TMI Tax Updates - e-Newsletter
July 28, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Levy of VAT - terminalling services provided to BPCL - petitioner cannot be made to suffer by two levies, namely, sales tax & service tax

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Articles

1. CENTRAL EXCISE RULES, 2017 – PART I

   By: DR.MARIAPPAN GOVINDARAJAN

2. GST News and Updates

   By: Bimal jain

News

1. RBI Reference Rate for US $

2. Cabinet approves revision of guidelines of Sovereign Gold Bonds Scheme

Notifications

Customs

1. 68/2017 - dated 27-7-2017 - Cus

Seeks to amend Notification No. 96/2008-Customs dated 13th August 2008

2. 73/2017 - dated 26-7-2017 - Cus (NT)

Amendment in Notification No. 131/2016 - Customs (N.T.), dated the 31st October, 2016 - Customs, Central Excise Duties and Service Tax Drawback Rules, 1995

GST - States

3. S.O.036/P.A.5/2017/S.7/2017. - dated 30-6-2017 - Punjab SGST

Notify the following activities or transactions undertaken by the Central Government or State Government or any local authority

4. S.O.035/P.A.5/2017/S.9/ 2017. - dated 30-6-2017 - Punjab SGST

Notifies the categories of supply of services.

5. S.O.034/P.A.5/2017/S.11/2017 - dated 30-6-2017 - Punjab SGST

Exempt intra-State supplies of second hand goods.

6. S.O.033/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exempt intra-State supplies of goods or services or both received by a deductor under section 51.

7. S.O.032/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exempt intra-State supplies of goods or services or both received

8. S.O.031/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exemption The supply of goods by the CSD to the Unit Run Canteens.

9. S.O.030/P.A.5/2017/S.55/2017. - dated 30-6-2017 - Punjab SGST

Supplies of goods Canteen Stores Department.

10. S.O.029/P.A.5/2017/S.54/2017. - dated 30-6-2017 - Punjab SGST

no refund of unutilized input tax credit accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such goods.

11. S.O.028 /P.A.5/2017/S.9/2017. - dated 30-6-2017 - Punjab SGST

Intra-state supply of services the state tax shall be paid on reverse charge basis.

12. S.O.027/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exempt intra-State supplies of goods, amount calculated at the rate state tax.

13. S.O.026/P.A.5/2017/S.10/C.A.14/2017/S.21/2017. - dated 30-6-2017 - Punjab SGST

Prescribes an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees,

14. S.O.024/P.A.5/2017/Ss.50, 54 and 56/ 2017. - dated 30-6-2017 - Punjab SGST

Council, fix the rate of interest per annum.

15. S.O.023/PGSTR/2017/R.46/ 2017. - dated 30-6-2017 - Punjab SGST

Harmonised System of Nomenclature (HSN) Codes

16. S.O.022/PGSTR/2017/R.26/ 2017. - dated 30-6-2017 - Punjab SGST

Notify the following modes of verification.

17. S.O.021/P.A.5/2017/S.9/ 2017. - dated 30-6-2017 - Punjab SGST

Electronic commerce operator intra-State supplies of services.

18. S.O.020/P.A.5/2017/S.55/ 2017. - dated 30-6-2017 - Punjab SGST

United Nations or a specified international organisation.

19. S.O.019/P.A.5/2017/S.54/ 2017. - dated 30-6-2017 - Punjab SGST

No refund of unutilised input tax credit.

20. S.O.018/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exempt intra-State supplies of goods description of which is specified in column (3) of the Schedule.

21. S.O.017/P.A.5/2017/Ss.9, 11, 15 and 16/2017. - dated 30-6-2017 - Punjab SGST

Intra-state supply of services.

22. S.O.016/P.A.5/2017/S.9/2017. - dated 30-6-2017 - Punjab SGST

Notify the rate of the state tax.

23. S.O.015/P.A.5/2017/S.3/2017. - dated 30-6-2017 - Punjab SGST

Appoint the officers.

24. S.O.014/P.A.5/2017/S.1/ 2017. - dated 30-6-2017 - Punjab SGST

Appoint the 1st day of July, 2017, as the date on which the provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9) thereof 42,43 except the proviso to sub-section (9) thereof 43, 44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the said Act, shall come into force.

25. S.O.013/P.A.5/2017/S.23/2017. - dated 30-6-2017 - Punjab SGST

Supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis

26. S.O.012/P.A.5/2017/S.146/C.A.13/2017. - dated 30-6-2017 - Punjab SGST

Common Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement

27. S.O.011/P.A.5/2017/S.1/2017. - dated 30-6-2017 - Punjab SGST

Appoint the 23rd day of June, 2017, as the date on which the provisions of sections 1,2,3,4,5,10,22, 23,24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the said Act, shall come into force.

28. GSR.022/P.A.5/2017/S.164/Amd.(1)/2017. - dated 30-6-2017 - Punjab SGST

The Punjab Goods and Services Tax (First Amendment) Rules, 2017.

29. GSR.021/P.A.5/2017/S.164/2017. - dated 29-6-2017 - Punjab SGST

The Punjab Goods and Service Tax Rules, 2017

30. G.O.(Ms.) No. 060 - dated 29-6-2017 - Tamil Nadu SGST

Bringing into force of certain provisions of the Tamil Nadu Act 19 of 2017 - Notifications.

31. G.O. Ms. No. 063 - dated 29-6-2017 - Tamil Nadu SGST

Exempts intra-State supplies of goods.

32. G.O. (Ms.) No. 062 - dated 29-6-2017 - Tamil Nadu SGST

Rates of the State Tax on Goods.

33. G.O. (Ms.) No. 061 - dated 29-6-2017 - Tamil Nadu SGST

Fixes the rate of interest per annum.

34. G.O. (Ms.) No. 059 - dated 29-6-2017 - Tamil Nadu SGST

Rate of tax under Composition Scheme.

35. G.O.(Ms.) No. 055-III - dated 28-6-2017 - Tamil Nadu SGST

Notifying the persons not liable for registration under sub-section (2) of sec.23 of the Act

36. G.O.(Ms.) No. 055-II - dated 28-6-2017 - Tamil Nadu SGST

Common Electronic Portal for facilitating registration, payment of tax, furnishing of returns.

37. G.O.(Ms.) No. 055-I - dated 28-6-2017 - Tamil Nadu SGST

Appoints the certain Sections.

Income Tax

38. 74/2017 - dated 26-7-2017 - IT

U/s 138(1) of IT Act 1961 - Central Government specifies Joint Secretary, Ministry of Corporate Affairs, Government of India

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/252/2017/ITA.II - dated 26-7-2017

U/s 138 (1) of IT Act 1961 Specified authority for furnishing the 'bulk information' to Joint Secretary, Ministry of Corporate Affairs (MCA), Government of India

GST

2. 1/1/2017-Compensation Cess - dated 26-7-2017

Clarification regarding applicability of section 16 of the IGST Act, 2017, relating to zero rated supply for the purpose of Compensation Cess on exports – Regarding.

FEMA

3. 02 - dated 27-7-2017

Exim Bank's Government of India supported Line of Credit of USD 24.54 million to the Government of the Republic of Ghana

DGFT

4. 11/2015-20 - dated 26-7-2017

Amendment in paras 2.16, 2.20, 2.51, 2.74, 2.79 and 2.80 of the Handbook of Procedures (HBP) of Foreign Trade Policy (FTP) 2015- 20 - regarding.

Highlights / Catch Notes

GST

• Exporters Can Claim Compensation Cess Refund on Goods Exports, Following the IGST Refund Procedure.

  Circulars : Exporter will be eligible for refund of Compensation Cess paid on goods exported by him [on similar lines as refund of IGST]
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Income Tax

• Deferred Income Reserves Transfer Notional; Section 28(iv) Income Tax Act Provisions Inapplicable.

  Case-Laws - AT : Addition of amount transferred from deferred income [reserves] to profit and loss account - it is a notional entry in its books of account and not effecting the real profit and loss account of the assessee and the provisions of sec.28(iv) have no application
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Customs

• Customs Confiscates Unaccompanied Baggage: No Justification for Commercial Quantity of New Items with Used Goods.

  Case-Laws - AT : Import of baggage - unaccompanied baggage - In the absence of any justification as to why such commercial quantity of brand new goods has been imported alongwith used house hold goods in the container, goods were rightly confiscated
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• Amendment to Notification No. 131/2016 - Customs: Changes to Customs, Excise Duties, and Service Tax Drawback Rules 1995.

  Notifications : Amendment in Notification No. 131/2016 - Customs (N.T.), dated the 31st October, 2016 - Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Notification
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Corporate Law

• Petitioners Denied Company Name Restoration Due to Lack of Proof as Directors or Members.

  Case-Laws - Tri : Restoration of the name of Company on the register of Registrar of Companies - The petitioners as such have not been able to show any document to claim their locus standi to be the director of member of the company. They are simply persona non grata.
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Service Tax

• Refund Claims Should Not Be Dismissed for Export Warehouse Portion, Says Appellants to Central Excise Commissioner.

  Case-Laws - AT : Refund claim - jurisdiction - the appellants filed the refund claims to the Assistant Commissioner of Central Excise having jurisdiction over the factory of manufacturer. The said refund claim cannot be rejected on the ground that a part of the refund related to the warehouse of the exporter.
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• Appellants Failed to Pay Service Tax on Club Membership Fees, Face Demand and 50% Penalty.

  Case-Laws - AT : Family clubbing activities - appellants had received huge consideration in the form of membership fees and charges, however, they did not deposit the service tax payable on such consideration and also did not file service tax returns - Demand confirmed with 50% penalty.
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• Cenvat Credit Refund Denied Due to Missing Invoices, But Procedural Lapses Alone Don't Justify Rejection u/r 4A.

  Case-Laws - AT : Refund claim - Cenvat credit on input services - rejection on the ground that the input credit taken on services against which no invoice or payment challans have been furnished and secondly input credit has been claimed against invoices not in compliance with Rule 4A of the Service Tax Rules - refund cannot be denied merely on procedural lapse.
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Central Excise

• Amortization charges for die modifications must be included in the assessable value of goods for Central Excise tax.

  Case-Laws - AT : Valuation - the amortisation cost of modification charges of the dies has to be included in the assessable value of the goods manufactured with the help of such die/tools. Hence the amortisation of modification charges of die is required to be included in the assessable value
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• Paddy to rice conversion not manufacturing u/s 2(f) of Central Excise Act; rice not excisable u/s 2(d).

  Case-Laws - AT : The conversion of paddy into rice/broken rice/rice bran does not amount to manufacture in terms of Section 2 (f) of Central Excise Act, 1944 and the rice/rice bran/broken rice are not excisable goods in terms of Section 2(d) of the Act
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VAT

• Court Rules Against Dual Taxation on Terminalling Services; Petitioner Exempt from Both Sales and Service Tax.

  Case-Laws - HC : Levy of VAT - terminalling services provided to Bharat Petroleum Corporation Limited (BPCL) - the petitioner cannot be made to suffer by two levies, namely, sales tax and service tax. - HC
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Case Laws:

• Income Tax

• 2017 (7) TMI 923
  Allowance of expenditure - set up of business - HC order [2016 (11) TMI 970 - DELHI HIGH COURT] stating it is not merely the earning of the income, but also the nature of expenditure incurred which is determinative at least in the facts of this case. The company strove and did all that it could to set-up the infrastructure which ultimately culminated in obtaining the NBFC license. In the process, the expenditure incurred by it had a nexus with the license that it could successfully obtain on 09.04.2008. Having regard to all these facts, this Court is of the opinion that the application of law declared in Whirlpool (2009 (8) TMI 28 - DELHI HIGH COURT) and the decision in CIT v. L.G. Electronics (India) Ltd. [2005 (5) TMI 30 - DELHI High Court ] was unexceptionable. The Special Leave Petition is dismissed leaving the question of law open.

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• 2017 (7) TMI 922
  Levy of penalty imposed under Section 271C - failure to deduct tax at source by Noida - Held that:- In view of the dispute as to whether NOIDA is a Corporation exempt from liability of deduction of tax at source there was a reasonable cause for the respondent assessee not to deduct the tax at source. In the case of Commissioner of Income Tax (TDS) Vs. G.M. (Telecom) BSNL [2014 (2) TMI 800 - ALLAHABAD HIGH COURT] the assessee was under a bonafide believe that tax was not liable to be deducted on commission/trade discount in view of decision in Idea Cellular Ltd. Vs. DCIT (2008 (3) TMI 355 - ITAT DELHI-A ). The Division Bench of this Court held that it was a reasonable cause for failure to deduct tax. This exactly is the position in the case at hand. Accordingly, even in the light of the provisions of Section 273 B of the Act no penalty could have been imposed upon the respondent assessee under Section 271 C of the Act. The question framed above is answered in favour of the assessee and against the revenue and it is held that the tribunal was justified in holding the penalty imposed under Section 271 C of the Act as the assessee not only had a reasonable cause for not deducting tax at source but also as NOIDA was exempt for payment of tax at source. - Decided against revenue

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• 2017 (7) TMI 921
  Addition of unexplained cash credits under Section 68 - counsel submits that farmers has given a statement that the cash was received by them from friends and relatives and the payments was made to the Assessee Firm - proof of genuineness of the Transactions and existence of the transactions - Tribunal deleted the addition - Held that:- Appeal can only be entertained on substantial question of law. The Assessing Officer has given a report, which states that the genuineness of the farmers is established. They have given a statement that as the sale transactions was cancelled, they have collected the amount from friends and relatives and paid to the Respondent-Assessee. The said amount is not disputed by those farmers. The genuineness of the creditors and existence of the transactions is established. The initial burden on the assessee has been discharged. There was no reason to doubt the genuineness of the cash credit. The Commissioner and the Tribunal have arrived at a concurrent finding with regard to the said fact. - Decided in favour of assessee.

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• 2017 (7) TMI 920
  Cancellation of registration of assessee trust invoking power u/s 12AA(3) - Held that:- It is apparent from the record that the Commissioner has invoked its powers under Section 12(AA)(3) of the Act. The said powers are circumscribed by the limitations imposed under Sub Section 3 of Section 12AA of the Act. The Commissioner, nowhere has given the finding that the activities of the Respondent institution are not genuine one or that the said activity carried out are not in consonance with the object of the institution. The Commissioner has merely relied on proviso to Sub-Section 2 of Section 15 of the Act, as it stood then. The said proviso has subsequently gone amendment. The CBDT Circular No.21 of 2016, dated 27th May, 2016, has been considered by the Division Bench of this Court in case of Khar Gymkhana (2016 (6) TMI 489 - BOMBAY HIGH COURT ). Even considering the proviso, as it stood then, the case has not been made out so as to invoke Section 12AA(3) of the Act. The Tribunal as rightly considered the said aspect - Decided against revenue.

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• 2017 (7) TMI 919
  Recovery notice - stay proceedings - Held that:- Provisions of Section 2(B)(iii) read with Section 220(6) of the IT Act, this court is of the opinion that it shall be left for the assessing officer at the first instance to decide the application for grant of stay moved by the petitioner and which is pending consideration before him including that of grant of complete stay of the execution of the recovery notice. In the event if the application is decided against the interest of the petitioner, it shall be left open for the petitioner to avail the remedy available under the said circular of moving before the Principal Commissioner, Income Tax challenging the order of assessing officer made under Section 220(6) of the IT Act. Needless to mention that since the said clause 2(B)(iii) empowers the authorities for grant complete waiver of the pre-deposit part, the authority concerned, pending consideration the stay application, both at the stage of assessing officer as well as if it is moved before the Principal Commissioner, Income Tax, they shall not take any coercive steps for making the recovery. Taking into consideration the entire factual matrix of the case, and with the consent of the counsel for 60th the parties this court is also of the view that ends of justice would meet if the appeal preferred by the petitioner itself is decided by the Commissioner (Appeals) at the earliest preferably within a period of three months.

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• 2017 (7) TMI 918
  TPA - selection of MAM - Held that:- It is apparent from a plain reading of order of the CIT (A) that it agreed with the Assessee that the transactions both in Class I and II segments had to be benchmarked by applying the TNMM. Therefore, it was factually erroneous on the part of the ITAT to observe to the contrary. Likewise, the ITAT proceeded on an erroneous assumption of fact that the RPM method was approved by CIT(A) for benchmarking the class II segment transactions. Change in the functional profile of the business of the Assessee - The functional profile of the Assessee for the AY in question i.e. AY 2004-05 has not changed in the subsequent AYs i.e. 2007-08 to 2010-11. The TPO has in each of the subsequent AYs i.e. 2007-08 to 2010-11 accepted the TP Study .of the Assessee insofar as the determination of ALP for the Class T Class II segment international transactions are concerned. Consequently, the Court is unable to accept the plea of the Revenue in the present case that the Court should proceed on the assumption that the Assessee had changed his business profile and functions. If there is, in fact, no change in the business profile of the Assessee in all these years i.e. in AY 2004-05 as well as subsequent years, there is no warrant for the Court to uphold the order of the ITAT remitting the matter to the TPO/AO or for this Court to remand the appeal to the ITAT for a fresh consideration. That will be a sheer waste of time and would serve no purpose.

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• 2017 (7) TMI 917
  Addition of amount transferred from deferred income [reserves] to profit and loss account - Held that:- Since the concession was linked to the import of capital goods, though conditional on fulfilling export obligation, it was a concession on the capital account. The assessee is also not allowed to use the import entitlement in any manner other than for import of capital goods. We agree with the argument of the ld. AR that there is no benefit or perquisite that accrued to the assessee on account of this transaction and it does not have any component of revenue nature and hence, the provisions of sec.28(iv) of the Act does not apply. For invoking sec.28(iv) of the Act, the pre-requisite conditions are that the benefit / pre-requisite must arise from the business of an assessee and that there must be a nexus or connection between the business of an assessee and the benefit / perquisite sought to be taxed. In this case, both the conditions are absent. Therefore, we find that the CIT(Appeals) is justified in giving direction the AO to delete the disallowance made. Further, in our opinion, it is a notional entry in its books of account and not effecting the real profit and loss account of the assessee and the provisions of sec.28(iv) have no application. This ground is dismissed. Disallowance of deduction u/s.43B - Held that:- As gone through the findings of the CIT(Appeals), we do not find the basis for disallowance computed by the CIT(Appeals) as above. Hence, we remit the issue to the file of the AO to decide the issue afresh. Accordingly, this ground of appeal is allowed for statistical purposes. Disallowance of debenture issue expenses - Held that:- We find that this issue is covered by the judgment of the jurisdictional High Court in the case of South India Agency Ltd. (2006 (8) TMI 153 - MADRAS High Court ) wherein it was held that the expenditure towards issuance of partly convertible debentures are allowable expenditure. Allowance of deemed interest on loans to subsidiaries - Held that:- As decided for the asst. years 2003-04 and 2004- 05 there cannot be any addition of notional interest since it is not the case of the Revenue that the subsidiary companies had misused the funds for any other purpose. In other words, since the subsidiary companies used the funds for their business this Tribunal is of the considered opinion there cannot be any addition in the hands of the assessee.

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• 2017 (7) TMI 916
  Validity of order u/s. 153C - Held that:- In the instant case, it is not the case of the assessee that the documents seized from the premises of searched person did not belong to assessee, rather the said document, i.e., sale deed unequivocally shows the purchase of property mentioned therein, by the assessee. It is also an admitted fact that the AO of searched person and that of the assessee is one and the same. Therefore, in view of the above decision of Hon’ble jurisdictional High Court, and in peculiar facts and circumstances of the present case, the impugned order u/s. 153C of the Act cannot be said to be legally invalid or without jurisdiction. Hence, this issue is decided against the assessee. Unexplained share application money and unsecured loans - admission of additional evidence - Held that:- In the remand proceedings, the AO has made no comments on the authenticity of these evidences, but commented only on their admissibility u/r. 46A. The additions have also been made without any material unearthed during any enquiry from the creditors. In the totality of all these facts, in our considered opinion, the assessee should be given one more opportunity to substantiate its claim before the AO by laying cogent evidences in support. We accordingly remit the issue back to the Assessing Officer for examining the confirmations of the creditors and to decide the matter afresh after making thorough enquiries as he thinks fit. Needless to say, the assessee shall be given reasonable opportunity of being heard and the assessee is directed to render full cooperation to the AO. Accordingly, the appeal of the assessee is partly allowed for statistical purposes.

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• 2017 (7) TMI 915
  Addition in respect of cash credits - addition on a/c of commission received - Held that:- We agree with contention of Ld. AR that by making addition in respect of cash credits, after rejecting books of accounts, would amount to double taxation of certain items. However, assessing officer has rejected books of account based on irregularities and infirmities recorded by internal auditors in audit report. Further it is observed from order of Ld. CIT(A) that even Ld. CIT(A) has not himself verified any of credit entries under head sundry creditors amounting to 68,01,864/-, alleged commission income earned and discount received amounting to 83,85,200/- and expenses under head other expenses amounting to 86,84,062/-. We are, therefore, inclined to set aside this issue is back to file of Ld. AO for a suo motu verification of these entries in books of accounts. Ld. AO shall take into consideration all documents that may be filed by assessee to establish its claim and may verify to his satisfaction as per law regarding the identity, creditworthiness, and genuineness of the transaction in respect of credit entries. Assessee is directed to furnish all the necessary details like bills/vouchers/discount coupons etc., before Ld. AO for purposes of adjudication of these grounds.

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• 2017 (7) TMI 914
  Addition as income earned in foreign country as undisclosed income - Held that:- There is no doubt that the income in question has suffered taxation in the USA, being derived from a place of business in the USA and activities carried out therefrom, and that too at the US tax rate of 48.35%. Hence, the assessee, as per the provisions of Article 25(2)(a) of the DTAA, would be allowed a deduction from tax on the income which has been taxed in the USA, "an amount equal to the income tax paid in the USA, whether directly or by deduction. Hence, if the income was to be added in the taxable income of the assessee, there would be no tax payable, as credit has to be allowed for taxes deducted in the USA. After considering all the above facts, and the provisions of law, Ld. CIT(A) has rightly held that the addition of 1,16,12,023/- was not justified, therefore, the Ld. CIT(A) has rightly deleted the addition - Decided against revenue Disallowance of 25% of foreign travel expenses - Held that:- The details of expenditure incurred which are claimed to have been provided to the Assessing Officer vide submission dated 29.12.2009. The assessee has also produced details of purchases made from companies in the countries visited. Considering the purchases made of 4,27,88,689/-, the travel expenditure of 14,01,331/- does not appear excessive. Moreover, the Assessing Officer has not pointed out any defects in the bills/vouchers relating to travel, or found that it was in the nature of personal expenditure. Therefore, the Ld. CIT(A) has observed that no cogent material exists for disallowance of 25% of the expenditure claimed. Therefore, the Ld. CIT(A) has rightly deleted the addition - Decided against revenue Disallowance of business promotion expenses - Held that:- The assessee has submitted that these items were purchased for festival gifting to clients, which were necessary in the interest of promotion of his business, and were normal business expenditure. Hence, it is apparent that the expenditure concerned has not created capital assets, and the numbers of items purchased indicate that they are intended for gifts. Considering the explanation offered by the assessee, the expenditure was rightly held as revenue in nature, and the addition was rightly deleted by the Ld. CIT(A). - Decided against revenue Disallowance u/s 40A(3) of payment made in cash to a club - Held that:- The assessee has produced the details of payment by cheque no. 940406 dated 29.08.2006 drawn on Citibank for the club membership. Disallowance u/s 40A(3) was clearly not called for, and in any case, could only have been made at 20% of the payment, and not of the entire amount. The assessee has explained that the club membership was a necessary business expenditure for purposes of meeting and entertaining his clients and foreign suppliers. Therefore, the Ld. CIT(A) has rightly observed that the addition u/s 40A(3) was found unfounded and without merit, and was rightly deleted.- Decided against revenue

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• 2017 (7) TMI 913
  Reopening of assessment - reasons to believe - non independent mind used by AO - Held that:- The reopening u/s 147 r.w.s 148 of the Act was done only on the basis of the information received from the Investigation Wing and the AO did not apply his independent mind to come to the conclusion that the income of the assessee escaped assessment. - Decided in favour of assessee.

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• 2017 (7) TMI 912
  Unexplained cash deposit in bank account - Peak credit addition - Held that:- From the documents produced by the assessee, the A.O found that agricultural receipt in the form of 6R only contained 1,29,600/- related with the assessee Shri Jailly Goraya. He, therefore, gave credit to this extent and made addition of 3 lakhs which has been upheld by the ld. CIT(A). Although it is the argument of the ld. AR that no addition can be made since the entire income is from agriculture, we find no merit in the same. From the copy of assessment order, it is notice that apart from agricultural income, the assessee has income from leasing of car. Therefore, it cannot be said that the entire income of the assessee is from agriculture. Since the assessee had explained before the A.O that the source of deposits of 4,29,000/- is out of agricultural produce of 2,38,500/-, we accept the source to this extent as explained. The balance amount of 1,90,500 is sustained. So far as the addition of 78,40,770/- made by the A.O the assessee cannot explain the non disclosure of the said bank account as ignorance of law or that he was not conversant with the intricacies of accountancy or tax proceedings. However, it is also a fact that the said bank account contains both deposits as well as withdrawals. It is an accepted principle that when the assessee is unable to explain the deposits in a particular bank account, the entire deposits cannot be added to the total income and only the peak credit has to be made when there are both cash deposits and cash withdrawals. In the instant case admittedly, there were both cash deposits as well as cash withdrawals on various dates. Therefore, the ld. CIT(A), in our opinion, was fully justified in sustaining the peak credit value for the addition u/s 69A of the Act. Accordingly, the same is upheld. Appeal filed by the assessee is partly allowed

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• 2017 (7) TMI 911
  Validity of reopening of assessment - AO has not disposed of the objections for reopening the assessment before passing the reassessment order - Held that:- Keeping in view the reasons for reopening the assessment, we would follow the decision of the Jurisdictional High Court in the case of MSPL Gase Ltd (2016 (2) TMI 469 - BOMBAY HIGH COURT ) and hold that reassessment order passed without disposing of the objections is bad in law. Thus, we set aside the reassessment order passed u/s 143(3) r.w.s.147 of the Act. - Decided in favour of assessee.

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• 2017 (7) TMI 910
  Capital gain - CIT(A) accepting the cost of construction of the property on sale of which the assessee has shown capital gain - Held that:- It is not in doubt that whatever is sold by the assessee is a three-storey building with basement for which the land was acquired in 1983 and 1994, construction was completed in September 2002 and occupation certificate obtained in February 2003. Therefore, it cannot be said that the assessee has not incurred any cost of construction for construction of a three-storey building. Further, also it cannot also be substituted by the estimated cost of construction based on some valuation report as facts cannot be replaced by opinion. In view of this, we do not approve the finding of the Ld. CIT (A). As finding is given by the Ld. CIT appeal that entire expenditure for construction was done by cheque withdrawals from non-resident bank account of the assessee the whole issue of granting the cost of improvement as deduction to the assessee is set aside to the file of the Ld. CIT(A) with a direction to grant deduction of actual cost of construction by making verification of the various payments made for the construction of the property from that bank account. Needless to say that proper opportunity of hearing may be granted to the assessee to substantiate the amount of expenditure incurred by issue of cheques from his non-resident bank account and also opportunity to ld AO Addition u/s 68 - Held that:- We do not agree with the order of the Ld. CIT (A) in deleting the whole addition of 2.68 crores on account of money received from his wife. Furthermore the Ld. CIT (A) also has given a wrong finding that she is an income tax assessee, in fact she has filed her last return of income for assessment year 2005 – 06 and not for assessment year 2008 – 09 which is the impugned assessment year. In the result, we agree with the finding of the Ld. CIT appeal in deleting the addition of on account of loan from Mrs. Poonam Singh wife of the assessee except the sum of 25 Lacs which is deposited in cash by her in her bank account for which the assessee has not given any source of income in cash in her hand in India. Therefore we set aside the issue of examination of the sources of this 25 Lakhs which is deposited by her in bank account for onward lending to her husband as he has not given any finding on this sum despite written submission made by assessee before him about the same. Further with respect to the unsecured loan from Mrs. Starex educational society and M/s direction importers and exporters private limited, it was noted by the Ld. CIT appeal that these 2 parties have in fact not even the loan to the assessee but has taken loan from the assessee and therefore the provisions of section 68 do not apply to transactions with these 2 parties. The Ld. departmental representative also could not point out any error in the fact that these are the parties to whom the assessee has given loan. In view of this with respect to starex import and export private limited and starex educational society, we confirm the finding of the Ld. CIT (A) in deleting the addition under section 68 of the income tax act.

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• 2017 (7) TMI 909
  Benefit of audit report before determining taxable income of the assessee - Held that:- No doubt, assessee is a company wholly owned by the Govt. of Uttrakhand. Its accounts are to be audited by CA appointed by CAG of India on year to year. It appears that auditor has not been appointed for year under consideration, who could have audited accounts of assessee and, therefore, assessee filed its income-tax return on estimate basis. The assessee has loss of 15,43,175/-, as per tentative profit and loss and account. In this background, we deem it appropriate that Assessing Officer should have the benefit of audit report before determining taxable income of the assessee.

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• 2017 (7) TMI 908
  Addition u/s 69 - Held that:- In the present case, it is noticed that the main addition has been made by the AO u/s 69 of the Act on the basis of alleged bank account in the name of the assessee firm in First Curacao International Bank, Netherland. The assessee now furnished the new documents first time before the Tribunal. These documents/evidences are relevant to resolve the present controversy and could not be furnished earlier before the authorities below because the assessee could not lay its hands. These additional evidences/documents now furnished by the assessee are relevant to resolve the present controversy and go to the root of the matter but these documents/evidences were not available to the authorities below, so they did not have any occasion to comment upon the same. We, therefore, set aside the cases to the file of the AO to be adjudicated afresh. Appeals of the assessee are allowed for statistical purposes.

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• 2017 (7) TMI 907
  TPA - ALP Determination - selection of comparable - Held that:- We direct the AO to include M/s Agrima Consultants International Ltd. and exclude M/s IDC India Ltd. and M/s Empire Industries Ltd. from the list of the comparables and then work out the average mean of OP/TC percentage and if it is found that the assessee’s margin is within the range of ±5% then no adjustment is required to be made on account of arm’s length price

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• 2017 (7) TMI 906
  Reopening of assessment - Addition u/s 68 - unexplained cash credit in the form of share capital - Held that:- No new information has been flown to the Assessing Officer after the order passed u/s 143(3) dated 6.11.2009 i.e. original assessment. He brought to the notice at page P.B. 7 the reasons recorded and the statement of the Mr. Tarun Goyal recorded on 2.8.2009 much before the date of the original assessment is a matter of record at P.B. 2 and 3. The first provision of the section 147 shall come into play when there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case as pointed out earlier the Assessing Officer and the ld. DR has not on record any new fact while recording the reasons u/s 147/148 of the Act. Therefore there is change of opinion. Moreover during the enquiries made in response to u/s 133(6) which was complied with there is no observation on the said compliance by the assessee and therefore in the circumstances and facts of the case the notice issued is lacking the reasons to believe and assessee having disclosed all the material facts in the original assessment and no new facts have been recorded in the reassessment proceedings - Decided in favour of assessee.

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• Customs

• 2017 (7) TMI 882
  Penalty u/s 112 (b)(1) of CA - smuggling of gold bars - It is alleged in the SCN that the petitioner has abetted the alleged illegal transaction of dealing in gold bars knowingly that they are smuggled. To the show cause dated 25.10.2014, the petitioner caused a reply on 15.01.2015 refuting the allegations - principles of natural justice - Held that: - the petitioner is not questioning the statutory competency or jurisdiction of the adjudicating Authority to adjudicate the matter. The only dispute is with regard to the liability of the petitioner to pay penalty and even assuming he is liable, then the quantum. These are all the questions involving factual aspect which are to be considered and decided only by the next fact finding authority, namely, the Appellate Authority, here in this case, CESTAT, Chennai. Therefore, it is for the petitioner to canvass the correctness or otherwise of the order passed by the Adjudicating Authority before the Appellate Tribunal by raising all the contentions. Principles of Natural Justice - Held that: - the Adjudicating Authority has dealt with in detail as to why such request is rejected by relying on certain case laws. In any event, as the Appellate Authority is also a fact finding authority, certainly, the petitioner is entitled to canvass before such authority as to how such denial of cross examination of those two persons, has resulted in affecting his interest. If the request for cross examination was not at all considered, then it is a different matter to say that there is a violation of principles of natural justice. On the other hand, if such request is considered and rejected on some reasons and findings, then it is for the next fact finding authority to go into the same to find out as to whether such reasonings and findings are justifiable or not. Therefore, at this stage, this court is not inclined to go into such question and give any finding on the same. The present writ petition is not maintainable as the petitioner has to exhaust the alternative remedy of filing an appeal before the CESTAT - petition dismissed - decided against petitioner.

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• 2017 (7) TMI 881
  Penalty - It was found that the said DEPB scripts were forged documents - case of appellant is that they had purchased DEPB scripts from the open market and they have no knowledge of the alleged irregularity - Held that: - the impugned order was passed without giving any reasons by the adjudicating authority. It is well settled that reasons linked with the material on which certain conclusions are based and the actual conclusion. The adjudicating authority needs to discuss in detail the submission of the appellant which would show the application of mind. The reasonings of the adjudicating authority would reflect the application of mind - the adjudicating authority had not discussed any of the submissions of the appellant and therefore, such order is a product of total non-application of mind, which is required to be examined by him - appeal allowed by way of remand.

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• 2017 (7) TMI 880
  Confiscation of imported consignment - It was the case of the appellant before the lower authorities that he has returned back from Middle East permanently and hence brought back his household goods under Baggage Rules (transfer of residence) through container as an unaccompanied baggage - Held that: - the appellant is not able to justify the presence of brand new Air Conditioners, Refrigerators, Lighting fixtures and Modular kitchen and in such huge quantity which is unacceptable that they are as used house hold goods - In the absence of any justification as to why such commercial quantity of brand new goods has been imported alongwith used house hold goods in the container, the adjudicating authority as well as first appellant authority were correct in coming to the conclusion that the impugned goods are liable for confiscation and consequent penalty - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (7) TMI 879
  Winding-up petition - failure to pay debts = Service of Notice - Installation and commissioning charges - The petitioner had sent various reminders/requisitions to clear the outstanding but to no avail and despite promises by the respondent no payment was made and hence a statutory notice dated 28.03.2015 was sent to the respondent company both at its registered office address and its corporate office address. The notice sent at the registered address returned with remark left without address; however on 29.03.2015 the statutory notice sent to the corporate office was duly served - Held that: - this e-mail was sent a year after the installation and still it only raises an apprehension that the plastic mesh may break. Such an apprehension was even removed by the petitioner as is evident from its e-mail dated 05.03.2014 (Annexure P) wherein the petitioner talks about visiting the Haridwar plant of the respondent on 14.02.2014 and of changing the issue pellet with steel deck pellet and further request for clearing its dues. Even then nothing was paid. The petitioner went on sending requests to the respondent through e-mails but the respondent did not answer. Where the goods were installed and commissioned to the satisfaction of the respondent on 21.01.2013 and on 21.03.2013 and where the respondent admitted its liability on 9.12.2013 (Annexure N) but raised only an apprehension after a year of installation which was also attended to, though beyond the scope of the contract and where the respondent rather appreciated the work of the petitioner then its plea per Section 41 that it could not inspect the goods, within a reasonable period of its installation, makes no sense. The facts reveal the respondent is raising this frivolous issue after a year of receiving demand letters and is trying to wriggle out of its liability & thus have neglected to pay without any cogent, substantial or genuine ground. Petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 876
  Voluntary winding up - Held that:- The power of Court under the provisions of Section 466 of the Act, to stay the winding up proceedings in relation to Companies being wound up by the Court, can also be exercised when a company is undergoing voluntary winding up, in the event the facts and circumstances of the case warrant stay of the voluntary winding up proceedings. In the present case, the Petitioner Company is stated to have sufficient funds with comparatively negligible liabilities, in order to continue the business operations of the Petitioner Company. Further, it has been stated that the primary shareholder of the Petitioner Company, Btindia Ltd., holding more than 99% of the share-capital of the former, is willing to support the Petitioner Company once the Petitioner Company revives its business operations. The voluntary winding up of the Petitioner Company being in its initial stage; and in view of the satisfaction accorded by the Official Liquidator and the Registrar of Companies, there appears to be no impediment to allow the relief prayed for by way of the present petition. Consequently, the voluntary winding up proceedings of the Petitioner Company are stayed altogether. The Directors of the Petitioner Company shall be restored with the power of managing the affairs of the Petitioner Company, and the Voluntary Liquidator shall handover the charge of the Petitioner Company to its Directors. The Voluntary Liquidator, Ms. Seema Khanna, stands discharged qua the voluntary winding up proceedings of the Petitioner Company.

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• 2017 (7) TMI 875
  Scheme of Amalgamation - Held that:- Transferee Company acquired 99.99% shares in the Petitioner Company and that the Petitioner Company became 100% subsidiary of Transferee Company. We have seen the affidavit / report of the Registrar of Companies Karnataka at Bengaluru. It is specifically stated in the affidavit that a notice was issued to the Income Tax Department but comments / objections were not received from the Income Tax Department. Further Registrar of Companies observed that Transferee Company to file balance sheet, profit and loss account and annual returns for the financial year ended 31.3.2015. The Petitioner Company has filed the balance sheet, profit and loss account and annual returns not only for the year ended 31.3.2015 but also for the year ended 31.3.2016. The Petitioner Company has complied the observations made by Registrar of Companies Karnataka at Bengaluru. However Transferee Company to file balance sheet, profit and loss account and annual returns before scheme is implemented. The Director of Transferor Company by name Jyosthna Shetty filed affidavit stating that Petitioner Company is not governed by any other regulatory authority and no need to give notice and that notices were issued to Regional Director, Official Liquidator, Registrar of Companies and Income Tax Assessing Officer. It is clear that the Petitioner Company is a wholly owned subsidiary of ACI Worldwide Solutions Private Limited the Transferee Company. There is no reorganisation of share capital under the scheme. Thus the scheme can be sanctioned at the instant of Petitioner Company even though no separate application is filed by the Transferee Company since the petition is a transferred petition from Hon'ble High Court. Scheme allowed.

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• 2017 (7) TMI 874
  Restoration of the name of Company on the register of Registrar of Companies - petitioners locus standi to be the director of member of the company - Held that:- According to the requirement of Section 108 of the Companies Act, 1956, a company is barred from registering transfer of shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee is presented to the company. It must specify the name, address and occupation of the transferee and it should be delivered to the company alongwith the certificate relating to the shares or with the letter of allotment of the shares. After the company has accepted the transfer, then it is required to enter the name of the transferee in the register of the companies. It is, thereafter that proper information is sent to the Registrar of Companies and the name of the transferee formally stands registered as a shareholder. In the reply filed by the Registrar of Companies-Respondent no. 2 it has not been revealed that at any stage petitioner acquired the share or uploaded on the website of the Register or submitted the same personally so as to constitute them either members of the respondent no. 1 company. The petitioners as such have not been able to show any document to claim their locus standi to be the director of member of the company. They are simply persona non grata. There is no possibility for us to assume that there is land in the name of the company at Mussoorie. No other condition laid down in section 560(6) of the Companies Act, 1956 has been satisfied namely; that the company was in operation or it could be presumed to be carrying on its business at the time when it was struck off. Therefore, the Petition is liable to be dismissed.

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• Service Tax

• 2017 (7) TMI 905
  Works contract - subcontractor of a principal contractor who was involved in construction activity - Held that: - the matter revolves around the proper application of Section 73 of the Finance Act, 1994. That provision opens up by prescribing a period of 18 months to carry out the process which is authorised thereby. This is part of the fundamental contents of sub-section (1) of Section 73 of the Finance Act, 1994. A survey of the different components of Section 73(1) would clearly show that action could follow within the limit of time prescribed under that sub-section only on the existence of the vitiating elements which are enumerated therein. No such ground has been found by the authorities below and the power to invoke Section 73 has not been done within the time prescribed in sub-section (1) thereof which was the only provision which governed the parties at that relevant point of time i.e. to say till the end of the financial year 2007-2008. In this view of the matter, the Appellant is entitled to succeed on this ground as well - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 904
  Refund of CENVAT credit - Section 11B - time limitation - denial on the ground that appellant had filed the application for refund claims of Cenvat credit beyond the period of one year from the date of export of services - Held that: - It is noticed that the appellant had sought refund claim under the provisions of N/N. 27/2012-C.E (N.T) wherein it is mentioned that application needs to be filed for refund of the unutilised Cenvat credit within the time limit prescribed under the relevant provisions of the notifications. It is noticed that the entire issue is res integra inasmuch the interpretation of the lower authorities in this case is regarding the relevant date of filing of refund claim - N/N. 27/2012-CE (N.T) by N/N. 14/2016-C.E (N.T), dated 01.03.2016 so as to read what would be the period of one year in respect of service provider, wherein it is mentioned that it will be from the date of receipt of payment in convertible foreign exchange and also the said notification contemplates as to receipt payment of service has been as an advance prior to the date of issue of the invoice. There is no dispute as to that the refund claims have been filed within one year of receipt of foreign exchange remittances - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 903
  Refund claim - services used for export of goods - rejection on the ground that the demand is time barred under the N/N. 41/2007-ST dt.06.10.2007 - Held that: - N/N. 41/2007-ST prescribed limitation of 60 days from the end of quarter which was amended by N/N. 32/2008-ST dated 18.11.2008 and extended the period of limitation to six months from the end of the quarter - In the present case, the respondent filed a refund claim on 03.07.2008 for the quarter ending on March, 2008. According to the Revenue, the time period of 60 days would be applicable - by Circular dated 12.03.2009 the refund claim for quarter ending March, 2008 filed under N/N. 41/2007-ST as amended by N/N. 32/2008, the limitation would be six months and effective retrospectively - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 902
  Refund of unutilised CENVAT credit - Rule 5 of the CCR 2004 read with N/N. 5/2006-CE dated 14.03.2006 and 27/2012-CE dated 18.06.2012 - Held that: - the learned Commissioner (Appeals) has omitted to take note of the fact that the lower authority has already reduced the same while granting refund - the original authority has observed that the appellant is paying service tax as a provider of service for the rental income from the sublet premises and the original authority has come to the conclusion that the rental of immovable property service received towards sublet property also should be an ‘input service’ for the appellant. Denying the refund on Renting of Immovable Property relating to the premises sub-letted is not sustainable and is hereby set aside - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 901
  Jurisdiction - Power of commissioner to condone delay - Held that: - the appeal before the Commissioner was filed after the delay of 280 days which the Commissioner was not empowered to condone - reliance placed in the decision in the case of Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] wherein the Hon'ble Apex Court has held that condonation of delay beyond 90 days not available to the appellate authority - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 900
  Refund claim - Service Tax paid on input service used for export of goods - denial on the ground that the goods were exported from the appellant's warehouse which is not situated under the jurisdiction of Central Excise, Haldia-II Division - Held that: - the manufacturer-exporter of the goods shall file the claim of refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory or the warehouse. On plain reading of the Notification, it is clear that the manufacturer-exporter may file the refund claim to their jurisdictional officers of the factory or the warehouse - In the present case, the appellants filed the refund claims to the Assistant Commissioner of Central Excise having jurisdiction over the factory of manufacturer. The said refund claim cannot be rejected on the ground that a part of the refund related to the warehouse of the exporter. However, the appellant is not entitled to the refund where the amounts of refund do not co-relate with the documents - appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 899
  Family clubbing activities - appellants had received huge consideration in the form of membership fees and charges, however, they did not deposit the service tax payable on such consideration and also did not file service tax returns - penalty - Held that: - Appellants have clearly suppressed the fact of the huge considerations received by them on account of Membership Fees and the like and evaded service tax liability on that count. It is also not the case that the department was well aware of these omissions for the reason that appellants had not filed any returns during the period. At the same time, I find that the erstwhile section 78, while mandating equal penalty in situations of fraud, suppression of facts etc., did provide for reduction of penalty to 50% where complete transactions are available in specified records - it cannot be denied that complete details of the transactions were available in the records of the appellant, whether in documents or computerized form. Another mitigating factor that has to be noted is that appellant definitely did pay up the tax liability of 7,50,882/- in March, 2014 itself, although, the show-cause notice was issued much later in October, 2014. The penalty requires to be reduced to 50% of the service tax demand of 7,50,882/- - appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 898
  Refund claim - Cenvat credit on input services - rejection on the ground that the input credit taken on services against which no invoice or payment challans have been furnished and secondly input credit has been claimed against invoices not in compliance with Rule 4A of the Service Tax Rules - Held that: - the appellant has submitted that they have produced the copies of invoices and the challans on the basis of which the credit has been availed and they have produced the same which has not been considered by the authorities below - also, the cenvat credit has been rejected on the ground that the registration number of the service provider is not mentioned in few invoices which is only a technical lapse provide other particulars are sufficient to justify the proof of receipt of input service and its utilization. Considering the submissions, these appeals need to be remanded back to the original authority with the direction to consider the documents produced by the appellant before deciding the refund claim of the appellant - appeal allowed by way of remand.

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• Central Excise

• 2017 (7) TMI 897
  CENVAT credit - job-work - denial on the ground that appellant had used capital goods exclusively in manufacture of Aluminium components on job work basis in terms of Rule 57R (1) of erstwhile CER, 1944 - Held that: - It is seen that on the matter of component washing machine, the appellant has been crying hoarse right from the initial adjudication proceedings that the said item was a new concept conceived and developed by them, that the same was under development, the design of the same was not yet frozen and therefore said machine was not a completely manufactured machine. We find merit in this contention. There is no allegation by department that the appellant had earlier manufactured and sold such component washing machines or for that matter, whether the said item found in the premises being utilized in the regular manufacturing operations. The averment of the appellant that it was only a prototype under development has also not been adequately countered by any of the lower authorities. It would not be just and fair to tax the appellant for an attempt at innovation, especially when that attempt was still in process and had not culminated in manufacture of a complete and fully functional machine. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 896
  Classification of boiler parts - The respondents/assessee have adopted the classification as CSH 8402.10 while the department contends the same to be classified under 8402.90 - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., PUNE-I Versus THERMAX BOBCOCK & WILCOX LTD. [2005 (1) TMI 145 - CESTAT, MUMBAI], where it was held that the impugned goods are classifiable under CSH 8402.10 upholding the classification adopted by respondents/assessee - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 895
  CENVAT credit - capiatl goods and inputs - welding electrodes used for repaid and maintenance of their capital goods like conveyor systems, SMS crane, structural electrical etc. use of the final product in their factory - Held that: - on the identical issue, the Tribunal in the case of CCE&ST Vs. M/s. Orient Cement Ltd. [2017 (5) TMI 629 - CESTAT HYDERABAD], the appellant is eligible for CENVAT Credit on the impugned goods - appeal allowed - decided in favor of appelalnt.

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• 2017 (7) TMI 894
  CENVAT credit - inputs - whether HR Coils, Aluminium Coils, Welding Rods etc., undisputedly used for the repair and maintenance of various capital goods, in the factory premises of the appellant are eligible to CENVAT credit under the definition of input as prescribed under Rule 2 (k) of CCR, 2004? - Held that: - This issue has been considered by this Tribunal in Kissan Sahakari Chini Mills Ltd's case [2013 (7) TMI 2 - CESTAT NEW DELHI], where it was held that the activity of repair and maintenance of plant and machinery is an activity which has direct nexus with manufacture of final products and the goods used in this activity would be eligible for Cenvat credit - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 893
  SSI Exemption - N/N. 8/2001-CE dated 01.03.2001 as amended - Revenue entertained a view that the appellant manufactured the branded goods and accordingly, not eligible for the said concession - Held that: - the restriction for denial of exemption Notification in terms of Para 5 of Notification 8 of 2001, availability of any symbol monogram, writing, in such goods indicating connection in the course of trade between such goods and the some person using such name, is sufficient. On perusal of evidences, we are satisfied that the goods manufactured did bear such brand name, which will make the appellant ineligible to claim the SSI exemption. Most of the purchase bills produced by the appellant, where reference is to nuts. The present case is relating to bolts with names embossed on them. As such, we find that the purchase documents cannot be linked with the seized goods. Penalty u/s 11AC - Held that: - In respect of the goods, which were still lying in the factory, no duty demand can be confirmed and accordingly, equivalent penalty cannot be imposed in terms of Section 11AC of the Central Excise Act, 1944. Accordingly, we find that the confirmation of duty demand and imposition of equal amount of penalty on the goods, which are still lying in the factory premises, is not sustainable. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 892
  Clandestine removal - job-work - penalty - The Revenue's case is that after job work, the goods have been received back in the factory of the appellant and further process has been carried out thereon - The case of the appellant is that after carrying out the further process, these finished goods were entered in RG-I register - Held that: - The Revenue has not proved that the goods received from the job worker and after further process were not entered in RG-I register. If the Revenue would have proved that all the goods received from the job worker back and after process the same has been cleared without payment of duty. In that case, there shall be a case of open and shut but in this case only duty involved of 42243/- has been established that the appellant had cleared the said goods on the basis of challans of the job worker and after processing without any invoices, the demand of 42,243/- alongwith interest is confirmed and penalty equal to that is also imposed - demand of 42,243/- is confirmed along with interest and equivalent amount of penalty is also imposed. For the remaining demand, it shows that the investigation has done half heartedly without bringing concrete evidence of clandestine removal of goods. Therefore, the demand is not sustainable. With regard to the statement recorded from M/s Chawla Auto Agency, although M/s Chawla Auto Agency has admitted that they have received the goods without cover of invoice but the appellant has never admitted that fact, moreover, while issuing show cause notice M/s Chawla Auto Agency was not made party to the proceedings to impose penalty under Rule 26 of the Central Excise Rules, 2002, which shows that the evidence collected from M/s Chawla Auto Agency are not fair evidence to allege clandestine removal of the goods by the appellant to M/s Chawala Auto Agency without cover of invoices, therefore, the said demand is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 891
  Refund of Central Excise duty paid on coal procured - jurisdiction - denial on the ground that the appellant is falling under special economic zone and as such the said officer has no jurisdiction to decide claim by the person located in SEZ, in terms of SEZ Act and Rules made thereunder - Held that: - Section 11B states any person claiming refund of any duty of excise. No distinction has been made that the claimant should be the manufacturer or the person, who paid the duty to the Government. Jurisdiction - Held that: - In the present case, the duty of excise has been paid by M/s Mahanadi Coal Field Ltd., though by applying the relevant provisions of law, they ought not to have paid the duty as the are to recognized SEZ unit/developer. Regarding the duty paid nature of the product, receipt of the said product by the appellant, there are no disputes - the jurisdiction issue has been under consideration with the Ministry of Finance as well as Minintry of Commerce and ultimately the Ministry of Commerce issued Notification dated 05.08.2016. This Notification specified that the refund, demand, jurisdiction, review and the appeal with reference to various operations under SEZ Act, 2005, shall be with a jurisdiction of Central Excise authorities in accordance with the relevant provisions of Customs Act, 1962, Central Excise Act, 1944 and Finance Act, 1994. We find that the said Notification makes the position amply clear on the question of jurisdiction of Central Excise officers to deal with the claim in the present matter. The impugned order set aside and the original authority directed to examine the claim afresh on merit - appeal allowed by way of remand.

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• 2017 (7) TMI 890
  CENVAT credit - job-work - place of removal - denial on the ground that the place of removal of the goods manufactured by appellant on job work basis is the factory premises and not the depot of PBPL? - Held that: - similar issue in respect of other job workers of PBPL, was before the Tribunal in many cases, where, the Bench in detailed order held in favour of the appellants therein. In view of the fact that similar issue has been decided in favour of various job workers on identical set of facts, I find that the impugned order in this case also does not survive - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 889
  Valuation - die modification charges - case of Revenue is that the die modification charges has also to be amortised in the value of the motor vehicle parts manufactured by the appellants in same manner as the cost of dies is amortised - Held that: - the amortisation cost of die/tools/ moulds has to be included in the assessable value of the excisable goods manufactured out of such tools/die/mould supplied free of cost by the customer even though it does not make any difference whether the appellants have carried out the modification. Even if the modification is carried out by someone else, the value of modification will enhance the value of the tools/dies. When such modified tools/dies used by the manufacturer the said enhanced value shall be considered for taking the cost of the tools/die for purpose of amortisation. Therefore whether it is the original cost of the die or enhanced cost due to addition of modification charges it is one and the same and the cost of the die should be taken as the original cost of the die plus modification charges. That is the total cost of the die which is to be amortised. Accordingly, the amortisation cost of modification charges of the dies has to be included in the assessable value of the goods manufactured with the help of such die/tools. Hence the amortisation of modification charges of die is required to be included in the assessable value. Extended period of limitation - penalty - Held that: - there was no means for ascertaining that the appellants have collected die modification charges in respect of those dies/tools which are used for manufacture of excisable goods of the appellants. In this fact there is a clear suppression of fact on the part of the appellants. Therefore the extended period was legally and correctly invoked by the adjudicating authority. For the same reason the penalty imposed under Section 11AC is also sustainable. Appeal dismissed - decided against appelalnt.

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• 2017 (7) TMI 888
  CENVAT credit - job-work - transfer of credit - whether the appellant is entitled to CENVAT Credit for the inputs which have been purchased initially by the job-worker and utilized within the job-workers premises for the product of the appellant and later sold to the appellant? - Held that: - the matter is covered by the Tribunals decisions in the cases of Flex Industries Ltd. Vs. Commissioner of Central Excise [2006 (2) TMI 439 - CESTAT, NEW DELHI], where it was held that since the job workers had used duty paid inputs for the processing carried out by it, the appellants were rightly eligible for the transfer of those credits - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 887
  100% EOU - Manufacture - As the appellant is 100% EOU and cleared basmati rice, broken rice and bran made into DTA without payment of duty, therefore, two show cause notices were issued to demand excise duty on the said clearance of basmati rice, broken rice and brown rice cleared into DTA - whether the conversion of paddy into rice amounts to manufacture as per Section 2(f) of the Act? - whether the rice, rice bran and broken rice are excisable goods, in terms of Section 2(d) of the act or not? Held that: - reliance was placed in the case of Dunar Food Ltd. Vs. CCE [2016 (11) TMI 636 - CESTAT CHANDIGARH], where it was held that the conversion of paddy into rice does not amount to manufacture and rice/rice bran/broken rice are not excisable goods in terms of Section 2(d) of the Act - the conversion of paddy into rice/broken rice/rice bran does not amount to manufacture in terms of Section 2 (f) of Central Excise Act, 1944 and the rice/rice bran/broken rice are not excisable goods in terms of Section 2(d) of the Act - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 886
  Manufacture - Aluminum frames, shutters and other parts of doors and windows - it appeared that the activity carried out by M/s. Ascon Arabian Aluminium Company (P) Ltd., amounted to manufacture and they have manufactured the same without obtaining Central Excise registration and cleared the same without following the Central Excise procedure and without payment of duty - Held that: - as per the direction of the Tribunal, the learned Commissioner has clarified the entitlement of modvat credit of 18,17,187/- which the Commissioner is held that the appellant is entitled to the same. Further the Commissioner has also reworked the duty liability after considering the SSI exemptions and has determined the total duty payable amounting to 6,18,103/-. Further the learned Commissioner has held that the appellant is liable to pay interest on the duty demand as the interest liability is compensatory in character which is imposed on the assessee who has withheld the payment of any tax or duty and such liability arises automatically by operation of law. Further I find that the learned Commissioner has observed that though the appellant is liable to pay the mandatory penalty under Section 11AC but since the Tribunal in the impugned order has directed him to impose nominal penalty and therefore he has only imposed a nominal penalty of 10,000/- under Section 11AC. Redemption fine - Held that: - the Tribunal has observed that there are several judgments for not imposing mandatory penalty and redemption fine in the facts and circumstances where the goods are cleared without payment of duty if bonafides are established - redemption fine dropped. Penalty - Held that: - the imposition of penalty of 10,000/- is justified. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 885
  Waste/scrap - excisability - Whether the appellants M/s IOC is liable to pay duty on the scrap of capital goods and on the Spent Catalyst? - Held that: - the issue of whether waste and scrap, which is generated in the course of manufacture due to scrapping of worn out parts of capital goods would attract any duty or require reversal of Cenvat Credit before 16.05.2005, when Sub Rule 5A to Rule 3 of Cenvat Credit Rules, 2004 was introduced, was settled by the judgment of Hon’ble Madras High Court in the case of CCE, Pondicherry Vs. CESTAT [2013 (7) TMI 53 - MADRAS HIGH COURT], where it was held that when the scrap had not arisen out of manufacture, but arising on account of wear and tear in the absence of specific provision for such waste and scrap in the relevant rules, duty could not be demanded. As to the leviability on the excise duty on spent Zinc Oxide Catalyst, we find that the same is not a new product arising during the manufacture of final Petroleum products. Since no new item is emerging as a result of the manufacture, duty is not liable on the same. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 884
  CENVAT credit - furnace oil - duty paying invoices - Held that: - the appellant has rightly availed the credit as per the invoices issued by M/s. BPCL and therefore, the Department cannot question the CENVAT credit availed by the appellant on the basis of valid invoices issued by the supplier - reliance placed in the case of COMMISSIONER OF C. EX., DELHI-II Versus RS. INDUSTRIES [2005 (7) TMI 117 - HIGH COURT OF DELHI] - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 878
  Input tax credit - cancellation of registration of dealers - Held that: - In the counter affidavit filed by the respondent in both the Writ Petitions which are more or less identical, the respondent has stated that the petitioner has to avail the alternate remedy of filing an appeal as against the impugned assessment orders and in this regard referred to the orders passed by the Division Bench. So far as the availment of the alternate remedy provided under the statue, it is not an universal rule that in all cases, the aggrieved parties have to be relegated to avail the alternate remedy and the Courts have carved out exceptional circumstances where the High Court can exercise jurisdiction under Article 226 of the Constitution, despite existence of an alternate remedy. Therefore, the facts of the each case have to be gone into to decide as to whether the petitioner should be relegated to avail the alternate remedy - the matter is remitted back to the respondent with a direction to consider the request of the petitioner for furnishing the copies of the statements and records and an opportunity of cross examination - petition allowed by way of remand.

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• 2017 (7) TMI 877
  Levy of VAT - terminalling services provided to Bharat Petroleum Corporation Limited (BPCL) - this Court is of the view that the third respondent has failed to address the important aspect raised by the petitioner by contending that they having discharged the service tax liability, they cannot be directed to pay VAT for the same transaction - whether the petitioner could be made to suffer two levies, namely, sales tax and service tax? - Held that: - it may be necessary to peruse the circular issued by the Central Board dated 01.08.2002. It appears that the circular was not placed before the Assessing Officer. Nevertheless, the circular throws light as to what would be includable in "storage and warehousing" and it states that service for goods including the liquids and gases would fall within the storage and warehousing. Above all, the legal principle should be taken note of by the third respondent, that is to say that except specific contracts so provided under Article 366(29A), no other contracts can be artificially severed to tax the sale element with respect to the goods as compromised in such composite contracts. The non-exclusivity of the agreement between the petitioner and the BPCL is also a relevant factor which the third respondent has not considered. Furthermore, the installation which have been erected by the petitioner are fixed to the ground and the photographs produced would show that it consists of pipes and cylinders and prima facie, this Court is the view that the finding rendered by the third respondent that it is not a fixed asset like land/building/space appears to be an incorrect finding. Thus, for all the above reasons this Court is of the considered view that the assessment under the said head requires to be re-done taking note of the legal position, circular issue by the Central Board, factual matrix and the non-exclusivity of the agreement between the petitioner and the BPCL and that the petitioner cannot be made to suffer by two levies, namely, sales tax and service tax. The impugned assessment under the head of terminalling service provided to BPCL is set aside and the writ petition is allowed and the matter is remanded to the third respondent to re-do the assessment on the said head - appeal allowed by way of remand.

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