N. 02/2003, the respondents are eligible for the benefit of exemption - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 513
  Rebate - Whether the petitioner is entitled to rebate of duty under Rule 18 of the Central Excise Rules, 2002 (“CER"), having availed of the benefit of Notification No.93/2004-Cus dated 10th September, 2004 issued u/s 25 (1) of the CA, 1962? Held that: - It is the admitted position that the petitioner has availed the benefits under the Advance Authorizations by importing input material and exporting the manufactured goods. The petitioner has, thus, availed of the benefit of non-payment of customs duty on the whole of the imports which it made during the relevant period. The discharge of the Advance Authorizations given in favour of the petitioner was as per N/N.93 of 2004 - In the present case, there is a categorical reference to Rule 18 in Notification No.93. It is a conscious and deliberate inclusion, inasmuch as, the policies envisaged in Rule 18 of the CER and Notification No. 93 is grant of rebate on payment of excise and exemption from payment of customs duty respectively. A party cannot be allowed to avail of both the exemptions when clearly, the intention seems to be to permit only one exemption. Once an export transaction has been used for seeking discharge of Advance Authorizations issued under the CA, the same export transaction cannot be used for seeking rebate of duty under CER, as the rebate, in this case, is subject to the conditions and limitations, as specified in Notification No.93, which clearly requires that ‘the facility under Rule 18 or Sub-rule (2) of 19 of CER, 2002’ ought not to have been availed. The Petitioner’s right to seek rebate is clearly limited by this condition and hence it is not entitled to rebate under Rule 18 CER - petition dismissed - decided against petitioner.

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• 2017 (7) TMI 512
  100% EOU - The Development Commissioner, KASEZ, issued a show cause notice dated 10.7.2015 in which it was pointed out that the petitioner had not refunded the amount of ₹ 55.75 lacs which was erroneously paid to the company and, therefore, to show cause why action should not be taken against the petitioner in terms of Foreign Trade (Development & Regulation) Act, 1992 - why on the purchases made by an EOU from another EOU, same would not qualify for Central Sales Tax reimbursement? Held that: - A minute scrutiny of these provisions contained in para. 6.11 would reveal that the language used in clauses (a), (b) and (c), in general, was not made limited to the supplies from a DTA unit. As noted, clauses(a) and (b) both confined their application to the supplies made by the DTA unit. Clause(c) itself contained two situations. In subclause( i) what was envisaged was reimbursement of CST on goods manufactured in India. Subclause (ii) envisaged exemption from payment of CST on goods purchased from DTA on goods manufactured in India. Thus the policy wherever intended to limit the benefit of an EOU on procurement made from a DTA unit, it was so specifically provided. When therefore, subclause( i) of clause (c) of para 6.11 did not make any such reference to the procurement from a DTA unit but used the expression “goods manufactured in India”, it must be understood that this clause would govern the goods purchased by EOU unit from any unit as long as the condition of goods being manufactured in India is satisfied. In plain terms, therefore, the Foreign Trade Policy 20042-009 did not limit the benefit of CST reimbursement to a EOU on purchases made only from a DTA unit. We have noticed that the Director General of Foreign Trade in terms of section 6 of the Act has certain delegated powers which would include powers to frame such procedures. Subsection( 3) of section 6 however, excludes the delegation of such powers to those contained under sections 3, 5, 15, 16 and 19 of the Act. In exercise of powers under section 6, the Director General of Foreign Trade could not have framed or altered the Foreign Trade Policy. On the goods manufactured in an EOU, excise duty would be leviable, only when such goods are brought to any other place in India. We would have certainly considered this angle further, but for the fact that in the later year, the Government of India itself has recognised the benefit of CST reimbursement on the purchases made by the EOU from another EOU. It was for this purpose that we had referred to and noted relevant portion of the Foreign Trade Policy 2015-2020 and the procedure for claiming the CST reimbursement. We may recall that insofar as base policy is concerned for grant of such CST reimbursement, no change has been brought about in the Foreign Trade Policy 2015-2020 as compared to the Foreign Trade Policy 2004-2009. Despite this, base policy being the same, the procedure for claiming reimbursement of CST on supplies made to EOU under the current policy now envisages such reimbursement on any sales made to a EOU not only from DTA but also from EOU, SEZ, etc. The claim pertained to period between 2006 and 2008. They were made at the relevant time and granted by the respondents without any dispute. Such reimbursements are now sought to be recovered for which show cause notice came to be issued on 10.7.2015. It is not the case of the respondents that the petitioner was responsible for any misrepresentation or misstatement of facts which resulted into such erroneous reimbursement being granted and which came to the notice later on. That being the position, it was not possible for the respondents to make recoveries after unduly long period of time which in the present case happens to be more than seven years, that too, without any explanation for such delayed action. Petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 511
  Reduction of quantum of redemption fine and penalty - release of confiscated Indian Currencies - implementation of order of Commissioner of Customs (Appeal-I) - Held that: - reliance was placed in the case of M/s NVR Forgings Versus Union of India and others [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT], where it was held that the order in appeal as well as revisionary order had been passed by the officers of the same rank which is not permissible as per law - this Court is inclined to issue direction to the respondents for implementation of the order passed by the Commissioner of Customs (Appeal-I) by releasing the Indian Currencies, subject to the payment of redemption fine and penalty, as ordered by the Commissioner of Customs (Appeal-I) and furnishing a bond securing the interest of the Revenue - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 510
  Renewal of CHA licence - the petitioner's contention is that the license is liable to be renewed for a full term of 10 years in terms of the Regulations - Held that: - this Court, at this juncture, does not propose to render any finding on this aspect as the SCN has been adjudicated and orders are to be passed coupled with the fact that the license has since been renewed for a period of six months by order dated 03.7.2017 - petition dismissed - decided against petitioner.

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• 2017 (7) TMI 509
  Jurisdiction - competence of officers of DRI/Commissioner of Customs(Prev.) to issue SCN - Held that: - While dealing with similar such matters relating to jurisdiction of these authorities to proceed under Customs Act, 1962, the Tribunal in various cases held that the matter has to go back to the original authority for fresh decision after the legal position was settled by the Hon’ble Supreme Court - the impugned orders set aside and matter remanded to the original authorities for fresh decision - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (7) TMI 534
  Oppression and mismanagement - Held that:- Mismanagement of funds done at the instance of the Respondents who have failed to comply with the conditions of the bank vis-a-vis the loan accounts. In addition to the aforementioned, according to the contentions of the Petitioner, the Petitioner had at an earlier point of time through a letter dated 21st October, 2010 had requested clarification from R1 regarding the irregularities and the illegalities that had arisen in the Company by virtue of the appointments of managing director, director and further issue and allotment of shares. It can be seen that the increase in authorized share capital of the Company and the subsequent issue and allotment of further shares to the Respondents was done in violation of the Articles of Association and the Companies Act, 1956. The appointment of R3 as a director and R2 as the managing director was also done in violation of the Companies Act, 1956 and the Articles of Association of the Company. The Respondents have not held either board meetings or general meetings and have failed to serve upon notices to the Petitioner regarding the same. Additionally, the Respondents have denied access to the Petitioner into the factory premises and have not regularized the Company's account maintained with the Punjab National Bank and defaults in payment of dues against the loans sanctioned by The Punjab National Bank, are apparent, which indicates towards acts of mismanagement. Further the Petitioner has also contended that the statutory auditors appointed by the Respondents for the Company have not reported any qualification on the operation and financial transaction of the Company, or about related party transaction, illegal allotment of shares, illegal appointment of directors and gross violation of the provisions of the Companies Act, 1956. In the present Petition, since the Petitioner has been reduced to an insignificant minority due to the acts of the Respondents whereby they increased the authorized share capital of the Company and issued and allotted further shares of the Company without notifying the Petitioner about the same, such acts of Respondents constitute acts of oppression. Therefore, in the light of the contentions and pleading of the parties, it is clear that there is a case of oppression against the Petitioner by the Respondents. Petition is allowed. The Respondents are hereby directed to reverse the change in the authorized capital to the initial amount and undo the issue and allotment of shares to the Respondents. It is hereby also being directed that R3's appointment as the director of the Company and R2's appointment as the managing director be reversed and a managing director be appointed in the Company through proper procedure as per statutory provisions.

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• 2017 (7) TMI 504
  Revocation of the leave granted to the Plaintiffs under Order 1 Rule 8 of the Code of Civil Procedure, 1908 - Held that:- The answer must, in turn, depend on the very position of the others who are claimed to be represented insofar as their interest in the suit is concerned. If by its very nature, their interest in the suit is not the same as the plaintiff, the application for leave must fail. If it is the same, the application must succeed. As we have noted above, by its very nature the interest in this suit of others of the alleged class is not the same as the Plaintiffs. If that is so, it does not matter that some others of that class have actually come forward in support of the Plaintiffs. That only means that there are, as it turns out, some others who claim the same right to relief in respect of, or arising out of, the same act or transaction, or series of acts or transactions. If that is so and if common questions of law or fact would arise if separate suits were to be brought by them, there is a case for joinder of those others under Order 1 Rule 1. If not originally joined, they may seek joinder under Order 1 Rule 10. But it is still not a case for leave under Order 1 Rule 8. Apart from impleadment of parties under Order 1 Rule 10, the law also envisages several other ways of dealing with such situations. There could be clubbing of several suits for trial (if several individual suits are filed) or there could even be a test case (if other suits could later follow). The rationale behind this statement of law is not far to seek. If the suit is truly a representative suit, any decree passed therein would bind every other person who is represented in the suit. A number of such other persons whom the Plaintiffs claim to represent, but who actually oppose the suit, will be forced to join the suit with a view to contest it, for if they do not, the decree, which they perceive to be to their detriment, will bind them. That would be clearly unjust, if, in the first place, there was no warrant in allowing the Plaintiff to represent them. In the present case, the non-promoter shareholders, who do not want reinstatement of Mistry, would be bound to accept his reinstatement if the Plaintiffs were to succeed and on top of it, suffer such reinstatement as something which was prayed for on their behalf or for their benefit. To avoid such predicament, they would be forced to join the suit and defend it, when they really had no intention or obligation to do so. Nothing could be more unjust. The present suit does not satisfy the requirements of Order 1 Rule 8. The Chamber Summons is, in the premises, allowed by revoking the leave granted on 9 December 2016 in Judges Order No. 215 of 2016.

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• Insolvency & Bankruptcy

• 2017 (7) TMI 505
  Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Whether the instant petition has been filed on the basis of a valid power of attorney? - Held that:- Under sections 271 and 272 of the Companies Act, 2013 as originally enacted, any creditor or creditors could file a petition for winding up of the company for its inability to pay the debts. These provisions had not been enforced till the time, the Code, became effective. The clause pertaining to the inability of the company to pay the debt entitling the creditor to file a petition for winding up, has been omitted as per the amendment to these sections incorporated in the 11th Schedule of the Code. So, the only remedy to a creditor against a company is to take steps for winding up of the company, for which the appropriate recourse is provided under sections 7 and 9 of the Code exclusively in respect of the financial and operational creditors respectively. So, the authority in favour of Pankaj Sachdeva, which is recent in time, authorising him to file the winding up petition etc. would fully cover the authority to file the insolvency resolution process under the Code. Whether the petitioner is entitled to file this petition as an assignee of the original supplier? - Held that:- In view of the above admitted documents, the petitioner would definitely comes within the definition of the term 'operational creditor', as defined under Section 5(20) of the Code, as meaning a person to whom an operational debt is owed and includes the person to whom such debt has been legally assigned or transferred. The learned senior counsel for the respondent submitted that the documents relied upon by the petitioner would not be the illegal assignment, but perusal of the definition shows that it has wide connotation to include the petitioner without an iota of doubt. The respondent's version is not that it has paid the amount of these supplies to the original supplier or to the petitioner. The issue is accordingly held in favour of the petitioner. Whether there is non-compliance of clause (c) of Section 9 (3) of the Code? If so, Its effect? - Held that:- The contention that the respondent is not prejudiced, having admittedly not made the payment cannot be accepted, there being non- compliance of the mandatory requirement of Section 9(3)(c) of the Code. The intent of the legislature for laying down the mandatory compliances is keeping in view the time line within which an application is required to be decided i.e. 14 days and that too even in the absence of the respondent despite being served or without calling upon the evidence. Therefore, there has to be uniformity. In ensuring the mandatory compliances as aforesaid. In the instant case, there being non-compliance of the mandatory requirement of Section 9(3)(c) of the Code-the Issue is held against the petitioner accordingly. Whether the petitioner had the notice of the existence of the dispute, as defined in the Code? - Held that:- The definition of dispute is inclusive and not exhaustive. The same has to be given wide meaning provided it is relatable to the existence of the amount of the debt, quality of goods or service or breach of a representation or warranty.Having given my thoughtful consideration to the rival contentions of the learned counsel for the parties and appraisal of the documents on record, would decline to attach much weight to the fetters Annexures R-9 and R-10 in preference to the exchange of emails and contradictions referred to by learned senior counsel for the petitioner. For the same reason, the institution of civil suit in the Bombay High Court after the receipt of demand notice under Section 8 of the Code, is also not considered as of much help to the respondent. Whether the petitioner does not haw the locus-standi to file the instant petition, having already been reimbursed by the insurer of the goods? - Held that:- We do not think that the right of the petitioner, if otherwise maintainable, could be defeated solely on that ground, as the corporate debtor cannot escape from its liability under the contract, in case it has made a default in payment of debt. The issue is accordingly held against the respondent.

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• Service Tax

• 2017 (7) TMI 529
  Levy of penalty u/s 28 of the FA, 1994 at a reduced rate of 25% - authority of the Commissioner or the Tribunal to reduce the penalty - Held that: - reliance placed in the case of Commissioner of Central Excise vs. GP Prestress Concrete Works [2012 (8) TMI 933 - GUJARAT HIGH COURT], where it was held that the assessee is required to be given an option by the adjudicating authority whether he is willing to pay the duty with interest and 25% penalty within 30 days from the date of adjudication. Whenever such option is not given, the facility of paying reduced penalty by fulfilling the condition of deposition of the same with interest within 30 days (along with tax dues if any) should be granted - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 528
  Valuation - abatement - Mandap Keeper service - Dry Cleaner service - CENVAT credit - Revenue is of the view that the appellant could not adduce any breakup or details of the amount of ₹ 11,723/- and could not produce any documentary evidence to prove their contention, in respect of allegation about abatement - the appellant submitted before me that the Cenvat credit availed in respect of Mandap Keeper Services & Dry Cleaner Services were reversed before issue of Show Cause Notice and such evidence was submitted to the Original Authority, which was examined - Held that: - matter remanded back to the Original Authority with direction to examine all the records that were already produced and now shall be produced during re-adjudication. The appellant also directed to produce all the evidences to establish their case along with reconciliation so as to enable the Original Authority to come to logical conclusion - appeal allowed by way of remand.

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• 2017 (7) TMI 527
  Refund claim - credit on various input services, claimed to have been used in the export of the goods - N/N. 41/2007-ST dated 06.10.2007 - Held that: - The Ld. Commissioner (Appeals) has rightly rejected the refund claim on the services which were not specified under the said notification as on the date of the claim so as to be eligible to the refund - retrospective effect cannot be granted to the said notification unless specifically, mentioned thereunder - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 526
  CENVAT credit - trading turnover - common input services were used for providing output services as well as for trading of the goods. It appeared to revenue that Rule 6 of Cenvat Credit Rules, 2004 were applicable only when the output service provider is engaged in both providing output service chargeable to service tax as well as exempted services and that trading activity was neither manufacture nor taxable service - Held that: - the issue is no more res-integra and is squarely covered by this Tribunal's decision in the case of M/s L. G. Electronics India Ltd. Vs Commissioner of Central Excise and Service Tax, Noida [2017 (3) TMI 1355 - CESTAT ALLAHABAD], where it was held that there is no allegation in the said Cause Notice that the appellants had taken credit of any inadmissible Cenvat credit. Further the Show Cause Notice dated 09/05/2011 states that Rule 6 of Cenvat Credit Rules, 2004 is not applicable in the present case. Therefore, the said Show Cause Notice did not make out a case for invocation of provisions of Rule 14 of Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 525
  Penalty u/s 77 and 78 - Banking and others Financial Services - Held that: - the said SCN dated 08.06.2010 is not sustainable in respect of Service Tax amount of ₹ 25,06,459/- since the said tax was paid alongwith applicable interest before issue of SCN. Therefore, as provided under Sub-Section 3 of Section 73 of Finance Act, 1994, this SCN in respect of said amount is not sustainable - penalty set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (7) TMI 524
  CENVAT credit - capital goods - componenets/spares/other accessories - scope of Rule 2(a)(A)(i) of the 2004 Rules - whether the structurals, cement, iron and steel, which are used in constructing foundations, would fall within the ambit and scope of Rule 2(a)(A)(iii), read with Rule 2(a)(A)(i) of the 2004 Rules? - N/N. 16/09. Held that: - structurals, cement, as also, iron and steel, which are used to erect foundations, would come within the definition of 'input' as they form part of the capital goods, which, in turn, are used in the manufacture of final product. The manner in which the Revenue seeks to read the provisions of Explanation 2 is flawed for the reason that the said Explanation cannot restrict the scope and ambit of the main provision, i.e., Rule 2k(i). Explanation 2 cannot be read in a manner that it constricts, the scope and ambit of the main provision, i.e., Rule 2k(i). The Court was, thus, clearly dealing with an exemption notification, and after applying a strict rule of construction, came to the conclusion that unless it is demonstrated that iron and steel structures, (which were claimed as component parts, within the meaning of sub-rule (5) of Rule 57Q), were essential in the manufacture of the sugar manufacturing unit or in the composition of the sugar manufacturing unit, they would not come within the ambit of the aforementioned exemption notification. MS structurals, which support the plant and machinery, which are, in turn, used in the manufacture of sugar and molasses are an integral part of such plant and machinery. The Assessee has clearly demonstrated that structurals as well as foundations, which are erected by using steel and cement are integral part of the capital goods (i.e., plant and machinery), as they hold in position the plant and machinery, which manufactures the final product. Therefore, in our opinion, whether the "user test" is applied, or the test that they are the integral part of the capital goods is applied, the Assessees, in these cases, should get the benefit of Cenvat Credit, as they fall within the scope and ambit of both Rule 2(a)(A) and 2k of the 2004 Rules. Appeal allowed - decided in favor of assessee.

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• 2017 (7) TMI 523
  Clandestine manufacture and removal - annual capacity of production - on 10.9.2011 a search was conducted by the Officers of Central Preventive Unit, Bhubaneswar-II acting on some alleged information that the petitioner was also manufacturing and clearing “Gutkha” of MRP ₹ 5/- per pouch under the brand name “Safal”, which was not declared by petitioner - natural justice - Held that: - the main edifice of the case of the department rests on the statements of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo, who state that they got the “Safal” brand “Gutkha” of MRP ₹ 5/- from the petitioner. Since the petitioner has taken a stand that during course of investigation neither any pouch of MRP ₹ 5/- of “Safal” brand “Gutkha” was seized nor any machinery with capacity to manufacture of “Safal” brand “Gutkha” pouch of MRP ₹ 5/- was seized and that there was no seizure of any document/diary/note book/computer printout showing manufacture and clearance of “Safal” brand “Gutkha” of MRP of ₹ 5/- from the petitioner Unit, in the fitness of things the authorities should have allowed cross-examination of the above two persons to test the veracity of their statements. By not doing so, in our considered view there has been violation of principles of natural justice. While filing the interim show cause under Annexure-25, the petitioner has wanted to cross-examine Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo before filing their final reply. Since the same was not acceded to, in our considered view, the entire decision making process has been vitiated. This is because in case during cross-examination the petitioner is able to demolish the statements of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo then the entire foundation of the case of the department would collapse. If the testimony of witnesses is discredited then there would no material for the department on the basis of which they can justify their action and accordingly allowed the appeal. Taking a cue from that, this Court has no hesitation in quashing the impugned order under Annexure-1, which, this Court hereby does. Further, this Court remands the matter back to the opposite party directing him to give opportunity to the petitioner to cross-examine Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo vis-à-vis their statements and conclude the entire proceeding within three months in accordance with law. Writ application allowed.

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• 2017 (7) TMI 522
  Benefit of N/N. 6/2002 - Integrated Mobile Missile Launcher (IMML) - P-II Missile Launcher - The allegation of the department is that excise duty has not been paid on the chassis and on the equipment - Held that: - The Hon’ble Apex Court in that judgment held that where the raw material is not liable to excise duty or where such duty is nil , no excise duty is as a matter of fact is paid upon it and that benefit of exemption notification will not apply to such goods - the appellants cannot then lay claim to duty exemption under the said notification No. 6/2002 for the impugned products namely IIML and P-II Missile Launcher. The differential duty liability on the clearances of these items made without discharge of proper duty liability thereon will then sustain. Classification of launching mechanism - assessees themselves have classified the item under 8425 at the outset. They have subsequently sought re-classification of the items under 8705 even in the written submissions submitted during the course of hearing. The appellant seems to be once again claiming CSH 8425. It is thus seen that the appellant themselves are changing their stance on the classification - Held that: - the said vehicles manufactured by BEML and other components manufactured by LTM (BU) have been manufactured to the design supplied by the buyer of the product and all the said items are fitted together to form an integrated mechanical unit which is clearly covered under para-2 of clause (b) of notes under 8425. Valuation - money value of free receipt materials of chassis/vehicles - design and drawing of engineering charges - includibility - Held that: - Held that: - The law is very clear that when design and drawings are intrinsically tied to the emergence of the final product and without which the intended goods cannot be conceived or manufactured, the intrinsic value of such design and drawing charges will necessarily be required to be added for the purpose of determining assessable value of the goods that have emerged neutralizing the same - value of chassis/vehicles and design and drawing charges, since amounting to additional consideration, there value will have to be included in the assessable value of the products cleared as a one single unit. Extended period of limitation - Held that: - Appellants are definitely not a neophyte in the field of central excise law and procedure. The fact that they are manufacturing such high value items for launch of missile/defense sector etc., will necessarily cast an additional responsibility on the appellants to ensure their compliance to all procedural requirements including correct discharge of central excise duty liability - The plea of the assessee that the goods were supplied for defence purposes does not absolve the unit from the charges of suppression - extended period rightly invoked. Appeal dismissed - decided against appellant.

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• 2017 (7) TMI 521
  SSI exemption - dummy units - it was alleged that the unit had floated fictitious non-existent companies so as to manipulate the purchase production and sales details and kept their clearances well within the exemption limit of ₹ 1 crore - Held that: - appellant concedes that the details had not been produced by the appellant in such proceedings, and in case the fact of these export clearances are considered, there would be a substantial change in the aggregate value of clearances and on this count, matter may be remanded for reconsideration on the basis of Form-H certificates evidencing export - matter on remand. CENVAT credit - credit on the date of crossing the exemption limit - Held that: - the adjudicating authority will consider the claim of the appellant on the matter of eligibility of cenvat credit. The penalty imposed under Section 11AC will be recalculated based on the eventual duty liability that will be arrived at by the authority in such adjudication. Appeal allowed by way of remand.

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• 2017 (7) TMI 520
  Manufacture - structures emerging during the course of erection of such chimney - whether fabrications carried out by the appellant at site of M/s.NTPC in connection with execution of the work order for erection of Chimney will be liable to Central Excise duty? - Held that: - The work order talks about erection of Chimney with the dimensions and designs as approved by M/s.NTPC. The design and drawing are all made specifically for such Chimney. There is no sale of such parts designed for fabrication. The marketability has to be established at least by existence of one customer or possibility of such market for the product. The execution of work order which is for the completely erect custom made Chimney by itself does not satisfy the question of marketability. Admittedly, the dimensions and designs for the said Chimney flue is specifically to the particular work and the impugned order did not justify the grounds of marketability before arriving at a finding - Tribunal in the case of J.K.Synthetics Ltd. v. Commissioner of Central Excise, Jaipur [1999 (5) TMI 366 - CEGAT, NEW DELHI] dealt with a similar item and held that the evidence of marketability is lacking and as such duty liability cannot be fastened on such goods - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 519
  Confiscation - redemption fine - penalty - the proper officer of Customs did not clear the goods on the ground that the goods were not imported directly from the manufacturer, viz. M/s. Liyang Chemical Factory, China, as required in the Registration issued by Central Insecticide Board, but through their authorized distributor - Held that: - the imported goods were actually manufactured by M/s. Jiangsu Tianrong Co. Ltd., China and as such the prime condition of the notification and registration is satisfied. I also find that such registration is required so as to ensure that the good quality insecticides only are imported. When the goods are admittedly manufactured by the empanelled manufacturer, the fact that the same have come through the distributor will not make much difference, in as much as the Insecticide Board itself could have allowed such import through the distributor. The commercial invoice, Bill of lading as also the Bill of entry clearly indicate that the goods have been manufactured and exported by M/s. Liyang Chemical Factory only and it may be for the business reasons that the documentation have been routed through the distributor. It can be safely concluded that there is no contravention of the registration certificate and even if it is there, it is too technical to be taken note of so as to penalize the assessee. There is no violation of the registration certificate and it is only a hyper technical objection taken by the Revenue, I find no reasons to sustain the impugned order imposing redemption fine and penalty on the assessee - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 518
  Rectification of mistake - applicant pointed out that an error has crept in the said order insofar as the applicant's contention that it was of a revenue neutral situation was not appreciated, insofar as the goods cleared on payment of duty within the first clearances of 3500 MT were also eligible to the benefit of the said notification - Held that: - From the order-in-original, it can be seen that the goods cleared on payment of duty within the first clearance of 3500 were otherwise also eligible for Notification 3/2001 dated 1.3.2001. This being the case, it would result in a revenue neutral situation and thus the distinction made in para 6 of the order dated 23.2.2017 does not survive. Consequently necessary rectification made - ROM allowed.

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• 2017 (7) TMI 517
  CENVAT credit - input - fuel - Alleging that as per the definition of input under Rule 2(f) of Cenvat Credit Rules 2001, fuel is an input only when used in generation of electricity and steam, used for manufacture of final products within the factory of production, and that the credit taken on furnace oil used in the generation of steam not used within the factory but cleared to M/s. Futura Polymers is incorrect - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., CHENNAI Versus INDIAN ORGANIC CHEMICALS LTD. [2014 (1) TMI 1570 - MADRAS HIGH COURT], where it was held that the assessee has used furnace oil in the generation of steam and the said steam was transferred altogether to a different unit situated outside the factory premises. Therefore, the case of the assessee would come under Rule 57B(1)(iv) - demand upheld - appeal allowed - decided in favor of Revenue.

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• 2017 (7) TMI 516
  Classification of goods - Edible preparation - whether classifiable under Chapter Heading No.2108.00 or under Chapter Sub Heading No.1901.92 of Central Excise Tariff Act, 1985? - Held that: - under Chapter Heading No. 19.01 the title of the heading includes food preparations containing Malt Extract and containing Cocoa less than 40% by weight. The said goods are divided through single dash in two categories, one category is ‘put up in unit containers’ and the other category is ‘others’. 1901.92 is sub set through double dash of ‘others’. It is a fact on record that the goods manufactured by the respondent are put up in unit containers. Therefore, obviously they will not fall in the category ‘others’ which includes 1901.92 - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 515
  Manufacture of imitation jewellery - It was alleged that appellant failed to get registered with Central Excise Department and follow Central Excise procedures in spite of having been engaged in the manufacture of dutiable goods viz. Imitation Jewellery - effects of amendment - validity of SCN - Held that: - the amendment that was brought in as on 13.05.2005 by insertion of words of base metal, whether or not plated with precious metal was not applicable for the clearance of chains of base metal on which there was no plating with precious metal for the period prior to 13.05.2005 therefore the demand for the period prior to 13.05.2005 is not sustainable - for the period from 13.05.2005 to 10.10.2005 neither the said Show Cause Notice nor the findings by Original Authority could establish that the chains of base metal on which there was no plating with precious metal and for which duty was demanded and confirmed were capable of being any small object of personal adornment. Therefore, the said Show Cause Notice even for the period 13.05.2005 to 10.10.2005 is not sustainable - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 508
  Classification of goods - Rate of tax applicable - Levy of tax on Image Runners @4% or @12% - Whether the Image Runners (Multi-function Network Printers) sold by the assessee are to be classified under Schedule I, Part B, Entry 18(i) as claimed by the assessee or under Schedule I, Part C, Entry 13(i) as held by the Tribunal - the decision in the case of M/s. Canon India (P) Ltd. Versus State of Tamil Nadu Represented By The Dy Commercial Tax Officer [2015 (2) TMI 751 - MADRAS HIGH COURT] contested, where it was held that Goods in question partake the character of "peripheral" of a computer and therefore, it is classifiable under Entry 18(i) of Part B of Schedule I of TNGST Act - Held that: - the decision in the above case upheld - SLP dismissed.

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• 2017 (7) TMI 507
  Attachment of the schedule mentioned property owned by the assessee in default - amendment brought by insertion of section 26E in Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Held that: - secured creditor would have priority over all other debts and Government dues, including taxes, cesses etc., due to the State Government, Central Government or Local Authority. Therefore the impugned order of attachment is liable to be set aside - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 506
  Validity of assessment order - rejection of application u/s 84 of the TNVAT Act, 2006 - petitioner have not filed monthly returns and not reported the transactions, which were reflected in the audit slips - Held that: - Till date, none of these Authorities have initiated any action in respect of the huge transactions, having effected in the Bank accounts standing in the name of the petitioner. Therefore, it may be true that the audit could give a cause to commence the proceedings, but before issuing a show cause notice to the dealer, the Assessing Officer should have sufficient material to connect the petitioner to that of the transactions, especially, in the light of the stand taken by the petitioner in the Petitions for rectification - the case on hand is being a very peculiar case, this Court is inclined to mould the relief, sought for by the petitioner - matters are remanded to the first respondent at the stage of the SCN - appeal allowed by way of remand.

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