TMI Tax Updates - e-Newsletter
August 3, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Cheques Bounce Charges are recovered for tolerating the act of delay not to be treated as interest - liable to GST

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Articles

1. CENTRAL CONSUMER PROTECTION AUTHORITY

   By: DR.MARIAPPAN GOVINDARAJAN

2. Time limit to claim input tax credit and the time limit to pay liability should be rational : a view

   By: Ganeshan Kalyani

News

1. GST Revenue collection for July, 2019

2. Search on a prominent Real Estate Group in Mumbai

3. Third Bi-monthly Monetary Policy Statement, 2019-20

4. The Right to Information (Amendment) Act, 2019.

5. THE FINANCE (NO. 2) ACT, 2019

6. Guruprasad Mohapatra Assumes charge as Secretary DPIIT

Notifications

Customs

1. 30/2019 - dated 1-8-2019 - ADD

Seeks to further amend notification No. 1/2017-Customs(ADD) dated 5th January, 2017 to prescribe ADD on exports from M/s. Natural Jute Mill (Producer/Exporter) [Bangladesh] and M/s Kreation Global, LLC,USA (Exporter/ Trader) [Bangladesh] on the basis of final findings of the Designated Authority

2. 29/2019 - dated 1-8-2019 - ADD

Seeks to rescind notification No.23/2018 - Customs(ADD) dated 23.03.2018 that provided for provisional assessment of jute goods exported from Bangladesh or Nepal by M/s. Natural Jute Mill (Producer/Exporter) [Bangladesh] and M/s Kreation Global, LLC,USA (Exporter/ Trader) [Bangladesh] till the final findings of New Shipper Review in this regard are recieved

GST - States

3. S.O. 350 - dated 31-7-2019 - Bihar SGST

Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

4. S.O. 349 - dated 31-7-2019 - Bihar SGST

Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

5. S.O. 348 - dated 31-7-2019 - Bihar SGST

Seeks to amend Notification S.O. No. 212, dated the 08th May, 2019

6. 72/GST-2 - dated 1-8-2019 - Haryana SGST

Amendment in notification no.47/ST-2, dated 30.06.2017 under the HGST Act, 2017

7. 71/GST-2 - dated 1-8-2019 - Haryana SGST

Amendment in notification no.35/ST-2, dated 30.06.2017 under the HGST Act, 2017

8. 13/2019—State Tax (Rate) - dated 31-7-2019 - Maharashtra SGST

Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

9. 12/2019—State Tax (Rate) - dated 31-7-2019 - Maharashtra SGST

Seeks to amend Notification No. 1/2017- State Tax (Rate), dated the 29th June 2017

10. 35/2019–State Tax - dated 30-7-2019 - Maharashtra SGST

Amendment in Notification No. 21/2019–State Tax, dated the 23rd April 2019

11. 34/2019—State Tax - dated 26-7-2019 - Maharashtra SGST

Seeks to amend Notification No. 21/2019– State Tax, dated the 23rd April, 2019

12. 33/2019 – State Tax - dated 24-7-2019 - Maharashtra SGST

Maharashtra Goods and Services Tax (Fifth Amendment) Rules, 2019.

13. 35/2019-State Tax - 1309-F.T. - dated 31-7-2019 - West Bengal SGST

Seeks to extend the last date for furnishing FORM GST CMP-08 for the quarter April June 2019 till 31.08.2019

14. 13/2019-State Tax (Rate) - 1311-F.T. - dated 31-7-2019 - West Bengal SGST

Seeks to amend notification No 1136-F.T. dated 28.06.2017 to exempt supply of services of hiring of certain electrically operated vehicle to a local authority.

15. 12/2019-State Tax (Rate) - 1310-F.T. - dated 31-7-2019 - West Bengal SGST

Seeks to amend notification No 1125-F.T. dated 28.06.2017 to reduce the rate of tax on supply of electrically operated vehicles

Circulars / Instructions / Orders

SEZ

1. Instruction No. 96 - dated 31-7-2019

Guidelines for clearance of unclaimed and abandoned goods kept in SEZs/ FTWZs

SEBI

2. SEBI/HO/OIAE/IGRD/CIR/P/2019/86 - dated 2-8-2019

Streamlining issuance of SCORES Authentication for SEBI registered intermediaries

3. SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/87 - dated 1-8-2019

Database for Distinctive Number (DN) of Shares - Action against non-compliant companies

4. CIR/HO/MIRSD/DOP/CIR/P/2019/88 - dated 1-8-2019

Rationalization of imposition of fines for false/incorrect reporting of margins or non-reporting of margins by Trading Member/Clearing Member in all segments

Customs

5. 23/2019 - dated 1-8-2019

Clarifications regarding Refunds of IGST paid on import in case of specialized agencies

Highlights / Catch Notes

GST

• Tour operators must pay GST at 5% without ITC; 18% rate with ITC is not an option.

  Case-Laws - AAR : Rate of Tax on tour operators services - Whether any option is available to the 'Tour operators' to either pay GST @ 5% (with no ITC) or to pay GST @ (with full ITC)? - HELD No - option to pay GST @ 18% (9% CGST + 9% SGST) (with ITC) is not available to them.
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• Tour Operator Charges Equal to Hotel Aggregators, Qualifies as "Pure Agent," Excludes Accommodation from Main Service Value.

  Case-Laws - AAR : Valuation - Tour Operator Services - Since, the applicant is charging the same amount from their client as is paid by them to the hotel aggregators and all other conditions of "pure agent" are also satisfied, the value of hotel accommodation cannot be added to value of their main service which is booking of hotel accommodation.
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• Authority Breaches Natural Justice by Recovering Input Tax Interest Without Show Cause Notice; Orders Unsustainable.

  Case-Laws - HC : Interest on Input tax credit - without issuing SCN - recovery by the Authority without issuing Show Cause Notice, which is in breach of principles of natural justice. It is trite law that any order passed by the quasi-judicial authorities in contravention of the principles of natural justice, cannot be sustained.
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• Court Orders Review of Denied CENVAT Credit Carry Forward; Officer to Address Grievances in Six Weeks under Notification No. 31/2018.

  Case-Laws - HC : Right to carrying forward of CENVAT Credit as a transitional credit - Discriminatory action by the respondent no. 3 and 4 in not extending the benefit of Notification No. 31 of 2018 - Officer directed to dispose off the grievances of the petitioner within 6 weeks.
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• Bounce Charges for Cheque Delays are Consideration Under GST Act, Section 2(31), Not Exempt Interest, Subject to GST.

  Case-Laws - AAAR : Levy of GST - cheques Bounce Charges - The bounce charges are recovered by the appellant for tolerating the act of delay and it is nothing but consideration u/s 2(31) - further the “bounce charges” in the present case are not covered in the interest meant for the purpose of the exemption and thereby not entitled for the exemption under Notification No. 12/2017 - will attract GST
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Income Tax

• Section 234E Fee Dispute: Favor Assessee's Interpretation When High Courts Differ on Jurisdictional Decisions.

  Case-Laws - AT : Charging of fee u/s 234E - In the absence of any decision by the jurisdictional High Court, where there is difference of opinion between different High Courts on an issue, then the one in favour of assessee needs to be followed.
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• Part-time accountant entering data into a computer exempt from Section 194J TDS for professional services. No disallowance.

  Case-Laws - AT : TDS u/s 194J - part time accountant - writing charges - feeding details in computer - As the person was simply feeding details in computer, he cannot be considered as a professional, and therefore in our considered opinion, section 194J is not applicable to present facts - no disallowance.
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• ITAT confirms rejection of sections 12AA and 80G registration due to trustee powers; no substantial legal question remains.

  Case-Laws - HC : Registration/approval u/s 12AA/80G - rejected on ground that Trustees have wide power but not concluded that the Trust activities were not genuine - ITAT has taken pains to examine the merits itself and since the facts spoke for themselves, there was no need to again send the matter back to the CIT(E) for a fresh determination - No substantial question of law arises
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• Section 154 of Income Tax Act: Limited to Correcting Apparent Mistakes, Not for Reviewing Orders or Detailed Inquiries.

  Case-Laws - HC : Rectification of mistake u/s 154 - the power u/s 154 is not a power to review an order and the power can be invoked to rectify a mistake, which is apparent from the record which undoubtedly would mean that such power cannot be exercised by making roving enquiry into the matter specially where there are disputes raised by the assessee on which a decision requires to be given after considering the submissions - no rectification
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• Court Quashes TDS Orders on Google, Facebook Ads Due to Violation of Natural Justice u/ss 194C, 194J.

  Case-Laws - HC : Deduction of TDS u/s 194C or 194J - advertisement to Google & Facebook - AO given detailed observation regarding How Google and facebook ads work for its clients but not provided to the petitioners - The least that he was expected to do was to share such material with the Petitioner giving an opportunity to rebut the same if so desired by the Petitioner - orders cannot survive the test of principles of natural justice, hence quashed only on this ground
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• Tax Authorities Reject Assessees' Books u/s 145(3) for Unverified Large Cash Transactions in Silver Sale.

  Case-Laws - HC : Rejection of Book u/s 145(3) - cash sale of silver - It was obligatory on the Assessees to satisfactorily account for the creditworthiness, identity and genuineness of the transactions of the so-called providers of such cash to each of them in such huge sums - Plainly this was not forthcoming and the AO rightly therefore disregarded the accounts of both Assessees u/s 145 (3)
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• No Fees u/s 234E for e-TDS Defaults Before June 1, 2015: No Basis for Charges Pre-Processing.

  Case-Laws - AT : Charging of fee u/s 234E - in intimation u/s 200A for the default in furnishing e-TDS statement for the period prior to 1st June, 2015 - in all these cases, the TDS return has been filed and processed much before 1.6.2015 - no basis for levy of fees u/s 234E
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• Interest Expenditure Claim Acknowledged by AO; No Penal Action for Excess Disallowance Under Penalty 271(1)(c).

  Case-Laws - AT : Penalty 271(1)(c) - deduction of interest out of ‘income from other sources’ - The AO has admitted the claim of interest expenditure to the extent of interest income and therefore one cannot definitely say that interest expenditure was not utilized for the purpose of earning interests - The disallowance of excess expenditure over and above similar income generated, cannot invite penal action in the form of penalty
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• Reopening of assessment u/s 147 upheld due to non-est return status u/s 139(4), triggering Explanation 2(a).

  Case-Laws - AT : Reopening of assessment u/s 147 - Return filed was non-est return and not a valid return in the eyes of law as per Section 139(4)- Clause (a) of Explanation 2 would squarely apply which provide that income would be deemed to have escaped assessment in case no return was furnished although assessee income exceeded the maximum amount which is not chargeable to income tax - reassessment valid
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• Stock broker cleared of allegations due to lack of evidence in Client Code Modification case; transactions deemed legitimate.

  Case-Laws - AT : Suppression of profit - hare / stock broker - fictitious loss by way of Client Code Modification (CCM) - except for general observation of investigation wing, there was no minimum adverse material on record which would prima-facie prove that loss was fictious and the assessee was in connivance with brokers - transactions were duly reflected in the books and done through banking channels - duly allowable
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• AO Fails to Prove Extra Premium on Shares: No Income Addition u/s 68 After Share Applicants Verified.

  Case-Laws - AT : Unexplained credits u/s 68 - share application money - share applicants are traceable by way of PAN, ITRs, Bank accounts and are also responding to the notices u/s. 133(6) then it is for the AO to bring on record the material in the form of extra premium paid to the assessee for the shares and that the case was deposited prior to issuance of cheques - nothing has been done - no addition
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Customs

• Guidance on Refund Process for Specialized Agencies to Recover IGST Paid on Imports, Ensuring Compliance with Tax Regulations.

  Circulars : Clarifications regarding Refunds of IGST paid on import in case of specialized agencies
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• Refund Approved for Interest on EPCG Duty; Policy Silent on Interest for Composition Fee.

  Case-Laws - AT : Refund of Interest paid settled amount of 50% of duty forgone - EPCG scheme - failure or delay in fulfilling the condition the export obligation - there is no mention in the Policy that this composition fee which is paid as a duty is to be paid along with interest - refund allowed.
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• Valuation Dispute: NIDB Data Inapplicable for 4000 Metric Tons of Base Oil SN-500 Due to Quantity Limitations.

  Case-Laws - AT : Valuation of imported goods - Base Oil SN-500 - price of NIDB data is for not more than 500 MTs - the goods involved in the contemporaneous bill of entry, therefore, due to the higher quantity (4000 MTs) imported by the appellant, the NIDB data of meager quantity cannot be applied
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• Court Quashes Summons Against Legal Heirs; Customs Act Lacks Provision for Recovering Deceased's Duty from Heirs.

  Case-Laws - HC : Continuation of proceedings against the legal heirs of a deceased - summons issued to petitioner - no machinery provision in the Customs Act, 1962 has been brought to the notice of this Court which enables the Customs Department to proceed against the legal heirs of a deceased notice/assessee against whom there may be proceedings for recovery of customs duty - summons quashed
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Indian Laws

• Parties Cannot Contest Cheque Validity After Consenting to or Making Alterations, Ensuring Fairness in Financial Transactions.

  Case-Laws - HC : Dishonor of Cheque - The party who consents to the alteration as well as the party who made the alteration are not entitled to complain against such alteration. If the drawer of the cheque himself altered the cheque, he cannot take advantage of it later by saying that the cheque became void as there is material alteration thereto.
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• Section 143A on cheque dishonor is not retroactive; applies only to cases post-enactment, allowing 20% payment orders.

  Case-Laws - SC : Dishonor of Cheque - Whether Section 143A of the Act is retrospective in operation - section creates a liability that an accused can be ordered to pay over upto 20% of the cheque amount to the complainant during pendency of petition and also machinery for its recovery as arrears of land revenue which may result in arrest and detention of the accused - Amendment is prospective in nature only.
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Central Excise

• Department Must Refund CENVAT Credit Appropriated After Unlawful Demand Overturned; Lacked Authority to Retain Funds.

  Case-Laws - AT : Refund of appropriated amount - Amount was recovered against CENVAT credit, but finally the demand was set aside - when unlawful demand has been set aside, the Department does not have any authority to retain the amount appropriated towards the said unlawful demand.
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• CENVAT Credit Eligibility: Can Credit on Outward Freight Claimed in November 2008 Cover Services from April 2007-March 2008?

  Case-Laws - AT : CENVAT Credit - outward freight - credit pertains up to March 2008 but availed in the month of November 2008 - impact of term used “clearance of final product from the place of removal” and w.e.f. 01.04.2008 - documentary evidence and the certificate of the Chartered Accountant prove that the cenvat credit of service tax paid on GTA pertains to the period April 2007 to March 2008 - entitled to take the credit
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VAT

• Ex-parte reassessment order for 2012-2013 deemed invalid due to unclear jurisdictional authority, set to be voided.

  Case-Laws - HC : Validity of ex-parte assessment order - one officer heard the matter after issue of notice and second passed expare order - the jurisdiction of the officers to proceed with the reassessment relating to the tax period 2012-2013 was not clear amongst the concerned authorities - the ex-parte re-assessment order now impugned certainly deserves to be set aside
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Case Laws:

• GST

• 2019 (8) TMI 116
  Nature of activity - supply of service or not - bouncing/dishonoring of cheques - Levy of GST - Bounce Charges collected by the Appellant - tolerate an act or situation of the default by the borrowers - scope of supply - entry 5 (e) of the Schedule II to the CGST Act, 2017 - HELD THAT:- The default in payment of EMIs as also the bouncing or dishonor of the cheque are hereby deemed to be defaults under the provisions of the agreement entered between the appellant and their customers. On any default or breach of the agreement, the remedies available with the appellant are either to recall loan or cancellation of agreement, or to initiate legal proceedings under the Negotiable Instruments Act or under the Payments and Settlement Act, or taking possession of the product, etc. However, the appellant instead of taking recourse to the remedial provisions in the agreement is tolerating the act or the situation of bounce / dishonor of the cheque / ECS / NACH, tendered by the customers for repayment of EMIs, by imposing / recovering certain amount as bounce charges . Hence, such an activity of tolerance of situation of bounce / dishonor of cheque is adequately covered by entry 5 (e) of Schedule ll. Appellant is entitled to recover the bounce charges from such defaulting borrowers. Thus, from the language of the above mentioned clause related to bounce charges, it is adequately clear that there is mutual agreement between the Appellant and the borrower that whenever this event of default occurs, the Appellant can tolerate this event against some fixed agreed amount. Thus, here it can be said that the Appellant has tolerated an act or situation of default by the borrowers, for which they are recovering some amount in the name of the bounce charges, wherever the repayment instruments, discussed above, have been dishonored. Hence, such activity of tolerance is against consideration. We do not find any scope and requirement as such to discuss the meaning of consideration in such cases, as there is no mention of the term consideration anywhere in the description provided in the entry 5 (e) of the Schedule Il to the CGST Act, 2017. The bounce charges are recovered by the appellant for tolerating the act of delay and it is nothing but consideration. It is clear from the meaning of the consideration provided under Section 2(31) that it includes the impugned charges - Here, the bounce charges recovered by the Appellant from their borrower can be construed as the monetary value of the act of the tolerance from the side of Appellant in the case of default by the borrower. Thus, this argument of the Appellant is not tenable. Benefit of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 - HELD THAT:- The bounce charges collected by the Appellant is clearly not on account interest for the delayed payment of the consideration for their supply, but for dishonor of the repayment instruments, such as bouncing of the Cheques issued by the borrowers or the failure of the ECS for non-availability of the sufficient fund in the borrower s account. Further, the Appellant is recovering separate amount at the fixed rate of interest under the head of default interest , as quoted in the loan agreement, on the delayed payment of the EMI by the borrowers - the bounce charges in the present case are not covered in the interest meant for the purpose of the exemption and thereby not entitled for the exemption as claimed by the appellant. Thus, the bounce charges recovered by the Appellant from their borrowers on account of the default of the borrowers, where their repayment instruments get dishonored due to lack of the sufficient fund in their bank account, will attract GST.

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• 2019 (8) TMI 115
  Release of seized goods - E-way bill not provided - Sections 129 and 130 of the Act, 2017 - HELD THAT:- It appears that a notice came to be issued for the confiscation of the goods u/s 130 of the Gujarat Goods and Services Tax Act, 2017, read with the relevant provisions of the Central Goods and Services Tax Act, 2017 and the Goods and Services Tax, Act, 2017. This Court is examining an larger issue as regards Sections 129 and 130 of the Act, 2017. Many writ-applications have been admitted and they have now been posted for final hearing on 7.8.2019. However, as the writ applicants have deposited the amount towards the tax as well as the penalty as reflected at Annexure F at pages 29 and 30, the vehicle, as well as the goods, should be released pending the final outcome of the petition. - Direct service is permitted.

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• 2019 (8) TMI 90
  Levy of GST - Accommodation services - GST on Service Fee / Convenience Fee charged by the applicant - pure agent - Tour Operator Services - Is there any option available to a Tour Operator to either charge GST@ 5% (with no ITC) or charge GST @ 18% (with full ITC)? Whether the applicant is acting as an agent defined under Section 2(5) of the CGST Act, 2017 while booking hotel accommodation in foreign countries for its clients in India? - HELD THAT:- From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of Agent , Supplier and Taxable Person . Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration while booking Hotel Accommodation in foreign countries for its clients in India. Pure Agent - Whether in the case of above mentioned booking of Accommodation only Services, the applicant is acting as a pure agent in respect of amount received for hotel room, while supplying the main taxable service of booking of hotel rooms, for which it gets service fee / convenience fee from Indian B2B or B2C clients? - HELD THAT:- as far as service of hotel accommodation is concerned, the same are supplied by the applicant to their clients on behalf of foreign hotels / hotel aggregators as their agent. Since, the applicant is charging the same amount from their client as is paid by them to the hotel aggregators and all other conditions of pure agent are also satisfied, the value of hotel accommodation cannot be added to value of their main service which is booking of hotel accommodation. Rate of tax on booking of hotel accommodation - HELD THAT:- The consideration for rendering such services is partly received from the Indian clients as service fee / convenience fee and partly received from the foreign Hotel aggregator as target based sales commission. The applicant has not disputed their liability to pay GST @ 18% on all such amounts whether received from the clients or from the Hotel Aggregators. Who is liable to discharge GST liability - whether GST is payable on the amount received by the applicant from the clients as pure agent and is paid by them to the foreign hotel / hotel aggregator - HELD THAT:- in respect of such services, the applicant is covered in the definition of Agent , supplier and Taxable Person under sections 2(5), 2(105) and 2(107) respectively of CGST Act, 2017. Hence, any liability to pay GST on such amount has to be discharged by the applicant. Rate of Tax on tour operators service s - Whether any option is available to the Tour operators to either pay GST @ 5% (with no ITC) or to pay GST @ (with full ITC)? - HELD THAT:- The tour operators services are covered under entry (i) of S. No. 23 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and they are required to pay GST @ 5% (2.5% CGST + SGST) (without ITC) subject to fulfilment of conditions and they are not covered under entry (ii) of the S. No. 23 of the said Notification before 25.01.2018 and entry (iii) of S. No. 23 of the said Notification from 25.01.2018 and hence option to pay GST @ 18% (9% CGST + 9% SGST) (with ITC) is not available to them.

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• 2019 (8) TMI 87
  Filing of TRAN-1 form - transitional credit - transition to GST regime - HELD THAT:- The Court directs the Respondents in the present case also to either open the portal so as to enable the Petitioner to file the TRAN-1 electronically or to accept a manually filed TRAN-1 form on or before 31st August, 2019. The Petitioner s claims thereafter be processed in accordance with law. Petition disposed off.

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• 2019 (8) TMI 86
  Refund of excess payment of tax liabilities - Petitioner points out that on account of the glitches in the system, the Petitioner ended up paying in excess of its tax liabilities leading to an excessive cash outflow of a huge amount which works out to nearly 923 crores - HELD THAT:- The Court directs the Respondents to file an affidavit specific to the above issue not later two weeks from today with an advance copy to the learned counsel for the Petitioner, who may file a response thereto before the next date. List on 7th November, 2019.

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• 2019 (8) TMI 85
  Unable to file TRAN-1 form - transitional credit - transition to GST regime - HELD THAT:- The Court would urge the ITGRC to review the policy it has adopted in such cases, and acknowledge instances like the present one, where the Petitioners are not able to link with the Portal and therefore, the fact of a technical glitch is not able to be accounted for in the system. The Court therefore, directs that the Respondents to either open the Portal to enable the Petitioner to again file the TRAN- 1 Form electronically, failing which they will accept the manually typed TRAN 1 Form on or before 31st August, 2019. The Petitioner s claim shall thereafter be processed in accordance with law.

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• 2019 (8) TMI 84
  Interest on Input tax credit - Recovery without issuing Show cause notice (SCN) and determination of liability - constitutional validity of Section 50(1) of Central Goods and Service Tax (CGST) Act, 2017 and Section 50(1) of the Karnataka Goods and Services Tax, 2017 - HELD THAT:- The issuance of Show Cause notice is sine qua non to proceed with the recovery of interest payable thereon under Section 50 of the Act and penalty leviable under the provisions of the Act or the Rules. Undisputedly, the interest payable under Section 50 of the Act has been determined by the third respondent Authority without issuing Show Cause Notice, which is in breach of principles of natural justice. It is trite law that any order passed by the quasi-judicial authorities in contravention of the principles of natural justice, cannot be sustained. It is ex-facie apparent that action of the third respondent is perverse and illegal and the same deserves to be set aside - petition allowed.

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• 2019 (8) TMI 82
  Right to carrying forward of CENVAT Credit as a transitional credit - Discriminatory action by the respondent no. 3 and 4 in not extending the benefit of Notification No. 31 of 2018 dated 06.08.2018 - benefit of carrying forward of CENVAT Credit as a transitional credit by virtue of enforcement of the Central Goods and Services Tax Act, 2017 - HELD THAT:- While a detailed discussion is present in the representation of the petitioner dated 11.07.2018 at Annexure-2 and a copy of which has been received in the Office of Commissioner on 27.08.2018 as manifest from the copy present at running Page-73 of the pleadings but the substance of the grievance, we have noted above and since the laches is on the part of the Nodal Officer, the respondent no. 5 in not taking necessary steps for disposal of the grievance so raised, that the writ petitioner is before this Court when understandably Mr. Pathy, learned counsel appearing for the petitioner makes an attempt to address the Court on the inter-party merits but considering that the relief prayed in the writ petition would invite a direction in the nature of mandamus, we would allow the concerned respondent authority i.e. respondent no. 5 to address on the issue and take all necessary steps for its disposal in accordance with law with opportunity of hearing to the petitioner or his representative within a period of six weeks of the receipt/production of a copy of this order. Petition disposed off.

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• Income Tax

• 2019 (8) TMI 114
  Rejection of Book u/s 145(3) - cash sale of silver - allegation of providing accommodation entry - AO hold that there was no silver at all and the story of purchase and sale of silver is entirely concocted - HELD THAT:- In the present case the sales of over 30 crores in one case and 40 crores in another being put forth entirely as cash sales had no valid basis in the books of accounts. It was obligatory on the Assessees to satisfactorily account for the creditworthiness, identity and genuineness of the transactions of the so-called providers of such cash to each of them in such huge sums. Plainly this was not forthcoming and the AO rightly therefore disregarded the accounts of both Assessees u/s 145 (3). The satisfaction recorded by the AO in the present cases that the books of account maintained by each Assessee deserved to be rejected cannot, in the circumstances, be said to be perverse. In Kachwala Gems Jaipur v. JCIT [ 2006 (12) TMI 83 - SUPREME COURT] it was held that the AO can reject the assessment u/s 145 (3) if he finds that there are defects in the books of accounts and where bogus purchases are shown by the Assessee in order to reduce gross profit. In the present cases, the discussion of the evidence on record both by the CIT (A) and the ITAT is found to be cryptic and without adverting properly to the facts referred to by the AO. - In the considered view of the Court, the AO rightly rejected the books of accounts of both Assessees and the additions made by him are required to be restored. - revenue appeals allowed

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• 2019 (8) TMI 113
  Registration/approval u/s 12AA/80G - rejected on ground that Trustees of the Respondent have vide power which could be utilized for attainment of the personal benefits of the Trustees or even be commercial in nature - ITAT after examining the issue on merit in details set aside the order of the CIT (E) and directed the grant of registration u/s 12AA as well as approval u/s 80G - ITAT even noted that the CIT (E) had not concluded that the Trust activities were not genuine - HELD THAT:- Learned Senior Standing Counsel for the Revenue, urged that even if the order of the CIT (E) was found unsustainable since it failed to discuss the merits of the application filed by the Respondent, the ITAT ought to have remanded the matter back to the CIT (E) for a fresh determination. The Court finds that the ITAT has taken pains to examine the merits itself and since the facts spoke for themselves, there was no need to again send the matter back to the CIT (E) for a fresh determination. The Court is therefore unable to find any legal infirmity in the impugned order of the ITAT. No substantial question of law arises

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• 2019 (8) TMI 112
  Assessment order passed in non existent entity - assessee contended before the ITAT that company in whose name the assessment was framed had been amalgamated with other company hence assessment order framed in a name of company that had ceased to exist, the assessment was void ab initio. - HELD THAT:- In the present case, HDTS long ceasing to exist at least three years prior thereto, getting amalgamated with HICS and then getting re-named as TMS. The case is squarely covered by the decision of this in Pr. CIT v. Maruti Suzuki [ 2018 (1) TMI 1438 - DELHI HIGH COURT] as well as by the recent judgment of the Supreme Court in Pr. CIT v. Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] . Thus, there is no legal error committed by the ITAT in the impugned order. No substantial question of law arises for consideration.

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• 2019 (8) TMI 111
  Deduction of TDS u/s 194C or 194J - advertisement to Google Facebook - orders passed u/s 201 (1) / 201 (1A) - payments to the agencies for such services provided relating to advertising by creative and production work, media planning etc. - breach of principles of natural justice - it comes out that such material exparte collected by the ITO (TDS) was ever put to the Petitioner before the final orders were passed - AO given detailed observation regarding How Google and facebook ads work for its clients but not provided to the petitioners HELD THAT:- We do not grudge, the ITO (TDS) carrying out such research, devoting time and energy in doing so nor do he find anything objectionable about his final order based on such information which he may from reliable and legitimate sources collect. Nevertheless, none of this would be permissible without following the principles of natural justice. The least that he was expected to do was to share such material with the Petitioner giving an opportunity to rebut the same if so desired by the Petitioner. By suggesting that the Petitioner is already engaged in the same business and therefore would be aware about intrinsic nature services rendered, is begging the question. In plain terms, the impugned orders cannot survive the test of following principles of natural justice. In the result, the orders are quashed only on this ground. Since the declaration of non deduction on payments, which according to the Petitioner had not accrued is in any case small element of the entire amount, we have not expressed any opinion on the same. However, the impugned orders being composite, it would be pointless to split it in two parts, first part for enabling the Petitioner to file Appeal and the other part remanding for fresh consideration. - Petition disposed off accordingly.

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• 2019 (8) TMI 110
  Reopening of assessment u/s 147 - original assessment u/s 143(3) - HELD THAT:- The Tribunal has recorded a finding of fact that there was no good reason for the AO to come to the conclusion that the income had escaped assessment. The finding of fact recorded by the Tribunal is that there was no new tangible material in the hands of the AO at the time of initiating the reassessment proceedings u/s 147 of the Act and at the time of issuing the notice u/s 148. Having regard to the finding of fact recorded by the Appellate Tribunal, we are not inclined to disturb the order. None of the questions as proposed by the Revenue would be termed as substantial question of law involved in this Tax Appeal. - revenue appeal is dismissed

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• 2019 (8) TMI 109
  Disallowance of expenses on consumption and replacement of stores and spares treating the same as revenue expenditure instead of capital expenditure - addition on account of loss on sale of fertilizer bonds treating it as business loss instead of capital loss - disallowance u/s 40(a)(ia) in respect of commission payment to dealers by invoking the provisions of Explanation (I) to section 194(H) of the Act - HELD THAT:- We take notice that the very same substantial questions of law, as proposed by the revenue in the present Tax Appeal fell for the consideration of this Court in [ 2019 (4) TMI 1723 - GUJARAT HIGH COURT] . This Court while answering the first question as regards the disallowance of the expenses on consumption and replacement of stores and spares treating the same as revenue expenditure instead of capital expenditure. So far as the second and third questions are concerned, they are with respect to the deletion of loss on sale of fertilizer bond it was held that same is allowable as business loss. So far as the fourth question as regards the disallowence under section 40(a)(ia) is concerned, while answering the same it was hold that there is no service provided by the dealer to the assessee in the course of buying or selling goods, inasmuch as, the assessee directly sells goods to the dealer and the dealer makes the payment after collecting it from the consumers and, therefore, it is a transaction on principal to principal basis and, therefore, the payment made by the dealer is not liable for any deduction of tax by the assessee company. In view of the aforesaid, none of the proposed questions of law are res-integra. In the result, this Tax Appeal fails and is hereby dismissed.

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• 2019 (8) TMI 108
  Deduction u/s 80IB - not to pay/charge interest on the partners capital and the remuneration - dedctiuon of higher amount - HELD THAT:- The Appellate Tribunal, while dismissing the appeal preferred by the Revenue placed strong reliance on a decision of this Court in the case of Pr. CIT v. Alidhra Taxspin Engineers , [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] wherein it was held that mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. In the result, this Tax Appeal fails and is hereby dismissed.

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• 2019 (8) TMI 107
  Substantial question of Law - addition was revenue neutral - disallowance of depreciation made by AO on enhanced value due to de-merger against original zero cost due to government grant - CIT(A) though upheld the addition but grant deduction u/s 80IC on increased profit due to disallowance - same the fate at ITAT - HELD THAT:- It is interesting that as far as the present appeal by the Revenue is concerned, no issue has been urged regarding the benefit of Section 80IC being available to the Assessee. The only ground urged is regarding the Assessee being allowed to claim depreciation in respect of assets acquired by DSL prior to the demerger from out of the government grants made available to DSL in terms of Central Excise (CE) Tariff Notification. Inasmuch as the Revenue does not question the availability of the benefit of the Section 80IC to the Assessee during the AY in question, as noted by the ITAT, the issue concerning depreciation has been rendered revenue neutral and, therefore, academic. Consequently, while leaving the question raised by the Revenue open for consideration in an appropriate case, the Court sees no reason to interfere with the impugned of the ITAT. No substantial question of law arises.

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• 2019 (8) TMI 106
  Rectification of mistake u/s 154 - in order u/s 154, AO alleged that the assessee claimed the entire capital gain arising from the sale of the two properties as exempt u/s 54 and 54F - assessee contention that both the properties sold are one property being building and land appurtenant thereto but sold to two different purchasers - CIT(A) and Tribunal decided the issue on merit against assessee without disposing objection of being debatable issue hence no order u/s 154 can be passed HELD THAT:- In our considered view, the first issue that should have been taken into consideration is as to whether the power u/s 154 could have been invoked. Admittedly, the power u/s 154 is a power to rectify the mistake and it is not a power to review an order. Furthermore, the power can be invoked to rectify a mistake, which is apparent from the record which undoubtedly would mean that such power cannot be exercised by making roving enquiry into the matter specially where there are disputes raised by the assessee on which a decision requires to be given after considering the submissions. The Hon ble Apex Court in CIT VERSUS SOUTH INDIA BANK LTD. [ 2000 (12) TMI 6 - SUPREME COURT] noted that there was a difference of opinion among the learned Judges of the High Court on the principal question and held that there was a debatable question and cannot be rectified u/s 154. We hold that the Tribunal committed an error in dismissing the appeal filed by the assessee and in the result the appeal is allowed and the substantial question of law are answered in favour of the assessee.

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• 2019 (8) TMI 105
  TDS u/s 194J - part time accountant - writing charges - feeding details in computer - Disallowance u/s 40 a (ia) - Assessee submitted that accountant to whom payment was made was part-time employee and there was no liability to deduct any TDS - HELD THAT:- Section 194 J is applicable to professional. As the person was simply feeding details in computer, he cannot be considered as a professional, and therefore in our considered opinion, section 194 J is not applicable to present facts. Further there do not exist any employee employer relationship between assessee and the person for any other provisions to be applicable. We direct Ld.AO to delete the addition made u/s.40 a (ia) - ground raised by assessee stands allowed Addition of HUF income - AO alleged that there is no separate existence of HUF and clubbed the income - HELD THAT:- For clubbing, there has to be common management, interglacing or interlocking of funds. Ld.AO has not given proper finding in respect of these, before clubbing the income of HUF in the hands of assessee. We therefore set aside the issue to Ld.AO for verifying the same. Assessee should file all relevant details to prove contrary. In the event there are sufficient materials to establish that both are independent business, though working having common address. Ld.AO shall give proper opportunity to assessee as per law. - ground raised by assessee is allowed for statistical purposes Disallowance of f rent paid and depreciation claimed in respect of flat at Mumbai - rent paid to son who is joint owner - HELD THAT:- Ld.AO also categorically observed that assessee is found to be occupying more than one property and therefore annual value of the properties to be treated as deemed let out as per section 23 (4) (b), which has been rightly tax in the hands of assessee. We do not find any infirmity in the view adopted by authorities below and the same is upheld. - ground raised by assessee stands dismissed

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• 2019 (8) TMI 104
  Disallowance u/s 14A - adjustment made while computing Book profits u/s115JB - no exempt income - HELD THAT:- Admittedly, there is no exempt income earned by assessee during years under consideration. Under such circumstances, the ratio that no disallowance can be computed under section 14 A read with Rule 8D, shall apply while computing Book profits u/s115JB. It is observed that this Tribunal in case of Windsor Gardens Private limited vs DCIT, applied same analogy for computing book profit under section 115 JB Explanation 1 Clause (f). Respectfully following same, we direct Ld. AO to delete the addition made on account of disallowance under section 14A while computing book profits. Admission of additional Ground - Issue not arising from impugned order - HELD THAT:- The Additional Ground raised by assessee is in respect of disallowance computed u/s 14A, as there is no exempt income earned during the year. It is observed that assessee raised this issue in an appeal against order passed u/s 154, where addition has been made to the book profits of assessee for years under consideration. As order passed u/s 143(3) by Ld. AO is not before us today. Accordingly, these Additional Grounds though, arising out of assessment proceedings, deserves to be admitted however stands dismissed as not arising out of the order passed by Ld. CIT (A) impugned before us. Disallowance of harvesting transportation charges - non deduction of TDS u/s 194C - assessee paid to the harvester on behalf of farmer and therefore, was not liable to deduct any TDS - no appeal against order of CIT(A) in earlier year on same issue - HELD THAT:- Admittedly, identical issue for assessment year 2011-12 has not been raised by revenue, meaning thereby, view adopted by Ld. CIT (A) stands accepted as on date. It is observed that for year under consideration, Ld.CIT(A) followed the view of his predecessor to allow claim of assessee. We do not find any infirmity in the view adopted by Ld.CIT(A).

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• 2019 (8) TMI 103
  Penalty 271(1)(c) - deduction of interest out of income from other sources - HELD THAT:- The fact of the incurring of expenditure was also supported with the relevant evidences. The disallowance was sustained in the quantum proceedings as the assessee did not succeed in proving how the borrowed funds from Kotak Mahindra Bank were utilized. The nexus was not proved for utilization of money from borrowed funds. The penalty has been imposed as the expenditure claimed was not found to be allowable. We note the observations of the Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Limi ted [ 2010 (3) TMI 80 - SUPREME COURT] that no penalty is justified where all the details of expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue, by itself, would not attract penalty u/s 271(1)(c). We notice that similar circumstances exist in the present case. Guided by the principles laid down by the Hon ble Supreme Court (supra), we find merit for non-applicability of penalty in the absence of any falsity in the particulars furnished. The AO has admitted the claim of interest expenditure to the extent of interest income and therefore one cannot definitely say that interest expenditure was not utilized for the purpose of earning interests. The disallowance of excess expenditure over and above similar income generated, cannot, in our view, invite penal action in the form of penalty. The order of the CIT(A) is accordingly set aside and the AO is directed to delete the penalty.

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• 2019 (8) TMI 102
  Unexplained credits u/s 68 - share application money - non production of admissible evidence during the course of assessment proceedings - CIT-A deleted the addition - HELD THAT:- For the purpose of bringing home the addition u/s. 68, it is necessary that the onus shifted to the AO is required to be discharged by the AO, as the primary onus had already been discharged by the assessee - besides confirming by way of remand report, the AO in the assessment year 2012-13 in the assessment order had again confirmed that after issuance of notices u/s. 133(6), the share applicants, their confirmations, ITRs etc. were examined/verified and kept on record. Nothing has been brought on record by the AO or by the ld. DR before us which shows that the share applications made were not in accordance with law. Therefore, the addition deleted by the CIT(A) is required to be declared void. In fact, AO is bestowed with ample powers u/s. 133(6) as well as section 142(2) - AO should have exercised all his powers at his ends and should have made enquiries and brought on record some cogent material contradicting the confirmations made in the remand report as well as subsequent assessment order for the assessment year 2012-13. Nothing has been brought on record and therefore, we do not find any perversity or illegality in the order passed by the ld. CIT(A). See FAIR FINVEST LTD [ 2012 (12) TMI 170 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2019 (8) TMI 101
  Suppression of profit - hare / stock broker - allegation of obtaining fictitious loss by the assessee company by way of Client Code Modification (CCM) by the brokers in large number of commodity transaction - HELD THAT:- Nothing has been brought on record to establish that the assessee was in collusion with brokers or other parties so as to indulge in the practice of client-code modification with a view to shift the profits. On the facts, onus was on revenue to rebut the assessee s stand by bringing cogent material on record which would prove the nexus of the assessee with the activity of client-code modification. The additions have been made merely on the basis of general observation of the investigation wing. It is trite law that no additions could be made merely on the basis of pure guess work, suspicion, conjectures or surmises. The applicable rules of the stock exchanges permit client-code modification so as to rectify the punching errors within certain time after closing of the trade. Nothing would suggest that the modifications were done in breach of the applicable rules or any punitive action was taken by the stock exchanges against the assessee s broker for violation of the said facility. It is also evident that the percentage of modified trades in terms of value as well as volume was miniscule in comparison to total trades carried out by the assessee with the broker. The onus was on revenue to dislodge the assessee s claim. Except for general observation of investigation wing, there was no minimum adverse material on record against the assessee which would prima-facie prove that loss was fictious and the assessee was in connivance with brokers which warrant the first appellate authority to investigate the matter further. All the transactions were duly reflected in the books, the transactions were through banking channels and the ledger confirmations were placed on record. - Decided against revenue.

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• 2019 (8) TMI 100
  Reopening of assessment u/s 147 - filing of non est return - HELD THAT:- Return filed by the assessee on 22/10/2010 was non-est return and not a valid return in the eyes of law as per Section 139(4) of the Act. In this situation, Clause (a) of Explanation 2 would squarely apply which provide that income would be deemed to have escaped assessment in case no return was furnished by the assessee although his income exceeded the maximum amount which is not chargeable to income tax. Taking cognizance of the return filed by the assessee on 22/10/2010, we find that the income was disclosed by the assessee as capital gains as against the observation of AO that the income was to be assessed as undisclosed income which would attract higher rate of tax. Therefore, this situation would also lead us to same conclusion that there was escapement of income in terms of statutory provisions of Section 147. No arguments have been advanced in respect of ground no. 1(ii). Therefore, finding no substance in the legal pleadings, we hold that reassessment proceedings were validly initiated against the assessee and the order of Ld. first appellate authority, in this regard, would not require any interference. In result, Ground No. 1 stands dismissed. Addition of notional rental income from two flats situated at Mumbai - adoption of deemed rent as per Municipal Rateable value - HELD THAT:- The issue is recurring in nature. The same has already been delved into by the co-ordinate bench of this Tribunal in assessee s own case [ 2018 (5) TMI 1817 - ITAT MUMBAI] wherein relying upon the decision in CIT V/s Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] directed Ld. AO to adopt the deemed rent as per Municipal Rateable value and assess the income accordingly. Ground No.2 stands partly allowed. Capital Gains - sale of painting - AO alleged that PAN of M/s Art Musings was not valid - HELD THAT:- It appears that the PAN has inadvertently been mentioned in the confirmation of account as AAAFA5038D which has led Ld. AO to doubt the genuineness of the transactions. There was no other reason to doubt the genuineness of the transaction. Nothing adverse is available on record. Therefore, since the evidence on record in the shape of confirmation of account, assessee s bank statement, details of PAN etc. has been placed on record and the same corroborates each other, there could no occasion now to doubt the genuineness of the transactions. Therefore, we hold that sale of painting to the extent of 38 Lacs has rightly been offered under the head Capital Gains. The ground of assessee s appeal stands allowed to that extent. So far as the balance addition AR has pleaded for restoration of matter back to the file of Ld. AO to place on record sufficient documentary evidences in support of the claim, as done by the Tribunal in earlier years. Concurring with the same, the matter stands remitted back to the file of Ld. AO with a direction to the assessee to substantiate his claim, in this regard.

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• 2019 (8) TMI 99
  Charging of fee u/s 234E - intimation u/s 200A for the default in furnishing e-TDS statement for the period prior to 1st June, 2015 - difference of opinion between different High Courts - AR relied Judgment of Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] which had laid down a clear proposition that the amendment to section 200A w.e.f. 1-6-2015 has prospective effect and is not applicable for the period of respective assessment years prior to 1-6- 2015. - whereas DR relied on Gujarat High Court in the case of Rajesh Kourani v. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] which held that it was always open for the Revenue to charge fees in terms of section 234E since, the returns of TDS were filed after 2016 and were processed after 2016 when there was enabling provision in section 200A for levying late fees u/s 234E HELD THAT:- We therefore find that though there has been a delay in filing of TDS returns, however, in all these cases, the TDS return has been filed and processed much before 1.6.2015 and none of the three cases involved a case of continuing default where the assessee has defaulted in furnishing the TDS statement even after 01.06.2015. In view of the settled law that where there is difference of opinion between different High Courts on an issue, then the one in favour of assessee needs to be followed as held by the Hon ble Supreme Court in Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] . In the absence of any decision by the jurisdictional High Court, the decision of the Hon ble Karnataka High Court supports the case of the assessee. In light of above discussion and in the entirety of facts and circumstances of the case, there is no basis for levy of fees u/s 234E and the same is hereby directed to be deleted in all three cases - appeals allowed

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• 2019 (8) TMI 98
  Reassessment proceedings u/s.147 - undisclosed sales - AO on information from the Joint Commissioner of Sales-tax, Economic Intelligence, Mumbai, alleged that assessee had collected sales tax @16% and showed only 4% to the Income-tax authorities, which lead to escapement of income - as per assessee no sales tax was collected - HELD THAT:- Here, we are confronted with a situation in which the assessee did not collect any Sales-tax at all and the entire exercise of showing inter-State sales instead of within State sales was aimed at increasing the balance of eligibility as per certificate which simply entitled it to make sales without charging any Sales-tax. Thus, it is established that the action of the assessee in resorting to such dubious means simply affected his liability under the Sales-tax Act without increasing the income chargeable to income-tax. Since no income escaped assessment by reason of the assessee showing sales made in Maharashtra as inter-State sales, we are satisfied that the ld. CIT(A) was justified in quashing initiation of reassessment proceedings. As the initiation of reassessment proceedings is held to be invalid, the sequitur is that the proceedings flowing there from should automatically stand cancelled including the additions so made by the AO. - Decided in favour of assessee.

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• Customs

• 2019 (8) TMI 97
  Continuation of proceedings against the legal heirs of a deceased - Realization of government dues owed by five concerns/firms of which the Petitioner s deceased father was either a proprietor or a partner - HELD THAT:- The issue in Shabina Abraham v. Collector of Central Excise and Customs [ 2015 (7) TMI 1036 - SUPREME COURT ] was whether a show-cause notice under the Central Excise and Salt Tax Act, 1944 could be issued to the legal heirs of a sole proprietor after his death, against whom a show-cause notice had been issued raising a demand of excise duty. The Supreme Court agreed with the Appellant in the abovementioned case that there was no machinery provision under the CE Act which enabled the continuation of such proceedings against the legal heirs of a deceased Assessee. In the present case also, no machinery provision in the Customs Act, 1962 has been brought to the notice of this Court which enables the Customs Department to proceed against the legal heirs of a deceased notice/assessee against whom there may be proceedings for recovery of customs duty. Petition allowed - decided in favor of petitioner.

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• 2019 (8) TMI 96
  Valuation of imported goods - contemporaneous bill of entry - qualitative difference - Base Oil SN-500 - to be valued at declared price of US $ 400 PMT as against the departments claim of US $ 450 PMT as per NIDB data? - HELD THAT:- There is no dispute on the fact that the appellant have imported 4000 MTs of base oil and the price on the basis of NIDB data applied is for not more than 500 MTs. It is also observed that the lower authority have not gone into the quality parameter of the goods imported by the appellant and the goods involved in the contemporaneous bill of entry, therefore, due to the higher quantity imported by the appellant, the NIDB data of meagre quantity cannot be applied. It is clear that for applying the NIDB data quantity of the import should be same - on the basis of contemporaneous import the value cannot be enhanced in the present case - appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 77
  Refund of Interest paid settled amount of 50% of duty forgone - EPCG scheme - failure or delay in fulfilling the condition the export obligation - Extension was granted with a condition that 50% of the duty payable in proportion to the unfulfilled export obligation is paid by the authorization holder to Customs authorities before an endorsement for extension is made on EPCG by RA concerned. - Section 28 of Customs Act, 1962 - HELD THAT:- This is not the duty under Section 28 of the Customs Act, 1962 which is paid by the appellant because the final duty is yet to be assessed after verifying the document furnished by the appellant regarding the fulfillment of export obligation. Further, the Customs authorities should have sought clarification from the DGFT authorities but the same has not been done and interest was demanded for not fulfilling the obligation, which is contrary to the Policy. Also, there is no mention in the Policy that this composition fee which is paid as a duty is to be paid along with interest. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 68
  100% EOU - Benefit of N/N. 52/2003-cus - Violation of import conditions - latching system - case of Revenue is that permission stands granted only to parts used in motor vehicles and not to latching system - HELD THAT:- On going through the said letter dated 09/05/2011 we note that the same is not a fresh LOP issued by the Development Commissioner and the same is to the effect that the item lashing belts system stands included in the earlier LOP dated 27/09/2000 which is modified to that extent. Inasmuch as it is a modification of the earlier LOP, we are of the view that the same has to be held as a clarificatory amendment by the Development Commissioner in which case the Revenue s objection would get over ruled. Time Limitation - HELD THAT:- Inasmuch as the issue is a bona fide issue of interpretation of provisions of the Notification, in the absence of contrary evidence reflecting upon any mala fide on the part of the appellant, the extended period was not available to the Revenue. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 66
  Condonation of delay of forty six days in filing these appeals - HELD THAT:- The reason for the delay being genuine as also the delay not being too high, the same is condoned. The Miscellaneous Applications for condonation of delay are allowed. List the appeals for hearing in normal course.

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• Corporate Laws

• 2019 (8) TMI 79
  Maintainability of petition - dispute regarding oppression and management of Producer company - Fraud, misfeasance and misconduct against management towards the Company and its affairs - Producer Company - distinct entity - recovery of misappropriated funds of the Company which comprised of the hard earned money of the innocent agriculturist members - HELD THAT:- The provisions of Sections 241-242 of the Companies Act, 2013 cannot be invoked for settlement of disputes regarding oppression and mismanagement of a Producer Company . Such disputes would continue to be resolved through conciliation or arbitration. The Tribunal appears to have narrowed down the definition of dispute for purpose of Section 581ZO by misinterpreting the explanation which only seeks to include certain types of disputes within the ambit of dispute as defined in the aforesaid provision. The explanation cannot be read in a manner so as to restrict the meaning of dispute as contemplated under the Section in the context of objects of the Producer Company and its being treated as a class apart. Also taking notice of the fact that the Tribunal has proceeded to return a finding that the dispute alleged in the Company Petition does not fall under the explanation of dispute thereby usurping the jurisdiction vested in the Arbitrator under Section 581ZO (2) of the Act, the impugned order cannot be sustained and is liable to be set aside. The impugned order suffers from legal infirmity and is unsustainable - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 69
  Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per the Financial Creditor the account of the Corporate Debtor was declared as Non-Performing Asset (NPA) with effect from 1st December, 2015. The Corporate Debtor having defaulted, the Financial Creditor issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) on 24th April, 2017. Inspite of that payment having not made, action was taken under Section 13(4) of the SARFAESI Act, 2002 on 27th July, 2017. The Appellant has not disputed that the Corporate Debtor defaulted in paying the debt (loan amount). The only ground is taken is about the dispute relating to quantum of payment - even if the loan amount is disputed as we find that the amount is more than Rupees One Lakh (in present case more than 75 Crore), we hold that the application under Section 7 was rightly admitted by the Adjudicating Authority. Appeal dismissed.

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• PMLA

• 2019 (8) TMI 72
  Allotment of Mining Lease - criminal conspiracy - scheduled offences - cheating and criminal misconduct by abusing official position of Late Dr. Y.S. Rajsekhara Reddy, the then Chief Minister of Andhra Pradesh, punishable under Section 120-B read with Section 420 of the Indian Penal Code, 1860 and Sections 9, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - main allegations in the charge-sheet as well as the provisional attachment orders are for allotment of mining lease granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that Y. S. Jagan Mohan Reddy, in a criminal conspiracy with certain public officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. ( BCCL then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions - proceeds of crime. HELD THAT:- It is an admitted position by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer. It is the admitted fact that the investment made by the various entities/ companies was a bona fide investment in the Appellant Company. Upon transfer of the shares of the various companies/ entities to PARFICIM, France, they made a substantial gain on investment by way of a bona fide, unchallenged and arm s length sale of shares to a third party, viz., PARFICIM, France, against which no allegations of any nature have been made. There was a substantial profit to each of the investors, which profit was based on a third party purchase, which transaction has clearly passed the scrutiny of the Respondent itself and the Reserve Bank of India without any shadow of doubt - There are no findings against the majority shareholder of the Appellant concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI. It is also a matter of fact that despite of change of various Governments in the State by rival political parties, the lease has not been cancelled, rather licensing fee has been accepted without any protest. There are also no allegations that some advantage is taken by BCCL by which the State Government has lost revenue. In the impugned order, replies filed by all the appellants have not been discussed and dealt with. The Adjudicating Authority is duty bound to deal with each and every plea raised by the aggrieved party legally. The same cannot be ignored, otherwise, the order is not sustainable and liable to be set-aside. In view of allegations in the charge-sheet filed by CBI and observation made in preceding paras, this Tribunal is of the view that it is appropriate to strike the balance at present, in order to secure the said amount by way of furnishing the Bank Guarantee instead of appropriating FDs - the huge amount cannot be stalled in the facts and circumstances of the present case, hence, the impugned order is modified about the attachment of 192 crores, instead of releasing the said amount to the appellants. Appeal allowed in part.

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• Service Tax

• 2019 (8) TMI 81
  Maintainability of appeal - time limitation - Section 85 of the Finance Act, 1994 - appeal dismissed on the ground that it was not filed within the period of limitation, and that there was no power to condone delay caused in filing the appeal - HELD THAT:- No case is made out as urged by Mrs. Wandile, learned Counsel for petitioner on the basis of Clause A.3 in paragraph no.31 of the Full Bench of the Gujarat High Court, since the appeal was preferred beyond the period of limitation, and there was no power to condone the delay caused in filing the appeal. Petition dismissed.

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• 2019 (8) TMI 80
  Valuation - security services - manpower supply services - deduction towards contribution towards EPF, ESI, salary and wages - Non-payment of service tax - in addition, appellant have collected service tax on exempted services from their clients, various educational institute, but failed to deposit the same in the government exchequer - negative list regime - deduction of contribution towards EPF, ESI, salary and wages - section 67 of FA - HELD THAT:- The appellant is engaged in providing the services of manpower recruitment and supply services which has been brought into service tax net with effect from 2.7.1997 vide Section 85(68) read with 65(105)(k) of the Act - It is on record that the appellant has provided the services of manpower supply and security agency to various educational institutes and has been collected service tax during the relevant period i.e. from 2009 to Feb. 2014. The appellant has agreed to the fact that they have not deposited the service tax collected from the educational institute which was not required to be collected in terms of the exemption notification. The demand confirmed by the impugned order is required to be re-quantified after giving abatement towards the salary and wages and the contribution made towards EPF and ESI - the entire amount of the duty of service tax collected is required to be deposited with service tax, department which appears to have been done in terms of the submissions made on behalf of the appellant - penalty not justified. Appeal allowed by way of remand.

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• 2019 (8) TMI 78
  Refund of service tax - unjust enrichment - case of appellant is that the Doctrine of Unjust Enrichment is not applicable in the present case because they have not passed on the incidence of service tax to the service recipient - HELD THAT:- The Commissioner (A) has observed that the original authority has verified the books of accounts and all the documents relating to building contracts and has found that the appellant has collected the service tax from their clients. In view of this categorical finding of the Commissioner (A) that incidence of service tax has been passed on to the service recipient, it can be held that the present claim is hit by Doctrine of Unjust Enrichment. Refund cannot be allowed - Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 70
  CENVAT Credit - inputs/capital goods - angles, shapes, sections and channels etc., used for erection of Unipoles /hoardings which are fixed to the earth and on which the appellant/assessee displays advertisement - assessee renders advertisement services - case of Department is that these are not goods - HELD THAT:- The issue is no longer res integra. It has been held by the jurisdictional High Court of Andhra Pradesh in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] that steel and cement used in erecting structures which were in turn used for rendering services are eligible inputs for availing Cenvat credit. Also it is only with effect from 07.07.2009 cement, angles, channels, CTD bars and TMT bars etc., have been excluded from the definition of inputs under Rule 2(k). Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 63
  Prayer for withdrawal of appeal - monetary amount involved in the appeal - instructions dated 11.07.2018 issued by the CBEC - HELD THAT:- The appeal filed by the Revenue is dismissed as withdrawn.

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• Central Excise

• 2019 (8) TMI 95
  CENVAT Credit - input services - outward freight - period in which credit availed in dispute - HELD THAT:- From the very beginning the stand of the appellant is that the service tax paid pertains to the period from April 2007 to March 2008 but they have availed the credit in the month of November 2008. This fact has been shown in ST-3 returns for the period September 2008 to March 2009 and the challans under which the service tax was paid also mention the period to which the said service tax pertains to. Besides this, the appellant has also filed the Chartered Accountant certificate before me to prove that the cenvat credit pertains to GTA relates to period April 2007 to March 2008 and prior to April 2008. As the appellant has proved by way of documentary evidence and the certificate of the Chartered Accountant that the cenvat credit of service tax paid on GTA pertains to the period April 2007 to March 2008, therefore, the appellants are entitled to take the cenvat credit of the same and there is no irregularity in availing the cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 89
  Penalty u/s 11AC - Whether the penalty under Section 11AC which is mandatory in nature can be reduced or waived by the Hon ble CESTAT? - Ld. Counsel for the respondent has not filed counter affidavit in two weeks. Rather Ld. Counsel for the respondent is seeking four weeks time today to file counter affidavit. HELD THAT:- Strictly last chance is given to file counter affidavit within two weeks. If counter affidavit is not filed within two weeks, further opportunity to file counter affidavit stands declined and the matter be listed before the Hon ble Court, as per rules. If counter affidavit is filed within two weeks, Ld. Counsel for the petitioner may file rejoinder affidavit, if any, within two weeks thereafter in terms of order dated 1.4.2019 mentioned above and the matter be processed for listing before the Hon ble Court, as per Supreme Court Rules, 2013.

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• 2019 (8) TMI 88
  Admissibility of rectification application - case of appellant is that rectification application is decided without any opportunity of hearing to the appellant - HELD THAT:- As the limited prayer made by the learned advocate for the appellant is that, rectification application is decided without any opportunity of hearing to the appellant, we are entertaining this appeal. No doubt, scope of rectification application would be limited. However, it would be against the principles of natural justice to reject the said application without affording an opportunity to the party. We set aside the order dated 20th December, 2018 in the rectification application filed by the appellant and remit the matter back to the Tribunal to decide the rectification application afresh after hearing all the parties concerned. Appeal allowed by way of remand.

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• 2019 (8) TMI 83
  Recovery during pendency of litigation - case of petitioner is that Section 35 of CE Act has been amended on and with effect from 06.08.2014 and post amendment, the concept of seeking stay of the order under challenge before CESTAT was done away with - HELD THAT:- As the SOD dated 04.07.2018 bearing reference No.06/2018-CE(ADC) has been referred to separately, but in conjunction with five orders in original, there is lack of clarity as to whether this SOD refers to these five orders in original or is independent of the same - with regard to amendment to Section 35 of CE Act, on and with effect from 06.08.2014, the aforesaid circular dated 16.09.2014 and paragraph 20.2 of the said circular (extracted and reproduced supra), there is no disputation. To the extent that the impugned communication calls for submission of documents pertaining to the aforesaid five orders in appeal, it is clearly in breach of the obtaining position, where the matter is pending before CESTAT - this Court deems it appropriate to set aside the impugned communication insofar as it relates to five orders in appeal, all dated 08.03.2018, made in Order in Appeal Nos.47/2018 SLM-CEX, 48/2018 SLM-CEX, 49/2018 SLMCEX, 50/2018 SLM-CEX and 51/2018 SLM-CEX, preserving the rights of the respondent to issue communication afresh, if any SOD or other documents are required with regard to periods not covered by the aforesaid five orders which are now pending before CESTAT. Petition allowed in part.

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• 2019 (8) TMI 76
  Default in payment of duty - vires of Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- The Division Bench of Delhi Tribunal in the case of GEI Industrial System Ltd. [ 2016 (11) TMI 227 - CESTAT NEW DELHI ] after considering the various decisions of the High Courts and also the fact that the Supreme Court has granted a Stay Order in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ], has come to the conclusion that the ratio adopted by the various High Courts and by the Tribunal in similar set of facts is still binding and has allowed the appeal of the assessee. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 75
  Refund claim - duty paid under protest - period from August 2009 to June 2011 - HELD THAT:- The Commissioner (Appeals) has given detailed reasons for allowing the refund claim of 47,29,610/- - further, as per the Circular dated 10.03.2017, the Department is under obligation to refund the amount even when the appeal is pending and no stay is granted by the higher courts. Refund allowed - appeal dismissed - decided against Revenue.

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• 2019 (8) TMI 74
  CENVAT Credit - duty paying documents - rejection on the ground that the invoices are in the name of head office whereas the CENVAT credit pertains to their Unit at Ramdurg - HELD THAT:- It is found from the invoices that it is mentioned in the invoices name of the appellant and the reference of the Unit pertaining to which the said credit on input service pertains. Though, the address of the head office is mentioned in the invoice but the reference of the Unit to which it pertains is also mentioned. Tribunal in the case of Kemwell Biopharma Pvt. Ltd. [ 2016 (6) TMI 229 - CESTAT BANGALORE ] in an identical issue has held that CENVAT credit cannot be denied with regard to Service Tax paid on the invoice issued to the head office rather than the factory which has actually utilized the services so long as the input services are received and utilized by the appellant, this at best can only be termed as procedural violation which is not fatal to the right of the appellant - Thus, CENVAT credit cannot be denied on the ground that the invoices issued in the name of the head office. CENVAT credit - denial on account of nexus of raw material with finished goods - HELD THAT:- The credit has been availed on the material used for cladding of equipment/pipes which fall under the category of repair and maintenance of manufacturing equipment and is integrally connected with the manufacturing process - credit allowed. CENVAT credit on remaining items - HELD THAT:- The appellant did not contest that in the present appeal but he has confined his CENVAT credit only for an amount of 4,15,642/- and 1,15,259/- and with regard to the other credit, he has already reversed and he had also proved on record that he has not utilized the same but he has only availed and therefore he is not liable to pay the interest and the penalty. Appeal allowed in part.

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• 2019 (8) TMI 73
  Refund of appropriated amount - Amount was recovered against CENVAT credit, but finally the demand was set aside - case of Revenue is that since the appellant has not challenged the appropriation and there was no direction in the remand order for sanctioning and returning the refund amount therefore that appropriation has become final and the appellant cannot claim the refund of the same - HELD THAT:- Once the demand has been set aside on merits then the amount appropriated by the original authority at the stage when the appeal of the appellant was pending before the Commissioner is not tenable in law - Further, once the demand has been set aside, the amount appropriated by the Department is liable to be refunded to the appellants and there is no justification for retaining the said amount by the Department - Further, when unlawful demand has been set aside, the Department does not have any authority to retain the amount appropriated towards the said unlawful demand. The decision of the Tribunal in the case of ISPAT TRADERS VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR [ 2010 (9) TMI 346 - CESTAT, AHMEDABAD] is very much applicable in the present case wherein the Tribunal has held that appropriation of the amount out of the refund amount payable in cash towards the demand confirmed in the said Order-in-Original is only a pre-deposit and once the said Order-in-Original has been set aside by the first Appellate Authority, the adjudicating authority in all fairness ought to have sanctioned the refund of the amount appropriated. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 71
  Clandestine removal - MS Ingots - period from January, 2008 to February, 2008 - issuance of two SCN for two different periods - HELD THAT:- The learned Commissioner (Appeals) had not categorically recorded the findings that the 506 MTs alleged to have been cleared clandestinely for the period February and March, 2008 was also subject matter of the dispute in the earlier show-cause notice. Also, the learned Advocate for the respondent could not produce any evidence or worksheet to show that the demand relating to 506 MTs of MS Ingots was also included in the show-cause notice dated 9.5.2008. To ascertain the said facts, we remand the matter to the adjudicating authority, who would consider whether the demand relating to 506 MTs for the period February to March, 2008 were also included in the total quantity alleged to have been cleared in the first show-cause notice dated 9.5.2008. Appeal allowed by way of remand.

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• 2019 (8) TMI 67
  Prayer for withdrawal of appeal - monetary amount involved in the appeal - HELD THAT:- The amount involved in the present appeal is below the monetary limit and as per CBEC Instruction in their Board s Instruction F. No.390/Misc./116/2017-JC dated 11.7.2018, this appeal should not have been filed before the Tribunal. Appeal dismissed.

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• 2019 (8) TMI 65
  Interest on delayed refund in terms of Rule 7(5) of the Central Excise Rules, 2002 - finalization of the provisional assessments - HELD THAT:- If any amounts are to be refunded as per the order of finalization of provisional assessment, the same should be refunded along with interest from the first day of the month succeeding the month for which such refund is determined till the date of the refund at a rate which is as prescribed as per the Notification issued under Section 11BB of Central Excise Act, 1944 - The ground taken by Commissioner(Appeals) cannot be justified because here the adjudication proceedings are for finalization of provisional assessment, which is a separate realm governed by Rule 7 of the Central Excise Rules. Interest is either by way of operation of contract or by way of operation of law. When it is by way of operation of law, needs to be paid as per the provisions stated in law, which in this case is Rule 7(5) - the three appeals need to be allowed to the extent of interest that needs to be determined under Rule 7(5) and paid to the appellants - appeal allowed.

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• 2019 (8) TMI 64
  Classification of manufactured goods - FIBC woven fabrics / cut pieces made of Polypropylene (PP) granules - classified under CETH 54072090 or under CETH 39269080? - HELD THAT:- It has to be kept in mind that the impugned goods are not plastic PP bags but only FIBC woven fabrics / cut pieces. There is no infirmity in the order of the lower appellate authority holding that the impugned goods are correctly classifiable under CETH 5407 2090 and not under CETH 3926 9080. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 94
  Validity of ex-parte assessment order - Jurisdiction of Officers to proceed with the assessment - KVAT Act - period 2012-2013 - HELD THAT:- The jurisdiction of the officers to proceed with the reassessment relating to the tax period 2012-2013 was not clear amongst the concerned authorities. The ex-parte re-assessment order now impugned certainly deserves to be set aside for the reason that assessee had appeared before DCCT (Audit)-5.2, Bengaluru, pursuant to the re-assessment notice issued by the said authority relating to the tax period in question, if that be the position, the DCCT (Audit)-5.2 ought to have transferred the proceedings initiated by him to the competent authority, assigned with the jurisdiction. That having not been done, the petitioner is made to suffer. This Court deems it appropriate to set aside the order impugned at Annexure-E dated 20.02.2018 as well as the Demand Notice at Annexure-F dated 03.10.2018 relating to the tax period 2012-2013 and remit the proceedings to the respondent No.2 DCCT(Audit)-5.5, Bengaluru, to redo the assessment after providing an opportunity of hearing to the petitioner - petition disposed off.

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• 2019 (8) TMI 93
  Rectification of mistake - error apparent on the face of record - non-speaking order - not taken note of the contentions/details adverted to while making an order u/s 66 - HELD THAT:- To find out whether rectification is really warranted on Ext.P2, this Court even for the limited purpose of judicial review undertake such enquiry. But having been satisfied that the jurisdiction vested in first respondent by Section 66 of the Act is not properly exercised, Ext.P4 is set aside and matter remitted to first respondent for disposal in accordance with law. The petitioner appears before the Officer on 07.08.2019. The Officer either on the date so appointed or any date fixed for this purpose considers the request for rectification and passes final orders not beyond 31.08.2019 - Petition disposed off.

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• 2019 (8) TMI 92
  Concessional rate of tax - C-Forms - inter-state purchases of High Speed Diesel Oil - HELD THAT:- The issue decided in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where this Court allowed the writ petitions filed by the assessees and directed the Revenue to permit the petitioners assessees to download C forms. Petition allowed.

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• Indian Laws

• 2019 (8) TMI 91
  Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - grant of interim compensation but percentage reduced - Whether Section 143A of the Act is retrospective in operation or prospective - HELD THAT:- In case an accused, against whom an order to pay interim compensation under Section 143A of the Act is passed, fails or is unable to pay the amount of interim compensation, the process under Section 421 can be taken resort to which may inter alia result in coercive action of recovery of the amount of interim compensation as if the amount represented the arrears of land revenue. The extent and rigor of the procedure prescribed for such recovery may vary from State to State but invariably, such procedure may visit the person concerned with coercive methods - In the present case, the Complaint was lodged in the year 2016 that is to say, the act constituting an offence had occurred by 2016 whereas, the concerned provision viz. Section 143A of the Act was inserted in the statute book with effect from 01.09.2018. Whether Section 143A of the Act is retrospective in operation and can be invoked in cases where the offences punishable under Section 138 of the Act were committed much prior to the introduction of Section 143A? - HELD THAT:- The provisions contained in Section 143A have two dimensions. First, the Section creates a liability in that an accused can be ordered to pay over upto 20% of the cheque amount to the complainant. Such an order can be passed while the complaint is not yet adjudicated upon and the guilt of the accused has not yet been determined. Secondly, it makes available the machinery for recovery, as if the interim compensation were arrears of land revenue - Thus, it not only creates a new disability or an obligation but also exposes the accused to coercive methods of recovery of such interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue. The coercive methods could also, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, in some cases result in arrest and detention of the accused. The applicability of Section 143A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143A, in order to force an accused to pay such interim compensation - Section 143A to be prospective in operation and that the provisions of said Section 143A can be applied or invoked only in cases where the offence under Section 138 of the Act was committed after the introduction of said Section 143A in the statute book. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 62
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- On a perusal of Ext.P1 cheque, it is seen that the name Kousthubhan (the name of the accused) was initially written as the name of the payee. It is seen that the name of the payee written as Kousthubhan is struck off and the name of the complainant is written in the cheque as the payee - Therefore, it is evident that there was alteration made in the cheque with regard to the name of the payee. The question is whether it is a material alteration or not. Alteration of the payee s name in a cheque is material which affects the character of the instrument, and so also the relationship of the parties and their legal position as originally expressed. Therefore, it has to be concluded that material alteration of Ext.P1 cheque was effected with regard to the name of the payee. The party who consents to the alteration as well as the party who made the alteration are not entitled to complain against such alteration. If the drawer of the cheque himself altered the cheque, he cannot take advantage of it later by saying that the cheque became void as there is material alteration thereto. Even if the payee or the holder of the cheque made the alteration with the consent of the drawer thereof, such alteration also cannot be used as a ground to resist the right of the payee or the holder thereof. It is always a question of fact whether the alteration was made by the drawer himself or whether it was made with the consent of the drawer. It requires evidence to prove the aforesaid question whenever it is disputed. Whether material alteration of the cheque was made by the accused himself or with his consent? - HELD THAT:- Ext.P1 is a cheque which was subjected to material alteration and that the complainant failed to prove that material alteration of the cheque was done or made by the accused himself or with his consent. The plea of the accused is also not probable. He did not even give any intimation to the bank regarding the loss of the cheque. According to him, the cheque was lost from the possession of his friend Babu. The accused did not examine his friend Babu. Therefore, the plea raised by the accused regarding the circumstances under which the cheque left his possession cannot be accepted as probable or convincing - in view of the material alteration of the cheque, non-acceptance of the plea of the accused, does not inure to the advantage of the complainant. The weakness of the plea of the accused does not come to the rescue of the complainant. Material alteration of the cheque, without the consent of the drawer, makes the instrument void and no criminal action would lie on the basis of such an instrument. There are no compelling grounds to reverse the order of acquittal passed by the trial court - appeal dismissed.

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