TMI Tax Updates - e-Newsletter
July 23, 2018

Case Laws in this Newsletter:

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

Articles

• TAXABILITY OF LIQUIDATED DAMAGES UNDER GST
• Significant Beneficial Owners

News

• GST Council recommends GST rates reduction on several goods & for specified handicraft items

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• GST rate on Services

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• GST council approves Simplified GST Return

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• Finance Minister Piyush Goyal addresses media after 28th GST council meet

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• Recommendations made during the 28thmeeting of the GST Council held in New Delhi on 21st 2018

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• Recommendations on opening of migration window for tax payers till 31st August, 2018

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Highlights / Catch Notes

GST

• GST Council recommends GST rates reduction on several goods & for specified handicraft items
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• GST Council Decisions - GST on goods and services - Rates, Exemptions, Reverse Charge, Procedural aspects etc. - As updated on 21-7-2018
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• GST rate on Services - GST Council decision
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• GST council approves Simplified GST Return
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• Finance Minister Piyush Goyal addresses media after 28th GST council meet
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• Recommendations on opening of migration window for tax payers till 31st August, 2018
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• Place of supply - sourcing (on a worldwide basis)) of goods from India - export or not - The services provided by Esprit India to its associate concern in Hong Kong EDCFE are taxable supplies. - The above stated services being taxable supplies, the question as to whether they qualify as “export of services” and accordingly “zero rated supply”, is out of jurisdiction of this authority.
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• Rates of GST - Unit container - goods in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE hags having mention of varying actual total weight of the carcasses packed in each such HDPE bags and supplied to Army Shall not quality as product put up in ‘unit Container'.
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• The Brake Pads, i.e., friction material mounted on metal plate, manufactured by the applicant for motor vehicles of headings 8701 to 8705 (other than specified parts of tractors) are correctly classifiable under HSN 87083000 of the Custom Tariff Act. - Rate of GST is 18% in case of tractors and 28% in case of motor vehicles.
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• Classification of supply - Manufacturing food as take away only with no sitting facility, is a restaurant service or manufacturing of goods? - to be taxed as supply of services only.
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Income Tax

• Penalty u/s 272A(2)(k) - delay in filing of quarterly statements in Form 26Q (TDS return) within the prescribed time - The explanation offered by the assessee would constitute ‘reasonable cause’ within the meaning of section 273B and hence the assessee would be entitled to immunity from the levy of penalty u/s 272A(2)(k).
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Customs

• Valuation of imported goods - Ball Valves - The transaction value has not been rejected by the Lower Authority by production of any positive evidences and the value stands enhanced only on the basis of suspicion and by referring the Tariff Value of the raw materials - Rejection of value cannot sustain.
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• Duty Drawback - assessee was eligible for the drawback benefit in respect of electrical energy - Brand rate fixation for electrical energy and clean energy cess exported to SEZ is permissible.
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• Valuation - rejection of transaction value - Comparable goods - import of Zinc Plate from Bangladesh of irregular Shapes and Sizes - London Metal Exchange (LME) Bulletin Prices cannot be accepted as the basis of value in absence of corroborative evidences of contemporaneous import.
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Indian Laws

• Recommendations made during the 28thmeeting of the GST Council held in New Delhi on 21st 2018
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Service Tax

• Registrar and Share Transfer Agents Service - Such amounts were reimbursed to the appellant on actuals. The appellant has raised separate invoices without markup for reimbursement of such expenses. - Demand of service tax set aside.
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• Business Support Services - stock broker services - arrangement for the VPN - this is a cost sharing arrangement and not in the form of a service provider-service receiver relationship - there is no justification for levy of Service tax under the category of ‘Business Support Services”.
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• Valuation - the consideration received by the appellant from their buyer on account of sale of parking space is a part and parcel of the services falling under the category of “Residential Complex Construction Services” and its value has to be added in the value of above services
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Central Excise

• CESTAT has been repeatedly passing remand orders virtually abdicating its responsibility as an Appellate Court. This trend is unhealthy given that it is the final Court of fact and is required to adjudicate both on the issues of fact and law.
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• Classification of goods - wastage, firewood, mango wood - the remnants of the logs which has undergone an activity of peeling for purpose of manufacturing ply wood cannot be classified under 4408.40
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Case Laws:

• GST

• 2018 (7) TMI 1334
  Place of supply - sourcing (on a worldwide basis)) of goods from India - export or not - sourcing (on a worldwide basis)) of goods which includes wearing apparel, shoe & accessories and fabric - sub-contract - refund of GST paid on inputs and input services used in export of services - Jurisdiction. Taxability of above stated services provided by Esprit India to its associate concern in Hong Kong EDCFE under GST regime? - Held that:- As per Explanatory Notes to the Scheme of Classification of Services read with N/N. 11/2017-Central Tax (Rate) dt. 28/07/2017 (as amended), the services enumerated by the applicant in tabular form as given above, qualify as taxable services - taxability upheld. Whether the above stated services provided by Esprit are covered under Export of Services having Zero rated taxability? - Jurisdiction - Held that:- Whether a transaction is “export of services” or not, is dependent upon the tact as to whether the place of supply of service is out of India or not. Consequently, if the advance ruling authority proceeds ahead with examination and consideration of this fact, discussions and findings on the aspect of “place of supply” will be inevitable - where a question also involves examination of “place of supply” (which is not among the issues which can be decided by AAR], the question cannot be taken up by the authority for lack of jurisdiction. Whether Esprit India is eligible for seeking refund of GST for the taxes paid on input services or goods or both? - Jurisdiction - Held that:- It is dependent upon the fulfillment of conditions as prescribed under Section 2(6) and Section 16(1), both of the Integrated Goods and Services Tax, 2017. Such refund claims merit to be examined in terms of provisions of Section 54 of the CGST/HGST Act, 2017 and rules made thereunder. The proper officer under the CGST/HGST Act, 2017 and roles made thereunder is the competent authority for the same - However, with regard to giving Advance Ruling on this question, it is observed that as the earlier question relating to export of services is dependent upon the definition of “place of supply”, which is out of jurisdiction of the authority, this instant question too, being corollary to earlier question, cannot be taken up for pronouncing any ruling due to lack of jurisdiction. Ruling:- The services provided by Esprit India to its associate concern in Hong Kong EDCFE are taxable supplies. The above stated services being taxable supplies, the question as to whether they qualify as “export of services” and accordingly “zero rated supply”, is out of jurisdiction of this authority. The same proposition applies to the question as to whether Esprit India is eligible for seeking refund of GST for the taxes paid on input services or goods, due to lack of jurisdiction.

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• 2018 (7) TMI 1333
  Levy of GST - Unit container - packing being considered as unit container or not? - Sheep/goat meat in carcasses of different weight and size in frozen Slate and similarly whole chicken of different weight and size is also supplied in frozen State to Army - case of applicant is that the dispatches made by them in LDPF/HDPE bags, both primary well as secondary packing do not qualify as unit container and therefore their product is not leviable to tax under GST. Held that:- The items mentioned in tariff heading 0204 or 0207 [other than fresh or chilled] would be exigible to tax @ 5% if these are put up in a 'unit container' and bears a brand name or bears a brand name on which actionable claim or enforceable right in court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been forgone voluntarily], subject to conditions as in the annexure I to the said notification - Correspondingly, in exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Service Tax Act, 2017, the Central Government vide notification no. 2/2017-lntcgraled Tax (rate) New Delhi dated 28.06.2017 has exempted, Inter-State supplies of goods, from the whole of the Integrated tax leviable thereon. In the present case, the packing of the frozen carcasses and chicken done by them is only a medium of delivery and since these are not in pre-determined units, these packing cannot be termed as 'Unit Containers' - the packaging of frozen sheep/goat carcasses and frozen chicken for delivery in primary LDPE bags further packed in secondary HDPE bags or non-standardised quantity done by the applicant cannot be regarded as ‘Unit Container' since it is not standardised to hold a uniform pre-determined quantity. Ruling:- The whole (sheep/goat) animal carcass in frozen state/whole chicken in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE hags having mention of varying actual total weight of the carcasses packed in each such HDPE bags and supplied to Army Shall not quality as product put up in ‘unit Container'. The products as mentioned at (a) and (b) above fall under exemption list as per entry no. 10 and 13 of N/N. 2/2017-lntegrated tax (Rate) dated 28th June 2017 upto 14th November 2017 and thereafter as per entry No. 9 of N/N. 44/2017- Integrated Tax (Rate) dated 14th November 2017.

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• 2018 (7) TMI 1332
  Classification of goods - Brake Pad and Auto Parts - whether the goods to fall under ITC HSN 87083000 attracting 28% GST or ITC HSN 6813 attracting 18% GST? - Held that:- The 'Brake Pads' manufactured by the applicant do not qualify under the ITC HSN 6813 since the heading clearly excludes the mounted frictional material and the product of the applicant is a result of frictional material mounted on metal sheets - the HSN heading 8708 classifies parts and accessories of motor vehicle of headings 8701 to 8705 which are in respect of Tractors (other than tractors of the type used on railway platforms), Motor vehicles for transport of 10 over more person, Motor cars and other Motor vehicles principally designed for the transport of person (other than those of headings 8702), including station wagons and racing cars, Motor Vehicles for transport of goods and special purpose motor vehicles respectively. Vide N/N. 1/2017-Central Tax (Rate), dated 28.06.2017, as amended from time to time and the corresponding State tax N/N. 35/ST-2, dated 30.06.2017 as amended from time to time, the parts and accessories of motor vehicles of heading 8701 to 8705 (other than specified parts of tractors) as classifiable under HSN 8708 attract 14% CGST & 14% HGST totaling 28% GST. Ruling:- The Brake Pads, i.e., friction material mounted on metal plate, manufactured by the applicant for motor vehicles of headings 8701 to 8705 (other than specified parts of tractors) are correctly classifiable under HSN 87083000 of the Custom Tariff Act. In view of the N/N. 1/2017-Central Tax (Rate), dated 28.06.2017, as amended from time to time and the corresponding State tax N/N. 35/ST-2, dated 30.06.2017 as amended from time to time, the brake pads for use as brake assembly and its parts thereof for tractors attract 18% GST (9% CGST+9% HGST) and the brake pads manufactured as parts and accessories of motor vehicles of heading 8701 to 8705 (other than tractors) attract 28% CST (14% CGST+14% HGST).

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• 2018 (7) TMI 1331
  Classification of supply - Manufacturing food as take away only with no sitting facility, is a restaurant service or manufacturing of goods? - scope of 'supply'. - Held that:- Since the supply of cooked food is mentioned in the Schedule-II (Sr. no. 6(b)) it is a supply of service. Rate of GST under the composition scheme will be 5% (i.e. 2.5% under CGST and 2.5% under SGAT).

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• 2018 (7) TMI 1330
  Extension of time period for filing of GST Tran-1 - petitioner has alleged in the petition that despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond - Held that:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - petition allowed.

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• 2018 (7) TMI 1329
  Seizure of goods - Section 129 (3) of the U.P. GST Act, 2017 - Held that:- An interim protection is granted to the petitioner by directing for release of the seized goods along with the vehicle on furnishing of bank guarantee to the tune of ₹ 5,00000/- - goods and vehicle are released forthwith on furnishing of bank guarantee. Constitution of appellate Tribunal - case of petitioner is that it is only the union to constitute the appellate Tribunal and not alone the State of U.P. - Held that:- This Court finds that in any case the constitution of the Tribunal is necessary and in this regard earlier also this Court has issued the directions for the constitution of the Tribunal - Surprisingly even after completion of one year from the date of introduction of the GST no appellate Tribunal has been constituted. Case listed for hearing next as on 2.8.2018.

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• Income Tax

• 2018 (7) TMI 1328
  Revision u/s 263 - addition u/s 14A - issue involved in the present appeal is covered against the revenue as relying on The Pr. Commissioner of Income Tax, Patiala Vs. State Bank of Patiala [2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] and The Pr. Commissioner of Income Tax, Patiala Vs. State Bank of Patiala [2017 (5) TMI 1551 - PUNJAB AND HARYANA HIGH COURT] - Held that:- The Special Leave Petition is dismissed.

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• 2018 (7) TMI 1327
  Retrospective effect of first proviso to section 43B - scope of Amendment to section 43B - omission [deletion] of the second proviso to Section 43-B – regarding restriction of deduction in respect of any sum payable by an employer by way of contribution to provident fund/superannuation fund or any other fund for the welfare of employees, unless it stood paid within the specified due date - Held that:- SLP dismissed.

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• 2018 (7) TMI 1326
  Penalty levied under Sections 271D and 271E - whether as the Sections do not specify any minimum penalty or maximum penalty, the cases of the assessee are outside the Amnesty Scheme mentioned? - Held that:- Special Leave Petition dismissed.

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• 2018 (7) TMI 1325
  Validity of assessment u/s 153A - 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 - Held that:- There is a delay of 86 days in filing of this special leave petition which has not satisfactorily been explained by learned counsel for the petitioner. The special leave petition is accordingly dismissed on the ground of delay.

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• 2018 (7) TMI 1324
  Order of furnishing a bank guarantee to get release the entire stock of sugar seized in search - Settlement commission orders - refund claim - Held that:- It is well settled that the Department is entitled to secure the tax liability by keeping the goods seized. The petitioner was directed to furnish a bank guarantee of ₹ 63,85,000/-, but instead of complying the aforesaid direction, the petitioner furnished bank guarantee of only ₹ 40,20,833/- and, therefore, the Department kept 1200 bags of sugar which was ultimately auctioned pursuant to the order dated 17th October, 2002 passed by this Court. Had the petitioner furnished the bank guarantee, as directed by the Department for an amount of ₹ 63,85,000/-, the Department would have released entire stock of sugar and the Department was not required to keep 1200 bags of sugar in the warehouse for which it had to pay ₹ 3,09,780 as warehouse charges. Therefore, it was not the Department which was at fault, rather it was the petitioner itself for which the Department cannot be penalized and, therefore, the claim of the petitioner for refund of ₹ 3,09,740/- towards warehouse charges paid to the Central Warehouse Corporation by the Department for keeping 1200 bags of sugar is rejected. Waiver of interest u/s 234A, 234B and 234C - In respect of second prayer for granting interest from the date of seizure to the date of its actual payment, it is clear that the tax liability was much more than the goods and cash which was seized, including FDRs. However, the Settlement Commission waived of the interest amount to the tune of ₹ 43,53,651/-. The petitioner kept the issue alive till the final order was passed by the Settlement Commission on 25th February, 2015. Therefore, the petitioner cannot claim interest on the amount of ₹ 6,24,260/- from the date when the goods were auctioned. We are of the view the petitioner is entitled for the interest at the rate of 12% per annum from the date of final order passed by the Settlement Commission i.e. 25th February, 2015. Thus, we direct the respondent-authority to release ₹ 6,24,260/- lying with the CIT (Moradabad) with interest at the rate of 12% per annum from 24th February, 2015 till the date actual payment is made. We further direct that the needful should be done within a period of four weeks from the date of production of certified copy of this order.

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• 2018 (7) TMI 1323
  CIT's power of revision u/s 263 - fulfillment of two conditions on the material available on record to exercise power under Section 263 - Held that:- It is clear that suo motu power under Section 263 of the Act can be exercised by the Commissioner if two conditions; firstly the assessment order passed is erroneous; and secondly the order is prejudicial to the interest of Revenue are satisfied. Commissioner, while exercising power under Section 263 in the present case was of the opinion that the assessee did not properly explain the transactions of ₹ 1,70,00,000/- for which the partners gave cheques, but the cheques were not encashed and cheques were given by the family members to partners for amount of ₹ 1,09,00,000/-. A.O. after looking into the accounts of the assessee was satisfied by the explanation offered and we do not find any illegality in accounting entries made in the books of account of the assessee in respect of these transactions. Therefore, we affirm the order passed by the Tribunal. - Decided against revenue

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• 2018 (7) TMI 1322
  Powers of revision u/s 264 - condonation of delay - Held that:- It was only after Assessing Officer, by his order dated 25th March, 2016 held that, this deduction of ₹ 4.25 crores relates to Assessment Year 2012-13 and therefore could not be allowed in the Assessment Year 2013-14 that the petitioner was compelled to file the Revision Petition so as to claim the deduction. This to ensure that, in atleast one of the two assessment years it gets the benefit of deduction. It is to be noted that the petitioner filed its Revision Application on 22nd April, 2016 i.e. within a month of the order of the Assessing Officer dated 25th March, 2016 relating to Assessment Year 2013-14. In the aforesaid circumstances, the reason in filing the Revision Application is for reasonable cause and should have been condoned by the respondent no.2-Principal Commissioner of Income-tax. We do not accept the contention of the Revenue that restoring the application under Section 264 of the Act the Principal Commissioner of Income-tax-respondent no.2 would be an exercise in futility. There are issues to be adjudicated and it is best that the Authority under the Act, discharges his obligation. At this stage, we make no comments on the merits of the Revision Application which is before the Principal CIT-respondent no.2. We set aside the impugned order dated 23rd March, 2018 and after condoning the delay in filing the Revision Application, we restore the petitioner's Revision Application dated 22nd April, 2016 before the respondent no.2-Principal Commissioner of Income-tax for disposal on merits after following the principles of natural justice. All contentions kept open.

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• 2018 (7) TMI 1321
  Grant of relief to the assessee u/s.80IA(4) - whether income of the assessee from the Industrial Park whether to be assessed under the head Income from Business, without going into admissibility of the claim on merits - Held that:- Apex Court reported in COMMR. OF INC. TAX v. COCANADA RADHASWAMI BANK LTD [1965 (4) TMI 11 - SUPREME COURT] held that the head under which income is assessed is not relevant for the purpose of claiming exemption under the Act. When the Revenue had accepted the view of the Commissioner of Income Tax (Appeals) on Section 80IA that the assessee had complied with Section 80IA(4)(iii) of the Act, there remains nothing for an enquiry either as to the nature of the receipt or for that matter the facilities developed to be treated as an industrial park to consider the question of deduction under Section 80IA(4)(iii) of the Act. When the character of the receipt is not a question to be gone in the matter of considering the claim of deduction under Section 80IA(4)(iii) of the Act, we do not find that any useful purpose would be served for the Revenue to again insist on a decision on the character of the receipt. - Decided in favour of assessee

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• 2018 (7) TMI 1320
  Rejecting the application for settlement for all the Assessment Years on the ground that the petitioner had not made true and full disclosures - Held that:- The Supreme Court in the case of Ajmera Housing Corporation and another v. Commissioner of Income ­Tax, [2010 (8) TMI 35 - SUPREME COURT OF INDIA] had emphasized the requirement of true and full disclosure in settlement proceedings and high­ lighted that such disclosures should be made at the outset in the application for settlement itself. It was a case in which a person, who had applied for settlement, had made sizable further disclosures after filing the application for settlement. The Supreme Court was of the view that this itself would show that the initial disclosure was not true. It was observed that full and true disclosure of income, which had not been previously disclosed, is a precondition for valid application u/s.245C(1) of the Act. The Scheme of Chapter XIX­A does not contemplate revision of the income as disclosed in the application. If the assessee is permitted to revise his disclosure, it would, in a sense, mean making a fresh application in relation to the said case by withdrawing the earlier application. Thus, the assessee cannot revise the application.

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• 2018 (7) TMI 1319
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act in order to initiate penalty proceedings against the assessee goes to prove that the AO himself was not aware as to whether he is issuing notice to initiate the penalty proceedings either for “concealment of particulars of income” or “furnishing of inaccurate particulars of such income” by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him, he/she should be specifically made aware of the charges to be leveled against him/her. Thus the penalty levied by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law - decided in favour of assessee

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• 2018 (7) TMI 1318
  Addition on account of car parking space - Held that:- In the assessment order, AO mentions that assessee has accepted in his statement that he has received ₹ 2. 5 lakhs per flat towards sale of car parking space and made addition. When particular evidence, more specifically the evidence in the form of diary, has been found in the course of survey and the assessee has explained the said evidence being a yellow diary, to discard the recordings in that diary, in the absence of any substantial or cogent evidence is impermissible. This being so, as no further evidence has been found to show that the assessee has sold car parking space to more than six persons as has been recorded in the diary, which is the foundation evidence, on the basis of which the assessment has been done in the assessee’s case, no further addition can be made in the hand of assessee. Consequently, the additions made on the issue of car parking spaces sold stands deleted, to such extent as is in excess to car parking space sold in respect of six flats as has been mentioned in page-28 of yellow diary. In the result, ground No 2 to 2. 5 of assessee’s appeal for all the three assessment years stand allowed. Additional consideration received in respect of balance 12 flats - Held that:- the assessment order also does not talk of any evidence, much less the CIT(A) in respect of any evidence has been found to show that the assessee had received any additional sale consideration other than what has been disclosed by the assessee for assessment years 2009-10 & 2010-11 also, no evidence has been recorded to show that the assessee has received additional sale consideration of ₹ 1,42,10,000 less ₹ 54,99,000 = ₹ 87,11,000/-. In fact, Revenue has not been able to dislodge the claim of assessee nor does Revenue deny that the Revenue had not recorded the statements from the purchasers of the flats who have denied having paid any amounts as additional consideration. This being so, the addition made by the AO and confirmed by the Ld. CIT(A) on this issue is liable to be deleted and we do so. Assessment of cost of acquisition - Held that:- The total cost claimed at ₹ 9,32,80,000/- is indisputably the cost of the land. The ld. Assessing Officer has not disputed the Stamp paper cost, or the Registrar fee and the commission paid. Out of the balance, the assessee has produced the evidences of the document writing paid by cheque to the extent of ₹ 3 lakhs, which is part of the cost of acquisition. Consequently the same is allowed. The bank charges in respect of taking DD’s is also substantiated with evidences and consequently is allowable expenditure. Expenses under the head Vehicle maintenance, the Rent, Leveling and compound wall, Telephone charges and vehicle insurances have not been shown to be intrinsically associated with the acquisition of the said land and consequently, the same cannot be treated as part of the cost of acquisition of land

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• 2018 (7) TMI 1317
  Rejection of assessee’s claim for grant of exemption u/s 54 - Taxability of a particular amount in a particular period - Held that- There will be no grievance if the long term capital gain be taxed in the assessment year 2011-12 on being refunded to him by the “PIPL”. We direct the AO to take action in the assessment year 2011-12 and assess the long term capital gain at ₹ 5,19,871/-. It is pertinent to observe that we do not find any merit in the contention of the assessee with regard to alleged wrong computation of capital gain at ₹ 5,19,871/-. The AO has rightly computed it because the assessee has failed to substantiate his computation at ₹ 3,7,607/-. The assessee has unnecessarily included a sum of ₹ 88,000/- in the cost of acquisition for taking benefit of indexation. He failed to substantiate the inclusion of ₹ 88,000/- in the cost of acquisition. We partly allow the appeal of the assessee. Assessment of long term capital gain is to be excluded from the assessment year 2009-10. But it is to be taxed in the assessment year 2011-12. The ld.AO shall give necessary effect accordingly. Decided in favour of assessee partly

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• 2018 (7) TMI 1316
  Reopening of assessment - allowability on “loss on sale of stores” - Held that:- Assessing Officer had raised specific questions vide requisite notice dated 15.10.2010 with respect to allowability on “loss on sale of stores” and that the assessee had explained the same – without any follow-up question by the Assessing Officer in this regard, in our considered view, the Assessing Officer had indeed formed an opinion about the deductability of loss on sale of stores. It is also not in dispute that no new material has come to the light on account of which the present assessment proceedings were reopened. The reopening was clearly on account of change of opinion by the Assessing Officer – something which is impermissible under the scheme of the Act and in the light of binding judicial precedent. Respectfully following the esteemed views in the case of Gujarat Power Corpn. Ltd. (2012 (9) TMI 69 - GUJARAT HIGH COURT), we uphold the grievances of the assessee

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• 2018 (7) TMI 1315
  Penalty u/s 272A(2)(k) - assessee did not file the quarterly statements in Form 26Q within the prescribed time - assessee has pleaded before the Ld. CIT (A) that the delay was due to severe financial crisis which the assessee was facing - Held that:- As seen that the CIT (A) has not considered this submission of the assessee and has upheld the penalty on the ground that even the tax deducted at source was not deposited in time. However, it is our considered opinion severe financial crisis is a reasonable cause which would have prevented the assessee from depositing the TDS within the prescribed time period. The explanation offered by the assessee would constitute ‘reasonable cause’ within the meaning of section 273B and hence the assessee would be entitled to immunity from the levy of penalty u/s 272A(2)(k). Set aside the impugned orders and direct the AO to delete the penalty. - Decided in favour of assessee.

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• 2018 (7) TMI 1314
  Imposition of penalty u/s. 271D - getting loans in violation of the provisions of sec. 269SS - loan exceeding permissible limit - Held that:- As per the explanations of the assessee, the goods were being imported from Hongkong. The assessee received first loan of ₹ 1.00 lakh on 01-10- 2007. It was repaid on 03-10-2007, since the consignment was stated to be delayed. The second loan of ₹ 1.00 lakh was received on 05.12.2007, since the foreign supplier was expected to ship the goods on 11.12.2007. The above said explanation would show that the goods were not shipped either on 01-10-2007 or on 05-10-2007, i.e., on the dates on which the impugned loans were taken. The question of payment of customs duty etc., would arise only upon shipment or receipt of goods. In fact, the assessee admits that the goods were expected to be shipped on the second occasion only on 11.10.2007, while the cash loan was taken on 05-10-2007. If the director had given cheque on 05-10-2007, the funds would have been credited to the account of the assessee well before 11.10.2007. These facts would show that there was no urgent business necessity for the assessee on both the occasions to accept the loan in cash. Further, the assessee has also failed to demonstrate that on both the dates the assessee was not having sufficient funds in its possession. We are of the view that the assessee has failed to show that there was a reasonable cause for getting loans in violation of the provisions of sec. 269SS of the Act. Penalty confirmed - Decided against assessee

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• 2018 (7) TMI 1313
  Penalty u/s 271 - unexplained cash credit - Held that:- The funds which are given as loan to the assessee were undisputedly raised through a loan taken from bank to the tune of ₹ 1 lakh and from kacha ahratiaya M/ s. Des Raj And Co., to the tune of ₹ 1 lakh which was affirmed to have been advanced as loan to the assessee, however, the learned Commissioner of Income-tax (Appeals) doubted the genuineness of the loan on the basis of probabilities. Although there are contrary judgments of various courts with regard to the levy of penalty on the addition, which based upon the probabilities, however, we are of the considered opinion that inassuch as the penalty is not warranted on the addition based upon the probabilities, hence, we are inclined to delete the same by setting aside the order impugned herein passed by the learned Commissioner of Income-tax (Appeals) - Appeal filed by the assessee is allowed.

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• 2018 (7) TMI 1312
  Interpretation of Total Turnover & Export Turnover under 10A - Held that:- We do not find any ground to interfere with the impugned order. The special leave petition is accordingly dismissed. Pending applications, if any, shall also stand disposed of.

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• 2018 (7) TMI 1311
  Addition u/s 40(a)(ia) - addition towards various expenses for non-compliance of TDs provisions - applicability of second proviso to section 40(a)(ia) - Retrospectivity - Held that:- No merit in these petitions. The special leave petitions are, accordingly, dismissed.

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• 2018 (7) TMI 1310
  Eligibility to benefit of Sections 80HH, 80-I and 80-IA - whether bottling of LPG is an activity which amounts to ‘production’ or ‘manufacturing’ for the purposes of the aforesaid provisions of the Act - Held that:- The issue raised in this special leave petition is covered against the petitioner by the decision of this Court in the case of Commissioner of Income Tax-I, Mumbai v. Hindustan Petroleum Corporation Limited reported in (2017 (8) TMI 197 - SUPREME COURT OF INDIA)

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• 2018 (7) TMI 1309
  Revision u/s 263 - entitlement to claim depreciation u/s 32 - whether order of the AO is erroneous and prejudicial to the interests of the Revenue? - The case of the Revenue is that the assets were developed under the BOT scheme and the Assessee was not eligible to claim depreciation as it was not the owner of the assets - Held that:- SLP dismissed. Question of law left open

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• 2018 (7) TMI 1308
  Transfer fee received from the incoming members of the Housing Society is exempt under the principles of mutuality - Held that:- The special leave petition is dismissed on the ground of delay as well as on merits.

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• 2018 (7) TMI 1307
  Income from house property - unsold inventory of built- up residential houses/flats were subject to the provisions of Section 22 read with Section 23 - notional annual letting value was taxable in the hands of the Assessee under the heads“Income from House Property” - as per assessee in view of the amendment to Section 23 of the Act with effect from 1st April 2002 in the assessee’s case, the annual letting value of the properties held as stock in trade was to be considered as “Nil” - Held that:- Leave granted.

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• 2018 (7) TMI 1306
  TPA - ALP determination - non-applicability of CUP method - comparability - Held that:- The Special Leave Petitions are dismissed. Pending applications, if any, stand disposed of.

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• 2018 (7) TMI 1305
  Penalty levied u/s 271(1)(c) - cash receipts from the assessee deposited in M/s Abhaya Investment Pvt. Ltd. - Held that:- SLP dismissed.

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• 2018 (7) TMI 1304
  GP estimation - Tribunal reducing GP rate to 6% as determined by Settlement Commission at 8% - Allowing telescoping of income - whether undisclosed income of the assessee shown in the form of income from "forfeiture of advances from customers and cessation of trading liability" was not from trading activity." - Held that:- The special leave petition is dismissed on the ground of delay.

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• 2018 (7) TMI 1303
  Nature of sale of land - agricultural land or capital asset - land is outside 8 km of city - Held that:- SLP dismissed.

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• 2018 (7) TMI 1302
  Reopening of assessment - Reasons for the belief that income has escaped assessment - claim of expenditure in course of trading of crude and refined edible oil on settlement basis as allowable business expenditure - AO held this not an allowable business expenditure but was a speculative loss and therefore not allowable under section 73 - Held that:- SLP dismissed.

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• 2018 (7) TMI 1301
  Validity of reopening of assessment - notice issued to non existent company - Held that:- We have perused the Review Petition and record of the Special Leave Petition and are convinced that the order of which review has been sought does not suffer from any apparent error warranting its reconsideration. Review petition

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• Customs

• 2018 (7) TMI 1300
  Import of certain pesticides - insecticide, Chlorpropham - prohibited goods or not? - whether the goods imported vide the above Bill of Entry are liable for confiscation under Section 111(o) of the Customs Act, 1962? - Held that:- For the import of the pesticide- Chlorpropham, as per Section 9 (3) of the Insecticide Act 1968 read with the Rules, the condition specified is that the item is allowed for import only from the specified source named in the United Kingdom and if the import is made through designated port such as JNPT Navi Mumbai. It is note worthy that ICTD Pithampur, through which the appellant had imported the item is not one of the ports specified for such import - The importer is also required to register himself with the Designated Authorities under the Insecticides Act ibid. The appellant’s registration certificate dated 30/06/2008 was not valid at the time of import. Further the goods have been imported from China as against the designated source in UK. The import has also been done through a port which is not notified for permissible imports. In view of the above facts, it is established that the import of pesticides made by the appellant is in contravention of the conditions specified under the Insecticides Act Rules for import of such goods. Consequently, the imported goods are liable for confiscation in terms of Section 111 (o) of the Customs Act, 1962. Considering the nature of the goods, the goods should not be allowed to be redeemed. Penalty u/s 112 (a) of CA - Held that:- Section 112 provides for imposition of penalty for improper importation of goods upto an amount not exceeding the value of the goods or ₹ 5000/- whichever is greater. The value of goods as assessed in bill of entry is ₹ 19.4 Lakh. Consequently, the penalty imposed is beyond the statutory limit - the penalty reduced from ₹ 25 Lakh to ₹ 15 Lakh. Appeal allowed in part.

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• 2018 (7) TMI 1299
  Valuation of imported goods - Ball Valves - enhancement of value - the Departmental officers were of the view the assessable value should be adopted on the basis of the tariff value of the brass scrap during the period of import by loading the same by 30% as value addition - Rule 8 of the Customs Valuation Rules - Held that:- The assessable value of the imported Ball Valves stands enhanced by the Revenue on the findings that the same is less than even the tariff value of the Brass scrap as notified by the Ministry of Finance for the relevant period of import and the importer has not been able to show the manufacturer’s invoice - Admittedly, the goods stand imported by the appellant from a trader under an invoice reflecting the transaction value of the goods in question. In the present case, the Revenue’s entire case is based upon the fact that the value of the Ball Valves/Check Valves cleared by the appellants under the declared transaction value is less than the value of even the raw material thus leading to a doubt about the correctness of the same - The Lower Authorities have jumped to the provisions of Rule 8 of the Customs Valuation Rule and has ordered value addition of 30%, without exhausting applicability of the previous Rules. Even if there was a doubt about the correctness of the transaction value, the onus was upon the Revenue to re-determine the value in terms of said Rules by applying them sequentially. As such without first exhausting earlier Rules which also include adoption of the transaction value as the assessable value it was not proper on the part of the Revenue to enhance the value. The transaction value has not been rejected by the Lower Authority by production of any positive evidences and the value stands enhanced only on the basis of suspicion and by referring the Tariff Value of the raw materials, there is no justifiable reasons to uphold the impugned order. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1298
  Duty Drawback - Brand rate - non-fixation of brand rate of duty drawback for export of electricity to Special Economic Zone (SEZ) - the Commissioner held that the appellant has received consideration for supply of power in Indian Rupees and not in foreign exchange, thus drawback is not applicable to the appellant - Held that:- In this case Ld. Commissioner has to pass an appropriate order following the decision of the Hon’ble Supreme Court regarding binding nature of departmental circulars as mentioned in paragraph -3 and also following the case of Hindustan Zinc Ltd. vs. UOI [2016 (10) TMI 819 - RAJASTHAN HIGH COURT] wherein it is held that the assessee was eligible for the drawback benefit in respect of electrical energy - Brand rate fixation for electrical energy and clean energy cess exported to SEZ is permissible. The Ld. Commissioner directed to pass an appropriate order taking into consideration of the above findings and fix the brand rate with respect to electricity and clean energy cess within 3 months from the date of receipt of the order - appeal allowed by way of remand.

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• 2018 (7) TMI 1297
  Fulfillment of NFEP in terms of LOP issued by Development Commissioner vide F.No.FSEZ/LIC/T-10/99/307 dated 13.04.2004 - Held that:- In Circular No.21/95-Cus dated 10.03.1995 and Circular No.122/95-Cus dated 28.11.1995, it has been clarified that the case of violation of the Exim Policy by the 100% EOU/EPZ be fresh settled by the Development Commissioner and only thereafter Customs should confirm the demand. On this account, that would avoid the situation wherein the allegation in the notice might be found unsustainable in terms of Exim Policy/Customs law and may have to be dropped by the Department itself. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1296
  Misdeclaration of value of imported goods - Flash Butt Welding Machine - benefit of N/N. 84/97-CUS dated 11.11.1997 denied - redemption fine - penalty - Held that:- The Adjudicating authority observed that it is not a bonafide mistake since it took five months to issue a revised invoice and therefore penalty would be imposed under Section 112(a) of the Customs Act, 1962. However, the Adjudicating authority allowed the amendment of the Bill of Entry dated 14.08.2007. He has also dropped the demand of duty. The Adjudicating authority allowed the amendment of the Bill of Entry under Section 149 of the Act, 1962 and therefore the confiscation of the goods and imposition of redemption fine is not justified - However, there is a mis-declaration in the Bills of Entry and the imposition of penalty is warranted. However, the quantum of penalty is excessive and the same is required to be reduced. Redemption fine set aside - penalty reduced - appeal allowed in part.

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• 2018 (7) TMI 1295
  Valuation - rejection of transaction value - Comparable goods - import of Zinc Plate from Bangladesh of irregular Shapes and Sizes - Rule 10A of CVR, 1988 - metal content in the goods. Held that:- The appellant purchased the goods from Bangladesh. The metal contents in the goods were declared to be below 90%. Test Report revealed that Metal content/purity varied between 87.2% and 88.3%. The Adjudicating authority discarded the transaction value following the rate of London Metal Exchange (LME) as reliable source in extracting the true value of the metal. It is observed by the Adjudicating authority that LME prices related to Zinc of the highest purity (99.9%) - in the present case the purity of the Zinc is 87.2% and 88.3%. Therefore, the LME price is not comparable with the impugned goods. The Tribunal in the case of Jindal Strips Limited Vs. Commissioner of Customs, New Delhi [2001 (7) TMI 170 - CEGAT, COURT NO. I, NEW DELHI] observed that LME Bulletin Prices cannot be accepted as the basis of value in absence of corroborative evidences of contemporaneous import. The LME price of Zinc having 99.9% purity is not comparable with the imported zinc consignment of less than 90% purity - there is no reason to reject the transaction value as declared by the appellant - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2018 (7) TMI 1335
  Corporate Insolvency Resolution Process - proof of debt - Held that:- The stand of financial creditor (SBI) that the applicant has not come with clean hands and has suppressed facts, cannot be a ground to reject the application if it is otherwise complete. The other two financial creditors have raised almost similar objections which cannot detain us from proceeding under Section 10 of the Code. The other objection that action under SARFAESI Act has since been initiated will also not come in the way of provisions of Section 10 of the Code. In view of the overriding effect given by the provisions of section 238 of the Code, the initiation and pendency of proceedings under SARFAESI Act is no bar for initiation of resolution and Insolvency proceedings under the Code. Hence, the objection raised by the financial creditors cannot sustain. As a sequel to the aforesaid discussion, we are satisfied that the present application is complete, the applicant corporate debtor has committed a default and there is no disciplinary proceeding pending against the proposed resolution professional. Therefore, as the application is complete the present application is admitted under section 10(4)(a) of the Code. The Corporate Insolvency Resolution Process shall commence from the date of this order under sub-section 5 of Section 10 of the Code.

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• Service Tax

• 2018 (7) TMI 1294
  Restoration of petition which was dismissed for want of prosecution - Held that:- On the given date, the train had arrived late at Indore and, therefore, when the matter was called up for hearing, no one gave appearance on behalf of the applicant - this is supported by the affidavit of learned counsel for the applicant. In the interest of justice, prayer for restoration is allowed - petition restored.

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• 2018 (7) TMI 1293
  Release on Bail - non-deposit of amount which company had collected from the customers as service tax - Held that:- Considering the nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, reasonable apprehension of tampering with the witnesses and prima facie satisfaction of the Court in support of the charge, the applicant is entitled to be released on bail in this case. Applicant is allowed to be released on bail subject to conditions imposed.

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• 2018 (7) TMI 1292
  Business Support Services - stock broker services - appointment of several sub-brokers - Held that:- The appellant has set up a VPN, and such network was utilised not only by the appellant but also their sub-brokers to access the various stock exchanges for putting through their transaction in securities. It is to be noted that the arrangement for the VPN was not made by the appellant by way of a support service for the sub-brokers. Evidently there is no service provider – service receiver relationship between the appellant and the sub-brokers. A part of the cost involved in the VPN has been recovered from sub-brokers as their share of the expenditure. It appears to us that this is a cost sharing arrangement and not in the form of a service provider-service receiver relationship - there is no justification for levy of Service tax under the category of ‘Business Support Services”. Management, Maintenance and Repair Service - consideration received by the appellant for providing computer software Consultancy Services to their customers - Held that:- The service of MMRS basically deals with the maintenance of immovable property. The definition has been amended to include goods also w.e.f. 01.06.2007. But w.e.f. 16.05.2008 a separate category of service has been defined under ‘Information Technology Software Service’. It is seen that the nature of activity carried out involves development and maintenance of software. These activities are covered only by the definition of Information Technology Software Service and cannot be brought within the definition of MMRS for the period prior to 16.05.2008 - It cannot be said that such activity related to software is includible under MMRS for the prior period - demand set aside. Online Information and Data Base Access or Retrieval Service - the appellant’s agreement with M/s National Security Depository Limited (NSDL), for setting up and renting a Facilitation Centre on behalf of the Income Tax Department - Held that:- The issue involved in the present case has been decided by the Tribunal in favour of the appellant in the case of S. V. Engineering Constructions [2016 (11) TMI 108 - CESTAT HYDERABAD], where it was held that When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - demand set aside. Reimbursement claimed by the appellant from NSDL - Held that:- Since NSDL has discharged the Service Tax, the appellant cannot be called upon to pay Service Tax once again. This is also applicable for the reimbursement - there is no justification for the levy of Service Tax on the reimbursement which is set aside. Registrar and Share Transfer Agents Service - Held that:- Such amounts were reimbursed to the appellant on actuals. The appellant has raised separate invoices without markup for reimbursement of such expenses. In view of the above, we find no justification to levy Service Tax on such amounts, particularly in view of the decision of the Hon’ble Supreme Court in the case of Intercontinental Consultants and Technocrats [2018 (3) TMI 357 - SUPREME COURT OF INDIA] - Service Tax demand on this ground is set aside. Banking and Other Financial Services - Held that:- The Tribunal in the case of LSE Securities Ltd. vs. CCE, Ludhiana [2012 (6) TMI 364 - CESTAT, NEW DELHI], has came to the conclusion that Service Tax cannot be charged on such amounts under the category of ‘Banking and Financial Services’, since such charges are collected by the appellant and paid to the depository participants who are authorised to levy such charges under the Depository Act, 1996 - demand set aside. CENVAT credit - digitization charges - Held that:- Since the Service Tax on the said income has already been paid by the appellant, the CENVAT credit, which is denied only for the reason for non payment of output service tax, cannot be upheld. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1291
  Liability of Service Tax - SIM Cards given free of cost to the distributors without any consideration - telecommunication services - Rule 5(1) of Determination of Value Rules Held that:- Rule 5(1) and the explanation thereof were practically disjoint, these were used as independent Rules and thus the explanation does not attain any clarificatory nature. It is difficult to consider it retrospectively applicable. The fact for the present case still remains is that the SIM Cards which the distributor received as free, has been sold on MRP, and since the MRP is inclusive of prices, therefore, demand has to be calculated by taking MRP as cum tax value in terms of Section 67(2) of the Finance Act, 1994 - demand upheld. Demand of Interest and penalties - extended period of limitation - Held that:- The adjudicating authority has rightly observed noticee to have already been registered with the Department and as such to already been well aware of the provisions of Service Tax, still not disclosing the taxable value of the SIM Cards supplied free of cost to the distributors in their returns nor paying the tax thereupon without seeking any clarification to that effect is sufficiently a positive act which constitutes suppression of facts - the Department was well entitled to invoke the extended period of limitation - demand of interest and penalties also upheld. Appeal dismissed - decided against appellant.

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• 2018 (7) TMI 1290
  Extended period of limitation - Commercial Coaching or Training Services - providing training to the employees of member Banks - Held that: - Admittedly during relevant period the decisions on the issue was in favor of the assessee and the subsequent setting aside of Tribunal order in the case of Great Lakes Institute Management Ltd. [2013 (10) TMI 433 - CESTAT NEW DELHI - LB] by the Hon’ble Supreme Court and the declaration of law by the Larger Bench, reversed the earlier views of the Tribunal. In such a scenario appellant cannot be held guilty of any suppression or mis-statement, and not discharging his service tax liabilities, in which case the longer period would not be available to the Revenue - the demand raised beyond the normal period would be barred by limitation - Penalty set aside. The demand falling behind the normal period of limitation is set aside along with setting aside of penalty and the matter is remanded to the Original Adjudicating Authority for re-quantification of the demand falling within the limitation period. Benefit of cum-duty to the appellant - Held that:- The said issue is settled by cateana of judgments that while calculating duty demand, the benefit of cum-duty has to be extended to the assessee - there is no merits in the above contention of the Revenue. Appeal disposed off.

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• 2018 (7) TMI 1289
  Valuation - Construction of Residential Complex Services - inclusion of amount charged from customers in respect of parking space in assessable value - Held that:- In the definition of Residential Complex Service , parking space specifically stands included in Serial No.(iii) of the definition. If that be so, it has to be held that parking space is a part and parcel of the services falling under the category of Residential Complex Services - the new definition of Preferential Location Services specifically excludes the parking place which means that parking services do not get covered by the new definition - the consideration received by the appellant from their buyer on account of sale of parking space is a part and parcel of the services falling under the category of Residential Complex Construction Services and its value has to be added in the value of above services Extended period of Limitation - Held that:- The Service Tax law, during the relevant period, was still at the nascent stage and was not clear - Inasmuch as admittedly the parking area is a separate area from flats sold by the appellant, there can be bona fide belief on the part of the assessee that such parking charges are not includible in the value of the services falling under Residential Complex Construction Services . There is also no positive evidence indicating any mala fide on part of the appellant - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1288
  Penalty u/s 70 of the Finance Act, 1994 - non-quantification of actual interest under Section 75 of the Act - transport for goods services by road - reverse charge mechanism - Whether the service can be categorized under the head GTA Services or not? - Held that:- This amount has been certified by the Chartered Accountant. Under such circumstances, the services rendered cannot be categorised as GTA service as has been held in the case of SOUTH EASTERN COAL FIELDS LTD. VERSUS C.C.E., RAIPUR [2016 (8) TMI 677 - CESTAT NEW DELHI] - there is no liability on the part of the appellant for the payment of Service tax on this account under RCM - the interest goes alongwith the amount of tax payable in case any amount is still remained to be paid, appropriate interest shall be payable by the appellant as per the provisions of Section 75 of the Act. Penalty u/r 76 of FA - Held that:- Section 76 and 78 are mutually exclusive - This is as per the amendment carried out under the 5th proviso of Section 78 through Finance Act, 2008 this has also been made applicable to the old cases also - penalty u/s 76 not warranted and is set aside. Payment of amount of Maintenance and Repair service - Held that:- As far as the demand under this heading for services rendered by them is concerned, the appellant has not contested the demand confirmed and agreed to pay the same as they had been paying the service tax under this Head. Shifting charge will be treated under Cargo Handling Service - Held that:- The Cargo Handling services does not come under the category of Reverse Charge Mechanism and therefore, the service tax required to be paid by the provider of the service nor the recipient thereof - In this case the appellant is not provider of the services and therefore the demand on this account is not sustainable and is set aside. Commission paid to the foreign agent - Held that:- The contract was signed on 1/4/2006 and negotiation with the buyer was completed on 6/4/2006 as is evident from the copies of the contract - As held in the case of International Shipping Owners Association Vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT], the service tax is not payable before 18/4/2006 i.e. the date of insertion of Section 66A in the Finance Act, 1994 - demand set aside. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1287
  Refund of excess Service Tax paid - Section 11B of the CEA made applicable to Service Tax by section 83 of Chapter V of FA - denial on the ground that the required documents including the invoices were not filed and produced for proper scrutiny of the refund claim - demand of Interest u/s 11BB of the CEA - Held that:- The refund claim cannot be treated as filed till it is filed along with all the supporting documents - Tribunal has in case of Reliance Industries [2015 (1) TMI 751 - CESTAT AHMEDABAD] held that if the prescribed documents were not submitted with the refund application, the same cannot be treated as complete application. In the present case though the refund application was filed 27.09.2006, but the same was not substantiated by the proper documents. Accordingly the same was rejected by the jurisdictional Assistant Commissioner - After receipt of the complete documents on 15.02.2011 and their verification Commissioner (Appeal) has vide order dated 29.04.2011 sanctioned the refund claim and set aside the order of the adjudicating authority dated 19.10.2007. Interest in terms of Section 11BB becomes payable to the appellant only after expiry of three months from the date of submission of supporting documents i.e. 15.02.2011. This issue whether the said refund could have been allowed or not on the ground of limitation cannot be part of this proceedings as revenue has not challenged the order of Commissioner (Appeal) date 29.04.2011, on the contrary acting on the said order revenue has made the refund to the appellants. Once having done so they cannot come again in this proceeding to challenge the refund claim on ground of limitation when they have not challenged the earlier order. Appeal disposed off.

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• 2018 (7) TMI 1286
  Consulting Engineer’s service - scope of the definition - Board’s Circular No.49/11/2002-ST dated 18.12.2002 - Held that:- The service tax under “Consulting Engineer” is only applicable prior to 01.05.2006 and did not include the private limited company and other corporate body under the Government of Meghalaya in view of the Board’s Circular - Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1285
  Demand of Interest - huge amounts shown under “unaccounted receipt” - delayed payment of tax - Held that:- It is on record that the service tax amount collected by MTNL has been paid to the Government only after delay. Hence, the charging of interest is upheld - demand of Service tax along with interest and penalty is also upheld - appeal dismissed - decided against appellant.

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• 2018 (7) TMI 1284
  Valuation - inclusion of transportation cost in assessable value - Clearing & Forwarding Agent Services - whether the freight is includible under the services provided by the respondent or not? - Held that:- It is very strange that the Revenue has alleged some allegations and the assessee is in defence taken the ground and no opportunity was given to him to defend the case that the activity of Clearing & Forwarding Agent Service does not fall under the category of Clearing & Forwarding Agent Services as alleged by the Revenue in the show cause notice. It does not mean that the said challenge cannot be addressed by the Learned Commissioner (Appeals). In fact against the finding of the ld. Commissioner (A) that the activity undertaken by the respondent does not fall under the category of Clearing and Forwarding Agent Services, has not challenged. In that circumstances, Learned Commissioner (Appeals) did not fell in error that their activity does not fall under the category of Clearing & Forwarding Agent Services. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1283
  Validity of SCN - the SCN did not point out the activity undertaken by the appellant and also did not establish how such activity was classifiable under Repair and Maintenance Service - Held that:- It was responsibility of revenue to first deliberate on the fact about the activity undertaken by the appellant and examine how the said activity was taxable and where it was classifiable. Such vital aspects are missing in the show cause notice. Therefore, the said show cause notice dated 05.03.2010 is not sustainable - appeal allowed.

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• 2018 (7) TMI 1282
  CENVAT Credit - whether the ‘other income’ shown by the appellant was taxable under the category of “Business Auxiliary Services” or “Transportation of Goods Services”? - Held that:- In the absence of any evidence to substantiate the stand of the Revenue that the said ‘other income’ was on account of services proved under the category of ‘Business Auxiliary’, the appellant stand of the ‘other income’ having been arisen on account of the Transportation Activities has to be accepted in which case the appellant would be entitled to Cenvat credit of the same - credit allowed. Extended period of Limitation - Held that:- The credit was availed by reflecting the same in the Cenvat credit account, in which case it cannot be said that there was any mala-fide suppression on the part of the appellant - the demand raised by invoking the longer period of limitation is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1281
  Voluntary Compliance Entitlement Scheme - GTA service - Reverse Charge Mechanism - suppression of facts - Manpower Supply Agency Service - renting of Immovable Property Service - Held that:- The learned Commissioner have rightly allowed the benefit of the VCES application, as admittedly there is no show cause notice issued under Section 111 of the Service Tax VCES, 2013 - the final certificate being VCES–3 have been issued by the revenue by its competent officers, as prescribed under the scheme. Accordingly, the learned Commissioner have rightly deleted the demand in respect to GTA service up to the period 31/12/2012. So far the observation that the scheme is applicable till 31st March 2013, this Tribunal clarifies that the scheme is applicable only upto 31st December, 2012 and accordingly, the benefit under the scheme is also applicable till 31st December, 2012 and not up to 31st March, 2013. The appellant have made payment of substantial taxes, as raised in the common bill raised by the service providers including the GTA service. It is also apparent that there is error in computing the tax, as certain services on which tax has already been paid, have also been included, relating to inflation of the impugned demand - appeal of the appellant-assessee is allowed by way of remand to the adjudicating authority, with a direction to hear the appellant with respect to the three services namely GTA Service, Manpower Supply Agency Service, slaughtering charges and to determine the tax liability in accordance with law. Extended period of limitation - Held that:- The same is invocable, as admittedly the appellant failed to disclose service tax payable under the head of ‘Manpower Supply Agency Service’ and also renting of ‘Immovable Property Service’ - extended period invoked. Appeal allowed by way of remand.

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• Central Excise

• 2018 (7) TMI 1280
  Validity of Remand of matter to Commissioner - appellant’s grievance is that the final order of CESTAT remanding the matter for fresh adjudication by the Commissioner is erroneous, inasmuch as, the Tribunal failed to discharge its obligations to consider the record - Held that:- It is evident from the consideration of the record that the Commissioner rendered elaborate findings on both the genuineness of the document (agreement dated 30.06.2006) as well as on its interpretation. Given these facts, if the Tribunal was in doubt as to whether the document was genuine, the least that it could have done was to limit the findings on remand while retaining Revenue’s appeal on the file. This Court notices that CESTAT has been repeatedly passing remand orders virtually abdicating its responsibility as an Appellate Court. This trend is unhealthy given that it is the final Court of fact and is required to adjudicate both on the issues of fact and law, especially in matters such as the present one i.e. where the appeal before it was by way of the first appeal. This Court hereby sets aside the impugned order - The Tribunal is hereby directed to render specific findings on the issue after taking into account the submissions of the parties and calling for a limited remand findings on the issue of genuineness of the document alone - appeal allowed.

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• 2018 (7) TMI 1279
  CENVAT Credit - duty paying documents - Supplementary Invoices - Rule 9 (1) (b) of the Cenvat Credit Rules 2004 - Held that:- In an identical set of facts in the case of Birla Corporation Ltd. V/s Commissioner [2018 (7) TMI 1264 - CESTAT NEW DELHI], Tribunal allowed the Cenvat Credit holding that there cannot be suppression of fact when the issue of liability of payment of Excise duty at the end of the coal companies was a debatable issue which is pending adjudication in the Apex Court - appeal allowed.

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• 2018 (7) TMI 1278
  Clandestine manufacture and removal - Pan Masala - appellant was neither registered with the Central Excise Department nor was paying any duty on the clearance of Pan Masala - Interpretation of statute - Rule 17(2) of CER - Held that:- As per the rule, if the manufacturer is found to be indulging in manufacturing activities without registration on the day of their visit, it has to be deemed as if such manufacturing activity was taking place right from the first day of April of that Financial Year in which unit was found to be not registered - Admittedly in the present case the unit was found to be not registered on 10/04/2011. As such by strict application of the said rule, the duty liability would arise against the appellant with effect from first day of April, 2011 and not first day of April, 2010. There is exception in the said rule itself to the effect that unless evidence to the contrary is provided to the satisfaction of the Central Excise Officers. This shows that if an assessee is otherwise is in a position to establish actual date of stock of manufacture, the deeming provisions would not apply. It, thus, simplicitor leads us to hold that if the evidence is available on record to show the actual period during which production and clearance of Pan Masala had taken place, duty would be confirmed from that date only - Deeming provision is applicable in those cases where there no evidence of start of production is available. In the present case, the Commissioner has accepted that the appellant was indulging in manufacture and clandestine clearance of Pan Masala since January, 2011. There is also evidence on record to show that there was agreement between the appellant and their brand owner, Shri Sunil Kumar Agarwal, Director of M/s Astha Fragrance Pvt. Ltd. which was executed with effect from 01/10/2010 and the present premises in which the machines were found to be installed were taken on rent by the appellant from January, 2011 as per the statement of the owner of premises. As such, it is clear that the appellant was manufacturing the said goods in rented premises with effect from January, 2011 - the duty liability is legally to be confirmed against the appellant from January, 2011. Penalty - Held that:- The appellant was admittedly indulging in clandestine activity for manufacture of Pan Masala and as such are liable to penalty of identical amount - matter remanded back to the Original Adjudicating Authority for quantification of exact amount of duty liability against the M/s Taj Products for the period of actual manufacture of the goods and for imposition of penalty. Penalty on Shri Sunil Kumar Agarwal - Held that:- There is no evidence on record to suggest that the said activity was in the knowledge of Shri Sunil Kumar Agarwal. In such a situation, the owner of the brand name cannot be, held liable to penalty - penalty set aside. Appeal allowed in part.

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• 2018 (7) TMI 1277
  SSI Exemption - Dummy units - N/N. 9/200-CE dated 01.03.2000 - it was alleged that the appellants were holding the other firm, M/s Mascot Chemicals, as a dummy unit - demand was confirmed jointly and severally against M/s Chemicos (the appellants) and M/s Mascot Chemicals. Held that:- The Small Scale exemption is available to a unit engaged in the manufacture of excisable products. As long as the two units are independent units, complete in themselves to manufacture the goods and did not belong to the same manufacturer, both are separately entitled to the benefit of small scale exemption notification - Admittedly, in the present case one unit is proprietary unit of Shri Avdhesh Gopal Agarwal and the other unit is a partnership unit of Shri Avdhesh Gopal Agarwal and his wife Mrs. Niti Agarwal. Admittedly both the units are located at far off places and are fully equipped to manufacture goods being manufactured by them. The clubbing of clearances of two units is required to be done when one unit is a dummy of the other unit and the goods being manufactured in one unit are being cleared in the name of other unit. When the two units are independent of each other and are manufacturing their own goods and doing the business independently as a separate legal entity, the clubbing of clearances cannot be done for the purpose of denial of the small scale exemption notification. Smt Niti Agarwal is a partner in M/s Mascot chemicals whose clearances stand clubbed with the clearances of M/s Chemicos. It is on record that no notice was sent to M/s Niti Agarwal calling upon her to show cause as to why the clearances of M/s Mascot Chemicals to which she is a partner should not be clubbed with the appellants Clearances. No statement of Smt Niti Agarwal was recorded and as such it is not justifiable on the part of the Adjudicating Authority to hold her partnership concern as a dummy of M/s Chemico, without even intimating the said facts to Mrs Niti Agarwal - one out of the two units is a proprietary unit and the other is a partnership unit. The clearances of the two units in question cannot be clubbed as held by the Tribunal in number of decisions - Reference made to the decision in the case of Mayur Printers V/s Commissioner of Central Excise, Mumbai-I [2017 (3) TMI 598 - CESTAT MUMBAI]. Also, It is not the Revenue’s case that the units were not separately registered with the various Tax departments and were not doing the business independently in the factories located too far away from each other. The mere fact of Shri Avdhesh Gopal Agarwal being proprietor of one unit and partner of other unit by itself is not sufficient to hold the clearances from both, to be clubbed and to deny the benefit of small scale exemption notification. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1276
  Valuation - Colour television sets - abatement - goods notified under section 4A of the Central Excise Act - appellant declared the MRP on the colour TV sets to the extent of ₹ 2,321/- per set and discharged duty on the same after taking 30% abatements i.e. on ₹ 1,625/- per set in terms of provisions of section 4A of the Central Excise Act - Revenue entertained a view that inasmuch as duty was being paid on ₹ 1,625/- whereas the appellant was receiving the consideration of ₹ 1,925/- per set from their customers, the differential amount of ₹ 300/- is required to discharge duty of excise - time limitation. Held that:- Section 4A of the Central Excise Act was introduced with the purpose of introduction of collection of excise duty on the basis of MRP. The entire purpose of the said section was to avoid litigation about the includibiliy of various elements in the assessable value of the excisable product - The said section provides for payment of excise duty on the basis of MRP affixed on the same. It is only when an assessee either removes the goods without declaring the retail sale price on the packages or declares a wrong MRP or tampers with or obliterate or alters the retail sale price declared on the packages after their removal from the place of removal, the section 4A can be discarded and the differential duty can be demanded. In the present case the MRP was declared on the TV sets at ₹ 2,321/- per set. It is not the Revenue’s case that the TV sets have been sold at an MRP which is higher than ₹ 2,321/-. Further the said section provides for arriving at the assessable value after an abatement to the extent of 30%. As such the assessable value would be ₹ 1,625/-, on which the appellant have paid the duty - Admittedly after abatement, the assessable value is bound to be lower than the MRP declared and the actual sale price has no relevance with the assessable value as long as it is not more than the MRP. The sale price of goods being actually ₹ 1,925/- which is admittedly less than the declared MRP, would not become the assessable value of the goods by adding back the differential amount of ₹ 300/- per set in the assessable value. That would defeat the very purpose of introduction of section 4A of the Central Excise Act inasmuch as the same would amount to assessments under section 4 of the Act, which is not permissible. Time limitation - Held that:- Admittedly the appellants were issuing the invoices clearly showing the prices of the goods as ₹ 1,925/-. In such a scenario, it cannot be said that there was any mala fide on the part of the appellant to evade payment of duty - also, the issue being a bonafide dispute of interpretation of the provisions of law and in the absence of any positive evidence to show the mala fide intention of the appellant, the extended period of limitation was not available to the Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1275
  Principles of Natural Justice - Captive Consumption - benefit of N/N. 67/95-CE dated 16.03.1995 - Paperboard Dibbis/Boxes manufactured by the appellant and consumed captively in packing the Aggarbatties - Extended period of limitation - Held that:- Even though the adjudicating authority had fixed various dates of hearings and as such cannot be faulted upon, but the fact remains that the appellants were not heard in person. As such the impugned order can be held to be suffering from violations of principles of natural justice. The detailed process of manufacture, now being canvassed before us by the appellant was not placed before the adjudicating authority and as such his comments are not available - the captive consumption N/N. 67/95-CE is available to an assessee if the obligation in terms of Rule 6 stands discharged by the assessee. As per requirement of said Rule 6, no Cenvat credit is available to the manufacturing unit. The said fact requires verification - The applicability of the ratio of the said two decisions as mentioned i.e., Ambuja Cement Ltd. v. Commissioner of C.Ex., Chandigarh [2015 (11) TMI 1413 - SUPREME COURT] and Funskool (India) Ltd. v. Commissioner of C.Ex. & Cus., Goa [2016 (12) TMI 1267 - CESTAT MUMBAI] is required to be considered by the adjudicating authority, in the facts and circumstances of the case, for which matter is required to be remanded. Appeal allowed by way of remand.

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• 2018 (7) TMI 1274
  Area based exemption - N/N. 50/2003-CE dated 10.06.2003 - Self assessment scheme - demand raised by invoking Extended period of limitation - Held that:- Under self-assessment scheme, duty is cast on the assessee to properly assess the goods for payment of duties leviable thereon. Admittedly the appellants were filing requisite returns showing the amount of excise duty or additional excise duty and claimed the exemption of the same in terms of the Notification. Non-mention of NCCD in the said returns should have raised the eyebrows of the jurisdictional officers and they should have advised the assessee at that point of time itself that NCCD is required to be paid by them. The fact of non-payment of NCCD was writ clear on the said returns, in which case the observations of the appellate authority that the appellant never approached the Revenue by seeking clarification on payment of NCCD cannot be appreciated. Hon’ble Supreme Court in the case of Pushpam Pharmaceuticals Company v. Collector of C.Ex., Bombay [1995 (3) TMI 100 - SUPREME COURT OF INDIA] has observed that extended period is not applicable just for any omission of assessee unless it is deliberate to escape from payment of duty. The Hon’ble Apex Court further observed that expression “suppression of facts” in proviso to section 11A(1) is to be interpreted strictly because it has been used in company of such strong words as fraud, collusion or willful default etc., where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not render it suppression of facts. Inasmuch as the entire facts were being placed before the Revenue, by way of filing returns and inasmuch as the Revenue was aware of the fact of non-payment of NCCD, it cannot be said that there was any mala fide suppression or mis-statement on the part of the appellant so as to evade payment of duty - the extended period was not available to the Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1273
  Classification of goods - wastage, firewood, mango wood - whether the goods merit classification under chapter heading No.4408.40 or not? - certain sale proceeds not shown in the ER-1 returns - Demand of the differential duty - Held that:- The wastages as has been cleared by the appellant cannot be classified under 4408.40 is the findings of the first appellate authority, which in our view is correct - It can be seen from the findings of the first appellate authority, he was correct in coming to the conclusion that the remnants of the logs which has undergone an activity of peeling for purpose of manufacturing ply wood cannot be classified under 4408.40 and we concur with the same. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1272
  Clandestine removal - demand based on the confessional statement of Shri Vimal Sharma - no corroborative evidences - Held that:- The original and first appellate authority have relied only on the confessional statement without having any material to corroborate the same - reliance placed in the precedent decision of this Tribunal in the case of Portland Cement (I) Ltd. [2015 (1) TMI 941 - CESTAT NEW DELHI], where it was held that in the absence of any other material to corroborate the confessional statement by the person in-charge of the business, the liability cannot be fastened on the persons. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1271
  Whether the show cause notice is barred by limitation and the provisions of extended period of limitation is invocable or not? Held that:- All the information and transaction in question has been recorded in the books of account maintained in the normal course of business. Further, it is admitted fact that upon audit objection the appellant had reversed the appropriate amount under Rule 3 (5A) of CCR, 2004 and had also filed their categorical reply to the objections of audit received by the department on 10th June, 2008. Thus, there is no case of any suppression or malafide on the part of the appellant. The proviso to Section 11A of CEA, 1944 is not applicable because SCN does not indicate that there was deliberate act of suppression of fact, fraud, mis-statement, etc. - the SCN is hit by limitation, as the proviso to Section 11A for extended period is not invokable. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1270
  CENVAT Credit - whether the appellant is entitled to Cenvat credit on U.V. Sheets (U V Coated Poly Carbonate Embossed Corrugated Profiles) falling under CETSH No.39206190 of Central Excise Tariff Act, 1985? - Held that:- The courts below have committed an error of fact by considering the UV Sheets, to have been used for factory shed instead of machine shed and/or for covering machine to ensure better quality of their finished goods. The ruling of this Tribunal in the case of M/s Mukund Ltd. [2016 (3) TMI 155 - CESTAT MUMBAI] is squarely applicable to he facts of the case, where it was held that appellant entitled to Cenvat credit, as the sheets so utilised partake nature of accessories of the capital goods and as such are capital goods as defined in Rule 2(a)A(iii) of CCR, 2004. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1269
  CENVAT Credit - fake invoices - entire allegation was made out against the appellant on the basis of the statement of the third party - Held that:- It is seen that the entire allegation was made out against the appellant on the basis of the statement of the third party. There is no material available on record of any cash transaction between the appellant and the Dealer. Further it has failed to investigate the encashment of the cheque as stated by the Director of the appellant company. Identical issue decided in the case of M/S. GONTERMMANN PEIPERS (INDIA) LTD., SHRI LALIT KR. PODDAR VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA [2017 (11) TMI 769 - CESTAT KOLKATA], where it was held that In the absence of such cross-examination and examination in chief, the statement on which the Revenue seeks to rely, have to be excluded from evidence. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (7) TMI 1268
  Condonation of delay in filing appeal - no proper explanation has been offered by the revisionist with regard to delay in filing the present revision - On asking by the Court in what time he will comply the order dated 06.07.2018, he said that he is busy at present and at least one months' time be allowed to him. He has stated that he has a lot of other work therefore he cannot comply the order of this Court as indicated in the order dated 06.07.2018. This Court proposes to pass the following orders:- The commissioner, Commercial Tax/Principal Secretary, Service Tax, Government of U.P. shall take appropriate action against this official and pass an appropriate orders in accordance with law.

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• 2018 (7) TMI 1267
  Validity of Revision proceedings - Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - case of petitioner is that the revision is uncalled for and the assessment was already accepted and all further proceedings were dropped - effective alternative remedy of appeal. Held that:- Section 51 of the TNVAT Act provides an Appeal to the Appellate Deputy Commissioner and Section 52 of the TNVAT Act provides an Appeal to the Appellate Joint Commissioner. Further, Section 84 of the TNVAT Act provides Power to rectify any error apparent on the face of the record. Section 84(4) of the TNVAT Act states that the powers under sub-section (1) may be exercised by the assessing authorities even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision. Section 84(5) of the TNVAT Act enumerates that the provisions of this Act relating to appeal and revision shall apply to an order of rectification made under this section as they apply to the order in respect of which such order of rectification has been made. The functions of the Appellate Authority under the TNVAT Act is quasi judicial in nature. They are empowered to conduct the proceedings by summoning the persons or calling for the documents or otherwise. Thus, the writ petitioner has to prefer an appeal against the order of revision, which is impugned in these present writ petitions. The very purpose of the appeal provision is to ensure that the orders passed by the original authorities are checked and the aggrieved person must get a remedy even before the Appellate forum. In all circumstances, if such appeal provision is dispensed with, then it will amount to circumventing the provisions of the TNVAT Act and further, this Court is of an opinion that the appeals provided under such statute are to be trusted even by the aggrieved persons. Thus, the writ petition is not only belated, since filed after a lapse of two years from the date of passing of the impugned order, but the appeal provision provided under the statute has not been exhausted by the writ petitioner. Under these circumstances, the present writ petitions cannot be entertained in view of the fact that the petitioner has to exhaust the appeal remedy contemplated under the provisions of the TNVAT Act. Petition dismissed - decided against petitioner.

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• 2018 (7) TMI 1266
  Enhancement of rate of tax - purchase and sale of food grains, pulses and oil seeds - case of revisionist is that though the survey was conducted at the business premises of the revisionist on 24.04.2014 by the SIB but so far as the loose parchas recovered from the business place of the revisionist are concerned, they do not belong to the revisionist - Held that:- This Court has noticed that the assessing authority has considered the survey report and further that the survey was also conducted at two other premises namely Raj Gharana Enterprises and Maa Durga Enterprises and admittedly both the aforesaid firms are related with the revisionist firm. The loose parchas clearly indicates and tallied with the dates of purchase, vehicle numbers, quantity, value and the name of persons etc. The parcha numbers did not describe the invoice number as well as the book number, therefore, it cannot be tallied with the books found at the time of survey at the business premises of the revisionist. The contention of the revisionist is not correct nor the same is based on any material. In fact, in the impugned order of the Tribunal, it is noticed that the figure being ₹ 4,97,300/- is wrongly typed/mentioned as ₹ 49,73,000/-which learned counsel for the revisionist has accepted - there is no error in the order of the tribunal. Even otherwise also, there are no discrepancies in the orders passed by the Tribunal and in fact the Tribunal has substantially reduced the turn over while confirming rejection of books of accounts. It is not a case where any legal issue is involved which can be decided by this Court under Section 58 of the U.P. VAT Act, 2008. Revision dismissed.

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• 2018 (7) TMI 1265
  Validity of assessment order - TNGST Act - case of petitioner is that Assessment Officer did not have any independent material, except some materials gathered from the Central Excise Department and there are no material to establish that the petitioner had not accounted for the transactions - Held that:- The respondent has used the materials received from the Central Excise Department to be the basis for initiation of the proceedings by issuing notice dated 12. 03. 2009. It is not as if the respondent has straightaway proceeded and passed the orders and issued demands based on the material received from the Central Excise Department. Therefore, the materials received from the Central Excise Department has been treated to be a source report based on which action under the Provisions of Tamil Nadu General Sales Tax Act has been initiated - there are no error in the said aspect. As regards that there are no material to establish that the petitioner had not accounted for the transactions, it is found that the entire material revolves on the disputed question of fact. This Court is inclined to issue appropriate direction so that the petitioner can approach the Appellate Authority simultaneously not exposing the petitioner to any further financial liability pending disposal of the appeals - petition is disposed off by directing the petitioner, in each of the above petitions, to file the appeal(s) before the Appellate Assistant Commissioner (CT-IV), Chennai 108 within a period of 30 days from the date of receipt of a copy of this order.

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