TMI Tax Updates - e-Newsletter
July 22, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Revenue audit, Post GST - Audit by Central Excise & service Department to continue for the accounting year 2016-17 and for the past period

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• Business English & Personality Development Courses - appellants can not be considered as commercial coaching or training centre - No ST

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Articles

1. No TDS on component of CGST, SGST and UTGST- thanks for timely Circular- more scope and clarity is desired

   By: DEVKUMAR KOTHARI

2. CENVAT CREDIT RULES, 2017 – III PART

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST Council may take up certain tax issues at August meet

2. Government constitutes a GST Feedback and Action Room (FAR) w.e.f. 26-06-2017 to review the information, calls, media inputs etc received from Ministries, State Governments, field formations, social media, news channels, emails etc

3. Number of Registration of GSTN crosses 77.5 lakhs

4. Government has constituted a Central Monitoring Committee headed by the Cabinet Secretary to monitor the impact of GST

5. GST - Sectoral FAQs – MSME

6. GST - Sectoral FAQs – TEXTILES

7. GST - Sectoral FAQs – EXPORTS

8. Loan growth of banks and initiatives taken by the Government to improve he asset quality of banks

9. Relief Measures for the Farming Sector Post Demonetisation

10. SBI creates a wholly owned subsidiary “SBI Infra Management Solutions Pvt. Ltd.” for providing real estate services to them

11. Atal Pension Yojana (APY) - launched by the Government of India in May, 2015, primarily targeted at the unorganised sector and informal workers

12. RBI Reference Rate for US $

13. FM: Entry into force of the WTO-Trade Facilitation Agreement (TFA) on 22nd February, 2017 is a major milestone for the global trading system; Releases National Trade Facilitation Action Plan today

Notifications

GST

1. 04/2017 - dated 20-7-2017 - GST CESS Rate

Seeks to exempt intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the goods and services tax compensation cess on the value of outward supply of such second hand goods, as determined under sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017, from any supplier, who is not registered, from the whole of the goods and services tax compensation cess leviable thereon under section 8 of the Goods and Services Tax (Compensation to States) Act, read with sub-section (4) of Section 9 of the Central Goods and Services Tax Act

GST - States

2. ERTS(T) 65/2017/023 - dated 29-6-2017 - Meghalaya SGST

Council, hereby fixes the rate of interest per annum.

3. ERTS(T) 65/2017/021 - dated 29-6-2017 - Meghalaya SGST

Appoints provisions of sections 6 to, 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.

4. ERTS(T) 65/2017/019 - dated 29-6-2017 - Meghalaya SGST

Specifies the persons whos engaged in making supplies of taxable goods or services on reverse charge basis.

5. ERTS(T) 65/2017/018 - dated 29-6-2017 - Meghalaya SGST

Appoints 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.

6. ERTS(T) 65/2017/017 - dated 29-6-2017 - Meghalaya SGST

Electronic Commerce Operator.

7. ERTS(T) 65/2017/016 - dated 29-6-2017 - Meghalaya SGST

United Nations or a specified international organisation shall be entitled to claim refund of central tax paid on the supplies of goods or services.

8. ERTS(T) 65/2017/015 - dated 29-6-2017 - Meghalaya SGST

Council hereby notifies that no refund of unutilised input tax credit.

9. ERTS(T) 65/2017/013 - dated 29-6-2017 - Meghalaya SGST

Notifies the categories of supply of services on reverse charge basis.

10. ERTS(T) 65/2017/010 - dated 29-6-2017 - Meghalaya SGST

Exempts intra-State supplies of second hand goods.

11. ERTS(T) 65/2017/009 - dated 29-6-2017 - Meghalaya SGST

Council, hereby exempts intra-State supplies of goods or services or both received by a deductor under section 51

12. ERTS(T) 65/2017/008 - dated 29-6-2017 - Meghalaya SGST

Exemption shall not be applicable where the aggregate value of such supplies of goods or service or both.

13. ERTS(T) 65/2017/007 - dated 29-6-2017 - Meghalaya SGST

Council, hereby exempts, supplies of goods State tax leviable thereon under section 9.

14. ERTS(T) 65/2017/006 - dated 29-6-2017 - Meghalaya SGST

Specifies the Canteen Stores Department claim a refund of fifty per cent. of the applicable State tax paid by it on all inward supplies of goods.

15. ERTS(T) 65/2017/004 - dated 29-6-2017 - Meghalaya SGST

Specifies the supply of goods State tax shall be paid on reverse charge basis.

16. ERTS(T) 65/2017/003 - dated 29-6-2017 - Meghalaya SGST

Exempts intra-State supplies of goods, State tax leviable thereon under section 9

17. FIN/REV-3/GST/1/08 (Pt-1) “H” - dated 30-6-2017 - Nagaland SGST

Notify the goods which no refund of unutilised input tax credit

18. FIN/REV-3/GST/1/08 (Pt-1) “G” - dated 30-6-2017 - Nagaland SGST

Reverse charge on specified supply of goods under section 9(3) of the Nagaland Goods and Services Tax Act, 2017

19. FIN/REV-3/GST/1/08 (Pt-1) “F” - dated 30-6-2017 - Nagaland SGST

Concessional rate of petroleum operations for supply of goods under section 11(1) of the Nagaland Goods and Services Tax Act, 2017

Income Tax

20. 64/2017 - dated 19-7-2017 - IT

Amendment in Notification No. S.O. 2753(E), dated the 22nd October, 2014

21. 63/2017 - dated 19-7-2017 - IT

Under Section 118 of the Income-tax Act, 1961 rescinds Various Notifications

Circulars / Instructions / Orders

GST - States

1. ERTS (T) 1/2015/197 - dated 6-7-2017

Departments and Local Bodies procuring supplies of goods and services

GST

2. 01/2017-GST-ORder - dated 21-7-2017

Time limit for filing intimation for composition levy under Rule 3(1) of the CGST Rules, 2017 extended to 16-8-2017

3. F. No. A-32012/04/2017-Ad.II - dated 20-7-2017

Promote the officers of the Indian Revenue Service (Customs and Central Excise) to the grade of Principal commissioner of customs, GST & CX

4. F.No.A.11015/2/2016-Ad.l - dated 20-7-2017

Appoint the IRS (C&CE) officers as Principal Commissioner (Revision Application) and ex-officio Additional Secretary

5. F. No. C-50/25/2000-Ad II - dated 19-7-2017

Allocate the charges amongst the Members of the Central Board of Excise and Customs

6. F. No. 381/209/2016 - dated 12-7-2017

Strategy for audits in 2017-18 consequent to GST - Audit by Central Excise and service Department to continue for the accounting year 2016-17 and for the past period

Highlights / Catch Notes

GST

• Audits Continue for 2016-17 and Earlier Periods Amid GST Transition to Ensure Consistent Oversight and Compliance.

  Circulars : Strategy for audits in 2017-18 consequent to GST - Audit by Central Excise and service Department to continue for the accounting year 2016-17 and for the past period - Circular
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Income Tax

• Court to Decide on Taxability of Advances Forwarded to Supplier; Potential Refunds to Customers if Ruled Favorably.

  Case-Laws - AT : Real income - Addition on account of advances received from customers which have been transmitted to the supplier - final judgement from the courts were pending - If the Courts decides the issue in favour of the assessee, then the assessee would have to return this amount to customers. - Not taxable as no real income arose.
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• Compensation for Society Membership Relinquishment Taxed as Capital Gains; Indexation Based on Payment Dates.

  Case-Laws - AT : Assessee has received the compensation in his capacity as a member of the society and not as an agriculturist - The amount received by assessee has to be taxed as capital gains and not under the head ‘income from other sources’ because assessee had parted with the membership of society. - however, the indexation is to be allowed with reference to the dates of payments made by assessee
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Customs

• Appellants Penalized for Exploiting System Loopholes to Obtain Unlawful Import Clearances Despite Confiscation Warnings.

  Case-Laws - AT : Levy of penalty - It emerges that the entire exercise was a meticulously planned one by the appellants who utilized loopholes in the system to obtain clearances of imported goods with their definite knowledge under confiscation. Their conduct cannot be but otherwise considered as one of deceit and contumacious.
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• Reassessment of Shipping Bill Hinges on Let Export Order Date, Not Iron Ore Loading Start Date.

  Case-Laws - AT : Reassessment of shipping bill - date of let export order permitting loading of goods was relevant to decide the correct rate of duty. - the date on which the actual loading of iron ore was started is totally irrelevant.
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• Customs to Use Ship Ullage for Edible Oil Imports Valuation, Simplifying Quantity Assessment per CBEC Recommendation.

  Case-Laws - AT : Valuation - determination of quantity of edible oil - it would not be practical for customs officers to have the dip measurement of the quantity received in refinery in their presence for the purposes of arriving at actually received quantity. It is for this reason only that the CBEC in its wisdom has advised that in such cases, only the ship ullage quantity will continue to be adopted as the quantity imported for the purposes of assessment.
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Service Tax

• Ambiguity in Service Tax on Computerized Reservation System: No Evidence of Intent to Evade Payment Found.

  Case-Laws - AT : Classification of service - Computerized Reservation System (CRS) service - the issue regarding levy of service tax on CRS was not free from doubt and accordingly, suppression of facts with intent to evade payment of service tax cannot be levied against the appellant.
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• Appellants' Claim on Exclusive Phone Use for Taxable Services Lacks Evidence, Affects CENVAT Credit Records.

  Case-Laws - AT : CENVAT credit - maintenance of separate records - appellants failed to produce sufficient/substantial evidence in support of their contention that the said phones were used exclusively for taxable services viz., business promotion of service of customers as well as sale of vehicles through financiers.
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• Amendment to Notification No. 41/2007-ST does not affect refund claims filed before 07.12.2008 for duty drawback.

  Case-Laws - AT : Refund claim - N/N. 41/2007-ST dated 06.10.2007 - exported under claim for duty drawback - it cannot be said that the amending Notification dated 07.12.2008 will have the retrospective effect and should be applicable for the refund claims filed prior to 07.12.2008.
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• Tunnels for dams or power projects are not taxable u/s 65(105)(zzzza) of the Finance Act, 1994.

  Case-Laws - AT : Works contract service - since the works contract was in respect of tunnels for dams/power projects, the same would then be excluded from taxability thereunder in view of the exclusion in Section 65(105)(zzzza) of Finance Act, 1994
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• Service of Earth Moving Equipment on Monthly Rental Not Classified as Site Formation Services.

  Case-Laws - AT : Classification of service - the earth moving equipment was provided by the appellant to the recipient of services on monthly payment basis - the activity involved in the present case is of hiring of equipment on a monthly fixed rental - the service does not fall under Site Formation Services
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• Service Tax Demand Overturned: Business English and Personality Development Coaching Not Classified as Commercial Training Center.

  Case-Laws - AT : Fee received for coaching provided for Business English and Personality Development - appellants can not be considered as commercial coaching or training centre. - Demand of service tax set aside
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Central Excise

• Dental plate brushes classified as toothbrushes under Tariff 96032100; deemed manufacture for central excise purposes confirmed.

  Case-Laws - AT : Classification of goods - dental plate brushes - Deemed manufacture - Once Tariff sub-heading 96032100 is mentioned with the description tooth brush, one cannot arrive at the conclusion that inter-dental brush or dental plate brush is not part of that entry or the said description, when dental-plate brush is also a kind of tooth brush.
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• CENVAT Credit Refund Entitlement u/r 5 Unaffected by Foreign Trade Policy Scheme Benefits.

  Case-Laws - AT : Refund of accumulated CENVAT credit - the availment of any benefit under a Foreign Trade Policy scheme would not in any way impact upon the entitlement for refund under rule 5 of CENVAT Credit Rules, 2004
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• Factory Setup Services Qualify for CENVAT Credit as Input Services u/r 2(l) of CENVAT Credit Rules, 2004.

  Case-Laws - AT : CENVAT credit - the services, in question, used for setting up of factory have to be treated as input service and would be eligible for Cenvat credit, as the factory has been setup for manufacture of final products which are liable to Central Excise duty. Therefore denial of Cenvat credit, in question, is contrary to the provisions of Rule 2(l) of Cenvat Credit Rules, 2004.
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VAT

• Dispute Over Turnover Tax: Petitioner Challenges ETO's Claim of In-State Sales Under PVAT Act, 2005.

  Case-Laws - HC : Levy of turnover tax - inter state sale - PVAT Ac, 2005 - according to the ETO, the petitioner sold the goods in the State of Punjab and that the sales were not inter-state sales as contended by the petitioner. This was a fundamental error - HC
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Case Laws:

• Income Tax

• 2017 (7) TMI 696
  Reopening of assessment - transfer of business of the assessee and exchange of shares between the companies and trust - reasons to believe - proof of non charitable activities - Held that:- The first part of the reasons referring to the complex structure of transfer of business of the assessee and exchange of shares between the companies and trust all happened during the year relevant to the assessment year 2011-12 and has therefore no direct bearing on the assessment year 2009-10 which is sought to be reopened. Whatever be the legality or the effect of such transactions on the assessment of the assessee for the relevant period, the same can have no relation to the assessee’s tax liability for the assessment year 2009-10. We cannot allow the Assessing Officer to examine this issue. Firstly, independently of the assessee’s activities of the assessment year 2011-12, the Assessing Officer had examined this question during the original assessment. We have noted the written queries raised by the Assessing Officer and the answers given by the assessee to such questions. This included the applicability of the amended Section 2(15) of the Act. We also noted that the Assessing Officer in the order of assessment did not, with the aid of such provisions, hold that the activities of the trust are not for charitable purpose. He, thus, accepted the assessee’s stand in this regard. Any attempt now to reexamine this issue would be considered as change of opinion and clearly impermissible even if it is within the period of four years. Assessing Officer has tried to link the assessee’s transactions of transferring its micro finance business to a company. This transfer or even valuation of the assessee’s tangible and intangible assets would not automatically imply that the activities of the assessee trust were not in the nature of charitable purpose. Substantial portion of the valuation was for tangible assets which may have been acquired by the assessee trust over a period of time. Even though part of the consideration comprised of valuation of intangible assets, the same would be of no consequence. - Decided in favour of assessee.

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• 2017 (7) TMI 695
  Transfer of cases - Notice under Section 158BC by assessee with Nagpur I.T.O. sufficient to apply bar under Section 124(3) of the Income Tax Act in the matter - Held that:- All the proceedings taken between 6.7.1999 till the Order dated 18.1.2000 by the Deputy Commissioner of Income Tax, Nagpur become regular and he will retrospectively enjoy the status of the Assessing Officer even on 22.9.1999, when he issued the notice u/s.158 BC of the Act. Transfer of proceedings u/s.127 of the Act cannot be retrospective so as to confer jurisdiction on a person who does not have it. This provision makes it clear that though transfer would come into effect from the date the order of Commissioner passed under Section 127(1) the proceedings already commenced would not abate and continue with new Assessing Officer, who assumes charge consequent to transfer subject of-course to the pending notices being within jurisdiction of the Officer issuing the notices. It is not a provision which validates without jurisdiction notice issued by an Income Tax Officer. If the submission of the Revenue on the above account is to be accepted, then an order which is without jurisdiction could be bestowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if they are transferred to a new Officer by an Order under Section 127 of the Act. Substantial question of law is answered in the negative i.e. in favour of the respondent/assessee and against the appellant/revenue.

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• 2017 (7) TMI 694
  Levy of interest under Sections 201 (1) and 201 (1A) - prescribed time limit for invoking provisions of Section 200 and Section 201 - default in non-deduction of TDS relates to A.Y. 1994-95 while ultimate order of demand was passed in March 2002 - period of limitation - Held that:- The question, whether any specific period of limitation like a statutory period can be applied in such a case when no time limit has been provided by legislature in a particular statute, has been considered by this Court in detail in M/s Mass Awash Private Limited Vs. Commissioner of Income Tax (International Taxation) [2017 (7) TMI 664 - ALLAHABAD HIGH COURT]. We find that both the substantial questions of law formulated above have to be answered in favour of Revenue and against Assessee. However, delay occurred in passing order under Section 201(1) and 201(1A) of Act, 1961, whether justified or not is a question of fact which has to be examined independently on the basis of facts of each individual case.In the present case, this aspect has not been looked into by Tribunal in the light of judgment bove, we, therefore, remand the matter to Tribunal and direct that it shall consider this aspect

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• 2017 (7) TMI 693
  Real income - Addition on account of advances received from customers which have been transmitted to the supplier - final judgement from the courts were pending - Held that:- It is seen that the amount received from customers is because of recovery made as tax by Coal companies from the assessee, which is shown as advance in the books of accounts, as the matter is under dispute by the assessee against coal suppliers. The assessee has also paid this amount to coal companies, who in turn showing it as advances in their books of accounts. If revenue wants to tax this amount in the hands of the assessee, then, the assessee be allowed deduction on account taxes paid to coal companies. If the Courts decides the issue in favour of the assessee, then the assessee would have to return this amount to customers. This being so, there is no real income in the hands of the assessee. In view of this matter, we find that the finding of Ld. CIT (A) as correct , therefore, no interference is called for. Accordingly, this grounds of appeal of revenue is dismissed. Reopening of assessment - reasons to believe - Held that:- The assessee has recovered an amount of 78,82,705/- from SSI units and paid to WCL on account of GSTV and same has been shown under the head advance received from customers , hence, there was prima-facie case of reason to believe that income chargeable to tax has escaped assessment. Further reliance placed in the case of Raymond Woolen Mills Ltd. vs. ITO [1997 (12) TMI 12 - SUPREME Court] wherein it was observed that in determining whether commencement of proceedings u/s 147(a) was valid, what was to be seen was only the prima facie material; the sufficiency or correctness of the material was not a thing to be considered at that stage. Reopening of the assessment of the preceding year on the basis of information obtained in the subsequent year's proceedings regarding undervaluation of inventories resulting in under- statement of profits was held valid under section 147(a). In the case of Kalaynji Mabji & Cop. V. CIT (1975 (12) TMI 2 - SUPREME Court) it was held that reassessment can be initiated even if information may be obtained from record of original assessment. - Decided against revenue

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• 2017 (7) TMI 692
  Disallowance u/s 40(a)(i) - various payments made by the assessee without deducting tax at source - Held that:- Disallowance made of such expenditure for non–deduction of tax cannot be sustained as there is no requirement for assessee to deduct tax at source while making such payments. As far as the payment made towards IVTC is concerned, nothing has been brought to our notice to conclusively prove that such services are not in the nature of technical services. The assessee has also failed to prove that such income does not accrue or arise in India. Therefore, we are not inclined to accept the arguments of the assessee that payment made are not in the nature of FTS, hence, no TDS was required. However, we agree with the conclusion of the Commissioner (Appeals) that the disallowance under section 40(a)(i) as per Article–21(1) of the India Switzerland DTAA has to be restricted to the amount actually paid during the relevant previous year. It needs to be mentioned, the assessee has made a without prejudice submission that as per Article 24(3) of the treaty disallowance on account of non–deduction of tax should be restricted to 30% of the amount paid, which is the quantum of disallowance applicable to domestic transactions as per section 40(a)(ia). It is submitted, the amendment to section 40(a)(ia) restricting disallowance to 30% of the amount paid should be made applicable retrospectively, since, it is clarificatory in nature. We are afraid, the contention of the assessee cannot be accepted. In our considered opinion, the amendment to section 40(a)(ia) brought by Finance Act, 2014, restricting the disallowance to 30% of the amount paid is substantive and not clarificatory, hence, will have no retrospective operation. Disallowing assessee’s claim to be taxed at lower rate on the dividend distribution tax (DDT) - Held that:- Keeping in perspective the provisions contained under section 115O vis–a–vis Article–10 of DTAA it needs to be examined whether the benefit of tax treaty can be extended to the DDT paid / payable by the assessee. We have noted, the various proposition advanced by the assessee claiming benefit under Article–10 of India Switzerland DTAA as contained in the written notes are nothing but repetition of submissions made before the learned Commissioner (Appeals) on 20th February 2014, a copy of which is at Page–112 of the paper book. Though, reading of Article–10 of India Switzerland DTAA prima–facie gives an impression that it will only apply to non–resident shareholder receiving the dividend, however, still it leaves a scope for examining the claim of the assessee that DDT being a tax on dividend, Article–10 of the DTAA would be applicable even if such dividend is payable by the domestic company. In our view, it will be too simplistic to reject the contention of the assessee on the plea that it will only apply where the non–resident recipient of dividend incurs the liability in respect of dividend. In our considered opinion, the learned Commissioner (Appeals), though, was required to deal with all propositions advanced by the assessee, he has not done so. Therefore, we are inclined to restore the matter back to the file of the learned Commissioner (Appeals) for fresh consideration after reasonable opportunity of being heard to the assessee. Addition made on account of transfer pricing adjustment on licence fee - Held that:- The learned Counsel appearing for both the parties have agreed before us that the issue stands covered by the decision of the Tribunal in assessee’s own case for assessment year 2002–03 to 2007–08. As could be seen, while deciding assessee’s appeal for assessment year 2002–03 and 2003–04 and other related appeals the Tribunal deleted the transfer pricing adjustment by accepting the arm's length price of the license fee declared at 3%. The same view was again reiterated in A.Y. 2004–05 and 2005–06 and, for assessment year 2006–07 and 2007–08. There being no material difference in facts brought to our notice by the learned Departmental Representative respectfully following the consistent view of the Tribunal, we upheld the order of the learned Commissioner (Appeals) on this issue. Addition on account of delayed payment of PF/ESIC dues - Held that:- Learned Counsels appearing for both the parties have agreed before us that the issue in dispute is covered in favour of the assessee by the decisions of the Tribunal. On a perusal of the order of the Tribunal for assessment year 2002–03 in assessee’s own case as referred to above, it is noticed that the Tribunal considering the fact that ESIC dues were paid before the due date of filing of return deleted the addition. The same view was again expressed by the Tribunal in assessee’s own case for assessment year 2006–07. Since the learned Commissioner (Appeals) has deleted the addition following the consistent view of the Tribunal in assessee’s own case, we do not find any reason to interfere with the order of the learned Commissioner (Appeals).

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• 2017 (7) TMI 691
  Unexplained cash credit addition u/s 68 - source of the cash deposited in the assessee’s bank - Held that:- On facts, the assessee, who appears to be a man of modest means, is to exhibit the build-up cash with him up to the date/s it was given to a party/s toward purchase of property, which remains unspecified. This could be from his savings – which again would only be from his earnings, or earnings, and may towards its reasonability, require assessment of the necessary expenditure toward personal/household purposes, and other mandatory, proven outgoings, viz. taxes, deposits under PPF/life insurance, etc. It is this that would constitute the source. This could also be from his capital – which would though have to be proved, invested in an asset, since realized to generate cash. And of which, again, there is no whisper (in the assessee’s explanation). Like-wise, for the mother, who has independently advanced Rs. . 30 lacs for the purchase of property, and whose capacity therefore to do so (i.e., deposit with a third party) would require being shown. The explanation is sans any specifics nor supported by any material or contemporaneous evidence. Rather, the explanation itself raises some questions, viz. qua the particulars of the property; the documents evidencing the transaction, binding the parties to the contract; was the transaction jointly with the mother and why, as it appears, the entire of it in cash, etc. Then, again, what is the basis to say that the amount stands received back on 30.04.2008, which could not again be without evidence? Why did the mother not deposit the money in her bank account or, alternatively, why was the amount not paid back to her but deposited in the assessee’s account? Again, is the explanation consistent with the assessee and his mother’s balance-sheet as on 31.03.2009; the cash statement rendered being, surprisingly, only up to 04.10.2008, and not up to the end of the year? How has the sum received from the mother been reflected in the assessee’s and her mother’s balance sheet as on 31.03.2009, i.e., as a gift or loan? In fact, it could also be that the assessee had financed the advance by the mother for the purchase and, accordingly, stands received by him, either from the mother or from the seller directly, in which case the assessee shall have to establish the source with him for the entire Rs. .60 lacs. Further, where there is a prima facie proof of the assessee having been paid by his mother, it is the capacity of the mother that shall have to be demonstrated to satisfactorily explain the source of deposit as being a loan (or gift) from the mother. Again, also relevant in the matter would be the information of whether any the property was purchased during the year, either by the assessee or his mother or both. In view of the foregoing, it is only considered proper to allow the assessee, in the interest of justice, even as observed during hearing, an opportunity to state his case in the matter. The same is accordingly restored back to the file of the AO to enable the assessee to present his case before him. - Decided in favour of revenue for statistical purposes.

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• 2017 (7) TMI 690
  Benefit of section 10(37) - nature of land sold - exemption of capital gains arising from the transfer of agricultural lands in the hands of individual or HUF - nature of receipt in the hands of the assessee - Held that:- Admittedly, the assessee has received the compensation in his capacity as a member of the society and not as an agriculturist, therefore, assessee cannot get the benefit of section 10(37) which exempts capital gains arising from the transfer of agricultural lands in the hands of individual or HUF. The amount received by assessee has to be taxed as capital gains and not under the head income from other sources because assessee had parted with the membership of society. As rightly held by ld. CIT(A), however, the indexation is to be allowed with reference to the dates of payments made by assessee towards deposit of 40,000/-. Appeal of the assessee is partly allowed.

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• Customs

• 2017 (7) TMI 673
  Valuation - imported bulk liquid edible oil - finalisation of provisional assessment - Revenue is aggrieved by the assessment based on shore tank quantity and not on shore ullage quantity - Held that: - It is noted that Commissioner(Appeals) in the impugned order has admitted that shore tank quantity should have been adopted, however, as no shore tank quantity was available, Bills of Entry were finalised as per old procedure i.e. shore ullage quantity - the shore tank quantity should have been the basis for arriving at assessable value and the customs duty liability on the imported goods - appeal allowed. Valuation - imported Soyabean oil in bulk - The grievance of the appellants herein is that dip reading should have been taken only after 48 hours, after the liquid is get stabilised. Since the reading has been taken within 48 hours, there is a difference in total quantity because of turbulence and foam - Held that: - Circular No.96/2002-Cus issued by the CBEC, while advising assessment of such bulk quantity cargo to be done on the basis of shore tank receipt, does not however give any guidelines as to the time, manner and method of such measurement of the quantity in shore tank quantity. However, the very same Public Notice No.2/2002 relied upon by lower appellate authority, in para 8, thereof lays down that the dip and temperature of the cargo in shore tank shall be taken “after cargo is settled - the percentage difference on account of such disputed measurements ranges between 0.003% to 0.26% only, which in our view is not very substantial. Such minor percentage differences can very well be attributed due to the presence of foam and added turbulence, proximate to discharge of the bulk edible oil cargo to the shore tank. Hence both on the manner and method of taking the dip measurement as also taking account the relatively low alleged difference in quantity, we find in favor of the importer - appeal allowed. Valuation - edible oil discharged directly into the refinery tank of the appellants - Held that: - where bulk edible oil cargo is warehoused and discharged directly into the shore tank, the aforesaid Board circular provides and facilitates for the shore tank measurement to be taken and adopted for the purposes of finalisation of assessment, instead of ship ullage quantity. But where the importer chooses to get such cargo directly pumped into their own tanks in the refinery and file Bill of Entry for clearance for home consumption, it would not be practical for customs officers to have the dip measurement of the quantity received in refinery in their presence for the purposes of arriving at actually received quantity. It is for this reason only that the CBEC in its wisdom has advised that in such cases, only the ship ullage quantity will continue to be adopted as the quantity imported for the purposes of assessment. In consequence, we fail to find any merit in these appeals - appeal dismissed. Condonation of delay in filing appeal - Section 128(1) of the Customs Act, 1962 - Held that: - As per the proviso to that sub-section, the Commissioner(Appeals), if he satisfied that the appellant was prevented by sufficient cause in presenting the appeal within such period of 60 days to allow it to be presented within a further period of 30 days. Thus the appeal before the Commissioner(Appeals) cannot be filed beyond the limitation period of 90 days - there is no provision whatsoever in the Customs Act, 1962 for further relaxation of the period allowed for filing appeal under Section 128 ibid - COD application dismissed. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 672
  Reassessment of shipping bill - it is the case of the Revenue that the goods are liable to enhanced duty as loading continued after duty - Held that: - It is recorded that the shipping bill which was duly assessed to export duty on 24/2/2011, was merely corrected to have the revised export duty. Such manual correction, which was not based on re-assessment order issued to the respondent, was held to be without authority of law - the basis of recalculation of duty was obtained by the respondent through a RTI application. Such calculation cannot be called as reassessment of shipping bill. Rate of export duty - relevant date for applying the rate of export duty - Held that: - The High Court in the case of Prime Mineral Exports Pvt. Ltd. Vs. Union of India [2010 (7) TMI 186 - BOMBAY HIGH COURT] examined the relevant date for export of applicable in identical situation and held that the date of let export order permitting loading of goods was relevant to decide the correct rate of duty. The High Court also held that the date on which the actual loading of iron ore was started is totally irrelevant. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 671
  Confiscation of goods - penalties - warehousing of goods - there was some variation in stock position - Held that: - appellant has not been able to justify the defence taken by him against imposition of penalties and also confiscation of the goods. It is undisputed that there was some excess stock in the Warehouse and also shortages of the duty free goods brought in for clearances. The said excess and shortage was communicated by the appellant himself to the lower authorities which indicates that there is definitely an error on the part of the appellant to not to reconcile the stocks regularly. Quantum of redemption fine - Held that: - considering the fact that the value of confiscated goods found the redemption fine of 1,50,000/-, seems to be excessive - in order to meet the ends of justice, the redemption fine imposed needs to be reduced, which is fixed at 75,000/-. Quantum of penalty - Held that: - the penalty u/s 114 of CA, 1962 is 50,000/-, which, in my considered view, is correct and no interference is called for - the first appellate authority reduced the penalty imposed u/s 112 of Customs Act, 1962 from 1,00,000/- to 50,000/- which also I find is correct. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 670
  Maintainability of rejection of refund claim - case of Revenue is that the refund claim cannot be entertained / decided until finalization of the case by DRI and adjudication by the competent authority, that till then there is no cause of action in the refund section, therefore, their claim is not maintainable - Held that: - the refund claim under the CA, 1962 would arise only if the claim satisfies the provisions of section 27 ibid, that in this case, the sum of 32 lakhs had been voluntarily paid well in advance of any notice being issued to the appellants, for payment of duty, therefore question of assessment to duty mentioned in section 27 would certainly would not arise until the order of assessment has been made, consequently, there would be no cause of action of refund ad any claim thereof would not be maintainable. It emerges that the entire exercise was a meticulously planned one by the appellants who utilized loopholes in the system to obtain clearances of imported goods with their definite knowledge under confiscation. Their conduct cannot be but otherwise considered as one of deceit and contumacious. The order of the lower appellate authority in respect of confiscation of sale proceeds of the illegally removed imported goods and confirmation of penalty of 4,00,000/- under section 112(a) ibid is therefore just, fair and legal and does not call for any interference. Appeal dismissed - decided against appellant.

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• 2017 (7) TMI 669
  100% EOU - N/N. 1/95-C.E. dated 4.1.95 - respondents are alleged to have procured huge quantity of raw materials, namely, polyester fabrics yarn from some of the 100% EOUs under CT-3 certificate, but instead of utilising the same in the manufacture of goods and exporting the same, they exported cheaper varieties of polyester fabrics yarn from local market, and the raw materials procured duty free were diverted into the Domestic Market - whether charge of confiscation and penalty sustainable, when the goods are not available for confiscation? - Held that: - principle of law laid down by the Hon’ble Gujarat High Court in the case of Commissioner of Central Excise Customs and Service Tax Versus M/s Sanjari Twisters [2017 (4) TMI 219 - CESTAT AHMEDABAD], taken into consideration, where it was held that as the goods were not available for confiscation, as the goods were already diverted/permitted to be warehoused without payment of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable - the matter needs to be remanded to the Adjudicating Authority to ascertain the quantum of fine - impugned order to the extent of not directing confiscation and imposition of fine is set aside - appeal allowed by way of remand.

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• 2017 (7) TMI 668
  Natural justice - non-issue of notice u/s 124 of the CA, 1962 - propriety of enhancement of value of the imported goods - Held that: - while Section 110 (2) requires issue of notice under Section 124, the latter has an inbuilt exception for not issuing such written notice. The proviso to Section 124 ibid provides that such notice may, at the request person of the concerned be oral - appellant had clearly waived his right for a SCN and in consequence, the proviso to Section 124 ibid will take effect, accordingly no notice in writing is then required to be served. Enhancement of value - Held that: - as correctly observed by lower appellate authority, there is only a marginal difference in the unit price between the earlier assessed value and that finally assessed vide the adjudication. In view thereof, no reason can be alluded to the enhancement of assessable value to US$ 0.45/mtr based on the contemporaneous import prices suggested by the appellant themselves. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (7) TMI 666
  Oppression and mismanagement - maintainability of petition - Held that:- Contention of the Respondent challenging the maintainability of the present Petition does not stand as the Petitioner being the daughter and the successor-in-interest to the estate of the Late NCG represents a part of the deceased's property as a representative and therefore can be deemed to be a shareholder of 11.6% shareholding in the company through the Late NCG. The Petition is therefore maintainable Respondents were guilty of mismanaging the affairs of the Company so much so that it led to the Company's name being struck off the list of active companies. In addition to it the appointments of the various directors in the Company were done contrary to the statutory provisions and Articles of Association of the Company. For these reasons, it can be concluded that the public company is being run in a manner prejudicial to the interests of the stakeholders of the Company. Moreover, the Company as per a special resolution passed on 26th October, 1990, the Company became public under Section 44 of the Companies Act, 1956 and the word “Private” was deleted from the name of the company. However, the Articles of Association of the Company continue to reflect the present company being a private company. The Articles of Association of the Company needs to be amended to that effect. Petition is partly allowed. The Respondents are hereby directed to fulfil all the statutory compliances for a public limited Company as has been mandated under the Companies Act, 1956 with respect to the appointment of the directors to the Board. It is directed hereby that the Petitioner be given the right to partake in the management and the affairs of the Company to the extent of the shareholding she is entitled to. The Respondents are directed to amend the Articles of Association of the Company to reflect that the Company is a public limited company and not a private limited company. Preliminary decree is being passed for the appointment of a special auditor and conducting a special audit for auditing and for verification of the accounts of the Company. The expenditure of the special auditor and the audit to be conducted will be borne by the Respondents. Moreover, the shareholding in the Company that the Petitioner is claiming to be entitled to, is a part of the inheritance dispute that is pending at the Civil Court. Since the Tribunal herein is concerned with the issue of oppression and mismanagement, any finding by the Tribunal or the order passed herein shall have no effect on the aforementioned Civil Partition proceedings pending between the parties in any Civil Court

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• 2017 (7) TMI 665
  Preliminary decree in favour of the plaintiff - attachment orders - Held that:- This Court does not find an unequivocal and clear admission of defendant Nos. 1 to 3 for a liability of the plaintiff to the tune of 6,99,24,861/- however considering the fact that the email dated 10th March, 2011 along with attachment is an admitted document wherein a clear admission has been made out on behalf of defendant Nos. 1, 2 and 3 to pay sum of 4,19,05,956/- to the plaintiff, this Court deems it fit to pass a preliminary decree in favour of the plaintiff and against the defendant Nos. 1 to 3 jointly and severely. It is ordered accordingly. Defendant Nos. 1, 2 and 3 shall jointly and severally pay a sum of 4,19,05,956/- to the plaintiff with an interest @9% per annum from after 10 days of receipt of the amount which in any case was on or before 18th October, 2010 till the recovery.

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• Service Tax

• 2017 (7) TMI 689
  Commercial coaching or training service - Fee received for coaching provided for Business English and Personality Development - fees received for offering courses of London School of Economics (University of London) resulting in issue of degree by the University of London - tax liability - demand - Held that: - the degree or diplomas are issued by the Universities or the main organisation to which the college or an institute or a centre is affiliated. Keeping this in the background, it can be seen that the degree or diploma being issued by University of London can be considered at par while interpreting the scope of commercial training or coaching centre. Whether such a degree or diploma is recognized by law for the time being in force? - Held that: - The UGC, AICTE etc are recognizing bodies of a University or an Institution. The degree or diploma awarded by these institutions considered as recognized by law for time being in force. In this connection, we note the position has been clarified regarding the scope of the term qualification 'recognized by any law' vide Board circular dated 28.08.2012. It clarifies that 'recognized by any law' will include such course as are approved or recognized by any entity established under a central or a state law, including delegated legislation, for the purpose of granting recognition to any education course. It is relevant to note here that the department has been taking consistently a view that when an educational institute is affiliated to a university/institution awarding a degree recognized by law, then the said institute is not a commercial training or coaching centre. Reference can be made to circular No.26/2003 28.08.2012 and 26.02.2010 of the Board. Admittedly, the appellants were providing course resulting in the award of B. Tech, BBA, MBA of Allahabad Agricultural Institute (deemed university). No demand for Service Tax has been made in respect of these courses. Even on this ground, the appellants can not be considered as commercial coaching or training centre. Apart from the fact that the appellants will fall outside the purview of commercial coaching or training centre, I find that the Business English Course and Personality Development course offered by the appellants will be covered by exemption notification No.9/2003 ST. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 688
  Classification of service - Site Formation & Clearance, Excavation and Earthmoving and Demolition Service - the earth moving equipment was provided by the appellant to the recipient of services on monthly payment basis - whether the service fall under Site Formation & Clearance, Excavation and Earthmoving and Demolition Service or under Supply of Tangible Goods Service? - Held that: - On perusal of contract between the respondent and the recipient of services, we find that the respondent have merely provided the earth moving equipment to M/s. Purti Sakhar Karkhana Ltd. on hire basis at a fixed monthly charges. The respondent is not under obligation to carry out the activity of Site Formation Services in the premises of the service recipient. In this fact it is clear that at the most the service is of supply of tangible goods for use and not fall under the service of Site Formation - the activity involved in the present case is of hiring of equipment on a monthly fixed rental. Therefore the learned Commissioner (Appeals) has correctly and legally held that the service does not fall under Site Formation Services - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 687
  Works contract service - Erection, Commissioning or Installation service - bidding for projects relating to various works in different States - the appellant was required to perform and undertake “works” of designing, supplying, fabrication, inspection, testing, installation and commissioning of pressure shaft liners otherwise called ‘steel liners/penstocks’ forming part of the respective projects contracted upon by the main contractors - department has sought to bring the impugned activity into the fold of Erection, Commissioning or Installation service (ECIS), for the period January 2005 to March 2010 and under Works Contract Service (WCS), from April 2010 to March 2012. Held that: - It is not disputed that assessee was functioning as a sub-contractor to main contractors for hydro-electric projects in Himachal Pradesh and Maharashtra. Assessee was required to perform and undertake activity of Installation and Commissioning of Pressure shaft liners also called “steel liners/penstocks”. As the dispute is around, the taxability or otherwise of this particular activity done by the assessee, we proceed to examine the same. Towards this end, it would be useful to understand the nature and scope of the said activity - This activity is performed within the excavated tunnel. The tunnel is formed and complete only after the steel liners are put in place and the space between liner and rock is filled with concrete and pressurised cement grout. It is also not disputed that these tunnels have been made in relation to hydro-electric projects as underground passages for conveyance of water. Thus, there is no doubt that the activity of fabricating penstock/steel liners are essential for the completion of tunnels. The work has been performed by the assessee on specific sub contract agreements for specific works detailed therein, the nature of work cannot, but, be otherwise than “Works Contract” and definitely not under “ECIS” as perceived by the department for the period upto March 2010. The nature and scope of the activity performed by the assessee also answers to the scope of works contract defined in Section 65 (zzzza) of Finance Act, 1994 for fabrication and installation work in respect of tunnel for transport of water from the Dam projects - Once it is clear that the impugned activity comes within the ambit of “works contract”, the same would also be taxable only w.e.f. 01.06.2007, when the said service was brought into the fold of service tax. The attempt by the department to categorise the very same activity for an earlier period under ECIS cannot then sustain. We find that the impugned activity of the assessee was nothing but “works contract service” in respect of tunnels/dams. We further find that since the works contract was in respect of tunnels for dams/power projects, the same would then be excluded from taxability thereunder in view of the exclusion in Section 65(105)(zzzza) of Finance Act, 1994 - demand cannot sustain - appeal allowed. Refund claim - claim on the basis that the activity does not amount to providing of taxable service as ECIS - Held that: - as there can be no taxability on the impugned activity during the period of dispute, the said amount would be refundable only for limited purpose of ascertaining whether the claim is hit by unjust enrichment or otherwise, which aspect has not been considered in the impugned order, we remand the matter to the original authority - matter on remand. Appeal allowed - part matter on remand - decided in favor of appellant.

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• 2017 (7) TMI 686
  Air travel agency service - short payment of tax - demand - Held that: - the Revenue authorities may not be aware that the respondent is not discharging the service tax liability from July 2001 to March 2005 in the absence of any returns filed by the respondent. It is on record that the respondent had not filed any returns for the period July 1997 to June 2001 as also for subsequent period - In the absence of any returns filed with the Revenue authorities, Revenue authorities will not be able to ascertain whether tax liability is correctly discharged or otherwise, and hence in our view the show-cause notice dt. 08/12/2005 is correctly invoking the extended period for demand of tax. The second show-cause notice dt. 08/12/2005 is issued for the period subsequent to the period which was in question in show-cause notice dt. 08/10/2002. It transpires from record that there is no overlapping of the demand in order to claim the relief by the respondent. Impugned order set aside - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 685
  Renting of immovable property - time limitation - Held that: - there cannot be any dispute on taxability on this score when the said activity is not being shown to be covered by any exclusion or exemption from service tax thereof. We therefore hold that this activity will definitely be leviable to service tax but only for the normal period of limitation - However for the periods beyond the period of limitation in all these cases, notwithstanding the protestations of the learned ARs to the contrary, we are of the opinion that appellants being statutory bodies, they cannot be held to have suppressed facts with any intent to evade payment of tax. - the demand of service tax amounts will sustain in respect of renting of immovable property, in respect of all these appeals but only for the normal period of limitation, along with interest liability thereof as applicable. Valuation - reimbursement of expenses - Sale of space or time for advertisement by municipalities / corporations - the appellants have contended that the activity sought to be taxed is only relating to collection of tax on advertisements and not on sale of space and time for advertisement per se - Held that: - if the amounts received by the appellants are only towards advertisement tax collected by them under statutory powers bestowed on them, that activity cannot be brought under ambit of service tax and the taxable value thereof cannot be taxed as sale of space and time for advertising service. This is a fundamental principal of taxation, which has been reiterated by the CBEC in the Circular No.192/02/20016 wherein at Sl.No.3, the Board clarifies that “taxes, cesses or duties levied are not consideration for any particular service as such and hence not leviable to service tax” - in the absence of any detailed facts and records before us, this particular aspect will have to be checked up and confirmed only at the ground level. Accordingly, for the limited purpose of establishing the nature and scope and the amounts received in these cases, whether they pertain only to collection of tax on advertisements or whether they relate to or also include amounts received for sale of space for advertisement, the matter is being remanded to the original authority for de novo consideration. Appeal allowed in part - part matter on remand.

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• 2017 (7) TMI 684
  Refund claim - N/N. 41/2007-ST dated 06.10.2007 - denial on the ground that Goods exported under claim for duty drawback, hence condition 1(e) of Notification No.41/2007-ST not satisfied - Held that: - in case of availment of draw back on specified services, the refund benefit contained in the Notification dated 06.10.2007 shall not be available to the claimant. However, the said condition was deleted by the Central Govt. vide N/N. 33/2008 dated 07.12.2008. Since, in the original Notification dated 06.10.2007, it has been clearly provided that availment draw back of service tax paid on specified services should not be considered for refund under the said Notification and in absence of any ambiguity regarding interpretation of the said phrase contained in the Notification dated 06.10.2007, it cannot be said that the amending Notification dated 07.12.2008 will have the retrospective effect and should be applicable for the refund claims filed prior to 07.12.2008. Therefore, the refund claim filed for the period 01.10.2008 to 06.12.2008 will not merit consideration. Refund claim - THC Charges, bill of lading charges, original haulage charges, repo charges etc. - denial on the ground that these are not covered under Port Services as the service providers are registered under different category and proof of deposition of tax under port services not produced - Held that: - it is an admitted fact on record that said services were used/ utilized by the appellant within the port of export for exportation of the goods. Thus, irrespective of the classification of service made by the service provider, the same should be considered as port service for the purpose of benefit of refund under Notification dated 06.10.2007 - the appellant should be eligible for refund of such charges paid by it for exportation of the goods. Refund claim - denial on the ground of non-submission of proper invoice, proof of payment of service tax and GTA services and accredition certificate issued by the competent agency - Held that: - we are remanding the matter to the original authority for verification of the documents to be produced by the appellant. Appeal allowed in part and part matter on remand.

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• 2017 (7) TMI 683
  CENVAT credit - maintenance of separate records in case of taxable as well as exempt goods - the appellants had availed credit of service tax paid on Telephone Bills, Mobile Bills, Motor car servicing bills etc., even though the said documents were in the name of individual by name Shri S. Venkataraman, Partner of the appellant company - the adjudicating authority rejected the credit on this aspect since the appellants were failed to submit any proof to the extent that these phones were used for the services for which they claimed - Held that: - the appellants are engaged in the activity of sale of Motor Vehicles which does not come under purview of Service Tax Act. The demand period involved is from October 2007 to March 2011. Prior to the issuance of the N/N. 10/2008-CE (NT) dated 01.03.2008, the service provider was entitled to utilize upto 20% of the common input service credit available towards the tax payable on the output services where the service provider was engaged in providing both taxable and non-taxable services. From 01.04.2008, the appellants are required to opt for either of the options envisaged in Rule 6 (3) of the CENVAT Credit Rules, 2004. As seen from the record, I find that the appellants continued to utilize the credit by calculating 20% of the tax payable irrespective of the factor whether the same is available or not. Since the appellants are engaged in both taxable and non-taxable activity and are not maintaining separate input accounts, the appellants are required to follow sub-rule 3 of Rule 6 of CENVAT Credit Rules 2004. As the appellants have failed to exercise any of the options given under the provisions of law, I cannot extend any benefit to them at this juncture. I also find that the appellants failed to produce sufficient/substantial evidence in support of their contention that the said phones were used exclusively for taxable services viz., business promotion of service of customers as well as sale of vehicles through financiers. Appeal dismissed - decided against appellant.

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• 2017 (7) TMI 682
  Quantum of penalty - reverse charge - Business Auxiliary Services - It is the contention of Revenue that the computation of the amount due for 2006-07 is incorrect arising from improper appreciation of the facts in the SCN - Held that: - We do not find any evidence on record to enable us to decide the veracity of this claim of Revenue. However, we observe that the confirmed demand reflects the tax computed for 2005-06 which is not consistent with the findings in the impugned order. It is therefore necessary that the value of taxable services would need to be determined afresh - matter is remanded back to the original authority for the limited purpose of computation of the tax and the interest and for imposing penalties thereon - appeal allowed by way of emand.

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• 2017 (7) TMI 681
  Classification of service - Computerized Reservation System (CRS) service - incentives provided to the appellant for increase in usage of their CRS - whether fall under Business Auxiliary Services or not? - extended period of limitation - penalty - Held that: - t the issue regarding classification of CRS service under the category of Business Auxiliary Service has already been decided - the issue regarding levy of service tax on CRS was not free from doubt and accordingly, suppression of facts with intent to evade payment of service tax cannot be levied against the appellant. Therefore, the extended period of limitation invoked in this case cannot be sustained. The demand of service tax liability should be confined to the normal period - Since, there is no suppression of facts, penalty imposed under Section 78 on the appellant cannot be sustained - appeal allowed - decided partly in favor of appellant.

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• Central Excise

• 2017 (7) TMI 680
  CENVAT credit - denial on the ground that appellant have not maintained separate accounts for the common input services used for generation of electricity in their co-generation plant - Held that: - the appellant is eligible to avail credit on the input services pertaining to electricity which is captively consumed. We hold that appellants are not eligible for credit on input services used for electricity which is sold outside the factory. For determining the quantum of electricity that is sold outside factory as well as determining the credit which is not eligible, we remand the matter to the adjudicating authority to recompute the same - appeal allowed in part and part matter on remand.

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• 2017 (7) TMI 679
  CENVAT credit - allegation of fraudulent availment - said amount with interest reversed on being pointed out - penalty - Held that: - the allegations in the show-cause notice are general in nature, like, that the appellants had availed the CENVAT credit fraudulently with intention to evade duty and there are no specific allegations as required under the provisions of Section 11AC or Rule 15(2) of the CENVAT Credit Rules, 2004. In the absence of any specific allegations, we hold that the issue seems to be covered by the judgment of the apex court in the case of Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], where it was held that the assessees had made payment of the demands simply in order to buy peace and to avoid any litigation. In those circumstances the imposition of penalty was wholly unjust - duty with interest upheld - penalty set aside. CENVAT credit - capital goods - MS channels, beams, TMT bars, CTD bars, etc. - Held that: - structural items such as MS channels, beams, TMT bars, CTD bars, etc. are held to be eligible for availment of CENVAT credit despite being used for fabrication of support structures for various capital goods. In the case in hand, it is on record that the respondent in this case had used these structural items for fabrication of capital goods which are put to use in the factory premises - reliance placed in the case of Singhal Enterprises Pvt. Ltd. Vs. CC&CE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - credit allowed. CENVAT credit - input services - denial on the ground that these input services were utilised for construction of a factory which is immovable property and is not liable to Central Excise duty or any output services - Held that: - the said input services were received by the respondent during the period September 2008 to June 2009. During the relevant period, Rule 2(l) of the CENVAT Credit Rules, 2004 (before its amendment on 01/04/2011) specifically allows the CENVAT credit of the service tax paid on the input services which are used for setting up / renovation / modernisation of factory premises by a manufacturer - similar issue decided in the case of Liugong Indian Pvt. Ltd. Vs. CCE&ST, Indore [2014 (3) TMI 984 - CESTAT NEW DELHI], where it was held that service tax credit on these items can be availed - the services, in question, used for setting up of factory have to be treated as input service and would be eligible for Cenvat credit, as the factory has been setup for manufacture of final products which are liable to Central Excise duty. Therefore denial of Cenvat credit, in question, is contrary to the provisions of Rule 2(l) of Cenvat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 678
  Benefit of N/N. 13/2009-CE (NT) dated 03/06/2009 - exemption to zinc Sulphate manufactured and cleared by them during the period January 2007 to 08/10/2007 - Held that: - on the legal principles examined by the Original Authority, the respondents are rightly eligible for the exemption under the said notification. The credit attributable to the inputs used for zinc Sulphate have been reversed and as verified by the Jurisdictional officer, the Original Authority gave his finding - exemption allowed. Quantification of proportionate credit - Held that: - It is not the date of receipt of inputs, which is relevant to calculate the proportionate credit. The credits, irrespective of the rate of receipt of inputs, attributable to inputs used in the manufacture of zinc Sulphate are to be reversed, in proportion. This aspect may be re-verified and confirmed by the jurisdictional authorities - matter on remand. Appeal dismissed - part matter on remand - decided against Revenue.

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• 2017 (7) TMI 677
  CENVAT credit - exempted goods - by-product, silver - The Revenue entertained a view that silver being an exempted product, the Cenvat credit attributable to inputs and input services used in the manufacture of such silver should be reversed in terms of provisions of Rule 57AD/Rule 6, as applicable during the relevant time - Held that: - It is apparent that the legal provisions applicable to the facts of the present case are clear to the effect that Cenvat credit attributable to inputs used in or in relation to manufacture of exempted goods is to be reversed. The relevant point to note here is that the Revenue itself categorically admitted in the appeal that it is not a case here, where common inputs are used both for the manufacture of dutiable and exempted goods in two separate processes. Segregation of quantity of inputs which is attributable to dutiable and exempted goods in an integrated process is not possible. The Revenue further admitted that quantification of proportionate quantity of input used in exempted goods is not possible in the case like the present one - We find no legal basis for the assertion made by the Revenue to arrive at the proportion of Cenvat credit to be reversed, should be based on value of exempted products. In the present case, all the inputs have been put to intended use and it is not the case that some portion of input is not put into use in the manufacture of zinc and lead. This position has been admitted by the Revenue also. If such is the case there can be no input which is solely attributable to the manufacture of small quantity of by-product namely, silver. The said silver is extracted as a by-product by the respondent whose intended/main manufacturing process is aimed at manufacture of non-ferrous metal like zinc and lead. The respondent also obtain various other by-products like sulphuric acid etc. In fact with reference to sulphuric acid emerging as a by-product, it was held in the respondent’s own case that there is no need for reversal of Cenvat credit on proportionate basis in Hindustan Zinc Limited Vs. CCE, Jaipur – II [2004 (1) TMI 283 - CESTAT, NEW DELHI]. The respondents fulfilled the condition as stipulated in the Finance Act, 2010 by reversing proportionate credit in 2002-2003 itself and by paying interest on the same. We also note that the Commissioner was to verify the correctness of amount paid within a period of two months from the date of receipt of application and in case the amount so paid is less than the amount payable, he shall call upon the applicant to pay the differential amount alongwith interest which shall be paid within 10 days. Considering the legal provision, as mentioned in Section 70 of the Finance Act, 2010 and the facts of the present case, we find no infirmity in the finding recorded by the Original Authority. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 676
  CENVAT credit - imported copper ingots/re-melted wire bars - The case of the department is that appellant have availed Cenvat credit on imported copper ingots/re-melted wire bars without physical receipt of the same - natural justice - Held that: - The entire case was made against appellant on the basis of various statements recorded from third persons i.e. seller, transporter, broker etc. If this is so, then it is necessary to allow cross examination of these witnesses to the appellant - As per Section 9(D) of Central Excise Act, 1944 it is provided that even if assessee does not ask for cross examination, it is obligatory on the part of the adjudicating authority to cross examination the witnesses whose statements being relied upon that means for relying on any statements it is necessary that the adjudicating authority first cross examine the persons whose statements are being relied upon for deciding the case - taking into consideration overall circumstances of the present case it is necessary to allow cross examination of the witnesses as requested for by the appellant - appeal allowed by way of remand.

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• 2017 (7) TMI 675
  Refund of accumulated CENVAT credit - denial of refund relying on the decision in the case of COMMISSIONER OF C. EX., KOLKATA-IV Versus BHUSAN LTD. [2008 (6) TMI 194 - CESTAT KOLKATA], where it was held that even if claim is filed within the time-limit is also required to be further examined with reference to N/N. 11 /02-C.E - Held that: - the availment of any benefit under a Foreign Trade Policy scheme would not in any way impact upon the entitlement for refund under rule 5 of CENVAT Credit Rules, 2004 - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 674
  Classification of goods - dental plate brushes - Deemed manufacture - assessee is emphasizing that the items tooth brushes and inter-dental brushes are in separate category. The tooth brush is available on any grocery shop whereas inter-dental brush is available only at a chemist shop - whether dental plate brushes can be said to be covered under the entry of Sr.No. 97 A of the Third Schedule to the Central Excise Act, 1944? - Held that: - the subject item, inter-dental brush of any kind is also a tooth brush and is used as an item for cleaning teeth. It is true that the item inter-dental brush or dental plate brush is not easily available at any grocery shop; the same is available only at a chemist shop. However, both are tooth brushes and both are covered by the Central Excise Tariff heading no. 96032100. Though it is true that inter-dental brush is specifically not mentioned in the entry 97A of the Third Schedule to Central Excise Act, 1944, Tariff sub-heading 96032100 is mentioned therein. Once Tariff sub-heading 96032100 is mentioned with the description tooth brush, one cannot arrive at the conclusion that inter-dental brush or dental plate brush is not part of that entry or the said description, when dental-plate brush is also a kind of tooth brush. Therefore, it is held that subject item is covered by entry at Sr. No.97A of Third Schedule to C.E. Act, 1944 - demand of excise duty upheld. Extended period of limitation - Held that: - subject matter is a matter of interpretation of law. Therefore, the demand beyond the normal period is not sustained and for the same reason no penalty is liable to be imposed on the assessee. The duty for the ‘normal period’ only is confirmed along with interest. The subject matter is remanded for limited purpose to original adjudicating authority, who shall quantify the duty payable for the normal period along with interest payable under section 11 AB Central Excise Act 1944 - appeal allowed in part by way of remand.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 667
  Levy of turnover tax - inter state sale - PVAT Ac, 2005 - whether the petitioner had traded in goods as defined under the PVAT Act? - Held that: - There is no dispute that the articles dealt with by the petitioner fall within the meaning of the word “goods” as defined in section 2(k) of the PVAT Act - the ETO proceeded almost entirely, on the basis that the goods were brought into the State of Punjab through the ICC and that in Form VAT-36 the petitioner mentioned its TIN. This fact, according to the ETO, established that the petitioner had imported the goods to Punjab without anything more and sold the same only thereafter to various customers. Thus, according to the ETO, the petitioner sold the goods in the State of Punjab and that the sales were not inter-state sales as contended by the petitioner. This, in our view, was a fundamental error. Whether the logistics partner is a trader? - Held that: - The WS Retail Services Private Limited, the logistics provider is a registered taxable person under the Punjab VAT Act, 2005 holding TIN 03392097512. The taxable person has imported the goods on its TIN. The taxable person does not have any physical stock or stock in the books of such imports made. Further, it has exported goods in the course of interstate trade and commerce. Thus, the taxable person is a legitimate trader - For continuously three years the goods were being imported into the State of Punjab on the Tax Identification Number (TIN). The dealer has no stock of the goods with him in his books. Hence, it is very clear that all the goods have been sold in the State of Punjab on which the dealer is liable to pay tax. Whether the taxable person be taxed? - Held that: - The data of the Department clearly shows that the taxable person has imported the goods on its TIN. If the goods have been imported by the taxable person, then it would have disposed off also by the taxable person. It is the taxable person who has dispatched the taxable goods to the end consumer. The consumer is in the State of Punjab. Most of the transactions made by the end users are on the basis of cash on delivery. The taxable person has also received the consideration for the goods sold to the end user - the transaction is a legitimate sale by the taxable person within the State of Punjab and hence, the person is liable to be taxed. Whether the sale occurred within the State of Punjab? - Held that: - In this case, it is clear that the goods were imported by the taxable person to sell in the State of Punjab. Hence, all the Sales except clearly mentioned as exports as per ICC data have occurred within the State of Punjab. Where does the property in the goods transferred (sic transfer) to the buyer? - Held that: - The assessment order has not considered any of the principles discussed elaborately in the above authorities. We will assume that the authorities were not brought to the notice of the ETO. The assessment order has proceeded on a basis which is contrary to these principles. We hasten to add that as stated in the assessment order it is also possible that the entire material was not produced before the ETO. Upon remand, it would be necessary for the Assessing Officer to consider the material in the light of the above principles and authorities. Isn’t the e-commerce website a virtual showroom? - Held that: - It matters not where the sale was ultimately concluded while determining whether it is an inter-state sale or not. Even assuming that the sale was finally concluded in the State of Punjab, so long as the sale caused the movement of goods from another State to the State of Punjab, it would be an inter-state sale. If the petitioner’s case, which we have already referred to in some detail, is correct the sales effected by it would constitute inter-state sales and fall within the ambit of the Central Sales Tax, 1956. If the dealer has acted as a logistics partner, then can we tax him? - Held that: - The question has not been answered. The assessment order does not hold the petitioner liable for tax in respect of the sales by other vendors to purchasers in respect whereof it rendered services as a logistic provider. As a logistic provider the petitioner only facilitated the transport and delivery of goods by the vendors to the purchasers. It did not have any proprietary interest in these goods - if the transactions are as suggested by the petitioner and as set out in detail by us earlier, the sales would be in the course of inter-state trade and commerce. It is for the petitioner to establish the same. If on the other hand the goods were first imported into the State of Punjab without anything more and the petitioner entered into the transactions of sale with its purchasers thereafter they would not constitute sales in the course of inter-state trade and commerce. Further, where it is established that the petitioner acted only as a logistic provider, the petitioner would not be liable under the VAT Act - It would be necessary for the ETO to consider the transactions afresh. The ETO must in other words assess the documents already furnished and the documents that may hereafter be furnished. The impugned assessment order and the demand notices issued pursuant thereto are quashed and set-aside - The matter is remanded to the ETO for passing a fresh assessment order in accordance with law - petition allowed by way of remand.

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