TMI Tax Updates - e-Newsletter
August 20, 2018

Case Laws in this Newsletter:

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

News

1. Insolvency and Bankruptcy Code (Second Amendment) Act, 2018

2. CBDT issues Circular on amendment of Tax Audit Report

3. Innovation in Retail Payments

Notifications

GST - States

1. CCT/26-2/2018-19/37 - dated 13-8-2018 - Goa SGST

Due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019

2. 38/1/2017-Fin(R&C)(65) - dated 6-8-2018 - Goa SGST

Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process

3. 38/1/2017-Fin(R&C)(22/2018-Rate) - dated 6-8-2018 - Goa SGST

Amendment in Notification No. . 38/1/2017-Fin(R&C)(8/2017-Rate) dated 30-06-2017

4. S. R. O. No. 512/2018 - dated 27-7-2018 - Kerala SGST

Nomination of Smt. Shainamol, IAS, Additional Commissioner as member, State Level Screening Committee constituted under sub-rule (2) of Rule 123 of Kerala Goods and Services Tax Rules, 2017

5. 21/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Seeks to prescribe concessional SGST rate on specified handicraft items, to give effect to the recommendations of the GST Council in it’s 28th meeting held on 21.07.2018

6. 20/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram No.5/2017-State Tax (Rate), dated the 7th July, 2017

7. 19/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram No.2/2017-State Tax (Rate), dated the 7th July, 2017.

8. 18/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram, No.1/2017-State Tax (Rate), dated the 7th July, 2017.

9. 17/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Clarifying the scope and applicability of the purposes of the “business” shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. - No.11/2017- State Tax (Rate), dated the 7th July, 2017.

10. 16/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram, No. 14/2017- State Tax (Rate), dated the 7th July, 2017 - to notify that services by way of any activity in relation to a function entrusted to a municipality under Article 243W shall be treated neither as a supply of good nor a service.

11. 15/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram, No.13/2017- State Tax (Rate), dated the 7th July, 2017 - specify services supplied by individual Direct Selling Agents (DSAs) to banks/ non-banking financial company (NBFCs) to be taxed under Reverse Charge Mechanism (RCM).

12. 14/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram, No.12/2017- State Tax (Rate), dated the 7th July, 2017.

13. 13/2018-State Tax (Rate) - dated 7-8-2018 - Mizoram SGST

Amendments in the Notification of the Government of Mizoram, No.11/2017- State Tax (Rate), dated the 7th July, 2017

14. CT/LEG/GST-NT/12/17/654 - dated 10-8-2018 - Nagaland SGST

Due dates for filing FORM GSTR-3B for the months from July,2018 to Mar,2019

15. F17 (131) ACCT/ GST/2017/3765 - dated 10-8-2018 - Rajasthan SGST

Due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019

16. F17 (131) ACCT/ GST/2017/3743 - dated 6-8-2018 - Rajasthan SGST

Notification regarding exemption from e-way bill for intra-state movement of goods in the State of Rajasthan for the purpose of Job Work

17. G.O. Ms. No. 103 - dated 10-8-2018 - Tamil Nadu SGST

Return filing procedure for registered persons having aggregate turnover of upto 1.5 crore rupees

18. G.O. Ms. No. 102 - dated 6-8-2018 - Tamil Nadu SGST

Special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process

Circulars / Instructions / Orders

IBC

1. IBBI/CIRP/016/2018 - dated 10-8-2018

Notice for Meetings of the Committee of Creditors under section 24 (3) (a) of the Insolvency and Bankruptcy Code, 2016 read with regulation 21 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

GST - States

2. 11/2018 - dated 13-8-2018

Clarification regarding applicability of GST on various goods and services

3. 12/2018 - dated 13-8-2018

Clarification regarding applicability of GST on the petroleum gases retained for the manufacture of petrochemical and chemical products.

4. 13/2018 - dated 13-8-2018

Classification of imported fertilizers used in the manufacture of other fertilizers at 5% GST rate.

5. 26-CT-2697/2018 C1 - dated 7-6-2018

GST- REFUND- Constitution of Refund facilitation Cell in GST Facilitation Centers at District and State Head Quarters

GST

6. 03/2018 - dated 16-8-2018

Constitution of Standing Committee under sub-rule (4) of rule 97 of Central Goods and Services Tax Rules, 2017 -reg.

Highlights / Catch Notes

GST

• Company Denied Input Tax Credit on Cash Carry Vans Purchased for Business, Later Sold as Scrap.

  Case-Laws - AAAR : Input tax credit - purchase of motor vehicles i.e. cash carry vans - ITC is not available to CMS Info Systems Limited on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap.
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• Children's Modelling Dough Classified Under Heading 3407 for Tax Purposes.

  Case-Laws - AAR : Classification of an item - Modelling dough - The impugned product being a dough used for amusement of children, the Heading 3407 would be the correct classification.
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Income Tax

• Reassessment u/s 147 Validated Due to Original Assessing Officer's Error, Not Just a Change of Opinion.

  Case-Laws - HC : Reopening of assessment - error committed by the original assessing officer (AO) - it cannot be said that there was a mere change of opinion in initiating the reassessment proceedings u/s 147 - Assessment proceedings sustained.
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• Agricultural Land Sale Considered Capital Asset u/s 2(14) of Income Tax Act; Buyer Intent Irrelevant for Tax Classification.

  Case-Laws - HC : Capital Gains - sale of agricultural land - scope of capital asset u/s 2(14) - the land was sold as an agricultural land and in fact, what was sold was agriculture land. What was the intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income.
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• Section 68 Dispute: Assessee Proves Investor Credibility, Avoids Income Additions on Equity Share Investments via Convertible Warrants.

  Case-Laws - AT : Additions u/s 68 - increase in share capital was not through public issue but by way of investment in equity share directly through fully convertible warrants - assessee discharged its initial onus to prove the identity of the investor companies, their creditworthiness and genuineness of the transaction - no additions.
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• Interest Invalid When Demand Raised via Rectification Order u/s 154; Not Applicable to Original Assessment Order.

  Case-Laws - AT : Charging of interest u/s 220(2) - demand was raised first time - additions made in the rectification order passed u/s 154 - the rectification order itself cannot include the interest under section 220 (2) of the Act, and the tax determined in the rectification order does not relate back to the assessment order - Demand of interest is not valid
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• Section 68: Share Premium Additions Addressed with Valuation Report, No Additional Tax Imposed on Share Issuance.

  Case-Laws - AT : Additions u/s 68 - share premium - The valuation report filed by the assessee support explanation of assessee that shares were issued at premium which were below the fair market value per share. - No addition.
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• Court Disapproves Rejection of Deduction Claim u/s 80IA Due to Lack of Separate Books of Accounts.

  Case-Laws - AT : Deduction u/s 80IA - we do not approve the approach of the assessing officer in rejecting the claim of the assessee at the threshold merely on the basis that no separate books of accounts are maintained
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• Capital Gains from Property Sale by POA Holder Not Taxable to Non-Resident Assessee Due to Ownership Issues.

  Case-Laws - AT : LTCG on sale of property - Power of attorney (POA) holder of the non-resident assessee - It is clearly evident that those properties are not belonged to the assessee and therefore capital gain arising from those properties cannot be taxed in the hands of the assessee solely on the ground that the person being the real owners have not filed their income-tax returns.
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Customs

• Court Allows Re-export of Confiscated SAMSUNG TVs Due to Misdeclaration, Overturns Absolute Confiscation Decision.

  Case-Laws - AT : Re-export of confiscated goods - Misdeclaration of imported goods - SAMSUNG Brand LED TVs - only for the reason that the models imported by the Appellant were not registered under the BIS, absolute confiscation of goods is not correct - re-export allowed.
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• Company Faces Allegations for EPCG License Violation Due to Incorrect Installation Address; Awaiting DGFT Decision.

  Case-Laws - AT : Violation of import conditions - EPCG license - different address for installation - for which they have already made an application to DGFT and which has yet not been not decided - any action could have only be taken if DGFT rejects the said application.
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Service Tax

• Service Tax Exemption for Renting Storage Tanks: Not Covered Under "Storage and Warehousing Service" Category.

  Case-Laws - AT : Renting out of storage tanks - the respondents cannot be asked to pay service tax under the category of "Storage and Warehousing Service".
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Central Excise

• CRGO Coils Case: Duty Paid on Removal Less Than CENVAT Credit; No Evidence of Fact Suppression or Misrepresentation Found.

  Case-Laws - AT : CENVAT Credit - removal of inputs as such in guise of manufacture - payment of duty on removal less then availed on inputs - activity is cutting and silting of CRGO Coils - In the given circumstances the question of suppression of fact or the misrepresentation as is alleged against the appellant is not sustainable.
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• Dhatri Brand Hair Care and Massage Oils Classified Under Chapter 30 for Central Excise Tax.

  Case-Laws - AT : Classification of goods - “Dhatri Brand Hair Care Herbal Oil” and “Dhatri Brand Massage Oil” - the products manufactured by the respondents fall under Chapter 30
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• Manufacturers Can Claim CENVAT Credit for Free Vehicle Service During Warranty Period as Input Service.

  Case-Laws - AT : CENVAT Credit - input services - The free service sale services of the vehicle provided during warranty period is an input service for the manufacturer - credit allowed
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• Fraudulent Cenvat Credit Availment: Substantial Benefit Denied Due to Lack of Actual Goods Supply, Not Just Procedural Lapse.

  Case-Laws - AT : Penalty - The plea that substantial benefit should not be denied for procedural lapse is clearly not tenable as there is fraudulent availment of Cenvat credit without supply of goods and it is not merely a procedural lapse.
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VAT

• TNVAT Act: Failure to Present Documents During Audit Doesn't Bar Later Submission to Assessing Officer.

  Case-Laws - HC : Revision of assessment - TNVAT Act - VAT audit - Though the petitioner did not produce documents before the inspecting officials, that will not be a bar for the petitioner to produce documents before the Assessing Officer.
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• Misuse of Form C: Penalty Only if Proven Violation of VAT/Sales Tax Concession Rules.

  Case-Laws - HC : Misuse of Form C - unless it makes out that the respondent or purchaser has used Form-C for the purpose of the availing concession of tax in contravention of provisions, it is not permissible to levy penalty.
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Case Laws:

• GST

• 2018 (8) TMI 977
  Input tax credit - purchase of motor vehicles i.e. cash carry vans - cash management network pan India - purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap - whether the money being transported by the Appellant in the cash carry vans is goods or otherwise for the purposes of availing Input Tax Credit under the GST law? - Held that:- Held that:- The argument of the Appellant that, although in general understanding, what is being transported by the appellants is currency or cash or money, from the Appellant s point of view or for the appellant, what is transported is goods and not money , does not support their cause, as the definitions provided in Acts are universal and same cannot be interpreted for suiting the requirement of any individual as claimed by the Appellant. If Money is not covered as Goods in the definition of Goods under CGST Act, then it is not goods for everyone and it cannot be said that it is not goods for general perception and it is goods for the Appellant. Ruling:- Input Tax Credit is not available to CMS Info Systems Limited on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap.

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• 2018 (8) TMI 976
  Rate of tax - Pure services - Whether Rate of Tax on Pure services (excluding works contract service or other composite supplies involving supply of any goods) received by VISVESVARAYA NATIONAL INSTITUTE OF TECHNOLOGY Nagpur from Service Providers is NIL as per Entry No 3 of N/N. 12/2017- Central Tax (Rate) dated 28th June , 2017? Held that:- The applicant is recipient of service and not service providers and also that these services are not under reverse charge mechanism. The notification as referred by them, is applicable to provider of service and not recipient of service. The present applicant being recipient of service and not service provider is not the proper person to make the present advance ruling application - the applicant's application is liable for rejection as per proviso to section 98 (2) of the CGST Act and therefore cannot be entertained by this authority and is accordingly rejected as it is not maintainable. Application dismissed being not maintainable.

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• 2018 (8) TMI 975
  Classification of an item - Modelling dough - Whether the product of the applicant i.e. “Modelling dough’ will be covered under Chapter 34 or Chapter 95 under the Customs Tariff Act, 1975? Held that:- The ingredients consist of maida, water and chemicals. The percentages of various chemicals used by the applicant in manufacture of their product was submitted by the applicant to us as per table above but we are not revealing the exact percentage of various chemicals used in manufacture of the product in the table above to protect the applicant’s trade secret - the product is being used by children to prepare some shapes from the dough. Chapter 34 of the Customs Tariff falls in Section VI which is for “Products of the Chemical or Allied Industries”. The Heading of Chapter 34 reads as “Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, “dental waxes” and dental preparations With a basis of plaster” - the impugned product contains several chemicals and not “maida” per se. There is no question that anybody would purchase this product for being used as “maida” as so many other chemicals as given in table above are also added to it . Neither can “maida” alone be used for preparing the various shapes as various chemicals are needed to be added to “maida” for it to be used and reused as modelling dough for making the various shapes. These chemicals are needed to give the needful firmness, elasticity, plasticity and non perishability to the shapes. The dough needs to be mouldable and flexible to make the various shapes. There needs to be some safeguard against cracking, crumbling. The meaning of ‘plastic” is not just restricted to the polymer ‘plastic’ but rather it refers to various properties with respect to malleability and flexibility. The impugned product being a dough used for amusement of children, the Heading 3407 would be the correct classification. Ruling:- “Modelling dough” will be covered under CTH 3407 under the Customs Tariff Act, 1975.

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• 2018 (8) TMI 974
  Input tax credit - migration to GST Regime - unable to upload FORM GST TRAN-1 within the stipulated time - Held that:- The Ext.P14 is the circular issued by the Government of India for “setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal.” - Not only the petitioner but also many other people faced this technical glitch and approached this Court. The petitioner may apply to the additional sixth respondent, the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off.

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• 2018 (8) TMI 973
  Input tax credit - migration to GST Regime - unable to generate FORM GST TRAN-2 - Held that:- It is appropriate to dispose of the writ petition permitting the petitioner to prefer a representation pointing out the grievance before the additional eighth respondent, the Nodal Officer appointed to resolve the issues of this nature - petition disposed off.

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• Income Tax

• 2018 (8) TMI 993
  Depreciation on assets leased out - treatment of expenditure on construction of jetty at its cement plant in Gujarat as revenue in nature - deduction of provision for unforeseeable losses in valuing workinprogress of construction contracts - interest expenditure on capital borrowed - per-operative expenditure - mining development expenditure SLP dismissed.

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• 2018 (8) TMI 992
  Reopening of assessment - order passed by the DIT (Exemption) dated 15/02/2010 u/s 12AA(3) by which he cancelled the registration granted under Section 12AA retrospectively Leave granted - Tagged with another case.

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• 2018 (8) TMI 991
  Assessment u/s 153A - Additions u/s 68 - statements made by the assessee's Directors in the course of search under Section 132. SLP admitted - Tagged with another case.

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• 2018 (8) TMI 990
  Levy of penalty u/s 271(1)(c) - ITAT deleted the penalty - voluntary disclosure by the assessee to buy peace - additions were made on account of gift - assessee had not given details like name of the donor, mode of receipt, etc. - Additions towards unsecured loans - Additions were made on account of undisclosed rental income - Held that:- Under Section 271(1)(c) of the 1961 Act, the imposition of penalty is not automatic whenever there is less income returned. The pre-condition for imposition of penalty is subjective satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or the Commissioner, as the case may be, that the assessee has concealed particulars of his income or furnished inaccurate particulars of such income. The furnishing of inaccurate particulars would have to be deliberate. In view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the assessee to show that there was no mens rea. Whether the assessee has been able to discharge the onus of establishing that there was no concealment or deliberate furnishing of inaccurate particulars of income, would depend on the facts and circumstances of the case. The initiation of penal proceedings is not automatic and depends upon the facts and circumstances of each case. In the case at hand, the learned Tribunal arrived at factual findings which ought not to be interfered with in an appeal under Section 260A of the Income Tax Act. In this case, the learned Tribunal, as observed above, arrived at the finding that the claim to the expenditure towards brokerage/commission was bogus and in effect, held that imposition of penalty was justified. No question of law - Decided against the revenue.

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• 2018 (8) TMI 989
  Search and seizure u/s 132 - reason to believe - whether the search and seizer is arbitrary, illegal and violative of fundamental rights of the petitioner - the petitioner society is one of the largest Multi State Cooperative Societies in the field of the Credit. - an order was passed u/s 133A(3)(ia) of the Act, by which, the documents as well as electronic media in the form of hard disk/CD/ Pen Drive etc. seized during the course of survey proceedings have been ordered to be impounded Held that:- Since the proceedings consequent to search and seizer operations are going on, at this stage, it would not be appropriate on our part to divulge in detail about the satisfaction note. Suffice it to record, in our opinion, there were sufficient grounds enabling the authorities to hold belief that case of the petitioner is covered under subclause (c)of subsection( 1) of Section 132 which permits the authorizing officer to issue authorization of search if he has reason to believe. We further find that satisfaction note place by the Principal Director of Income Tax (Investigation), Rajasthan was placed before the Director of Joint Income Tax Office, Rajasthan who has considered and scrutinized satisfaction minutely. All the authorities offered their own comments and thereafter authorization be issued. We find that necessary care has been taken and the case properly scrutinized before issuance of the authorization. It is not a case of either hurriedly or perfunctorily issuing search authorization. Therefore, in the facts and circumstances of the case, we see no reason to interfere with the impugned authorization / search and seizer proceedings under Section 132 of the Act as well as impounding document etc. under Section 133 A(3)(ia) of the Act. Merely because, in the past for earlier transaction, the department might have given clean chit, there does not mean that on fresh cause of action and / or fresh material and / or evidence, search and seizer cannot be undertaken. - Decided against the assessee.

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• 2018 (8) TMI 988
  Reopening of assessment - error committed by the original assessing officer (AO) - Prior period depreciation - Prepayment premium on IDFC Term Loan - Excess depreciation on Plant and Machinery - Excess depreciation on the intangible asset “Brand Name” by wrongly adopting the WDV - Held that:- The depreciation Schedule as per the IT Rules was shown to us by the AO as available in the records. It contains the depreciation for plant and machinery and brand name is shown separately in the said Schedule. The AO admits that on a careful scrutiny, definitely, dis-allowance ought to have been made by the person who carried out the original scrutiny assessment under Section 141(3). The learned Senior Counsel for the Revenue, supports the AO and points out that as per the decisions cited by him, even an error committed by the AO would come within the ambit of a re-opening on valid grounds of escapement of income. It is also argued that the allowances were not specifically granted and there is no reasoning available in the order; which alone would reveal a definite opinion having been formed by the AO. True, the AO could have found the wrong claims made by the assessee from the profit and loss account as also the depreciation Schedule filed under the IT Rules. However, obviously, there is no discussion nor is there any finding entered into in the assessment order at Ext.P2. We do not see any of the issues having been discussed by the AO, nor is there an opinion expressed specifically with respect to the issues now sought to be reopened under Section 147. In such circumstances, it cannot be said that there was a mere change of opinion in initiating the reassessment proceedings under Section 147 within the four year period by the new incumbent AO. Decided against the assessee.

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• 2018 (8) TMI 987
  Capital Gains - sale of agricultural land - scope of capital asset u/s 2(14) - AO rejected the claim of the assessee of exempt profit mainly on the ground that the land in question was sold to an industrial unit and had potential to be used for industrial purpose and therefore, the same was held as business profit - ITAT deleted the additions and allowed the benefit of exemption Held that:- the land was sold as an agricultural land and in fact, what was sold was agriculture land. What was the intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income. Similarly, merely because for whatever reason, the assessee has earned sufficient huge amount of profit also cannot be a ground to treat the profit earned by the assessee on sale of agriculture land as business income. The learned Tribunal has not committed any error in directing the Assessing Officer to treat the profit earned by the assessee on the sale of agriculture land as exempt under Section 2(14) of he Income Tax Act.

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• 2018 (8) TMI 986
  Deduction u/s 80HHC / 010A, - supporting manufacturer and the export house - Held that:- The Tribunal found that since both the supporting manufacturer and export house had profits in the relevant year, there is no question of application of IPCA Laboratory Ltd. (supra) and the assessee was entitled to the deduction. We agree with the finding on principle. But, the learned Senior Counsel, Government of India (Taxes), however, would contend that nothing is seen from the first appellate authority’s order or the Tribunal’s order as to whether the export house had profit in the said year. The learned counsel appearing for the respondent-assessee would point out that the profit and loss accounts of both the export house and the assessee were produced before the Tribunal across the bar and only on examination of the same, the claim was allowed. We agree with the learned Senior Counsel that there is nothing in the Tribunal’s order to substantiate the findings of the Tribunal, factually, evidencing the profit made by the export house. The respondent-assessee submits that they also have a valid claim under Section 10A of the Act. - It has to be noticed that for the subject year, after the amendment to Section 10A, mere processing does not entitle a claim under Section 10A. But by the proviso added on amendment by substitution, the undertakings which were entitled under the earlier provision would be so entitled even under the new provision for the unexpired period of entitlement as per the earlier provision Matter remanded back.

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• 2018 (8) TMI 985
  Deduction u/s 10A - eligible activity - Whether the processing of prawns undertaken by the assessee under IQF (Individual Quick Freezing) can be termed to be a manufacture or production - Claim of expenditure/ deduction towards contribution made in the Fishermen's Welfare Fund, which Fund - Fund was declared unconstitutional by the judgment of the Honourable Supreme Court Held that:- Any assessee, who was entitled to the benefit prior to the substitution would be entitled to the benefit under the substituted provision for the unexpired period as per the un-amended provision. - First question decided against the revenue. Contribution to the fund which was held unconstitutional - Held that:- We find that the Honourable Supreme Court while declaring the Fund to be unconstitutional also directed that the amount of contributions already paid will not be liable to be refunded to the contributors. In such circumstances, there is no question of a refund to the assessee and as found by the Tribunal, when the contributions were made, there was a valid fund created. The contribution so made to the Fishermen's Welfare Fund Board having not been refunded as specifically interdicted by the Honourable Supreme Court, the same would also be employed for the welfare of the fishermen. - Decided against the revenue.

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• 2018 (8) TMI 984
  Exemption u/s 11 - Charitable activity - whether the activities of the assessee authority are covered by first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s. 11 and 12 as per provisions of section 13(8) of the Act? - Held that:- as the issues involved in the present Tax Appeal/s are now not res integra and since the decision of the Division Bench of this Court is against the Department, in view of the aforesaid decision, in the case of the very assessee but with respect to different assessment years, both the Tax Appeals deserve to be dismissed and are accordingly, dismissed. - Decided against the revenue.

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• 2018 (8) TMI 983
  Additions u/s 68 - increase in share capital was not through public issue but by way of investment in equity share directly through fully convertible warrants - AO noted that the assessee is merely showing bogus sale and purchase - creditworthiness and genuineness of the transaction - CIT(A) deleted the additions by admitted additional evidences - Held that:- It is not in dispute that assessee produced sufficient documentary evidence before the authorities below to prove identity, creditworthiness of the investors and genuineness of the transaction in the matter with regard to payments like cheque no. date, confirmation copy of the ledger account with explanation for credit entries, bank statement, PAN, ITR and copy of the balance sheet of all the investor companies before A.O. The A.O. instead of making any inquiry on the documents filed before him, ignored the same and made the addition against the assessee without application of mind. In the absence of any challenge to the admission of additional evidences which were already part of the record of the A.O, the contention of the Ld. D.R. is rejected that additional evidences should not be admitted by the Ld. CIT(A). Therefore, the totality of the facts and circumstances of the case, clearly prove that the assessee discharged its initial onus to prove the identity of the investor companies, their creditworthiness and genuineness of the transaction in the matter. No material is produced before us to rebut the finding of fact recorded by the Ld. CIT(A). - Decided against the revenue.

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• 2018 (8) TMI 982
  Charging of interest u/s 220(2) - demand was raised first time - additions made in the rectification order passed u/s 154 - assessee contended that such an interest can be charged only if the assessee has defaulted in payment of demand as per notice of demand issued u/s 156 - Held that:- A demand in respect of such amount could be raised only after passing the rectification order and it is the default, if any, in payment of such demand that would attract the interest under section 220 (2) of the Act. It is, therefore, simple and plain that the rectification order itself cannot include the interest under section 220 (2) of the Act, and the tax determined in the rectification order does not relate back to the assessment order - Demand of interest is not valid - Decided against the revenue.

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• 2018 (8) TMI 981
  Validity of assessment u/s 153C - Additions u/s 68 - ex-parte appellate order - failure to appear on the date of hearing due to his personal difficulties - opportunity of being heard and natural justice. - Since in the instant case, the satisfaction under Section 153C of the Act was recorded on 08.08.2013, therefore, the relevant six assessment years available for assessment/reassessment would be assessment year 2008-09 to 2013-14. The year under consideration being assessment year 2007-08, which being out of the purview of this period, the assessment in the year under consideration cannot be made under Section 153C of the Act. Accordingly, we quash the assessment order passed by the Assessing Officer under Section 153C of the Act. The additional ground raised by the assessee is accordingly allowed. Since we have already quashed the assessment proceedings, the other grounds raised by the assessee are rendered merely academic - Decided in favor of assessee.

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• 2018 (8) TMI 980
  Additions u/s 68 - share premium - Additions u/s 69C - unexplained expenditure - Held that:- assessee produced sufficient documentary evidence before A.O. at the assessment as well as appellate stage to prove ingredients of Section 68 of the I.T. Act. The A.O. however, did not make any further enquiry on the documents filed by the assessee. Thus, the A.O. failed to conduct scrutiny of the documents at assessment stage and merely suspected the transactions in question on the irrelevant reasons. The A.O. did not make any enquiry from the Banker of the Investor and Income Tax record of the Investor Company. The valuation report filed by the assessee support explanation of assessee that shares were issued at premium which were below the fair market value per share. Further, there is no material available on record to justify if assessee paid any amount of 12 lakhs as alleged commission to obtain any accommodation entry. Additions made deleted - Decided in favor of assessee.

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• 2018 (8) TMI 979
  Deduction u/s 80IA - assessee has allegedly not maintained the separate books of accounts - failure to comply with audit as prescribed under section 80 IA (7) of the act in respect of the windmill undertakings - Held that:- According to the subsection 7 of section 80 IA the only requirement is that, the accounts of the undertaking are required to be audited. In the present case, the assessee has submitted the audited accounts. If the auditor has not qualified those audited accounts, there is no reason to reject them at the threshold without making further verification. The Ld. assessing officer should have verified whether the assessee has properly computed the income derived from the industrial undertaking or not. If the assessing officer finds that such working is not proper then only he can say that that the audited accounts of the assessee are not reliable. The principle of consistency also demands the assessee may be treated as eligible for deduction and it may not be rejected merely based on non-maintenance of books of accounts. Same is also not found as the mandatory conditions for deduction. Therefore, we do not approve the approach of the assessing officer in rejecting the claim of the assessee at the threshold merely on the basis that no separate books of accounts are maintained even when the assessee has submitted the audit report of the accounts of the industrial undertaking which was the requirement of subsection 7 - Deduction allowed - Decided in favor of assessee. Assessment u/s 144C - Disallowance u/s 14A r.w.rule 8D - built-in cost in the investment activity - appropriation of cost of composite funds needed to be allocated towards earning of exempt income - expenses having direct/ proximate nexus with earning of the dividend income - failure on the part of DRP/AO to record satisfaction for the purpose of section 14A - Nature of expenses incurred on repair of cost tank - revenue or capital expenditure - Held that:- before invoking the provisions of rule 8D the Ld. assessing officer has failed in his duty as per the provisions laid out under section 14 A read with rule 8D to point out any discrepancy in the claim made by the assessee having regard to its accounts. It is further the fact that investment of the assessee in the mutual fund is out of this para surplus funds. - Additions made u/s 14A deleted. Regarding expenditure on repairs - Held that:- In the light of the various discussion, it is respectfully submitted that there is no warrant to make any disallowance of the revenue portion of engineering services, since there can be no doubt or ambiguity about rendering of the services before 31.3.2010 and accordingly, 14% of the expenditure should be allowed as revenue expenditure. - Decided in favor of assessee.

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• 2018 (8) TMI 972
  Estimation of Income - Low Gross Profit (GP) rate - assessee expressed inability to furnish all supporting bills for purchase of materials and complete address and details of sundry creditors and also assessee failed to furnish supporting bills and vouchers in respect of transportation charges and wages. - Held that:- rate of net profit at 5. 35%, 5. 16% and 5. 15% has been accepted by the department in the case of the assessee itself for the preceding assessment years 2007-08, 2008-09 and 2009-2010. In the assessment year under consideration, the assessee has shown net profit rate at 5. 07%. - there is force in the arguments of ld A. R. of the assessee that net profit for the year under consideration should be estimated at 6% of the gross turnover. We modify the order accordingly. Thus, the grounds of appeal taken by the assessee are partly allowed.

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• 2018 (8) TMI 971
  Levy of penalty u/s 271(1)(c) - Assessment u/s 153A - revised return - Assessee contended that, when the assessee filed the return pursuant to notice u/s 153A of the Act and validly revised it, such return takes the place and deemed to have been filed the return u/s 139(1) of the Act and since the assessment is complete accepting the revised return, no penalty could be levied. - Held that:- the return of income filed pursuant to the notice u/s 153A takes the place of the return filed u/s 139(1) which was validly revised by the assessee even before any defect was pointed out by the learned AO. - Admittedly, in this matter both the returned income and the assessed income are nil. On this ground also, we cannot sustain the penalty order. No penalty - Decided in favor of assessee

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• 2018 (8) TMI 970
  Exemption u/s 11 - Charitable activity - last limb of proviso to section 2(15) - activities carried out by the society which yielded income to the society are commercial in nature - CIT(A) has allowed the benefit of exemption by observed that, the assessee is purely a charitable and non-profit organization and I do not find that the assessee is involved in any trade, commerce or business and accordingly the AO is directed to allow the exemption to the assessee u/s 11(1) with all the consequential benefits. - Held that:- we do not see any merit in this appeal of the department. - Decided against the revenue.

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• 2018 (8) TMI 969
  Capital Gains - Valuation of sale of property - As the assessment was getting time barred the ld AO passed assessment order without waiting for the report of DVO taking the circle rate for stamp duty purposes as deemed sales consideration. - There is no specific manner provided by the act for making a claim before the Ld. assessing officer under section 50 C of the income tax act. Such claim can also be made in the return of income as well as in various communications before the assessing officer. As the assessee has submitted the report of the registered government approved valuer, Therefore, it cannot be said that the assessee has not claimed before the Ld. assessing officer that valuation adopted by the Stamp duty authorities is not the correct valuation of the property sold. The provisions of section 50 C are amended w.e.f. 1/4/2019 only for ignoring the stamp valuation authority valuation if it does not exceed 105% of the consideration received. However, that applies only when comparing the stamp duty valuation with the actual sale consideration of the property. In view of above facts we direct the Ld. assessing officer to work out the capital gain by considering the deemed sale consideration of the property at 21.78 Lacs and then work out the capital gain chargeable to income tax act. Decided in favor of assessee.

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• 2018 (8) TMI 968
  Long Term Capital Gain (LTCG) on sale of property - determination of ownership - Power of attorney (POA) holder of the non-resident assessee - Held that:- the copy of the purchase agreement, Power of Attorney and the Sale Deeds of those immovable properties were duly produced by the assessee before the Ld. AO during the assessment proceedings. It appears from those documents that nowhere it is mentioned the assessee is the real owner of the property or the consideration money has been received by the assessee. It is clearly evident that those properties are not belonged to the assessee and therefore capital gain arising from those properties cannot be taxed in the hands of the assessee solely on the ground that the person being the real owners have not filed their income-tax returns. With utter surprise we note that in spite of having the information about the residential address of those two NRIs in India, the AO had not taken any initiative to make an enquiry about the genuineness of the whereabouts of the said vendors with intend to impose tax on capital gain upon them. On the other hand, CIT(A) has made the assessee responsible to discharge its onus so as to justify the action of the AO to take recourse to the provisions of section 5(2)(a) or (b) of the Act. We, therefore fail to appreciate the stand taken by the first appellate authority who has acted in such lackadaisical manner and without any cogent document against the assessee while confirming the addition made by the AO. Order of additions set aside - Decided in favor of assessee.

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• Customs

• 2018 (8) TMI 967
  Confiscation - Gold - stand taken by the first respondent was that the articles were confiscated not from the petitioner but from the second respondent/Southern Gold Pvt.Ltd., and that only they would be allowed to obtain release of the gold on payment of the redemption fine - Held that:- It is deemed appropriate to order this writ petition leaving liberty to the petitioner to approach the competent Authority for release of the gold on payment of the entire dues, including statutory dues, as is applicable to the gold of the extent of 4346.890 gms., that has been confiscated through Ext.P4 order - petition disposed off.

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• 2018 (8) TMI 966
  Re-export of confiscated goods - Misdeclaration of imported goods - SAMSUNG Brand LED TVs - suppression of facts of supplier of goods, country of origin, BIS specification IPR - appellant has prayed for re-export of the goods - Held that:- Only for the reason that the imported goods did not comply with the compulsory registration scheme of the Bureau of Indian Standards, it cannot be said that the goods are liable for absolute confiscation. The other models of Samsung Brand are registered under BIS and are BIS Compliant. The models imported by the Appellant were slightly different as the manufacturing company keep on changing the model number with some minor variations. This is the reason that the goods were found to be not registered under BIS. However, it is a vital fact that the goods were manufactured and sold by M/s Samsung Electronics who is already an established manufacturer of TV sets in India on mass scale. In such circumstances, only for the reason that the models imported by the Appellant were not registered under the BIS, absolute confiscation of goods is not correct. The absolute confiscation of the goods is set aside and goods are allowed to be re-exported on payment of redemption fine of 2 lakhs - Penalty also reduced to 1 lac against M/s Raj Traders - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 965
  Violation of import conditions - EPCG license - an allegation has been made that the appellant had diverted the machines imported under EPCG scheme and not installed the same in the address declared in the license - N/N. 22/2013 - Held that:- Revenue has sought to disregard the rent agreement on the basis of what the land lord told the Revenue officials. However, no statements of the said land lord were recorded, nor the said land lord was confronted with the said rent agreement. In these circumstances, the charge that the appellant had not entered into the rent agreement for the said premises cannot be upheld. There is no merit in the Revenue s allegations that the explanation given by the importer is false or incorrect. The appellant has claimed that the machine was not sold or disposed off or transferred by him to anybody else and, thus, there is no violation of that condition of the notification. It has been argued that the different address for installation is a curable defect for which they have already made an application to DGFT and which has yet not been not decided. There is no violation on the part of the importer, on account of which the duty could have been demanded or machines could have been confiscated. The appellants application for change of address is pending with DGFT and any action could have only be taken if DGFT rejects the said application. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 964
  Restoration of appeal - case of appellant is that they had not received the due notice for hearing from the Tribunal and they have come to know of the order only when they received the order - Held that:- It is evidenced by the records that they have resigned and the same was accepted well before the import of the impugned goods. Therefore, these two directors cannot be held responsible for commissions and omissions of M/s. Cochin Plastics Pvt. Ltd. The only findings given by the learned Commissioner was that he cannot escape from the liability of non-performing of the unit. No findings whatsoever have been given on his commissions or omissions with reference to the import of the impugned goods. Under the circumstances, the penalty levied on him also appears to be not sustainable. Applications for restoration of appeals are upheld - Penalties set aside.

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• Service Tax

• 2018 (8) TMI 961
  Refund of Service Tax - rejection of refund on the ground that many services were consumed wholly with the SEZ - whether the appellant is entitled for refund of service tax paid on input service received in their units which is an SEZ Unit under N/N. 15/09-ST? - Held that:- The issue is no more res-integra and is decided in the case of Sears IT & Management Services (I) Pvt. Ltd. [2017 (9) TMI 888 - CESTAT MUMBAI], where it was held that From the plain reading of clause (c) of the N/N. 9/2009-ST, it is clear that the exemption by way of refund is not available to the services consumed wholly within the Special Economic Zone however as per the first para of the notification all the services provided in relation to authorized operations in a SEZ and received by SEZ unit are exempted therefore the services received by the appellant even though consumed wholly within the SEZ are exempted per se. The impugned order is set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 960
  Business Auxiliary Services - distribution of pre-paid cards and recharge coupons purchased from BSNL - case of appellant is that BSNL had paid service tax on the entire value of the telecom products including the amount of commission paid to the franchisee/appellants - Held that:- CESTAT has continuously held that telecom operators discharging service tax on the whole MRP value of SIM cards and recharge cards there could be no further service tax liability on the persons who are dealing / selling the said SIM cards or recharge cards to the public. When the appellants have received incentives and discounts in the course of their trading activity, they are not liable to pay service tax. Another case of Revenue is that there is a specific contract between BSNL and the appellants - Held that:- Similar is the issue with all the service providers like BSNL and other operators and the respective dealers as has been elaborately discussed in Tribunal’s Delhi order CCE vs. Moradabad Gas Services [2014 (1) TMI 199 - CESTAT NEW DELHI], where it was held that where the principal has already paid service tax on the full value of the SIM cards, franchise cannot be called upon to pay tax again on the same transaction on the ground that his activity is separately liable to service tax under the category of BAS. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 959
  Works contract involving both supply and service - Erection, Commissioning and Installation Services - service tax not paid - Held that:- Admittedly the work executed by the appellant was a ‘works contract’ as per the Works Contract Order placed on record involving both supply and service for the customers like Bangalore Development Authority plus Karnataka Industrial Area Development Board - Further, the period involved in the present case is July 2003 to March 2006 and as per the judgment of the Hon’ble Apex Court, in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], has held that service tax cannot be levied on works contract for the period prior to 1st June 2007 and the period in the present case is prior to 1st June 2007 - The period involved in the present case is July 2003 to March 2006 and as per the judgment of the Hon’ble Apex Court, service tax cannot be levied on works contract for the period prior to 1st June 2007 and the period in the present case is prior to 1st June 2007. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 958
  CENVAT Credit - duty paying documents - denial on the premise that the invoices are not in the name of the appellant - Held that:- It is a fact on record that service tax paid by M/s Baheti Soya Links has been paid in the name of M/s Baheti Agro Links. In that circumstances, the appellant is entitled to avail cenvat credit on the invoices which are in the name of M/s Baheti Soya Links - the appellant has correctly availed the credit. CENVAT Credit - input services - telephone services - denial on the premise that telephones were installed in the office of the appellant are in the name of the partners - Held that:- The telephones is used by the appellant for providing for taxable service and these telephones are installed in the office of the appellant, although in the name of the partners - the appellant is entitled to avail cenvat credit on the telephone services. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 957
  Benefit of abatement - Manpower recruitment service - Goods transport agency service - N/N. 32/2004-ST dated 3.12.2004 - denial on the ground that the appellants could not produce any proof of non-availment of credit of capital goods by the providers of MRS and GTA services - Held that:- This Bench has already decided the similar issue in the case of M/s. Pragathi Automation Pvt. Ltd. [2018 (6) TMI 259 - CESTAT BANGALORE], where it was held that Before the omission of Explanation to Rule 2(p) of the CENVAT Credit Rules by N/N. 21/2006-CE (NT) by N/N. 21/2006-CE (NT), GTA services were deemed to be output service, therefore, there was no bar on the utilization of CENVAT credit for payment of such service tax - benefit cannot be denied - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 956
  Business Auxiliary Services - appellant undertook manufacture of forgings for others on job work basis and also undertook the work of “heat treatment” of forgings for other during the period from 09/2004 to 02/2005 - Held that:- Reliance placed in the case of Hitech Industrial Lining Pvt. Ltd. Vs. Commissioner of C.Ex., Salem [2017 (8) TMI 837 - CESTAT CHENNAI], where it was held that The amendment was brought forth with effect from 16.6.2005 to include the production or processing of goods for, or on behalf of, the client. Thus, the activity of the appellant has become taxable with effect from 16.6.2005, demand upheld - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 955
  Consulting Engineers Service - Body Corporate - Held that:- The word “body corporate” being included after amendment in Section 65/31 w.e.f. 01.05.2006 there can be no question of levy of Service Tax for “Consulting Engineering Services” of body corporates before 01.05.2006 - Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 954
  Storage and Warehousing Service - renting out of storage tanks - whether the amounts received by the respondents from M/s. Adept agencies Pvt. Ltd. should suffer service tax and as to whether the respondents are performing any such storage and warehousing services to the customers through M/s. Adept Agencies on a principal to agent basis? Held that:- The agreement nowhere mentions that M/s. Adept Agencies Pvt. Ltd. shall render the services listed therein as agents of the respondents. Going by the nature of the agreement it is clearly seen that the agreement is on a principal to principal basis - Going by the nature of the agreement it is clearly seen that the agreement is on a principal to principal basis. As observed by the learned Commissioner (Appeals), M/s. Adept Agencies Pvt. Ltd. is dealing with users of storage and warehousing infrastructure of the respondent directly and collecting service charges on their own account and also paying service tax on the same. M/s. Adept Agency is an independent and unrelated organization dealing with respondents and users on a principal to principal basis. A analogy can be drawn at this juncture of a mandap keeper who provides space for conducting marriages, functions, parties etc; should clients require any catering services for such ceremony there is normally a designated colour for the mandap and the client can avail his services - the respondents cannot be asked to pay service tax under the category of "Storage and Warehousing Service". Time Limitation - Held that:- A show-cause notice has been issued on 11.05.2005 clearly beyond the normal period - As the Department was having knowledge of the agreement between respondents and the Adept Agencies Pvt. Ltd as early as 21.11.2002, issuance of show-cause notice for extended period that too solely based upon the agreement between the respondents and M/s. Adept Agencies is not acceptable - issue is barred by limitation. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (8) TMI 978
  CENVAT Credit - duty paying invoices - supplementary invoices - Rules 9 (1) (b) of CCR 2004 - Held that:- In the case of M/S BIRLA CORPORATION LTD. VERSUS CGST, CC & CE, JABALPUR [2018 (7) TMI 1264 - CESTAT NEW DELHI], where it has been specifically noted that the connected matters of South Eastern Coal Field Ltd. are pending adjudication before the Hon’ble Apex Court, issue being already sub-judiced the element of confusion cannot be ruled out. Suppression being altogether contradictory to confusion cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record. Mere failure of ascertaining about the exclusion part of Rule 9 (1) (b) cannot be held to be the act of suppression or collusion on part of the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 953
  Principles of Natural Justice - Method of Valuation - Section 4 or 4A of CEA - Held that:- Perusal of the impugned orders would also show that the respondents 1 and 3 have not stated anything more than extracting the relevant provision of law, namely, definition of pre-packaged commodity , as defined under section 2(l) of Legal Metrology Act, 2009, and also to indicate that the commodity consisting of tyre, tube or tyre, tube and flaps in the form of package may be considered as 'pre-packaged commodity', if it falls in the ambit of definition of 'pre-packaged commodity' given under section 2(l) of the Act. When it is evident, apart from the fact that the learned Additional Solicitor General also admitted to the position, that the authorities will consider each and every case on its own merits and in accordance with law, there need not be any apprehension in the minds of the petitioners as though the respondents have pre-determined the matter as per the stand taken in their counter affidavits. Since the learned Additional Solicitor General has given such assurance before this Court that the individual case will be dealt with separately on its own merits and in accordance with law uninfluenced by any of the observations made or stand taken by the respondents in their pleadings or in the impugned proceedings, these writ petitions are disposed of without expressing any view on the merits. Petition disposed off.

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• 2018 (8) TMI 952
  CENVAT Credit - duty paying invoices - supplementary invoices - Rule 9(1)(b) of Cenvat Credit Rules, 2004 - non-inclusion of Royalty charges/Stowing Excise duty, Paryavaran Upkar, Vikas upkar, forest fee, entry tax etc. - suppression of facts or not?. Whether the Appellants are entitled to CENVAT Credit on the basis of supplementary invoices issued by the coal companies and whether the said credit stands denied in terms of Rule 9(1)(b) of the CCR which denies the credit if the supplementary invoices are issued for duties which became payable by the manufacturer on account of willful misstatement or suppression of facts on their part? Held that:- It is an admitted position that demand raised by the department against M/s. SECL is under challenge before the Hon’ble Supreme Court and therefore the Cenvat credit can be availed by the manufacturer on the strength of supplementary invoice since such amount of duty cannot be said to be paid on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty. There cannot be suppression of fact when the issue of liability of payment of Excise duty at the end of the coal companies was a debatable issue which is pending adjudication before the Hon’ble Supreme Court. Appellant is entitled to take Cenvat Credit on the supplementary invoices in question - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 951
  100% EOU - liability of duty - DTA Clearances - case of Revenue is that the appellants being EOU have not paid duties of excise under proviso to Section 3(1) of Central Excise Act, 1944 on the DTA clearances made by them during the period from April 2003 to June 2006 - whether the appellants are liable to pay duty on the DTA clearances? Held that:- The appellants cannot take the plea that their goods are not manufactured, non-excisable and therefore, they are not liable to pay the duty. The appellants failed to distinguish between a DTA unit and an EOU unit - Understandably, the appellants have availed all the benefits of EOU under various Acts; they should be aware of the fact that any clearance by EOU into DTA shall be treated as imports in India as they are governed by the Customs Act, 1962. In respect of 100% EOUs, duties of excise levied and collected shall be an amount equal to the aggregate the duties of customs which would be leviable (under the Customs Act, 1962 or any other law for the time being in force) on like goods produced or manufactured outside India and if imported into India. It is also clear that if such goods are chargeable to duties with reference to the value, the value of such excisable goods shall be determined in accordance with the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 - it is not correct for the appellants to take recourse under only on the fact that such goods if cleared by a DTA unit are not liable to pay any duty. The goods cleared by the appellants into DTA ought to be treated as imported goods and duty shall be levied accordingly. Extended period of limitation - Held that:- The appellants have contravened the provisions of Rules 8, 17 of Central Excise Rules, 2002 by way of non-maintenance of account relating to production, description and removal of goods into DTA and have also not filed ER-2 Returns for the months from April 2003 to June 2006 and therefore, the extended period is correctly invoked. The exemption available under N/N. 23/2003-C.Ex. dated 31.03.2003 cannot be denied to the appellant if they are otherwise eligible for the same. For the determination of the applicability of the N/N. 23/2003-C.Ex. dated 31.03.2003, the matter request to go to the original authority for determining the exact duty liability of the appellants on the goods cleared by them into DTA. Matter remanded to the original authority to quantify the duty liability on the clearances made by the appellants into DTA after extending the benefit of N/N. 23/2003-C.Ex. dated 31.03.2003 - appeal allowed by way of remand.

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• 2018 (8) TMI 950
  CENVAT Credit - input services - Banking & Financial Services regarding realisation of the export proceeds - case of Revenue is that this is a post export activity and therefore not covered under the definition of Input Service provided under Rule 2(1)(ii) of CCR, 2004 - Held that:- Realization of export proceeds is a necessary concomitant of export and therefore the same is also eligible for input service credit. Realization of export proceeds is a sine qua non of export business. Otherwise also, Banking and other financial services, although related to post export period, but are covered in the inclusive part of definition of input service in Rule 2(l) under the head “Financing”. Tribunal in the matter of Commr.of C.Ex., Delhi-III vs. Fiamm Minda Automotive Ltd. [2016 (3) TMI 64 - CESTAT NEW DELHI] has been held that the CENVAT credit of Service Tax paid on the Banking and other financial services which have been used/utilised for accomplishing the purpose of business towards payment of export clearance of the final produce, is available to the manufacturer/service provider in terms of Rule 2(l) of CENVAT Credit Rules, 2004. So far as the extended period of limitation is concerned, since on merits the case is decided in favour of the Appellant therefore there is no need to go into this issue. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 949
  Valuation - related party transaction - CBEC Circular No.692/08/2003-CX dated 13-2-2003 - Held that:- The CAS-4 Certificate itself was not questioned with supporting evidence; Revenue did not initiate any action independently to ascertain by another Cost Accountant whether the CAS-4 submitted by respondents is correct or not - As the Revenue failed to substantiate the allegations on CAS-4 submitted the respondents by concrete evidence, the appeal is bound to fall - Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 948
  100% EOU - Extended period of limitation - no suppression of facts - deemed exports - case was booked against the appellant for exceeding the limit of their DTA clearance - Held that:- In terms of decision of the Hon ble Gujarat High Court in the case of Anita Synthetics Pvt. Limited [2014 (9) TMI 368 - GUJARAT HIGH COURT], deemed exports cannot be clubbed for the purpose of calculation of clearances in DTA and thus, the appeal on this count is allowed. A perusal of the show cause notice shows that the entire data for issue of show cause notice has been derived from the returns filed by the assessee. In the circumstances, the appellant has disclosed the entire clearances to the Revenue therefore, the charge of suppression of facts or misdeclaration cannot be invoked against the appellant - It is a failure on the part of the Revenue to detect the mistake of the appellant - demand is not sustainable on limitation. Since the demand is not sustainable the penalties imposed on the appellant and its Director are also set-aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 947
  CENVAT Credit - removal of inputs as such in guise of manufacture - payment of duty on removal less then availed on inputs - extended period of limitation - The department observed while comparing the inputs & the final products with the input invoices, that the appellant has paid duty less than the CENVAT credit availed on the inputs - recovery of short duty paid under Rule 14 of CENVAT Credit Rules read with Section 11 A of Central Excise Act, 1944(CEA) alongwith the interest and the proportionate penalty. Held that:- In the present case the admitted activity is cutting and silting of CRGO Coils irrespective the Tariff head had been changed but to still to be called as manufacture, the activity has either to be identical or ancillary to the completion of final product or should itself amount to manufacture or should be a process which in relation to the goods specified in third schedule involves packing or re- packing of such goods in a unit container. The main product of appellant, admittedly, is the manufacture of transformer core stack falling under Chapter 85 of CETA 1985 for which the CRGO Coils is the main input. It becomes clear that the unused input if cut into any other form but since is not used in the manufacture of final product of the appellant the same can be nothing more than the clearing of the unused input/ raw material. The appellant has removed the inputs as such and has failed to reverse the equal cenvat credit which has been taken on the said inputs and thus has contravened the provision of Rule 3 (5) of Cenvat Credit Rules, 2004 (CCR) Rule 2004. The appellant rather, while removing the inputs as such was required to pay cenvat credit taken by them. With respect to this show cause notice dated 27.10.2015 the appellant has submitted that the adjudicating authority below has failed to consider the documents of the appellant i.e. Exhibit-F at page no. 155 wherein it has been specifically shown that the cenvat credit availed by the appellant is much less than the duty paid by him. Perusal of the document reflects correctness in the contention of the appellant order under challenge is observed to be silent to this aspect - The matter is remanded back to the Additional Commissioner however for the limited purpose as above i.e. for computation. Appeal allowed in part and part matter on remand.

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• 2018 (8) TMI 946
  CTC machines - whether manufactured goods or only traded item - Held that:- On perusal of the invoices, there is no material found, supporting the contention put forward by the appellant that these are bought-out items and not manufactured by the appellant in their factory - also, after such a long lapse of time, it will be futile exercise to remand the matter to examine whether the appellant during the disputed period of 1.5.2009 to 26.2.2010 had engaged in manufacture of the goods. It is also to be remembered that for the period prior and after, the appellant have availed the exemption as per the notification contending that they are manufacturing the impugned goods. We therefore do not find any ground to interfere with the demand. Demand of duty confirmed - However, penalty imposed under Rule 25 is unwarranted and is set aside. Appeal allowed in part.

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• 2018 (8) TMI 945
  CENVAT Credit - GTA Services - transportation of finished goods from the place of removal - Held that:- CENVAT credit on the outward transportation services provided by the appellant is eligible to them - reliance placed in the case of CCE, Belgaum vs. Vasavadatta Cements Ltd. [2018 (3) TMI 993 - SUPREME COURT], where it was held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 944
  Classification of goods - “Dhatri Brand Hair Care Herbal Oil” and “Dhatri Brand Massage Oil” - Department sought to classify the Hair Oil and the Massage Oil under Central Excise Tariff Heading 3305 and 3304 respectively as cosmetics - Held that:- This very Bench in the case of Haridev Formulations (the job workers of the respondents) have concluded that the products manufactured by the respondents fall under Chapter 30 of the Central Excise Tariff Act, 1986 - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 943
  CENVAT Credit - input services - amount paid to the dealers for providing free services to the buyers of vehicles during warranty period - denial on the ground that the said services have been received beyond the place of removal after sale of goods - Held that:- Similar issue came up before this Tribunal in the case of CCE, Nashik vs. Mahindra & Mahindra Ltd. [2012 (8) TMI 530 - CESTAT, MUMBAI], where it was held that Service of repair and maintenance of transformers during warranty period is a service covered by definition of input service and the assessees are entitled to take Cenvat Credit of service tax paid on such services. The free service sale services of the vehicle provided during warranty period is an input service for the manufacturer - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 942
  Penalty - Clandestine Removal - SS Ingots - goods were carried without any invoice/bill of the same except a weighment slip - case of appellant is that they deposited duty immediately on the day of seizure before issuance of show cause notice, hence equivalent penalty not called for - CENVAT Credit - credit was availed on Nickel Cathodes, which was not found in the factory. Held that:- The arguments advanced by the Ld. Consultant do not carry much force, especially, when there is no proof of receipt of goods at any time. The plea that substantial benefit should not be denied for procedural lapse is clearly not tenable as there is fraudulent availment of Cenvat credit without supply of goods and it is not merely a procedural lapse. In the present case, the Revenue has been able to establish by way of contrary statements of the Director and Sh. Vijay Kumar, accountant of M/s Aseem Global Ltd that the Cenvat credit has been irregularly taken. Besides, the appellant has been changing their versions but still failed to account for shortage of inputs - Revenue has done the verification from M/s Aseem Global Ltd., which established that the appellants were giving contrary statement. There is no infirmity in the order of the Commissioner (Appeals) and the same is sustained - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 941
  Sales Tax incentive scheme - Package Scheme of Incentive - Eligibility Certificate - benefits sanctioned by the Government of Maharashtra under the 1993 scheme - reopening of assessment on account of change in opinion - Held that:- The petitioner was entitled to utilize the benefits available under the 1993 Package Scheme between 1.09.1999 to 31.08.2013 or on the exhausting the monetary ceiling, whichever occurred earlier. According to the petitioner the Nashik plant availed the incentive's in the ratio/proposal prescribed in the entitlement certificate as also the circular and exhausted the monetary ceiling in the year 2008. As per the case of the petitioner it was assessed by the Assistant Commissioner of the Sales Tax for the Financial year 2006­2007 by order dated 29.03.2011 and the assessment order confirmed the deferment amount claimed by the petitioner. These orders passed by the Assistant Commissioner came to be rectified on 27.02.2012 and the petitioner preferred an appeal to the Deputy Commissioner of Sales Tax, Nashik Division. Section 41BB of the Bombay Sales Tax Act came to be inserted on 27.03.2001, introducing a provision of proportionate incentives to an eligible unit in certain contingencies which included a provision of making the incentives dependent on the turn over of sales and purchases to be arrived at by applying a ratio prescribed by the State Government to the total turnover of sales and purchases of the said unit in that year. By introduction of the said provision the benefits availed of by an eligible unit in contravention of subsection (1) was deemed to be withdrawn and such unit was liable for payment of tax in respect of turnover of sales and purchases in respect of the turnover and the benefit which was withdrawn was directed to be recovered as a tax. The said provision was introduced with a non­obstante clause, giving effect to it inspite of existence of any provision contained in package Scheme of Incentives. By the Package Scheme of Incentives the State Government has granted a tax concession but there is no embargo to withdraw the said concession under the Package Scheme of Incentives of 1988 and 1993 which were formulated under the provisions of the Bombay Sales Tax Act - Once the validity of Section 93 has been upheld, the Petitioner cannot be permitted to argue that he was entitled to enjoy the benefits in terms of its eligibility and entitlement certificate. It was found by the Reviewing Authority that the Assessing officer had committed an error and since the provision of law which has been brought by amendment Act 2009 is to be implemented with retrospective effect, the Deputy Commissioner of Sales Tax has exercised the power of review and passed the impugned order. The exercise of the said power is in the larger interest of the revenue and hence cannot be said to be without jurisdiction or mala­fide. This is not only a case of reopening of the assessment on account of change of opinion. Petition dismissed.

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• 2018 (8) TMI 940
  Revision of assessment - TNVAT Act - VAT audit conducted in the business premises of the petitioner - Authorization by the Commissioner as required under the TNVAT Act - Held that:- This Court had an occasion to consider the validity of similar orders in the case of M/s.Empress Audio vs. Commissioner of Commercial Taxes and Others [2018 (6) TMI 1239 - MADRAS HIGH COURT], where it was held that the authorization was by the Commissioner, the competent Authority - the stand taken by the respondent in the impugned order that the VAT Audit conducted was well within the jurisdiction of the officer is a correct finding. The petitioner failed to produce any documentary evidence before the Assessing Officer. Though the petitioner did not produce documents before the inspecting officials, that will not be a bar for the petitioner to produce documents before the Assessing Officer. This Court is inclined to give one more opportunity to the petitioner to go before the Assessing Officer - petition allowed by way of remand.

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• 2018 (8) TMI 939
  Principles of Natural Justice - Whether the prescribed authority can issue a notice of re-assessment under Section 39(1) of the KVAT Act read with Section 9(2) of the CST Act, without first recording his satisfaction/belief that there is an understatement of tax liability? Similar issue decided in the case of The State of Karnataka vs. M/s. V.N.Corporation [2018 (8) TMI 935 - KARNATAKA HIGH COURT], where it was held that giving one declaration form for one calendar month as provided in the first proviso is a mere procedural formality rather than a substantive provision and no substantial question of law arises requiring our consideration in these matters. The substantial questions of law is answered in favour of the petitioner-assessee and against the Revenue - decided in favor of assessee.

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• 2018 (8) TMI 938
  Prayer to withdraw petition - transfer of property in goods involved in the execution of works contracts - the processes of dyeing and printing of cloth - Held that:- Apex court in the case of TVL. SSM Processing Mills [2014 (8) TMI 1150 - SUPREME COURT OF INDIA] has permitted the appellant therein to withdraw the SLP and granted permission to raise other additional queries before the appropriate forum - Thus, granting liberty, SLP has been dismissed as withdrawn. On the specific question as to whether it is open to the respondent herein to raise questions of law in the revision petition filed by the State, answer of Mr.K.Venkatasubramaniam, learned counsel for the respondent, was in the negative. However, learned counsel for the respondent submitted that in the absence of any notice issued by the assessing officer, dealer was not in a position to raise the issue before the assessing officer and thus, substantial questions of law now raised, captioned as "counter" requires to be considered by this Court. Tax Case (Revision) is allowed. Substantial questions of law, are answered in favour of the State.

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• 2018 (8) TMI 937
  Revision of return - petitioner failed to include the purchased item in the return submitted by it, for December 2016 - Held that:- When a dealer wants to revise a return, the Assessing Authority, as the Act mandates, must accept it - the 2nd respondent is directed to permit the petitioner to revise the returns for December 2016 - petition disposed off.

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• 2018 (8) TMI 936
  Penalty - Misuse of Form C - non-production of Form –C of Central Sales Tax Act - Section 10(a) of the Central Sales Tax Act, 1986 - It is the case of the petitioner that mens rea is established by conduct of the respondent himself and the question of reestablishing the mens rea, does not arise - Held that:- The main ingredient under Section 10(a) of the Act is that unless it makes out that the respondent or purchaser has used Form-C for the purpose of the availing concession of tax in contravention of provisions, it is not permissible to levy penalty. In order to invoke Section 10(a) of the Act, the very important ingredient is whether there is mens rea or involvement of mind to defraud the Government. Mens rea or guilty mind, it is sine quo non before invoking Section 10(a) of the Act. When an Authority invokes Section 10(a) of the Act, Authority should clearly establish or elicit defraud to the Government by misusing Form-C for the purpose of resale. When it is permissible under Part-M of Schedule-II of Entry No.1 of KST Act, which specifically includes the machineries of the nature which respondent has bought from outside, it is permissible for the purpose of his use - it cannot be held that he has misused Form-C for the purpose of defrauding the Government. The petitioner has utterly failed to establish mens rea on the part of the respondent. Under these circumstances, it is proper to hold that there is no substantial question of law involved in this matter - petition dismissed - decided against Revenue.

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• Indian Laws

• 2018 (8) TMI 963
  Whether in a criminal prosecution, it will be in consonance with the principles of justice, fair play and a fair investigation, if the informant and the investigating officer were to be the same person? Held that:- In a criminal prosecution, there is an obligation cast on the investigator not only to be fair, judicious and just during investigation, but also that the investigation on the very face of it must appear to be so, eschewing any conduct or impression which may give rise to a real and genuine apprehension in the mind of an accused and not mere fanciful, that the investigation was not fair. In the circumstances, if an informant police official in a criminal prosecution, especially when carrying a reverse burden of proof, makes the allegations, is himself asked to investigate, serious doubts will naturally arise with regard to his fairness and impartiality. It is not necessary that bias must actually be proved. It would be illogical to presume and contrary to normal human conduct, that he would himself at the end of the investigation submit a closure report to conclude false implication with all its attendant consequences for the complainant himself. The result of the investigation would therefore be a foregone conclusion. To leave the matter for being determined on the individual facts of a case, may not only lead to a possible abuse of powers, but more importantly will leave the police, the accused, the lawyer and the courts in a state of uncertainty and confusion which has to be avoided. It is therefore held that a fair investigation, which is but the very foundation of fair trial, necessarily postulates that the informant and the investigator must not be the same person. Justice must not only be done, but must appear to be done also. Any possibility of bias or a predetermined conclusion has to be excluded. This requirement is all the more imperative in laws carrying a reverse burden of proof. Appeal allowed - The prosecution is held to be vitiated because of the infraction of the constitutional guarantee of a fair investigation - decided in favor of appellant.

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• 2018 (8) TMI 962
  Smuggling - carrying of contraband item - Opium - Section 18 of NDPS Act, 1985 - acquittal of accused - non-compliance of Section 50 of the NDPS Act - Held that:- The trial court held that the oral evidence regarding production of the case property before the Magistrate was not trustworthy and not acceptable. In the absence of the order of the Magistrate showing that the contraband seized from the accused was produced before the Magistrate, the oral evidence adduced that the contraband was produced before the Magistrate cannot form the basis to record the conviction - For proving the offence under the NDPS Act, it is necessary for the prosecution to establish that the quantity of the contraband goods allegedly seized from the possession of the accused and the best evidence would be the court records as to the production of the contraband before the Magistrate and deposit of the same before the Malkhana or the document showing destruction of the contraband. In an appeal against acquittal, the High Court will not interfere unless there are substantial and compelling reasons to reverse the order of acquittal. The mere fact that on reappreciation of evidence the appellate court is inclined to arrive at a conclusion which is at variance with the trial court, the same cannot be the reason for interference with the order of acquittal. The findings of the trial court cannot be said to be distorted conclusions warranting interference. Based on the oral evidence of Joginder Singh (PW-2) and Harbhajan Singh (PW-3), the High Court ought not to have interfered with the order of acquittal and the conviction of the appellant under Section 18 of the NDPS Act cannot be sustained - the conviction of the appellant under Section 18 of the NDPS Act and the sentence of imprisonment imposed on him is set aside. Appeal allowed - decided in favor of appellant.

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