TMI Tax Updates - e-Newsletter
August 1, 2018

Case Laws in this Newsletter:

GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. MAJOR PRE-DEPOSIT RELIEF TO APPELLANTS

   By: Dr. Sanjiv Agarwal

News

1. Tax Evasion in Post-GST Regime

2. Note on Simplified Returns and Return Formats July, 2018

3. Loans and deposits of Indians, other than Banks, in the Swiss Banks show decrease by 34.5% in the year 2017 as compared to 2016

4. Unearthing of Black Money

5. Lateral entry of Domain Experts in PSBs

6. Unearthing of Benami Properties worth ₹ 4,300 crore

7. Index of Eight Core Industries (Base: 2011-12=100) June, 2018

8. Monthly Review of the Account of the Union Government of India up to the month of June 2018 for the Financial Year 2018-19

9. Finance Commission to visit Jharkhand from tomorrow, Challenges in Social Sector to top the agenda

10. Startup India Yatra begins in Chhattisgarh

11. Production of RAW Cashew at All Time High

Notifications

Companies Law

1. F.No. A-45011/44/2018-Ad.IV - dated 27-7-2018 - Co. Law

Seeks to amend Notification No. S.O. 1935 (E), dated the 1st June, 2016

Customs

2. 66/2018 - dated 31-7-2018 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg

3. 65/2018 - dated 30-7-2018 - Cus (NT)

Sea Cargo Manifest and Transhipment (Amendment) Regulations, 2018

4. 12/2018-Customs (N.T./CAA/DRI) - dated 30-7-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI-reg.

5. 11/2018-Customs (N.T./CAA/DRI) - dated 30-7-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI-reg.

6. 01/2018 - dated 30-7-2018 - Safeguard

Seeks to impose safeguard duty on imports of ‘Solar Cells, whether or not assembled in modules or panels’ falling under heading 8541 of the Customs Tariff Act, 1975, for a period of two years

GST

7. 30/2018 - dated 30-7-2018 - CGST

Extend the due date for filing of FORM GSTR-6 Seek to make amendments (Seventh Amendment, 2018) to the CGST Rules, 2017

GST - States

8. ERTS(T) 65/2017/Pt.I/123 - dated 6-7-2018 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Seventh Amendment) Rules, 2018.

9. ERTS(T) 65/2017Pt.I/115 - dated 19-6-2018 - Meghalaya SGST

The Meghalaya Goods and Service Tax (Sixth Amendment) Rules, 2018.

10. ERTS(T) 65/2017/Pt.I/108 - dated 13-6-2018 - Meghalaya SGST

Specifying the goods which may be disposed off by the proper officer after its seizure.

11. ERTS(T) 65/2017/Pt/296 - dated 31-5-2018 - Meghalaya SGST

Constitute the Meghalaya Appellate Authority for Advance Ruling.

12. ERTS(T) 65/2017/Pt/292 - dated 28-5-2018 - Meghalaya SGST

Notifies the National Academy of Customs; Indirect Taxes and Narcotics, Department of Revenue, Ministry of Finance, Government of India, as the authority to conduct the examination as per said sub-rule.

13. ERTS(T) 65/2017/380 - dated 28-5-2018 - Meghalaya SGST

Amendments in the Notification No. ERTS (T)/65/2017/4, dated the 29th June, 2017.

14. ERTS(T) 65/2017/372 - dated 14-5-2018 - Meghalaya SGST

Waives the late fee payable the return in FORM GSTR-3B.

15. 29/2018-State Tax - dated 25-7-2018 - Mizoram SGST

The Mizoram Goods and Services Tax (Seventh Amendment) Rules, 2018.

16. 28/2018-State Tax - dated 2-7-2018 - Mizoram SGST

The Mizoram Goods and Services Tax (Sixth Amendment) Rules, 2018.

17. 27/2018-State Tax - dated 2-7-2018 - Mizoram SGST

Seeks to specify goods which may be disposed off by the proper officer after its seizure.

18. 26/2018-State Tax - dated 2-7-2018 - Mizoram SGST

The Mizoram Goods and Services Tax (Fifth Amendment) Rules, 2018.

19. 24/2018-State Tax - dated 28-5-2018 - Mizoram SGST

Notifies the National Academy of Customs, Indirect Taxes and Narcotics, Department of Revenue, Ministry of Finance, Government of India, as the authority to conduct the examination as per the said sub-rule.

20. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/180 - dated 29-6-2018 - Nagaland SGST

Amendment in the Notification of the Government of Nagaland, Finance Department (Revenue Branch), F.NO.FIN/REV-3/GST/1/08(Pt-1) 'K' dated the 30th June, 2017

21. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/173 - dated 13-6-2018 - Nagaland SGST

Seeks to specify goods which may be disposed off by the proper officer after its seizure.

22. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/161 - dated 28-5-2018 - Nagaland SGST

Amendment in the Notifications of the Government of Nagaland, Finance Department (Revenue Branch), F.No.FIN/REV-3/GST/1/08(Pt-1) “G”, dated the 30th June, 2017 and No. FIN/REV-3/GST/1/08(Pt-1)/44 dated: 26th October, 2017.

23. F.NO.FIN/REV-3/GST/1/08 (Pt-1)/129 - dated 28-5-2018 - Nagaland SGST

Extension of due date for filing of application for refund under section 55 by notified agencies

Circulars / Instructions / Orders

GST - States

1. 15/2018 - dated 25-6-2018

Modifications to the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Circular No. 41/15/2018-GST dated 13.04.2018

2. 14/2018 - dated 19-6-2018

Clarifications on certain issues under CST-reg.

GST

3. 50/24/2018 - dated 31-7-2018

Withdrawal of Circular No. 28/02/2018-GST dated 08.01.2018 as amended vide Corrigendum dated 18.01.2018 and Order No 02/2018–Central Tax dated 31.03.2018 – reg.

4. 51/25/2018 - dated 31-7-2018

Applicability of GST on ambulance services provided to Government by private service providers under the National Health Mission (NHM) — Reg.

Highlights / Catch Notes

GST

• Authorities Boost Efforts Against Tax Evasion with Advanced Data Analytics Under GST Regime for Fair Market Competition.

  News : Tax Evasion in Post-GST Regime
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• GST Simplified Returns Update: July 2018 Revisions Aim to Streamline Filing, Enhance Compliance, and Reduce Business Burden.

  News : Note on Simplified Returns and Return Formats July, 2018
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Income Tax

• Transitioning from Leasehold to Ownership is a Cost of Acquisition for Capital Gains u/ss 48 and 55.

  Case-Laws - HC : Capital Gains - The perfection of the title from perpetual leasehold rights to complete ownership had, in such circumstances, to be regarded as a cost of acquisition within the meaning of such expression in Sections 48 and 55 of the Act.
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• Tax Authorities Confirm No Extra Deductions for Suppressed Sales; All Income Additions Upheld by Authorities.

  Case-Laws - HC : Sales suppression detected on survey - The assessee having filed its return claiming deduction for the entire expenditure incurred, there is no warrant for making further deduction for expenditure or computing the profit for the suppressed sales turnover detected on survey - entire additions confirmed.
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• Oral Trusts Qualify for Registration with Evidence Under Income Tax Act Sections 12AA or 12A.

  Case-Laws - HC : Exemption - the trust can be created even orally and if the assessee is able to give some evidence of creation of such Trust by a word of mouth, the same shall be eligible for registration u/s 12AA/12A
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• Retail Outlet Expenses Considered Part of Single Business Operation; Allowed as Revenue Expenditure Once Business Commences.

  Case-Laws - AT : Expenditure towards acquiring and oping of retail outlets / stores - Operations of these stores at various locations is one composite business and once business had been started then the expenditure can not be linked only to the stores which became operational during the year under consideration. - expenses allowed as revenue expenditure.
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• Excise Duty Refund as Self Cenvat Credit is a Capital Receipt, Not Taxable; Section 80IB Deductions Irrelevant.

  Case-Laws - AT : Addition as Excise duty refund (Self Cenvat Credit) - it is capital receipt - the entire receipt itself cannot be treated as part of taxable receipt and the entire question of allowing and disallowing the deduction u/s.80IB becomes purely academic.
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• Domain Name Registration Fees Classified as Royalties u/s 9(1) of the Income-tax Act.

  Case-Laws - AT : Receipts from domain name registration - the charges received by the assessee for services rendered in respect of domain name is royalty within the meaning of Clause (vi) read with Clause (iii) of Explanation 2 to Section 9(1) of Income-tax Act.
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• Wharfage Charges Exempt from TDS u/s 194I; Not Classified as Rent by Port Authorities.

  Case-Laws - AT : Wharfage charges paid to the KPT is not rent and no TDS is liable to be deducted under the provisions of section 194I of the Act.
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Customs

• Sea Cargo Manifest and Transhipment Regulations, 2018 to Take Effect November 1 Instead of August 1.

  Act-Rules : Sea Cargo Manifest and Transhipment Regulations, 2018 will come into force w.e.f. 1.11.2018 instead of 1.8.2018
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• Strict Interpretation of Ambiguity in Exemption Favors Revenue, Not Assessee.

  Case-Laws - SC : When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
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• Imported CKD Vehicle Exceeds 250-Watt Limit, Requires Registration; Penalty Issued for Breaching Import Policy Notes.

  Case-Laws - AT : Violation of import conditions - the present vehicle (in CKD condition) was imported having electric capacity of more than 250 watt which as per mandatory requirement is to be registered with the Motor Vehicle Authority - Thus, the imported goods are in violation of Import Policy Notes, applicable during the relevant time - levy of penalty confirmed.
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• Import Valuation of Sukkur Dates Challenged; Enhancement Without Rejecting Transaction Value Violates Rule 12 of Customs Valuation Rules.

  Case-Laws - AT : Valuation of imported goods - dry dates of Sukkur variety - The enhancement of the value on the basis of SIIB alert circular without first rejecting transaction value as per procedure under Rule 12 of Customs Valuation Rules, is not legally tenable
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Indian Laws

• Cheque Bounce Case: No Offence by Petitioner Due to Lack of Statutory Notice u/s 138.

  Case-Laws - HC : Cheque bounced - Since no demand was made by the payee or holder in due course, of the subject cheques, by issuance of a statutory notice under section 138, the petitioner has not committed any offence under section 138 of the Act.
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Service Tax

• Rajasthan Housing Board Must Pay Service Tax on Commercial Leases, Not on Residential Units.

  Case-Laws - AT : Rajasthan Housing Board (RHB) will be liable for payment of service tax on the lease amounts recovered by them from the allottee of commercial properties and shops by whatever name. But no service tax levied can be upheld in respect of such lease amounts recovered for allotment of residential units.
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• Commissioner (Appeals) Dismisses Export Service Rebate Claims as Time-Barred Due to Non-Adherence to Reasonable Time Doctrine.

  Case-Laws - AT : Rebate/refund claim - export of services - Since the appellant has failed to exercise the doctrine of reasonable time with respect to remaining two claims, those have rightly been rejected by the Commissioner (Appeals) being barred by time.
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• Government-Owned Corporation Cleared of Mala Fide Intent in CENVAT Credit Case; No Extended Limitation Period Applied.

  Case-Laws - AT : CENVAT Credit - The appellant is wholly owned corporation of Government of India (PSU) and cannot be attributed with any mala fide so as to justifiably invoke the longer period of limitation
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• Banking Sector Appellant Unlikely to Acquire Small CENVAT Credits Due to Large Transactions and Significant Tax Payments.

  Case-Laws - AT : CENVAT Credit - The appellant being in the Banking Sector, cannot be expected to indulge in such clandestine availment of small amounts of Cenvat credit, when they are dealing with the huge transactions and are paying huge taxes.
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Central Excise

• CENVAT Credit Denied for Inputs on Bought Items Like Soap and Herbal Oil; Repayment Demand Confirmed.

  Case-Laws - AT : CENVAT Credit - inputs - supply of bought items such as soap and Herbal oil with manufactured items - credit denied - demand confirmed.
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• Goods Classification: Cotton Tents Qualify for 4% Duty Under Notification for "Cotton, Not Containing Other Textile Material.

  Case-Laws - AT : Classification of goods - tents made of 'cotton' - description of the goods covered by the said SCN matches with the entry in the said notification stating to be “cotton, not containing any other textile material", goods were rightfully attracting 4% duty.
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VAT

• Tax Procedures Require Reasonable Time Limits; Notices Beyond Reasonable Periods Are Invalidated.

  Case-Laws - HC : Time Limitation - escapement of turnover - When there is no limitation prescribed for completion, there could only be the principles of reasonableness applied, on facts of individual cases - notices issued beyond the limitation period set aside.
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• Rejected Compounding Application Requires Taxpayer to File Returns with Supporting Documents; No Automatic Contract Established.

  Case-Laws - HC : If after payment of quarterly tax the compounding application is rejected, necessarily, the assessee will have to file returns by producing the books of account. Therefore, payment of tax at compounded rate by itself cannot be a reason for concluding that there is a concluded contract between the parties.
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Case Laws:

• GST

• 2018 (7) TMI 1825
  Input tax credit - inability to upload Form GST TRAN-1 within the time stipulated on account of some error - Held that:- It is appropriate to dispose of the writ petition permitting the petitioner to prefer an application before the additional sixth respondent, the Nodal Officer appointed to resolve issues in the nature of one raised by the petitioner.

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• 2018 (7) TMI 1824
  Quantum of GST - specified works already undertaken by the petitioner - the concerned officer is awaiting directions from the Head Office - Circular No.GST/002/17, dated 10.08.2018 - Held that:- I cannot immediately accede to the stand taken by the respondents because, as is clear from Ext.P5 circular, the Head Office, which is to mean the Managing Director, has already taken a decision to compensate the contractors to the extent of the GST paid by them on account of the fact that, at the time when the contract was entered into, the GST regime had not been implemented - I, therefore, fail to understand why the Deputy Chief Engineer should take a stand in the counter affidavit that he is still awaiting directions from the Head Office, when the circular makes it clear that all such payments are to be made to the contractors - petition disposed off.

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• 2018 (7) TMI 1823
  Release of seized Jewellery - petitioner is unable to furnish bank guarantee in terms of sub-rule (1) of Rule 140 of the Rules - Held that:- It was pointed out that the seized articles belong to third parties, entrusted to the petitioner for Hall Marking and the owners of the articles are prepared to furnish bank guarantee so as to enable the petitioner to claim release of the seized articles - there is no stipulation anywhere that the security shall be furnished by the party claiming release of the seized articles. The writ petition is disposed of directing the third respondent to release the seized articles in accordance with sub-section (6) of Section 67 of the Act and sub-rule (1) of Rule 140 of the Rules

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• Income Tax

• 2018 (7) TMI 1822
  Disallowance of the royalty payment made to G4S NAMESA - whether the same was not incurred wholly and exclusively for the purpose of business under Section 37? - Held that:- We find that, CIT (A) and the Tribunal have both rendered finding of fact that the respondent-assessee has not led any evidence before it to establish the manner in which the technical knowhow as acquired from G4S NAMESA has been used in the business of the respondent. The authorities have also held that the Incident Report Format produced on account of ERP obtained from an Associated Enterprise to whom the payment was made, was infact being carried out by the appellant even prior to entering into an agreement dated 27th December, 2007 with G4S. The concurrent finding recorded is that the assessee had offered no explanation as to the manner in which the agreement had helped the assessee to carry out its business. These are findings of facts. Thus, mere entering into an agreement with it being actually put to use cannot lead to the conclusion that the payment made under the Agreement was for knowledge to be used in its business. - Decided against assessee.

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• 2018 (7) TMI 1821
  Reopening notice u/s 148 - applicability or otherwise of provisions of section 50C was not examined at all by the Assessing Officer in the assessment order passed u/s 143(3) - Held that:- In this case it is not the case of the Revenue that the Assessing Officer was not aware of Section 50C of the Act at the time of passing the Assessement Order dated 26.12.2007 under Section 143. In this case the trigger to reopen assessment proceedings as recorded in the reasons is non-furnishing of copy of the sale deed by the Respondent. This has been found factually to be incorrect. Therefore, once the sale deed was before Assessing Officer and enquiries were made during the assessment proceedings regarding the quantum of capital gains, it must follow that the Assessing Officer had while passing the order dated 26.12.2007 under Section 143(3) of the Act had taken view on facts and in law as in force at the relevant time. Thus, this is a case of change of opinion. One must not loose the sight that the reassessment proceedings are not proceedings to review of the order already been passed but only a power to reassess. As observed by the Supreme Court in CIT v. Kelvinator [2010 (1) TMI 11 - SUPREME COURT OF INDIA] 'We must also keep in mind the conceptual difference between power to review and power to reassess'.

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• 2018 (7) TMI 1820
  Capital Gains - Short-term capital gain or not - transfer of leasehold rights - Revenue claims that since the acquisition of the full ownership pertaining to the property preceded the transfer thereof by the assessee by a few months - Held that:- Since the assessee in this case inherited the relevant immovable property under a Will and the perfection of the title from perpetual leasehold rights to complete ownership did not amount to the acquisition of the property by the assessee; the acquisition took place upon the bequest under the Will being effective. The perfection of the title from perpetual leasehold rights to complete ownership had, in such circumstances, to be regarded as a cost of acquisition within the meaning of such expression in Sections 48 and 55 of the Act. Indeed, the assessee in this case was no longer transferring the leasehold rights to the assessee’s transferee; the assessee was transferring complete ownership rights therein. As to the second issue, it will be governed by the same legal principle as in the recognition by the Supreme Court in R.M. Arunachalam [1997 (7) TMI 5 - SUPREME COURT] that the discharge of a mortgage debt created by the predecessor-in-interest of the assessee had to be regarded as a part of the cost of acquisition. The encumbrances to the property in this case were created by the Will and the conduct of the assessee’s predecessor-in- interest. These encumbrances were got rid of by the assessee by payment. A better title to the property was acquired by the assessee and transferred to the assessee’s transferee. For the same principle as recognised in the Supreme Court judgment, the cost of getting rid of such encumbrances in any immovable property has to be accepted as a part of the cost of acquisition of the property, subject, however, to the assessment as to the genuineness and validity of such encumbrances. To spell it out in more clear terms, merely because an assessee seeks deductions by adding to the cost of acquisition upon citing payments to other claimants in respect of the property may not pass muster unless, on facts, the claims are found to be genuine and the transactions discovered to be at arm’s length.

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• 2018 (7) TMI 1819
  Penalty u/s 271(1)(c) - Held that:- The impugned penalty notices having issued well beyond the period of limitation fixed in the first limb of Section 275(1) (a) of the Act, are held to be barred by limitation. However, the respondent is at liberty to initiate penalty proceedings after the order is passed by the CIT (A) before whom the matters are pending. In the result, these Writ Petitions are allowed, the impugned notices are directed to be kept in abeyance with liberty to the respondent to initiate 'fresh proceedings after the disposal of the Appeals by the Commissioner of Income Tax (Appeals), which have been preferred against the orders of assessment passed by the respondent.

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• 2018 (7) TMI 1818
  Offences u/s 276B - Failure to pay tax (TDS amount) to the credit of Central Government - Held that:- In the present case, this Court finds sufficient materials in the complaint as well as the documents filed along with the complaint and also the evidence given by the witnesses and therefore, this Court does not want to interfere with the cognizance taken by the Court below on the irregularity pointed out by the learned Senior Counsel. In the considered opinion of this Court, the irregularity pointed out by the learned senior counsel does not vitiate the entire proceedings. There are no grounds to discharge the petitioner. This Court does not find any ground to interfere with the order passed by the Court below. Accordingly, this Court confirms the order passed by the Court below dismissing the discharge petition. It is made clear that the findings that have been given both by the Court below and this Court, are only based on prima facie materials. None of these findings will have any bearing while Court below decides the case finally and the decision will be made only based on the evidence on record and on the merits of the case without being influenced by any of the findings given while dismissing the discharge petition. The complaint is of the year 1991. It is therefore necessary for this Court to fix a time limit for the completion of the proceedings. The Additional Chief Metropolitan Magistrate (EO-1), Egmore, Chennai is directed to complete the proceedings strictly within a period of four months from the date of receipt of copy of this order. The petitioner and the respondent are directed to co-operate with the proceedings to ensure that the same is completed within a time stipulated by this Court. Criminal Revision Petition is dismissed.

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• 2018 (7) TMI 1817
  Sales suppression detected on survey - Whether could be taken as taxable income when there was no suppression found on purchases? - Held that:- This is the additional income received as profit on sales, over and above that seen from the accounts. We need not labour on the figures in the next year; which alone differ and the principle on which estimation was made is similar. The mere fact that there was no investment made outside the books of accounts would not help the assessee in the present case. As was noticed, the purchase turnover does not alter at all since the purchases can only be made from a State owned Corporation. There is no restriction with respect to the price for which liquor has to be sold by a person holding licence to run Bars under the Abkari Act. The price being variable and the suppression being the actual price for which the liquor was sold; the entire suppression is income. The assessee having filed its return claiming deduction for the entire expenditure incurred, there is no warrant for making further deduction for expenditure or computing the profit for the suppressed sales turnover detected on survey. What was detected on survey was added on as income and the assessment was completed, which cannot be faulted. - Decided against assessee.

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• 2018 (7) TMI 1816
  Reopening of assessment - reason to believe - deductions/exemptions under sections 54EC and 54F - Held that:- Neither in the notices dated March 31, 2017 nor in the reasons furnished in September/October, 2017, did the Assessing Officer record the presence of the jurisdictional conditions for reopening the subject assessments. Even thereafter, when she rejected the petitioners' objections under her letters dated November 17, 2017, the Assessing Officer did not do so. Assessing Officer never opined that issue of the subject notices was warranted on the ground that the petitioners did not disclose fully and truly all material facts necessary for their assessment or that the income that escaped assessment during that year amounted to or was likely to amount to one lakh rupees or more. The absence of these jurisdictional conditions in her reasons for seeking to reopen the assessments beyond four years is fatal to the very issuance of the impugned notices. The reasons communicated by the Assessing Officer to the petitioners must be the same reasons furnished to the competent authority for seeking approval under section 151 of the Act of 1961, as the Assessing Officer cannot modify, add to or delete from such reasons to suit her own purposes at different points of time. Further, when the reasons recorded by the Assessing Officer are the only material that can be looked into by the competent authority for granting approval under section 151 of the Act of 1961, the absence of such jurisdictional conditions therein would invariably vitiate the approval, if any, by the competent authority, as he could not have recorded the requisite satisfaction under section 151 of the Act of 1961, when the fundamental jurisdictional conditions justifying the reopening of the assessments beyond the normal four-year period did not even find mention in the reasons recorded by the Assessing Officer. On the above analysis, this court finds that reopening of the petitioners' assessments for the assessment year 2010-11 by way of the notices dated March 31, 2017 issued under section 148 of the Act of 1961 and the rejection of their objections thereto by the letters dated November 17, 2017 cannot be sustained on grounds more than one. The attempt on the part of the Revenue to do so is an abuse of power as the facts demonstrate that the very basis for such reopening was the subject matter of the appeals before the Appellate Tribunal and, thereafter, before this court - Decided in favour of assessee

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• 2018 (7) TMI 1815
  Refusing the registration u/s 12AA to the trust - necessity that the trust should be established under an instrument - Tribunal allowing the appeal of the assessee for statistical purposes - Held that:- The applicable Rule 17A itself provides that it is not necessary that the Institution/ Trust should be established under an instrument. The Rule 17A does not prescribe that in case the Institution/Trust is established otherwise than under an instrument, what type of document evidencing the creation of the Trust or the establishment of the Institution, has to be filed, meaning thereby that the document evidencing the creation of Trust of the establishment of Institution could be of any type. As per the provisions of the Indian Trust Act, the trust can be created even orally and if the assessee is able to give some evidence of creation of such Trust by a word of mouth, the same shall be eligible for registration u/s 12AA/12A of the Act, provided such evidence is filed and the other conditions under the statute are satisfied. Following the decision of HC [2016 (9) TMI 307 - DELHI HIGH COURT], decided against the Revenue.

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• 2018 (7) TMI 1814
  Undisclosed income - Addition on money received on sale of flats - method of accounting of the project - Held that:- In the case of Runwal Homes Pvt Ltd (2017 (12) TMI 1216 - ITAT MUMBAI), we are of the considered view that the AO was erred in quantifying undisclosed income by taking average rate of 21,400 per sq.ft. and applying such rate to 21 flats without any evidence found as a result of search. Hence, direct the AO to restrict the quantification of undisclosed income to the extent of incriminating material found as a result of search. We further direct the AO to delete addition made towards on-money received from sale of flats in the impugned assessment year and make addition in the year in which the project has been completed, since the assessee is following project completion method for recognition of revenue. Hence, we set aside the issue for the limited purpose of quantification of undisclosed income on the basis of incriminating material found as a result of search and to make addition in the year in which project is complete. In the result, the appeal filed by the assessee is partly allowed, for statistical purpose.

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• 2018 (7) TMI 1813
  Expenditure towards acquiring and oping of retail outlets / stores - Disallowance of claim for deduction in respect of revenue expenditure - contention of the assessee that expenditure incurred under the head ‘pre-operative expenses and treated as capital work-in-progress are in the nature of revenue expenditure being rent, salary and other general overhead expenses, which are incurred in connection with running of day to day business of expansion of its existing business by acquisition of new outlets - Held that:- The expenditure are in the nature of salary, electricity, audit fee etc. incurred for expansion of existing line of business that is setting up of more number of stores/speciality stores or for maintenance of already established stores - Operations of these stores at various locations is one composite business and once business had been started then the expenditure can not be linked only to the stores which became operational during the year under consideration. Respectfully following the decision of Hon’ble Bombay High Court in the case of M/s Reliance Footprint Ltd (2013 (12) TMI 161 - ITAT MUMBAI), we are of the considered view that the AO was erred in disallowing revenue expenses claimed by the assessee in the statement of total income, but treated as pre-operative expenses to be capitalized under the head, ‘capital work-in-progress’ in books of account. Therefore, we direct the AO to delete addition made towards disallowance of expenses. - Decided in favour of assessee.

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• 2018 (7) TMI 1812
  Revision u/s 263 - claim of long term capital gain exempt U/s 10(38) - Held that:- Once the AO has called for the relevant record and verified the same before allowing the claim of the assessee then the AO is not required to give detailed reasons in respect of each and every item of deduction in the assessment order. The Commissioner has given much importance and emphasis to the report of the DIT, Patna however, once the assessee has produced evidence which established the genuineness of the transaction being holding of shares by the assessee in the demat account and purchase of the shares against the consideration paid through banking channel then in the absence of bringing any contrary fact or disapproving the evidence produced by the assessee, the mere setting aside issue by the Pr. CIT for denovo consideration is not sustainable. Though Explanation-2 to Section 263 mandates a proper enquiry as the AO should have conducted however, even in the opinion of the Pr. CIT, the AO has not conduced a proper enquiry as it ought to have been once the AO has examined the relevant record in support of the claim of the assessee then, the Commissioner in the proceedings U/s 263 of the Act it also required to have conducted an enquiry to contradict evidence. In the absence of any efforts on the part of the Commissioner to cause a routine inquiry on the issue that has already been conducted by the AO, the order passed by the Pr. CIT merely setting aside the issue to the AO for conducting the denovo assessment is not permissible When the entire evidence in support of the claim was available on the assessment record and the Assessing Officer has already examined the same, then the Pr. CIT directing a re-enquiry on the issue is not permissible U/s 263 of the Act. - Decided in favour of assessee.

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• 2018 (7) TMI 1811
  Disallowance of expenses made on a/c of license fee/royalty paid to Sh. Ashok Chaturvedi, pertaining to Jammu Unit - Held that:- Since, the entire basis for adverse inference by the Assessing Officer as well as of ld. CIT (A) is upon the assessment order and first appellate order given in the Assessment Year 2006-07, which the Tribunal has reversed by holding that assessee has rightly shown the payment of licence fee/royalty under the corporate unit; therefore, respectfully, following the precedence of the earlier year, we also give the same direction that the licence fee, royalty payment of 6 crore has rightly been shown under the Corporate Division and accordingly, the finding of the ld. CIT(A) is reversed Disallowance u/s. 14A r.w.r. 8D - Held that:- In so far as disallowance of interest expenditure is concern, the same has rightly been deleted by the ld. CIT (A) after due verification of the records that none of the investments have been made out of borrowed funds and has been made by assessee’s own fund. In view of such a clear cut finding, no disallowance of interest can be made. With regard to other disallowance on account of administrative cost, we find that assessee has given a categorical explanation that no expenditure can be said to be attributable especially when all the investments were made in much earlier years and there is only one dividend cheque received during the year. In the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly, disallowance made u/s.14 by Assessing Officer is hereby deleted. Addition as Excise duty refund (Self Cenvat Credit) treating it to be the Revenue receipt - holding this receipt as eligible for deduction u/s. 80IB - Held that:- We find that in the case of Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT], on same Govt. Notification has held that excise refund receipt in pursuance of new Industrial policy of the government is a capital receipt. Once that is so, then the entire receipt itself cannot be treated as part of taxable receipt and the entire question of allowing and disallowing the deduction u/s.80IB becomes purely academic. This judgment of Hon'ble Jammu & Kashmir High Court has also been approved and affirmed by the Hon'ble Supreme Court in the case of CIT vs. Shree Balaji Alloys [2016 (4) TMI 1161 - SUPREME COURT] Decided in favor of assessee.

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• 2018 (7) TMI 1810
  Revision u/s 263 - determination of the annual value of premises under section 23(1)(a) - assessee’s assessment was reopened by issuing notice under section 148 - Held that:- In the present case, the CIT has exercised his jurisdiction under section 263 of the Act for the purposes of determination of the annual value of the said premises under section 23(1)(a) of the Act, in view of the Tribunal's Order dated 30.12.2011 and the judgment of Full Bench of the Delhi High Court in Moni Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT]. The said issue was a subject matter of appeal before the CIT(A) against order dated 20.12.2012 passed by the AO giving effect to the Tribunal's order. CIT(A) has also considered the said issue in his appellate order. In this regard, he has observed that the determination of annual value only based on the fair rent is incorrect without ascertaining the standard rent of the said premises. According to him, standard rent as determined under the rent control legislation is the upper limit and annual value under section 23(1)(a) has to be lower of the standard rent or the fair rent. A bare perusal of this part of the CIT(A)'s order shows that determination of annual value of the said premises as per the Tribunal's Order was a subject of matter of appeal before the CIT(A) which has been considered and decided by him. Therefore, the CIT could not have assumed jurisdiction under section 263 of the Act in respect of the said issue. - decided in favour of assessee

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• 2018 (7) TMI 1809
  Receipts from domain name registration - whether should be charged to tax as royalty as per the provisions of section 9(1)(vi) read with section 115A of the Act? - Held that:- As decided in assessee's own case [2018 (4) TMI 390 - ITAT DELHI] Hon’ble Apex Court in the case of Satyam Infoway Ltd. (2004 (5) TMI 529 - SUPREME COURT OF INDIA) has held that the domain name is a valuable commercial right and it has all the characteristics of a trademark and accordingly, it was held that the domain names are subject to legal norms applicable to trademark. The rendering of services for domain registration is rendering of services in connection with the use of an intangible property which is similar to trademark. Therefore, the charges received by the assessee for services rendered in respect of domain name is royalty within the meaning of Clause (vi) read with Clause (iii) of Explanation 2 to Section 9(1) of Income-tax Act. In view of the above, we uphold the orders of the lower authorities on this point and reject ground of the assessee’s appeal.

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• 2018 (7) TMI 1808
  Installation PE in India - Gulf of Kuchch (GOK) Project - Held that:- Consideration received in respect of offshore supply of equipments and services and profits attribution @ 10% on the same should not be added in the hands of the assessee construing it as ‘Installation PE’ in India. ONGC AMC Project - Held that:- We find that these grounds had been adjudicated by this tribunal in assessee’s own case for the Asst Year 2011-12 [2018 (4) TMI 504 - ITAT KOLKATA] wherein it was held that the maintenance actvities carried out by the assessee does not constitute any PE in India and accordingly, in the absence of any PE, no attribution of profits could be done in India. With regard to the aspect of AMC services being considered as FTS, we hold that these services do not make available any technical know how or knowledge to the personnel of the customer as per Article 12(5) of the India- Netherlands DTAA AIRPORTS AUTHORITY OF INDIA (Mumbai, Chennai and Kolkata Project) - Held that:- Respectfully following the aforesaid decision of this tribunal in assessee’s own case for the Asst Year 2011-12, we uphold the action of the ld AO in treating the assessee as an Installation PE in respect of AAI Project but however restrict the profit attribution thereon to 10% of gross receipts. ONGC- ADDITIONAL (SAGAR LAXMI) PROJECT - Held that:- We are inclined to accept the arguments of the ld DR that the number of days taken by the assessee for executing the installation work is not on records and even before this tribunal, no details whatsoever in that regard were filed by the assessee. Hence we dismiss the plea of the ld AR that the assessee cannot be treated as an Installation PE. We hold that the assessee is to be treated as an ‘Installation PE’ in as much as there is no evidence produced by the assessee to prove the time duration taken for the project carried out by the assessee for executing the installation work. However, in line with various judicial decisions on the issue, we hold that only the onshore provision of services and onshore supply of equipments should be considered at 10% on gross basis as profits attributable to such Installation PE in India Charging of interest u/s 234B - Held that:- We find that the income of the foreign enterprise is to be governed by the provisions of section 195 of the Act wherein any payment made to foreign enterprise would be subjected to full deduction of tax at source. The ld DRP by placing reliance on the decision of Hon’ble Delhi High Court in the case of GE Packaged Power [2015 (1) TMI 1168 - DELHI HIGH COURT] and by observing that the proviso to section 209(1) of the Act is applicable only from Asst Year 2013-14 onwards, had directed the ld AO not to charge interest u/s 234B of the Act. Similarly the ld DRP had also directed the ld AO not to charge surcharge and cess in view of specific provisions contained in India-Netherlands DTAA. We find that the directions of Hon’ble DRP are binding on the ld AO as per provisions of section 144C(10) Grant of short credit of TDS - Held that:- We find that the assessee had claimed credit of taxes deducted at source of 1,52,12,219/- in its income tax return for the Asst Year 2012-13. The ld AO in the final assessment order granted credit for the same only to the tune of 1,51,39,418/- thereby leading to short credit of TDS by 72,801/-. The assessee stated that it had produced the TDS certificate for the same before the ld AO which has been ignored. Hence we direct the ld AO to verify the veracity of the said TDS certificate and grant credit for TDS as per law

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• 2018 (7) TMI 1807
  Disallowance of business loss - loss consists of trading loss and business expense - Held that:- Documentary evidence and facts cannot be ignored and the theory of human conduct, preponderance of probability etc. cannot be relied upon, to reject the claim of the assessee on the ground of that these are “suspicious circumstances”. The purchase of the share has been accepted by the Revenue. The fact that both the companies have earlier advanced amount to the assessee is accepted by the Revenue. While so, there is no reason as to why sale transaction is to be disbelieved admittedly on the ground of suspicious circumstances. The conclusions of the AO and the Ld. CIT(A) are based on, conjecture and surmises. It is well settled that no addition can be made of suspicion however as strong held by in the case of Umarcharan Shah & Bros vs. CIT (1959 (5) TMI 11 - SUPREME COURT). - decided against revenue Disallowance of expense - As already stated, the accepted fact is that the assessee is engaged in share trading business. The disallowance in this case has been made in an arbitrary manner. No proper reason is assigned. When the assessee is in the business of share trading, the expenditure relatable to such business is allowable under the Act. Even if there is no business activity during the year, the expenditure is still allowable as held by the Hon'ble Calcutta High Court in the case of Ganga Properties Ltd [1989 (5) TMI 10 - CALCUTTA HIGH COURT]. Disallowance of cost price - Held that:- We find that the assessee has submitted copies of the bills evidencing the fact that the shares were sold by Shri S.R. Bansal. Copies of share certificate evidencing transfer of share from Shri S.R. Bansal to the assessee were filed. Both the parties are income tax assessees and have reported these transactions. If the purchases of the shares are not to be believed, then the income arising out of the sale of such shares cannot be taxed in the hands of assessee. It may have to be taxed in the hands of Smt. Saroj Rani Bansal. The assumption that Mrs. Saroj Rani Bansal could have gifted these shares to Mr. K.K. Bansal i.e. transferred without consideration, cannot be upheld. Thus, if the sale is believed, the purchase is also to be believed. Hence, the disallowance of the purchases cost of shares are wrong. In any event, of the sale consideration received by the assessee, the source of funds are not in doubt. Hence, we delete the addition on the source of fund is proved and as the assumption made by the AO is wrong Computation of capital gains on sale of share of Turtle in motion - assessee claimed that these shares were received from his father Shri R.D. Bansal by way of gift - Held that:-When an amount is received by way of gift/inheritance the cost of previous owner is the cost of acquisition by the assessee and the indexation is also to be given form the date on which the previous owner acquired the capital assets.We find this issue is covered in favour of assessee and against the Revenue by the following:- DCIT v. Manjuta J. Shah (2009 (10) TMI 646 - ITAT MUMBAI) and Smt. Mina Deogum v. ITO (2007 (8) TMI 375 - ITAT CALCUTTA-E). Addition u/s 68 - assessee sold one residential flat to his daughter and wife Smt jointly for a consideration but has not proved that the transaction is bona fide - Held that:- here is no bar on an individual in making a sale of any property to his close relatives. There is no allegation that the transfer has not taken place at market rates. The document filed by the assessee, i.e. copy of the agreements, details of payments, adjustments of loan, balance-sheet and profit and loss account, income tax details of all the parties, have not been rebutted by the revenue authorities. The entire addition was made on mere surmise and conjecture. The purchaser’s of the property have confirmed the transactions, in reply to notice issued u/s. 133(6) of the Act. The Revenue Authorities have not brought out any contrary evidence on record to rebut the evidence filed by the assessee. When the parties to the contract have confirmed that the possession of the property has been handed over, a contrary view cannot be taken on this fact without evidence. Suspicion however strong cannot take the place of proof. Thus, we delete the entire addition made u/s 68 of the Act as unwarranted. Decided in favour of assessee Addition on the ground that same is bogus liability - Held that:- The liability in question pertains to the mother of assessee, Smt. Saran Kumai Bansal. Subsequent to her demise, the liability devolved on her husband, Shri R.D. Bansal. On the death of Shri R.D. Bansal, the liabilities along with assets devolved upon to assessee by way of inheritance. The issue is whether such liability could be added u/s. 41(1) of the Act, on the ground that there is remission or cessation of the same. The undisputed fact is that all liabilities continue to be reflected in the books of account of assessee. It is not the case of the Revenue that assessee had claimed a deduction in its books of account in the earlier assessment year of these amounts. Under the circumstances Sec. 41(1) cannot be invoked by the AO as held in the case of CIT vs. Sugauli Sugar Works (P) Ltd [1999 (2) TMI 5 - SUPREME COURT] as held in absence of declaration by the assessee that it does not intend to honour its liabilities, provision of Sec. 41() cannot be invoked - decided in favour of assessee.

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• 2018 (7) TMI 1806
  TDS u/s 194I - non deduction of TDS on wharfage charges paid to KPT - whether ‘KPT‘ is a pubic charitable trust and no TDS is liable to be deducted at source by the assessee? - Held that:- Wharfage charges paid to the KPT is not rent and no TDS is liable to be deducted under the provisions of section 194I of the Act. In view of the same, the order dt. 30-11-2015 passed by the CIT-A in confirming the order of AO that the assessee is in default and charging of interest thereon u/s. 201/201(1A) of the Act is not justified and it is set aside. - Decided in favour of assessee.

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• 2018 (7) TMI 1805
  Addition made on account of alleged transfer of shares without consideration - Held that:- It is difficult to imagine Articles of Association of a company providing for gifting of assets in the company to another company by way of shares in a public limited company, unless it be one which has been set up for some purpose. A.O. had rightly raised question regarding the reality and genuineness of transaction, in addition to its validity. In fact when such transactions are entered into, involving assets substantially worth, it behoves the assessee before Ld. AO to establish to the hilt, the factum, genuineness and validity of such transaction, the right to enter into such transaction and bonafides of such transaction, especially when, revenue challenges genuineness of such transaction itself. It has been vehemently contested by authorities below as well as Ld. CIT DR that transaction has been effectuated for avoiding payment of tax and to get out of the ambit of section 56 (2) (viia) of the Act. And it is apparent from record that assessee has not demonstrated by way of documentary evidence or in any of the manner to prove the genuineness and validity of transaction. Ld.Counsel has been harping that the shares held by assessee in a Public Limited Company was transferred in lieu of a family realignment, but failed to establish the relation of the alleged transferee company with that of assessee or any of the group/subsidiary companies. Further there is no agreement/document that has been executed between group companies forming part of family realignment. Assessee is thus directed to provide all necessary and relevant information/details to assist Ld. A.O., as called for, to his satisfaction, in determining correct nature of alleged transaction as per law. It is also directed that in the event assessee fails to provide any document as called for, in order to establish the genuineness and validity of alleged transaction, as has been submitted to be for a family realignment, Ld.A.O. may compute income in the hands of assessee as per law. On the contrary if assessee is able to prove to the satisfaction of Ld.AO regarding genuineness and validity of the transaction, no addition shall be called for. - Decided in favour of assessee for statistical purposes.

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• Customs

• 2018 (7) TMI 1826
  Interpretation of tax exemption Notification / statutory provision - applicability in case of ambiguity - correctness of the ratio in Sun Export Corporation, Bombay v. Collector of Customs, Bombay [1997 (7) TMI 117 - SUPREME COURT OF INDIA] - Held that:- It is the law that any ambiguity in a taxing statute should enure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Every taxing statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.

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• 2018 (7) TMI 1804
  Pre-deposit - furnishing of security in lieu of cash deposit - Held that:- There being no provision for providing security for the purpose of maintaining the appeal on the basis of the waiver granted by the Tribunal and later modified by this Court we are not inclined to direct the respondent to accept the security in lieu of cash deposit - the appellant could be granted a further time of three months to raise the amounts - appeal disposed off.

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• 2018 (7) TMI 1803
  Import of electrical tricycle without battery in CKD condition along with spare parts - it was alleged that new vehicle imported is not meeting the requirement of Centre Motor Vehicle Rules (CMVR), 1989 - Type approval certificate not produced - whether the impugned goods under consideration were imported in violation of policy? - Held that:- When the Appellants intended to import ‘motor vehicle’, the requirement of Motor Vehicle Rules are to be complied. The Policy stipulations clearly make out that various conditions including Type Approval Certificate by the competent authority is a mandatory requirement for any vehicle imported into India - the present vehicle (in CKD condition) was imported having electric capacity of more than 250 watt which as per mandatory requirement is to be registered with the Motor Vehicle Authority - Thus, the imported goods are in violation of Import Policy Notes, applicable during the relevant time. Penalty - Held that:- The penalty reduced from 5,00,000/- to 1,00,000/-. Appeal allowed in part.

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• 2018 (7) TMI 1802
  Valuation of imported goods - dry dates of Sukkur variety - enhancement of value based on DRI alert - absence of contemporaneous import - rejection of transaction value not done - Held that:- In the order of the adjudicating authority and the Commissioner (Appeals), no contemporaneous imports of identical or similar goods have been mentioned. The goods were imported from a particular region from Pakistan but no contemporaneous imports of that variety of dry dates at higher prices is found in both the orders - The sole basis of enhancement of value is the calculation chart appended with the Nhava Sheva alert circular. The enhancement of the value on the basis of SIIB alert circular without first rejecting transaction value as per procedure under Rule 12 of Customs Valuation Rules, is not legally tenable as held by this Tribunal in the case of Sedna Impex India Pvt.Ltd. [2016 (10) TMI 517 - CESTAT CHANDIGARH]. Refund claim - Section 14 of the Customs Act - Held that:- the value for purposes for refund of special additional duty has no relevance for the purpose of Section 14 of Customs Act, 1962. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1801
  Requirement of permission of MOEF - Hazardous Waste - imported 'Old and Used Tyres' - restricted item - Confiscation - penalties - Held that:- Hon’ble High Court in the case of COMMISSIONER OF CUSTOMS NOIDA VERSUS M/S JIBRAN OVERSEAS [2016 (12) TMI 1032 - ALLAHABAD HIGH COURT] held that the Tribunal’s finding that the imported old and used tyres which are capable of being used was not hit by the mischief of hazardous waste and would not be defined as hazardous waste and, therefore, their importer did not require the permission of MOEF - appeal allowed - decided in favor of appellant.

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• PMLA

• 2018 (7) TMI 1800
  Offence under PMLA - provisional attachment order - The properties in question are admittedly mortgaged with the bank who sought to be detached and released in favour of the appellant bank - Held that:- In the present appeal it is admitted position that the loan was given by the bank in good faith who had suffered a loss because of non-return of money by the borrowers. It is evident from the said proviso that in case the claimant would be able to satisfy the Special Court that it has acted in good faith and suffered the loss despite of having taken all the reasonable precautions and is also not involved in the offence of money laundering then the Special Court is empowered to restored such property during the trial. In the facts of the present case, the mortgaged properties are not purchased from the proceed of crime. Those were purchased prior to FIR against borrower/accused and even prior to execution of mortgaged deed agreement. The question of proceed of crime qua those properties does not arise. Even the stand of the respondent in almost in all the cases where it was found that the attached properties are mortgaged properties which were not purchased from proceeds of crime, the Bank are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the respondent no. 1 is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. Thus in case the Special Court passes the order to release the property of the victim and innocent party is mortgaged property could be disposed of for the purpose of adjustment of the amount due from the borrowers. Once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. In the fact and circumstances and material available in the present case, the allegation of money laundering, so far as present appellant & properties involved in this appeal are concerned, found to be unsustainable for the purpose of attachment under the PMLA, 2002. The appeal is allowed. The respondent in the present case has not made the appellant bank a party in the array of defendant before the Adjudicating Authority, New Delhi under the PMLA. Despite of knowledge, the said actual fact has not been disclosed with regard to the aspect of the mortgaged properties with the appellant bank. The impugned order is therefore is set aside/modified pertaining to the attached properties at serial no. 8 to 11 at page 65 to 67 of impugned order. Accordingly, appeal is allowed. The appeal filed by the borrowers would be decided as per its own merit pertaining to other properties.

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• Service Tax

• 2018 (7) TMI 1798
  Works Contract - sale or service? - mutual exclusivity - Benefit of N/N. 12/2003 ST dated 20.06.2003 - appellants are procuring cement, steel, fittings and fixtures etc which are consumed in the providing of services. They are discharging duty of sales tax as well as service tax in the ratio 70% and 30% respectively on the total value of the property - Department contended that the items are consumed by them in the course of providing services and such consumption do not tantamount to sale, therefore, the benefit of the Notification is not available to them. Held that:- What the appellants are executing are nothing but 'Works Contract’ and as such their case is squarely covered by the Hon’ble Supreme Court judgment in the case of M/s. Larson & Toubro [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works Contract came to be taxed under service tax only w.e.f. 01.06.2007 and that Section 65(105) of Finance Act 94 had levied service tax only on contracts simplicitor and not contested in the Works Contract. There was no charging Section specifically levying service tax only on Works Contract and moreover on tax the service element derived from the gross amount charged for Works Contract less value of property and goods transported under exclusion of Works Contract - Demands in the case of the appellants as far as they pertain to a period prior 01.06.2007 are liable to be set aside. Demands for the month of June 2007 - Held that:- The Larger Bench in the case of appellants themselves [2009 (9) TMI 342 - CESTAT, BANGALORE] has held the mutual exclusivity of service tax and sales tax and the powers to tax assigned by the Constitution to the States and Centre respectively on sales and services - the impugned demand of differential duty relating to value of materials supplied in the course of provision of construction of commercial or industrial buildings and construction of residential complex services is not sustainable - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1797
  Residential Complex Service - Renting of Immovable Property Service - Construction of residential units - the appellant undertook construction of residential units and received consideration for the same - appellant also constructed shops which were leased to successful bidders in the auction process. Such lease was for a period of 99 years and various amounts were recovered - demand of service tax on both the above services - time limitation - penalty. Construction of Complex Service - activity undertaken by RHB includes the development of land and construction of residential units on the land made available by the Rajasthan Government - demand contested on the ground that they have undertaken construction of independent houses/ residential units and not of any complex with more than twelve such units - Held that:- From a few photographs enclosed with appeal, it is noted that RHB has undertaken construction of row houses. Each house shares a wall with the houses on either side and perhaps with the one in front / behind. For the activity to be covered by the definition of residential complex, it should comprise of more than twelve residential units. These should be situated within one building or more than one building. Further, the requirement is that these residential units should have common area and also water supply/ affluent treatment system and other common facilities such as park, lift, common parking space etc. All these facilities should be located within a premises and the layout of such premises should be approved by an authority under any law for the time being in force - From the findings recorded by the Adjudicating Authority, it does not appear that he has examined the situation in terms of satisfying the condition specified in the definition in respect of each and every cluster of houses constructed by RHB and for which demand of service tax has been made - the matter remanded to the Adjudicating Authority for re-examination and denovo decision. Renting of Immovable Property - The RHB has constructed various commercial buildings/ shops which have been allotted on the basis of auction on a 99 years Perpetual Lease. From such allottees, various amounts were recovered by RHB as lease charges - demand of service tax on such lease charges - Held that:- RHB will be liable for payment of service tax on the lease amounts recovered by them from the allottee of commercial properties and shops by whatever name. But no service tax levied can be upheld in respect of such lease amounts recovered for allotment of residential units - reliance placed in the case of Greater Noida Industrial Development Authority vs. CCE&ST, Noida [2014 (9) TMI 306 - CESTAT NEW DELHI] - demand upheld. Time limitation - RHB is an instrumentality of the State Government - no suppression of facts - Held that:- The appellant entertained a bonafide belief that such lease of commercial property/ shops may not be liable for payment of service tax under the category of “Renting of Immovable Property” - the Department is not justified in invoking the extended period of time limit for demanding the tax - demand for normal period upheld. Penalties - Held that:- The appellant is an instrumentality of Rajasthan Government and performing statutory functions in accordance with the Rajasthan Housing Board Act and they were under the bonafide belief that the activity would not attract service tax, this is a fit case to waive penalty in terms of Section 80 of the Finance Act, 1994 - penalty set aside. Part matter on remand, partly decided in favor and partly against assessee.

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• 2018 (7) TMI 1796
  Rebate/refund claim - export of services - services in the nature of International Inbound Services, that too, to the foreign telecom service providers - rejection of refund claim on the ground of time limitation and unjust enrichment. Principles of unjust enrichment - whether such service is an export service? - Held that:- Export of Services Rules, 2005 qualifies the taxable services into three categories and we observe that the above mentioned telecommunication services provided by the appellant fall under Category 3 thereof. As per Rule 3(1)(iii) of the said Rules, this category deals with such services when provided in relation to business or commerce, be provision of such services to recipient outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service. Provided that the payment for such services is received in convertible foreign exchange - The appellant is observed as rendering the same service. Since the transaction is that of export, the principle of unjust enrichment would not be applicable - rejection of all six of the rebate claims being barred by the doctrine of unjust enrichment, is hereby set aside. Time limitation - whether the time limit prescribed under Section 11B of the Central Excise Act, 1994 is applicable to the rebate claims? - Held that:- The appellant herein had filed the rebate claim in terms of the aforesaid Notification of 19.05.2005 issued under Rule 5 of Export Service Rules, 2005. The period covered for the rebate was April 2007 to March 2008 and April 2008 to March 2009 and both the applications for refund were filed on 30.11.2010 - provision of Section 11B of the Central Excise Act, 1994 which deals with excise duty, has been made applicable for Service Tax vide Section 83 of the Finance Act, 1994. This would imply that the time limit of one year from the payment of tax for filing of refund claim would apply in respect of Service Tax refund also. Irrespective, there is no time limit set out in the respective notifications, it is otherwise the settled position of law that even if a law is silent on the time limit applicable, a reasonable time limited has to be read into the law. In the present case, six rebate claims of appellant are in question - Four have been filed within a period of one year, i.e., not only within the limit of time prescribed under Section 11B, but also within the period of reasonable time for the purpose - Since the appellant has failed to exercise the same doctrine of reasonable time with respect to remaining two claims, those have rightly been rejected by the Commissioner (Appeals) being barred by time. Appeal allowed in aprt.

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• 2018 (7) TMI 1795
  Rejection of Voluntary Compliance Entitlement Scheme (VCES) - VCES claim rejected on the basis of inquiry/investigation pending against the appellant - Commercial Training and Coaching Services - case of appellant is that it was mandatory for the Department to observe the principles of natural justice in the manner as mentioned in the Circular dated 08.08.2013, prior rejecting the VCES claim of the appellant - whether the Department has rightly rejected the VCES claim of the appellant? - principles of natural justice. Held that:- The very opening line of Section 106 of the Finance Act, 2013 is a clear mandate rather on the appellant that prior declaring his tax dues under VCES he has to ensure that no notice nor any order of determination as under Section 72 or Section 73 or Section 73A of this Chapter has been issued or made qua may before 01.03.2013 - Section 106 (2) (iii) clarifies that whenever any party has been required for producing certain accounts, documents or other evidence under the chapter or rules made thereunder, the designated authority shall, by an Order and for the reasons to be recorded in writing, reject such declaration. In the present case, appellant had received several letters from the Department qua scrutiny of ST-3 returns. The letters as old as 26.09.2012, 05.12.2012, 09.10.2012 and 18.04.2013. Four of these being prior the cut off date of Section 106 of the Act i.e. 01.03.2013 - Perusal of Show Cause Notice makes it abundantly clear that the same was issued due to the differences noticed from the scrutiny as was conducted under the aforesaid four letters - the Show Cause Notice despite being post dated 01.03.2013 but the inquiry in that respect had initiated much prior to the said cut off date, that too to the notice of the appellant - the Show Cause Notice despite being post dated 01.03.2013 but the inquiry in that respect had initiated much prior to the said cut off date, that too to the notice of the appellant. Principle of natural justice - Held that:- No doubt the Circular dated 08.08.2013, clarified that whenever designated authority has a reason to believe the applicability of Section 106(2), a notice on intention should be given to the assesse within 30 days of the date of filing of the declaration stating reasons for the rejection - But the fact for the present case is that the rejection Order was passed after two years of filing of the declaration and meanwhile an inquiry in furtherance of Show Cause Notice dated 17.04.2013 was already in progress - the absence of any specific hearing in furtherance of Circular dated 08.08.2013 is not at all procedural lapse on the part of the Department as is alleged by the appellant - principles of natural justice has not been violated. Appeal dismissed - decided against appellant.

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• 2018 (7) TMI 1794
  Rectification of Mistake - In paragraph 21 of the order demand in respect of issue no. 1,2 & 3 are set aside but consequential penalties were also not expressly set aside - Held that:- onsidering the fact that on issue no. 1,2 & 3 it has been held by this Tribunal that the demands are not sustainable, therefore, consequential penalties are also not imposable - paragraph 21 of that order will be read as:- “In view of the above, demands in respect of issue no. 1,2 & 3 are set aside, therefore, consequential penalties are also set aside.” Application for ROM allowed.

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• 2018 (7) TMI 1793
  CENVAT Credit - duty paying documents - Rule 9(1) of Cenvat Credit Rules, 2004 - extended period of limitation - Held that:- Commissioner (Appeals) has himself admitted that the issue stands covered by the earlier decision of the Tribunal in the same assessee’s case BHARAT SANCHAR NIGAM LTD. VERSUS CCE, SALEM [2008 (10) TMI 141 - CESTAT CHENNAI]. However, Appellate Authority has not followed the same on the ground that Revenue has filed an appeal before the Hon’ble High Court of Chennai - Learned A.R. has not been able to show any decision of the Hon’ble High Court indicating that the said decision of the Tribunal stands reversed. Even there was no stay granted by the High Court - the law declared by the Tribunal was required to be followed by Commissioner (Appeals). Extended period of limitation - Held that:- The appellant is wholly owned corporation of Government of India and cannot be attributed with any mala fide so as to justifiably invoke the longer period of limitation - demand is barred by limitation also. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1792
  CENVAT Credit - duty paying documents - credit denied on the ground that they have not been able to produce the relevant documents for the purpose of availment of credit - Time Limitation - Held that:- The credit can be availed only on the basis of the eligible documents and if an assessee does not have the documents in their possession, the credit cannot be claimed by them. However, the demand is barred by limitation - SCN issued on 17/08/2010 covers the period October, 2005 to September, 2009 and stands issued by invoking the longer period of limitation - there is neither any allegation nor any evidence to suggest that the appellants had taken the said credit, with a mala-fide mind. The credit was availed by them, by reflecting the same in statutory records and was a part of the returns being filed by them - The appellant being in the Banking Sector, cannot be expected to indulge in such clandestine availment of small amounts of Cenvat credit, when they are dealing with the huge transactions and are paying huge taxes. Matter remanded to Original Adjudicating Authority for quantification of the amount, if any, falls within the normal period - Appeal allowed by way of remand.

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• 2018 (7) TMI 1791
  Erection, commissioning and installation service or manufacture? - job of fabrication and erection of various steel structurals at site on and for behalf of their client - main argument of the appellant is that they are basically engaged in the manufacturing activities for the main contractor and as such, their activity cannot be held to be a taxable service - Held that:- The Tribunal on similar issue, in the case of Neo Structo Construction Ltd. [2010 (3) TMI 252 - CESTAT, AHMEDABAD], concluded that such as activity would amount to manufacture and not rendering of any service at this stage - As the said decision was not before the Commissioner at the time of adjudication, it is fit to set aside the impugned order and remand the matter for fresh decision in the light of the law declared in the above referred decision of the Tribunal. Revenue neutrality - Held that:- As the main contractor has discharged the service tax liability on the gross value of the contract given to him and the present appellant is only a sub-contractor, the entire exercise would be revenue neutral - as the matter is remanded, the said fact would also be verified by the Commissioner. Time limitation - Held that:- The appellant being an illiterate person, and as such non-maintenance of records, does not confer any malafide intention upon them so as to show that the appellant were not maintaining the records with a malafide intention not to pay service tax. In the absence of any positive activity and referring to such malafide on the part of the assessee, invocation of longer period is prima facie not justified. Appeal allowed by way of remand.

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• 2018 (7) TMI 1790
  Imposition of penalty - the assessee had paid the Service Tax on ‘Renting of Immovable Property’ within a period of six months from receiving the President assent to the Finance Bill, 2012 - Revenue’s only grievance is that the entire tax was not paid within a period of six months and small amount of 18,000/- approx was deposited subsequently - Held that:- Admittedly, the matter was under litigation before various courts and as such not free from doubt. In such a scenario, the penalty imposition, in any case was not justified and has been rightly set aside by Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1789
  Extended period of Limitation - malafide intention on the part of the assessee - Repair and Maintenance Service - Held that:- The reasons and circumstances for invocation of the extended period as also for imposition of penalty u/s 78 are identical i.e. a malafide mind - The appellate authority have already taken a view in favor of the assessee, in respect of penalty, it was not open to the appellate authority to hold to the contrary for invocation of longer period. Otherwise also, the appellant is a labourer and there being a lot of confusion in the field of service tax, would not be aware of the service tax liability - Inasmuch as the demand stands confirmed by invoking the longer period, the same is not sustainable but for the period falling within the limitation. The demands beyond the normal period of limitation set aside - matter remanded to the Original Adjudicating Authority for re-quantification of demand, if any falling within the normal period of limitation - appeal allowed by way of remand.

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• 2018 (7) TMI 1788
  Business Auxiliary Service - collection of toll / fee - amount retained by them as commission over and above the actual payment made to NHAI - Held that:- The issue stands covered by the decision of the Tribunal in the case of M/s Ideal Road Builders Pvt. Ltd. Vs Commissioner of Service Tax, Mumbai [2015 (8) TMI 592 - CESTAT MUMBAI] wherein in identical circumstances, it was held that no service tax is payable on the commission on the amount collected as toll for the services rendered at Toll Collection Center - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1787
  Interpretation of Statute - Rule 6(3A)(a)(ii) of Cenvat Credit Rules, 2004 - relevant date - With effect from 01/04/2011 trading was clarified to be exempted service - case of Revenue is that the option was availed by the respondent on 20/07/2011 stating that option was to be availed from 01/04/2011 and that the Adjudicating Authority has accepted the said plea - Held that:- The substantial provision was to reverse attributable Cenvat credit involved in the exempted service. The Original Authority has given a finding on the basis of verification conducted by the Jurisdictional Range Superintendent for the Financial Year 2011-12 that the respondent correctly reversed the Cenvat credit attributable to the exempted service - there is no merit in Revenue's appeal - appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1786
  Classification of Services - Composite contract - respondents were engaged in transport of coal within the mining area and loading and unloading were ancillary to the same - GTA Services or mining services? - CBEC s Circular No.186/5/2015-ST dated 05.10.2015 - Held that:- The Revenue could not satisfactorily establish that the transactions in the present appeal are not covered by the said clarification dated 05.10.2015 issued by CBEC. Further, Revenue did not contradict the finding of the original authority that same service has been subjected to payment of service tax treating the same as GTA Service - Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1785
  Erection, Commissioning & Installation Service - laying of Optical Fiber Cables & Outdoor Up-gradation Works, Execution of Repair & Maintenance thereof - C.B.E.C. Circular dated 24/05/2010 - Held that:- At Para 3 of the said Circular one table is provided and under the said table Serial No. 1 covered the activity of shifting of overhead cables/wires and Serial No. 2 covered the activity of laying of cables under or alongside roads and it was clarified that the said activity does not attract Service Tax - laying of fresh cable is also clarified to be out of the Service Tax levy - demand cannot sustain - appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (7) TMI 1784
  Validity of Private Complaint and prosecution proceedings - Clandestine removal of goods - Section 200 of the Code of Criminal Procedure - approval of Principal Collector/Principal Commissioner for launching any prosecution - it was alleged that the complaint was lodged without any authorization or any authority, the same is liable to be quashed. Held that:- A perusal of the entire complaint shows that the complaint was launched with approval / sanction and the said sanction/approval order given by the Chief Commissioner has been filed along with the complaint as document No.11. Therefore, the argument advanced by the learned counsel appearing for the petitioners that the prosecution has been launched without any approval/sanction from the concerned authority cannot be accepted - Whether the said sanction/approval is in accordance with Central Excise Act and Rules is a matter for trial, which cannot be decided in the instant petition filed under Section 482 of the Code of Criminal Procedure. Jurisdiction - contention of petitioners is that the complaint has been filed before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, when the factory of the first respondent is located at Gummidipoondi - Held that:- This contention of the learned counsel for the petitioners cannot be accepted for the simple reason that the respondent/complainant had visited the registered office of the first accused company situated at New No.1, Old No.62, First Link Street, Raghavan Colony, Jaffarkhanpet, Chennai-83 and conducted a search on 24.02.1999 and also recovered certain incriminating documents, leading to issue of summons to the accused and also to launch a criminal complaint against them. Therefore, it cannot be said that the Additional Chief Metropolitan Magistrate, Egmore, Chennai does not have any jurisdiction to entertain the complaint. Petition dismissed - decided against petitioner.

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• 2018 (7) TMI 1783
  Non-speaking order - Whether Hon ble CESTAT is correct remanding the case for fresh adjudication on a new ground i.e.excisability dutiability of RFO, which was not a ground for appeal, without calling for views from the Department, as per Rule 10 of CESTAT (Procedure) Rules, 1982? - Held that:- In M/S. NANDHI SPINNING MILLS (P) LIMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE [2017 (11) TMI 654 - MADRAS HIGH COURT], it was held that The tribunal is a final fact finding authority. Though the tribunal has considered the grounds of appeal, there is no discussion. The matter be remitted back to CESTAT, Chennai. CESTAT, Chennai, is directed to issue notice to both parties and give opportunity to the parties to raise all contentious issues - appeal allowed by way of remand.

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• 2018 (7) TMI 1782
  Rectification of Mistake - SSI Exemption - aggregate value of clearances - N/N. 8/2003-CE dated 01.03.2003 - benefit denied on the ground that the aggregate value of clearances of all excisable goods including nil rate of duty items had exceeded 300 lakhs during the preceding Financial Year i.e. 2002-03 - time limitation - Held that:- Notification 8/2003 does not charge duty on any goods retrospectively. It only lays condition that the value of clearances in the previous years, which are exempted or nil rated will also be considered for the purposes of arriving the limit of 300 lakhs - In the absence of any ambiguity in the wordings of the Notification, the appellants’ logic appears to be not only queer but bizarre. Time Limitation - Held that:- There is no record to show that the appellants had bonafide belief and that they approached the Department for clarification - extended period is rightly invoked. ROM application of the revenue allowed and penalty imposed.

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• 2018 (7) TMI 1781
  Rectification of Mistake - case of appellant is that the non consideration of the above main arguments constitutes an error apparent on the Tribunal requiring rectification - Held that:- There is no discussion about the arguments advanced by the appellant that demand is time barred and further that the appellant may not be liable to imposition of any penalty. The attention has been drawn to the written submission placed on record wherein the submissions as regard time bar as well as penalty have been raised. Inasmuch as the same does not stand discussed by the Tribunal in the final order, the same amounts to a mistake on the part of the Tribunal. ROM application allowed.

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• 2018 (7) TMI 1780
  Rectification of Mistake - it was alleged that the said order is an ex-parte order and has recorded incorrect facts while recording the facts of the case - Held that:- There is a mistake on record by recording the fact that the appellant filed the statement of self credit on 16.07.2015. Same may be read as 07.07.2015. If the same is taken as 07.07.2015, there is no delay in filing the statement of availing self credit by the appellant - the mistake is to be rectified accordingly - ROM application allowed.

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• 2018 (7) TMI 1779
  Clandestine removal - pig iron - the pig iron had been cleared by them without reversal of applicable Cenvat Credit - Held that:- Admittedly the entire case of the Revenue is based upon the entries made in the said log sheet read with the statement of the Director - The Revenue has not made any efforts to further Investigate the matter. No buyer of the goods, as detailed in the said log sheets has been approached by the Revenue so as to investigate the matter at that end. The appellants have contested the statement as having been given under duress, as the language of the statement itself suggests. In any case, it is found that the statement by itself cannot be made the basis for arriving at the clandestine activities and such confessional statements are required to be corroborated by independent evidences - The allegations of clandestine removal is a serious charge and the onus to discharge the same is upon the Revenue, who is required to prove it by production of sufficient and admissible legal evidence. CENVAT Credit - it was alleged that input pig iron stands cleared by the appellant after availing the Cenvat Credit - Held that:- Apart from the fact that Revenue has alleged sale of the pig iron, there is no investigations either at the end of the buyers or transporters or the manner of receipt of consideration for the same. Further no inventories were made at the time of stock-taking and there is nothing on record to show that the stock available at the production floor or as work in progress was also taken into consideration. The entire investigations of the Revenue are flimsy and does not take the matter to its logical end. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1778
  CENVAT Credit - Clearance of waste and scrap arisen out of old plant and machinery - whether clearance of 'cenvatable capital goods as such' or not? - extended period of limitation - Held that:- According to the well settled principal of law the “one who alleges has to prove”, it is for the Revenue to prove that the scrap in question had arisen out of the capital goods which were the one in respect of which the appellant has availed the credit. Also, the scrap is in the nature of worn out items of the plant and machinery, which has arisen during the course of repair and maintenance - The Hon’ble Supreme Court in the case of Grasim Industries Limited vs. Union of India [2011 (10) TMI 2 - SUPREME COURT OF INDIA] has observed that such type of scrap and waste arising from repair and maintenance of capital goods are not dutiable. Extended period of limitation - Held that:- It is not a case for invocation of longer period of limitation inasmuch as the waste and scrap was cleared on the basis of invoices and as such no mala fide can be attributed to the assessee, in the absence of any positive evidence to reflect upon any suppression or mis-statement. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1777
  Refund claim - sealing of machinery - manufacture of Pan Masala - Gutkha - Rule 10 of Pan Masala Packing Machine “Capacity Determination and Calculation of Duty” Rules, 2008 - denial of refund on the ground that in terms of the said rule, they should have given three days prior intimation for sealing of the machine, which condition was not followed by them - Held that:- The appellant admittedly approached Revenue on 31/08/2010 for sealing of the machine, which was actually sealed on 01/09/2010. Further, there was admittedly no production during the period of September, 2010, thus making the appellant entitled to refund of duty already deposited by them, by extending the abatement in terms of Rule 10. Merely because the intimation, which is primarily for the purpose of facilitation of sealing process was not given in advance by three days, it cannot be adopted as a ground for rejection of abatement, especially when such request of the assessee was accepted by the Range Authorities and the machine was actually sealed. Refund cannot be denied - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1776
  Clandestine removal - shortage of raw material - M.S. Ingots - the earlier order of the Tribunal passed on the assessee’s appeal confirming the demand but reducing the penalties was not placed before the Tribunal while allowing the Revenue’s appeal by way of remand - Held that:- If the said demand stands confirmed by the earlier order of the Tribunal, it was not open to Commissioner (Appeals) to confirm the same again. In as much as, the fate of the earlier order has not been placed on record, it is deemed appropriate to set aside the impugned order and remand the matter to the Original Adjudicating Authority to find out the correct factual position and to re-decide the matter again - appeal allowed by way of remand.

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• 2018 (7) TMI 1775
  Principles of Natural Justice - Refund claim - Sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004 - refund rejected on the ground of limitation - Held that:- The learned Commissioner (Appeals) has not given any finding on said submissions covered by para-9 of written submission filed before him. The learned Commissioner (Appeals) should have considered all submissions before him and given his decision on acceptance or rejection grounds raised before him - the impugned order set aside and matter remanded back to the Commissioner (Appeals) to consideration of said submissions under said para-9 and any other submission and give a reasoned order - appeal allowed by way of remand.

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• 2018 (7) TMI 1774
  Classification of Waste - Waste Crude Oil or Heavy Residue Oil - whether classified under Tariff Item No. 27090000 or under Tariff Item No. 38140010? - Held that:- The issue is no more res-integra in view of the case in M/S BAJRANG PETRO CHEMICALS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [2018 (1) TMI 248 - CESTAT ALLAHABAD] passed by this Tribunal, where Residue Crude Oil or Waste Crude Oil or Heavy Residue Oil is correctly classified under Tariff Item No. 27090000 - appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1773
  Clearance of scrap of capital goods without payment of duty - appellant availed Cenvat credit of duty paid on such capital goods - Section 11A of the Central Excise Act read with Rule 3(5) of Cenvat Credit Rules, 2004 - scope of SCN - onus of proof - Held that:- The Revenue neither in the show cause notice nor in the impugned order has anywhere referred to any entries in the RG-23 Part-II Register to substantiate their allegation that the assessee had availed the Cenvat credit - It is well established law that one who makes the allegation is required to substantiate the same with proof - Negative onus to show that the appellant had not availed the credit, cannot be placed upon the assessee. Time limitation - Held that:- The demand is barred by limitation having been raised beyond the normal period as clearance of the scrap were on the basis of invoice and there was not any clandestine activity on the part of the assessee, in which case, longer period cannot be invoked. Appeal allowed on merits as well as on limitation.

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• 2018 (7) TMI 1772
  Imposition of equivalent penalty - proportionate credit belonging to the services relatable to their sister unit reversed - Held that:- There cannot be any mala fide on the part of the assessee so as to invoke penal provision against them. Credit was admittedly admissible to them, either to the present unit or to their sister unit. Since there was only one common certificate given by the bank the appellant took the entire credit but on being pointed out by the Revenue, reversed the proportionate credit, which were availed by the sister unit - the entire situation was revenue-neutral and it cannot be said that appellants have gained anything by the said exercise, so as to make them liable to penalty - penalty set aside. CENVAT Credit - duty paying documents - certificate issued by the bank - denial of credit on the ground that such certificate issued by the bank does not give the proper details - Held that:- There is no dispute as regards the duty paid character of the services and receipt of said services in the appellant unit or their utilization in the course of their activities, or the appellant entitlement to the same otherwise - It is well settled law that such technical objections, in the absence of any other dispute, the availment of the credit should not be adopted for denial - credit allowed. CENVAT Credit - service tax stands paid by the appellant’s head office under reverse charge mechanism - denial on the ground that during the relevant period their head office was not registered as ISD - Held that:- The head office was subsequently registered as ISD - As such the only procedural defect in taking the credit remains to be issuance of the invoices by Head Office which is rectifiable defect. Such procedural lapses cannot be made the basis for denial of the substantive rights of assessee to which he is otherwise entitled to - credit cannot be denied. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1771
  CENVAT Credit - inputs - supply of bought items such as soap and Herbal oil with manufactured items - manufacture of Keo Karpin oil - scope of SCN - Held that:- In the case of M/s G.S. Enterprises Vs Commissioner of Central Excise Jaipur [2002 (3) TMI 116 - CEGAT, COURT NO. I, NEW DELHI], It was held that a tuck of 7 O’clock blade purchased from the market and supplied along with the razor under one MRP cannot be considered to be Cenvatable input - credit not allowed. Scope of SCN - the plea of assessee is that in the SCN, the herbal oil is not specifically mentioned - Held that:- Though the herbal oil does not stand specifically mentioned in the show cause notice but the manufacturers name having been specifically mentioned as also the fact that the total credit availed by the assesses including the credit availed in respect of herbal oil having been proposed to be denied - there is no merit in the assessee's plea. Penalty - Held that:- There was no malafide intent to warrant penalty - penalty set aside. Appeal allowed in part.

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• 2018 (7) TMI 1770
  Classification of goods - tents made of 'cotton' - classified under Chapter sub-heading No. 63062100 of CETA, 1985 or not? - benefit of N/N. 29/04-CE dated 09.07.2004 - Held that:- The issue is squarely covered by the decision in the case of COMMISSIONER OF CENTRAL EXCISE, LUCKNOW. VERSUS M/S A.R. POLYMERS PVT. LTD., FATEHPUR [2017 (3) TMI 415 - CESTAT ALLAHABAD], where it was held that the description of the goods covered by the said SCN matches with the entry in the said notification stating to be “cotton, not containing any other textile material", goods were rightfully attracting 4% duty as provided by the said exemption under N/N. 29/04-CE dated 09.07.2004 - appeal allowed- decided in favor of appellant.

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• 2018 (7) TMI 1769
  Remission of duty - semi-finished/finished goods destroyed by fire - claim rejected on the ground that the appellant was in a position to control the fire and to avoid the accident - Held that:- To reject the remission application on the ground that the appellant was in a position to control the fire and to avoid the accident cannot be appreciated, inasmuch as nobody invites the fire accident in their factory which may result in destruction of the assessee’s goods. Every accident is a result of some negligence or omission on the part of the person concerned of unless such negligence is deliberate, the accident have to be held as unavoidable. An identical issue was considered by this bench in the case of Sumit Chemicals Pvt. Ltd. [2015 (12) TMI 1594 - CESTAT ALLAHABAD] wherein it was held that the assessee was entitled to avail remission on loss of semi finished goods and finished goods. In respect of destroyed raw material, the appellant is not contesting. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (7) TMI 1768
  Demand of Interest - suo-moto revision u/s 35 of the Kerala General Sales Tax Act, 1963 - effect of provisions of section 55C, whether effective only from 01.01.2000 onwards? - appropriation of the amount paid by the petitioner towards the fictitious interest amount for which there was no demand - Whether the Tribunal was right in sustaining the order of the Deputy Commissioner passed in purported exercise of the power conferred under Section 35 of the KGST Act? Held that:- Section 55C of the KGST Act, though brought into statute on 01.01.2000, is applicable in so far as all the assessment years. The general principles in appropriating amounts paid, first towards the interest, and then the principal dues was adopted by a clarificatory amendment to the statute. It is also to be noticed that Section 55C specifically refers to the amounts due under the Act including the interest and appropriation of payment; which applies whenever the recovery is made after the amendment was introduced, without reference to the assessment years, whether it is prior or post - Thus, Section 55C applies to all payments made on or after 01.01.2000 irrespective of the year to which arrears of the tax and interest relates - decided against assessee. Applicability of Section 23(3) of the KGST Act - Held that:- When there has been no levy of interest made, at the time of assessment and as a result no demand raised, the liability for interest would not arise is the argument. Whether there is any liability for interest under Section 23(3) on the petitioner in the given situation with reference to the assessment year 1997- 1998 particularly in the light of the sequence of amendments brought to Section 23 by the legislature? - Held that:- Section 23(3) of the KGST Act also mandates that the interest due should be paid by the dealer or other person in the manner prescribed in addition to the amount due. Hence there is a definite obligation cast on the dealer, assessee or such other person to pay the amounts due even without a determination. This is not to say that the assessee cannot dispute the computation, but the levy remains unaltered and there could be a dispute raised only on the actual amounts levied. Time Limitation - whether the assessment being completed under Section 17 of the KGST Act, is it possible to re-open it after five years? - Held that:- The assessment was completed within the period of limitation provided under Section 17, in the year 2003; after Section 55C came into the statute. The assessee had filed appeals and later by Annexure D an order was passed giving effect to the modifications as made by the Appellate Tribunal. At that point, the levy of interest was not taken note of and the appropriation under Section 55C was not also applied - it was perfectly in order for the Deputy Commissioner to have invoked the jurisdiction under Section 35. Revision dismissed - decided against assessee.

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• 2018 (7) TMI 1767
  Classification of goods - Ecohume - benefit of exemption - Whether the said product Ecohume can be classified as an organic substance coming under Entry 17 of III Schedule of the Kerala General Sales Tax Act, 1963? Held that:- It has to be understood that the scope and purpose of Entry 17 in III Schedule of the Act read together with the Explanation cannot be found analogous to Entry 31.011 of the Central Excise Tariff Act. No where in Annexure F order has it been held that 'Ecohume' is an 'organic manure' so as to import the finding to the requirement of Entry 17 read with the explanation. For the purpose of Central Excise Tariff Act what was required to be proved was that it is an animal or vegetable fertilizer, whether or not mixed together or chemically treated. But the scope of Entry 17 of III Schedule, especially in view of Explanation to Entry 17 as also Entry 47 of the First Schedule would indicate that what is required for the exemption to be granted under Entry 17, is that it should be an "organic manure" and applying the rule of ejusdem generis to the articles mentioned under Entry 17, which are cow dung, wood ash, poultry manure, green manure, compost, town compost, fish manure; organic manure can only be that produced or derived naturally from animals or plants not otherwise subjected to a manufacturing or chemical process - The purpose of Entry 17 is not to include all 'organic substances' within its fold. The report of the Agricultural University also states the the product 'Ecohume' is a growth promoter or a growth stimulant; which offers no aid to decide on the classification. A similar question came up for consideration before the Division Bench of this Court in Nelkadir Bone Industries v. Commercial Tax Officer, [2013 (5) TMI 29 - KERALA HIGH COURT], wherein the question that arose was whether the legislature was justified in including bone meal, under the head fertilizer in Entry 57(V) of the I Schedule to the Act instead of showing the same as organic manure in Entry 17 of third schedule of the KGST Act, and whether it is arbitrary and unreasonable and liable to be declared as organic manure entitled for exemption - it was held that Since it has been held that 'bone meal' did not qualify to be an organic manure for the reason that it is not produced by a natural process, the principle laid down by the Apex Court has no relevance. The impugned finding of the Tribunal is not sustainable, and requires to be reversed as being perverse on facts for having relied on irrelevant factors and not having taken into account the relevant considerations - revision allowed.

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• 2018 (7) TMI 1766
  Time Limitation - escapement of turnover - whether notices could be issued after the five year period as stipulated in Section 25 of the KVAT Act? - Held that:- Section 25(1) of the KVAT Act specifically speaks of a limitation of five years for proceeding to determine to the best of judgment the turnover, when the contingencies as enumerated under the provision occur. When there is no limitation prescribed for completion, there could only be the principles of reasonableness applied, on facts of individual cases, if a challenge is made with regard to that - We cannot presume the legislature having done it purposefully, especially when the limitation prescribed for was not for the final determination, but to proceed to determine , which definitely indicates initiation of proceedings for determination. The legislature also was aware of Section 19 of the KGST Act, which was in pari materia with Section 25 of the KVAT Act. The petition allowed, setting aside the notices issued beyond the limitation period as provided under Section 25(1) of the KVAT Act - appeal allowed.

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• 2018 (7) TMI 1765
  Withdrawal of compounding application - Compounding of tax - KVAT Act, 2003 - Rule 11 of the Kerala Value Added Tax Rules, 2005 - Held that:- Unless the compounding application is accepted by an order of sanction, it does not become a concluded contract. If there is no concluded contract between the parties, the application remains only as an offer which could be withdrawn at any time and the assessee can go for regular assessment. Viewed at a different angle, if after payment of quarterly tax the compounding application is rejected, necessarily, the assessee will have to file returns by producing the books of account. Therefore, payment of tax at compounded rate by itself cannot be a reason for concluding that there is a concluded contract between the parties. The appellant ought to have been given an opportunity to withdraw the compounding application especially when no sanction had been issued during the assessment year - The appeals are only to be allowed and an opportunity should be given to the appellants/petitioners to file regular return for the respective assessment years. However, it is made clear that the appellants shall not be entitled for refund of any amount paid towards compounded tax. Appeal allowed.

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• Indian Laws

• 2018 (7) TMI 1799
  Cheque bounced - Maintainability of Complaint - case of petitioner is that the complainant, who has filed the complaint, was neither the payee of the subject cheques nor the holder in the due course of the subject cheques - Held that:- It is an admitted position that the landlord of the property is Friends Motels Pvt. Ltd. The payee in the subject cheques is also Friends Motels Pvt. Ltd. The complaint does not state as to how the complainant Mr. Arun Dwivedi has become the holder in due course or is entitled to receive the amount payable in the cheques - There is no further averment as to how a presumption under 139 of the Act would arise in favour of the complainant. Even on the cheques, there is no endorsement that the same were negotiated/indorsed in favor of the complainant. The Complainant is neither the payee nor the holder in due course of the subject cheques and thus not entitled to either issue the statutory notice or file the complaint under section 138 of the Act. Since no demand was made by the payee or holder in due course, of the subject cheques, by issuance of a statutory notice under section 138, the petitioner has not committed any offence under section 138 of the Act. Since no complaint has been filed by the either the payee or the holder in due course, the court could not have taken cognizance of the alleged offence under section 142 of the Act. The petitioner was entitled to a discharge under Section 251 Cr.P.C., as the basic ingredients of Section 138 of the Act are not satisfied - petition allowed - decided in favor of petitioner.

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