TMI Tax Updates - e-Newsletter
July 20, 2017

Case Laws in this Newsletter:

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

TMI SMS

• NO TDS on GST component - wherever the component of 'GST on services' is indicated separately in the Invoice

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• TDS U/S 194J - internet services, i.e. leased line benefits/broadband services - whether in the nature of technical services - Held No

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Articles

• ADJUDICATION ORDER BEYOND PECUNIARY JURISDICTION ab initio VOID
• Compensation Cess on Aerated Waters, Lemonade

News

• Discussions with Stakeholders on GST

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• GST win-win deal for all: Jaitley

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• RECLAIMING MULTILATERALISM

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• Development of Vizag-Chennai Industrial Corridor

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• Setting Up of Industrial Cities

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• Export Facilities to MSMEs

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• Review Session to Promote Connectivity through Digital Trade

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• The Union Finance Minister, Shri Arun Jaitley to inaugurate Delhi Economics Conclave-2017 on Saturday, 22nd July, 2017 in the national capital; Mr. Tharman Shanmugaratnam, Deputy Prime Minister, Republic of Singapore to deliver the Inaugural Address on ‘India Development Strategy and International Engagement post Hyperglobalisation”

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• RBI Reference Rate for US $

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Notifications

Central Excise

• 21/2017 - dated 18-7-2017 - CE
  Central Government rescinds the certain notifications

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• 22/2017 - dated 18-7-2017 - CE (NT)
  Central Government rescinds the certain notifications

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GST - States

• 17/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  e-commerce operator.

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• 16/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  United Nations or a specified international organisation;

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• 15/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Notify the no refund of unutilised input tax credit.

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• 14/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Neither as a supply of goods nor a supply of service.

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• 13/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Notifies the categories supply of services, goods transport agency (GTA)

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• 12/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Exempt the intra-State supply of services under sub-section (1) of section 9.

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• 11/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Notify the state tax the intra-State supply of services.

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• 09/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Exempts intra-State supplies of goods or services or both received by a deductor under section 51.

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• 05/2017-State Tax (Rate) - dated 30-6-2017 - Himachal Pradesh SGST
  Notify the goods which no refund of unutilised input tax credit

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• No. EXN-F(10)-13/2017. - dated 27-6-2017 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax Rules, 2017.

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• C1-24614/16/CT Eoffice 11137/17 - dated 15-7-2017 - Kerala SGST
  GST-Pharmaceuticals dealers - information-reg.

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• G.O. (P) No. 58/2017/TAXES - dated 30-6-2017 - Kerala SGST
  Notification of Common GST Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax and electronic way bill under Kerala GST Ordinance 2017

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• G.O. (P) No. 57/2017/TAXES - dated 30-6-2017 - Kerala SGST
  Appointed date for sections 6 to 9, 11 to 21, 31 to 41, 42 (except proviso to sub-section (9)), 43 (except proviso to sub-section (9), 44 to 50, 53 to 138, 140 to 145, 147 to 163 and 165 to 174 of Kerala GST Ordinance, 2017

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• MGST-1017/C.R.111/Taxation.-1 - 16/2017-State Tax - dated 11-7-2017 - Maharashtra SGST
  Notification u/r 96A(5)-Conditions and safegaurds for export without payment of IGST-A Letter of Undertaking in place of Bond.

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• MGST-1017/C.R.104/Taxation-1. - dated 11-7-2017 - Maharashtra SGST
  CORRIGENDUM - MGST-1017/C.R.104/Taxation-1 [No. 1/2017-State Tax (Rate)], dated the 29th June 2017,

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• MGST-1017/C.R.103(1)/Taxation-1. - dated 11-7-2017 - Maharashtra SGST
  CORRIGENDUM - MGST. 1017/C.R. 103(1)/Taxation-1 [No. 2/2017-State Tax (Rate)], dated the 29th June 2017

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• 15/2017-State Tax - dated 4-7-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Third Amendment) Rules, 2017.

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• MGST-1017/C.R.104(1)/Taxation-1. - dated 1-7-2017 - Maharashtra SGST
  CORRIGENDUM - MGST-1017/C.R.104/Taxation.-1 [No. 1/2017-State Tax (Rate)], dated 29th June 2017

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• MGST-1017/C.R.103(21)/Taxation-1. - dated 1-7-2017 - Maharashtra SGST
  Rescinds the Notification No. MGST. 1017/C.R. 103 (21)/Taxation 1.— dated the 29th June 2017

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• 18/2017-State Tax (Rate) - dated 1-7-2017 - Maharashtra SGST
  Amendments In Notification of the Finance Department No. MGST-1017/C.R. 104/Taxation.-1 [No. 1/2017-State Tax (Rate)], dated 29th June 2017

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• VAT-1517/CR-102/Taxation-1. - dated 30-6-2017 - Maharashtra SGST
  MVAT Rules (Amendment )2017

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• MGST-1017/C.R.103/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Appoints provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9) of section 42, 43 except the proviso to sub-section (9) of section 43, 44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the said Act, shall come into force.

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• MGST-1017/C.R.103 (21)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Specifies that the input tax credit of rent-a-cab, life insurance and health insurance.

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• MGST-1017/C.R.103 (20)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Council, hereby fixes the rate of interest per annum.

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• MGST-1017/C.R.103 (19)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Harmonised System of Nomenclature (HSN) Codes

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• MGST-1017/C.R.103 (18)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Notifies the following modes of verification.

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• MGST-1017/C.R.101(2)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Appoints sections 13 to 31 of the said Act shall come into force.

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• MGST-1017/C.R.101(1)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Maharashtra Goods And Services Tax (Compensation to Local Authorities) Act, 2017 w.e.f. 01.07.2017.

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• MGST-1017/C.R.100 (2)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Second Amendment) Rules, 2017.

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• MGST-1017/C.R.100 (1)/Taxation-1 - dated 29-6-2017 - Maharashtra SGST
  Maharashtra Goods and Services Tax (Amendment) Rules, 2017.

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• GST-1517/C.R.103 (17)/Taxation-1. - dated 29-6-2017 - Maharashtra SGST
  Council, prescribes the registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees.

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• 17/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Electronic Commerce Operator.

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• 16/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  United Nations or a specified international organisation shall be entitled to claim refund of state tax paid on the supplies of goods or services.

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• 15/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies no refund of unutilised input tax credit.

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• 14/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies neither as a supply of goods nor a supply of service.

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• 13/2017- State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies the categories of supply of services reverse charge basis.

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• 12/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  State tax leviable thereon under sub-section (1) of section 9.

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• 11/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies the Rate of taxes on the intra-State supply of services.

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• 10/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Exempts intra-State supplies of second hand goods.

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• 09/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Intra-State supplies of goods or services or both received by a deductor under section 51.

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• 08/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Exempts intra-State supplies of goods or services or both received by a registered person from any supplier.

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• 07/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Exempts The supply of goods by the CSD to the Unit Run Canteens

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• 06/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Inward supplies of goods refund of fifty per cent. of the applicable state tax.

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• 05/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies the goods no refund of unutilized input tax credit.

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• 04/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Specifies the supply of goods, state tax shall be paid on reverse charge basis

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• 03/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Exempts intra-State supplies of goods, Petroleum operations undertaken under specified contracts.

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• 02/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Exempts intra-State supplies of goods Schedule appended

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• 01/2017-State Tax (Rate) - dated 29-6-2017 - Maharashtra SGST
  Notifies the rate of the state tax

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• JC(HQ)-1/GST/PWR/Sections/2017-18/ADM-8. - dated 27-6-2017 - Maharashtra SGST
  Power delegation under GST-Registration and Composition.

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• PWR/GST/2017/01/ADM-8. - dated 23-6-2017 - Maharashtra SGST
  Geographical Jurisdiction of AC and STO.

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• PWR-GST/2017/01/ADM-8. - dated 23-6-2017 - Maharashtra SGST
  Geographical Jurisdiction of Joint Commissioner.

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• PWR-GST/2017/01/ADM-8 - dated 23-6-2017 - Maharashtra SGST
  Geographical Jurisdiction of Deputy Commissioner.

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• MGST-1017/C.R.90/Taxation-1 - dated 22-6-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax Rules, 2017.

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• GST-1017/CR 94 (D)/Taxation-1. - dated 21-6-2017 - Maharashtra SGST
  engaged in making supplies of taxable goods or services on reverse charge basis.

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• GST-1017/CR 94 (C)/Taxation-1. - dated 21-6-2017 - Maharashtra SGST
  Electronic Portal for facilitating registration.

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• GST-1017/CR 94 (B)/Taxation-1. - dated 21-6-2017 - Maharashtra SGST
  Appoints the officers under section 3 of the Act.

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• GST-1017/CR 94 (A)/Taxation-1. - dated 21-6-2017 - Maharashtra SGST
  Appoints 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 said Act shall come into force.

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• Mah. Act No XLII of 2017 - dated 29-5-2017 - Maharashtra SGST
  Maharashtra Goods and Services Tax related laws (Amendments, Validation and Savings) Act, 2017.

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• KA.NI.-2-857/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  U/s 11(1) of the Uttar Pradesh Goods and Services Tax Act, 2017 Exempts intra-State supplies of second hand goods

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• KA.NI.-2-856/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Exemption for tax deductor under section 11(1) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-855/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Concessional rate of petroleum operations for supply of goods under section 11(1) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-854/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Exemption from reverse charge upto ₹ 5000 per day under section 11 (1) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-853/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Exemption for inward supply to Canteen store department under section 11(1) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-852/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Entitlement to claim refund for the purpose of Canteen Store Department under section 55 of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-851/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Reverse charge on specified supply of goods under section 9(3) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-850/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Specifying supplies of Goods in respect of which no refund of unutilized input tax credit shall be allowed U/s 54(3) of the Uttar Pradesh Goods and Services Tax Act, 2017

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• KA.NI.-2-849/XI-9(15)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees

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• KA.NI.-2-848/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Electronic Commerce Operator

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• KA.NI.-2-847/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  United Nations or a specified international organisation

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• KA.NI.-2-846/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Notifies that no refund of unutilised input tax credit

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• KA.NI.-2-845/XI-9(47)/17 - dated 30-6-2017 - Uttar Pradesh SGST
  Activities not to be considered neither supply of goods nor services

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Circulars / Instructions / Orders

Income Tax

• 23/2017 - dated 19-7-2017
  Modification of Circular No.1 of 2014 in view of substitution of Service Tax by Goods and Services Tax (GST)
• F. No. 279/Misc-142/2007-ITJ-(Pt) - dated 14-7-2017
  Modification of Circular No. 21/2015 dated 10.12.2015

Customs

• 30/2017 - dated 18-7-2017
  Detailed guidelines for re-testing of samples- reg

Highlights / Catch Notes

Income Tax

• NO TDS on GST component - wherever the component of 'GST on services' is indicated separately in the Invoice - tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid or payable without including such 'GST on services' component - Circular
  Visit to Get Source

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• Income received by the Assessee from letting of the premises - premises are furnished and centrally air conditioned - ITAT was correct in holding that the rental income should be treated as ‘income from other sources’ - deduction in terms of Section 57 (iii) allowed - HC
  Visit to Get Source

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• Penalty u/s 271 (1)(C) - purchasing the shares at higher price - The explanation is also accepted by the Tribunal that any attempt to purchase the shares in such bulk quantity directly from the open market could have resulted in increase in the price of shares on the stock exchange resulting into loss to the Assessee. - no penalty
  Visit to Get Source

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• Deemed dividend under section 2(22)(e) - Merely because licence deed was on plain paper and not registered, would not be ground to reject contention of the assessee.
  Visit to Get Source

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• Addition u/s 68 - in the absence of any material on record that what is the ‘other income’ of the assessee except that of agriculture income - there is no question of assessee earning any 'income from other sources' other than the agriculture income.
  Visit to Get Source

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• TDS U/S 194J - internet services, i.e. leased line benefits/broadband services - whether in the nature of technical services - the payment for uses of internet of the width cannot be considered as Fees for Technical Services.
  Visit to Get Source

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Customs

• Detailed guidelines for re-testing of samples- reg - Circular
  Visit to Get Source

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• Advance Authorisation Scheme - clubbing of three schemes - Whether the Petitioner is entitled to invoke Public Notice No. 79 dated 13th October, 2011 on 29th August, 2012 and seek clubbing of the three AAs? - Held No - HC
  Visit to Get Source

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Indian Laws

• Section 27 of the General Clauses Act indicates expression “served”, “give” or “sent” while section 138 (c) of the N.I. Act indicates the giving of notice and accrual of a cause of action, if the amount is not paid within 15 days after receipt of the notice, therefore, for the purpose of Section 138, the Court ought to construe the word “give” as “receive”. It should not be construed as specified under the General Clauses Act “served”, “give” or “sent”. - HC
  Visit to Get Source

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Service Tax

• Refund claim - the service tax was deposited against the PAN based registration number of the outgoing proprietor instead of on registration number using PAN of the new proprietor - refund allowed subject to verification
  Visit to Get Source

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• Sale of space for advertisement service - Department is seeking to levy service tax on the amounts collected by appellant as advertisement tax - Not liable to service tax - demand set aside
  Visit to Get Source

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• Service of notice - It appears that the notices were not issued on the new address and all the notices issued to the petitioner on the old address were returned with an endorsement “left”. Naturally, there was no service to the petitioner of the said notices. - matter restored - HC
  Visit to Get Source

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• Levy of Penalty - bonafide belief - reverse charge - if, once it is established that the non-payment of tax was a result of a conscious and/or deliberate act of deception or wrong doing - But revenue failed to prove its case - no penalty - HC
  Visit to Get Source

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VAT

• Penalty - purchase of Gold Bullion - it is a case where the petitioner could not have been permitted to revise the return so as to cure the defects that were noticed by the assessing authority. The petitioner, therefore, had to suffer the consequences of any omission in the only valid return that was filed before the assessing authority. - HC
  Visit to Get Source

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Case Laws:

• Income Tax

• 2017 (7) TMI 621
  Validity of reopening of assessment - Held that:- The Special Leave Petition is dismissed. HC order confirmed [2017 (4) TMI 188 - DELHI HIGH COURT] HC has held that to require the Revenue to disclose further details regarding the nature of documents or contents thereof would be virtually rewriting the conditions in section 147. After all, Section 147 merely authorises the issuance of notice to reopen with conditions. If the Court were to dictate the manner and contents of what is to be written, the statutory conditions would be added as it were. In this context, it needs to be emphasized that the court would interpret the statute as they stand in their own terms, but at the same time being conscious of the rights of the citizens.

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• 2017 (7) TMI 620
  Revision u/s 263 - whether the view taken by the Assessing officer in accepting the valuation of the closing stock at cost price was a plausible view in the circumstances of this case? - Held that:- In the instant case where the partnership firm stood dissolved by the operation of law in view of the death of one of the partners, i.e., the mother, but the business did not come to an end as the other partner, viz., son, who inherited the share of the mother, continued with the business. In a situation like this, there was no question of selling the assets of the firm including stock-in-trade and, therefore, it was not necessary to value stock-in-trade at market price. When a business continues, it may not be necessary to follow the market rate to value the closing stock as the reasons because of which the same is to be done are not available. When this position becomes clear, it follows that in the instant case the view taken by the Assessing Officer in accepting the book value of the stock-in-trade was a plausible and permissible view. In this scenario, the CIT could not exercise his powers under Section 263 of the Act. - Decided in favour of assessee.

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• 2017 (7) TMI 619
  Validity of assessment u/s 153A - Held that:- Merely visiting the premises on the pretext of concluding the search but not actually finding anything new for being seized cannot give rise to a second panchnama. In such event, there would be no occasion to draw up a panchnama at all. In the present case, the Court is satisfied that the second visit by the search party to the Ashok Vihar premises on 15th May, 2007 did not result in anything new being found that belonged to any of the searched parties. The second visit and the panchnama drawn up on that date cannot lead to postponement of the period for completion of assessment with reference to Section 153B (2) (a) of the Act.

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• 2017 (7) TMI 618
  Income received by the Assessee from letting of the premises - assessed as ‘income from other sources’ u/s 56 (2) (iii) OR ‘income from house property’ - Held that:- In the present case, as already discussed, it is plain that letting is not merely of the building but a composite letting of both, the building as well as the equipment, furniture etc. and thereby Section 56 (2) (iii) was attracted. Applying the test laid down in Sultan Bros. (1963 (12) TMI 4 - SUPREME Court) the income from the letting in the hands of the Assessee was "a new kind of income" which could be considered to be income from house property since the income not from the ownership of the building alone "but an income which though arising from a building would not have arisen if the plant, machinery and furniture had not also been let along with it. The Court is, therefore, not persuaded to take a view different from that by the ITAT in the present matter. Consequently, the question urged, viz., whether the ITAT erred in holding that the rental income should be treated as ‘income from other sources’, is answered in the negative i.e., in favour of the Revenue and against the Assessee. Assessee said that in the event the entire income from the letting is treated as ‘income from source sources’ it cannot be deprived of the corresponding deduction in terms of Section 57 (iii) of the Act. The Revenue too has not disputed the fact that the Assessee has not claimed depreciation. Accordingly, it is directed that while giving the appeal effect, the AO will grant the Assessee the benefit of Section 57 (iii) of the Act.

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• 2017 (7) TMI 617
  Notice to the Petitioner u/s 226 (3) issued by Income Tax Department prior to issuing a notice to the garnishee, i.e., the Branch Manager, HSBC under Section 226(3)(i) - Held that:- In the present case there was no illegality committed by the Department in not issuing to the Assessee a notice under Section 226 (3) (iii) of the Act simultaneously with or prior to the notice issued to its bank under Section 226 (3) (i) of the Act for recovery of the tax demand from its account. The Court accepts the submission of the Revenue that requirement under Section 226(3)(iii) is only that a copy of the notice should be “forwarded to the assessee” and not that a copy should be served on the Assessee in advance or simultaneously.

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• 2017 (7) TMI 616
  Addition on account of unutilized Cenvat credit to closing stock - Held that:- The Apex Court in the case of Indo Nippon Chemicals Co. Ltd. (2003 (1) TMI 8 - SUPREME Court ) while affirming the order of High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material. Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid rawmaterials, that would not amount to income which was liable to be taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same. Considering the above, the amount of the unutilized Cenvat credit could not have been directly added to the closing stock. The Tribunal has not committed any error.

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• 2017 (7) TMI 615
  Cancelling registration granted under Section 12AA(1)(b)(i) - Held that:- Out of five grounds in respect of ground no. 2 only Assessee's explanation has been accepted by CIT-II but rest four grounds have been upheld for passing order of cancellation of registration. No part of findings of CIT-II has been reversed by Tribunal. It has affirmed view taken by CIT-II but for the purpose of discussion has relied more on the findings of CIT-II with respect to ground no. 5. It is not a new ground as it is already part of ground no. 5 mentioned in show cause notice. The contention of learned counsel for appellant that Tribunal has made out a new case, we find unacceptable and contrary to record, hence it is rejected. So far as proposition of law that no new ground can be taken before Tribunal which is not part of show cause notice, in our view, is not at all applicable in the present case. Appellant has tried to make out a case which is not evident from record and in fact the ground which has been stressed by Tribunal in confirming order passed by CIT is part of ground no. 5 which is one of the four grounds on which registration was cancelled by CIT-II, hence neither the judgments relied by appellant, in our view, are applicable in the case in hand nor the same help appellant in any manner. So far as argument regarding observations made by Tribunal when application for registration was considered, we find has rightly been distinguished by Tribunal. When an order is to be passed on the basis of activities of Assessee having already taken and borne out from record, same have to be examined not on mere averments contained in Memorandum of Society but in the light of actual activities carried out by Society which was not the position when issue of grant of registration was to be considered. - Decided against Assessee.

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• 2017 (7) TMI 614
  Enhanced income on account of jewellery - Held that:- Commissioner of Income Tax itself did not carry out necessary inquiry and merely substituted his view for the view of the Assessing Officer. Approach of the learned CIT to be rather contradictory in this respect. While he has accused the Assessing Officer of having accepted that the Jewellery represented undisclosed income of the assessee's wife and daughter without establishing that they were capable of earning such income. He himself readily believes that the assessee had utilised this concealed income without having carried out any such enquiry in respect of the assessee. We therefore find it to be a simple case of mere substitution of the opinion of the learned CIT for the view as held by the Assessing Officer in the order u/s.158BC. Traveling expenses addition - Held that:- As observed that the sum of ₹ 12,00,000/was offered for taxation in this respect in the assessment of M/s.D.C.Silk Mills Pvt. Ltd., and was assessed and subjected to tax. It was observed that the Foreign Trips were in connection with the business of the Company. The said finding is a finding of fact. It was also observed that the Assessee's wife and daughter were regular assesses of long standing and had sufficient sources of income of their own to bear their own travelling expenses.

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• 2017 (7) TMI 613
  Addition u/s 68 - discharge of onus - parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced - Held that:- Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (2017 (3) TMI 1263 - BOMBAY HIGH COURT ) would be applicable in the facts and circumstances of the present case.– Decided against revenue.

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• 2017 (7) TMI 612
  Penalty u/s 271 (1)(C) - purchasing the shares at higher price - Held that:- As observed by the Tribunal and the Commissioner (Appeals) that the reason has been given by the Assessee for purchasing the shares at higher price than the one reflected in the stock exchange price. The said shares were not much traded in the market and the Assessee had to purchase the bulk quantity of shares which was possible only from few targeted holders and not from the open market and such transaction of bulk purchases generally carry premium and the price of ₹ 10/per share was arrived at after negotiation with the sellers. The explanation is also accepted by the Tribunal that any attempt to purchase the shares in such bulk quantity directly from the open market could have resulted in increase in the price of shares on the stock exchange resulting into loss to the Assessee. Even the valuation report of the approved valuer was considered by the Assessee before purchase of the said shares. All other explanations has been accepted by the Commissioner (Appeals) and the Tribunal. The same are the findings of fact. - Decided against revenue

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• 2017 (7) TMI 611
  Project Development Expenses - Preoperative expenditure - nature of expenditure - revenue or capital - Held that:- In view of the specific finding of fact arrived at by the Commissioner (Appeals) and the Tribunal, the Tribunal have held the expenditure to be revenue expenditure. In case of Kothari Auto Parts Manufacturers Pvt. Ltd. (1975 (12) TMI 28 - BOMBAY High Court) this Court had specifically observed that separate computation of income and expenditure would be justified only when several distinct business are carried on, and not when the separate business activities were carried out by some person and when one set of account is maintained for all set of activities. In the present case also, one set of account is maintained for the business activity by the Assessee. The Assessee had incurred expenditure on account of expansion of business and the Assessee had commenced the business as per the findings of the Commissioner (Appeals) and the Tribunal. The said findings are findings of the fact. - Decided against revenue

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• 2017 (7) TMI 610
  Compounding of offences under section 276 CC - Held that:- Pursuant to the decision taken by the CBDT as approved by the Hon'ble Finance Minister, the learned Judge has given such a direction, which is exactly on the line of earlier directions issued by atleast in two cases, as referred to by the learned Judge in his Judgment, as well as by the RCC committee, in its deliberations dated 20.3.2015. The present appeal filed by the Revenue assailing such direction, issued by the learned Judge, in the impugned order, in our considered view, is totally unjustifiable, bereft of any sustainable ground. Moreover, on perusal of the report of the Principal Chief Commissioner of Income Tax, Chennai, dated 27.4.2015 and subsequent report as well as documents on record, and the periodical notes generated from time to time at the level of CBDT that all authorities, unimpeachably, have uniformly recommended the case of the Assessee for consideration, in view of her age, illness and the circumstances encountered by her during the relevant period. The only negative turn, which we noticed from the reading of the note file produced before us, is the view expressed by the member CBDT on 30.3.2016, which we have extracted hereinabove. The reason according to the CBDT for taking a different view on 30.3.2016 is, that the Assessee had filed the returns as a consequence of survey under Section 133 A and there is a wide gap between returned income and the Assessed income, for which no explanation has been offered and even the Court has observed that but for survey under Section 133 A, the returns would not have been filed. This reasoning given by the member CBDT, albeit taking a different view, was already available, despite which, the Principal Chief Commissioner, of Income Tax, had sent a recommendatory report to the CBDT. These reasons, in our view, cannot form the sole criteria, to take a different stand and thus, form the basis of rejecting the plea of the Assessee in exercise of its powers by the Hon'ble Minister under para 7.2 of the guidelines dated 16.05.2008. Given the over all factual matrix, we find that there is considerable force in the submissions made by the learned counsel appearing for the Assessee that the direction issued by the learned Judge, is a well considered one, as the learned Judge took into account not only the circumstances of the Assessee but also relied upon precedents of similar nature. Therefore, the mere pendency of the appeal against the conviction, in our view, could no longer be a reason for refusing the consideration for compounding of offence within the meaning of clause 4.4(f) of the guidelines dated 16.05.2008. The reasoning given by the CBDT via its note dated 30.3.2016, which has subsequently been approved by the concerned Secretary to the Government of India as well as by the Hon'ble Finance Minister, in our view, in the present circumstances, cannot stand in the way of the Revenue re-visiting the issue of compounding the Assessee's offence, as accordingly, has been directed by the learned Judge, via the Judgment impugned. We are of the considered view that, there is no infirmity in the directives issued by the learned Judge save and except for the fact that for completeness he ought to have gone further and dealt with order dated 3.5.2016 as well. Accordingly, the appeal filed by the Revenue in W.A.No.132 of 2017 is liable to be dismissed. It is ordered accordingly.

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• 2017 (7) TMI 609
  Revision u/s 263 - Held that:- The proceedings under section 263 have been initiated on mere change of opinion on the same identical facts and circumstances of this case as is considered by the Revenue Department in earlier year as well as in the assessment year under appeal. As is noted above, Assessing Officer has considered this issue at assessment stage by calling for information from the assessee. The claim of the assessee is consistent as have been made in earlier years, therefore, in the absence of any new material against the assessee, Revenue Department cannot be allowed to take a contrary view in subsequent year. Such approach is not permissible under the law. We may also note here that CIT has not pointed out in the impugned order as to how the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue. The ld. Pr. CIT, without any basis and merely following two decisions of the Hon'ble Supreme Court referred to above, have set aside the assessment order. Whether a particular income is ‘income from house property’ or a ‘business income’, depends upon facts and circumstances of each case and different views are possible as per various judgements, referred to above based upon the evidence and material on record. The issue is highly debatable and as such, ld. Pr. CIT was not justified in setting aside the assessment order by invoking jurisdiction under section 263 of the Act. We do not agree with the view of ld. Pr. CIT in invoking jurisdiction under section 263 of the Act. Accordingly, we set aside and quash the order under section 263 of the Act dated 25.02.2016 and restore the assessment order dated 14.01.2014. Appeal of the assessee is allowed.

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• 2017 (7) TMI 608
  Re-opening of the assessment u/s 148 - dismissing the claim of assessee on account of depreciation claimed on warehouse building @ 25% - Held that:- The assessee was not able to explain as to how the warehouse was plant and machinery in the case of the assessee. The assessee, merely claimed before the authorities below that the apparatus of the businessman by which he is carrying on business, may be termed as ‘Plant’. However, the authorities below have noted that nature of business of the assessee was running of a Container Freight Station which is an infrastructure facility only. Therefore, it was correctly held to be ‘building’ only. Even during the course of arguments, nothing is explained as to how warehouse in the nature of business of the assessee was plant and machinery so as to claim higher depreciation. Merely because in earlier year, warehouse was forming part of the block of asset on which no opinion have been expressed by the authorities below on merit, would not entitle the assessee to claim higher depreciation. In the absence of any evidence or material on record to prove as to how warehouse is plant and machinery in the case of the assessee, re-opening of the assessment is wholly justified in the matter and addition on merit have also been correctly made. Deemed dividend under section 2(22)(e) - Held that:- There is no reason to disbelieve explanation of the assessee. Merely because licence deed was on plain paper and not registered, would not be ground to reject contention of the assessee. The factual findings shall have to be given by the authorities below whether the amount received was ‘security’ from this concern and whether assessee was a shareholder in the company from whom security have been received. In case of negative factual findings on facts, provisions of Section 2(22)(e) would not be attracted in the case of the assessee. Both the issues therefore, require re consideration at the level of the Assessing Officer. Set aside the orders of authorities below and restore this issue to the file of Assessing Officer with direction to re-decide this issue as per law in the light of judgement in the case of M/s Hotel Hilltop (2008 (3) TMI 310 - RAJASTHAN HIGH COURT). The Assessing Officer shall give reasonable sufficient opportunity of being heard to the assessee. This ground is allowed for statistical purposes.

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• 2017 (7) TMI 607
  Addition u/s 68 - agriculture land income holding the same as 'income from other sources' - Held that:- The documentary evidences of the revenue officers in case of assessee, as noted above when produced before authorities below, should not have been ignored. Further, it is a fact that assessee has merely small interest income on savings. The assessee has no other income except agriculture income. Therefore, there is no material on record to show any vested interest or motive with the assessee to declare agriculture income higher than the actual amount. The authorities below have made and confirmed the addition of ₹ 18 lcs on account of 'income from other sources' under section 68/69 but authorities below have failed to point out as to what income is earned by assessee from “other sources” because assessee has no other source of income except the agriculture income. The interest is from specified source and ascertained. Therefore, in the absence of any material on record that what is the ‘other income’ of the assessee except that of agriculture income, in the case of Shri Jarnail Singh (Karta) (2008 (5) TMI 280 - PUNJAB AND HARYANA HIGH COURT) clearly applies in favour of the assessee. This fact is further strengthened by the fact that even in earlier years, assessee has shown the agriculture income. Therefore, there is no question of assessee earning any 'income from other sources' other than the agriculture income. - Decided in favour of assessee.

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• 2017 (7) TMI 606
  TDS U/S 194J - internet services, i.e. leased line benefits/broadband services - whether in the nature of technical services - TDS liability - Held that:- The expenditure in question incurred by the assessee are in respect of internet charges and communication and service charge paid to three companies. There is no dispute that the payment for uses of internet of the width cannot be considered as Fees for Technical Services in view of the decision of Hon'ble High Court in the case of CIT Vs. Estel Communcations Pvt. Ltd. (2008 (3) TMI 327 - DELHI HIGH COURT ), we do not find any error or illegality in the order of the impugned order of CIT (Appeals) on this issue. Addition made under Section 41(1) - Held that:- The assessee has claimed that this amount was capitalized in the books of account and therefore no claim was made by the assessee as an expenditure in respect of this amount. However this fact was not pointed out before the Assessing Officer and therefore in the absence of verification of the relevant record regarding the fact that the assessee has not claimed this amount in the computation of income in any of the earlier years in our opinion the CIT (Appeals) should have asked a remand report from the Assessing Officer before giving the finding on this issue. Accordingly, in the facts and circumstances of the case and in the interest of justice we remit this issue to the record of the Assessing Officer for limited purpose of verifying the fact as to whether this amount was capitalized by the assessee and not claimed as an expenditure. Disallowance u/s 40(a)(ia) - depreciation on Intellectual Property Rights (‘IPR’) - Held that:- As regards the applicability of the provisions of Section 40(a)(ia) of the Act for disallowance of claim of depreciation, we find that when the assessee has capitalised this amount and not claimed as a revenue expenditure then the claim of depreciation cannot be disallowed by invoking the provisions of Section 40(a)(ia) of the Act.

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• 2017 (7) TMI 605
  Reopening of the assessment - unexplained credit u/s 68 - Held that:- A plain reading of the assessment order demonstrate that the A.O. merely went by the investigation done by the Office of D.G.I (Investigation), Mumbai. No enquiries or investigation was carried out. No evidence to controvert the claims of the assessee was brought on record by the A.O. Even the statement of Mr.Praveen Kumar was supplied. Nothing is on record about the result if investigations done by DGIT (Inv.), Mumbai. The papers filed by the assessee do demonstrate, the identity, credit worthiness and genuineness of the transaction. The addition is made merely on surmises and conjectures. We hold that the addition made under section 68 of the Act is in bad in law. In the result, reopening of the assessment is quashed and the addition is also deleted on merits. Appeal of the assessee is allowed.

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• 2017 (7) TMI 604
  Addition of prior period expenses - assessee is following a mercantile system of accounting - expenses relate to current year - Held that:- The receipt of bills in a particular year cannot alone lead to the crystallization of liability in that year. What is imperative for crystallization of a liability is incurring of the same and quantification of the same with reasonable certainty. Assessees maintaining mercantile system of accounting can treat the liability to incur the expenses having crystallized in the year in which it becomes definite, certain or ascertainable. For answering the question whether prior period expenses can be claimed as business expenses for the relevant assessment year, the point to be considered is whether the claims were ascertained and crystallized only during the year. In the absence of any finding given on the above lines for holding the liability pertaining to prior period expenses to have crystallized in this year, we consider it fit to restore the issue back to the file of the Ld. CIT (Appeals) to consider the expenditure and evidences filed by the assessee afresh and thereafter pass a reasoned order, in accordance with law. Expenses incurred on account of modernization and renovation of the project - capital v/s revenue expenditure - Held that:- CIT (Appeals) has deleted the impugned disallowance by simply accepting the assessee’s submissions, giving no reason for doing so, nor referring to any documents, which supports the assessee’s argument. Clearly, the CIT (Appeals) has not passed a well-reasoned order supporting his findings. The Ld. CIT (Appeals) has merely reiterated the assessee’s submissions that a part of interest had been capitalized by it, while the balance pertained to loans transferred by HSEB against completed scheme and hence is revenue in nature. There is no mention of how the CIT (Appeals) was satisfied on both the aspects of the matter or what documents produced before him lead him to concur/agree with the assessee’s submissions. Thus in view of the non-speaking order passed by the Ld. CIT (Appeals), we consider it fit to restore the matter back to the file of the CIT (Appeals) to consider the issue afresh Disallowance made on account of depreciation relatable to capital-grant-in-aid received - Held that:- Acquiring of an asset out of the grant received is a sine qua non for applying Explanation-10 to section 43(1) and logically also since the purpose of the Explanation is to reflect the actual cost of the asset to the purchaser only, reducing the cost contributed by any other person therefrom. We, therefore, hold that Explanation-10 to section 43(1) is not attracted on the portion of the grants in-aid not utilized for acquiring capital asset and the same will not go to reduce the cost of assets acquired by the assessee. Explanation-10 to section 43(1) is not automatically attracted the moment grants-in-aid are received. It is only when they are utilized for acquiring assets that the Explanation gets attracted in. In view of the same, we hold, that to the extent of grant-in-aid is not utilized for acquiring capital assets, the same will not be adjusted against cost of assets of the assessee and the denial of depreciation to this extent also is deleted. Thus we delete the disallowance of depreciation on the grants-in-aid received TDS u/s 194C - Addition u/s 40(a)(ia) - non-deduction of TDS on payment of transportation charges by the assessee - Held that:- There was no work contract between the assessee and the supplier of coal and hence the Ld. CIT (Appeals) has rightly held that the liability of the assessee to deduct tax under the provisions of section 194C of the Act did not arise in the present case. The Ld. CIT (Appeals), therefore, has correctly deleted the disallowance made under section 40(a)(ia) of the Act on account of non-deduction of TDS on transportation charges Addition of guarantee commission expenses and commitment charges holding the same to be capital in nature - Held that:- Undisputedly, identical disallowances were made in assessment year 2004-05 and 2006-07, which, in assessment year 2006 07,were upheld by the CIT (Appeals) and not further challenged by the assessee before the I.T.A.T. while in assessment year 2004-05,the addition was not challenged before the CIT(A), thus implying that the assessee has accepted that the nature of the guarantee commission and commitment charges paid was capital. Further, before us, no distinguishing facts have been brought to show how the facts in the present case are different from that in the preceding years, nor any evidence adduced to show that the impugned expenses were incurred for availing working capital funds and hence were revenue in nature. We, therefore, find no reason to differ from the order of the Ld. CIT (Appeals) and uphold the disallowances

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• Customs

• 2017 (7) TMI 590
  Advance Authorisation Scheme - clubbing of three schemes - As a consequence of the Petitioner's noncompliance of the conditions imposed by the PRC, the Petitioner was placed in a DEL list on the websites of the authorities - Whether the Petitioner is entitled to invoke Public Notice No. 79 dated 13th October, 2011 on 29th August, 2012 and seek clubbing of the three AAs? - Held that: - The Petitioner’s contention that it has a legitimate expectation for its request to be considered under Public Notice No. 79 is belied by the fact that its request for clubbing itself was after the supersession of the said Public Notice. The HBP had stood amended and hence, there cannot be a legitimate expectation for continuation of a relaxation policy, which is non-existent on the date it is invoked - The Petitioner having filed its application for clubbing on 29th August, 2012 cannot, therefore, legitimately expect that its application would be considered under Public Notice No. 79 which already stood amended and superseded. The authorities, therefore, rightly rejected the application for clubbing of the three AAs which were not as per the Notification dated 5th June, 2012. Whether the Policy Relaxation Committee (PRC) has the power to impose conditions, while allowing clubbing of the 3 AAs? - Held that: - the powers of the PRC, while making its recommendations are wide and are purely discretionary. The PRC, in its order dated 24th April, 2015 has considered the relevant facts and permitted the clubbing of the three Advanced Authorizations and while permitting the said clubbing, conditions ‘as it deemed fit’ have been imposed by it which cannot be said to be perverse or arbitrary. The review order of the PRC dated 26th April, 2016 also clearly shows that the case of the Petitioner was discussed at length and it is only thereafter, that the decision dated 24th April, 2015 was reiterated. The submission of the Petitioner that the PRC does not have the power to impose such conditions does not appear to be correct inasmuch as the order of clubbing is by itself an exercise of power for granting an exemption - The exercise of discretion to grant exemption is a delicate balance between balancing the hardship of the Petitioner and the adverse impact on trade. The PRC, in the background of the Petitioner's case, has imposed conditions which are neither illegal nor arbitrary. The earliest AAs which were issued, dated back to 21st November, 2007 with an export obligation period of 24 months. The Petitioner has had sufficient time to discharge the said obligations. In fact, even the Public Notice No. 79 which permitted clubbing of the three AAs with a time span of 36 months was a relaxation. The invocation of the said relaxation after the same was superseded and amended cannot be claimed as a matter of right. On the date when the application was filed by the Petitioner, the said Public Notice No. 79 had already lapsed. The relaxation by the PRC allowing clubbing of the three AAs being an exercise of discretionary power and the conditions imposed thereon, being in furtherance of the exercise of that discretion for granting exemption from applicable policy and procedure, this Court does not deem it a fit case for interference under Articles 226/227 of the Constitution of India. Petition dismissed - decided against petitioner.

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• 2017 (7) TMI 589
  Rectification of Mistake - time limitation - Section 129B(2) - Whether the Hon’ble Tribunal erred in holding that ROM Application filed within the period of six months from the date of receipt of the order was beyond the time limit prescribed under the law? - Held that: - There is nothing on record to show that the Appellant has received the copy of order on a particular date immediately after passing of the order. On the contrary, the Tribunal issued the copy of order on 9.1.2015, on the request/Application filed/made by the Appellant for the same. The statement is made that this Application for copy was moved as the Respondent/Department raised the demand on 8.1.2015. The Department's submission, that the plain reading of section itself is sufficient to reject the Application for rectification so filed by the Appellant beyond six months from the date of order, is unacceptable. There is no power and/or remedy available and/or no provision for condonation of delay in filing such Application for rectification. In the absence of any such provision, we are of the view that the second part of the Section need to be read in the interest of the Appellant. The second part of the Section read to mean that the Appeal/Application may be filed within six months from the receipt of the order. It would not be treated as beyond the prescribed period of six months from the date of order - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 588
  Issuance of redemption certificate - case of Revenue is that the petitioner has failed to produce the shipping bill originals along with the application form to the licensing authority - whether the petitioner has fulfilled his export obligation? - Held that: - the department would admit that the petitioner had produced copies of the shipping bills, but the department is insisting upon the originals, which are not available with the petitioner, as they are third party documents and they claim that exports were done through those two third parties - If the scheme permits for such procedure, then, the proper officer of the Directorate General of Foreign Trade can examine the genuineness of the claim made by the petitioner by making appropriate verification with regard to the license number, quantity of the product exported etc - the petitioner directed to appear before the Joint Director General of Foreign Trade and produce the copies of the shipping bills - appeal allowed by way of remand.

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• 2017 (7) TMI 587
  DEEC scheme - fulfillment of export obligation - whether the appellant is required to discharge the differential customs duty in view of the fact that they had not completed the export obligation when they procured the DEEC licences from the Govt of India? - Held that: - appellant was correct in bringing to our notice that the DEEC book which is issued by the authorities contains two portions one for the import and another for the export. The Customs Officers meticulously make entries of the imports made by the appellant and also meticulously recorded the exports made by them and countersigned the same with the stamp. The said entries clearly indicate exports made by appellants against such licenses. The adjudicating authority has failed to consider this evidence which is in their hand when the DEEC books were produced for registration/ incorporating the imports and exports. The appellant has recalculated his duty liability in the submissions made by them, in the absence of any relevant documents made available to us we are unable to verify the authenticity of the same. For the limited purpose of checking the calculations put forth by the appellant for arriving on the duty liability we remit the matter back to the adjudicating authority only for checking the calculations done by the appellant for discharging the differential customs duty. Interest - penalty - Held that: - there is no question of demand of interest or imposition of penalty on the appellant. Appeal allowed in part and part matter on remand - decided in favor of appellant.

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• 2017 (7) TMI 586
  Entitlement to interest - excess duty paid on finalization of Shipping Bills which were provisionally assessed earlier - the declared price of US$ 165 PDMT FOB was rejected the same was re-determined at USD 172 PDMT FOB - Held that: - Revenue has not filed any appeal against Order-in-Appeal No. 10/2013-VCH dated 17.04.2013 which would mean that the Revenue has accepted the value declared by the appellant in the Shipping Bills as filed. The adjudicating authority cannot again assess the said Shipping Bills, as there are no provisions to do so. It is also surprising that once the re-determined the value of Shipping Bills was set aside it would mean the provisional assessment vide Order-in-Original dated 31.05.2012 was effectively finalised at the price/value declared by the appellant - there was no requirement of finalising the already finalised the Shipping Bills. The appellant is entitled for interest as per the provisions of Section 18 of the Customs Act, 1962 from the date of finalisation of the Shipping Bills - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 585
  Rectification of mistake - attachment of bank properties - Held that: - There is no dispute that, in relation to the appeals against the order-in-original dated 29th March 2006, the restoration is entirely in order. There is also no doubt that this restoration flows from the directions issued by the Hon’ble High Court of Bombay - Our disinclination to consider submissions which we do not deem to be relevant to the decision to restore the appeals does not preclude the applicant Commissioner from placing the matter before higher appellate authorities for redressal. In the absence of prejudice, seeking a rectification of our order on the ground of non-consideration of submissions is not without impropriety. We do not wish to dilate further on this transgression - ROM application dismissed.

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• 2017 (7) TMI 584
  Misdeclaration of imported goods - whether the respondent had mis-declared the imported of spares along with clearance of dredger claiming NIL rate of duty, claiming benefit under Customs N/N. 21/2002 Sl. No. 353A consequently, non-payment of SAD by N/N. 20/2006? - Held that: - there is no dispute as to that the spares which were found on the dredger were not sought to be cleared as individual items but were considered by the respondent as mandatory spares - the Revenue has not been able to controvert satisfactorily, the factual findings recorded by the adjudicating authority as reproduced herein above. In my view, the factual findings of adjudicating authority are correct and the adjudicating authority was correct in vacating the seizure of the spares in respect of the goods imported by the respondent - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 583
  Classification of imported goods - "Electric conductors 7/8" - whether classifiable under CTH 85442010 or under CTH 85444190? - Held that: - A specific entry in tariff excludes other goods embraced by different tariff entries and even may be under the same chapter - The goods being described in the bill of entry is meant for telecommunication purpose, those were unerringly co-axial cables and nothing else. Therefore the order of the learned Commissioner (Appeals) is fundamentally erroneous for which that is set aside and the adjudication order is upheld - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (7) TMI 579
  Winding up petition - Held that:- The learned Single Judge has rightly held that the explanations in the affidavit in rejoinder belatedly made, inspire no much confidence and the explanation is feeble. The learned Single Judge has also noted the contradictions in the affidavit in rejoinder. On the one hand, the Appellant, denies suppression of material facts, but, in the same breath, admitted the commercial relationship between Tiryaki, Agrozan Dubai and Agrozan Singapore. Then again, there is a bare denial regards relevance of such commercial relationship to the transaction of supply of Yellow Peas. In a petition seeking winding up of a Company, the Company Court will go into the question of genuineness or otherwise of the dispute raised. If the Company Court is satisfied that the dispute raised is bona fide, the Court will normally not embark upon a detailed examination of the disputes in a winding up petition. In that sense, the procedure involved in a petition seeking winding up of a company, is of a summary nature. Accordingly, the learned Single Judge, exercised discretion based upon relevant considerations in declining to admit the petition for winding up of the Company.Accordingly, we see no reason to interfere with the impugned order made by the learned Single Judge.

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• Insolvency & Bankruptcy

• 2017 (7) TMI 580
  Proceedings under the Insolvency and Bankruptcy Code, 2016 - press release issued by RBI - Held that:- Filing of insolvency proceedings would be a decision of the concerned person, who is entitled to file such application and, therefore, to that extent, it cannot be said either respondent No.2 or 3 can be restrained from filing such application in accordance with law. It is undisputed fact that filing of such application itself cannot be questioned or that action cannot be quashed, but it goes without saying that such filing would not amount to admitting or allowing the petition for insolvency without offering reasonable opportunity to the company, which is requested to be taken into insolvency by any such person. Therefore, the adjudicating authority being NCLT herein, which is constituted in place of the Company Court, needs to decide on its own based upon factual details that whether the insolvency petition is required to be entertained as such or not. For the purpose, adjudicating authority, certainly requires to extend hearing and reasonable opportunity to the company to explain that why such an application should not be entertained. It would be a decision based on judicial discretion by the adjudicating authority to deal with such application in accordance with law and based upon facts, evidence and circumstance placed before it. To that extent, prayers 7(b) and (c) cannot be granted. Then, remains the only issue that whether RBI is empowered to publish press release dated 13.6.2017 or not. So far as directions to the Bank to initiate insolvency proceedings against companies, which are in debt to certain level or extent, the amended provisions of the Banking Regulation Act, 1949 in the form of Sections 35(AA) and (AB), certainly makes it clear that, now, RBI has such powers to issue certain directions to certain Banks and banking companies so as to see that there is proper recovery of public money or for any other such purpose. Therefore, the issuance of press release alone, cannot be quashed and set-aside. So far factual details of Petitioner Company with reference to its activities and exercise of restructuring through JLF is concerned, it would be appropriate not to enter into any determination on such point since that would be the subject matter before the Adjudicating Authority under IBC (i.e. NCLT) and therefore it is left open for it to consider it for its determination in accordance with Law, to avoid any prejudice to either party It cannot be held that Banking Company is not entitled to initiate insolvency proceedings without the directions of the RBI u/s 35AA of BRA. Therefore relief in terms of para 7(b) cannot be granted. It cannot be held that directives of RBI under reference by impugned press release is binding upon SCB and therefore SCB is bound to consider the restructuring proposal by the petitioner, wherein petitioner has offered to start payment of dues only after 25 years and that too only with 1 % interest. Therefore relief in terms of para 7(c) cannot be granted. Only because SCB has corresponded to SBI for its proposal with reference to JLF activities, it cannot be held that SCB could not have initiated insolvency proceedings but it has done it only because of RBI guidelines by way of press release. Therefore relief in terms of para 7(c) cannot be granted. Provisions of IBC may be drastic to some extent, but since it is part of statue which is yet not declared unconstitutional and therefore they are to be followed, but in consonance with Constitutional mandate by all concerned i.e. Without being guided by any advice or directions in any form or nature viz: impugned press release. There is reason to say so because RBI has tried to do so and changed its document when called upon to explain their stand; and Thereby it is obvious that adjudicating authority may though proceed in accordance with Law, there should not be undue pressure on it by administration and period of pendency of present petition can certainly be considered as reasonable ground to count the time limit from the date of receipt of writ of this order. No writ can be issued against SCB and therefore petition stands dismissed against Respondent No. 3 SCB. Factual details between the Petitioner and SCB has been avoided to be discussed further because this Court has not to decide the validity or proprietary of action by SCB against the petitioner when petition by SCB against petitioner is pending before the NCLT and therefore discussion and determination on factual issues may prejudice either side.

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• Service Tax

• 2017 (7) TMI 603
  Levy of Penalty - bonafide belief - reverse charge - lead arrangers - Despite the fact that the assessee had already paid the requisite service tax, the Revenue issued a Show Cause Notice dated 27.12.2007 (SCN). Via the said SCN, the Revenue proposed, to not only appropriate the service tax, which included the educational cess already deposited by the assessee, but also called upon the assessee to show cause as to why interest ought not to be levied under Section 75 of the Finance Act, coupled with penalties under Section 76 for failure to pay service tax and under Section 78 for suppressing the factum of receipt of taxable services from a non-resident service provider. Held that: - upon a bare perusal of Section 80 (i), it opens with the non-obstante clause. Accordingly, it terms of the said Section an assessee can plead for waiver of imposition of penalties levied under Sections 76, 77 and 78 of the Act, if it is able to demonstrate that a "reasonable cause" obtained for non-payment of service tax. The assessee had paid service tax on a reverse charge mechanism basis, as soon as it received a communication dated 15.03.2007. The assessee did not wait for issuance of the SCN. Not only did the assessee pay the service tax, but it also paid interest, albeit, after the demand was confirmed. The assessee, it appears, therefore, verily believed that since, arrangement fee had been paid to ICICI Bank, which is an entity incorporated in India, it is that entity which would be required to pay service tax. The assessee continued to hold this belief and, as a matter of fact took a specific ground, in that behalf, even in the appeal filed with the Tribunal - merely because service tax was paid prior to SCN, therefore, penalty ought to be waived. What is required to be looked at is, the cumulative set of facts obtaining in each case, and then, assessing as to whether non-payment of service tax was a conscious and/or deliberate act of wrong doing and/or deception. Our sense of the matter is that, it was not, and, therefore, the conclusion reached by the Tribunal, in our view, is correct. Since, it is a civil obligation emanating from a statutory offence, imposition of penalty would follow, if, once it is established that the non-payment of tax was a result of a conscious and/or deliberate act of deception or wrong doing. Tribunal has rightly, invoked the provisions of Section 80 of the Finance Act. - Appeal dismissed - decided in favor of assessee.

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• 2017 (7) TMI 602
  Service of notice - Section 37(C) of the Central Excise Act - natural justice - Held that: - In the present case, it is a matter of record that thrice, the notice of hearing were issued to the petitioner i.e. on 30th October, 2014, 12th November, 2014 and 14th September, 2015. However, the said notices have been issued on the old address of the petitioner, whereas prior to the said notices of hearing being issued to the petitioner, the petitioner on 6th January, 2014 had intimated the respondent Authority of its address being changed and had also intimated the new address. It appears that the notices were not issued on the new address and all the notices issued to the petitioner on the old address were returned with an endorsement “left”. Naturally, there was no service to the petitioner of the said notices. The petitioner did show his bona fide by undertaking to deposit ₹ 25 lakhs within three months without prejudice to his rights - The deposit of ₹ 25 lakhs as undertaken is condition precedent. Petition allowed - matter restored before lower authorities - decided partly in favor of petitioner.

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• 2017 (7) TMI 601
  Condonation of delay - Section 35B of Central Excise Act, 1944 read with Rule 8 and Rule 15 of CESTAT (Procedure) Rules, 1982 - Held that: - if the order passed by Commissioner (Appeals) is not legal or proper, then the Committee of Commissioners is required to examine such order and may have the powers to direct an officer to file appeal before the Tribunal. Admittedly, in this case, in compliance with the provisions of Section 35B of Central Excise Act, 1944, read with Section 86 (2A) of the Finance Act, 1994, the committee of Commissioners authorised the Assistant Commissioner, Service tax, Division-III, Gurgaon. It is an admitted fact that the applications are not signed by the person authorised by the Committee of Commissioners as per section 86(2A) of the Finance Act, 1994 read with Section 35B (2) of the Central Excise Act, 1944 - applications for condonation of delay are not maintainable - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 600
  Sale of space for advertisement service - Department is seeking to levy service tax on the amounts collected by appellant as advertisement tax - Held that: - It is a cardinal principle of taxation that there should not be any tax on tax - In respect of service tax liability demanded by the Department on alleged sale of space or time for advertisement service, we find that in the Gazette Notification published by the Municipal Corporation, Rajahmundry the rate of tax within the municipal limits has been indicated. We further find that the Section 197 (1f) of the Greater Hyderabad Municipal Corporation Act, 1955, authorising municipal taxation on advertisements has been adopted in respect of the municipal corporations in Andhra Pradesh. In respect of the municipalities, they are authorised to collect the said tax vide Section 114 of the Andhra Pradesh Municipalities Act, 1965 This activity of the appellant is certainly not selling of space or time for advertisement as alleged by the show-cause notice and confirmed / upheld by the lower authorities. Appellants then cannot be subjected to tax on this score. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 599
  Works contract service - taxability of the amounts received by appellant from Punjab Water Supply & Sewerage Board (PWSSB) for the work contracts for providing extension and augmentation of water supply, sewerage works with pumping stations, sewerage treatment plants and other works on turnkey basis in several places - Held that: - the adjudicating authority should be given an opportunity to examine the entire issue in this case with reference to decision given by the Larger Bench of the Tribunal, in similar issue in the case of M/s. Lanco Infratech Ltd. And Others Versus Versus CC, CE & ST, Hyderabad [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], where it was held that Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/ contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act - matter remitted back to adjudicating authority reconsider the issue a fresh - appeal allowed by way of remand.

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• 2017 (7) TMI 598
  Taxability - business of providing various marine services relating to Port Activities - It is the case of the Revenue that appellant is required to discharge the service tax liability on this activities which were under taken by them under the category of Port Service - Held that: - It is undisputed that the appellant herein was licensed by the CPCL for rendering various services to CPCL. Whether the activity under taken would get covered under the category of Port Services was a question which was raised before this Bench in the case of Ashok International [2015 (12) TMI 1599 - CESTAT HYDERABAD], where the similar activities were held to be under the category of Port Services - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 597
  Refund claim - the service tax was deposited against the PAN based registration number of the outgoing proprietor, Shri Kaushik Jain instead of on registration number using PAN of the new proprietor, Shri Narnendra Jain - Held that: - even after transfer of business with effect from October 2010 by Mr. Kaushik Jain, Proprietor, the proprietorship concern continued to remain the same as Adinath Bulk Carrier without change of name. Thus, there could be possibility of wrong deposit of service tax against the same service tax registration number which was PAN based. It is the claim of the appellant that Shri Kaushik Jain who remained as proprietor till October 2010 even after transfer of the business, the service tax amount was continued to be deposited against the same service tax registration number till it is changed. The new proprietor Shri Narnendra Jain later discharged the entire amount of service tax along with interest again. These facts need to be verified whether the service tax against the same invoices were paid twice and whether Shri Narendra Jain discharged the service tax with interest subsequently - appeal allowed by way of remand.

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• Central Excise

• 2017 (7) TMI 596
  Maintainability of appeal - Section 35G - whether appeal maintainable before Supreme Court in view of the fact that The “Rate of Duty” and “Value of Goods” are the basic issues? - Held that: - It is clear from the provisions of section 35(G) itself that no appeal lies to the High Court from the Order passed by the Appellate Tribunal being the order relating among other things, to the determination of any question having a relation to the rate of duty of excise and/or to the value of goods for the purposes of amendment - the present appeal is disposed of as not maintainable.

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• 2017 (7) TMI 595
  SSI exemption - use of brand name of others - whether the petitioners are entitled for the exemption from payment of duty on goods bearing the brand name of another person cleared from their factory in terms of the relevant Notifications? - Held that: - The said issue has been finally decided in the assessee's own case in Kali Aerated Water Works vs. Commissioner of C.Ex., Madurai, [2015 (6) TMI 226 - SUPREME COURT], wherein the appeal filed by the petitioner/assessee was allowed, and it was held that Trade name 'Kalimark Aerated Water Works' and trade mark mentioned in the said agreement would remain vested in all the parties including the appellant and the appellant was also allowed to use the same - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 594
  Clandestine removal - demand - Held that: - the case has been booked against the appellant on the basis of computer printouts recovered from pen drive recovered from Shri M. Jaganbabu, Production Manager of the appellant. The printouts of the pen drive were taken in the presence of panchas. The said fact has not been disputed by the appellant at any stage. Moreover, no cross examination of panchas has been sought by the appellant - as the Revenue has been able to corroborate the statement Shri Narendra Gupta with documentary evidence, the Revenue has been able to prove the case of clandestine removal of goods beyond doubt - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 593
  Condonation of delay - Held that: - it would be unfair and unjust that Appellants suffer due to non hearing of their earlier ROA Application filed in 2007, for no fault of theirs. In any case, the earlier application had been dismissed on the ground of considerable delay in filing ROA application - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 592
  CENVAT credit - retrospective benefit under Section 69 of the Finance Act, 2010 - denial on the ground that the interest @ 24% on the amount credit calculated, as required to be reversed was not discharged by the assessee - Held that: - the assessee has filed an application declaring one input namely, printing ink as commonly used both dutiable and exempted final product involving CENVAT credit of ₹ 12,474/- and interest ₹ 10,006/-. But later they have furnished their information for other inputs also during the course of adjudication proceeding. Thus, it cannot be said that the adjudicating authority have traveled beyond the scope of the proceeding - the ld. Commissioner has arrived at the total amount of proportionate credit required to be reversed by the assessee, used both on dutiable and exempted product. The computation of quantum credit has been disputed by the assessee on the ground that while computing the amount, the inputs which were exclusively used in the exempted product cannot be construed as common inputs used both dutiable as well as exempted product. Hence, the amount if properly calculated would be reduced to around ₹ 4.00 lakhs - Revenue's appeal that the assessee should not be eligible to benefit of reversal of credit retrospectively, is without merit and not acceptable. The interest to be calculated within 10 days from the date of communication of the order, therefore, there is no discrepancy in the impugned order on this count. However, for re-determination of the quantum of proportionate credit, required to be reversed, the matter is remanded to the adjudicating Commissioner with the direction to decide the issue afresh - appeal allowed by way of remand.

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• 2017 (7) TMI 591
  Clandestine removal - the goods supplied under ARE-1 certificate were not exported - the parental unit did not mention ARE-1 No.19 and 20 - Held that: - As there are contrary views and difference of opinion between the Members, the points of difference of opinion are framed as: Whether in the facts and circumstances, the Member (judicial) is correct in holding that duty cannot be demanded and consequently penalty under Rule 25 Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, is not imposable on the appellant? - matter referred to Larger Bench.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 582
  Valuation - includibility - whether freight, cylinder charges and handling charges were required to be included in the taxable turnover of the Respondent/Assessee? - The Tribunal, examined the sale bills, which were shown to it, during the course of the hearing and thereafter, recorded a finding of fact that freight and other charges were shown separately in the sale bills - Held that: - the finding returned by the Tribunal, that the freight and other charges were shown separately, was not correct. In so far as the cylinder holding charges were concerned, the Tribunal relied upon the judgment in the case of West coast Industrial Gases V. State of Kerala, [2002 (10) TMI 743 - KERALA HIGH COURT], where it was held, that unless, it could be demonstrated that the Assessee had transferred the effective control of the cylinders to its customers, the charges collected for temporary possession of the cylinders could not be included in the taxable turnover. Appeal allowed - decided partly in favor of Revenue.

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• 2017 (7) TMI 581
  Penalty - purchase of Gold Bullion - suppression of facts - Held that: - there is no justification for the imposition of any penalty on the petitioner for the said assessment year since, as already noted above, it was the petitioner, who brought the discrepancy with regard to non-inclusion of the purchase turnover in the return for the month of December 2013 to the notice of the assessing authority, and hence, there was no deliberate suppression or misrepresentation by the assesse necessitating the imposition of a penalty for the said assessment year. I, therefore quash P5 (a) penalty order that is impugned in the writ petition. It is relevant to note in this connection that, by Ext.P1 notice dated 24.08.2016, the assessing authority had already initiated steps in connection with the completion of an assessment by requiring the petitioner firm to produce its books of account for verification. Although it is the case of the petitioner firm that it was only thereafter, and at the time of auditing the books of accounts of the firm, that it was noticed that the purchase turnover of gold bullion referred above was not included in the return filed by the partnership firm, I am of the view that, inasmuch as the realisation by the petitioner firm, of the omission, was only after the issuance of Ext.P1 notice to them, it is a case where the petitioner could not have been permitted to revise the return so as to cure the defects that were noticed by the assessing authority. The petitioner, therefore, had to suffer the consequences of any omission in the only valid return that was filed before the assessing authority. When so viewed, I do not find any illegality in the estimation that is done by the assessing authority while finding against the petitioner in Ext.P6 order that is impugned in W.P.(C).No.33522 of 2016 - In Ext.P6(a) order, the penalty that is imposed on the petitioner is double the tax levied. I modify Ext.P6(a) order by reducing the penalty imposed from ₹ 23,61,076/- to an amount of ₹ 1,00,000/-. Petition allowed - decided partly in favor of petitioner.

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• Indian Laws

• 2017 (7) TMI 578
  Dishonor of cheque - NI Act - whether after dishonouring of the cheque and on issuing the notice by payee to the drawer for repayment of the amount of the cheque, if it is returned unclaimed then what would be the date of receipt of the said notice to count the period of 15 days as specified under Section 138 of the N.I. Act? - Held that:- A loose cheque was given by the drawer to the payee which was dishonoured. Within a period of 30 days from the date of dishonouring, the notice was issued on 20.12.2007 to the drawer by post. The Post Office of the drawer’s address gave first intimation on 24.12.2007 and when it remained unclaimed for seven days as per the noting dated 1.1.2008 pleaded in private complaint No.233/08 and on 3.1.2008 pleaded in private complaint No.234/08, it was returned to the payee. It is not in dispute that both the complaints were filed on 14.1.2008, however, from the date it was shown to be unclaimed by the postal department i.e. 1.1.2008 and 3.1.2008 and the complaints have been filed prior to expiry of the 15 days of the said notice. However, in the said context, prosecutability of the private complaint has been objected by filing a preliminary objection by the trial Court which is rejected by the orders impugned, which were confirmed in revision. Section 27 of the General Clauses Act indicates expression “served”, “give” or “sent” while section 138 (c) of the N.I. Act indicates the giving of notice and accrual of a cause of action, if the amount is not paid within 15 days after receipt of the notice, therefore, for the purpose of Section 138, the Court ought to construe the word “give” as “receive”. It should not be construed as specified under the General Clauses Act “served”, “give” or “sent”. In view of the foregoing discussion in my considered opinion, the order passed by the trial court rejecting the preliminary objection filed by the petitioner, upheld by the revisional Court stands set aside. The preliminary objection filed by the petitioner is hereby upheld. Consequently, both the private complaints filed by the respondent are hereby quashed.

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• 2017 (7) TMI 577
  Dishonor of cheques - complaint under N.I. Act - Held that:- In the present case five post-dated cheques were handed over to non-applicant not as a security but for said payment with a stipulation that when the amount of ₹ 24 lakhs would be paid by applicant to the non-applicant then only the same were to be returned. As such the cheques issued were meant to discharge a debt or liability within the meaning of Section 138 of N.I. Act. The present petitions filed by the applicant are not maintainable. Learned Courts below have not committed any legal error in dismissing the application. No interference is required in these petitions under Section 482 of Code of Criminal Procedure, as prayed is made out.

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