TMI Tax Updates - e-Newsletter
August 30, 2018

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

Articles

1. GST AAR ruling in the Columbia Asia judgment - needs reconsideration!

   By: pranav deshpande

News

1. 99.3% of junked ₹ 500, ₹ 1,000 notes returned to banks: RBI

2. Cabinet approves Trade Cooperation Framework between India and Rwanda

3. Cabinet approves Memorandum of Understanding between India and USA in insurance regulatory sector

4. Cabinet approves additional 2 percent Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1st July, 2018

5. Invitation for comments on LEGALLY BINDING INSTRUMENT (LBI) ON TRANSNATIONAL CORPORATIONS (TNCS) AND OTHER BUSINESS ENTERPRISES

6. In order to review the relief and rehabilitation measures being undertaken by the Banks and Insurance Companies in the State of Keralain view of the large scale devastation caused by the recent floods in the State, a High Level Delegation led by the Minister of State(Finance), Pon. Radhakrishnan will visit Kerala today

7. Government of India and the World Bank sign $300 Million Agreement to help scale-up India’s Energy Efficiency Program

8. The Government of India, Government of Rajasthan and World Bank sign a $250 Million Agreement to Support Electricity Distribution Sector Reforms in Rajasthan

9. Extension of date for filing of Income Tax Returns for taxpayers in Kerala

Notifications

DGFT

1. 31/2015-2020 - dated 29-8-2018 - FTP

Withdrawal of Notification No.15 dated 02.07.2018 regarding amendment in import policy of Peas under Chapter 7 of the ITC (HS) 2017, Schedule -I (Import Policy)

2. 30/2015-2020 - dated 28-8-2018 - FTP

Corrigendum to Notification No. 25/ 2015-2020 dated 17th August, 2018

3. 29/2015-2020 - dated 28-8-2018 - FTP

Export Policy of Bio-fuels

GST - States

4. G.O.Ms.No. 442 - dated 21-8-2018 - Andhra Pradesh SGST

Amendments in the Notification issued vide G.O.Ms.No.588, Revenue (Commercial Taxes-II) Department, dated. 12th December, 2017.

5. 35/2018 - State Tax - dated 21-8-2018 - Gujarat SGST

EXTENSION FOR GSTR-3B On or Before 24th August 2018

6. I-L / 2018 - dated 21-8-2018 - Karnataka SGST

Seeks to extend the due date for filing of FORM GSTR-3B for the month of July, 2018

7. ERTS (T) 18/2018/9 - dated 10-8-2018 - Meghalaya SGST

Re-constitute the Authority for Advance Ruling for the State of Meghalaya

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/242/2018/ITA.ll - dated 28-8-2018

Extension of date of filing Income Tax Return in case of assessees in Kerala State

Highlights / Catch Notes

Income Tax

• Income Tax Authorities Affirm Respondent Bank's Status as Scheduled Bank, Allowing Bad Debt Deduction u/s 36(1)(viia)(a.

  Case-Laws - HC : Bad debts - CIT(A) and Tribunal concurrently held that the respondent bank would also be a scheduled bank and consequently allowed the bad debts u/s 36(1)(viia)(a) of the Act. Such being the position, we find no error in the view.
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• Late Fee u/s 234E Not Applicable for First Quarter of Assessment Year 2016-2017 Due to Timing of Amendment.

  Case-Laws - AT : Levy of late fee u/s. 234E - delay in filing of TDS statement - case of the assessee does not fall under the purview of amendment as the first quarter for the assessment year 2016-2017 ends on 30.06.2015 and the amendment is effective from 01.06.2015.
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• Court Upholds Commission Payments as Genuine; No Tax Additions Due to Lack of Evidence Against Transactions.

  Case-Laws - AT : Disallowance towards commission expenditure - The payments in commission are made on a monthly/periodical basis based on the clearing of the bills of the assessee pursuant to periodical invoices raised by those commission agents - payments are made by a/c payee cheques - no iota of evidence to suspect the genuineness of these transactions - No additions.
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• Revision Upheld: Assessing Officer's Lack of Enquiry into "Suspense Account" Justifies Action u/s 263.

  Case-Laws - AT : Revision u/s 263 - case of “no enquiry” - admittedly Assessing Officer at assessment stage has not verified amount shown under “suspense account”. It is very apparent that Assessing Officer has not verified its sources and mode of deposit - revision proceedings upheld.
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• Intangible assets depreciation granted in 2005-06 cannot be contested in subsequent years 2006-07 and 2007-08.

  Case-Laws - AT : Depreciation on intangible assets - The above issue could be raised in the AY 2005-06 when the assets entered into the block. Once the assets became part of a block of assets in AY 2005-06, and depreciation is granted on that block, the issue cannot be agitated in the AYs 2006-07 and 2007-08
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• Closely Held Company Loses Tax Benefits Due to Significant Shareholding Change u/s 79 of the Income Tax Act.

  Case-Laws - AT : Carry forward and set off of losses - the status of the company was “closely held company”, i. e. , a company in which public is not substantially interested, when the change in shareholding took place. - Since there is a change in shareholding exceeding 49%, the assessee company is not entitled to set off brought forward losses u/s 79.
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Customs

• Customs Duty Refund Granted After Reconsideration of FOB Price as Cum-Duty Price Despite Initial Denial.

  Case-Laws - AT : Refund of Customs Duty paid in excess - denial of refund on the ground that the assessment had become final, there being no challenge to such assessment - considering the FOB price as cum-duty price, refund allowed.
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• Gold Chain Worn on Person Must Be Declared at Customs, Authorities Rule Against Appellant's Claim.

  Case-Laws - AT : Non-declared goods - Gold chain, carried on her body - the contention of the appellant that the gold chains were worn on her person and does not fall within the category of baggage cannot be accepted.
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• Used Digital Printers Import Restricted, Not Banned: Redeem for Home Use u/s 125 and FTP para 2.31.

  Case-Laws - AT : Import of used Digital Multifunction Printing Machine (MFD) - restricted item or not? - as there is no absolute prohibition on import of these goods and but only a restriction brought about by para 2.31 of the FTP, there is no reason why appellants should not be given an option to redeem the goods for home consumption as per provisions of Section 125
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• Gold Import Allowed with Conditions per Exim Policy and RBI Guidelines.

  Case-Laws - AT : Import of Gold Jewellery - prohibited goods or not? - The gold is not a prohibited item. It can be imported only with certain conditions as prescribed under Exim Policy as well as guidelines laid down by the RBI.
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• CHA License Revocation Overturned: Show-Cause Notice Issued Beyond 90-Day Limit Violates Regulations, Deemed Unsustainable.

  Case-Laws - AT : Revocation of CHA License - Forfeiture of Security deposit - show-cause notice issued beyond 90 days is not sustainable in law being violative of the Regulations.
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DGFT

• Petroleum Bitumen and Residues Imports Under HS Codes 2713 20 00 and 2713 90 00 Now Classified as 'Free'.

  Notifications : Import policy of Petroleum bitumen under HS code 2713 20 00 and other residues of petroleum oils or of oils obtained from bituminous minerals under HS Code 2713 90 00 is 'Free'.
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• Export Policy Shift: Bio-fuels Now 'Restricted' Under National Policy on Biofuels-2018.

  Notifications : Export Policy of Bio-fuels - Export Policy of bio-fuels is revised from 'Free' to 'Restricted' as per the National Policy on Biofuels-2018.
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Corporate Law

• Company Faces Winding Up u/s 433(e) for Unpaid Debts; Not a Substitute for Disputed Debt Recovery.

  Case-Laws - HC : Winding up of respondent company under Section 433 (e) on the ground of inability to pay the debt - proof of bonafide debt - It is settled position in law that winding up proceeding cannot be used as a tool to recover the bona-fidely disputed debts as a substitute for recovery suit.
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IBC

• Petition u/s 9 of Insolvency Code Dismissed: Applicant Not an Operational Creditor, Dues Not Operational Debt.

  Case-Laws - Tri : Once the applicant is not an ‘Operational Creditor’ and his claimed dues not being ‘operational debt’, the present petition filed under section 9 of the Code for initiation of Corporate Insolvency Resolution Process is not maintainable.
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• Arbitration clause in share purchase agreement doesn't block CIRP initiation u/s 7 of Insolvency and Bankruptcy Code.

  Case-Laws - Tri : Corporate Insolvency Resolution Process - The presence of an arbitration clause in the share purchase agreement would not cause any impediment with regard to initiation of Corporate Insolvency Resolution Process because under Section 7 of the Code the mentioning of an arbitration clause in the disputed agreement is no bar to the admission of the petition and initiation of Corporate Insolvency Resolution Process unlike Section 8 & 9 of the Code.
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Central Excise

• Debate Over Classification of Input Clearance as Trading Under CENVAT Credit Rules: Key Implications of Rule 3.

  Case-Laws - AT : CENVAT credit - trading activity versus removal of inputs as such - If the clearances of inputs as such is allowed under the provisions of Rule 3 of the CENVAT Credit Rules subject to the condition mentioned therein, the clearances effected by the respondent of the excess raw materials procured cannot be termed as trading activity.
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Case Laws:

• Income Tax

• 2018 (8) TMI 1558
  Bad debts - Status of the assessee as “Scheduled Bank” - the name of the assessee bank was not reflected in the second schedule of the Reserve Bank of India Act, 1934, as on date of assessment - disallowance of deduction of bad debts u/s 36(1)(viia)(a) - Held that:- There were three Gramin banks. All of which were duly notified as scheduled banks as per the Government notification dated 02.01.2006 all these three banks were amalgamated under a Government notification bringing into existence Saurashtra Gramin Bank i.e. the present respondent-assessee. On account of such facts, Commissioner of Income Tax (Appeals) and the Tribunal concurrently held that the respondent bank would also be a scheduled bank and consequently allowed the bad debts under section 36(1)(viia)(a) of the Act. Such being the position, we find no error in the view. No question of law arises. Disallowance of the deduction of Amortized Government Security Premium - Held that:- Similar question came up for consideration of before this Court in COMMISSIONER OF INCOME TAX RAJKOT II VERSUS RAJKOT DIST. CO-OP BANK LTD. C/O. AD. VYAS AND CO.[2014 (3) TMI 110 - GUJARAT HIGH COURT] as held as per the directives, the assessee had to invest certain amounts in Government securities and to hold the same till maturity - In the process of acquisition, if there was any premium paid on the face value of the security, the loss had to be amortised - The instructions clearly provide for amortisation of premium paid on acquisition of securities when the same are acquired at the rate higher than the face value - Such amortisation would have to be for the remaining period of maturity - This precisely the Tribunal had directed in the order - no contrary instructions of CBDT are brought to notice - The instruction in question having been issued under section 119(2) of the Income Tax Act, 1961, would bind the Revenue – thus, there was no question of law arises – Decided against Revenue. Addition of accrued interest on advances which had become NPA - Held that:- This issue is squarely covered by the judgment of the Division Bench of this Court in case of Principal Commissioner of Income Tax v. Shri Mahila Sewa Sahakari Bank Ltd.[2016 (8) TMI 377 - GUJARAT HIGH COURT]. This question is also therefore not required to be considered.

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• 2018 (8) TMI 1557
  Monetary limit for filling appeal - Held that:- By Circular No.3/2018, dated 11.07.2018, monetary limit has further been increased and appeals be maintainable before the High Courts. It has been increased to 50,00,000/-. Hence, viewed from any angle, this appeal could not have been filed. As pointed out by the learned counsel for the assessee that by way of giving effect to the order dated 05.11.2002, the Assessing Officer, viz., the Deputy Commissioner of Income Tax, Central Circle, Salem-7, has stated that the balance tax payable is 49,20,000/-. Thus, the said communication clearly shows that the tax effect is less than the limit prescribed in the Circular. Thus, by adopting the monetary limits in the Circular, the tax case appeal filed by the Revenue is dismissed

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• 2018 (8) TMI 1556
  Validity of reopening of assessment - existence of substantial question of law - Held that:- hen primary facts were disclosed in the return, it cannot be said that income chargeable to tax which had escaped assessment came to the notice only subsequently. There is no infirmity with the order of the learned Tribunal, which calls for interference of this Court. In M.Janardhana Rao Vs. Joint Commissioner of Income Tax [2005 (1) TMI 14 - SUPREME COURT] the Supreme Court held that the principles contemplated under Section 100 of the Code of Civil Procedure would apply to Section 260-A of the 1961 Act too. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal restricted only to cases which involve substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. The questions raised in this appeal do not meet the tests laid down by the Supreme Court for holding that the questions are substantial questions of law. We are constrained to hold that there is no question of law, let alone any substantial question of law, involved in this appeal. - Decided against revenue

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• 2018 (8) TMI 1555
  Penalty u/s 271(1)(c) - statutory claim under Section 54/54F - Held that:- The Appellate Tribunal observed that the respondent assessee had computed the capital gain and disclosed the capital gain, but claimed exemption under Section 54/54F for investment in another land and property, which, according to the assessee, was a residential house. The Revenue claimed that the reinvestment was in agricultural land and not residential house. It was not the case of the Assessing Officer that the respondent assessee had concealed any part of the sale proceedings and thereby concealed the capital gain that had accrued to him. Making of a statutory claim under Section 54/54F of the 1961 Act could not be said to be concealment of particulars of income. An appeal lies under Section 260A of the 1961 Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much less any substantial question of law. The learned Tribunal, which is the highest fact finding body, has found on facts that the respondent assessee had neither concealed his income nor furnished inaccurate particulars of income. Such factual findings cannot be interfered with in an appeal under Section 260A of the 1961 Act. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal restricted only to cases which involve substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal.

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• 2018 (8) TMI 1554
  Allowable deduction in computing the income - consideration paid by the appellant to Mr.SK for the non-competing covenant - Held that:- The non-compete compensation, from the stand point of the payee of such compensation, is so paid in anticipation that absence of a competition from the other party to the contract may secure a benefit to the party paying the compensation. There is no certainty that such benefit would accrue. Inspite of the fact that a competitor is kept out of the competition, one may still suffer loss. If it were to be a capital expenditure whether or not, an assessee makes a business profit, the character and value of the capital assets will, subject to depreciation, remain unaltered. Thus, the facts clearly disclose that on account of the payment of non-compete fee, the assessee has not acquired any new business, profit making apparatus has remained the same, the assets used to run the business remained the same and there is no new business or no new source of income, which accrue to the assessee on account of the payment of non-compete fee. Apart from that the stand taken by the Revenue that the petitioner had amortised expenditure spread over for the period of five years has been found to be factually incorrect, as the assessee has not capitalised the same in their accounts, but treated it as deferred revenue expenditure for a period of five years. That apart, such issue was never raised by the Revenue before any of the lower authorities, as the Tribunal has recorded that there is no dispute regarding the facts.- Decided in favour of the assessee and against the Revenue. Disallowance of claim for deduction of the payment - disallowance under Section 40(a)(i) - Held that:- The transponder hire charges made by the appellant on which no tax has been deducted does not come under the purview of either Royalty or Technical Fees on which tax has to be deducted. Accordingly, no disallowance under Section 40(a)(i) is warranted on those payments. Therefore, the CIT(A) held that the TDS payment claim made by the assessee to the extent of 15,68,69,040/- is prima facie not an allowable expenditure, when the assessee is not required to deduct any TDS on payment of transponder charges and so the payment itself is not covered by Section 40(i)(a) of the Income Tax Act. Thus, the assessee's claim for TDS payment for the year 2000-01 was held to be not permissible and the same was disallowed. The reason for disallowing this deduction was as a result of the decision in the assessee's own case for the assessment year 1995-96.

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• 2018 (8) TMI 1553
  Reassessment of proceedings - justification given for the disallowance of loan restructuring fee and alike charges paid by the assessee - Held that:- The assessee’s appeal succeeded before the Income Tax Appellate Tribunal which, on the issue of subsequent assessment proceedings for the Assessment Year 2003-04, accepted the assessee’s contentions with respect to the correct interpretation under Section 2(28A) of the Act. It was held on the merits that the broad nature of the definition of “interest” under Section 2(28A) of the Act includes not only interest but also the other amounts. The Revenue’s contention that the restructuring fee paid by the assessee under these circumstances, in the opinion of this Court, is not interest, is unpersuasive. Firstly, Section 2(28A) of the Act is using wide terms and comprehensively not only ‘interest’ per se and also the other amounts, such as deposits, service fee or “other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised”. This broad definition led the Court to the interpretation in the case of Gujarat Guardian Ltd. (2009 (1) TMI 13 - HIGH COURT DELHI) that the pre-payment premium or charges were “interest” within the meaning of the Act. A restructuring fee or processing fee or a payment of any description would likewise answer the description of “other charge in respect of the moneys borrowed.” or “in respect of any credit facility which has not been utilised”. For these reasons, the Court is of the opinion that no substantial question of law arises.

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• 2018 (8) TMI 1552
  Addition u/s 68 - reopening of assessment - Assessing Officer was of the opinion that bogus transactions were shown as receipts towards share application money through 10 entities - ITAT deleted the addition - Held that:- CIT(A) and the ITAT reconsidered the materials on the record and upon their overall analysis formed the opinion that the appropriate tests, indicated by the Supreme Court in Commissioner of Income Tax vs. Lovely Exports [2008 (1) TMI 575 - SUPREME COURT OF INDIA] were satisfied that the materials on record are not mere superficial details like PAN, ROC, etc. but further facts relating to the bank accounts of the share applicants. The share applicants were entering into proper commercial transactions and were not per se forged, bogus or sham investors. Undoubtedly, the Assessing Officer had ground to suspect that the entries were made prior to the investments. But that was precisely what was required of him. The assessee – in re-assessment, provided all that it could; share investors’ income tax returns and balance-sheets could appropriately have been sourced by the Assessing Officer in the reassessment proceedings. In these circumstances, it cannot be said that the Assessing Officer exercised due diligence in respect of all facets of the case. Even a contrary view would amount to re-assessment in the facts and circumstances. - decided against revenue

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• 2018 (8) TMI 1551
  Exemption of income under section 11 disallowed - assessee was registered as a Trust on 24th March, 2000 and this registration was granted under Section 12A - Held that:- The sole reason as to why the Assessing Officer chose not to follow the Tribunal’s decision and disallowed claim of the assessee for exemption was that the appeal of the Revenue against the order of the Tribunal restoring the appellant’s registration under Section 12A of the Act was pending before this Court. As this Court has already dismissed the appeal, the foundation of the order of the Assessment Officer collapses automatically.

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• 2018 (8) TMI 1550
  Levy of late fee u/s.234E - delay in filing of TDS statement - scope of section 200A r.w.s 200(3) - Held that:- All the quarters i.e. Quarter 4 in the A.Y.2013-2014, for Quarters 1 to 4 in the assessment year 2014-2015 and for Quarters 1 to 4 in the assessment year 2015-2016 are coming under the purview of amendment to Section 200(3) of the Act. Therefore, the fee levied u/s.234E of the Act while processing the statement of tax deducted at source was beyond the scope provided under Section 200A of the Act. Accordingly, we respectfully follow the judicial precedent and set aside the orders of lower authorities and delete the levy of fee u/s.234E of the Act in Quarter 4 in the A.Y.2013-2014, for Quarters 1 to 4 in the assessment year 2014-2015 and for Quarters 1 to 4 in the assessment year 2015- 2016 and allow the appeals filed by the assessee. For Quarter-1 in assessment year 2016-2017 we considering the amendment to Section 200(3) of the Act and applicability to the present case of the assessee does not fall under the purview of amendment as the first quarter for the assessment year 2016-2017 ends on 30.06.2015 and the amendment is effective from 01.06.2015. Therefore, we are of the opinion that the assessee is liable to pay the late fee as levied for the assessment year 2016-2017. Accordingly, we uphold the orders of lower authorities and dismiss the ground of appeal of the assessee.

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• 2018 (8) TMI 1549
  Monetary limit - maintainability of appeal - Held that:- Section 268A has been inserted by the Finance Act, 2008 with retrospective effect from 01/04/99. The said section 268 of the Act provides that the Board may issue instruction or directions to the other income-tax authorities fixing monetary limits for not filing the appeals before the Appellate Tribunal or the Courts, said instructions/directions are binding on the income tax authorities. CBDT has issued Circular No. 3 of 2018 dated 11.07.2018, vide which it has revised the monetary limit to 20,00,000/- for not filing the appeal before the Tribunal - From Clause 12 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11. 07. 2018, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal.

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• 2018 (8) TMI 1548
  Disallowance towards commission expenditure - TDS liability - Held that:- The very fact that the DCIT(TDS) has issued Nil deduction certificate u/s 197(1) obligates the assessee to make the payment without deduction of tax at source. We hold that the identity of the commission agents are proved beyond doubt in-as-much as the summons issued by the AO on them were duly served on them; they are income tax assessee; certificate issued u/s 197(1) for each of the commission agents by the Income-tax Department; all the commission agents have filed their income-tax returns showing the commission received as income in their respective returns and master data of Registrar of Companies website showing these companies in ‘active’ category. The payments in commission are made on a monthly/periodical basis based on the clearing of the bills of the assessee pursuant to periodical invoices raised by those commission agents clearly defining the services rendered by them and linking the sales made through them for and on behalf of the assessee. All these payments are made by a/c payee cheques. There is absolutely no iota of evidence to suspect the genuineness of these transactions and there is no case made out by the revenue before us to sustain the order of the ld. AO. - Decided against revenue

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• 2018 (8) TMI 1547
  Revision u/s 263 - unexplained cash deposit - Held that:- CIT is correct in invoking jurisdiction u/s 263 of the Act. Coming to the main contention of the assessee with respect to the explanation to introduce u/s 263 of the Act though there cannot be any quarrel that the CIT cannot revise each and every order, if enquiries are not carried out as per his wisdom. In such cases, it should be the wisdom of the Ld. Assessing Officer, and if the enquiries conducted are reasonable then the CIT despite explanation (2) to Section 263, cannot revise orders passed by the AO. However, if there is no iota of any enquiry made by the AO then it cannot be said that the power of the revision invoked by the Ld.CIT is unsustainable. In the present case, when the A.O even did not care to obtain necessary documentary evidence to reconcile the amount of cash deposit with the explanation of the assessee where a short fall 1 lac is shown and accepted the explanation of receipt of 5 lacs from the wife of the assessee without any documentary evidence, then, non fault can be found with the order of the Ld. CIT. In view of this, we uphold the order of the CIT passed u/s 263 dated 11/2/2016 holding that the assessment order passerby the AO u/s 143(3) of the Act on 28/2/2014 is erroneous and prejudicial to the interest of the Revenue. Appeal of the assessee is dismissed.

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• 2018 (8) TMI 1546
  Revision u/s 263 - case of “no enquiry” - non verification of amount shown under “suspense account” - Held that:- CIT has rightly invoked the provisions of section 263 of the Act as Ld.AO failed to make proper enquiry, examination and verifications as warranted for the proper completion of the assessment, with respect to monies shown under the head ‘suspense account’. It is correctly pointed out by Ld.CIT-DR, section 263 has been enacted to empower CIT to exercise power of revision and revise any order passed by Assessing Officer if two cumulative conditions are satisfied, where the order sought to be revised should be erroneous and it should be prejudicial to the interest of revenue. In the facts of the present case, admittedly Assessing Officer at assessment stage has not verified amount shown under “suspense account”. It is very apparent that Assessing Officer has not verified its sources and mode of deposit. In our view this is clear case of “no enquiry” and therefore, Ld.CIT was right in initiating proceedings under section 263 of the Act. Further, it is observed that, Ld.CIT has specifically directed Assessing Officer to restrict examination of transactions in suspense account and taking such examination to its logical conclusion as per law. We therefore do not find any infirmity in order passed by Ld. CIT under section 263 of the Act as there is no injustice that is caused to assessee. - Decided against assessee.

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• 2018 (8) TMI 1545
  Monetary limit - maintainability of appeal - Held that:- the amended circular is not applicable to the facts of the present case rather it is covered by the original circular No. 3/18 dated 11. 07. 2018, vide which the CBDT has revised the monetary limit to 20,00,000/- for not filing the appeal before the Tribunal - From Clause 12 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11. 07. 2018, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal.

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• 2018 (8) TMI 1544
  Depreciation on intangible assets acquired during the course of running of proprietorship-firm - block of assets - Held that:- Once an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in its subsequent year on the ground that one of the assets is not used by the assessee in some of years. The concept “user” of assets has to apply upon block as a whole instead of an individual asset. The above issue could be raised in the AY 2005-06 when the assets entered into the block. Once the assets became part of a block of assets in AY 2005-06, and depreciation is granted on that block, the issue cannot be agitated in the AYs 2006-07 and 2007-08. - Decided against revenue

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• 2018 (8) TMI 1543
  Nature of land sold - Long term capital gain - capital asset or agricultural land - Held that:- From sale of the impugned agriculture land situated at village Rau (M.P) long term capital gain was computed by the assessee. Through out the proceedings before the lower authorities and before us that the impugned agriculture land is not a capital asset and is not liable to be taxed as per the Notification No.9447 dated 6.1.94. The agriculture land situated at Rau being 1.5 to 2 km away from A.B Road is not to be treated as capital asset. The impugned land sold by the assessee was an agriculture land used for agricultural operations and was not covered under the definition of capital asset as provided in section 2(14)(iii) of the Act read with Notification No.9447 dated 6.1.1994. Therefore no interference is called for in the findings of Ld.CIT(A). Accordingly the appeal of the revenue stands dismissed.

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• 2018 (8) TMI 1542
  Carry forward and set off of losses in the case of certain companies - Entitled to set off of brought forward losses as against the provisions of sec. 79 - interest income should be netted off against interest expenditure and hence interest income should not be assessed separately - Held that:- In the instant case, the assessee company was a closely held company at the time when the change in shareholding took place. It has become widely held company after the change in shareholding. We have held that the status of company has to be examined at the time when the change in shareholding takes place. In the instant case, the status of the company was “closely held company”, i. e. , a company in which public is not substantially interested, when the change in shareholding took place. The provisions of sec. 79 would apply to the company. Since there is a change in shareholding exceeding 49%, the assessee company is not entitled to set off brought forward losses relating to AY 2010-11 and earlier years. In view of the foregoing discussions, we set aside the order passed by Ld CIT(A) on this issue and restore the order passed by the AO on this issue. Interest income assessed by the AO as income from other sources - Held that:- We notice that the Ld CIT(A) has examined the submissions made by the assessee that the fixed deposits have been kept with ICICI Bank in connection with the L/C facility availed by the assessee for import of DG sets for the corporate office constructed by the assessee. The assessee has furnished relevant documents before the Ld CIT(A). It is an admitted fact that the expenditure incurred in construction of corporate office has been shown as work in progress. The interest paid on loan taken for the purpose of construction of corporate officer has also been capitalized under the head “Capital Work in Progress”. The assessee has imported DG sets from Singapore for the use of corporate office only. The assessee has made the fixed deposits out of loan funds with ICICI Bank for availing L/C facility for importing the DG sets only. Under these set of facts, there is link between the fixed deposits and the Corporate office constructed by the assessee. Hence the decision rendered in the case of Karnal Co-operative Sugar Mills Ltd (1999 (4) TMI 7 - SUPREME COURT) and Bokaro Steels Ltd (1998 (12) TMI 4 - SUPREME COURT) shall apply to the facts of the case. Hence the assessee was justified in reducing the interest income from the above said fixed deposit from Capital work in progress. CIT(A) has rightly directed the AO to delete the addition of interest income under the head income from other sources. Accordingly we uphold the order passed by Ld CIT(A) on this issue. Appeal filed by the revenue is partly allowed.

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• Customs

• 2018 (8) TMI 1540
  Principles of Natural Justice - Smuggling - Gold Jewellery - prohibited goods or not? - non-declaration to the Customs authorities - Absolute Confiscation - penalty - Held that:- The strict provisions of Section 124 of the Customs Act have not been complied with as no show-cause notice was given to the appellants - even if a show-cause notice is waived, even then, a oral show-cause notice and an opportunity of hearing should be granted to the affected party, if the goods are liable for absolute confiscation. Whereas in this case, the goods have been absolutely confiscated without issuing the show-cause notice - Further, the appellants are not frequent flyers as per their travel documents and they were wearing the jewellery in a usual manner and have not concealed in a manner that it cannot be detected by ordinary means. The gold is not a prohibited item. It can be imported only with certain conditions as prescribed under Exim Policy as well as guidelines laid down by the RBI. Te order of absolute confiscation is not sustainable in law - the order of absolute confiscation in both the cases is set aside and an option given to the appellant to redeem the goods on payment of redemption fine and penalty u/s 112(a) and Section 114AA of CA. Appeal allowed in part.

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• 2018 (8) TMI 1535
  Valuation of imported goods - related party transaction - it was found that the petitioner (importer) and the Foreign Supplier are related under Rule 2(2) of the Custom Valuation (Determination of Valuation of Imported Goods) Rules 2007 - Held that:- The Tribunal found the Appellate authority has compared the prices of other producers like M/s.Gamesa and that the appellate authorities has came to a wrong conclusion. The Tribunal therefore, upheld the order of the original authority, which held that the price variation for capital goods and components, is because of the supply of assembled products to M/s.Gamesa Wind, whereas, the imports made by the appellant in SKD/CKD products, required some assembling process to make for the finished products - The Tribunal has analysed the entire facts as the final fact finalising authority and that cannot be said to be unreasonable or wrong. The conclusion arrived at by the Tribunal that Article 19 only mandates that the respondent will be liable to pay all the tax that will imposed on the transaction has nothing to do with the payment or a condition of sale is a possible view which does not require any interference - appeal dismissed.

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• 2018 (8) TMI 1534
  Revocation of CHA License - imposition of penalty - High Seas Sale - it was alleged that the HSS was invalid, the CB filed B/E in the name of wrong person i.e. HSS buyer instead of actual importer - it was also alleged that Customs Duty was paid wrongly by HSS buyer through debit in SFIS scrip instead of payment by actual importer/ HSS seller in cash Held that:- It is found from the submissions of the appellant before the Customs Authority that they have accepted their fault and wrongdoing. Once that is so, what is admitted need not to be probed as held in the case of Commissioner of Central Excise Vs. System Component Pvt. Ltd. [2004 (2) TMI 65 - SUPREME COURT OF INDIA]. The appellant also failed to inform the concerned Customs Officer Incharge of assessment of the goods about the fact of non-availability of SIFS scrip in this case. It was the duty of the CHA to guide and advise for the payment of Customs duty to the importer that the impugned SFIS scrip is not applicable in their case of the import made by the importer. Also, the High Sea Sale was itself in a doubt because the same has been affected prior to the loading of consignment in the aircraft which is conceptually wrong for affecting such High Sea Sale. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1533
  DEPB License - bonafide purchaser - Held that:- As the law is settled and there is no dispute as to the fact that the respondent is bonafide purchaser of DEPB license from open market, we hold that the impugned order is correct and legal and does not suffer from any infirmity - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1532
  Refund of Customs Duty paid in excess - denial of refund on the ground that the assessment had become final, there being no challenge to such assessment - Held that:- There is no dispute as to the fact that filing of the shipping bill, discharge of the customs duty appellant herein and also question of considering the FOB as cum duty value. On an identical issue in the case of Sameera Trading Company [2010 (5) TMI 518 - CESTAT, BANGALORE], it was held that The excess duty claimed by the respondents considering the FOB price as cum-duty price is in accordance with law and the original authority should have allowed the refund Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1531
  Refund claim - rate of export duty reduced by N/N. 129/2008- Cus dt. 07.12.2008 - Whether the appellant is eligible for the reduced rate of export duty on iron ore exported by them? Held that:- There is no dispute that let export order of the iron ore was issued on 02.12.2008 and that is relevant date under 51. In order to be eligible for exemption under Notification No. 129/2008- Cus dated 10.12.2008 the let export order should have been posted 10.12.2008 - benefit of notification not allowed - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1530
  Smuggling - non-declared goods - Gold chain, carried on her body - Baggage Rules - N/N. 30/2016 Cus.- NT dated 01.03.2016 - Absolute Confiscation - Penalty - Held that:- As per Rule 2(vi), ‘personal effects’ is defined to mean things required for satisfying daily necessities, but does not include jewellery. Thus, the contention of the appellant that the gold chains were worn on her person and does not fall within the category of baggage cannot be accepted. As the gold chains fall within the category of ‘baggage’ and not ‘personal effects’, the present appeal is not maintainable - appeal dismissed being not maintainable.

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• 2018 (8) TMI 1529
  Classification of imported goods - Licences for Software on paper media - whether classified under CTH 4907 0030, which covers “Documents of title conveying the right to use Information Technology Software” or under CTH 8523 8020 as “”Information Technology software”? - Customs Circular No- 15/2011-Cus. dated 18.03.2011. Held that:- The imported items are not PUK cards per se but are paper licences only. This being so, in view of the CBEC clarification, there should not be any more controversy on the classification of this item. The item is correctly classified only under Heading 4907 of the CTA - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1528
  Import of Old and Used Multifunction Print & Copying Machines with standard accessories - Hazardous goods or not? - Country of origin - Confiscation - redemption fine - penalty - Held that:- The Department, not having appealed against the first order of Commissioner (Appeals) dated 05.04.2017, the adjudicating authority in de novo adjudication, was legally bound to follow only the remand directions and not go beyond that. As a corollary, the Revenue also cannot now raise any appeal to this forum on issues which had been decided in the first order of Commissioner (Appeals), but not appealed against. Such non-appeal will have the effect of that earlier order having been accepted by Department. The lower appellate authority has arrived at a well analysed and reasoned decision as to the correctness of the Country of Origin declared by the importers - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1527
  Import of used Digital Multifunction Printing Machine (MFD) - restricted item or not? - Confiscation - redemption fine - penalty - compliance under the Electronic IT Goods (Requirement for Compulsory Registration) Order, 2012 - non-registration under BIS - Held that:- The Ministry of Communications and Information Technology, Department of Electronics and Information Technology vide two communications dt.06.12.2016 10.03.2017 had informed the CBEC that import of second hand Multi Function Printers are neither registered with BIS nor having permission from the Ministry for their import. Such imports would be a violation of the said 2012 order - However, a perusal of the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012 at page 32 onwards of the paper book, brings out that although printers, plotters find a place at Sl.No.7 8 respectively of the Schedule to the Notification, there is no reference to Multifunction Devices - the finding of the lower appellate authority that the impugned goods suffers from non-registration under BIS is flawed and is set aside. Clearance of goods for Home Consumption - Held that:- The goods have been imported vide Bill of Entry dt. 03.01.2017. For the imports made till 30.04.2017 no EPR authorization is necessitated - refusal to allow home consumption for this impugned goods on this score cannot sustain - It remains undisputed that the impugned goods are restricted for import as per 2.31 of FTP 2015-2020 and hence will become liable for confiscation under Section 111 (d) of the Customs Act, 1962. Nonetheless, as there is no absolute prohibition on import of these goods and but only a restriction brought about by para 2.31 of the FTP, there is no reason why appellants should not be given an option to redeem the goods for home consumption as per provisions of Section 125 ibid. Goods allowed to be redeemed on payment of redemption fine - Only for the limited purpose of determining the appropriate quantum of such redemption fine, the matter is being remanded to the adjudicating authority - appeal allowed in part by way of remand.

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• 2018 (8) TMI 1526
  Interpretation of Statute - Offence report - Revocation of CHA License - Forfeiture of Security deposit - stay of the operation of the impugned order as per Rule 41 read with Rule 28C of the CESTAT(Procedure) Rules, 1982 - Time Limitation. Held that:- By letter dt. 26/10/2016, the Tuticorin Customs Commissionerate intimated the Cochin Customs Commissionerate and the Order-in-Original was also sent to the Cochin Customs Commissionerate along with this letter and it was requested by Tuticorin Customs to the Cochin Customs to take action under CBLR 2013 against the appellant. This Order-in-Original and the letter dt. 26/10/2016 can be considered as 'offence report’ because the Order-in-Original is very clear regarding the alleged offence committed by the appellant. The date of knowledge gained by the Commissioner by himself of any communication be it a show-cause notice or the Order-in-Original or a letter narrating the offence committed has to be construed as an offence report and the date of receipt by the Cochin Commissionerate has to be taken as the date of offence report. Time Limitation - Held that:- The show-cause notice proposing to revoke the licence was issued on 01/06/2017 which is beyond the period of 90 days time limit prescribed by the CBLR - In the case of Ambika Enterprises, [2016 (6) TMI 265 - CESTAT NEW DELHI], the Division Bench of this Tribunal considered an identical issue and held that show-cause notice issued beyond 90 days is not sustainable in law being violative of the Regulations. Further, the enquiry report which as per the Regulation should be submitted within 90 days from the date of issuance of such show-cause notice has also been not adhered to in the present case. The enquiry report forwarded on 15/09/2017 but the said report is not dated. The enquiry report was served on 26/09/2017 which is also beyond 90 days prescribed under the Regulations. Order of revocation of CHA License set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1525
  Liability of SAD - Benefit of N/N. 85/2004 dated 31.08.2004 - short paid duty - Held that:- The appellants do not have a case that they are eligible for the benefit of notification claimed by appellants. Subsequent to assessment and out of charge of the goods, the assessing officer found that the conditions of the notifications are not fulfilled and that appellants are liable to pay SAD - Section 28 empowers the Department to demand the short paid duty - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2018 (8) TMI 1539
  Complete stay on the voluntary winding up of the respondent company - Held that:- This court does have the power to stay voluntary winding up process. See VOLUNTARY LIQUIDATOR, DIMPLES (P.) LTD., S.P. SOOD VERSUS REGISTRAR OF COMPANIES [1977 (3) TMI 97 - HIGH COURT OF DELHI] In opinion therefore this is a fit case to exercise power under Section 518(i)(b) of the Act to permanently stay the voluntary winding up of the said company. The Company is solvent. It is likely to receive funds in the litigation against MCL. The petition is accordingly allowed. The respondent company will file all the statutory reports before the ROC, as per law. The powers of the Ex-directors of the aforesaid company are restored. The liquidator will hand over the charge of the said company to the Ex.Directors pursuant to which the liquidator will be discharged from further proceedings in the winding up process. After the filing of returns by the said Company, ROC will mark the said company as active in their records.

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• 2018 (8) TMI 1538
  Winding up petition - dues payable to the petitioner - Held that:- The petitioner has placed on record an email dated 22.12.2014 whereby the petitioner has pointed out regarding an outstanding amount of 1,03,93,398/- to the respondent. The respondent has replied on the same date stating that once the cheques are ready intimation will be sent to the petitioner. Hence, there is no denial of the dues payable to the petitioner. Similarly, learned counsel for the petitioner has relied upon an exchange of whatsapp message which was sent on 17.11.2014 where the reply was received on 17.11.2014 stating that the work will be taken care of. Again there is no denial of the dues of the petitioner. No communication or document is sought to be placed on record whereby the respondent in the past had informed the petitioner of its failure to comply with the terms and conditions of the purchase order. There is not even one document place on record to show that the petitioner were informed that they have failed to adhere to the terms and conditions of the purchase orders or that the work being performed by them is defective. In fact what the learned counsel for the respondent has relied upon is a communication dated 31.07.2014 allegedly written by the respondent regarding some defects. This communication has been attached by the petitioner themselves. This is the solitary communication which shows some defects were there in the work done by the petitioner. Presumably, the work would have been completed by the petitioner as there is no subsequent correspondence. Clearly, the defence raised is not bona fide. Today in the course of submissions that were made by the learned counsel for the respondent, she did not deny that no work has been done by the petitioner. Her plea was that some work had been done by the petitioner and there were some defects in the work that was done. Based on this she pleaded that some amount may be payable to the petitioner but the same is not quantifiable. Much stress was also laid by the respondent on the fact that there are two different amount being claimed by the petitioner, namely, the outstanding amount of 1,03,93,398/- and another amount claimed as due was 53,66,278/-. Learned counsel for the petitioner had tried to explain away the said differences stating that as there was delay in clearance of the bills by the respondent, on the request of the respondent, a bill for 58,66,278/- was raised on a sister concern which was said to have funds to pay dues. It is manifest that some amount does remain payable by the respondent to the petitioner. I admit the present petition. However I defer appointing the OL as the PL till the next date of hearing. In the meantime, the respondent is free to deposit a sum of 53,66,278/- within four weeks from today with the Registrar General of this Court. If such amount is deposited the petitioner would be free to have the said amount released

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• 2018 (8) TMI 1537
  Winding up of respondent company under Section 433 (e) on the ground of inability to pay the debt - proof of bonafide debt - Held that:- As pointed out that since it is a BOT project with a concession period of 25 years, therefore, the entire cost of the project has been borne by the company which is to be recovered through toll collection during the concession period. Alongwith IA No. 3356/18, the respondent has filed the solvency certificate issued by State Bank of India and certificate of Chartered Accountant Krishnamurthy Jain and Suryawanshi showing its healthy financial state as also the CARE rating wherein the respondent has been rated A+ stable and also enclosed the tax payer counterfoil showing that respondent is paying the huge amount towards income tax. These documents clearly reveal that substrata of the company has not been eroded. That apart undisputedly respondent is a running company having more than 200 employees. It is settled position in law that winding up proceeding cannot be used as a tool to recover the bona-fidely disputed debts as a substitute for recovery suit. The aforesaid analysis of facts clearly reveal that in the present case not only alleged debt is bona-fidely disputed by respondent but financial condition of the company and other circumstances noted above do not make out a case for winding up the company under Section 433(e) of the Act. Hence the company petition is dismissed.

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• 2018 (8) TMI 1536
  Winding-up petition - Held that:- In the present case it is an accepted position that the Respondent Company has not engaged in the business and also there is a dead lock situation in the Management and further the Company had sold its all assets and also not having any liabilities upon it, hence, in consideration of all the facts and circumstances of this case hereby we record our satisfaction that the prayer by the Petitioner to wound-up the Respondent Company is on just and equitable ground to order the Winding-up of the Respondent Company. We are of the conscientious view that this Petition deserves to be Allowed. Although, U/s. 275 of the Companies Act, 2013 provides that for Winding-up of a Company by the Tribunal, at the time of passing of the Order of Winding-up; the Tribunal shall appoint an Official Liquidator. It has also been inserted in the S. 275(2) the Tribunal can also appoint Insolvency Professional registered under the Insolvency and Bankruptcy Code, 2016. However, U/s. 275(5) a jurisdiction is prescribed that the terms and conditions of appointment of the Provisional Liquidator or Company Liquidator or the fees payable to him shall be fixed on the basis of the task required to perform. Exercising the discretion, we are of the view that it is a fit case that no terms be pronounced for the appointment of Provisional/Official Liquidator. In this case there is no specific task to be performed by the Liquidator because the record of the case as well as the Order of CLB have specifically declared that no Assets or Liabilities are available with the Company which can thus be liquidated easily. Therefore, on just and equitable ground it is also purposeful not to appoint any liquidator. Instead the Petitioner shall furnish the relevant data before the RoC and the RoC shall examine the latest position of the Company. If in the Balance Sheet some changes are recorded, he shall intimate this Bench for requisite directions within 30 Days on receipt of this Order, otherwise the RoC shall dissolve the Respondent Company by Winding-up from its records. After giving the direction on the issue of Assets and Liabilities of the Respondent Company, one more direction is yet to be passed, hence, directions now issued U/s. 274 of the Act that the RoC shall also take due cognizance of the proceedings, if any pending and shall expedite for closure of those proceedings and in case an Order is required by this Bench, can revert back accordingly. Otherwise if satisfied, finalise the process of Winding-up.

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• Insolvency & Bankruptcy

• 2018 (8) TMI 1559
  Initiation of Corporate Insolvency process in respect of the Corporate Debtor - Held that:- The framer of the Code has also defined the expression ‘Financial Debt’ in section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However, the framer of the Code has not included in the expression ‘Operation Debt’ as any debt other than the ‘Financial Debt’. As confined to aforesaid four categories like goods, services, employment and Government dues. In the present case, the debt has not arisen out of the provisions of goods or services. The debt has also not arisen out of employment or the dues which are payable under the statute to the Centre/State Government or local body. Therefore, the present claim of the applicant cannot be considered as an ‘operational debt’ under the Code. The ‘Operational Creditors’ are those persons to whom the ‘Operational Debt’ is owed and whose liability from the entity comes from a transaction on operations. The applicant in the present case had advanced money towards booking of a shop and admittedly has neither supplied any goods nor has rendered any service etc. as defined in section 5(21) of the Code and as such his claim does not fall within the purview of operational debt, he cannot acquire the status of an ‘Operational Creditor’. According to section 9(1) a petition like the one in hand could be maintained only by an ‘Operational Creditor’ against the ‘Corporate Debtor’. In case the applicant does not fall within the definition of ‘Operational creditor’, his present application filed under section 9 for initiation of Corporate Insolvency process in respect of Corporate Debtor shall not be maintainable. Therefore, once the applicant is not an ‘Operational Creditor’ and his claimed dues not being ‘operational debt’, the present petition filed under section 9 of the Code for initiation of Corporate Insolvency Resolution Process is not maintainable. Once it is held that the applicant is not an ‘Operational Creditor’ and the debt in question not being ‘operational debt’, the present petition filed under Section 9 of the Code for initiation of corporate insolvency resolution Process is not maintainable and therefore rejected.

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• 2018 (8) TMI 1541
  Corporate Insolvency Resolution Process - occurrence of default - Held that:- Form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission. As a sequel to the above discussion, this petition is admitted and Mr. Om Prakash Vijay, 2250, Gali Raghu Nandan, Naya Bazar, Delhi-110006, email id - [email protected], Registration No. IBBI/IPA-001/IP-P00491/2017-18/10879 is appointed as an Interim Resolution Professional. The presence of an arbitration clause in the share purchase agreement would not cause any impediment with regard to initiation of Corporate Insolvency Resolution Process because under Section 7 of the Code the mentioning of an arbitration clause in the disputed agreement is no bar to the admission of the petition and initiation of Corporate Insolvency Resolution Process unlike Section 8 & 9 of the Code. In accordance with the provisions of Section 8 and 9 of the Code if a dispute in a civil suit or a dispute in arbitration proceeding is pending then a bar has been created by Section 8(2)(a) of the Code and it is deemed to be an existence of dispute therefore, no Corporate Insolvency Resolution Process could be triggered. There is however no such provision in Section 7 of the Code. Accordingly, this argument is also rejected as unfounded.

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• Service Tax

• 2018 (8) TMI 1524
  Refund claim - Time Limitation - Did the Tribunal fall into error in holding that only part of the amount claimed by the assessee was refundable and that the other part could not be repaid on account of expiry of limitation under Section 11(B) of the Central Excise Act or Section 27(c) of the Customs Act? Held that:- This court is of the opinion that the CESTAT clearly fell into error - In the present case, levy never applied, a fact conceded by no less than the authority of CBEC - Krishna Carbon Paper Co. [1988 (9) TMI 50 - SUPREME COURT OF INDIA] was a case where principal duty was payable; excess amount had been paid on a mistaken notion with respect to the liability for excess production under a notification which was later discovered to be not correct - the general principle alluded to in Krishna Carbon Paper Co. would apply. The appellant shall be entitled to refund of entire amount with proportionate interest - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1523
  Restoration of appeal - the appeal was dismissed on 05.03.2018 by an ex-parte order - Held that:- Considering the fact that on 05.03.2018, a call was given by the Bar Association of Punjab Haryana High Court, which is the parent association of the Bar Association CESTAT Chandigarh to abstain from the work and it was brought out in the knowledge of the Hon'ble President by the Bar Association. In these circumstances, the ex-parte order passed by this Tribunal is recalled in the interest of justice - appeal restored.

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• 2018 (8) TMI 1522
  Restoration of appeal - the appeal was dismissed on 05.03.2018 by an ex-parte order - Held that:- Considering the fact that on 05.03.2018, a call was given by the Bar Association of Punjab Haryana High Court, which is the parent association of the Bar Association CESTAT Chandigarh to abstain from the work and it was brought out in the knowledge of the Hon'ble President by the Bar Association. In these circumstances, the ex-parte order passed by this Tribunal is recalled in the interest of justice - appeal restored.

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• 2018 (8) TMI 1521
  Monetary amount involved in the appeal - Held that:- Considering the fact that Revenue involved in these appeals is less than the amount of 20 Lakhs and as per Litigation Policy vide F. No. 390/Misc/116/017 J. C. Dated 11.07.2018 instructions were issued not to file appeal or withdrawn the appeals where the amount in dispute is less than 20 Lakhs before this Tribunal and no substantial question of law is involved - appeal filed by Revenue dismissed.

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• 2018 (8) TMI 1520
  Business Auxiliary Services - activity of sale and purchase of the SIM Cards of BSNL - Held that:- The issue has been decided by this Tribunal in appellants’ own case VOICE TELESYSTEM, CHOPRA FERTILIZER AND PESTICIDES TRADING CO. VERSUS CCE, ROHTAK [2016 (9) TMI 488 - CESTAT CHANDIGARH], where it was held that the appellant is not liable to pay service tax under the category of Business Auxiliary Services on the commission received by them on sale and purchase of SIM Cards. The activity of sale and purchase of the SIM Cards on behalf of BSNL on the commission received by them is not chargeable under the category of Business Auxiliary Services - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1519
  Monetary amount involved in the appeal - Held that:- Considering the fact that Revenue involved in these appeals is less than the amount of 20 Lakhs and as per Litigation Policy vide F. No. 390/Misc/116/017 J. C. Dated 11.07.2018 instructions were issued not to file appeal or withdrawn the appeals where the amount in dispute is less than 20 Lakhs before this Tribunal and no substantial question of law is involved - appeal filed by Revenue dismissed.

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• 2018 (8) TMI 1518
  Valuation - C&F Agents services - The adjudicating authority has confirmed the demands on the ground that the gross amount of commission received is taxable while it is the case of the appellant that the gross amount which is received as commission, needs to be reduced by the amount of salary paid for his staff and the amounts which he has incurred for the godown. Held that:- There are no merits in the appeal filed by the appellant as no documents evidencing the claim is adduced - also, the 1st appellate authority has given a well reasoned order that It is only the cost incurred by the service provider in providing certain services not falling within the realm of the taxable service, that are deductible while arriving at the value of the taxable service and not every expenditure by the appellant. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1517
  Business auxiliary services - Production of goods on behalf of client - activities of separating of scrap in the premises of RINL - Held that:- Tribunal in an identical/similar set of facts in the case of Ferro Scrap Nigam Ltd Vs CCE Raipur [2014 (1) TMI 1049 - CESTAT NEW DELHI], has allowed the appeal of the appellant therein by holding that appellant’s activity prior to June 2005 cannot be held to be exigible to service tax under the category of BAS - demand set aside - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1516
  Liability of Service Tax - GTA services - claim of the appellant is that they are not liable for tax as they are not issued any consignment note, and they are eligible for abatement of 75% of the amount of the freight paid by them to GTA - Held that:- The appeal filed by the appellant is devoid of any evidences as to the claim of the appellant that they did not avail services of goods transport agency but owners of the individual tax to whom they have paid freight charges. Appeal memoranda is also devoid of any evidence to suggest that the appellant had declarations of transport agencies to indicate that they had not availed CENVAT credit on the capital goods, which is requirement for claiming the abatement of 75% of the value of freight paid. The appellant has no case on merits - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1515
  Works Contract - levy of Service Tax - construction of residential complex - Held that:- The period involved in the case is from June 2005 to April 2006 - That the issue being a works contract whether subject to service tax prior to 1.6.2007 has been settled by the judgment of the Hon’ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1514
  Valuation - inclusion of expenses such as statutory levy on various reimbursable charges incurred by the appellant and recovered from, their clients in assessable value - Held that:- The issue is now finally settled by the Hon’ble Apex Court in the case of UOI Vs Intercontinental Consultants And Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] wherein the Apex Court has unequivocally laid down that such reimbursable cost shall not form part of valuation of taxable services prior to 14.05.2015 - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1513
  CENVAT Credit - input services - outdoor catering services - business auxiliary services (Sodexo pass for employees) - group insurance services - furniture hire services - Held that:- The period involved is prior to 01.04.2011, when the definition of input service had a wide ambit - reliance placed in the case of C.C.E. Mumbai Vs. GTC Industries Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI], Commissioner of Service Tax, Bangalore Vs. Yodlee Infotech (P) Ltd. [2015 (11) TMI 653 - CESTAT BANGALORE] and M/s. C-Cubed Solutions Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore, Service Tax-I [2017 (8) TMI 792 - CESTAT BANGALORE] - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1512
  Monetary amount in appeal - the amount involved is less than 10,00,000/- - Held that:- According to the instruction issued under F. No. 390/Misc./163/2010-JC dated 17.12.2015 in partial modification of the earlier instruction dt. 17/08/2011, monetary limit for filing the appeal before the Tribunal by the Revenue has been fixed at 10,00,000/- - Since in this appeal the amount is less than 10,00,000/-, the appeal has to be rejected - the appeal is dismissed on monetary limits without going into the merits.

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• 2018 (8) TMI 1511
  Works contract - Completion of finishing services - contracts for partition work, paneling of work of wood, metal joinery and carpentry work, in respect of commercial or industrial buildings - Held that:- For the period prior to 01.06.2007, following the ratio already laid down by the Apex Court in Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - the services provided by the appellant will not be exigible to service tax prior to 01.06.2007. For the period after 01.06.2007, the said services will have to discharge service tax liability under works contract - as this aspect is not forthcoming from the record, the matter is remanded for the limited purpose of ascertaining the claim of the appellant to have discharged service tax liability under works contract service w.e.f. 01.06.2007 till December 2007 under composition scheme. Penalty - Held that:- The issue was mired in litigation and was only settled by the judgments of the Supreme Court - This being the case, the penalties imposed are set aside. Appeal allowed in part and part matter on remand.

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• 2018 (8) TMI 1510
  Valuation - service tax collected separately over and above the service charges from their clients - includibility - case of appellant is that related invoice and documents in support of their claim had indeed not been produced at the stage of adjudication - Held that:- Interest of justice would be served in this matter by remanding the issue relating to the demand of service tax in relation to the Chennai Branch of the appellants for de novo adjudication. Appellants shall produce all the necessary proof to support their claim that no tax would arise in respect of their Chennai activities also - appeal allowed by way of remand.

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• 2018 (8) TMI 1509
  Construction of residential complexes - residential complexes constructed for the Tamil Nadu Police Housing Corporation - residential complexes constructed as a sub-contractor for M/s. VGN Devadoss - non-payment of service tax - demand of service tax with Interest and penalty. Construction services provided to TNPHC - Held that:- This very Bench in the case of SIMA Engineering Constructions and others [2018 (5) TMI 405 - CESTAT CHENNAI] had held that the levy of service tax in respect of such construction activities cannot sustain - demand set aside. Construction of complex service provided to VGN - Held that:- It is seen that the appellants had already paid up the tax liability along with interest for belated payment before the issuance of SCN. Although these payments have been effected only after the visit of the officers, from the facts it emerges that the appellants had not received the payment from VGN till June 2007 - tax liability upheld, penalty u/s 78 set aside - However, penalty under Section 77 of the Act is not disturbed. Appeal allowed in part.

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• 2018 (8) TMI 1508
  Benefit of reduced Penalty - case of Revenue is that Tribunal had observed that the Commissioner (Appeals) has only remanded for re-computation of tax liability and penalty and therefore the appellant cannot put forward the plea to set aside the penalty - Held that:- The said request for confining the penalty to 25% of the service tax demand is reasonable when taking note of the fact that the appellant has deposited 25% of the penalty to the tune of 1,89,316/- in the earlier round of adjudication, which in denovo proceedings could have been adjusted towards the interest liability. Instead the appellant has been asked to deposit the interest (revised amount) and 25% of reduced penalty by the adjudicating authority. This was indeed burdening of the assessee who has opted to pay up the amount. The benefit of reduced penalty to the tune of 1,44,096/- allowed - remaining part of the order is not disturbed - appeal allowed in part.

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• Central Excise

• 2018 (8) TMI 1507
  Maintainability of appeal - substantial questions of law - monetary amount involved - Held that:- It is made clear that dismissal of present appeal will not be taken as upholding the order passed by the Tribunal as the legal issue raised therein is left open to be considered in an appropriate case.

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• 2018 (8) TMI 1506
  Closure of case for statistical purpose - Held that:- Both Mrs.Aparna Nandakumar, learned Senior Standing Counsel for the appellant and Mr.V.Sundareswaran, learned counsel for the appellant, and the learned counsel for the respondents, consented that the orders impugned in both the appeals, be set aside, and matters be remanded to CESTAT, Madras, either to dispose of the appeals filed before the Tribunal, on the basis of the decision made by the Tribunal/High Court, proximate to the case on hand, or to keep the appeals pending, till the final outcome of the issues raised. The matters are remitted to CESTAT, Madras - appeal disposed off.

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• 2018 (8) TMI 1505
  Valuation - inclusion of cost of the materials supplied to them free of cost in assessable value - Held that:- In the instant case, the raw materials have been received free of cost under Rule 57F (4) challans. After the process, the appellants are sending back the goods to the supplier should, after completing the manufacture of the final product is clearing the same on payment of duty - This Bench in the case of Kailash Auto Builders [2004 (9) TMI 216 - CESTAT, BANGALORE] held that if by mistake the job worker had paid the duty on the raw materials used by him that should not be a reason for the Department to demand duty from him on the entire value of goods, hence, the demand cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1504
  Application for early hearing - appellant has filed the applications for early hearing of the appeals on the ground that the issue is squarely covered by the decision of Hon’ble Apex Court, therefore the appeals be heard on priority basis - Held that:- The applications of early hearing of the appeals are allowed and the appeals are taken up for consideration today itself with the consent of both the sides. Monetary amount involved in Revenue's appeal - the disputed amount involved in the case is less than 20 lakhs and the issue is of the valuation - Held that:- As no substantial question of law arises, therefore, Revenue’s appeals are not maintainable under litigation policy - appeal dismissed. Assessee's appeal of amount involved 44,609/- - Held that:- In terms of proviso to Section 35B of the Central Excise Act, 1944, the appeal not entertained as the amount in dispute is less than 2 lakhs - appeal dismissed.

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• 2018 (8) TMI 1503
  Rectification of mistake - the amount of duty disputed by the appellant has not been considered by this Tribunal - Held that:- In the appeal filed by the appeal wherein one more ground has been raised by the applicant that there is error in the calculation of amount of which should be 2,53,158/- instead of 3,53,158/- and the same has not been considered by this Tribunal while passing the order - there is mistake apparent on record - application for ROM allowed.

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• 2018 (8) TMI 1502
  CENVAT credit - it was alleged that respondents had engaged himself in a trading activity which is an exempted service - Rule 6 of CCR - Held that:- The 1st appellate authority was correct in coming to a conclusion that when statutory provisions have been framed, the assessee who procures inputs on payment of duty for consumption cleared the same as such on payment of duty, cannot be considered as trading activity. In the case in hand, there is no dispute as to the fact that the respondent had procured manganese ore for the purpose of consumption and manufacturing activity in the premises. In the case in hand it is not the allegation of the Revenue that respondents have procured manganese ore for stocking and subsequent resale - there is not a single line of finding by the original adjudicating authority as to whether clearances of manganese ore as such amounted to trading activity or rendering of any services. If the clearances of inputs as such is allowed under the provisions of Rule 3 of the CENVAT Credit Rules subject to the condition mentioned therein, the clearances effected by the respondent of the excess raw materials procured cannot be termed as trading activity. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1501
  SSI Exemption - use of Brand Name - it was alleged that for calculation of gross value of clearances, the value of branded goods cleared by them was not considered - time limitation - Held that:- There is no dispute as to the fact that the goods manufactured on 3rd party basis were affixed with the brand name of others. This factual position is not disputed by the appellant before the lower authorities or before us. If that be so, such clearances would definitely attract central excise duty as benefit of SSI exemption notification is not applicable to branded goods. The appellant has no case either on merits or on limitation - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1500
  CENVAT Credit - inputs - MS angles, MS plates, channels, aluminium coils, asbestos, etc., used for making structures for support of capital goods - Held that:- The issue is no longer res integra and has been laid to rest by the jurisdictional Hon’ble High Court of Madras in the case of Thiru Arooran Sugars Ltd. Vs. CESTAT, Chennai [2017 (7) TMI 524 - MADRAS HIGH COURT], where it was held that the credit availed on such MS channels, plates, etc., used as structural items, is very much eligible. The Ld. AR has argued that while the decision has covered only MS angles, plates, channels, etc., however, in the present appeals, there is also a dispute concerning admissibility of Cenvat Credit on asbestos - Going by the ratio laid down by the jurisdictional High Court in the Thiru Arooran Sugars judgment, asbestos would also be required as a structural, along with the MS angles, plates, etc. - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1499
  Demand of Interest and penalty - Reversal of CENVAT Credit already done - period involved is from April 2007 to March 2010 - Held that:- The Hon’ble High Court of Madras in the case of Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] has categorically held that when the assessee has reversed the credit before utilization, the demand of interest and the penalty cannot sustain - the demand of interest and the penalty requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1498
  CENVAT credit - input service - business development services - Held that:- The period involved is prior to 01.04.2011 when the definition of input service included the words ‘activities relating to business’ - denial of credit unjustified. Penalty u/r 15(1) of the Cenvat Credit Rules, 2004 - Held that:- Since the major credit of business development service has been set aside, the penalty is also unwarranted and requires to be set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1497
  Liability of Interest and penalty - On being pointed out about the mistake, the credit, having been reversed before utilization - Held that:- The appellant has reversed a substantial portion of the irregularly availed credit to the tune of 1,70,290/- along with interest before the issuance of the Show Cause Notice. A small differential amount of 6,296/- was also reversed by them after passing of the order in original - It is also brought out that the appellants had sufficient credit balance and the wrongly availed credit was reversed before utilization. Interest and penalty set aside without disturbing the confirmation of demand or interest already paid - appeal allowed in part.

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• 2018 (8) TMI 1496
  CENVAT Credit - input services - cleaning/housekeeping services - Held that:- The appellant has availed the impugned services for the purpose of cleaning the equipment/machinery used in the manufacturing activity. Further, housekeeping services were availed to keep the factory premises as well as the office attached to the factory in a clean and hygienic manner. These services are indispensable for the manufacturing activity and are integrally connected also - the denial of credit is unjustified - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1495
  CENVAT Credit - input services - tour operator services for the period prior to 01.04.2011 - denial on the ground of nexus - whether the service tax paid for services availed for pickup and drop of employees under the head “tour operator services” is eligible for credit or not? Held that:- The period involved is prior to 01.04.2011 when the definition of input services had a wide ambit - the issue is also covered by the decision in the case of Comstar Automotive Technologies Pvt. Ltd. [2017 (6) TMI 910 - MADRAS HIGH COURT], where it was held that availing of such services are necessary to the manufacture and transporting the workers to and fro from the factory is included under input services, in relation to the manufacture of excisable goods - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1494
  100 % EOU - Exit from the 100% EOU scheme - duty liability to be paid by the appellants on in-process goods lying in stock - Held that:- The ratio laid down by the Tribunal in Tirumala Seung Han Textiles Ltd. [2008 (9) TMI 252 - CESTAT BANGALORE] will apply on all fours to the appeal on hand, where it was held that when appellant is opting out of scheme, demand in respect of in-process goods not justified - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 1493
  Penalty - it was alleged that though the goods were sold to a person situated outside the state of U.P. i.e. at Delhi but the challan/invoice indicating the details showing the charge of tax under U.P. Trade Tax Act and not under the Central Sales Tax Act - Held that:- There is no dispute that in the challan/invoice the details of the Delhi purchaser are mentioned but it appears that inadvertently while preparing the challan/invoice the tax has been charged under the U.P. Trade Tax instead of Central Sales Tax laws - it is the case where this cannot be ruled out that some time the person who is suppose to prepare the challan/invoice or the documents may commit mistake and in the instant case instead of mentioning the Central Tax the person, who has prepared the challan/invoice has mentioned the rate of tax as U.P. Tax. There was no ill intention at the hands of the Revisionist as the sales are duly accounted for and due challan/invoice was issued - penalty set aside - appeal allowed.

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• 2018 (8) TMI 1492
  Penalty u/s 15-A(i)(c) of the U.P. Trade Tax Act, 1948 - sale through stock transfer or inter-state sales - Held that:- It transpires that at the time of survey, which was held on 10.12.1996, Exhibit-15, was ceased in which the details of purchasers situated outside the State of U.P. were found mentioned. According to the department, since the details were known to the revisionist prior to movement of goods, therefore, the claim of the revisionist that it was the stock transfer cannot be accepted rather it was a inter-state sales. The revisionist-assessee has claimed the transaction against From-F as an exempted turnover / sales whereas from the record it is transpired that the transaction in question was deliberately concealed by claiming as an exempted turnover with ill intention - In view of the undisputed facts that the transaction in question was not the stock transfer as such was an inter-state sales, the entries and details of the purchasers was found in Exhibit 15, the claim of the revisionist is not acceptable that there was no intention on his part to evade the tax. The penalty proceedings under Section 15A(1)(c) of the Act were fully justified and there was no proper acceptable explanation is found - revision petition dismissed.

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• Wealth tax

• 2018 (8) TMI 1491
  Penalty u/s 18(1)(c) of the Wealth Tax Act - concealment of particulars of wealth - assessee filed the wealth tax return only after issuance of notice u/s 17(1A) - Held that:- The records placed before us shows that the allegations made by both the lower authorities is not correct, as the assessee filed the return few days before the notice issued u/s 17(1A) of the Act. The assessee voluntarily paid taxes and declared total wealth in the return of wealth tax. In this situation the assessee cannot not be held to have concealed the particulars of wealth. As regards non inclusion of value of Indica car of 1,81,772/- in the computation of wealth, we observe that the assessee has disclosed the value of other remaining three cars and the total value of assets excluding the value of Indica Car has been disclosed at 1,00,58,811/-. We find merit in the contention of the assessee that due to inadvertence and without having any mensrea of evading the wealth tax, the assessee failed to include the value of Indica Car in the computation of wealth and for such un intentional error the assessee should not be visited with penalty. Both the lower authorities were not justified in confirming the penalty of 1,00,000/- u/s 18(1)(c) - Decided in favour of assessee

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