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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 24, 2018 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax TMI SMS Valuation of closing stock - Even if Ex.Duty was not paid & assessee has postponed its payment, the valuation of goods will not get affected Articles 1. Foreign Direct Investment By: CSHithakar Chouta Summary: On 7th June 2018, the Reserve Bank of India (RBI) issued a circular detailing the implementation of the Single Master Form (SMF) for reporting foreign investments. The SMF consolidates various reporting forms for foreign investments in Indian entities such as companies, LLPs, REITs, InvITs, and AIFs. Before the SMF's implementation, entities must submit foreign investment data via the Entity Master Form (EMF) within a 15-day window from 28 June to 12 July 2018. Failure to file the EMF will prevent entities from receiving foreign investments and result in non-compliance with the Foreign Exchange Management Act, 1999. 2. GST Charcha: Whether Intermediary Services are export of Services? By: Bimal jain Summary: The article discusses the classification of intermediary services under India's Goods and Services Tax (GST) framework, specifically whether these services qualify as exports. Under the IGST Act, intermediary services, defined as facilitation between parties, are not considered exports if the supplier is in India, even if the recipient is abroad. This is due to the "place of supply" rule, which is the supplier's location. The article argues for changing this rule to the recipient's location to boost India's forex earnings by making intermediary services more competitive internationally. It also highlights the economic rationale for such a change, suggesting it would align with zero-rated export benefits under Section 16 of the IGST Act. 3. GST Charcha: Compliances of E-Way Bill – Alarming Bells!! By: Bimal jain Summary: A recent ruling by the Madhya Pradesh High Court imposed a penalty of INR 1.32 crores on a transport company for not completing Part-B of the E-Way Bill, highlighting the strict enforcement of compliance under the CGST Act, 2017. This decision has raised concerns about the potential misuse of authority for imposing penalties on procedural lapses without tax evasion intent. The E-Way Bill, mandatory for transporting goods over INR 50,000, requires complete details in Part-A and Part-B. The case underscores the need for clarity in responsibilities and potential legislative amendments to Section 129 to prevent undue penalties for technical errors. 4. RECENT ADVANCE RULINGS IN GST (PART-4) By: Dr. Sanjiv Agarwal Summary: Advance rulings under the GST framework provide clarity on tax provisions and legislative intent. Recent rulings include: the classification of UPS and battery supply as mixed, not composite; recruitment services to foreign university students as taxable, not export services; reinstatement charges for street restoration attracting 18% GST; certain exempt suppliers not requiring registration unless liable under reverse charge; catering services to manufacturing industries taxed at 18% as outdoor catering; and classification of trophies and Caesarstone under specific tariff headings. These rulings highlight the need for a centralized authority to prevent inconsistent state rulings. Highlights / Catch Notes GST Fabricating and Fitting Bus Bodies on Chassis is a Composite Supply; Principal Supply under HSN Code 8707. Case-Laws - AAR : Nature of supply - The activity of fabrication and fitting and mounting of bus bodies on the chassis supplied by the other party is a composite supply with supply of goods, i.e., bus-bodies, being principal supply (HSN code 8707). Visit to Get Source Unredeemed payback points are taxable under GST as consideration for services rendered by the issuer. Case-Laws - AAR : The value of points forfeited of the applicant on which money had been paid by the issuer of points on account of failure of the end customers to redeem the payback points within their validity period would amount to consideration received in lieu of services being provided by LSRPL to its clients - liable to GST. Visit to Get Source Taxation Classification for Truck Mounted Cranes: Heading 8705 Applies to Cranes Mounted on Ashok Leyland, TATA Trucks. Case-Laws - AAR : Classification of goods - Truck Mounted Cranes (TMC) - The product manufactured/supplied by the applicant, which is resultant of mounting/fixing of crane on readymade trucks/lorries bought by them from truck/lorry manufacturers such as Ashok Leyland, TATA, etc. and known as truck mounted cranes (TMC), is classifiable under heading 8705. Visit to Get Source Lithium-Ion Batteries for Mobile Handsets: Classification Affects GST and Customs Duties Under Customs Tariff Act, 1985. Case-Laws - AAR : Classification of goods - Battery’ for Mobile Handset - Under which of the chapter headings of the Customs Tariff Act, 1985, the said product “battery for mobile handsets’’, which is lithium-ion battery would be covered? - To be classified according to its use and type of sale. Visit to Get Source Income Tax Postponed Excise Duty Payment Doesn't Impact Closing Stock Valuation; Accounting System Irrelevant to Accurate Valuation. Case-Laws - HC : Valuation of closing stock - Even if the excise duty has not been paid and the assessee has postponed its payment, the valuation of the goods will not get affected. Accounting system of the assessee would be of no consequence to arrive at the true and correct valuation of the closing stock Visit to Get Source Partner's Exclusive Property Sale Pre-Dissolution Triggers Firm's Capital Gains Liability. Case-Laws - HC : Sale of property owned exclusively by one of the partners - Even if the partner has been allotted the share, prior to dissolution, as is revealed from the facts, capital gains arise on the firm. Visit to Get Source TDS Provisions Apply to Technical Services Received: Additions u/s 40(a)(ia) Confirmed for LOTUS Note Management. Case-Laws - AT : TDS liability - additions u/s 40(a)(ia) - the management of the LOTUS Note is not a mere sharing of any infrastructure or facility and since the assessee has received the technical services from Bayor, the same is liable to TDS provisions - additions confirmed. Visit to Get Source Service Tax Tribunal Rules Room Booking Charges Exempt from Service Tax, Differentiates from Mandap Keeper Services. Case-Laws - HC : Valuation - Mandap keeper service - Whether the Tribunal is correct in holding that no service tax is leviable/payable on the charges collected in the name of booking of the Rooms - Tribunal has rightly distinguished the Mandap service and the rooms rents received Visit to Get Source VAT and Service Tax Are Mutually Exclusive: Sales Cannot Be Reclassified as Services for Tax Purposes. Case-Laws - AT : Business Auxiliary Service - The levy of VAT as well as Service Tax is mutually exclusive and once the transaction has been considered and declared as sale of goods it is not open to reopen transaction and consider it as service. Visit to Get Source Chilling Milk Classified as Manufacturing Process, Exempt from Service Tax According to Established Law. Case-Laws - AT : Business Auxiliary Service - activity of chilling of milk - chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax. Visit to Get Source Employee Deputation Not a Manpower Supply Service; No Service Tax Demand Due to Lack of Profit or Agency Relationship. Case-Laws - AT : Manpower Recruitment and Supply Agency Services - deputation of employees from one company to another does not involve profit or finance benefit there is no relationship of agency and client involved in such deputation - demand set aside Visit to Get Source Central Excise Allegations of Fake Invoices in CENVAT Credit Claims Challenged; Transport Tax Payments Support Goods Movement. Case-Laws - AT : CENVAT Credit - fake invoices - allegation of non receipt of goods - The service tax payment in respect of transportation of goods also establish the transportation of goods - merely on the basis of the RTO reports, it cannot be concluded that the inputs were not received by the appellant. Visit to Get Source Supreme Court Rules Job Worker Can't Claim Duty Exemption; Principal Manufacturer's Area-Based Exemption Stands. Case-Laws - SC : SC confirmed the decision of tribunal against the assessee denying the benefit of exemption from duty on Job work - Benefit under N/N. 214/86 - As the principal manufacturer was enjoying the area based exemption notification, job worker could not have sent the aluminum ingots to the principal manufacturer without payment of duty inasmuch as the final product of the principal manufacturer was exempted. Visit to Get Source Supreme Court Affirms Tribunal's Decision: Insurance Charges Included in Valuation for Central Excise on FOR Basis. Case-Laws - SC : SC confirmed the decision of tribunal on the issue of Valuation under Central Excise against the assessee - inclusion of insurance charges - tribunal found that such sale ought to be considered not a sale on ex-factory basis but on FOR basis even though the Cost Transportation is not included in the price but shown separately in the invoice. Visit to Get Source VAT Late Input Tax Credit Claim Denied Under TNVAT Section 19(3)(b) Due to Missed Deadline in Section 19(11). Case-Laws - HC : Input Tax Credit on Capital Goods - Section 19(3)(b) of the TNVAT Act - denial of credit on the ground that the claim was made after the expiry of the time stipulated in Section 19(11) of the TNVAT Act, which states that input tax has to be claimed before the end of the financial year or before 90 days from the date of purchase, whichever is later. - Claim not allowed. Visit to Get Source Case Laws: GST 2018 (7) TMI 1423 Export of services - Whether the auxiliary services provided by H&M Hennes & Mauritz India Private Limited to Plus Trading Far East Limited, Hong Kong in terms of Auxiliary Services Agreement dated 19th January 2015 (effective from 01 February 2015) qualify as Export of Services under Section 2(6) of the Integrated Goods and Service Tax Act’ 2017 and hence be treated as zero rated supplies in terms of Section 16 of the IGST Act? Held that:- The Applicant requested to permit them to withdraw the application filed for advance ruling vide their letter dated 27.06.2018 - The application filed by the Applicant for advance ruling is dismissed as withdrawn. 2018 (7) TMI 1422 Nature of supply - Classification - Business of fabrication & fitting out bus bodies on the chassis supplied by its customers - Job work or contract for sale of goods? - rate of tax. Whether the activity of fabrication & fitting and mounting of bus bodies on the chassis supplied by the other party is a job work (SAC 9988 or contract of sale of bus body HSN CODE 8707? - If it is held to be a job work, what rate of tax is required to be charged and paid? Held that:- It is only the chassis which is supplied by the customers of the applicant and in fact no treatment or process is undertaken by the applicant on the chassis itself, except fitment/mounting of bus body on the same. At the same time, bus body building involves use of raw materials/inputs etc., for manufacture/fabrication of bus body and the cost of these inputs, etc., do form the part of value which is being charged by the applicant from its customers - It emerges that the customer is providing only chassis. All inputs/materials required for fabrication of bus body, has to be used by the applicant from its own account. Under such situation it is the bus-body which is being fabricated and also being mounted on the chassis provided by the customer. Therefore, it is not merely job-work. It is supply of bus body and an activity of fitting/mounting of bus body on chassis is an ancillary activity to the principal activity of supply of bus-body. Hence, in terms of the clarification issued by the CBEC vide circular No.34/8/2018-GST dt.03.03.2018, the impugned activity is a composite supply, with principal supply being supply of bus-body - As the activity has not been held as supply of service, the second rate of tax on supply of service is not required to be spelt out in this ruling. Ruling:- The activity of fabrication and fitting and mounting of bus bodies on the chassis supplied by the other party is a composite supply with supply of goods, i.e., bus-bodies, being principal supply (HSN code 8707). 2018 (7) TMI 1421 Levy of GST - amount of issuance fee retained/forfeited by LSRPL - scope of the term "actionable claim" - supply of services - Whether the value of points forfeited of the applicant on which money had been paid by the issuer of points on account of failure of the end customers to redeem the payback points within their validity period would amount to consideration for 'actionable claim' other than lottery, gambling or betting and therefore would not qualify as supply of either goods or services? Whether the value of points forfeited of the applicant on which money has been paid by the issuer of points on account of failure of the end customers to redeem the payback points within their validity period can be treated as "supply" of any other goods or services and consequently be chargeable to GST under the CGST, HGST or IGST Act? Held that:- Rewards points earned by the end customers for purchase of products of "partners" to loyalty programme are indeed "actionable claim" - it is observed that after the expiry of validity date, these reward/payback point can no longer be redeemed/encashed by the end customer and the end customer loses any right over them. Also, as per the definition of "actionable claim", given under Section 3 of the Transfer of Property Act, no legal action can be taken by the end customer in connection with enforcing their right over redeeming these reward/payment points This implies that after expiry of their validity period, these reward/payment points are not "actionable claim". Consequently, the action of forfeiture of rewards/payment who validity period has lapsed, does not mean that actionable claim been transferred, as after expiry of validity period, these reward/payback points are no longer covered under the definition of "actionable claim". Thus, the provisions of Schedule III to CGST Act, 2017 also do not come into picture, under such circumstances. The money equivalent to these reward/payback points, i.e. issuance fee given by partners and lying with LSRPL, which is retained by LSRPL in the name of forfeiting reward/payback points is nothing but revenue of LSRPL coming from the respective "partners" which has been earned by them owing to the activities of their providing services to the said "partners" through the loyalty programmes run by LSRPL - this amount is liable to be considered as consideration for supply of services by LSRPL to its partners in the normal course of business and becomes part of remuneration for LSRPL for providing services. LSRPL is already charging service/management fee from the partner, on which LSRPL is paying GST. Thus, the retention of amounts received from partners as issuance fee by LSRPL and retained by LSRPL on account of non-redeeming of reward/payment points by end-customer would be liable to be added to the value of services being provided by LSRPL to their partners - retention of issuance fee after forfeiture of reward/payment points, amounts to charging of amount equivalent to amount retained as issuance fee for the services which have been provided by LSRPL, to its partners. Ruling:- The value of points forfeited of the applicant on which money had been paid by the issuer of points on account of failure of the end customers to redeem the payback points within their validity period would amount to consideration received in lieu of services being provided by LSRPL to its clients and thus would be outside the scope of being considered as 'actionable claim' other than lottery, gambling or betting and therefore would qualify as supply of services in terms of Section 7 of the Central Goods and Services Act, 2017/Haryana Goods and Services Act, 2017 and therefore would be within the scope of levy of GST. The value of points forfeited of the applicant on which money has been paid by the issuer of points on account of failure of the end customers to redeem the payback points within their validity period is to be treated as "supply" of services and consequently be chargeable to GST under the CGST, HGST or IGST Act as the case may be. 2018 (7) TMI 1420 Classification of goods - Truck Mounted Cranes (TMC) - whether these TMC will fall under the chapter heading 8426 or 8705? Held that:- Chapter heading 8426 covers SHIP’S DERRICKS; CRANES INCLUDING CABLE CRANES; MOBILE LIFTING FRAMES, STRADDLE CARRIERS AND WORKS TRUCKS FITTED WITH A CRANE. Due to the fact that this heading covers Works Trucks fitted with cranes, the concerned jurisdictional officer has also recommended that the impugned product merits classification under chapter heading 8426 - It is a special purpose vehicle (crane lorry) which is engaged in lifting/loading. It is evident that when the works truck is not fitted with lifting of handling equipment such as crane, it merits classification under chapter heading 8709. However, when it is fitted with crane, it merits classification under heading 8426 - In their application, the applicant has submitted that they buy readymade trucks say Ashok Leyland, TATA, etc. Such Trucks and Lorries which are meant for transport of goods are covered under chapter heading 8704. Accordingly, classification of the impugned goods under heading 8426 is ruled out, as because the trucks being purchased/used by the applicant for manufacturing truck mounted crane (TMC) are not works truck but these are trucks/lorries which are basically meant for transport of goods. Such Trucks and Lorries are covered under chapter heading 8704 and when crane is mounted upon them to make Truck Mounted Crane, the resultant product will be special purpose vehicles, falling under chapter heading 8705. The product of the applicant cannot be classified under chapter heading 8426 as the applicant is not using works truck for producing truck mounted crane. As cranes are being mounted by the applicant on automobile chassis, the resultant product merits classification under chapter heading 8705, in view of HSN explanatory notes to Harmonised System of Nomenclature (HSN). Ruling:- The product manufactured/supplied by the applicant, which is resultant of mounting/fixing of crane on readymade trucks/lorries bought by them from truck/lorry manufacturers such as Ashok Leyland, TATA, etc. and known as truck mounted cranes (TMC), is classifiable under heading 8705. 2018 (7) TMI 1419 Classification of goods - Battery’ for Mobile Handset - Under which of the chapter headings of the Customs Tariff Act, 1985, the said product “battery for mobile handsets’’, which is lithium-ion battery would be covered? - Held that:- Sub-heading 85076000, meant for lithium-ion battery, is more specific classification for the product under consideration and heading 85177090 is a general heading for parts of mobile phone. Hence, mobile phone batteries are covered under chapter heading 8507 - lithium-ion battery is classifiable under heading 8507, Whether it is included in the description “parts for manufacture of telephones for cellular networks or for other wireless networks”? - Held that:- Mobile phones are classifiable under heading 8517 and the parts of mobile phones are also classifiable under chapter heading 8517. However, it does not imply that any other goods, which are not covered by chapter heading 8517, would cease to be parts of mobile phones - a mobile phone cannot function, cannot be operated without a battery, whether the same is detachable/separable or not. Hence, mobile phone batteries qualify as part of mobile phone. Whether “battery for mobile handset” can qualify- for GST under S.No.203 of Schedule II of the Notifications? - Held that:- Sr.No.203 covers all the goods falling under chapter 85, which are parts for manufacture of telephones for cellular telephones for cellular networks or for other wireless networks. Battery of mobile handsets are indeed covered under chapter 85 and they are parts of mobile phones - Accordingly, when they are used tor manufacture of mobile phone handsets, they qualify to be covered vide S.No.203 schedule II. Advance Ruling:- The product ‘Battery’- for Mobile Handset’ whether it be separable or non-separable i.e.. whether it be detachable or non-detachable, when sold to the mobile handset manufacturers who uses the same to make it form part of the mobile handset will, qualify to be classified under heading-85 attracting GST Rate of 12% (CGST rate 6%, SGST rate 6%, IGST rate 12%). The product ‘Battery for Mobile Handset’, when sold to the customers other than mobile handset manufacturers who does not use the same in manufacture of mobile handset, will qualify to be classified under heading-8507 having description Electric accumulators, including separators thereof, whether or not rectangular (including square)”, attracting GST Rate of 28% (CGST rate 14%, SGST rate 14%) and IGST rate 28%. 2018 (7) TMI 1418 Failure to upload FORM GST TRAN-1 within the stipulated time - case of petitioner is that though he attempted to upload it within the time, he failed because of some system error - input tax credit - migration to GST - Circular No.39/13/2018-GST, dated 03.04.2018 - Held that:- Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame. Petition allowed. Income Tax 2018 (7) TMI 1417 TDS and the payment of royalty (on software) - Held that:- This Court notices at the outset that the findings of the Settlement Commission fully accord with the law declared by this Court in ANZ Grindlays Bank vs. DCIT [2016 (3) TMI 56 - DELHI HIGH COURT] and with DIT vs. Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] as far as the second issue urged with respect to royalty on software is concerned. Exclusion of the outstanding receivable of the Jharsuguda project - Held that:- The exclusion of adjustments in respect of Jharsugoda project goes, the matter is factored. The case law as to the scope of the Court’s remit under Article 226 of the Constitution of India while dealing with the orders of the Settlement Commission are categorical, it is only in the case where there is manifest and egregious findings of law that are erroneous; which call for interference. The other grounds on which the Court is permitted to interfere with the Settlement Commission’s findings are non-application of mind or lack of bonafides, or as emphasised in ‘CIT, Mumbai vs. Anjum M.H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and ‘Brij Lal & Others vs. Commissioner of Income Tax, [2010 (10) TMI 8 - SUPREME COURT] where no true and full disclosure was made by the assessee. 2018 (7) TMI 1416 Valuation of closing stock of sugar and molasses - Excise duty payable addition in the value of closing stock - Held that:- The assessee was adopting the mercantile system of accounting. The true value of closing stock would include the amount of any tax duty, cess or having fully paid, payable or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation which is evident from the provisions of Section 145A - the provisions of Section 145A of the Act were introduced by the Finance Act No.2 of 1988 w.e.f. 01.04.1999 which are infact clarificatory in nature and, therefore, it would be applicable even for Assessment Years prior to Assessment Year 1999-2000. Thus, provisions of Section 145-A would be applicable for the Assessment Year in question. Excise duty becomes payable, the moment excisable goods are manufactured as the taxable event under Section 3 of the Central Excise Act is manufacturing or production of the excisable goods. It would be immaterial whether the assessee has paid the excise duty or not for the purposes of arriving at the correct valuation of the closing stock. Even if the excise duty has not been paid and the assessee has postponed its payment, the valuation of the goods will not get affected. Accounting system of the assessee would be of no consequence to arrive at the true and correct valuation of the closing stock. - Decided in favour of the Revenue 2018 (7) TMI 1415 Deduction under Section 10-A - Held that:- Tribunal in ignorance of the aforesaid Proviso to Sub-section (4) of Section 92C of the Income Tax Act, but we do not find any binding character of such findings or observations because as far as the computation of income of the assessee is concerned, the Assessing Authority has not given any benefit of Section 10-A of the Act to the assessee with respect to Transfer Pricing Adjustments made in the Assessment Order. There is no reversal of such findings of the Assessing Authority by the Tribunal in the present case. Therefore, this observation cannot be said to be causing any prejudice to the Revenue in the present case. Therefore, no substantial question of law arises on the said submission of the learned counsel for the Revenue. As far as the other questions are concerned, we have already observed above that none of the questions actually gives rise to any substantial questions of law in the present appeal in view of our aforesaid judgment extracted above and therefore there is no merit in the present appeal of the Revenue. - Decided against revenue 2018 (7) TMI 1414 Recovery of income tax dues - arrest of person - Writ of habeas corpus directing the respondents to produce/release Ashwin Kumar Kataria, the father of the petitioner (“the detenu”), who is said to have been detained in civil prison - Held that:- From the perusal of the record it appears that the detenue is residing at Akola and he neglect the service of notice, therefore, service of notice were made through affixure. Even after the service of notice, he deliberately remained noncooperative and absconding. T.R.O. also found that after the attachment of the aforesaid land of the detenue he objected the execution of the certificate and transfer of his property. He refuses to pay the arrears of amount of tax, therefore, a show cause notice was issued against him under Rule 73 of Second Schedule of the Income Tax Act. As per Rule 73 of the Second Schedule of the Income Tax Act, the Recovery Officer is having discretion to pass an order that detenue be detained in the custody and under the aforesaid powers the TRO has issued detention warrant against the detenue. The father of the petitioner has been arrested under the warrant of the Income Tax Department and after the arrest he would produce before him by the Police Authorities and he was sent for safe custody till the finalisation of the investigation and after that on 23/02/2018, the detention order was passed, therefore, there was no need to produced him before the Magistrate, under the provision of Section 57 of the Cr.P.C.. Proceedings done by the TRO is under the statutory provisions and therefore, no violation has been made under Article 21 of the Constitution of India. In the considered view of this Court, Article 21 of Constitution of India has no application in the matter because there is specific provisions have been made for recovery of tax dues. In the present matter Tax Recovery Officer followed the procedure established under the provisions of Income Tax Rules before directing arrest of the detenu for the recovery of arrears of tax, therefore, the judgment relied by the counsel for the petitioner in the case of Gajendra Kumar Banthia vs. Union of India reported in 1996 (3) TMI 109 - CALCUTTA HIGH COURT is not applicable in the circumstances of the present matter. 2018 (7) TMI 1413 Profit on sale of land at Thalambur - agricultural land or capital asset - Assessing Officer admits utilization of the land for agricultural purposes - Held that:- Whether a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of this Court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The Court has to answer the question on a consideration of all of them a process of evaluation. The inference has to be drawn on a cumulative consideration of all the relevant facts. The learned Tribunal, which is the highest fact finding body, having arrived at the factual finding that the land in question was agricultural land, the appeal cannot be entertained under Section 260A of the 1961 Act. An appeal lies under Section 260A of the 1961 Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much less any substantial question of law. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal restricted only to cases which involve substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. Appeal dismissed. 2018 (7) TMI 1412 Deduction u/s 80IB(10)(c) - Held that:- CIT(A) with concurrent findings was of the view that the balconies raised could not be taken into account for calculating 1000 sq.ft. limit prior to 01.04.2005. This court finds no reason to interfere with such logic. Commencement of the project - Held that:- The concurrent findings are based upon the actual commencement of the project. The Revenue urged that the date of approval is determinative and commencement has to be reckoned from that period, this court is of the opinion that the ITAT cannot be faulted on this aspect for the simple reason that mere securing the approval does not lead to any step towards development. Rather that may be the foundation for various steps that may ultimately lead to obtain finances and starting construction activity. Therefore, it is the actual date of construction which is determinative - no substantial question of law arises 2018 (7) TMI 1411 Granting stay pending appeals - payment of 15% of the disputed tax demand pending appeals to enjoy stay of further recoveries - Held that:- Some of the additions made by the Assessing Officer would be arguable. At the same time, several of the oppositions of the assessee to such additions also, going by the material that the AO has taken into consideration, cannot be discarded out of hand. Considering all we reduce the requirement of depositing the disputed tax dues to enable the assessee to enjoy stay pending appeals before the Commissioner to 7.5%. This would however be on a further condition that he shall offer immovable security for the remaining 7.5% to the satisfaction of the assessing authority. The order passed by the Principal Commissioner stands modified accordingly. Both these conditions shall be satisfied latest by 30.04.2018. The petitioner shall file an affidavit before the registry whether he would abide by these conditions and undertake to fulfill them within the time permitted. Such affidavit shall be filed latest by 16.03.2018. It is clarified that either if the petitioner does not file any such affidavit, or in such affidavit declares that he does not wish to be bound by such conditions or having in such affidavit agreed to fulfill the conditions, fails to do so by 30.04.2018, the relief granted under this order would stand automatically withdrawn and the impugned order of the Principal Commissioner would revive. 2018 (7) TMI 1410 Unexplained cash credit - Appellant received gift of 17,00,000/- from relatives and 1,50,400/- borrowings from relative and friends - Held that:- We are just fail to understand how this much of land can produce such a huge crop. It is a matter of research for the Agriculture Scientist as well. This statement cannot be relied upon and in support of its contention he has not produced any certificate from the agriculture department and when he was specifically asked whether he has maintaining any record then in reply he stated that he does not have any documentary evidence and moreover he has not maintaining any account of agriculture produce and bank account. He further stated that he does not have any gift deed when he gifted the amount to the relatives. So in our considered opinion, appellant has been failed to prove his case as he has not maintaining any bank account nor his relatives and friends are maintaining any bank account either they are labourers or farmers. Therefore, there credit worthiness is in doubt. - Decided against assessee. 2018 (7) TMI 1409 Sale of property owned exclusively by one of the partners - liability to short-term capital gains in the hands of the partnership firm as per the provisions of section 45(4) - Whether the Tribunal was correct in finding a transfer of property in favour of the partnership firm when there was no registered conveyance effected and there could be no short-term capital gains assessed in the hands of the partnership firm when the sale was made by the owner of the property ; who happened to be a partner of the firm ? Held that:- In the instant case the contention of a licence granted to the partnership firm and the family arrangement has been rejected. Then the question is how the sale was effected; when the land and building was brought into the common stock, the capital of the firm; which fact has been affirmed hereinabove. If it is on dissolution of the firm then the same would be assessable under section 45(4). Even if the partner has been allotted the share, prior to dissolution, as is revealed from the facts, capital gains arise on the firm. Firm is assessable to capital gains and answer the questions against the assessee and in favour of the Revenue, upholding the order of the lower authorities. We desist from speaking on the actual computation of tax due for the reason of there being an appeal pending from the fixation of fair market value of the land at the time of sale; made on remand by the Tribunal. 2018 (7) TMI 1408 Accrual of expenses - liability to pay enhanced license fee to the Railways - Whether the expenses claimed had in fact accrued or were contingent? - Held that:- This issue is no longer res integra; they have been concluded by the common judgment of this Court in Jagdish Prasad Gupta v. CIT (2017 (8) TMI 734 - DELHI HIGH COURT). As is evident that judgment relates to past years in the case of the assessee/respondents involved in the present appeals. The conclusion in support can be noticed in paragraph 56.1/56.4 of the judgment where it was held that the assessee’s liability to pay enhanced license fee to the Railways for the assessment in question was an accrued liability that arises in the year in which the payment was issued. Therefore, the question sought to be urged are covered by the judgment in Jagdish Prasad Gupta (supra) and connected cases. 2018 (7) TMI 1407 Computation of deduction under Section 80-HHC - Held that:- The Tribunal relied upon a decision of this Court in the case of Associated Capsules P. Limited vs. DCIT [2011 (1) TMI 787 - BOMBAY HIGH COURT]. It is not in dispute that as of today, the decision of this Court in the case of Associated Capsules P. Ltd. (supra) has become final in view of the fact that the Higher Court has not set aside the said decision - as the decision of this Court in the case of Associated Capsules P. Ltd. (supra) is not stayed by the Apex Court, the same continues to bind this Court - no substantial question of law 2018 (7) TMI 1406 Bogus purchases - GP determination - Held that:- The addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which lower authorities have rightly done. However, considering GP rate already declared by the assessee, we find that the estimation of 17% is on the higher side and therefore, we restrict the same to 5% of alleged bogus purchases. The same comes to 1,44,808/-. The order of Ld. first appellate authority stand modified to that extent. 2018 (7) TMI 1405 Addition on account of unsubstantiated claim of wastage - Held that:- As noticed that the assessee has furnished quantitative details of each gram of raw gold issued to goldsmiths for getting gold ornaments manufactured. The confirmation letters and ledger account copies of the goldsmiths have also been filed. The Assessing Officer has been unable to point out any mistake in these records. The books of accounts are audited and quantitative details are certified by the auditors. The Assessing Officer has not rejected the books of accounts before making such ad hoc addition that too without bringing any clinching evidence against the assessee. This fact is also not disputed that in the preceding years also the assessee has claimed similar type of wastage of almost around same per centage which has been accepted by the revenue authorities also. - decided against revenue 2018 (7) TMI 1404 Depreciation on genuine goodwill - Held that:- In our considered opinion, this issue is no more res integra in view of the judgment of the Hon'ble Summit court in CIT vs. Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) in which it has been held: “that goodwill will fall under the expression ‘or any other business or commercial rights of similar nature’” and, hence, qualifies for depreciation u/s 32(1) of the Act. We, therefore, answer the legal issue raised in the question before the Special bench in affirmative by holding, in principle, that depreciation is available on genuine goodwill. 2018 (7) TMI 1403 Addition rejecting the claim of long term capital gains - exemption u/s. 10(38) eligibility - Held that:- From the point of view of the assessee, he has purchased and sold the shares through an authorized share broker, who has executed the transactions by furnishing broker notes. The report given by BSE only shows that there may be some irregularities on the part of the share broker. In our view, such kind of irregularities, if any, committed by share broker cannot be a ground to suspect the genuineness of purchase and sale of shares undertaken by the assessee. We noticed that the assessee has furnished copies of contract notes in support of the purchase and sale of shares. He has also furnished copies of demat account which shows entry and exit of shares. The assessee has also received payment towards sale of shares though it was received from two other persons on behalf of DPS Shares and Securities P. Limited. In our view, so far as the assessee is concerned, he has proved the genuineness of purchase and sale of shares of M/s. Prraneta Industries Ltd., and hence long term capital gains arising on sale of above said shares cannot be doubted with. We also noticed that the Assessing Officer did not make inquiries with regard to demat account furnished by the assessee and also could not disprove the affidavit filed and statement given by DPS Shares and Securities P. Limited. Hence, decision rendered in the case of Shyam R. Pawar (2014 (12) TMI 977 - BOMBAY HIGH COURT) fully supports the case of the assessee. Accordingly, we set aside the order passed by the CIT(A) and direct the Assessing Officer to accept the claim of long term capital gains of 42.22 lakhs and allow exemption u/s. 10(38) of the Act claimed by the assessee. - Decided in favour of assessee 2018 (7) TMI 1402 TPA - comparable selection criteria - Held that:- Considering assessee to be an ITES provider, companies functionally dissimilar with that of assessee need to be deselected from final list. Deduction u/s 10A - Held that:- While computing the deduction u/s 10A of the Act, if any expenditure is to be excluded from the export turnover, then the same is to be excluded from the total turnover as well. AO is bound to give the benefit of variation (+_)5% margin under the proviso to sub-section (2) of section 92C of the Act and if the assessee’s margin is within (+_)5% of the average margin of the comparables, then no adjustment is to be made. The AO is directed accordingly. 2018 (7) TMI 1401 Reopening of assessment - assessment in the name of the non-existent company - Held that:- We quash the assessment order passed by the ld AO in the name of the non-existent company. 2018 (7) TMI 1400 Expenditure incurred on leasehold improvement - revenue v/s capital - nature of expenditure - Held that:- Hon’ble Delhi High Court in the case of Sri Ram Refrigeration Ltd. [2001 (1) TMI 15 - DELHI HIGH COURT] has considered a similar issue of expenditure on furniture, wooden partitions, cable works, wall tiles, sundry fittings in rented premises and has held it to be revenue expenditure. We find that the decisions on which the Ld. DR has placed reliance upon are distinguishable from the facts of the case before us, as in those cases, it was held that the repairs were giving enduring benefit to the assessees’ therein, whereas in the case before us, though the assessee is entitled to remove and take the additional fittings etc., at the time of leaving the premises, we find that the electrical fittings, wooden partitions etc., would be of no use to the asseessee as they would get damaged in the process of dismantling itself. Therefore, we are inclined to accept the assessee’s contentions and treat the expenditure incurred by the assessee on the leased premises for making the premises fit for functioning and efficient for carrying on the business is revenue expenditure. TDS u/s 195 - disallowance of payment made by the assessee to Nunhems BV u/s 40(a)(ia) - contentions of the assessee have been that the above payment was reimbursement of expenditure incurred by Nunhems BV on behalf of the assessee towards the inter-connectivity facility which was provided to the assessee at its Gurgaon facility - Held that:- The payment does not fall under the category of “fee for technical services” or “Royalty” and is thus not liable for TDS. Further, the CIT (A) has held it to be business income of M/s. Equant u/s 9(1)(i) of the Act and since the non-resident Equant does not have PE in India, it cannot be brought to tax. It is undisputed that only such income which is taxable in India is amenable to TDS provisions. TDS liability on payment to Bayor Crop Science Ltd - said amount was paid by the assessee on account of provision of I.T. facilities and services as Bayor was to manage the Lotus Notes and other LAN facilities of the assessee for economies of cost - Held that:- the payment has been made to a resident sister concern for IT support given by the said concern. The services rendered by Equant and Nunhems BV are different from services rendered by Bayor Crop Science to the assessee. Bayor was managing the Lotus Notes of the assessee and that the ultimate recipient of the payments have not been revealed by the assessee. We therefore, agree with the findings of the CIT (A) that the management of the LOTUS Note is not a mere sharing of any infrastructure or facility and since the assessee has received the technical services from Bayor, the same is liable to TDS provisions. Disallowance u/s 40(a)(ia) of the Act only with respect to provision for commission to be paid on sales - Held that:- Agents who are entitled to the commission are identified and that the commission is paid only after receipt of the payment against the supplies made. Therefore, the ultimate recipients are ascertainable and hence the assessee ought to have made the TDS at the time of crediting the said a/c. Disallowance of discount - Held that:- assessee submitted that similar issue had arisen in the assessee’s own case for the A.Y 2009-10 and the AO after scrutiny has allowed the same. He has filed a copy of the said order before us. He also submitted that even for the A.Y 2008-09, the CIT (A) has allowed the said discount though on different basis and therefore, there should be uniform stand by the Revenue and this amount should be allowed. As the decisions of CIT (A) and the AO are in respect of subsequent A.Ys, we deem it fit and proper to remand this issue also to the file of the AO for reconsideration Disallowance of Leave Travel Expenditure and Bonus - Held that:- We find that the Leave Travel Expenditure and Bonus are crystalised expenditure and since it has been paid before due date of filing of the return of income, as provided under the proviso to section 43B, the same is allowable. Therefore, we direct the AO to allow the same if it is paid before the due date of filing of the return. Mark up of 10% margin on the reimbursement of receipts from AE - Held that:- We find that this issue is covered in favour of the assessee by various decisions of the ITAT wherein it has been held that where there is no profit element in the reimbursement of the expenses, there cannot be any unilateral mark up on the same. Therefore, this issue is also remanded to the file of the AO to verify whether there is any profit element in the reimbursement of the expenditure and if it is found that there is no such element, then we hold that there can be no mark up on such reimbursement. This ground of appeal is accordingly treated as allowed for statistical purposes. 2018 (7) TMI 1399 Addition under the head “Income from Salary” - In this case, what was paid to the assessee is a salary in the capacity as Managing Director of the company - Held that:- Merely because the payment was contrary to the provisions of Companies Act, this Tribunal is of the considered opinion that the Income-tax Act, being a special provision, the Companies Act cannot override the Income-tax Act. The Income-tax Act will override the Companies Act. Even the illegal payment or the payment received by the assessee contrary to the provisions of Companies Act by way of salary has to be assessed as income in the assessee’s hands provided the same was not recovered by the company. In the absence of any details or material to support the claim of recovery or adjustment in the books with regard to excess payment of salary, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee 2018 (7) TMI 1398 Reopening of assessment - Unexplained capital - Held that:- On a prima facie reading of such sale deeds, it is apparent that the sale deeds have been executed and registered with the stamp authorities on 12.01.2007 and therefore, any escapement of capital gains on such sale transaction shall fall in financial year 2006-07 relevant to Assessment Year 2007-08 and not Assessment Year 2006-07. We are, therefore, of the view that as far as the first ground for reopening the assessment proceedings is concerned, there is lack of nexus between the material and the formation of prima facie belief that the income has escaped taxation for the impugned assessment year. Addition on unexplained deposits in the bank account of the assessee - Held that:- As gone through the contention regarding issuance of notice under section 148 to an assessee and not to any person and the fact that in the instant case, the appellant is not an assessee. If we look at the definition of “assessee” as defined in section 2(7), it talks about a person by whom any tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income. In our view, the appellant clearly falls in the definition of an assessee as so defined and the contention so raised is clearly devoid of any merits and is hereby rejected. In the result, the additional ground of appeal is hereby dismissed and the assumption of jurisdiction by the AO u/s 147 of the Act is held to be valid. Addition on account of unexplained deposits - Held that:- The assessee’s explanation in this regard is that there were advances received towards the sale of land totalling to 18,00,000 which were deposited in his bank account and the said sale transactions were subsequently cancelled and the said amount was refunded. In support, the assessee has submitted the affidavits of these persons, namely Sitaram, Ramprasad, Hanuman, Gopal and Bajrang Lal along with source of cash available with these persons. The Revenue has not disputed the receipt and refund of money to these persons. Further, where there is no further enquiry conducted by the AO calling for these persons and examining the contents of these affidavits, it cannot be held that these affidavits were false or doesn’t represent the correct state of affairs. In light of the same, we find that the assessee has provided the necessary explanation regarding the source of these deposits. Hence, the addition so made is hereby deleted. The ground no.1 taken by the assessee is allowed. Action of the AO in invoking provisions of section 50C and adopting sale consideration of 23,41,244/- instead of actual sale consideration of 18,46,095/- - as submitted that the value adopted by the Sub-Registrar for stamp duty purposes is not final value which has to be taken for tax purposes - Held that:- CIT(A) has returned a finding that from the perusal of material available on record, it is found that during the course of assessment proceedings, the assessee neither objected to the value determined by the sub-registrar nor had requested the AO for making reference to valuation officer. We have also gone through the material available on record and we donot find any such claim made by the assessee before the AO. Though there is no prescribed form or manner for making the claim, the trigger point for referring the matter to Valuation Officer is whether the assessee has made any such claim or objection raised before the AO and unless the same is made, the AO cannot invoke the provisions of section 50C(2) suo-moto. The AO has thus acted within four corners of law where he has brought to tax deemed sales consideration as per stamp duty authority under section 50C instead of actual sale consideration as so claimed by the assessee. In the result, ground no. 3(a) read with 3 (b) is dismissed. Treating the land sold as capital assets instead of agricultural land - only grievance of the assessee is that he has not been granted a right to cross-examine the Tehsildar who has given the report about the exact location of the land - Held that:- Tehsildar is a Government official and where he has given a report and a copy of such report is made available to the assessee, the assessee has got all rights to examine such report and he can challenges the contents thereof. Where the assessee is ceased of such a report and doesn’t point out any defect in such a report, he cannot say that his rights have been violated as he has not got a right to cross-examine the Tehsildar. Further, we agree with the findings of the ld CIT(A) that certificate of Gram Panchayat cannot take precedence over the report of the Tehsildar who is the appropriate land revenue authority to assess the nature and location of the land. In the result, we donot find any infirmity in the order of the ld CIT(A) Reopening of assessment - for A.Y 2007-08 - Held that:- If we look at the definition of “assessee” as defined in section 2(7), it talks about a person by whom any tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income. In our view, the appellant clearly falls in the definition of an “assessee” as so defined and the contention so raised is clearly devoid of any merits and is hereby rejected. Regarding contention of the ld AR that no sanction was taken by the AO from the appropriate authority u/s 151 before issuance of notice under section 148, during the course of hearing, the assessment records were called for and it was noted that the approval u/s 151 is duly placed on record. Hence, the said contention has been duly addressed and doesn’t support the case of the assessee. In the result, the ground of appeal is hereby dismissed and the assumption of jurisdiction by the AO u/s 147 of the Act is held to be valid. Addition account of unexplained deposits - Held that:- No infirmity in the order of the ld. CIT(A) as the assessee has failed to explain the source of such deposits in his bank account and which has rightly been brought to tax by the AO. In the ground no. 2 of the assessee’s appeal is hereby dismissed. Long Term Capital Gain - sale of land - whether the ld CIT(A) was justified in bringing to tax long term capital gains, on sale of land by the assessee to his two daughter-in-laws, by way of enhancement of income in terms of provisions of section 251(1)(a) - Held that:- In light of the legal propositions so laid down by the Hon’ble Supreme Court and other High Courts referred supra, the powers of the ld CIT(A) are circumscribed by the assessment order in the matters arising thereof or a matter arising out of the proceedings. As held by the Courts, even though, the ld CIT(A) has suo motu power to consider the questions arising thereof but there is no provision to go beyond the matter arising out of the proceedings before the Assessing officer, more particularly as separate provisions for such eventuality are provided in the Act. In light of the same, the enhancement so done by the ld CIT(A) whereby the impunged sale transactions are brought to tax in the year under consideration are beyond the scope of her powers envisaged under section 251(1)(a) and the same thus cannot be accepted. However, the AO shall be free to take action as per law. Addition On account of unexplained deposits where AO observed that the assessee has failed to produce necessary explanation of the source of such deposits - Held that:- As gone the rival contentions and the material available on record and do not find any infirmity in the order of the ld. CIT(A) except for an amount of 20,462 which was a wrong credit and later on rectified by the bank itself. In the result, the ground taken by the assessee is partly allowed. 2018 (7) TMI 1353 Deduction u/s 10AA - proof of manufacturing activity - Held that:- No merit in this petition. The Special Leave Petition is accordingly dismissed. 2018 (7) TMI 1352 Computation of exemption u/s 10A - sight consultancy services expenses, Telecommunication expenses, travel expenses, expenses borne by the customers of the Assessee Company on behalf of the Assessee Company need to be reduced from Total Turnover while computing exemption - ITAT allowed the claim as relying on HC decision against which there is a pending of Special Leave Petition before the Apex Court - Held that:- SLP dismissed. 2018 (7) TMI 1351 Reopening of assessment - Addition u/s 68 - ITAT deleted the addition as no notice was issued under Section 143(2), before the completion of assessments - Held that:- SLP dismissed. 2018 (7) TMI 1350 Exemption u/s 11 - proof of charitable activities - Held that:- Special Leave Petitions are accordingly dismissed 2018 (7) TMI 1349 Exemption u/s 11 - allowability of expenses incurred for religious purposes - Income from property held for charitable or religious purposes - Held that:- SLP dismissed. 2018 (7) TMI 1347 Addition u/s 68 - identity, genuineness and creditworthiness of the investors - Held that:- No ground to interfere with the impugned order. The special leave petition is accordingly dismissed. 2018 (7) TMI 1346 TDS u/s 194C OR 194J - payments made by the assessee to IRCTC - non deduction of tds - disallowance under section 40(a)(ia) - whether IRCTC was not Government and that the payment was made to a contractor and therefore required deduction of tax at source in view of section 194C? - Held that:- SLP dismissed. 2018 (7) TMI 1345 Penalty u/s. 271AAA - disclosure as undisclosed income - Held that:- The special leave petition is dismissed because of low tax effect, leaving the question of law open. 2018 (7) TMI 1344 Inclusion and exclusion of comparables for determining the arms length price (ALP) for the purpose of transfer pricing adjustment - as submitted that the conclusions of the ITAT in respect of each of the comparables are perverse - exclusion and inclusion of comparables is by and large an exercise of analysis of facts - Held that:- No ground to interfere with the impugned order. The special leave petition is accordingly dismissed. Customs 2018 (7) TMI 1395 SEZ Unit - provisional release of goods - As per the Revenue, the ascertained value was higher than the declared value in the Bill of Entry with respect to three containers - Held that:- Having considered the rival contentions and considering the fact that the goods are lying in the ICD, Pithampur, for about two years, the terms of provisional release are modified - Subject to fulfillment of the modified conditions and filing of compliance report before the concerned Customs authorities, the goods shall be released provisionally within three days. Appeal disposed off. 2018 (7) TMI 1393 Jurisdiction - proper officers - validity of SCN issued by Addl. Director General (DRI) - Held that:- No substantial question of law arises in the present case requiring our further consideration. The question of jurisdiction is obviously pending consideration before the Hon’ble Supreme Court of India in the case of UNION OF INDIA VERSUS MANGALI IMPEX LTD. [2016 (8) TMI 1181 - SUPREME COURT] and the law laid down by the Hon’ble Supreme Court is bound to be final and binding on all the Authorities and the Tribunal below. Since the present nature of the case as to which authority will have jurisdiction to decide the matter of the appellant and other persons mentioned in the show cause notice, will depend upon the Judgment of the Hon’ble Supreme Court, this matter need not be kept pending here on our Board and in our considered view no substantial question of law arises for consideration in this appeal. Appeal dismissed - decided against appellant. 2018 (7) TMI 1343 Monetary limit involved in appeal - Held that:- Only on the ground that the tax effect is low we are not entertaining this appeal - appeal dismissed. 2018 (7) TMI 1341 Condonation of delay in filing appeal - Held that:- There is a delay of 2244 days in filing this appeal and we do not find any justifiable reason to condone this huge delay - appeal is dismissed on the ground of delay. Corporate Laws 2018 (7) TMI 1397 Removal of director - removal of Mr. Cyrus as Executive Chairman - leak of information of TATA sons - Held that:- When confidential information was admittedly come from Mr. Cyrus’s mail id, the burden lies upon Mr. Cyrus to prove that it was not leaked from his side, but no such efforts has been made by either by the petitioners or by Mr. Cyrus to prove that this information was not leaked by him. According to law, a fact admitted as done results into another action, such other action presumed to be remained in the special knowledge of the person done first act, it could be inferred as done by him only as envisaged under section 106 of Indian Evidence Act unless it has been disproved that fact of leaking information is proved as done by somebody else. In view of the same, for Mr. Cyrus has not made any effort to show that somebody else leaked that email, it is to be construed that it is done by Mr. Cyrus only. Here in this case, since the letter dated 25.10.2016 came from Mr. Cyrus through email and the same not been disproved that it has not been leaked from his end, it has to be held that it was leaked by him only. With such presumption, we hereby hold that the information letter dated 25.10.2016 about hotel issue, Tata Capital issue, DoCoMo issue, Airlines issue, is leaked by Mr. Cyrus to the media, in the same line, we further hold that Mr. Cyrus sent Tata Sons information to DCIT, though he was not continuing as Executive Chairman at the time when he sent such information to the DCIT without even putting it to the responsible officers of the Tata Sons. In view of these two reasons, we hereby hold that Mr. Cyrus perhaps by virtue of being removed as Executive Chairman, leaked the information above, forgetting that he was giving out Tata Sons information, whose affairs today Mr. Cyrus impugned before this Bench, to the outsiders, which does not go well to the company. Whatever be the differences, as long as Mr. Cyrus continuing as one of the directors along with others as on the date the aforesaid episode happened, he should not have divulged the information at least for the sake of fiduciary obligations cast upon him. All these things, according to the answering respondents led the board to initiate proceedings for removal of him as director of the company on 06.02.2017. To conclude:- a) Removal of Mr. Cyrus Mistry as Executive Chairman on 24.10.2016 is because the Board of Directors and Majority of Shareholders, i.e., Tata Trusts lost confidence in Mr. Cyrus as Chairman, not because by contemplating that Mr. Cyrus would cause discomfort to Mr. Tata, Mr. Soonawala and other answering Respondents over purported legacy issues. Board of Directors are competent to remove Executive Chairman; no selection committee recommendation is required before removing him as Executive Chairman. (b) Removal of Mr. Cyrus Mistry from the position of Director is because he admittedly sent the company information to Income Tax Authorities; leaked the company information to Media and openly come out against the Board and the Trusts, which hardly augurs well for smooth functioning of the company, and we have not found any merit to believe that his removal as director falls within the ambit of section 241 of Companies Act 2013. (c) We have not found any merit to hold that proportional representation on Board proportionate to the shareholding of the petitioners is possible so long as Articles do not have such mandate as envisaged under section 163 of Companies Act, 2013. (d) We have not found any merit in purported legacy issues, such as Siva issue, TTSL issue, Nano car issue, Corus issue, Mr. Mehli issue and Air Asia issue to state that those issues fall within the ambit of section 241 and 242 of Companies Act 2013. (e) We also have not found any merit to say that the company filing application under section 14 of Companies Act 2013 asking this Tribunal to make it from Public to Private falls for consideration under the jurisdiction of section 241 the management is rather more accountable to the shareholders under the present regime. Corporate governance is collective responsibility, not based on assumed free-hand rule which is alien to the concept of collective responsibility endowed upon the Board. (j) We have observed that prejudice remedy has been included in 2013 Act in addition to oppressive remedy already there and also included application of “just and equitable” ground as precondition to pass any relief in mismanagement issues, which was not the case under old Act. 2018 (7) TMI 1396 Arbitration proceedings - main plea of the appellant in these appeals is that there is MOU dated 20.7.2011 between the parties and the clause 19 of the MOU clearly provides that the dispute can be referred to arbitration whereas the respondents argued that the so called MOU has already been cancelled vide letter dated 10.11.2011 and as on date it is not in existence - Held that:- A chart has been filed showing that who are the party to the MOU and the company petition. We have verified from the chart that some of the Company Appeal (AT) No.319, 320 and 321 of 2017 respondents are not party to the MOU but they are party in appeal. It shows that all the members are not signatory to the MOU. We find that neither all Members of the companies are party to the said MOU, nor the Companies were party to the MOU, nor the Companies adopted the MOUs. Even if it is assumed that the arbitration clause survives even after cancellation, as all respondents are not party to the MOU, therefore, the Arbitral Tribunal has no jurisdiction to pass an award in favour of a third party who is not party to the arbitration agreement. Further the appellants has not been able to produce the original agreement or a duly certified copy of the same as per Section 8(2) of the Arbitration and Reconciliation Act, 1996. Again, the scope of petition under Section 397, 398 of the Old Act is much wider than what can be subject of arbitration. Appeal dismissed. Service Tax 2018 (7) TMI 1394 Refund of unutilized CENVAT Credit - Rule 5 of CCR 2004 - rejection of refund on the ground of non-registration of premises - Held that:- Reliance was placed in the case of mPortal India Wireless Solutions Private Limited V. Commissioner of Service Tax, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that Registration not compulsory for refund - refund cannot be denied - appeal dismissed - decided against Revenue. 2018 (7) TMI 1392 Valuation - Mandap keeper service - Whether the Tribunal is correct in holding that no service tax is leviable/payable on the charges collected in the name of booking of the Rooms which were integrally used in connection with the functions organized by the organizers in the adjacent gardens/’ and the payment for the entire premises was made by the organizers under a composite contract whereas the Service Tax is leviable on the gross amount charged from the customers under the category of Mandap Keeper Services in terms of the provisions of Section 67 of the Act, 1994? Held that:- Counsel for the respondent has taken us to the definition of Mandap Keeper Services, which clearly does not include the service and the Tribunal has rightly distinguished the Mandap service and the rooms rents received - The view taken by the Tribunal is logical and requires to be accepted. Appeal dismissed - decided against Revenue. 2018 (7) TMI 1391 Liability of Tax - appellant’s office in India for services received by them under the category of ‘Online Information and Data Base Access Retrieval Service’ - Reverse Charge Mechanism - Held that:- Such service has been received by the appellant in India from foreign based CRS Service provider. Such services were received on the basis of agreements executed by the Head Office of the appellant with the respective CRS Companies - The liability for payment of Service Tax on similar arrangements of various Foreign Airlines have been held to be not liable to payment of Service Tax on Reverse Charge Basis. Matter remanded to the Adjudicating Authority for de novo decision of the matter in the light of the various decisions on the matter - appeal allowed by way of remand. 2018 (7) TMI 1390 Business Auxiliary Service - commission received from M/s. Amadeus India Pvt. Ltd. for booking of tickets through Computerized Reservation Booking System (CRBS) offered by the said company - Held that:- Appellants have not countered the findings of the lower appellate authority that the agreement is a conditional agreement and that loyalty incentive will only be paid on the tickets booked in the airlines specified by Amadeus based on achievement of segment volumes. We are unable to fathom how in spite of such agreement between the appellant and Amadeus, there could have been any confusion that they were promoting the business of the latter and in such a situation how there could be any bonafide belief that the services are not in the nature of Business Auxiliary Service - demand upheld. Penalty - Held that:- There was some interpretational confusion that prevailed in respect of the taxability of the impugned services - the penalties imposed under sections 76 and 78 are set aside by invoking Section 80 of the Finance Act. The demand of service tax along with interest thereon and the penalty imposed under section 77 upheld - appeal allowed in part. 2018 (7) TMI 1389 Works contract - Commercial or Industrial Construction Service - demand of service tax on two on-going projects which had been carried out from the period July 2006 to September 2009 - Held that:- Part of the demand would fall prior to 1.6.207 being works contract service and hit by the decision in the case of Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT]. Demand of service tax - sub-contractor - The demand is made against the appellant merely alleging that he is the main contractor and although the contractor has discharged the service tax, it is only the sub-contractor and therefore the appellant is liable to pay service tax - Held that:- There is no merit in this allegation of the department - The construction services had already suffered service tax as the contractor who is engaged in the construction of building/complex has discharged service tax. Further, the circular also makes it clear that when a contractor is engaged in construction of residential complex, the liability is on the contractor to pay the service tax - The Tribunal in the case of Logos Construction Pvt. Ltd. Vs. Commissioner of Central Excise, Chennai [2018 (6) TMI 1361 - CESTAT CHENNAI] had occasion to consider a similar issue and has held that the demand cannot sustain. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1388 Business Support Services - tripartite agreement - remuneration received by the respondent from the franchisee M/s KPH. Held that:- An identical matter titled as Sourav Ganguly v. UOI & Ors. [2016 (7) TMI 237 - CALCUTTA HIGH COURT], has been decided by the Hon’ble Calcutta High Court in favour of cricketer. The Petitioner therein entered into an agreement with the franchisee under which he was obliged to participate in promotional activities apart from playing cricket for their franchisee and the department sought to tax the consideration received by the Petitioner from their franchisee under ‘Business Support Service’ - The Hon’ble High Court of Calcutta held that the Petitioner was engaged as a professional cricketer for which the franchisee was to provide fee to the petitioner. He was under full control of the franchisee and had to act in the manner instructed by the franchisee. The Hon’ble High Court further held that the Petitioner therein was not providing any service as an independent individual worker and his status was that of an employee. Therefore it cannot be said that the Petitioner was rendering any service which could be classified as Business Support Service. The remuneration received by the respondent from the franchisee M/s KPH cannot be taxed as ‘Business Support Service’ - appeal dismissed - decided against Revenue. 2018 (7) TMI 1387 Business Support Services - “collection charges/ facilitation fee” retained by the appellants - Revenue held a view that such charges / fee retained by the appellant formed a taxable consideration for the service of infrastructural support provided by the appellants to the doctors to enable the doctors to carry-out their work in the hospital - Held that:- The identical issue has been considered by the Tribunal and decided in favour of the appellants in the case of Sir Ganga Ram Hospital & Others [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that there is no justification for levy of Service Tax on such amount retained by the hospital under ‘Business Support Services’. Even for the period w.e.f. 01.07.2012, the Tribunal has held that there is no justification for levy of service tax - Demand with interest and penalties set aside. Regarding the service tax liability under the category of ‘Renting of Immovable Property’, the same have been admitted by the appellant and has also been paid alongwith interest prior to issue of show cause notice. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1386 Business Auxiliary Service - activity of modification and ornamentation of motor vehicles - It is the argument of the assessee that the activity is not covered within the definition of BAS- as ‘production or processing of goods for on behalf of the clients’ - Held that:- In the facts of the present case, there are only two parties-the appellant as well as their customer. The customer has handed over the motor vehicle for carrying out the minor modifications to the assessee. It cannot be said in the facts of the present case that such processing has been done on behalf of a third party - there is no third party in the transaction which is a requirement for considering the activity as covered by BAS. Further, the entire activity has been considered and declared by the assessee as a supply of goods and VAT also stands paid. The levy of VAT as well as Service Tax is mutually exclusive and once the transaction has been considered and declared as sale of goods it is not open to reopen transaction and consider it as service. Appeal dismissed - decided against Revenue. 2018 (7) TMI 1385 Construction of Complex Service - construction of individual houses - appellant carried out the work orders for the construction of ten as well as twelve housing units in different parts of Pratap Nagar colony - Revenue has taken the view that these residential units have been constructed as part and parcel of a massive colony. Held that:- The Tribunal in the case of M/S. LEKH RAM ARYA VERSUS CCE, JAIPUR [2017 (12) TMI 838 - CESTAT NEW DELHI] on similar issue has held that in the absence of any positive evidence to the effect that these units share common facilities, the Service Tax liability cannot be upheld - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1384 Non-payment of Service Tax - servicing of Maruti cars - appellant received certain commissions from various financial institutions for promoting their loan schemes for purchase of Maruti cars by the customers - whether taxable under the head Business Auxiliary Services or not? - Held that:- The demand on this ground is upheld in as much as the same is not contested. Any interest payable on such delayed payment of service tax is also upheld - penalty set aside by invoking section 80. Appellant receives certain amount by way of rebates/ discounts/ incentives in the price of the car - whether taxable under the head Business Auxiliary Services or not? - Held that:- The discounts/ incentives received by the appellant from the manufacturer of cars will not be liable for payment of service tax - reliance placed in the case of Toyota Lakozy Auto Pvt. Ltd. [2016 (12) TMI 541 - CESTAT MUMBAI] - demand set aside. Valuation - inclusion of consumable/ spare parts recovered from the customers in assessable value - Held that:- The appellant has been paying VAT on the spare parts/consumables sold to the customer while providing service - reliance placed in the case of Krishna Swaroop Agarwal [2014 (10) TMI 569 - CESTAT NEW DELHI] - demand set aside. CENVAT Credit - common input services used in taxable service as well as trading activity - Rule 6(3) of the CCR - Held that:- The entire amount of common input service on which cenvat credit has been availed has since been reversed by the appellant - there is no justification for the amount ordered to be paid under Rule 6(3) of the CCR - demand set aside. Appeal allowed in part. 2018 (7) TMI 1383 Management, Maintenance or Repair Service - the respondent has charged various amounts by way of deposits from the buyers/ clients of the respondent in respect of the residential complex constructed by them - whether the security deposits collected by the respondent, is to be taken as consideration for the providing of ‘Maintenance of Immovable Property Service’? Held that:- Identical issue stands decided by the Tribunal in the case of Kumar Beheray Rathi [2013 (12) TMI 269 - CESTAT MUMBAI], wherein under similar circumstances, the Tribunal has held that the levy of Service Tax under MMR was not justified. Demand of service tax not justified - appeal dismissed - decided against Revenue. 2018 (7) TMI 1382 Manpower Recruitment and Supply Agency Service - respondent had been engaged by M/s Alpha for in house fabrication work during the period 01/04/2011 to 05/09/2011, for which consideration was received by the respondent - Held that:- It is observed that the employees of the respondent are required to work as per the directions of M/s Alpha who supply the required drawing, raw materials and machines. These employees are carrying out fabrication work in the premises of M/s Alpha and are paid for such work on the basis of the quantum of goods fabricated - In the case of Shivashakti Enterprises [2015 (12) TMI 682 - CESTAT MUMBAI] where this bench in the case of Shriram Sao TVS Ltd. [2015 (4) TMI 38 - CESTAT MUMBAI], in a similar kind of service of lump sum contract for harvesting, loading and unloading of sugarcane is not manpower supply service. Demand cannot sustain - appeal dismissed - decided against Revenue. 2018 (7) TMI 1381 Penalties - demand with Interest already stand paid by the appellant even before the issue of show cause notice - Held that:- Since the amount has already been paid even before issue of show cause notice, there is no justification to impose penalty - penalty set aside. Demand of Interest - CENVAT credit wrongly taken - case of assessee is that since the cenvat credit has been allowed to be lapsed without utilising the same, the Department was not justified in charging interest on the same - Held that:- The fact whether the cenvat credit was allowed to lapse or utilised need to be verified and for this purpose the matter is remanded - matter on remand. Refund claim - excess payment of service tax - the appellant refunded the excess Service Tax paid to its customer suo moto and adjusted the same in the month of November, 2009 - Held that:- The matter is required to be re-adjudicated after proper verification of the records. The claim of the appellant that excess duty was paid in the month of April is required to be verified as also the claim that the said amount was paid back to the appellant’s customer and the same adjusted in November, 2009 - matter on remand. Demand of interest u/r 14 of the Cenvat Credit Rules - it is the submission of the ld. C.A. that the credit has been taken only on the basis of proper documents and copies of such documents were produced before the lower adjudicating authority. However, instead of verifying the same he has ordered payment of service tax - Held that:- To facilitate such verification, the impugned order is set aside and matter remanded for re-verification of the documents to be submitted to confirm whether credit has been availed properly - matter on remand. Appeal disposed off. 2018 (7) TMI 1380 CENVAT Credit - capital goods - tower materials - Held that:- The issue on merit regarding the cenvat credit entitlement on tower material under the category of capital goods has been settled against the assessee. The reversal of cenvat credit is to be upheld - the penalties also are liable to be set aside only subject to the appellant also paying the interest involved in such delay - appeal disposed off. 2018 (7) TMI 1379 Business Auxiliary Service - activity of chilling undertaken by the assesses - deemed manufacture or not? - Held that:- The process undertaken in the assesses’s factories involves chilling the milk and maintaining it at appropriate temperature to prevent it from spoiling - The identical issue has come up before the Tribunal in the case of Vinayak Industries, [2016 (6) TMI 1072 - CESTAT NEW DELHI], where the Tribunal has observed that chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - appeal dismissed - decided against Revenue. 2018 (7) TMI 1378 Refund of service tax paid - VAT and service tax paid on same transactions - rejection of refund on the ground of time bar - Held that:- There is no dispute about the fact that VAT and service tax are mutually exclusive levies. If VAT is paid on anything, the same would not attract service tax - However, in the present case, it is seen that the appellants have not paid VAT on the logistic charges and it is only on the basis of a proposal by the VAT Department to levy VAT on logistic charges, they have approached the Service Tax Department for refund of the service tax. In any case and any view of the matter, the refund claims stands filed after a period of one year from the relevant date in terms of Section 11B of the Act - All the refund claims are governed by the provisions of Section 11B and the time limit prescribed therein is required to be adhered to by the Revenue authorities. Tribunal being a creature of the law and working under the Act, is bound by the provisions of the Act and has no extraordinary jurisdiction to dilute the limitations prescribed under the law. Refund claim is time barred - appeal dismissed - decided against appellant. 2018 (7) TMI 1377 GTA Services - Reverse Charge Mechanism - failure to produce records in remand proceedings - extended period of limitation - Held that:- When the appellant had pleaded before Tribunal that they have documentary evidence to show that the transporters have deposited the service tax with the Government and when by appreciating the said plea of the assessee, the matter was remanded for verification of such documents, it was obligatory on the part of the assessee to produce such documents. Having failed to do so, the lower authorities have rightly confirmed the demand on merits. Extended period of limitation - proviso to Section 73 - penalties - Held that:- There is no allegation or evidence to show that such non-payment of service tax was with an intent to evade payment of duty - When the appellant was paying service tax on reverse charge basis in respect of all the GTA services so received by them, there could not be no mala fide intention on their part to evade payment of duty of 44,000/- in a span of five years - the extended period of limitation would not be invocable against them - penalty also set aside. Matter remanded for re-quantification of demand falling within the limitation period - appeal allowed by way of remand. 2018 (7) TMI 1376 Business Auxiliary services - multilevel marketing termed as “Right Concept Marketing (RCM)” - Held that:- Prior to 15.04.2006, the BAS covered only “Commercial Concerns”. Only with effect from 15.04.2006, BAS was made applicable to “Any Person”. Since the Appellant’s status was that of an individual, he will not be covered under the definition until date of amendment of BAS, i.e., 15.04.2006 - the demand prior to 15.04.2006 cannot be sustained and is set aside. The adjudicating authority is directed for requantification of the demand and restrict it to that with effect from 15.04.2006 and charge penalty also accordingly - appeal allowed in part by way of remand. 2018 (7) TMI 1375 Manpower Recruitment and Supply Agency Services - Reverse Charge Mechanism - Department was of the view that such employees were being paid by the foreign principal and not the Appellant, and hence, MCI has supplied manpower from abroad to the Appellant - Held that:- The Tribunal has decided the identical issue for the earlier period in the case of M/S MITSUI PRIME ADVANCED COMPOSITES INDIA PVT. LTD. VERSUS CCE, JAIPUR – I [2018 (4) TMI 1464 - CESTAT NEW DELHI], where it was held that deputation of employees from one company to another does not involve profit or finance benefit there is no relationship of agency and client involved in such deputation - demand set aside - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1374 Penalties - the allegation is that the appellants have made expenditure in foreign currency towards the professional and consultancy charges in respect of which they had discharged the service tax liability - Held that:- Regarding service tax demand of 13,01,708/-, the appellants have reversed the amount. As regards, service tax demand for the period, 2010-2011 and 2011-2012, they have paid the entire demand of service tax along with interest and the same stands appropriated by the adjudicating authority. It is also observed that the demand of 40,000/- being late fees for the service tax return for the period April, 2011 to September, 2011 and October, 2011 to March, 2012, has also been paid and there is no occasion to impose and the separate penalty for the same and the Commissioner (Appeals) has rightly set aside the same - Since the appellant-assessee has paid the entire amount of service tax along with interest before issuance of show-cause notice, the Commissioner (Appeals) has rightly set aside the penalty by invoking the provisions of Section 80. Penalties set aside - appeal dismissed - decided against Revenue. 2018 (7) TMI 1373 Valuation - inclusion of freight and transportation charges from factory gate to the premises of Stockyard /Consignment Agent in assessable value - assessee contended that they never acted as consignment agent though there is an agreement for consignment agent - Held that:- It is seen that the Assessee paid the duty on the Invoice value - The Revenue had not disputed the fact that the assessee cleared the converted goods on payment of Central Excise duty - appeal dismissed - decided against Revenue. 2018 (7) TMI 1372 Classification of services - Advice & Supervisory Functions in relation to production of Auto Sock Products in India - Export of services - Whether the said services would fall under the head Management Consultancy Services or not? - Held that:- The invoice recipient is located outside India and all the services provided by the respondent had been given in Convertible Foreign Exchange. Moreover, the services of the respondent were advisory nature to their Foreign Service Recipient. In that circumstances, the activity of the appellant is covered by Export of Service in terms of CBEC Circular dated 24.02.2009 - appeal dismissed - decided against Revenue. 2018 (7) TMI 1339 Review of order - Held that:- We have perused the Review Petitions as well as the grounds in support thereof. In our opinion, no case for review of order is made out. 2018 (7) TMI 1338 Condonation of delay in filing appeal - Held that:- The civil appeal is dismissed on the ground of delay in terms of the signed order. Central Excise 2018 (7) TMI 1371 Alternative remedy of appeal - CENVAT Credit - Held that:- It is true that as against the order impugned in this Writ petition, an appeal remedy is very much available to the Writ petitioner. In fact in the earlier round, the petitioner did successfully avail the appeal remedy - This Court is therefore of the view that when the order of the Authority does not consider the contentions of the assessee, the appeal remedy can certainly be bypassed and this Court would be justified in directly entertaining the challenge to the impugned order - This Court has to necessarily sustain the contention of the petitioner's counsel that the Writ petitioner having rightly availed the Cenvat input credit originally, cannot be called upon to reverse the same, merely because it was stepping into exemption regime. This Court would fully concur with the contention of the petitioner's counsel that the Authority erred in levying the penalty equivalent to the amount demanded. Petition allowed - decided in favor of petitioner. 2018 (7) TMI 1370 CENVAT Credit - duty paying invoices - denial on the ground that the assessee failed to prove the sales returns in question for which it raised RBA series of Invoices and could not relate these RBA invoices to the original duty paying documents known as IBA invoices - Scope of SCN. Held that:- There is no merit in the contention raised by the learned counsel for the assessee and no substantial question of law arises in the present case requiring our consideration in the present appeal under Section 35G of the Act - It is clear that a part of the relief was given to the assessee for Cenvat Credit in respect of Ten consignments, because the assessee could relate the “Sales Returns” to the original sales invoices through the Lorry Receipts with respect to said Ten consignments but for the remaining four consignments, such Cenvat Credit could not be allowed for want of relevant corroborative evidence produced by the assessee. Scope of SCN - Held that:- The Show Cause Notice given to the assessee in the present case was for disallowing the Cenvat Credit and therefore after having examined each and every transaction, if the Appellate Authorities who are the fact finding authorities under the Act have returned such findings of facts based on evidence, the same cannot be assailed on the ground that they have gone beyond the scope of the Show Cause Notice. Appeal dismissed - decided against appellant. 2018 (7) TMI 1369 Demand of Interest and penalty - CENVAT Credit reversed with respect to Basic Customs Duty and Cess on Textiles which was not admissible to it - Held that:- The controversy involved in this appeal is squarely covered by the decision of the co-ordinate Bench of this Court in the case of Commissioner of Central Excise & Sales Tax, LTU, Bangalore Vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that Once the entry was reversed, it is as if that the Cenvat credit was not available. The imposition of penalty and interest in the present case has been set aside by the learned Tribunal essentially on the ground that soon upon the mistake being pointed out by the Officer of the Department, the Respondent Assessee immediately reversed the Cenvat Credit wrongly availed by it in respect of the Basic Customs Duty (BCD) and Cess on Textiles - there cannot be said to be any mis-statement, fraud or collusion on the part of the Respondent Assessee through which it wanted to evade the Excise Duty in question - the setting aside of the interest and penalty in these circumstances cannot be faulted. Appeal dismissed - decided against Revenue. 2018 (7) TMI 1367 Refund claim - closure of factory - sealing of machinery - rejection on the ground that the surrender of registration on 29/05/2015 and taking fresh registration w.e.f. 01/06/2015 cannot be considered as permanent discontinuation of the manufacture of goods and recommencement on 05/06/2015 by a new manufacturer - whether the appellant is entitled to refund of duty paid in advance for the month of June, 2015 for the period 1st to 4th June, 2015 when all the machines were sealed? Held that:- The Tribunal in the case of M/S DHARIWAL INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [2015 (9) TMI 514 - CESTAT AHMEDABAD], considered similar closure of the factory and recommencement of production subsequently by obtaining fresh registration - The Rule 16 in the Pan Masala Rules corresponds to Rule 17 of the Chewing Tobacco Rules. The wordings are identical and these rules are to be considered as pari materia. The appellant will be entitled to the refund for the period 1st to 4th April in view of the fact that the Department had after surrender of registration on 29/05/2015, allowed registration w.e.f. 01/06/2015 without any objection or murmur. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1366 100% EOU - Refund of unutilized CENVAT Credit - rejection of refund on the ground that certain inputs were procured by the appellant on payment of duty, when the same goods were covered under N/N. 22/2003 dated 31.03.2003 and have been procured without payment of any duty - Whether the appellant is entitled to CENVAT credit of duty paid on inputs procured by them for use in the manufacture of final product in the EOU? Held that:- Section 5A(1A) is applicable to those cases where the exemption is granted absolutely - Circular dated 26.11.2010 has referred to the Notification No. 29/2004 dated 09.07.2004 which has granted exemption to various textile articles. It has been explained that the manufacturer cannot opt to pay duty under the above notification and he cannot avail cenvat credit of duty paid on inputs. The appellant, being EOU was entitled to procure inputs without payment of duty under N/N. 22/2003. A reference to this notification indicates that the exemption is granted subject to various conditions including the condition that the procedure contained in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. The above clearly reveals that the exemption is conditional and is not absolute - provision of Section 5A(1A) as well as the Circular dated 26.11.2010 are not applicable for procurement of goods under N/N. 22/2003. The appellant will be entitled to consequential refund under Rule 5 of CCR subject to satisfying the conditions prescribed therein - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1365 Classification of goods - Rotary Frequency Converter - appellants claimed that the item is a Ground Power Unit (GPU), which is part of aircraft only meant for exclusive use of aircraft, classifiable under CETH 8803 of the CCETA and hence subject to Nil rate of tariff rate of duty - Revenue has sought to classify the item under CETH 8502 of CETA and attracting Excise Duty @ 16% - Whether the goods would be classifiable under CETH 8803 or under CETH 8502 of CETA? - penalty. Held that:- Taking into account the fact that GPU (Diesel Engine) has been held to be part of the aircraft by virtue of Tribunal decision in Mak Controls [1998 (6) TMI 563 - CESTAT CHENNAI], the interest of justice will be met by remanding the matter back to the adjudicating authority for reconsideration of the issue of classification after applying the test laid down by the Tribunal. Penalty - Held that:- The matter is only one of interpretation of classification of goods - penalty u/r 25 is unjust and is set aside. Appeal allowed by way of remand. 2018 (7) TMI 1364 CENVAT Credit - fake invoices - it was alleged that Cenvat Credit availed on the strength of invoices issued by various raw material suppliers as they have fraudulently passed on the Cenvat Credit by issuing invoice only without actual supply of material. Held that:- In the entire investigation, the evidences which were brought on records are RTO reports according to which the vehicle number shown in invoices are not capable of transporting the heavy goods like inputs and the two transporters admission that the goods were not supplied to the appellant - Contrary to this evidences the fact that the appellant have recorded the receipt of the goods in their cenvat account i.e. RG-23A, the purchase of the goods under the invoices in question were booked in books of accounts. The payment against the said invoices were made through cheque, even the payment of transportation was also made by cheque. The Revenue could not bring any evidence that the goods covered under the invoices were diverted to any other place. It is also not the case of the department that the appellant have procured some unaccounted inputs to cover up the quantity of input shown in the invoices. The statement of managing director of the appellant company is exculpatory - The appellant have recorded the receipt of the goods in RG-23 part I register and payment of the same was made through cheque. The finished goods were cleared on payment of Central Excise duty. Transportation charges were also paid by account payee cheque and such payment was accounted for in the books of accounts. The clearances of all the goods from the suppliers premises was never disputed. The payment of transportation was made after deduction of TDS. All the suppliers affirmed the sale of goods and receipt of payments for such sale. There is no evidence that the inputs shown in the invoices received by the appellant were not used in the manufacture of final product. Department has not disputed the correctness of quantity manufactured by the appellant recorded in their daily stock account. The service tax payment in respect of transportation of goods also establish the transportation of goods - merely on the basis of the RTO reports, it cannot be concluded that the inputs were not received by the appellant. The facts are established that the appellant have received the inputs in their factory used in the manufacture of final product and same was cleared on payment of duty - credit cannot be disallowed - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1363 Invocation of extended period of Limitation - Revenue neutrality - Short payment of duty on clearance of Capital goods to other unit - wrong calculation of Depreciation - Held that:- The appellant has in fact paid the Central Excise duty at the time of clearance of the capital goods to their other unit. The Revenue has noticed the liability for differential duty only during the course of audit. Under these circumstances, it cannot be said that the appellant has suppressed the facts from the Department. Since the facts in the present case also leads to situation of Revenue neutrality, this is not a fit case for invoking the extended period of limitation - demand raised on the ground of limitation is not justified. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1362 Transmission of electricity to water supply plants - benefit of N/N. 3/2004-CE dated 08.01.2004 - case of appellant is that the finished goods were used for transmission of electricity to water supply plants in the lift irrigation scheme, and they are eligible for benefit of notification - Held that:- It is undisputed that the appellant had cleared finished goods by claiming exemption under N/N. 3/2004 dated 08.01.2004 after following all the conditions laid down therein. The said certificates issued by the District Collectors are not contested by the Revenue - Identical/similar issue came up before the Bench in the case of Commissioner of Central Excise, Jaipur-1 Vs Cords Cable Industries Pvt Ltd [2016 (5) TMI 936 - CESTAT NEW DELHI], where it was held that Setting up of water supply plant is for the intended purpose covered by the terms of the notification. The explanation only shows the inclusive scope of the water supply plants - benefit of notification cannot be denied. Appeal dismissed - decided against Revenue. 2018 (7) TMI 1361 Clandestine removal - PVC Resins - Revenue’s case is based upon the entries made in the said Kaccha Slips, recovered from the premises of the assessee - Held that:- The said Kaccha Slips are admittedly written in hand writing of Shri Rajender Singh, foreman of the appellant. He has not been examined as regards the entries made therein. On the other hand, the statement of the Director clearly deposed that the said entries related to movement of the goods within the factory premises. As regards, the statement of the buyers, it stands deposed by them that they have availed the Cenvat credit based upon the invoices issued by the present appellant, without corresponding receipt of the raw-material. The said depositions of the buyers are contrary to the allegations made by the Revenue which are to the effect that the appellant has cleared the raw-material, without the reversal of the Cenvat credit availed by them. If the buyers have not received the raw-material, the Revenue has failed to show as to where the said clandestinely remove raw-material has gone to. Also, during the time of visit of the Investigating Officer, no discrepancy was found and detected by the Officers in the stock of the raw-material. In this scenario, the allegations as regards the removal of raw-material cannot be upheld. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1360 Production capacity based duty u/s 3A - Clandestine manufacture and removal - 'Banarsi Ashiq' brand Deshi Pan Samigri - non-notified goods - excess of stock - Whether the duty of 1,40,82,789/- have been rightly demanded on 8,17,75,733 pouches of Banarsi Ashiq Brand Deshi Pan Samigri, manufactured and removed without payment of appropriate Central Excise Duty under Section 11A(4) of the Act alongwith equal amount of penalty under Section 11AC of the Act read with Rule 25 of CER, 2002 on the appellant K.K. Tobacco Company? - whether penalty has been rightly imposed under Rule 26 of CER, 2002 on the other two appellants? Held that:- It is an admitted fact that the goods manufactured by the appellant namely 'Banarsi Ashiq' brand Deshi Pan Samigri is not a notified goods under the notifications under Section 3A of the Act - Although the learned Commissioner have not referred to Section 3A, but evidently the duty have been worked out and confirmed on the basis of the production capacity based levy, which is untenable and is fit to be set aside. SCN not sustainable - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1359 Clandestine removal - M.S.Ingots - excess stock of finished goods - Confiscation - Redemption Fine - Held that:- It is noticed that the Central Excise Officers, detected the excess stock after taking into account the clearances from 01.02.2009 to 09.02.2009 and further taking closing stock as on 31.01.2009. It is apparent from the face of the record that the stock register was written upto 31.01.2009. The Commissioner (Appeals) observed that had the appellant had any bonafide intention, they would have entered the said excess stock in their Daily Stock report, if not in DSA. Thus, the appellant had not recorded the excess quantity of stock in their record - confiscation and redemption fine justified - penalties also upheld. Clandestine removal - clearance of 65.903 M.T. of the unrecorded stock of finished goods - extended period of limitation - Held that:- It is seen from the record that the Director of the appellant company in his statement dated 31.05.2011 had accepted the non-existence of 65.903 MT of the unrecorded stock of the said goods. He stated that it is implied that the clearance of the same without payment of duty and accordingly paid the duty on 65.903 M.T. - the Director of the appellant company admitted that the goods were cleared without payment of duty. Hence, the extended period of limitation can be invoked. Appeal dismissed - decided against appellant. 2018 (7) TMI 1358 CENVAT Credit - various articles of iron and steel namely MS Coils, MS Channels, GP Sheets, DHR Plates, etc. - case of appellant is that these items were used for the expansion of the plant for constructing the equipment and machinery for production of excisable goods. Held that:- Hon’ble Chhatisgarh High Court in the case of Commissioner of Customs, C.Ex & ST, Bilaspur v. Singhal Enterprises Pvt. Ltd. [2017 (7) TMI 1112 - CHHATTISGARH HIGH COURT] held that structural steel items used for fabrication of support structure for capital goods would be eligible for CENVAT credit - The Hon’ble Madras High Court in the case of Thiru Arooran Sugars Vs. CESTAT, Chennai [2017 (7) TMI 524 - MADRAS HIGH COURT] allowed the CENVAT credit on MS structures which support plant and machinery and cement and steel which were used in the erection of foundation that holds the plant machinery terming it as an essential element of the plant and machinery. It is noted that the Revenue had not disputed that these items have been used as components and accessories of the machinery which are used in the manufacturing of final product - there is no reason to deny the CENVAT credit on these items - appeal allowed - decided in favor of appellant. 2018 (7) TMI 1357 Excisability/Marketability - 6939.980 M.T. of Solid Waste/ Bag Filter Dust - assessee contended that the Bag Filter Dust is nothing but a waste collected through Pollution Control Equipments installed at their factory and are sold as waste - Board Circular No. 904/24/2009-CX dated 28.10.2009 - Held that:- Hon’ble Supreme Court in the case of Union of India Vs. DSCL Sugar Limited [2015 (10) TMI 566 - SUPREME COURT], after considering the amendment of Section 2(d), had held that Bagasse is not excisable goods as there being no manufacturing process and dismissed the appeal filed by the Revenue. The goods are not excisable - appeal dismissed - decided against Revenue. 2018 (7) TMI 1356 Recovery of Refund granted earlier against CENVAT Credit - retrospective amendment - scope of Clause 145(1) Finance Bill 2003 - Held that:- The Revenue ventured to raise a demand beyond 22.12.2002 that must be paid within 30 days of the assent of the President to the Finance Bill failing which interest @ 15% per annum would be levied - The Revenue has acted with bias in exceeding the scope of Clause 145(1) Finance Bill 2003 by making an illegal demand of recovery of Central Credit till 28.02.2003 instead of 22.12.2002 and failing to consider that the Cenvat Credit availed of in the manufacture and removal of goods have already been duly utilized and refunds made accordingly - appeal is liable to be allowed. Appeal allowed - decided in favor of appellant. 2018 (7) TMI 1348 Area Based Exemption - Held that:- Delay condoned - there is no merits in the present appeal - Admission is refused and the civil appeals are, accordingly, dismissed. 2018 (7) TMI 1342 Valuation - includibility - insurance charges - Held that:- No case for review of order dated 5th February, 2018 is made out - the review petitions are dismissed. 2018 (7) TMI 1340 Review petition - Classification of goods - Chewing Tobacco - Held that:- We have perused the Review Petition as well as the grounds in support thereof. In our opinion, no case for review is made out - review petition dismissed. 2018 (7) TMI 1337 Monetary amount involved in the appeal - Held that:- In view of the small amount of revenue involved, we are not inclined to interfere with the impugned order - appeal dismissed. 2018 (7) TMI 1336 Demand of Interest and penalty - CENVAT Credit availed in respect of common services, which were relatable to their second unit, which was not a registered ISD, is reversed - Held that:- Reliance placed in the case of CCE & ST, LTU Vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it is held that if the excess credit availed remained as paper entry and was not utilised, no interest liability would arise. Penalty - Held that:- This is a case of bona fide availment of credit and inasmuch as the issue also stands decided in favour of the assessee, it cannot be held to be a case of any mala fide so as to attract penal provisions - penalty also not warranted. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2018 (7) TMI 1368 Recover of sales tax dues - Works Contract - AMNESTY Scheme to settle the liability of the defaulters of tax - purchase of property without any liability after fixing the amount - SARFAESI Act - Held that:- This Court is of the view that the present dilemma can be resolved, if the State is allowed to appropriate the amount towards the sales tax arrears by allowing the Company to settle the liability under the AMNESTY Scheme. It is to be noted that the Company had filed an application though belatedly for such relief. Therefore, treating that matter as settled under the AMNESTY Scheme, the amount due under the AMNESTY Scheme i.e., 37,11,210/- shall be released by the Bank in favour of Deputy Tahsildar (RR) within three days from today. The Company's request can be safeguarded in I.A.No.1068/2018 by allowing them to set aside the sale provided that the Company pays Rs.Four Crores and One Thousand along with 10% interest from the date of deposit by the auction purchaser till the Company clears the amount of the auction purchaser. However, it is made clear that it has to be done within three months from today. If the Company pays the amount within time, the sale would stand set aside. Petition disposed off. 2018 (7) TMI 1355 Input Tax Credit on Capital Goods - Section 19(3)(b) of the TNVAT Act - denial of credit on the ground that the claim was made after the expiry of the time stipulated in Section 19(11) of the TNVAT Act, which states that input tax has to be claimed before the end of the financial year or before 90 days from the date of purchase, whichever is later. Held that:- Section 19(3)(a) of the TNVAT Act speaks about the entitlement of an assessee for credit in respect of purchases of capital goods. The entitlement is as per the manner prescribed under the TNVAT Rules, viz., Rule 10(4). Section 19(3)(b) of the TNVAT Act speaks about deduction of such input tax credit that may be allowed to be liable after the commencement of commercial production and over a period of three years in the manner as prescribed. After the expiry of three years, the unavailed credit shall lapse to the Government - Rule 10(4)(b) of the TNVAT Rules prescribes the manner in which the credit shall be allowable after commencement of commercial production and over a period of three years. The Rule states a dealer shall be entitled to avail up to 50% of the credit in the same financial year and the balance credit before the end of the third financial year. A registered dealer, who has purchased capital goods shall be allowed input tax credit in terms of Rule 10(4) provided, he gives an intimation within 30 days from the date of commencement of commercial production and the tax leviable shall be not more than 50% in the same financial year and the balance before the end of the third financial year. Thus Section 19(3) read with Rule 10(4) of the TNVAT Rules speaks only about the entitlement. Section 19(11) does not carve out any distinction between the type of goods purchased by the dealer on which there is a claim for input tax credit, but refers to any transaction of taxable purchase in any month. Thus, if a dealer fails to claim input tax credit in respect of any transaction of taxable purchases, in any month, the legislature has given time to the dealer to make the claim before the end of the financial year or before 90 days from the date of purchase, whichever is later. Section 19 of the TNVAT Act, being a complete code by itself, cannot be truncated in the manner sought to be done by the petitioner - The prescription under Rule 6 of the TNVAT Rules is mandatory, which the dealer has to comply with. Therefore, such maintenance of input tax adjustment account can have no impact on the time limit prescribed in the statute for claiming input tax credit. Thus, the distinction, which has to be borne in mind is that Section 19(3) deals with entitlement and Section 19(11) deals with availment, which prescribes not only a procedure but also an outer time limit. Thus, the interpretation given by the respondent in the impugned order is perfectly valid and legal. Petition dismissed - decided against petitioner. 2018 (7) TMI 1354 Validity of recovery notice - proceedings on dead person - recovery of arrears of tax payable pursuant to the assessment order dated 30.1.198 - TNGST Act - Held that:- The dealer, in the said writ petition, contended that he did only labour works for building body of lorries and that the same could not be stated to be a manufacturing process nor there was an element of sale involved. Thus, without adjudicating the said issue, the second respondent cannot proceed to recover the amount, that too, by issuing a notice against a dead person - the impugned notice is held to be not sustainable in law - petition allowed.
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TMI Tax Updates - e-Newsletter July 24, 2018

TMI SMS

Articles

1. Foreign Direct Investment

2. GST Charcha: Whether Intermediary Services are export of Services?

3. GST Charcha: Compliances of E-Way Bill – Alarming Bells!!

4. RECENT ADVANCE RULINGS IN GST (PART-4)

Highlights / Catch Notes

GST

Fabricating and Fitting Bus Bodies on Chassis is a Composite Supply; Principal Supply under HSN Code 8707.

Unredeemed payback points are taxable under GST as consideration for services rendered by the issuer.

Taxation Classification for Truck Mounted Cranes: Heading 8705 Applies to Cranes Mounted on Ashok Leyland, TATA Trucks.

Lithium-Ion Batteries for Mobile Handsets: Classification Affects GST and Customs Duties Under Customs Tariff Act, 1985.

Income Tax

Postponed Excise Duty Payment Doesn't Impact Closing Stock Valuation; Accounting System Irrelevant to Accurate Valuation.

Partner's Exclusive Property Sale Pre-Dissolution Triggers Firm's Capital Gains Liability.

TDS Provisions Apply to Technical Services Received: Additions u/s 40(a)(ia) Confirmed for LOTUS Note Management.

Service Tax

Tribunal Rules Room Booking Charges Exempt from Service Tax, Differentiates from Mandap Keeper Services.

VAT and Service Tax Are Mutually Exclusive: Sales Cannot Be Reclassified as Services for Tax Purposes.

Chilling Milk Classified as Manufacturing Process, Exempt from Service Tax According to Established Law.

Employee Deputation Not a Manpower Supply Service; No Service Tax Demand Due to Lack of Profit or Agency Relationship.

Central Excise

Allegations of Fake Invoices in CENVAT Credit Claims Challenged; Transport Tax Payments Support Goods Movement.

Supreme Court Rules Job Worker Can't Claim Duty Exemption; Principal Manufacturer's Area-Based Exemption Stands.

Supreme Court Affirms Tribunal's Decision: Insurance Charges Included in Valuation for Central Excise on FOR Basis.

VAT

Late Input Tax Credit Claim Denied Under TNVAT Section 19(3)(b) Due to Missed Deadline in Section 19(11).

Case Laws:

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Customs

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TMI Tax Updates - e-Newsletter
July 24, 2018