TMI Tax Updates - e-Newsletter
August 2, 2018

Case Laws in this Newsletter:

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

Articles

1. GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XV)

   By: Dr. Sanjiv Agarwal

2. Key 15 suggestions on simplifying GST for SME / MSME sector

   By: Bimal jain

News

1. GST Revenue collections for July 2018

2. Cabinet approves Extension of Concessional Financing Scheme (CFS) to support Indian Entities bidding for strategically important infrastructure projects abroad

3. Indian Advance Pricing Agreement regime moves forward with signing of nine UAPAs by CBDT in July, 2018

4. Cabinet approves grant of Interest Free Loan equivalent to interest during construction component to fertilizer revival projects at Sindri, Gorakhpur and Barauni by Hindustan Urvarak and Rasayan Limited

5. Cabinet approves issue of fresh equity to the extent of 15% of the paid up equity capital by Hindustan Copper Limited

6. LIC to acquire controlling stake of IDBI Bank

7. Indo-German Government to Government Umbrella Agreements worth Euro 653.7 Million (approx. ₹ 5253 crore) on Financial Cooperation and Technical Cooperation 2017 were signed today in New Delhi

8. Third Bi-monthly Monetary Policy Statement for 2018-19

9. Single Brand Retail Trade received FDI Equity of US$ 1,048.14 Million since 2006

10. Digital payments set to become a trillion-dollar market in next five years: NITI Aayog

Notifications

Companies Law

1. F. No. 1/19/2013-CL-V-Part - dated 31-7-2018 - Co. Law

Companies (Accounts) Amendment Rules, 2018

GST - States

2. 24928-FIN-CT1-TAX-0043/2017 - dated 27-7-2018 - Orissa SGST

Amendments in the Notification of the Government of Odisha in the Finance Department No. 19845-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017.

3. 24920-FIN-CT1-TAX-0043/2017 - dated 27-7-2018 - Orissa SGST

Amendments in the Notification of the Government of Odisha in the Finance Department No.19829-FIN-TAX-0022-2017, dated the 29th June, 2017.

4. 22150-FIN-CT1-TAX-0034/2017-S.R.O. No. 271/2018 - dated 6-7-2018 - Orissa SGST

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

5. 21128-FIN-CT1-TAX-0043/2017-S.R.O. No. 262/2018 - dated 30-6-2018 - Orissa SGST

Amendment in the Notification of the Government of Odisha, in the Finance Department No.19857-FIN-CT1-TAX-0022/2017, dated the 29th June, 2017

6. 19372-FIN-CT1-TAX-0034/2017-S.R.O. No. 230/2018 - dated 19-6-2018 - Orissa SGST

The Odisha Goods and Services Tax (Sixth Amendment)

7. 19196-FIN-CT1-TAX-0043/2017-S.R.O. No. 211/2018 - dated 13-6-2018 - Orissa SGST

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

8. 19192-FIN-CT1-TAX-0034/2017-S.R.O. No. 210/2018 - dated 13-6-2018 - Orissa SGST

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

9. 18768-FIN-CT1-TAX-0072/2017-S.R.O. No. 201/2018 - dated 8-6-2018 - Orissa SGST

Constitute the Odisha State Appellate Authority for Advance Ruling for Goods and Services Tax.

10. 18764-FIN-CT1-TAX-0039/2018-S.R.O. No. 200/2018 - dated 8-6-2018 - Orissa SGST

State Government appointed officers under the Odisha Value Added Tax Act, 2004.

11. 17574-FIN-CT1-TAX-0043/2017-S.R.O. No. 186/2018 - dated 28-5-2018 - Orissa SGST

Amendment in the Notification of the Government of Odisha in the Finance Department No. 19841-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017.

12. 16082-FIN-CT1-TAX-0043/2017-S.R.O. No. 169/2018 - dated 14-5-2018 - Orissa SGST

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

SEZ

13. S.O. 3609 (E) - dated 20-7-2018 - SEZ

Central Government de-notifies an area of 159.211 hectares, thereby making resultant area as 681.016 hectares at Chengambakkam, Appaiahpalem, Gollavaripalem, Mallavaripalyam, Aroor, Moporapalle villages at Satyavedu and Vardayya Palem Mandals in the State of Andhra Pradesh

Circulars / Instructions / Orders

GST - States

1. 13/2018 - dated 11-6-2018

Clarifications on certain issues under GST.

2. 12/2018 - dated 7-6-2018

Clarifications on refund related issues

3. Trade Notice No. 01/2018 - dated 30-5-2018

Organizing of refund fortnight from 31st May, 2018 to 14th June, 2018

Customs

4. 24/2018 - dated 31-7-2018

Electronic scaling - Deposit in and removal of goods from Customs bonded Warehouses

5. 14 /2018 - dated 25-7-2018

Sea Cargo Manifest and Transshipment Regulations, 2018 – reg.

6. 110/2018 - dated 23-7-2018

Amendment in Notification SO 1761(E) dated 26.04.2018 vide notifying "Tramadol" as a Psychotropic Substances under Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985 –reg.

7. 111/2018 - dated 20-7-2018

Tariff rates in respect of the LCL cargo under Customs

8. 109 /2018 - dated 17-7-2018

Third IGST Refund Fortnight to clear pending refunds-reg.

9. 108/2018 - dated 11-7-2018

Monitoring of realisation of export proceeds on shipping bills on which drawback has been claimed & disbursed-reg

10. 106/2018 - dated 10-7-2018

Revised instructions for stuffing and sealing of refrigerated containers –reg.

Highlights / Catch Notes

GST

• Circular No. 28/02/2018-GST and Order No. 02/2018-Central Tax Withdrawn, Impacting GST Compliance Guidelines.

  Circulars : 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.
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Income Tax

• Foreign Income Exempt from Indian Tax if Residing Abroad Over 182 Days u/s 5(2)(a) Income Tax Act 1961.

  Case-Laws - AT : Accrual of income in India - Salary/ remuneration received by the assessee in respect of the foreign employment is not taxable in India under provision of section 5 (2) (a) of the IT Act, 1961 and such income cannot be taxed in India when the assessee stayed outside India for more than 182 days
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• Assessee's Fee Income Not Eligible for Trust Benefits u/ss 11(1)(a), 11(1)(d), 12 of Income Tax Act.

  Case-Laws - AT : Entitlement to benefit of section 11(1)(a) & 1l(l)(d) and u/s 12 - assessee’s income by way of fees cannot be held to be derived from property held under the trust because students cannot be treated as property
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• Section 11 Deduction Applies to Training and Consultancy Profits as Incidental to Charitable Objectives of Society.

  Case-Laws - AT : Deduction u/s.11 on profits earned out of training and consultancy - the same was incidental to the attainment of the objects of the assessee society, which are charitable in nature.
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• Deemed Dividend u/s 2(22)(e): AO Cannot Claim Accumulated Profits if Income Accepted as Declared.

  Case-Laws - AT : Deemed dividend addition u/s 2(22)(e) - proof of accumulated profits - if the AO has accepted the income returned by the said company and not made any changes in the return of income and assessed the income as declared by the said company, he cannot hold that there was accumulated profits for the purpose of section 2(22)(e)
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• Taxpayer Penalized for Loan Transactions via Journal Entries; Assumed Compliance with Income Tax Act Sections 271E and 271D.

  Case-Laws - AT : Penalty imposed u/s.271E and 271D - taking and repayment of loan from the various sister concerns through Journal Entry - all the entries is the bona fide belief of the assessee that there was no violation of any provision of the Act.
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Customs

• Mandatory RFID for Bonded Goods Delayed to October 2018, Allowing More Time for Stakeholder Adaptation.

  Circulars : Mandatory RFID scaling in case of movement of goods under warehousing bond - Postponed till 1-10-2018
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• Probat Roasting Unit Confirmed Under Customs Tariff Heading 84193100; Impacts Import Classification and Tax Regulations.

  Case-Laws - AT : Classification of imported goods - Probat Roasting Unit - The classification of the coffee roasting machine under CTH 84193100 of Customs Tariff Act is upheld
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• Appellants' Imported Software Classified Under CTH 8523 8020 as Standalone CD for Any ADM Use.

  Case-Laws - AT : Classification of imported software - the software imported by the appellants is a standalone independent software as given in the form of CD and can be loaded on any ADM. Under these circumstances it is rightly classifiable under CTH 8523 8020.
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Service Tax

• Service Tax Confirmed for Wind Turbine Part Production Under Business Auxiliary Service Classification.

  Case-Laws - AT : Business Auxiliary Service - The appellant have carried out the processing of machining, drilling, shot blasting and painting, thereafter, the resultant product is final part of wind turbine which is a final product, hence the process under taken by the appellant, clearly falls under the category of production. - Demand of service tax confirmed.
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• Service Tax Demand on Registry and Registrars Misclassified as Franchise Services Overturned by Adjudicating Authority.

  Case-Laws - AT : Franchise Services - services rendered to domain registrars - It becomes abundantly clear that both registry and registrars are independent entities operating on principle-to-principle basis - the original Adjudicating Authority has miserably erred while holding an arrangement of accreditation as that of providing franchisee services - demand set aside.
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• Non-payment of service tax in Renting of Immovable Property Service; Form 26 AS deemed correct for valuation.

  Case-Laws - AT : Renting of Immovable Property Service - non-payment of service tax - the amounts reflected in Form 26 AS represent the correct value of the services which has to be adopted as the assessable value, unless evidence to the contrary is produced by the appellant.
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• Duplicate Service Tax Paid by Both Parties in Subcontracting Arrangement; Government Must Refund Overpayment.

  Case-Laws - AT : Refund of tax paid by sub-contractor - Since both the parties had discharged the service tax liability for the some work, tax amount paid twice, cannot be retained by the Government, as the legitimate due; and on claim of one tax as refund by either of the person, the same should have been refunded.
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Central Excise

• Printing on PVC Sheets Not Considered Manufacturing Under Central Excise Regulations.

  Case-Laws - AT : Manufacture - activity of printing of plain PVC sheet - on the bought out manufactured PVC sheet mere printing activity will not amount to manufacture - the printing of PVC sheet is held to be activity not amounting to manufacture.
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• Shared Premises and Services Don't Make Entities Related Parties Under Central Excise Act, 1944, Section 4(4)(c)/4(3)(b).

  Case-Laws - AT : Valuation - related party transaction - mere fact of sharing common premises and services of employees do not make the two entities related in terms of Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944.
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• CFL Lamps from Noida Unit Correctly Classified Under Tariff Item No. 85393110 as per Central Excise Case Laws.

  Case-Laws - AT : Classification of goods - CFL lamps - the goods cleared by IAFL from Noida unit were appropriately classifiable under Tariff Item No.85393110.
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VAT

• Consignors Must Prove Goods Transport: F-Forms Alone Insufficient for Inter-State Transfers; Assessee Holds Proof Responsibility.

  Case-Laws - HC : Stock Transfer - When F-Forms are supplied and the consignor is asked to prove the transport of goods, it is the duty of the assessee to establish such transport, since F-Form is only one mode of evidence to establish the inter-State transfer of goods on consignment.
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• VAT on Works Contracts: Determining Intra-State vs. Inter-State Tax Based on Goods Sourcing for Turnkey Projects.

  Case-Laws - HC : Levy of VAT - Intra-state or inter-state levy? - works contract - turnkey project - If the transfer of goods, which are incorporated in the works, are those brought from the other State, it has all the characteristics of an inter-state sale
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Case Laws:

• GST

• 2018 (8) TMI 67
  Detention of goods - efficacious alternative remedy u/s 107 of the Central Goods and Service Tax Act - Held that:- Nevertheless, the petitioner has agreed to provide the Bank guarantee as mandated under Rule 140 of the CGST Rules and to have the goods released, subject to the departmental proceedings now initiated through Ext.P7 - the respondent will release the petitioner's goods on its providing the Bank guarantee for the value of the goods as mentioned in Ext.P7 - petition allowed.

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• 2018 (8) TMI 65
  Unable to upload Form GST TRAN-1 to take credit of the input tax/ service tax/central excise duty - Held that:- The respective Commissioner of GST and Central excise are directed to appoint Nodal Officer/Officers for the State of Tamil Nadu, if not already appointed, within a period of 2 weeks from the date of receipt of a copy of this order - The petitioners/assessees are directed to submit their applications in accordance with paragraph 8 of the said circular dated 03.4.2018 within a period of two weeks from the date of receipt of a copy of this order to their respective Assessing Officers/Jurisdictional Officers/GST Officers. The Assessing Officers are directed to forward the applications to the Nodal Officers within a period of one week. Petitions disposed off.

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• 2018 (8) TMI 64
  Release of detained goods - Section 129 of the Goods & Service Tax Act, 2017 - Held that:- The petitioner is aware of the consequences which would follow post such detention and seizure and if it still desires to approach the concerned official with a proper request and express its readiness and willingness to comply with all the conditions permissible in law, we have no doubt in our mind that the release would be granted - petition dismissed.

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• 2018 (7) TMI 1829
  Unable to upload FORM GST TRAN-1 - Input tax credit - It is alleged by the petitioner that though he has attempted to upload FORM GST TRAN-1 within the time, he was not able to do so on account of some system error - Held that:- It is deemed 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 - petition disposed off.

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• Income Tax

• 2018 (8) TMI 63
  Cancellation of bid (Sole bidder) at the auction held - auction / sale of property by the Income Tax department (CBDT) - Held that:- In the present facts, it cannot be said that action of the Respondent No.2 in issuing the impugned letter dated 4.5.2018 is arbitrary or in violation of Article 14 of the Constitution of India. The answer to the question to be posed as laid down by the Supreme Court in Michigan Rubber (I) Ltd [2012 (3) TMI 512 - SUPREME COURT] has to be, in these facts in the negative. Thus caselaws cited on behalf of the Petitioner would not be applicable in the present facts as from perusal of the additional affidavit filed on behalf of Respondent Nos.2 and 3 we have come to view that there are sufficient reasons on record for the Respondent Nos.2 and 3 to cancel the earlier auction held on 22.9.2017 and publish notice dated 12.5.2018 in newspapers for a fresh auction of the said property. Thus, we are not dealing individually with the case laws relied upon by the Petitioner. Petitioner thereafter mentioned that bid which has been received in fresh auction which was conducted on 30.5.2018 was higher only by 90 Lakhs than that made by the Petitioner. On instructions he submits that the Petitioner is ready to match that bid. However, this option he ought to have exercised by participating in auction held on 30.5.2018 bearing in mind that on 23.5.2018 the Court had specifically permitted the Petitioner to bid at the auction which was held on 30.5.2018. In these circumstances, we see no reason to interfere with the impugned letter dated 4.8.2018 cancelling auction held on 22nd September, 2017 or in holding of the fresh auction consequent to notice dated 12.5.2018.

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• 2018 (8) TMI 62
  Attachment orders - priority to dues - initiation of liquidation proceedings - priority in appropriation of the amounts set aside by the liquidator for clearance of the tax dues - Sale transaction effected by the fifth respondent - Held that:- The first respondent cannot claim any priority merely because of the fact that the order of attachment dated 27.10.2016 issued by him was long prior to the initiation of liquidation proceedings under the Code against VNR Infrastructures Limited, Hyderabad. It may be noted that Section 36(3)(b) of the Code indicates in no uncertain terms that the liquidation estate assets may or may not be in possession of the corporate debtor, including but not limited to encumbered assets. Therefore, even if the order of attachment constitutes an encumbrance on the property, it still does not have the effect of taking it out of the purview of Section 36(3)(b) of the Code. The said order of attachment therefore cannot be taken to be a bar for completion of the sale effected by the fifth respondent under the provisions of the Code. The first respondent necessarily has to submit the claim of the Income-tax Department to the fifth respondent for consideration as and when the distribution of the assets, in terms of Section 53(1) of the Code, is taken up. The writ petition is accordingly allowed declaring the legal position as aforestated. The fourth respondent shall entertain and register the sale transaction effected by the fifth respondent in favour of the petitioner company, if not already done. The first respondent is at liberty to submit its claim before the fifth respondent, who shall duly consider the same in accordance with the priorities stipulated under Section 53(1) of the Code.

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• 2018 (8) TMI 61
  Withdrawal of approval granted by the first respondent Union Commerce Ministry under the Industrial Park Scheme 2002 and Section 80IA - the notification (No. 21/2014) dated 27.03.2014 withdrawing the earlier approval given by another notification (dated 09.02.2007) - Held that:- In the present case, there does not appear to have been any prior opportunity; even the written submissions given to the committee was not considered or adverted to. The material facts, such as the approval given by the town planning authorities, the repeated inter se correspondence between the Haryana Director of Industries (based on whose recommendation the approval and notification were issued in 2007) and the explanation given by the petitioner were completely ignored. DIPP just went by a bare comparison of the area in the Original Application (24299.75 sq. mtrs.) and the final built up area (14715.55 square meters). The petitioner’s explanation as regards the built up area being the larger super area (for which the leases were entered into) and the actual carpet area being 8094 square meters were ignored altogether. In these circumstances, the impugned order and notification suffers from non application of mind. In the absence of any stipulation as to the minimum requirement of industrial park under the scheme as well as under the Income Tax Act, the unreasoned order of DIPP (ignoring the record and overlooking the material explanation of the petitioner with respect to the area constructed, the super area in fact leased and that there was no suppression of facts anytime) withdrawing the earlier notification cannot survive. As regards the other ground, i.e. non-construction beyond the scheme, the court notices that the approval was in fact issued after the date mentioned by the DIPP. Following the reasoning in Silverland (2011 (11) TMI 384 - BOMBAY HIGH COURT) of the Bombay High Court, that reason cannot survive. The impugned order and notification, withdrawing the earlier notification (of 2007) is hereby quashed. The second respondent shall consider all the materials on the record and after granting proper opportunity of hearing to the petitioner, and in the light of the above discussion, issue a reasoned order, dealing with all contentions. The fresh order shall be restricted to the question of constructed area and whether there was any material suppression, having regard to the position of the scheme and the Income Tax Act, especially that in the absence of any stipulation in either of them regarding minimum constructed area qualifying for benefit of the scheme. Writ petition allowed.

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• 2018 (8) TMI 60
  Addition in respect of undisclosed interest income on estimate basis - reassessment proceedings U/s 153A - Held that:- When the Assessing Officer as well as the CIT(A) has accepted the fact that the assessee was suffering from the ailment and was undergoing the treatment of Tuberculosis during the period under consideration then the estimation made by the Assessing Officer as well as the confirmed by the ld. CIT(A) without any proper and reasonable basis and particularly in the reassessment proceedings U/s 153A is not permitted. Even the Assessing Officer has not worked out the income on basis of the funds available with the assessee and employed in the business activity by considering the corresponding application of income which was found during the course of search and seizure action as well as recorded in the books of account of the assessee. When the Assessing Officer has not found any significant discrepancy in the income offered by the assessee and corresponding application of income then there is no reason for not accepting the income offered by the assessee. Accordingly, in facts and circumstances of the case when the addition was made by the AO purely on ad hoc estimation and without any tangible material, the same is not sustainable and consequently is liable to be deleted. Hence we delete the addition made by the Assessing Officer and sustained by the ld. CIT(A) on this account. Accordingly, ground No. 1 of the assessee’s appeal is allowed and ground No. 1 of the revenue’s appeal is dismissed. Interest chargeable U/s 234B after giving the credit of the amount in the PD account - cash seized during the search and seizure action is available for adjustment against the advance tax liability and consequently chargeability of interest U/s 234B - Held that:- Accordingly in view of the binding precedents as well as the CBDT circular, we do not find any error or illegality in the impugned order qua this issue. Hence, this ground of revenue’s appeal is dismissed. Addition made by the Assessing Officer on account of cash deposits in the bank account of employees of the assessee - Held that:- in absence of any documentary evidence of operating of the bank accounts by the assessee, the mere availability of cheque books with the assessee cannot be an evidence for making addition of the cash deposits in the accounts of these persons specifically when all these persons are regularly assessed to income tax. The assessee filed the return of income in support of explanation. Further the statement of one of these persons namely Shri Mahaveer Prasad Sharma was recorded by the search party U/s 132(4) and no such question was asked from the said person regarding the deposits in the bank account. Therefore, when the assessee has discharged its onus by producing the return of income of these persons wherein the declared income was sufficient to cover the deposits made in the bank accounts, then in the absence of any direct evidence or tangible material to disclose the fact that the cash deposit in the bank accounts of these persons belongs to the assessee, the addition made by A.O. is not sustainable. The said deposit is subject matter of assessment in the hands of these persons, accordingly, in the facts and circumstances of the case, we delete the addition made by the Assessing Officer on this account. Addition made on account of sale of jewellery by mother-in-law of the assessee treating the same as undisclosed income - Held that:- once the amount was found duly credited in the bank account of Smt. Saraswati Devi Sharma and subsequently it was transferred in the account of the assessee then the transaction cannot be doubted. Even the source of credit in the account of mother in law is found during the search and seizure action. The assessee explained that during the last days of her life, she was residing with the assessee and her daughter Smt. Kalawati Sharma, wife of assessee and thus it is natural that all her belongings and valuables would be at the place of assessee. Accordingly, in view of the above facts and circumstances of the case, we are of the considered opinion that when the seized material itself shows the source of amount deposited in the bank account of Smt. Saraswati Devi Sharma by cheque and subsequent transfer from her account to the account of assessee, the same cannot be treated as undisclosed income of the assessee. Accordingly, we delete the addition made by the Assessing Officer on this account. Disallowance on account of short fall of fund and making excess investment - Held that:- CIT(A) has recasted cash flow statement and found that there is no short fall of fund as per the revised fund flow statement. Moreover when we have already decided the issue of jewellery in favour of the assessee, then the question of disallowance on account of short fall of fund and making excess investment does not arise. Accordingly, in view of the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(A). Hence, the grounds No. 1 and 2 raised in the revenue’s appeal is dismissed.

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• 2018 (8) TMI 59
  Addition on account of long term capital gain - disallowing the claim of the assessee on account of exemption u/s 54F - assessee had neither purchased nor constructed any house and the amount of sale consideration was utilized in purchase of plot which cannot be treated as residential house - Held that:- No doubt the provisions of section 54F should be construed liberally and it is also held in various decisions that where substantial amount of the capital gain has been invested for construction of the house property, exemption u/s 54F may be allowed notwithstanding that the property is not fully complete or that the house is not in habitable condition. However, in the instant case, the assessee could not produce the contractor M/s Manya 8,57,850/- for the examination of the Assessing Officer to find out about the completion of the construction - restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to produce the contractor M/s Manya & Bhuwan Infrastructure (P) Ltd. and the architect M/s Khurshid Ahmed & Associates for examination of the Assessing Officer. The Assessing Officer upon satisfaction may allow the deduction u/s 54F of the I.T. Act as per fact and law. Thus hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. Chargeability of interest u/s 234B - Held that:- CIT(A) has not adjudicated the issue by passing a speaking order on account of chargeability of interest u/s 234B. Since the deduction u/s 54F has been restored to the file of the Assessing Officer, therefore, I deem it proper to restore this issue also to the file of the Assessing Officer with a direction to levy interest u/s 243B as per law

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• 2018 (8) TMI 58
  Accrual of income in India - Stay outside India - number of days stay in India - remuneration received by the assessee in respect of the foreign employment - Held that:- It has been held in various decisions that when a citizen of India leaves India for employment abroad and stayed outside India for 182 days or more, then he becomes a non-resident and the income received from services rendered outside India cannot accrue or arise or deemed to accrue or arise in India and cannot be taxed in India notwithstanding the fact that the same is credited in the bank in India or TDS has been deducted on such income. As find the Delhi Bench of the Tribunal in the case of Pramod Kumar Sapra (2017 (11) TMI 567 - ITAT DELHI) has held that where the stay of the assessee, an employee of RIL, and deputed to Iraq outside India was for more than threshold 182 days, salary income of assessee for the previous year could not be held to be taxable because he was not resident of India - remuneration received by the assessee in respect of the foreign employment is not taxable in India under provision of section 5 (2) (a) of the IT Act, 1961 and such income cannot be taxed in India when the assessee stayed outside India for more than 182 days Since the assessee in the instant case has stayed outside India for more than 182 days, therefore, respectfully following the decisions cited (supra) set aside the order of the CIT (A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee

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• 2018 (8) TMI 57
  Entitlement to benefit of section 11(1)(a) & 1l(l)(d) and u/s 12 - addition on ground that the assessee is pursuing its object of imparting and spreading education with profit motive and not that of charity purpose - Held that:- Since in the instant case the registration granted under Section 12A is still in force and since the object of the assessee society has not under gone any change, therefore, considering the totality of the facts of the case, we deem it proper to restore the issue to the file of the Assessing officer with the direction to adjudicate the issue a fresh in light of the decision of Adarsh Public School cited (2018 (2) TMI 1692 - ITAT DELHI)wherein held that the assessee’s income by way of fees cannot be held to be derived from property held under the trust because students cannot be treated as property - decided in favour of assessee for statistical purpose.

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• 2018 (8) TMI 56
  Addition u/s 14A r.w.r 8D - Held that:- Once the assessee has submitted before the Assessing Officer that no expenditure had been incurred for earning the dividend income, the Assessing Officer was under legal obligation to demonstrate as to how he was not satisfied with the contention of the assessee and only, thereafter, he could have proceeded to make a disallowance. As is evident from the assessment order, the satisfaction of the Assessing Officer before invoking provisions of section 14A r/w Rule 8D is missing. CIT (A) has also taken a similar view while deleting the disallowance. Under the circumstances, we find no reason to interfere with the findings of the Ld. CIT (A) in this regard and accordingly, ground nos. 1 and 2 of the department’s appeal are dismissed. Ad hoc disallowance @25% of the conferences and seminars expenses - Held that:- Assessing Officer has not pointed out any specific defect in the details/accounts submitted by the assessee. It is also pertinent to note that the Assessing Officer had made inquiries from two parties viz. M/s Imperial and M/s Habitat World in respect of payments made to them by issuing notices u/s 133(6) of the Act and it is a matter of record that these two parties had confirmed the transactions with the assessee. It is well settled by now that ad hoc disallowance cannot be made unless specific defects are brought on record by the Assessing Officer. This is not the case in the present appeal before us. There is a plethora of judicial rulings wherein it has been held that ad hoc disallowance without specific pinpointing of defect is not sustainable. Directors’ remuneration - Held that:- As to how the Assessing Officer has reached this conclusion has not been elaborated. Further, the Board resolution approving the appointing of directors passed in the extraordinary general meeting is available on record. The Ld. CIT (A) also did not undertake the exercise of examining the evidences but rather addressed the issue in a casual way by holding that remuneration of 40 lakh was fair and reasonable. CIT (A) has also not elaborated as to how he has reached the conclusion that an amount of 40 lakh was fair and reasonable towards payment of directors’ remuneration. Accordingly, in view of the lack of examination with respect to this issue by both the lower authorities, we deem it appropriate to restore the issue to the file of the Assessing Officer to reexamine evidences which have been submitted in this regard after giving proper opportunity to the assessee to present its case. Accordingly, ground no. 4 of the department’s appeal and ground no. 3 of the assessee’s appeal are allowed for statistical purposes. TDS u/s 195 - Held that:- Addition made by the Assessing Officer by invoking provisions of section 40(a)(i) it is seen that the Assessing Officer in his remand report has himself accepted that in view of the provisions of Double Taxation Avoidance Agreements between India and US and India and India and UAE, the payment to Mr. Renee Mauborgne amounting to 47, 52, 000/- and of 17, 67, 150 to Mr. Shashi Tharoor did not attract the rigors of provisions for deduction of tax at source. The Ld. CIT (A) seems to have ignored this admission by the Assessing Officer in the remand report. In view of the comments of the Assessing Officer in this regard as contained in the remand report, we delete the disallowance of 47, 52, 000/- and 17, 67, 150/-. AO is directed to delete these additions. We also note that the remaining payment of 3, 06, 181/- was made to M/s KPMG Helion which was in the nature of reimbursement on which TDS had also been deducted by them. Accordingly, no further tax was required to be deducted on this reimbursement. Thus, this amount of 3, 06, 181/- is also directed to be deleted and the Assessing Officer is directed to allow consequential relief. Addition by treating the payment made for carrying out due diligence and valuation of business as capital expenditure - Held that:- The copies of invoices placed show that invoice of 3, 06, 181/- was raised for professional services rendered in connection with Project Quest and the other invoice for 7, 82, 440/- was raised for professional services rendered in connection with Project Chip. However, the nature of the services rendered is not discernible from these invoices. In view of the inability of the assessee to demonstrate as to how these invoices pertained to capital expenditure, we are unable to differ with the findings of the lower authorities in this regard and we dismiss ground no. 4 of the assessee’s appeal.

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• 2018 (8) TMI 55
  Claim of deduction u/s 80IB(5)(ii) - assessee has not filed a separate P&L A/c and the balance sheet of the Midnapore Unit certified by the CA for making the claim in Form No.10CCB of the Act - report is not signed by the CA but is signed by the authorized signatory - Held that:- As decided in assessee's own case deduction u/s 80IB is a special deduction allowable to the undertakings which are set up in a backward area as certified by the Central Govt. Therefore, there is a requirement that while making the claim u/s 80IB(5) the claim should be made inform No.10CCB signed by the CA of the assessee and should be accompanied along with the report for each of the undertaking along with the P&L and the balance sheet of the undertaking as if it is a distinct entity. In the case of the assessee, though the assessee has got its books of account audited and Form 10CCB is signed by the C.A. of the assessee company, the report is not signed by the CA but is signed by the authorized signatory. However, as rightly pointed out by the learned Counsel for the assessee, there is no variation in the claim of deduction u/s 80IB(5) in Form No.10CCB and P&L A/c and balance sheet of the assessee filed during the re-assessment proceedings. Therefore, the objection raised by the AO, in our opinion, is a technical objection and unless the AO brings out as to how the P&L A/c and the balance sheet are not reliable and vary with the results declared by the assessee in Form No.10CCB, the AO cannot deny the deduction on this ground alone. Reopening of assessment - Held that:- With regard to reopening of assessment, we notice that the assessment order u/s 143(3) was passed on 26/12/2008. The reopening proceedings for AY 2005-06 were initiated in November, 2008. The assessee sought reasons for reopening and filed its objections vide letter dated 25/11/2009. AO disposed off the objections and completed the assessment u/s 143(3) r.w.s. 147 on 29/12/2009. No doubt, the reassessment proceedings were initiated in November, 2008 but completed the assessment in December, 2009. But the order passed u/s 143(3) for the current AY on 26/12/2008 is within one month of initiating reassessment proceedings for previous AY relevant to AY 2005-06. Therefore, in our view, AO may not have considered the various issues which were raised in reassessment of AY 2005-06. Further, we also noticed that the assessment order passed u/s 143(3) is not a speaking order. Therefore, we do not see any merit in rejecting the proceedings initiated u/s 147 for the AY 2006-07. Hence, the ground raised by the assessee on this issue is dismissed. Disallowance the depreciation claimed by the assessee on the ground that assessee failed to substantiate the proof for making addition - Held that:- Even the books of account are subject to tax audit, it means that the proof of purchases was presented before audit. Therefore, AO can demand for proof of making addition in this block of asset. It is the duty of the assessee to substantiate the claim before the AO. Even before us, no evidence was submitted in order to adjudicate on merit. Hence, these grounds raised by the assessee are dismissed as not substantiated the proof of making addition in the block of assets in Pollution Control Equipment.

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• 2018 (8) TMI 54
  Deduction u/s.11 on profits earned out of training and consultancy - According to the Assessing Officer, the assessee ought to have maintained separate books of account in respect of its activity of providing training and consultancy services in view of section 11(4A) - Held that:- In the facts of the instant case, education is the main object of the assessee society. The training and consultancy fee was charged in the course of attainment of the main object as an incidental activity. The income realized from the training and consultancy fee by the assessee society was not significant keeping in view the total revenue of the assessee society. Thus, we do not find any material to show that the training and consultancy activity was undertaken by the assessee society as an independent business activity. We are inclined to agree with the contention of the assessee that the same was incidental to the attainment of the objects of the assessee society, which are charitable in nature. Thus, in our considered view, provisions of section 11(4A) are not attracted in the instant case. Also in an assessment made in the subsequent assessment years u/s.143(3) of the Act in the case of the assessee, the income derived from similar activity in the similar facts in assessment years 2012-13, 2013-14, 2014-15 & 2015-16 has been allowed as exemption u/ss 11 & 12 of the Act by the Income Tax Officer himself. Thus, there is no reason to take a different view in the years under appeal Penalty u/s. 271(1)(c) - Held that:- Hon’ble Supreme Court in the case of K.C.Builders and Another vs ACIT (2004 (1) TMI 7 - SUPREME COURT) has held that “Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside. In the instant case, the quantum appeal has been decided in favour of the assessee. Hence, we confirm the order of the CIT(A) in deleting the levy of penalty - decided in favour of assessee

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• 2018 (8) TMI 53
  CIT-A enhanced the income of the assessee by discovering a new source of income - TDS u/s 194C - CIT(A) enhancing the income of the assessee u/s 251(1)(a) - disallowing the expenditure incurred on account of procurement of materials from third party vendors u/s 40(a)(ia) - assessee has entered into transactions with domestic third parties, LGEK and its related parties for purchase of finished goods without deducting tax at source - Held that:- There is no discussion of any such disallowance either in the return of income or in the assessment proceedings, therefore, the disallowance made by the ld. CIT(A) by discovering a new source of income is not sustainable in law. We, therefore, hold that the disallowance made by the ld. CIT(A) u/s 40(a)(ia) is void ab-initio. Since we are allowing the grounds raised by the assessee on the issue of enhancement of assessment by the ld. CIT(A) by discovering a new source of income, the other alternate arguments made by the ld. counsel for the assessee become academic in nature and therefore are not being adjudicated. Treatment to sales-tax subsidy - taxable revenue receipt OR capital receipt - Held that:- As following the order of the Tribunal in assessee’s own case for assessment year 2002-03 has decided the issue against the assessee by observing that the facts concerning this ground are that the assessee treated sales tax subsidy as capital receipt, which was held by the AO to be chargeable to tax in the nature of revenue receipt. It is noticed that this issue came up for consideration before the Tribunal in earlier years. For the first time, the tribunal decided it against the assessee for the assessment year 2002-03 and such view has been followed for the subsequent years. In view of the consistent view taken by the Tribunal in deciding sales tax subsidy as revenue receipt, we do not find any reason to interfere with the impugned order on this issue. Disallowing the provision for service warranty - Held that:- We find the Tribunal following the order of the Tribunal in assessee’s own case for assessment years 2002-03, 2003-04 and 2004-05 has decided the issue in favour of the assessee Disallowing royalty paid to LG Electronics Inc. Korea holding the same to be capital expenditure - Held that:- Respectfully following the decision of the Tribunal in assessee’s own case for assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI], we hold that the total royalty payment as reduced by the transfer pricing adjustment on this score be treated as revenue expenditure. The ground raised by the assessee on this issue is accordingly allowed. Disallowing the claim of bad debts - Held that:- We find the ld. CIT(A) rejected the claim of the assessee on the ground that the assessee has not made out any case except making a bald claim that it has fulfilled the requirement of section 36(1)(vii) or 36(2) of the I.T. Act. Since the assessee is required to fulfill the twin conditions, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate the claim of allowability of bad debts. The ground raised by the assessee on this issue is accordingly allowed for statistical purposes. Disallowing the claim of deduction u/s 80JJAA - Held that:- This issue is decided against the assessee by the Tribunal in assessee’s own case in earlier years and in assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI] Addition of sales promotion and advertisement expenditure - as submitted that sales promotion and advertisement expenditure is incurred by the appellant wholly and exclusively in connection with its own business in India and is not at all guided by the alleged motive of promoting the business interest of its overseas group company - Held that:- Respectfully following the order of the Tribunal in assessee’s own case for assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI] which has been decided earlier i.e. prior to assessment years 2005-06 and 2006-07, we deem it proper to restore the issue to the file of the Assessing Officer/TPO for fresh adjudication of the issue in the light of the decision of the Tribunal for assessment year 2007-08. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2018 (8) TMI 52
  Independently determine the taxability of revenues from separate, independent and divisible scope of work under the contract - installation PE - Held that:- Activities carried out by the assessee viz. (i) supply of offshore products/equipment; (ii) offshore repair work (including related warehousing costs and reimbursement for transport and logistic support); (iii) equipment rental; (iv) project management services; and (v) installation and commissioning activities (though not rendered during the year under consideration) are separate, divisible and independent of each other, therefore, the CIT(A) in the backdrop of the settled position of law as laid in the case of Ishikawajima-Harima Heavy Industries Limited (2007 (1) TMI 91 - SUPREME COURT) and Hyundai Heavy Industries Company Ltd. (2007 (5) TMI 196 - SUPREME COURT), had rightly concluded that the taxability of the revenues received there from by the assessee from such separate, independent and divisible activities were required to be undertaken independently. We thus, finding ourselves to be in agreement with the view taken by the CIT(A), uphold the same. The Ground of appeal No. 1 raised by the revenue is dismissed. Composite taxability of aggregate revenue from ONGC contract -taxability of revenue received by the assessee from offshore supply of equipments under the ONGC contract, being a case of outright transfer of title in the products by the assessee to ONGC outside India, thus, cannot be construed to be FTS or Royalty and brought to tax in India - Held that:- CIT(A) observed that as the products identified by ONGC are requested on need basis as per their requirements, therefore, the interconnection of the revenue received by the assessee from offshore supply of goods with other activities under the ONGC contract was unwarranted. We find that the CIT(A) had observed that in case of offshore supplies made under the ONGC contract, the property in goods were transferred by the assessee to ONGC outside India and the entire sale was executed outside India. The CIT(A) had further observed that no part of the activities of the offshore supply of equipments were carried out in India. Further, the PE of the assessee in India also had no role to play in effectuating such transactions either pre or post such offshore supply - as in the case of the assessee no part of the activities of offshore supply of equipments by the assessee were undertaken in India, hence the revenue received by the assessee there from could not be taxed in India. We have deliberated at length on the aforesaid observations of the CIT(A) and find ourselves to be in agreement with the view arrived at by him that the revenue received by the assessee from offshore supply of goods to ONGC could not be taxed in India. We thus finding no infirmity in the order of the CIT(A) - decided against revenue Revenue received the assessee from repair work (and related activities) undertaken by the assessee under the ONGC contract - income accrued in India - whether not falling either within the sweep of FTS as provided in Explanation 2 to Sec.9(1)(vii) or Royalty as per Article XII(3) of the India-Australia DTAA - taxability in India - Held that:- as the consideration received by the assessee for providing the repair work (and related activities) to ONGC are in context of the business of providing services or facilities in connection with, or supplying plant and machinery on hire, used or to be used, in the prospecting for, or extraction or production of mineral oils, thus, the receipts in the hands of the assessee from providing such services would clearly fall within the sweep of the exclusion contemplated in Explanation 2 to Sec. 9(1)(vii) of the Act. We thus, in terms of our aforesaid observations are of the considered view that the revenue received by the assessee from providing repair services to ONGC would not fall within the sweep of FTS under Sec.9(1)(vii) of the Act. As per Article XII(3)(g) of the said tax treaty, payments made as consideration for rendering of services (including provision of technical or other personal) would result in royalty, if such services make available technical knowledge, expertise, skill, know how or process, which enables the person acquiring the service to apply the technology contained therein. In other words, if the service provider does not make available the technical knowledge, experience, skill know how or process etc., then the consideration received for rendering of such services cannot be characterised as royalty for the purpose of Article XII(3)(g) of India-Australia DTAA. Whether the repair activities provided by the assessee to ONGC can be brought within the sweep of royalty, as defined in Article XII(3)(g) of the India-Australia tax treaty? - Held that:- We find that the CIT(A) after relying on a host of judicial pronouncements and the scope of the term “make available” as used in India- USA DTAA, had observed that mere rendering of the repair services by the assessee at its overseas work station did not satisfy the ‘make available’ condition as contemplated under Article XII(3)(g) of the India- Australia tax treaty. We thus, are persuaded to subscribe to the view taken by the CIT(A) that the rendering of the repair services by the assessee to ONGC cannot be characterised as royalty. Still further, we may herein observe that as the equipment is owned by ONGC itself, therefore, while rendering the repair services, no right to use the equipment can be said to have been provided by the assessee to ONGC. We thus, finding no infirmity in the order of the CIT(A) holding that the revenue received by the assessee from rendering of the repair services to ONGC cannot be brought within the sweep of FTS or Royalty, uphold the same. As the repair works are undertaken at the overseas work stations of the assessee, therefore, the question of taxability of such receipts from rendering of the repair work as attributable to PE of the assessee in India does not arise. We thus, in terms of our aforesaid observations conclude that the A.O had erred in holding that the revenue from repair activities rendered by the assessee to ONGC was taxable in India under Sec. 44DA

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• 2018 (8) TMI 51
  Deemed dividend addition u/s 2(22)(e) - proof of accumulated profits for the purpose of section 2(22)(e) - Held that:- CIT(A) has rightly observed that AO has wrongly made the addition u/s. 2(22)(e) by holding that there are accumulated profits in the hands of M/s Robin Software Pvt. Ltd. Ld. CIT(A) has also noticed that the AO has completed the assessment of M/s Robin Software Pvt. Ltd. for assessment year 2012-13 and no addition has been made in the hands of that company and return of loss has been accepted. CIT(A) has rightly cancelled the order of the AO by holding that if the AO has accepted the income returned by the said company and not made any changes in the return of income and assessed the income as declared by the said company, he cannot hold that there was accumulated profits for the purpose of section 2(22)(e) of the Act. when AO assesses the income of M/s Robin Software Pvt. Ltd. as loss for the same financial year, there could be no ground available to hold that the said company had accumulated profits at the time of making loans/advances. Therefore, the addition made as deemed dividend u/s. 2(22)(e) of 13,88,23,000/- was rightly deleted by the Ld. CIT(A) for want of fulfillment of the required conditions stipulated under the said section, which does not need any interference - decided against revenue

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• 2018 (8) TMI 50
  Disallowance of interest expenditure u/s 36(1)(iii) - borrowed funds utilized for installation of captive power plant which has not been put to use during the assessment years in question - Held that:- The condition that borrowing must have been made for the purpose of business being carried on by the assessee in the previous year is implicit or inbuilt in Section 36(1)(iii) of the Act itself. The captive power plant was intended for pharmaceutical business as per the consistent stand of the assessee since inception. There is no rebuttal on this account. It is a matter of record that the assessee has entered into Sale & Lease Back Agreement of captive power plant with the lenders with a view to reduce financial costs. Notwithstanding, the assessee throughout is engaged in the business of pharmaceutical and therefore, interest incurred on power plant incidental to pharma unit is allowable deduction on revenue account. The power plant ultimately taken back on lease is nothing but the expansion/incidence of existing business. Thus, dis-investment and gaining control over the asset by way of lease would not, in our view, change the character of claim. Thus, we do not find any infirmity in the order of the CIT(A) in adjudicating the issue in favour of the assessee. We also take note of significant plea raised on behalf of the assessee that the assessee executed sale & lease back – equipment lease agreement with Industrial Development Bank of India on 26.09.1996 relevant to AY 1997-98. We thus also find merit in the alternative plea raised in this regard that where the equipment was sold and company is not the owner of the asset at all, the interest on subsisting loans/borrowing cannot be attributed any longer to the assets so divested. While the power generation asset has been sold, the subsisting loans/borrowings has remained and continued in the books of accounts and used for the purpose of existing and ongoing business of the assessee company in revenue account. Thus, interest on loan amount presently used in ongoing pharma business is allowable otherwise also. - Decided against revenue

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• 2018 (7) TMI 1836
  Addition u/s 69(B) - books of accounts not rejected - Held that:- No merit in this petition. The Special Leave Petition is accordingly dismissed. However, the question of law is kept open.

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• 2018 (7) TMI 1835
  Difference between the market price and the employees stock option plan - revenue expenditure allowable under Section 37(1) - Held that:- Special Leave Petition is dismissed on the ground of low tax effect leaving the question of law open.

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• 2018 (7) TMI 1834
  TDS u/s 194H - non-deduction of tax at source for the amount of discount/commission to the advertising agency - Held that:- Special Leave Petition is dismissed. Pending applications, if any, stand disposed of.

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• 2018 (7) TMI 1833
  Validity of assessment u/s 153C - Two documents stated to have been recovered during the search which did not belong to the Assessee - Held that:- There is a delay of 660 days in filing this Special Leave Petition. Moreover, it is also an admitted fact that on the same question of law, the petitioner had earlier filed Special Leave Petitions which were dismissed by this Court way back in December, 2017. In spite thereof, the present special leave petition is filed in June, 2018 even when the issue had attained finality. We deprecate this tendency of the Income Tax Department in filing special leave petition mindlessly and that to after such abnormal delays. This Special Leave Petition is dismissed both on the ground of delay as well as on merits with costs of 50,000/- which shall be deposited by the Income Tax Department with the Supreme Court Legal Services Committee within four weeks. This Order shall also be brought to the notice of the Chairman, Central Board of Direct Taxes so that its house is set in order.

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• 2018 (7) TMI 1832
  Addition of difference in receipt as per receipts of the assessee mentioned in 26AS and receipts shown by the assessee to the net profit ratio @1.96% - Held that:- Special Leave Petition is dismissed. However, the question of law is left open

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• 2018 (7) TMI 1831
  Benefit of deduction u/s 80-IA - agreement for operating and maintaining the infrastructure facility viz the airport - entitlement to the benefit of deduction from which year - whether MOU entered into by the assessee with the Airport Authority of India could be taken as an agreement as contemplated in clause (b) of Section 80-IA(4)? - Held that:- special Leave Petitions are dismissed.

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• 2018 (7) TMI 1830
  Penalty u/s 271AAA - ITAT holding that the penalty imposed was on an incorrect appreciation of law - For A.Y. 2010-11, search assessment was completed under Section 153A - Held that:- The Special Leave Petitions are dismissed. However, the question of law is left open. Pending application stands disposed of.

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• 2018 (7) TMI 1828
  Penalty imposed u/s.271E and 271D - taking and repayment of loan from the various sister concerns through Journal Entry - Held that:- As decided in case of Ajinath Hi-Tech Builders Pvt. Ltd.[2018 (2) TMI 603 - BOMBAY HIGH COURT] the assessee could not be visited with penalty in respect of the period prior to 12.06.2012, the day on which the decision in CIT v. Triumph International Finance (I) Ltd. (2012 (6) TMI 358 - BOMBAY HIGH COURT) was pronounced. In light of this, it can safely be concluded that the assessee being under a bona fide belief, could not be visited with penalties u/ss. 271D and 271E of the Act. In any case, in light of this binding decision, there is no requirement to establish reasonable cause in respect of each and every entry as canvassed by the Id. DR. The reasonable cause in respect of all the entries is the bona fide belief of the assessee that there was no violation of any provision of the Act. In view of the above, we observe that the case of the assessee is squarely covered by the exception carved out in the judgment of the Hon'ble Bombay High Court in CIT v. Triumph International Finance (I) Ltd.(2012 (6) TMI 358 - BOMBAY HIGH COURT). Accordingly, both the penalties were not exigible in the present case as the assessee was under a bona fide belief and there was no contravention as per the law prevailing as on the date of passing the journal entries. The orders of the CIT (A), therefore, do not call for any interference. - decided in favour of assessee

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• Customs

• 2018 (8) TMI 49
  Entitlement to Demurrage charges - effect of subsequent development i.e. clarification dated 14th May, 1996 - Held that:- No mala fide intent or any extraneous reasons/ grounds can be attributed to the Revenue in detaining and refusing to clear the goods of the importer(s). Rather, the actions of the Revenue were prompted by what we consider to be a possible understanding of the provisions of the Notification in force i.e. Notification No.104/95 dated 30th May, 1995. The subsequent change of opinion and issuance of Circular bearing No.4/1006 dated 14th May, 1996 would not make the Revenue liable as has been sought to be contended by the importer(s) unless the initial action is palpably wrong or wholly unacceptable which is not the position in the present case - A stand taken by the Revenue or an action undertaken which is subsequently corrected by the Revenue itself or corrected on the basis of a subsequent judicial pronouncement will not, ipso facto, make the Revenue liable for payment of demurrage charges as has been contended on behalf of the appellant(s) – importer(s). Petition dismisssed - decided against appellant-importer.

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• 2018 (8) TMI 48
  Suspension of CHA License - Jurisdiction to order suspension - power of Commissioner to order suspension of a licence - power was exercised only after the receipt of the offence report dated 27.02.2018and there was no immediate action - Regulation 19(1) of the CBLR - Held that:- When a licence is suspended under Regulation 19(1) of the CBLR, the Principal Commissioner or Commissioner of Customs shall within fifteen days from the date of suspension, give an opportunity of hearing to the Customs Broker, whose licence is suspended and may pass an order either revoking the order of suspension or continuing it, as the case may be - The proviso states that in case the Principal Commissioner or Commissioner continues the suspension, the further procedure thereafter shall be as provided under Regulation 20 of the CBLR. The investigation, which has proceeded since March 2017, appears to have opened a can of worms. The consignment, which was in transit, handled by the petitioner, was brought back. On examining of the cargo, CLRI certified that it does not confirm to the prescribed standard. On further investigation, it appears that several such similar consignments handled by the petitioner have come under scrutiny. The Department conducted search operations in the premises of the petitioner, after obtaining warrant, documents have been recovered, statements have been recorded from several persons including the officers of the petitioner and the writ petitioner themselves would admit that for several months, statements have been recorded from various persons - the auction initiated by the respondent in invoking such Regulation 19(1) of the CBLR by passing an order on 14.03.2018 on receipt of the offence report on 27.02.2018 cannot be stated to be barred by limitation or an exercise, which is uncalled for. Thus, the petitioner has to necessarily fail on this issue. The impugned order of suspension passed under Regulation 19(2) of the Regulations cannot be held to be invalid merely because the power was exercised only after the receipt of the offence report dated 27.02.2018 and the Court is convinced that the exercise of power cannot be faulted as not being the one where immediate exercise was done - petition dismissed - decided against petitioner.

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• 2018 (8) TMI 47
  Classification of imported goods - Probat Roasting Unit - appellant classified the goods under 85167990 claiming benefit of exemption under S.No. 252 (A), S.No. 2 of list 32 (A) of Customs N/N. 21/2002 - Department has denied the classification and exemption thereby and classified the coffee roasting machine under CTH 84193100. Whether the goods will be classified under CTH 85167990 or under CTH 84193100? Held that:- What is important is to see the source of energy for the main function of the machines. The impugned machine is gas-fired for the main function of roasting and therefore, as per the construction of the tariff Heading 8419, coffee beans being agricultural products used for heating or roasting of coffee beans finds merits classification under CTH 84193100. Therefore, there is no reason to interfere with the order of the learned Commissioner (A). Classification given in the Notification - Held that:- Notification has given the description under List 32A (ii) not only mentions coffee roasting machine intended for industrial use at S.No. (ii) but also say machines falling under CTH 85167990 - It is not so that the lower authority cannot interpret the Notification in a piecemeal manner and to say that the exemption is available to coffee roasting machine intended for industrial use even if they do not fall under the tariff Heading mentioned therein. The classification of the coffee roasting machine under CTH 84193100 of Customs Tariff Act is upheld - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 46
  Refund claim - whether the appellant is able to prove the hurdle of unjust enrichment has been passed on or not? - Held that:- As against clear evidence from the Chartered Accountant, Revenue has not adduced contrary evidence to show that appellant herein had passed on the incidence of duty. In the absence of any contrary evidence, it is to be held that the Chartered Accountant’s Certificate as produced by appellant needs to be accepted. Hon’ble High Court of Madras in the case of Micromax Informatics [2017 (7) TMI 551 - MADRAS HIGH COURT] on identical set of facts held that refund is admissible. Thus, the Lower Authorities have erred in coming to a conclusion that the appellant herein has not passed the hurdle of unjust enrichment - appeall allowed - decided in favor of appellant.

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• 2018 (8) TMI 45
  Classification of imported software - whether the impugned software is IT software or a software tailor-made to a particular machine and as to whether the software is eligible for exemption under Notification No. 7/2007? Held that:- On going through the series of letters in a short span it appears that the appellant’s contentions are justified as there are no other justifiable reasons which make the appellants change their stand overnight on the issue of classification. The software is manufactured of functioning independently and can be loaded on any computers. This fulfills the requisite conditions of the Chapter Notes 8523 for software under 8523. The certificates issued by the Radiologists or in-charge of radiologist centres/hospitals also pointed out to this effect that the QPC X software is a image processing software with additional facilities of QPC, the data base of the computer system and the CD can be loaded to any computer - This is not be construed as a customer built software in the instant case. There is no justification for interfering with the opinion expressed by two learned Commissioner (Appeals) in classifying the product under 8523 8020 - the software imported by the appellants is a standalone independent software as given in the form of CD and can be loaded on any ADM. Under these circumstances it is rightly classifiable under CTH 8523 8020. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 44
  Mis-declaration of imported goods - Confiscation - redemption fine - penalty - Held that:- The charge of mis-declaration is sustainable as the Appellant could not show any evidence that they had instructed/ informed courier about licence fee amount to be included in assessable value - the goods has been rightly confiscated - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• 2018 (8) TMI 43
  Mis-declaration of imported goods - Confiscation - redemption fine - penalty - Held that:- It was the responsibility of the Appellant importer to inform the exporter and the courier to mention correct details in the documents. Further the Bill of Entry could not have been filed without intimating the Appellant. The charges of mis-declaration are thus sustainable as the Appellant did not adduce any evidence that they had instructed/ informed courier of licence fee amount to be included in assessable value - Confiscation upheld - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• 2018 (8) TMI 42
  Mis-declaration of imported goods - Confiscation - redemption fine - penalty - Held that:- The Appellant has not adduced any evidence that the courier was not authorised by them to file Bill of Entry or they had intimated him to file Bill of Entry after including the licence fee - It was the responsibility of the Appellant importer to inform the exporter and the courier to mention correct details in the documents. Further the Bill of Entry could not have been filed without intimating the Appellant. The charges of mis-declaration are thus sustainable and the goods has been rightly confiscated - quantum of redemption fine and penalty reduced. Appeal allowed in part.

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• 2018 (8) TMI 41
  Scope of SCN - Valuation of imported goods - related party transaction - deductive method - rule 3(3)(b) of the Customs Valuation Rules, 2007 - rejection of transaction value - Held that:- The Commissioner (Appeals) instead of going into this issue where the value was determined under Rule 3(3)(b) came to the conclusion that the transaction value should not have been rejected under Rule 3(3)(a) - the Commissioner (Appeals) has gone beyond the scope of appeal inasmuch as Revenue had merely challenged the manner and the data on the basis of which the declared assessable value has been found correct. Thus, the Commissioner (Appeals) has travelled beyond the scope of dispute before him - matter is remanded to the Commissioner (Appeals) for adjudication on the specific issue which was raised in the appeal filed before him - appeal allowed by way of remand.

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• 2018 (8) TMI 40
  Amendment of Shipping bills before export of goods - valuation of goods - Confiscation - redemption fine - penalty - Held that:- The goods were allowed to be exported after allowing the amendment to the documents presented and the respondent has already received the total foreign inward remittance and, therefore, there was no case of confiscation of said goods and imposition of fine and penalty. The charge of overvaluation is presumptive in nature and such charge could have been proved only if goods could be exported with declared value and export proceeds could not have been realized to the extent of such value. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 39
  Penalty u/s 114 and 114AA of CA on appellant, employee of CHA-Firm - mis-declaration of exported goods - Held that:- It is not established by Revenue that appellant had prior knowledge of mis-declaration of goods. The Customs Authorities allowed Let Export Order on the basis of documents. In similar manner the appellant also prepared documents on the basis of information given to him. Therefore, it is not established that the appellant either connived or abated in the offence allegedly committed by exporter - penalties set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 38
  Import of Restricted Item - old and used tyres of various sizes and of mixed brands - License not produced by appellant - enhancement of value based on opinion of Chartered Engineer - Confiscation - Penalty - Held that:- Admittedly, the foreign supplier has raised the invoices for the goods in question which invoice has not been rebutted by the Revenue by producing any evidence on record. As such, to enhance the value of such goods depending upon the opinion of the Chartered Engineer is not justifiable - enhancement of value set aside. Inasmuch as the appellant have admittedly not produced the license to import the goods. The confiscability of the goods and imposition of penalty is upheld - the enhancement of the value has already been set aside. Appeal allowed in part.

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• 2018 (8) TMI 37
  Valuation of imported goods - Stock Lot of Unused Hand Tools - rejection of declared value - enhancement of value - no speaking order was passed by the department as contemplated under sub-section (5) of Section 17 of the Customs Act, 1962 - Held that:- Sub-section (5) of Section 17 ibid provides that where reassessment done under sub-section (4) is contrary to the self-assessment done by the importer, then the proper officer shall pass a speaking order on the re-assessment within the stipulated time-frame. Since the Customs statute specifically mandates for passing of a speaking order by proper officer, which admittedly has not been done in this case, before addressing the issue, whether refund claim is maintainable, the matter should go back to the original authority, in the interest of justice, for passing of a detailed speaking order, indicating the reason/ground for rejection of the declared value. Appeal allowed by way of remand.

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• PMLA

• 2018 (8) TMI 36
  Offence under PMLA - Held that:- The presumption under section 5(1)(a) cannot be drawn ipso facto that they have in their possession the proceed of crime received as professional charges and on the basis of presumption, their movable and immovable properties can be attached unless link and nexus directly or indirectly towards crime with the accused is established within the meaning of section 2(1)(u) of the Act. In the absence as mentioned above, they are to be treated as innocent persons. If the argument of the respondent is accepted that a mere possession of money paid by the accused as service charges to the professionals without any link and nexus, then the movable and immovable properties of most of the professionals may be attached and after confirmation, the same is vested with the State. The same is not intention and scheme of the Act. Mechanical orders of such nature by the respondent and adjudicating authority cannot be passed blindly. They have to apply their mind and consulting well established law. Section 5 and 2(u) of PML Act, 2002 have to be read together when any order of attachment is passed. Unless link and nexus of proceed of crime is established under section 2(1)(u), the proceedings under PML Act, 2002 can not be initiated. No case is made out on merit. The impugned order against the appellant is totally perverse and against the law. The respondent has not prima facie established that the appellant has any link in the nexus in the crime. The prosecution complaint against the appellant has already been dismissed. The appellant has merely received the consultation fee from the accused party at the time of receiving the said fee. The appellant was not aware that he is receiving the consultation fee which may be part of proceed of crime.

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• Service Tax

• 2018 (8) TMI 33
  Applicability of Service Tax - technical testing and analysis’ service - the service received by the respondents on or after 18.04.2006 - Reverse charge mechanism - whether any service received by the respondents under the heading ‘technical testing and analysis’ was received in India wholly or partly after 18.04.2006? - Held that:- The learned counsel for the appellants has produced invoice in their defence. However, that invoice is dated 16.02.2006 which is prior to 18.04.2006; the other records like invoices are not available to verify at this end. It is logical that the case should go back to the original Adjudicating Authority for the limited purpose of verifying the services received by them, for the period from 18.04.2006 to December 2006, under the category of ‘technical testing and analysis’, ‘consulting engineer service’ and ‘business auxiliary service’ - appeal allowed by way of remand.

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• 2018 (8) TMI 32
  Business Auxiliary Service - “production” of goods not amounting to “manufacture” and covered under Business Auxiliary Services - appellant are engaged in processing of machining, drilling, shot blasting and painting on job work basis for the principle on the semi finished casting supplied by M/s Patel Alloys - Case of the department is that since the appellant is engaged in production activity, the same is liable for service tax under the sub head of production of goods on behalf of the client under Clause (V) of Business Auxiliary Service. Held that:- The appellant have carried out the processing of machining, drilling, shot blasting and painting, thereafter, the resultant product is final part of wind turbine which is a final product, hence the process under taken by the appellant, clearly falls under the category of production. The Division Bench of this Tribunal in the case of PSL Corrosion Control Services Ltd [2008 (8) TMI 72 - CESTAT AHMEDABAD] held that even mere epoxy coating made on steel bars supplied by the client is amount to production and accordingly liable for service tax under Business Auxiliary Services. In the present case much more processing of machining, shot blasting, drilling were carried out in addition to painting, therefore, the activity carried out by appellant are indeed falls under production - The service of production of goods on behalf of the client was very much taxable during the impugned period, therefore, it is legally liable to service tax. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 31
  Business Auxiliary Services - appellant is engaged in collecting of toll on Ahmedabad- Mehsana highway - case of appellant is that the activities is in the nature of statutory function of Government and the same are not taxable - Held that:- The decision in the case of Ideal Road Builders Pvt. Limited vs. CST, Mumbai [2015 (8) TMI 592 - CESTAT MUMBAI] deals with the issue raised in the instant case, where it was held that collection of tolls by the appellant is not considered as Business Auxiliary Service provided to NHAI - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 30
  Franchise Services - services rendered to registrars - setting up the registry for “.in country got top level domain name (TLD) and for operating as registry for “.in domain name in India - whether the registrar accreditation agreement is a mere agreement between the appellant and its registrar for accreditation or it actually is in agreement for rendering franchise services by the appellant to its registrars? Held that:- The registrars are the entities which contract with the registered name holders and the registry and collects registration data about registry name holders and submit the same to the registry for entering in the database maintained by the registry. It becomes abundantly clear that both registry and registrars are independent entities operating on principle-to-principle basis - the original Adjudicating Authority has miserably erred while holding an arrangement of accreditation as that of providing franchisee services - demand set aside. Extended period of limitation - penalty - Held that:- No services as alleged by the Department have been rendered by the appellant. Show Cause Notice in fact was wrongly served - there seems no ground available with the Department to invoke the extended period of limitation while serving the said Show Cause Notice - penalty also set aside on this ground. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 29
  Refund of service tax paid by mistake - rejection on the ground of time limitation - applicability of Section 11B of the Central Excise Act, 1944 - Held that:- It is evidenced from the refund applications that the same were filed under the statutory provisions and were also entertained by the authorities under the provisions of the statute - Since, Section 11B of the Act clearly mandates that the refund applications have to be filed within one year from the relevant date, which have admittedly not been filed by the appellant within such prescribed period, the refund sanctioning authority, being a creature under the statute, has rightly rejected the refund applications as per the statutory provisions. In terms of well laid principles of law that the time limit should be strictly adhered to for consideration of the refund application and that the same has not been complied with by the applicant, rejection of the refund applications by the authority below cannot be interfered with by the Tribunal. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 28
  Classification of services - Interior Decorator’ services or Works Contract Service? - appellant are not only providing materials like Gypsum boards etc. but also were also taking up the work of making false ceiling with these items - Held that:- Interior Decorator’ services involve advice, consultancy, technical assistance related to planning design and beautification of space etc. This being so, any work involving beautification of space cannot by itself be brought within the fold of ‘interior decorator’. Thus, the appellant cannot then be brought within the fold of Interior Decorator Service - demand set aside. Show cause notices have also proposed demand of differential tax on the ground that provisions of Section 66 and 68 of the Finance Act, 1994 and Rule 3 of the Compensation Scheme have been contravened by not exercising the option as required under the Compensation Scheme etc. - it is found from para-5 of SCN dt. 0.09.2008 that the total taxable value for the impugned period is only 6,84,179/-. So also in respect of another SCN dt. 08.10.2009 it is found that the total taxable value is only 5,15,920/- - thus, the assertion of Ld. consultant on this score is correct - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 27
  Management, Maintenance and Repair Service - the cost of Television sets was fixed and appellants were required to provide two years free warranty to ELCOT - no consideration received for warranty service - Held that:- The appellant has not received any consideration towards free service during the period of warranty of Two years after sale. As appellant has not received any amount towards services provided by them, therefore, no service tax is payable by the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 26
  Renting of Immovable Property Service - non-payment of service tax - premises were occupied during the entire period in terms of the agreement but Form 26 AS submitted by the party shows that the party received the amount made by their tenant only upto June, 2011 - deduction of TDS amounts - Held that:- Form 26 AS is a document under the Income Tax Law reflecting the amount of tax deduction at source (TDS) - Admittedly the TDS is required to be deducted by a person making payment to another person and reflects on all the payment actually made. The appellants have not produced any evidence to show that such TDS amount reflected in Form 26 AS is incorrect or inflated or the appellant have made any refund claim of such excess TDS collected by the tenant, from the Income Tax Authorities. Thus, the amounts reflected in Form 26 AS represent the correct value of the services which has to be adopted as the assessable value, unless evidence to the contrary is produced by the appellant. Penalty - Held that:- During the relevant period, the taxability under the category of Renting of Immovable Property was under dispute and subject matter of litigation before various Courts. In such a scenario, non-payment of tax by the appellant cannot be held on account of any mala fide, thus requiring any invocation of Penal provisions against the appellant - Penalty set aside. Appeal disposed off.

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• 2018 (8) TMI 25
  Renting of immovable property service - Whether the appellant are required to discharge service tax on the amount of rent received for leasing out their premises to M/s. Travelline International for carrying out hotel business on the said premises and whether the penalty is imposable on the appellant for failure to discharge the same and the quantum of penalty? Held that:- Ld. Commissioner (Appeals) after interpretation of the scope of the definition of renting of immovable property prescribed under Section 65(105) (zzzz) of the Finance Act, 1994, particularly Explanation-I and Clause (d) thereof, recorded a categorical finding that the building have been given to M/s. Travelline International for carrying out the hotel business which consist 4 Conference Halls apart from rooms, kitchen, bar room etc. and thus the hotel was not used exclusively for residential or personal accommodation purposes - there is no discrepancy in the said reasoning of the Ld. Commissioner (Appeals) in absence of any evidence produced by the assessee-appellant, rebutting the said findings of the Ld. Commissioner (Appeals). Appeal disposed off.

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• 2018 (8) TMI 24
  Demand of Service tax - difference between the figures in ST-3 Returns and their Profit and Loss account - POT Rules - insurance commission and recovery towards reimbursement of expenses - Held that:- The issue of calculation of service tax as per balance sheet prepared on accrual basis for the period prior to 01.04.2011 is not legally sustainable as the Point of Taxation Rules, 2011 came into effect on 01.04.2011. The issue of includability of reimbursible expenses or cost in value of taxable services prior to May 14, 2015 has been held in favor of the assessee by the Hon’ble Supreme Court in the case of U.O.I vs. M/s Intercontinenatal Consultants and Technocrats Pvt Ltd [2018 (3) TMI 357 - SUPREME COURT OF INDIA]. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 23
  Reverse charge mechanism - ‘Designing Services’ from overseas entities - amount remitted to entities outside India - Section 66A of the Finance Act 1994 - C.B.E.C. vide Circular No. 334/1/2007-TRU dated 28/02/2007 - Held that:- The findings by the Original Authority were based on C.B.E.C. Circular dated 28/02/2007. Also, Revenue has not presented any ground before the ld. Commissioner (Appeals) as to how the said finding of Original Authority were not sustainable. Ld. Commissioner (Appeals) also did not deal with application of said C.B.E.C. Circular to the facts of the present case and did not give any finding as to how said finding of Original Authority are not sustainable - demand not sustainable. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 22
  CENVAT Credit - Real Estate Agent Service - credit denied placing reliance on CBEC Master Circular No.96/7/2007-ST dated 23/08/2007 - Held that:- The said Circular deals with availment of Cenvat credit of Service Tax paid on ‘Commercial Construction Services’ and ‘Works Contract Services’ whereas in the present case Service Tax was paid on ‘Real Estate Agent Service’ - the said circular will not be applicable to the facts of the present case - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 21
  Liability of service tax - transportation of sugarcane from Sugarcane Collection Center to Sugar Factory - GTA Service or not - Held that:- The issue herein is no more res-integra and the same is squarely covered by the precedent decision of this Tribunal in the case of M/s Nandganj Sihori Sugar Co. Ltd. Vs Commissioner of Central Excise, Lucknow [2014 (5) TMI 138 - CESTAT NEW DELHI] wherein this Tribunal under similar circumstances has held that service tax under the said circumstances is not liable to be paid by sugar mills - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 20
  Principles of Natural Justice - the order has been passed by the lower adjudicating authority without affording personal hearing as requested by the appellant and also not providing the ledgers which have been obtained from the CD print out of the computer - appellant has contested that had the print out of the ledgers were made available to them, they could have satisfied the adjudicating authority about their bonafide and payment of service tax and also the non-payment of service tax which were pending for lack of resources at their end. Held that:- The appellant had been prevented from making defence by not allowing the personal hearing despite of request made by them and thus there is a violation of principle of natural justice in their case. Thus, at least one opportunity is required to be afforded to the appellant for defending their case before the lower adjudicating authority. The lower adjudicating authority shall afford the opportunity of personal hearing to the appellant and the appellant is also directed not to seek any further adjournment before the lower adjudicating authority - appeal allowed by way of remand.

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• 2018 (8) TMI 19
  Refund claim - service tax paid on the input services, which were used in output service, exported by the appellant - denial on account of nexus - Rule 5 of the CCR read with N/N. 27/2012-CE(NT) dated 18.06.2012 - Held that:- Under the substituted Rule 5 of the rules, there is no requirement of showing the nexus between the input service and the output service provided by the assessee. Since the refund under the said amended rule is governed on the basis of receipt of export turnover to the total turnover, the establishing the nexus between the input and output service cannot be insisted upon for consideration of the refund application - refund cannot be denied - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 18
  Advertising Agency Services - demand of service tax on difference in the amount shown in Balance Sheet and amount shown in ST-3 returns - job-work and sale of material also done by appellant - Held that:- The Original Authority did not take into consideration the said contention of the appellant that part of the value on which service tax was not paid was on account of job work of printing of Hoardings, Banners etc., installation of the Tree Guards and sale of advertising material - matter requires reconsideration - appeal allowed by way of remand.

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• 2018 (8) TMI 17
  Refund of tax paid by sub-contractor - case of appellant is that the main contractor had paid the tax, thus, sub-contractor applied for refund claim for the tax paid by him on same service as it amounted to double payment of tax - refund rejected on the ground that the respondent did not produce any documentary evidence to show that they were in fact the sub-contractor of the work, ultimately executed by the main contractor, M/s Devi Constructions - Held that:- For providing the same taxable service viz. Commercial and Industrial Construction Service, only one party was liable to pay service tax. Since both the parties had discharged the service tax liability for the some work, tax amount paid twice, cannot be retained by the Government, as the legitimate due; and on claim of one tax as refund by either of the person, the same should have been refunded. Thus, the service tax paid by the respondent should be eligible for the refund benefit. It is also found that the respondent had enclosed copy of invoices, showing payment of VAT/ Sales Tax on the material component, used for providing the works contract service. Since works contract service was specifically brought into tax net only with effect from 01.06.2007, the respondent should not be liable to pay service tax under the taxable category of Commercial or Industrial Construction Service prior to such date Refund cannot be denied - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 16
  CENVAT Credit - input services - services of handling contractors for lifting and disposal of hazardous waste from the factory - Held that:- The fact is not under dispute that the hazardous waste in the form of sludge, solid waste, generated from effluent treatment plant were required to be removed from the factory, in order to keep the environment free and unpolluted - Considering the nature of waste generated by the manufacturer and its effect on the environment, the Maharashtra State Pollution Control Board, the regulatory authority for pollution control, have also prescribed the norms for disposal of hazardous waste from the factory. It has been decided in the case of Vardhman Special Steels Ltd. vs. CCE & ST, Chandigarh [2016 (10) TMI 238 - CESTAT CHANDIGARH], that disposal of hazardous waste is an essential activity for manufacture of final product and the services availed for such activity should be considered as input service. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 15
  Penalty - non-payment of Service Tax - It is the case of the Revenue that removing of Hard Shale is nothing but Site formation for coal extraction by way of earthmoving and clearance and production of carbonaceous shale by way of drilling, boring, excavation, core extraction, earthmoving upto the pit area - Held that:- In the appeal before us, in Form ST-5, the period of dispute has been mentioned as 01.04.2007 to 31.08.2007 and it is also repeated in the Statement of Facts. There seems to be some discrepancies and misstatement of facts on the part of appellant revenue in drafting and filing this appeal before the Tribunal. Penalty is not imposable in this case as the dispute involves interpretation of provisions of law and in view of the various decisions of the Tribunal, Hon’ble High Courts and Hon’ble Supreme Court, this part of the order is sustained. Since the respondent assessee has neither filed any cross objection against the grounds of appeal nor have appeared before the tribunal, it would be appropriate to remand the matter to the adjudicating authority to consider the grounds of appeal filed by the Revenue and to pass the order in accordance with law - appeal is allowed by way of remand.

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• Central Excise

• 2018 (8) TMI 68
  CENVAT Credit - several input services - justification of Rule 8 (3A) - Held that:- The matter has been decided and appeal has been dismissed by the Delhi High Court in the case of Principal Commissioner of Central Excise, Delhi-I v. Space Telelink Limited [2017 (3) TMI 1599 - DELHI HIGH COURT], where it was held that An order keeping in abeyance the judgment of a lower Court or authority does not deface the underlying basis of the judgment itself, i.e. its reasoning. The law on the issue is well settled by various High Courts - no case for interference is made out - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 14
  Manufacture - activity of printing of plain PVC sheet - whether printing of PVC sheet amounts to manufacture? - Held that:- It is clear that whether the PVC sheet is printed or unprinted it is falling under the same category and under same chapter heading, therefore, the legislature consciously categorized the printed PVC sheet and unprinted PVC sheet in the same class of the goods, therefore, on the bought out manufactured PVC sheet mere printing activity will not amount to manufacture - the printing of PVC sheet is held to be activity not amounting to manufacture. The identical issue has been considered by Hon’ble Supreme Court in the case of J.G. Glass Industries [1997 (12) TMI 110 - SUPREME COURT OF INDIA] wherein the facts involved was whether the printing decoration carried out on the already manufactured glass bottles is amount to manufacture, where it was held that as the process of printing is being carried out in a separate premises as found by the Tribunal and such process is not `manufacture' within the meaning of the Act. Extended period of limitation - Held that:- There were catena of judgments on the same set of facts moreover, on the same activities and same product, therefore, the matter involved is pure interpretation of law - Extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 13
  Valuation - related party transaction - whether the appellant and WDPL are ‘related persons’ within the ambit of Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944 so as to necessitate the rejection of the transaction value under Section 4(1)(a) and to re-determine the value in terms of Rule 6 of Central Excise Valuation (Determination of the Price of Excisable Goods) Rules, 2000 and as to whether Rule 9 and Rule 10 of Valuation Rules are invokable? Held that:- The only mention in the show-cause notice is about the appellant and WDPL being related and other than that it has not been shown as to how they are related. As rightly observed by the original adjudicating authority, mere fact of sharing common premises and services of employees do not make the two entities related in terms of Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944. No discussion or proof regarding any flow-back of funds or consideration from WDPL to the appellant has been brought forth. Mutuality of interest in one another is also not established - the allegation that WDPL have been put in place only with an intention to depress or suppress the value is not tenable. Once there is no ground for rejection of transaction value, recourse to re-determination of the value in terms of Central Excise Valuation Rules, is not warranted. Time limitation - Held that:- The appellants have given a clear declaration that they will be clearing their entire goods to WDPL who are their sole distributors. The appellants were audited by the departmental officers in 2000 and 2002 and there was no positive act of suppression shown to have been done by the appellants with an intent to evade payment of duty - the department is not free to invoke the extended period for issue of show-cause notice - the issue is barred by limitation. Penalty not leviable either on the appellant or their Director. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 12
  CENVAT Credit - credit taken on the basis of documents which are not in their name but in the name of their CHA - credit of the entire amount of freight taken but service tax not paid on insurance amounts. Credit taken on documents issued in the name of CHA - Held that:- It is required to be examined whether the invoices raised in the name of their CHA were actually related to the services rendered for the appellant - matter requires reconsideration. Credit on tax paid on insurance amount - Held that:- There are no invoices to decide whether or not these are related to the provision of inward transportation of their inputs - matter required reconsideration. Appeal allowed by way of remand.

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• 2018 (8) TMI 11
  Imposition of penalty - clandestine removal - penalty - Held that:- The ld. Commissioner have considered the entire facts in Detail in a pragmatic manner. He has recorded categorical finding that the allegations in the SCN against Mr. Sharma are not substantiated. Further, the statement in question also does not lead to any such conclusion as all replies to the query raised, appear to be a mere declaration of the happenings in the subject matter - The said mere declarations were not countered or vetoed by the Department during the investigation nor a suggestion made by Mr Sharma that being a member of the management he was aware of the matter and actively engaged and are involved in the illicit removal of capital goods and raw materials etc. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 10
  Clandestine removal - excesses of stock found - Cross examination of various witnesses not granted - Section 9D of the Act not followed - test reports as regards samples not found - confiscation of inputs u/r 25 of CER - Statement of Sh. Sudhakar Dwevedi was not provided at the stage of adjudication and at the stage of Commissioner (Appeals). Held that:- The request for cross examination has not been examined afresh by the adjudicating authority and there is adoption of findings of previous adjudicating authority without fresh application of mind - Such an approach is also in violation of the principles of natural justice. Procedure laid down under Section 9D of the Act followed - Held that:- The adjudicating authority has not followed the procedure laid down under Section 9D of the Act in respect of the goods found at factory premises and the goods lying at the head office. The procedure has not been followed in respect of other goods also by the adjudicating authority. It is settled position in law that the procedure laid down under Section 9D of the Act is required to be followed by the adjudicating authority. The adjudicating authority has not followed the procedure laid down under Section 9D of the Act and also violated the tenets of natural justice - the impugned order is liable to be set aside and the matter requires to be adjudicated afresh by following the procedure laid down under Section 9D ibid and by following the principles of natural justice. Appeal allowed by way of remand.

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• 2018 (8) TMI 9
  Cash Refund - para no. 2B of the N/N. 56/2002-CE dt. 14.11.2002 (as amended) - the sole ground to deny self credit to the appellants by the Commissioner (Appeals) is that condition of para 2C(d) of the N/N. 56/2002-CE is required to be complied strictly - Held that:- Similar issue has recently come before this Tribunal in many cases and the Tribunal has taken the consistent view that condition 2C(d) is procedural in nature and for compliance with the said notification, delay cannot be fatal to the appellants. In the case of Eon Electrics Limited [2018 (7) TMI 778 - CESTAT CHANDIGARH], where the appellants had availed the exemption N/N. 50/2003-CE dt. 10.06.2003, but did not file the required declaration before their first clearance. The Tribunal took the view that belated filing of declaration in the present case will not disentitle the appellants from the availment of the exemption under N/N. 50/2003-CE dt. 10.06.2003. The condition 2C(d) is procedural in nature and for compliance with the said notification, delay of seven days cannot be fatal to the appellants and the self credit taken by the appellants cannot be denied. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 8
  Benefit of reduce rate of duty - Adhesive Tape (USP) - benefit of N/N. 4/2006-CE dated 01.03.2006 - Held that:- Without establishing that the impugned Order-in-Appeal is not sustainable Revenue cannot raise the same grounds once again which has been adjudicated upon by the First Appellate Authority and if such ground is raised which has been already adjudicated upon then Revenue has to establish how the findings are not sustainable - there are no such arguments on behalf of Revenue to establish that the findings of First Appellate Authority are not sustainable - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 7
  Classification of goods - CFL lamps - whether the goods will be classifiable under Tariff Item No.85393110 or under Tariff Item No.85399010? - Held that:- Learned Commissioner (Appeals) has taken into consideration the various statements recorded of Shri Arunava Choudhary, Shri M.S. Karolia, Shri Satnam Singh and examined the said Rule 2 (a) of General Rules for Interpretation of the First Schedule to Central Excise Tariff Act, 1985 and relied on the ruling by Hon’ble Supreme Court in the case of M/s O.K. Play (India) Ltd. Vs CCE, Gurgaon [2005 (2) TMI 114 - SUPREME COURT OF INDIA] and concluded that the goods which were cleared from Noida unit were classifiable under Tariff Item No.85393110. The findings recorded by the learned Commissioner (Appeals) are sustainable in law - the goods cleared by IAFL from Noida unit were appropriately classifiable under Tariff Item No.85393110. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 6
  CENVAT Credit - Bagasse as also Press Mud arising in the course of manufacture of sugar and molasses, cleared without payment of duty - demand of an amount equal to 6% of value of the same in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 - whether Bagasse and Press Mud can be considered to be ‘goods’ whether excisable or non-excisable? Held that:- It stands held in decision of the Hon'ble Allahabad High Court in the case of COMMISSIONER, CENTRAL EXCISE, LUCKNOW VERSUS M/S KISAN SAHAKARI CHINI MILLS LTD [2013 (10) TMI 1197 - ALLAHABAD HIGH COURT] that Bagasse is agricultural waste of sugarcane and even though marketable duty cannot be imposed on the same and adding of explanation to definition of goods in section 2(d) will not make Bagasse a dutiable item. Admittedly Bagasse is bound to come into existence during the crushing of the sugarcanes and is an unavoidable agricultural waste. It cannot be said that the same emerges as a result of manufacture or any other process and cannot be equated with the word ‘goods’ - The explanation added to the Rule 6 which is to the effect that for the purposes of this Rule, exempted goods or final products as defined in Clauses D & H of Rule 2 shall include non-excisable goods cleared for consideration from the factory - the explanation added to Rule 6 will not change the scenario declared by Hon'ble Allahabad High Court. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 5
  Clandestine removal - confiscation - penalty - Held that:- It would appear that there is no order for recovery of duty under section 11A of Central Excise Act, 1944 nor any finding to conclude that duty liability did arise. In the absence of any adjudication of duty liability, confiscation cannot arise nor does any penal consequence - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 4
  CENVAT Credit - inputs - Steel items used for laying “foundation” and for building “supporting structures” and also for making self-manufactured capital goods such as Hydraulic Press, Crane etc. - Held that:- As per the decision of the Tribunal in the case of Singhal Engineering Enterprises Private Limited [2016 (9) TMI 682 - CESTAT NEW DELHI] the appellant is entitled to avail the Cenvat Credit on the Iron & Steel items used for supporting structures for making self manufactured Capital Goods but they are not entitled to avail the credit on steel items used for laying foundation - Adjudicating authority is directed to re-quantify the demand of Cenvat Credit to disallow the credit on the iron and steel items used for laying foundation. Penalty - Held that:- As the matter involved is regarding the interpretation of provisions of law, the penalty imposed is liable to be set aside. Appeal allowed in part by way of remand.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 66
  Condonation of delay in filing appeal - Validity of assessment orders - Form 18 declarations produced by the assessee being not genuine - concessional rate of tax - Held that:- We need not look into the facts or the sustainability of Exhibit P4 as of now, since the appellant is guilty of laches on account of the long delay. The appellant is said to have filed an appeal itself in the year 2011, belatedly too. The pre-condition of deposit of the tax demanded was also not satisfied. The appellant also did not choose to approach this Court under Article 226 of the Constitution at that point - The writ petition itself is filed in the year 2018. The appeal cannot be entertained and is thus dismissed.

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• 2018 (8) TMI 3
  Concessional Rate of Tax - sales of molasses - taxable at 2.5% or 8%? - claim of the revisionist was that since the sales are covered against Form 3-B the revisionist, therefore, is liable to pay the tax at the concessional rate of 2.5% - Principles of natural justice - Held that:- Admittedly, the purchase of molasses is being used in the chemical unit of M/s Dhampur Sugar Mills Ltd. and there is no illegality committed by the revisionist while affecting the sale to M/s Dhampur Sugar Mills Ltd. against Form 3-B which are issued by the assessing authority of the purchaser M/s Dhampur Sugar Mills Ltd. and since the sales are affected against Form 3-B, there is no wrong at the hands of the present revisionist to charge the tax at the concessional rate. Also, before proceeding and completing the assessment proceedings/order, no adequate opportunity of hearing was provided to the revisionist in this regard nor even any show cause notice was issued. Revision allowed.

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• 2018 (8) TMI 2
  Imposition of tax - income on account of hire charges received by the Company for furniture supplied to the residences of the employees - contention of the assessee is that, in fact, it is a loan to the employees for the purpose of purchase of furniture - Whether the Tribunal was right in affirming the tax imposed on the income on account of hire charges received by the Company for furniture supplied to the residences of the employees? - Held that:- If it were a loan it should have been disbursed so, but the specific contract reveals that the assessee retained the ownership of the furniture and also received hire charges for the same. The three purchase vouchers in the name of the assessee, produced by the assessee itself, goes against its contention that it was a mere loan. The assessee had been supplying furniture to its employees and also had been taking hire charges for the same which definitely comes within the ambit of a transfer of right to use and we do not find any reason to interfere with the order of the AO as approved by the Tribunal - levy of tax upheld. Whether levy of tax on transfer of furniture to employees is liable to be taxed being a second sale? - Held that:- The assessee had produced before the Tribunal three invoices which indicated purchases from a manufacturer of furniture. The Tribunal only to that extent granted relief, insofar as the second sale was absolved from liability to tax. The assessee did not produce any evidence to indicate that the other furniture supplied to its employees and later purchased by them, had suffered tax at the earlier point - demand upheld. Equipment charges received by the assessee from its contractors - Whether the Tribunal was correct in having sustained levy of tax on equipment charges being charges on hire received from contractors for permission to use heavy equipments, like cranes, for the purpose of execution of the contract? - Held that:- Only certificate of registrations have been produced as Annexures-D16 to D-19, which do not indicate that the assessee had used its own employees in operation of the said vehicles registered with the Motor Vehicles Department. Further, it is seen from the submission of the assessee before the appellate authority as extracted in the memorandum that there is a specific contract between the assessee and the contractors and the conditions of contract facilitates such hiring for speedy completion of the job. In that case, the terms of the contract would have indicated as to under whose control the cranes were, even when it was hired. The assessee failed to produce such a contract before any of the fact finding authorities - demand upheld. Form-18 and SRO forms - Ought not the Tribunal verified Form-18 declarations and SRO forms produced before it and allowed the exemption claimed to the extent of the turnover reflected in such forms? - Held that:- There is no explanation as to why these Forms were not produced before the AO. We also do not see any production of these documents before the Tribunal as is seen from the extract of the appeal memorandum, either as extracted by the Tribunal or by the assessee in the memorandum of revision. The claim with respect to Form-18 also does not hold any credence, insofar as the perusal of the same as produced at Annexures-D13, D14 and D15. Annexures-D13 does not have a date and Annexure- D14 is not filled up in the blank portions and Annexure-D15 again is one issued on 13.11.2001 - the prayer for reconsideration by the Tribunal is rejected. Whether the Assessing Officer (AO) was right in having imposed tax at the rate of 30% for bitumen and Special Boiling Point Spirit (SBPS) for which tax is only 24%? Has not the Tribunal erred in not having considered the specific submission made before it? - Held that:- The Tribunal has extracted the said grounds but has not answered it - The correct rate of bitumen and SDPS will be verified by the AO and the modifications, if any, required would be made - matter on remand. Whether the Tribunal was correct in having sustained levy of interest as made in the assessment order? - Held that:- There can be no doubt that it is from the date of return and if the assessee has any complaint regarding the computation, they have to necessarily approach the AO - there is no substantial question of law raised in S.T.Rev.No.86 of 2012; but, however, leaving the assessee to agitate before the AO, on the correct rate to be applied on bitumen and SDPS as also the computation of interest. Whether the inclusion of water cess in the turnover for the purpose of levying purchase tax under Section 5A on the water supplied by the Irrigation Department to the revision petitioner is justified? - Held that:- The cess payable under the circumstances of a local authority supplying water to a person carrying on a specified industry is by the industry who consumes and uses such water supplied. The Explanation to Section 3 also brings in consumption of water within the ambit of the description “supply of water”. Hence, the cess is on the supply of water, which has to be levied at the time of supply and the charge is on the person who uses such water. In the present case, it is the Irrigation Department which supplies water for a price and, hence, the turnover also includes water cess. The water cess is a component that can be legitimately included in the aggregation of the consideration for the transfer of the goods - decided against assessee. Whether the stock transfer supported by F-Forms were rightly rejected for reason only of the assessee failing to establish the movement of goods outside the State? - Held that:- When F-Forms are supplied and the consignor is asked to prove the transport of goods, it is the duty of the assessee to establish such transport, since F-Form is only one mode of evidence to establish the inter-State transfer of goods on consignment - decided against assessee. Revisions dismissed - part matter on remand.

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• 2018 (8) TMI 1
  Levy of VAT - Intra-state or inter-state levy? - works contract - turnkey project - registration of outside contractor - Whether the dealer who is engaged in installation and commissioning of water and sewage treatment plant, is liable to pay tax within the State, for the goods incorporated in the works contract when the said goods are transported inter-state pursuant to the contract entered into by the awardee situated within the State of Kerala? Held that:- When there is an inter-state sale there would be no tax leviable in the recipient State. Like wise when there is an inter-state works contract the sale occurs only when there is an incorporation in the works. If the transfer of goods, which are incorporated in the works, are those brought from the other State, it has all the characteristics of an inter-state sale - decided in favor of in favor of the out-of- state contractor. Whether the outside contractor who had carried out the inter-state works contract, in his status as an importer has obtained registration or not? - Held that:- The necessity to get a registration cannot be disputed. In such circumstances, there is a reason for penalty but however, there being no tax evasion, the consequence would be the imposability to compute the tax evaded, and in that context the maximum penalty of 10,000/- would be imposed on the dealer, in all the three years - There shall be a levy of penalty of 10,000/- in each of the years on the dealer-petitioner in the revision under the KGST Act and the respondent in the revisions under the KVAT Act. Revision allowed in part.

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• Indian Laws

• 2018 (8) TMI 35
  Dishonor of Cheques due to insufficiency of funds - failure to rebut the presumption that the cheque is issued in discharge of a legally enforceable debt or liability - Section 139 of the N.I. Act - Held that:- Under Section 139 of the N.I. Act, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability - This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. In the present case, the respondent has failed to produce any credible evidence to rebut the statutory presumption - The appellants have proved their case by overwhelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The respondent having admitted that the cheques and Pronote were signed by him, the presumption u/s 139 would operate. The respondent failed to rebut the presumption by adducing any cogent or credible evidence. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 34
  Whether Section 34(5) of the Arbitration and Conciliation Act, 1996, inserted by Amending Act 3 of 2016 (w.e.f. 23rd October, 2015), is mandatory or directory? Held that:- It is seen that Section 34(5) does not deal with the power of the Court to condone the non-compliance thereof. It is imperative to note that the provision is procedural, the object behind which is to dispose of applications under Section 34 expeditiously - One must remember the wise observation contained in the case of Kailash v. Nanhku and Ors. [2005 (4) TMI 542 - SUPREME COURT], where the object of such a provision is only to expedite the hearing and not to scuttle the same. All rules of procedure are the handmaids of justice and if, in advancing the cause of justice, it is made clear that such provision should be construed as directory, then so be it. Section 80, though a procedural provision, has been held to be mandatory as it is conceived in public interest, the public purpose underlying it being the advancement of justice by giving the Government the opportunity to scrutinize and take immediate action to settle a just claim without driving the person who has issued a notice having to institute a suit involving considerable expenditure and delay - This is to be contrasted with Section 34(5), also a procedural provision, the infraction of which leads to no consequence. To construe such a provision as being mandatory would defeat the advancement of justice as it would provide the consequence of dismissing an application filed without adhering to the requirements of Section 34(5), thereby scuttling the process of justice by burying the element of fairness. It shall be the endeavour of every Court in which a Section 34 application is filed, to stick to the time limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every Court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. This will give effect to the object sought to be achieved by adding Section 13(6) by the 2015 Amendment Act - in cases covered by Section 10 read with Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within six months, as stipulated. Appeals which are not so covered will also be disposed of as expeditiously as possible, preferably within one year from the date on which the appeal is filed. Thus, Section 34(5) is held to be directory - appeal allowed.

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• 2018 (7) TMI 1827
  Validity of Public Interest Litigation based on some newspapers reports - Held that:- This petition is filed only on the basis of some newspapers reports which cannot be the basis for filing a Public Interest Litigation - petition is dismissed at this stage.

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