TMI Tax Updates - e-Newsletter
August 6, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Business support service (BSS) - sharing of the infrastructure of the hospital with the diagnostic centres - Demand of service tax confirmed

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Articles

• Restaurant services rationalized
• GST Charcha - Seizure Order of Goods: Appealable or Not?
• INCOME TAX INFORMANTS REWARDS SCHEME, 2018

News

• Hon. Minister Piyush Goyal briefing media about the decisions taken in the GST Council Meet, at a press conference in New Delhi

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• GST slabs may reduce to 3 in long-term: Sanjeev Sanyal

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• Government permits e-commerce shipment via Foreign Post Offices

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• Notices for assessment/reassessment of income of old cases

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• Remarks for the Convocation Ceremony at the Meghnad Desai Academy of Economics Mumbai, August 3rd 2018 Urjit R. Patel

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• Grand Finale of Startup India Madhya Pradesh Yatra

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• Anti-dumping Duty on the import of Specified Stainless Steel Products for providing relief to the Domestic Steel Industry

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Notifications

Customs

• 56/2018 - dated 3-8-2018 - Cus
  Seeks to further amend notification No. 50/2017-customs dated 30th June 2017, to give effect to serial number 14A and the second proviso to the notification from the 18th day of september, 2018 to delay the implementation of retaliatory duties against US till 18th September, 2018.

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• 70/2018 - dated 3-8-2018 - Cus (NT)
  Appoints Commissioner of Customs (Appeals)

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• 69/2018 - dated 3-8-2018 - Cus (NT)
  Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2018

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• 68/2018 - dated 3-8-2018 - Cus (NT)
  Courier Imports and Exports (Clearance) Amendment Regulations, 2018

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GST - States

• 21/2018- State Tax (Rate)- S.O. 219 - dated 26-7-2018 - Bihar SGST
  Exempts the intra-state supplies of handicraft good

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• 20/2018- State Tax (Rate)- S.O. 218 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 5/2017- State Tax (Rate), dated the 29th June, 2017,

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• 19/2018- State Tax (Rate) - S.O. 217 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 2/2017- State Tax (Rate), dated the 29th June, 2017

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• 18/2018- State Tax (Rate) - S.O. 216 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 1/2017- State Tax (Rate), dated the 29th June, 2017

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• 17/2018- State Tax (Rate) - S.O. 215 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017

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• 16/2018- State Tax (Rate) - S.O. 214 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 14/2017- State Tax (Rate), dated the 29th June, 2017

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• 15/2018-State Tax (Rate) - S.O. 213 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017

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• 14/2018-State Tax (Rate) - S.O. 212 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

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• 13/2018-State Tax (Rate) - S.O. 211 - dated 26-7-2018 - Bihar SGST
  Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29thJune, 2017

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• S.O. 206 - dated 16-7-2018 - Bihar SGST
  Amendment in Notification No. S.O. No. 173, dated the 21st September, 2017

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• SRO 242 - dated 30-5-2018 - Jammu & Kashmir SGST
  Seeks to waive the late fee for FORM GSTR-3B

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• CT/LEG/GST-NT/12/17/584 - dated 30-7-2018 - Nagaland SGST
  CT Notification issued to extend the due date for filing of FORM GSTR-6.

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• F.12(56)FD/Tax/2017-Pt-III-076 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the F.12(56)FD/Tax/2017-pt-I-44 dated 29-06-2017, related to notifying the goods in respect of which no refund of unutilised input tax credit shall be allowed.

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• F.12(56)FD/Tax/2017-Pt-III-075 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification No. F.12(56)FD/Tax/2017-pt-I-41 dated 29-06-2017, related to schedule of exempted goods under section 11(1) of RGST Act, 2017

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• F.12(56)FD/Tax/2017-Pt-III-074 - dated 26-7-2018 - Rajasthan SGST
  Amendments in this department's Notification number F. 12(56)FD/Tax/2017-Pt-I-40 dated 29th June, 2017.

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• F.12(56)FD/Tax/2017-Pt-III-073 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification No. F.12(56)FD/Tax/2017-pt-I-49 dated 29-06-2017, to notify the definition of Business with respect to activities of Central Government/State Government or local bodies.

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• F.12(56)FD/Tax/2017-Pt-III-072 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification No. F.12(56)FD/Tax/2017-pt-I-52 dated 29-06-2017, related to notifying the activities or transactions which shall be treated neither as a supply of goods nor a supply of service.

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• F.12(56)FD/Tax/2017-Pt-III-071 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification F.12(56)FD/Tax/2017-pt-I-51 dated 29-06-2017, related to notifying the categories of services on which tax shall be paid under reverse charge mechanism.

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• F.12(56)FD/Tax/2017-Pt-II-077 - dated 26-7-2018 - Rajasthan SGST
  Notification under section 11(1) of RGST Act, 2017 regarding certain changes in rates on Handicraft items.

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• 19/2018-State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 02-2017 State Tax (Rate)dated the 30th June, 2017

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• 18/2018-State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

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• 17/2018-State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Insert explanation in an item in notification No. 11-2017 State Tax (Rate), dated the 30th June, 2017

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• 16/2018-State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 14/2017- State Tax (Rate), dated the 30th June, 2017

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• 15/2018- State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30thJune, 2017

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• 14/2018- State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017

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• 13/2018-State Tax (Rate) - dated 26-7-2018 - Sikkim SGST
  Amendment in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017

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Circulars / Instructions / Orders

GST - States

• PUBLIC NOTICE - dated 18-5-2018
  E-Way Bill for intra-state movement of goods in the State of Punjab was postponed for a period of two months from 01-04-2018 vide Notification No. PA/ETC/2018/63 dated 29-03-2018.

Highlights / Catch Notes

GST

• Classification of Supply - The activity of Body Building undertaken by the Applicant, carried out on the chasis supplied by the principal in the capacity of a job worker, would amount to ‘Composite Supply’ - to be classified as supply of goods or supply of services as per the predominant component involved.
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• Works contract - Composite supply - pooling sub-station, Transmission Lines and Feeder Bay Work - work involves both supply of goods and supply of services, which are naturally bundled - all the three agreements shall have the same classification for the purpose of taxation under the GST Laws.
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• Hon. Minister Piyush Goyal briefing media about the decisions taken in the GST Council Meet, at a press conference in New Delhi
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Income Tax

• Installation PE in India - since no business activities were carried out by the assessee in India, it is unreasonable to conclude that the assessee has any PE in India.
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• Denial of exemption u/s.11 - proof of charitable activities - there is no merit in the action of the lower authorities for decline of claim of exemption in respect of excess of income over the expenditure which was transferred to the education fund
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• Denying the exemption u/s 11 - the income over and above amount for ₹ 25 lacs from the business activity i.e. from the exploitation of its right to hold Davis Cup will be treated as ‘business income’ of the assessee and will be liable to include in its total income.
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• Deduction u/s. 54 - CIT(Appeals) as an appellate authority cannot deny the benefit of deduction - If the assessee is entitled to deduction while computing the long term capital gain, that cannot be denied on the ground that such a claim was not before the AO
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Customs

• Provisional release of the seized goods - SCN issued by the JC - it is not understood as to how and why the provisional release was granted by the Commissioner who as per Show Cause Notice is not the competent adjudicating authority in this case - the action of the Commissioner granting the provisional release itself is not sustainable and liable to be set aside.
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• Seeks to further amend notification No. 50/2017-customs dated 30th June 2017, to give effect to serial number 14A and the second proviso to the notification from the 18th day of september, 2018 to delay the implementation of retaliatory duties against US till 18th September, 2018.
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Service Tax

• Classification of services - The aircraft has been allowed to be used by the charterer but the effective control and possession remains with the appellant. The appellant will charge the charterer on the basis of the actual time consumed on engine on to engine off. - the services will be rightly classifiable under the category of “Supply to Tangible Goods Service” (STGS)
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• Business support service - sharing of the infrastructure of the hospital - It is merely collecting money on behalf of the diagnostic centres for providing them the number of patients. Hence, the share of revenue so collected in the hands of the appellant cannot be categorized as a consideration for rendering the health service to the patients - considerations received undoubtedly is for such activities as are enumerated in the definition of the BSS.
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• Small service provider - exemption upto ₹ 10 lacs - use of brand name of others - Benefit of N/N. 6/2005-ST - Business Auxiliary services - the appellant is not entitled to the benefit of such SSI Notification since the appellant has provided the services under the brand of ‘Voltas’.
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• Renting of Immovable Property Service - notional interest accruing on the lumpsum amounts received - There is no justification for inclusion of the notional interest in the consideration for payment of service tax.
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• Cold storage facility for agricultural produce - The appellant is not engaged in the activity of storage of agricultural produce - the benefit as storage of agricultural produce cannot be provided.
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• Cargo Handling Services - moving of goods within the factory cannot be brought within the definition of “Cargo and Cargo Handling Service”
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• Reverse charge mechanism - Levy on the account of appellant having been paid subscription in foreign currency for obtaining membership of World Medical Association (WMA) under reverse charge mechanism - The authorities failed to specify the nature of services, directed to do so.
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Central Excise

• Manufacture - Conversion of pure platinum to colloidal platinum catalyst - The name, character and use of the raw material (metallic platinum) thus, changes by its emergence into colloidal platinum - process amounts to manufacture
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• Manufacture - the process of conversion of spent platinum catalyst into regenerated platinum catalyst cannot be considered as a process resulting in emergence of a new product having a different name, character or use.
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• CENVAT Credit - availing CENVAT credit before few days in advance is only a procedural lapse - CENVAT Credit rightly allowed.
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VAT

• Liability of tax - replacement during warranty period - The contention of the appellant that replacement of motor vehicle part during warranty period by the appellant assessee is not covered in sale and, therefore, is not liable to tax, is not correct - demand of tax confirmed.
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Case Laws:

• GST

• 2018 (8) TMI 286
  E-Way Bill - intra-state movement - Unmanufactured Tobacco - Is any applicability of the notification number F-A-3-08-2018-1-V (43), DATED 24-4-2018 issued under MPGST Act/Rules on “unmanufactured tobacco” under CTH 2401? - Held that:- The description of goods for which e-way bill is required for intra state movement of the goods are Cigarette/tobacco and tobacco products but the Chapter/Heading/Sub-heading/Tariff item specified for these goods are 2402 & 2403 - The description of goods in Chapter HSN 2402,2403 does not contain “unmanufactured tobacco”. The generation of e-way bill is not required for intra-state movement of “unmanufactured tobacco” within the State of Madhya Pradesh as per the conditions given in the notification. Ruling:- The notification number F-A-3-08-2018-1-V (43), DATED 24-4-2018 issued under MPGST Act/Rules 2017, is not applicable on “unmanufactured tobacco” described under Chapter HSN 2401 i.e. to say generation of e-way bill for intra-state movement of “unmanufactured tobacco” described under Chapter HSN 2401 is not required as per the notification.

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• 2018 (8) TMI 285
  Levy of IGST - Supply of goods under Deemed Export - Mid-term Review - scope of Section 97(2) of the CGST Act 2017 - complete procedure for S.No.l & Explanation 1 of the Notification 48/2017-Central Tax dtd.18.10.2017 for supplies by DTA to Advance Authorisation Holder - applicability of Foreign Trade Policy 2015-2020 Mid Term Review and specify procedure for procuring goods from DTA against Advance Authorisation. Complete procedure for S.No.l & Explanation 1 of the Notification 48/2017-Central Tax dtd.18.10.2017 for supplies by DTA to Advance Authorisation Holder - Held that:- As per Section 97(2)(b) ruling can be sought on ‘Applicability of a notification under the provisions of this Act’, but the Applicant have not questioned applicability of a notification. On the contrary, the applicant admittedly agrees to the applicability of the notification. In the given circumstances, there is no reason to entertain this part of the instant Application. Applicability of Foreign Trade Policy 2015-2020 Mid Term Review and specify procedure for procuring goods from DTA against Advance Authorisation - Held that:- The question is beyond the ambit of Section 97(2), as it relates to applicability of Foreign Trade Policy 2015-2020 Mid Term Review and the related procedure. Obviously, the Applicant has sought a ruling for applicability of Foreign Trade Policy which is clearly beyond the ambit of Authority for Advance Ruling constituted under CGST Act 2017/MPGST Act 2017 - the application is not worthy of admission. Ruling:- The Application for Advance Ruling filed by the Applicant is rejected in terms of Section 98(2) of the CGST Act 2017/MPGST Act 2017.

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• 2018 (8) TMI 284
  Classification of Supply - activity of Body Building on the chasis supplied by the Principal, which is undertaken as a job work - utilising and consuming tangible material from their (Applicant’s) end for fulfilling the job work. Whether the supply is to classified as supply of goods or supply of services? - Held that:- In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case - the activity of Body Building undertaken by the Applicant, carried out on the chassis supplied by the principal in the capacity of a job worker, would amount to ‘Composite Supply’ as define under CGST Act 2017/MPGST Act 2017. What would be the appropriate classification and applicable rate of tax for the above transaction? - Held that:- The classification in case of a composite supply has to be arrived at on the basis of ‘predominant element’ of a composite supply, which in turn would be the ‘Principal Supply. Needless to say that as per the definitions envisaged under the statute the predominant component of the composite supply involved in the activity of Body Building would determine the rate of tax applicable on such composite supply. In case the ‘Goods’ part is predominant, then the Composite Supply in this case would be governed by Chapter 87 depending upon the nature of body being built by the Applicant on the chasis supplied by the principal. In case, the ‘Service’ part is predominant in the composite supply, then the rate of tax would be applicable as per Heading No.9988 - Due to incomplete information provided by the Applicant, the Authority finds itself constrained to provide any definitive ruling on this aspect. Ruling:- The activity of Body Building undertaken by the Applicant, carried out on the chasis supplied by the principal in the capacity of a job worker, would amount to ‘Composite Supply’ as define under CGST Act 2017/MPGST Act 2017. The rate of tax on such Composite Supply would be determined by the predominant component involved in such Composite Supply in terms of Section 8(a) of the CGST Act 2017, depending upon the character of the body being built on the chasis, which would eventually be classifiable under Chapter 87 of the Tariff. On the other hand, if the predominant element happens to be the Service part, then the Principal supply would be classified under Heading no.9988.

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• 2018 (8) TMI 283
  Whether the Project Development and Management Consultancy services (PDMC) provided by Applicant to recipient under the Contract for AMRUT; and the Project Management Consultancy services (PMC) under the Contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? - Held that:- Similarly, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private participation, and Affordable Housing in Partnership - the various objectives of both the above Schemes are covered in more than one clauses of the Eleventh and Twelfth Schedule referred in Article 243G and 243W of the Constitution, including Housing, drinking water, sanitation, Park, etc. - the Consultancy services rendered by the applicant under the Agreement with Urban Administration & Development, Government of Madhya Pradesh, Bhopal for implementation of AMRUT and PMAY are in relation to functions entrusted to Municipalities under Article 243-W and to Panchayats under Article 243-G of the Constitution of India. Would such services provided by the Applicant qualify as “Pure services (excluding works contract service or other composite supplies involving supply of any goods)” as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017[Notification No. FA -3-42/201711/v (53) dated 30 June 2017, as amended by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under CGST Act, 2017 and corresponding notifications issued under MPGST Act, where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and MPGST, respectively - Held that:- These items are not naturally bundled into the service being provided by the applicant Further, as per the contracts, such items have to be disposed off by the applicant after completion of contract as directed by the principal, and the cost of such items would be over and above the contract price. Therefore, such purchases of equipments, furnitures, etc. would neither make the said contract of consultancy as a works contract, nor a composite contract, and therefore, due to purchase of Equipments, Furnitures, etc. by the applicant, and getting reimbursement of their costs from the employer will not affect eligibility of the applicant for NIL rate of tax in Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 and corresponding notification issued under MPGST Act, 2017 in respect of Consultancy services rendered under the contract in question. Ruling:- The PDMC provided by Applicant to recipient under the Contract for AMRUT; and the PMC under the Contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India. Such services provided by the Applicant would qualify as “Pure services (excluding works contract service or other composite supplies involving supply of any goods)” as provided in serial number 3of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 as amended by Notification No. 2/2018-Central Tax (Rate) dated 25 January, 2018 issued under CGST Act, 2017 and corresponding notifications issued under MPGST Act in respect of the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and MPGST, respectively.

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• 2018 (8) TMI 282
  Works contract - Composite supply - natural bundling of supply of goods and services - What is HSN in which the service of construction of new 33/220 kV Pooling i Substation at Badwar, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot-I) under World Bank Financing shall fall? - What is HSN in which the service of construction of new 33/220 kV Pooling Substation at Barsita Desh, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot - II) under World Bank Financing shall fall? - What is HSN in which the service of construction of new 33/220 kV Pooling Substation at Ramnagar Pahad, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot - III) under World Bank Financing shall fall? - What shall be the applicable rate of CGST and SGST on the supply being made under the contract? Held that:- On a reading of the scope of work, it is clear that the work involves both supply of goods and supply of services, which are naturally bundled. Accordingly, the under this agreement, the applicant is providing a composite supply within the meaning of Section 2 of the CGST Act, 2017 - Perusal of the agreements that the applicant has entered into with RUMS shows that the scope of work in all the three agreements are identical, accordingly, all the three agreements shall have the same classification for the purpose of taxation under the GST Laws - applicability of SI.No. 6 of Schedule II of the CGST Act, 2017 and MPGST Act, 2017, to the work being done by the applicant. The work being done by the applicant being a Composite Supply and Works Contract u/s 2 is clearly a supply of service. Ruling:- The HSN Code for the supply of composite service in the nature of Works Contract under the all the three agreements entered into with RUMS, shall be 9954/995423 - The rate of CGST on the supply being made under the contract shall be according to Notification No. 11/2017 - Central Tax (Rates) - The rate of MPGST on the supply being made under the contract shall be also 9 percent as per the corresponding Notification to the Notification No. 11/2017- Central Tax (Rates), issued under MPGST Act,2017.

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• 2018 (8) TMI 281
  Appealable Order - non establishment of the Appellate Tribunal - Section 112 of the CGST Act - Seizure proceedings - detention of vehicle - Inter- State transaction - Held that:- This issue is now serious as because of non establishment of the Tribunal, the parties are unnecessarily approaching this Court whereas, in case of establishment of Tribunal they can easily file the appeal under Section 112 of the Act - Issue notice to the newly added respondent nos. 3 and 4, Union of India and Goods & Service Tax Council to explain as to why the previous orders of this Court are not complied with and as to why the statutory Tribunal is not setup so far. This explanation must be furnished within two weeks by the respondents. In the instant case, on account of non establishment of the Appellate Tribunal, the dealers or the parties aggrieved are approaching the High Court. The respondents must proceed forthwith in this regard - since the petitioner is a registered company and the purchaser is a Government of India Enterprise, this Court finds it proper and appropriate to protect the interest of parties. The goods are directed to be released on furnishing an indemnity bond to the extent of the value of tax only and not the penalty amount, so as indicated in the impugned seizure order passed under Section 129 (3) - The goods seized along with vehicle be released forthwith - The petitioner be permitted to download a fresh E-way bill immediately after release of the goods and vehicle.

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• Income Tax

• 2018 (8) TMI 280
  Registration granted u/s 12AA withdrawn - proviso to Section 2(15) applicability - Held that:- There is no factual dispute. We do not find any merit in the appeal. The proviso to Section 2(15) of the Act has been made applicable w.e.f. 1st April, 2009, therefore, the registration of the respondent-authority under Section 12AA of the Act could not have been withdrawn with effect from 1st April, 2008 on the ground that proviso was added on 1st April, 2008. Accordingly, we affirm the finding recorded by the Tribunal. - Decided in favour of assessee

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• 2018 (8) TMI 279
  Interpretation of the Explanation to Section 251 of the Income Tax Act, 1961 - power of CIT(A) to direct the AO to reopen the case - Assessee was discovered to have not disclosed the donations received by the assessee or claimed deduction thereon - Proceedings for imposing penalty on the assessee were taken up under Section 271 - Commissioner (Appeals) perceived that the assessment of tax was erroneous and required the Assessing Officer to reopen the matter to ascertain whether further income had escaped tax and also affirmed the penalty imposed on the assessee - Tribunal did not disturb the penalty that was imposed on the assessee but found that the further direction issued by the Commissioner (Appeals) for the Assessing Officer to reopen the matter was unwarranted Held that:- The key expression in the Explanation to Section 251 of the Act is “any matter arising out of the proceedings in which the order appealed against was passed”. As would be evident from Section 251(1) of the Act, an appeal against an order of assessment is covered by clause (a) thereof and an appeal against an order imposing a penalty is covered by clause (b) thereof. In other words, independent appeals arise out of orders of assessment and orders imposing any penalty. In this case, the order that was before the Commissioner (Appeals) was an order imposing a penalty and not an assessment order. If the assessment order that resulted in the penalty proceedings being instituted was before the Commissioner (Appeals), the direction may have been justified. However, in the appeal arising out of the order imposing the penalty, the matter pertaining to some other income escaping assessment did not fall within the purview of the expression “any matter arising out of proceedings in which the order appealed against was passed”. Accordingly, the view taken by the Appellate Tribunal in the context of the limited authority exercised by the Commissioner (Appeals) in course of adjudicating an order imposing a penalty, does not warrant any interference.

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• 2018 (8) TMI 278
  Valadity of assessment u/s 153A - Held that:- We are of the opinion that whether there was a satisfaction recorded or not and thereafter proceedings under Section 153C of the Income Tax were initiated or not and whether the learned Tribunal and the departmental representative proceeded further erroneously and /or on erroneous facts, it may firmly be brought to the notice of the learned Tribunal by way of rectification application so that the learned Tribunal may consider the file and the material on record and consider the same whether the learned Tribunal has proceeded on erroneous facts and /or what was considered by it was even submitted by the Deputy Commissioner is borne out from the material on record /file or not, we are not further entering into the merits of the case at this stage and we relegate the department to submit appropriate rectification application /applications before the learned Tribunal pointing out what is stated in the present Tax Appeals with supporting material and if such application /applications are preferred within the period of four weeks from today, we direct the learned Tribunal to decide the same in accordance with law and on its own merits

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• 2018 (8) TMI 277
  Addition observing undisclosed receipt - system of accounting followed - Held that:- As assessee has submitted that the assessee is following cash system of accounting and since the said amount after deducting TDS was actually received by the assessee only in the previous year relevant to AY 2014-15, the same has been duly offered to tax in AY 2014-15. He has contended that this claim of the assessee can be verified by the AO before allowing the relief to the assessee. Since Ld. DR has not raised any objection in this regard, direct the AO to verify the claim of the assessee and allow proper relief on such verification. Amount earned as interest on PPF - whether it being exempt from tax ought to have been allowed as exempt income - Held that:- As assessee has contended that this claim of the assessee also can be verified by the AO before allowing the relief to the assessee. DR has not raised any objection in this regard. Accordingly, this issue is also restored to the file of the AO for deciding the same afresh after verifying the claim of the assessee that the amount in question represented interest on PPF account received for the earlier years. Addition of sum credited in the Capital account - Held that:- Respectfully following the order of the Tribunal on the similar issue in assessee’s own case for AY 2010-11, set aside the impugned order of Ld.CIT(A) for the year under consideration on this issue and restore the matter to the file of the AO for deciding the same afresh as per the similar directions as given for AY 2010- 11.

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• 2018 (8) TMI 276
  LTCG on sale of shares treated as unaccounted income - not allowing the exemption u/s. 10 (38) as claimed - Held that:- Assessee has taken to various documents in the paper book as referred to above which specifically prove the purchase of shares made by assessee genuinely which were also sold genuinely. The transactions were carried through Demat account and banking channel on which STT has been paid by assessee. Report of the SEBI was not adverse in nature against the assessee because name of the assessee did not appear therein for conducting dubious transaction. The report of the Investigation Wing and other material was not confronted to assessee, therefore, the same cannot be read in evidence against the assessee. More so, the general enquiry conducted about modus operandi without verifying bogus long term capital gains could be indicated to take action against some of the assessees. A specific query and material against the assessee should have been brought on record to put assessee under liability. However, in the present case, the entire documentary evidence on record have not been disputed by the authorities below and there is no rebuttal to the explanation of assessee. No adverse material have been brought on record against the assessee. Further, no proper enquiry have been conducted by the A.O. on the documentary evidences filed by assessee. Whatever statements have been referred to in the order were general in nature with whom assessee did not have any transaction. As relying on Meenu Goel vs. ITO [2018 (3) TMI 1020 - ITAT DELHI] assessee has entered into genuine transaction of sale and purchase and therefore, satisfied the conditions of Section 10(38) of the I.T. Act. The assessee is entitled for exemption under the same provision. - decided in favour of assesse

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• 2018 (8) TMI 275
  Addition of suppressed sale and payments to partners - submission of ld A.R. is that if there is difference in sale between the assessee’s return of income and the figure shown in the VAT return, then the only net profit should be added and not the entire suppressed sale figure - Held that:- From the audited accounts filed before us, it is observed that the gross profit as per the audited accounts of the assessee of the year under consideration was ₹ 2.54%. We, therefore, direct the Assessing Officer to restrict the addition on account of suppressed sale to 2.54% of the said sales. Thus, this ground of appeal of the assessee is partly allowed. Disallowance of interest and salary to partners by applying section 144 read with Sec. 185 & 184 - most of the documents/information/records have been submitted during assessment proceedings - Held that:- We find that the Assessing Officer has just made general statement that the assessee has not complied with the terms of the notice u/s.142(1) of the Act. The above remark of the Assessing Officer is not only vague but also contrary to his quoted recording also. Thus, in our considered view, the Assessing Officer was not correct in holding that the assessment was made u/s.144 of the Act and consequently in disallowing deduction for partner’s interest and remuneration. We, therefore, delete the said disallowance and allow this ground of appeal of the assessee. Rejections of books of accounts u/s 145 - customers from whom advances have been received did not confirm the balances at year-end, rather he could have added those advances only instead of rejecting the books of accounts - Held that:- From the perusal of net profit shown and accepted by the department in the preceding five assessment years, we find that the highest net profit shown was 0.25%. It is an established position of law that after rejection of book results of the assessee, the Assessing Officer cannot make a wild guess but has to estimate the income of the assessee on the basis of past accepted results. We find that in assessment year 2007-08, the assessee had shown the highest net profit at 0.25%. Therefore, we modify the order of the CIT(A) and direct the Assessing Officer to compute the income of the assessee for the year under consideration by applying net profit rate of 0.25% and partly allow the ground of appeal of the assessee Disallowance of ESI contribution and EPF contribution - amounts are deposited before due date of filing the return of income - Held that:- Respectfully following the decision of Hon’ble Supreme Court in the case of Rajasthan Beverage Corporation Ltd. [2017 (7) TMI 1087 - SUPREME COURT OF INDIA], we delete the addition of ₹ 6976/- being employee’s contribution to ESI and ₹ 47,278/- being employee’s contribution to EFP deposited before filing of the return of income u/s.139(1) of the Act and allow this ground of appeal of the assessee.

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• 2018 (8) TMI 274
  Disallowance u/s 14A r.w.r. 8D - specific disallowance of interest u/s 14A - Held that:- We find that the assessment year under consideration is 2008-09. It is from this year onwards that the mandate of Rule 8D has come into force. All the Hon’ble High Courts are unanimous that the disallowance u/s 14A is to be made only on ‘reasonable basis’ up to assessment year 2007-08. Such a disallowance has to be made in a holistic manner de hors any reference to individual items of expenses, including interest, as is the position under rule rule 8D applicable from the year under consideration. Thus, it is graphically clear that the question of specific disallowance of interest u/s 14A read with rule 8D is and could have occurred for the first time in the year in question and there can be no presumption that the AO accepted in the preceding year that no interest bearing funds were utilized by the assessee in making the investments in respect of opening balance of investments, so as to disable him from making disallowance of interest under rule 8D, even if it is proved that interest bearing funds were utilized for the purpose. Ergo, this contention of the ld. AR is jettisoned. It is, therefore, directed that the Assessing Officer will examine the question of disallowance of interest under Rule 8D(2)(ii) in the above hue and compute the same after allowing opportunity of being heard to the assessee. As decided in CIT vs. Holcim India P. Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] that if there is no exempt income, there can be no question of making any disallowance u/s 14A. A fortiori, the disallowance u/s 14A of the Act has to be restricted to the amount of exempt income. As such, we direct that the disallowance computed by the Assessing Officer in the fresh proceedings should not cross the amount of exempt dividend income of ₹ 3,38,62,672/- - Assessee's appeal is partly allowed for statistical purposes.

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• 2018 (8) TMI 273
  Denial of exemption under section 80P - credit facilities extended to ‘nominal’ members far exceeds ‘regular’ members, and therefore, principle of mutuality has been broken - Held that:- In the present case, the nominal members are members as provided in the Act and that deposits received and loan advanced to the nominal cannot be treated as from non-members or from public and in the nature of banking business. That being so, then, an assessee engaged in primary agriculture activities and providing credit facilities and agriculture facilities to the farmer-members of a particular region, claim of deduction under section 80P(2) cannot be denied. It is not denied by the Revenue that the activities of the assessee society are of primary agriculture activities. Competent authority has also recognized the assessee as primary agriculture credit society. In the earlier assessment year also, Revenue has accepted this fact and allowed the claim of the assessee - We allow the claim of the assessee and direct the ld.AO to re-compute income of the assessee by allowing claim under section 80P(2)(4) - Decided in favour of assessee

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• 2018 (8) TMI 272
  Condonation of delay - power of CIT(A) to condone the delay - company in liquidatation taken over by the official liquidator (OL) - reasons for delay for filling application by OL from 95 upto 316 days - Held that:- A perusal of opening part of the application would indicate that ld. OL has not specified any reasons for filing the appeals late. Vague explanation has been given wherein it has been pleaded that he has remained occupied in work assigned by the Hon’ble High Court. He has no where demonstrated as to how he could not apply his mind for filing the appeals upto 316 days. To our mind this vague explanation given by the ld.OL is not sufficient and convincing. It is hardly believable that if a file has been assigned to the OL, then he could not have glance on the file for more than 300 days and remained occupied in other works. There could be some other correspondence with his office exhibiting that it was practically impossible for him to attend large volume of work, if any. But no data has been provided along with explanation. Therefore, we are satisfied that there is no plausible explanation for huge delay from 95 upto 316 days.

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• 2018 (8) TMI 271
  Addition of bogus loan entries - Held that:- AO did not seek any further explanation or detail from the assessee. He solely relied upon the investigation wing enquiry regarding the Bhanwarilal group. Commissioner of Income Tax (Appeals) in this regard has correctly made the observation that the assessee having given all the necessary details and has discharged its onus, it was incumbent upon the assessing officer to make further enquiry if he was not convinced by the submissions of the assessee. We find that assessing officer has displayed total lack of application of mind by not even issuing a notice to the loan creditors. We find that it is settled law that while making any disallowance/addition, AO needs to make due enquiry. In this case, the Assessing Officer has not made any enquiry whatsoever. As noted hereinabove, the assessee has given all the documentary evidences including confirmatory letters, bank statements and financial statements of the creditors. AO has not found any error therein. It has been held in number of cases that when the assessee has given all the necessary details of the loan creditors, including the identity, creditworthiness and genuineness of the transaction, the onus upon the assessee is discharged. Thus the assessee has discharged its onus. The Assessing Officer has not rebutted any of the submission of the assessee and the documentary evidence in this regard. - Decided against revenue

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• 2018 (8) TMI 270
  Installation PE in India - Gulf of Kuchch (GOK) Project - Held that:- These grounds had been adjudicated by this tribunal in assessee’s own case for the Asst Years 2012-13 and 2013-14 [2018 (7) TMI 1808 - ITAT KOLKATA] wherein it was held that the assessee herein constituted Installation PE in India. Further it was held that no attribution can be done on receipts from Offshore supply of equipment and Offshore provision of services. Only the profits attributed to the activities carried out in India shall be taxable and accordingly, only the onshore supply of equipment and onshore services rendered by the assessee, would have to be considered for taxing the onshore receipts at 10%. Tax the AMC fee received as business profits attributable to an Installation PE in terms of Article 5(3) of the India-Netherlands DTAA - Held that:- We find that this tribunal had considered the same issue in assessee’s own case for the Asst Years 2010-11 , 2011-12 , 2012-13 and 2013-14 and had held that the AMC services provided post completion of installation actvities at the site of the customer, cannot lead to carrying out installation activities for the purpose of constitution of an Installation PE in India. Further, it was also held that the presence of an Indian Contractor to which the assessee has sub-contracted the whole AMC work on principal – to- principal basis , does not create any virtual presence of the assessee in India. It was held that since no business activities were carried out by the assessee in India, it is unreasonable to conclude that the assessee has any PE in India. With regard to the aspect of AMC services being considered as FTS, we hold that these services do not make available any technical know how or knowledge to the personnel of the customer as per Article 12(5) of the India-Netherlands DTAA.

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• 2018 (8) TMI 269
  Entitled to deduction u/s. 80P(2)(a)(i) - assessees are primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 - Held that:- Admittedly, the assessees are primary agricultural credit societes registered under the Kerala Cooperative Societies Act, 1969. The Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. (2016 (4) TMI 826 - KERALA HIGH COURT) had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). - Decided against revenue

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• 2018 (8) TMI 268
  Revision u/s 263 - non sufficient compliance for the provision of the Income Tax Act, 1961, - CIT-A directed to AO to examine the limited issue, i.e., relating to allowance of deduction u/s. 80-IB of the Act after giving sufficient opportunity of being heard - Held that:- The submission of return within time as specified under sub section (4) of section 139 has to be taken as sufficient compliance for the provision of the Income Tax Act, 1961, as it was expounded that the sub section (1) and sub section (4) of section 139 have to be read together and, hence, it is the inevitable conclusion that a return made within the time specified in sub section (4) has to be considered as having been made within the time prescribed in sub section (1) of the Act. On the touch stone of the above said exposition, we find that there is no infirmity in the Assessing Officer’s order on granting the assessee the deduction u/s. 80IB of the Income Tax Act, 1961. It is not the case that the returns were filed beyond the time limit for sub section 139(4). Even otherwise, we find that the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] has expounded that when there are two views possible and the Assessing Officer has adopted one of the views with which the Commissioner of Income Tax does not agree, the same will not give rise to granting the Commissioner of Income Tax the power to exercise jurisdiction u/s. 263 of the Income Tax Act, 1961. Here we find that in view of the above said decision, if the Assessing Officer has formed a view that the assessee deserves deduction u/s. 80IB, having complied with the overall provisions of section 139, it cannot be said that the Commissioner of Income Tax can legally assume jurisdiction u/s. 263 if he does not agree with the view of the Assessing Officer. Thus we quash the direction of the Commissioner of Income Tax to examine the allowability of deduction u/s. 80IB for both the years. Assessee has claimed double deduction on account of partners salary - Held that:- Commissioner of Income Tax has overlooked the submission of the assessee that it is entitled to deduction u/s.80IB. In this view of the matter, the entire additional income was not liable for taxation. Still the assessee has offered ₹ 65 lacs for taxation which the assessing officer has accepted, which cannot be said to be erroneous so as to be prejudicial to the interest of revenue. Furthermore we note that in this regard except for the statement on survey there was no corroborative material supporting the addition of ₹ 1.55 crores. As held in the case of S kader Khan [2013 (6) TMI 305 - SUPREME COURT] dehorse any corroborative material addition only on account of a statement obtained under survey is not sustainable. In the background of aforesaid discussion and precedent we find that the assessing officers acceptance of ₹ 65 lakh offered for taxation cannot be said to be erroneous so to be prejudicial to the interest of revenue - decided in favour of assessee

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• 2018 (8) TMI 267
  Revision u/s 263 - deduction u/s. 80IB(11C) - Commissioner of Income Tax in this case has directed the AO to ascertain whether the referral income, income from running a nursing college, interest, rental income from medical store are to be allowed as deduction u/s.80IB(11C) - Held that:- We note that u/s. 80IB(11C) of the Act, the deduction will be available in case of an undertaking which derives profits from business of operating and maintaining the hospital located anywhere in India. Now it is undisputed that the assessee is in the business of operating and maintaining the hospital. In this regard, we note that in the preceding assessment year, i.e., for assessment year 2011-12, under a scrutiny assessment u/s. 143(3), for all the above mentioned items of income noted, the assessee was granted deduction u/s. 80IB(11C). There is no mention anywhere that there is any change in the facts and circumstances of the case from that prevailing in the previous assessment year. In this regard, we note that the present assessment year 2012-13, is not the initial year for grant of deduction u/s. 80IB(11C). It is the settled proposition of law that this deduction cannot be disturbed if the initial year for scrutiny of said deduction is not disturbed. In this view of the matter, in our considered opinion, the Commissioner of Income Tax assumes jurisdiction u/s. 263, is not at all sustainable in law. - Decided in favour of assessee.

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• 2018 (8) TMI 266
  Reopening of the assessment under section 147/148 - transaction of purchase of property requires verification because of Non-PAN financial transaction relate to assessment year under appeal - Held that:- The reasons recorded for reopening of the assessment shows that A.O. received the information that assessee purchased immovable property for which verification is required for Non-PAN financial transaction related to A.Y. 2009-2010. A.O. in order to verify the transaction, issued notice to the assessee. In the absence of any reply from the side of the assessee, A.O. noted that same established that assessee has willfully concealed her income by way of not disclosing the source of the investment. A.O. in the reasons did not record if he has reason to believe that income chargeable to tax has escaped assessment which is mandatory condition for reopening of the assessment. A.O. also noted in the reassessment order that assessee, in reply to the notice under section 148, submitted that return originally filed for assessment year under appeal on 30.07.2009 may be treated as return filed in compliance to the notice under section 148. Copy of the return originally filed by assessee along with other annexures are filed in the paper book, which shows that assessee has filed original return of income within time mentioning her PAN, supported by computation of income, in which the major source of income of the assessee is income from salary, on which, tax at source have been deducted and supported by Form-16. Therefore, A.O. has wrongly mentioned in the reasons for reopening of the assessment that the transaction of purchase of property requires verification because of Non-PAN financial transaction relate to assessment year under appeal. A.O. in the reasons for reopening of the assessment, reopened assessment merely because assessee has nothing to say in the matter which is irrelevant to the reopening of the assessment. Since the A.O. did not apply his mind to the information and that A.O. did not record in the reasons that he has reason to believe that income chargeable to tax has escaped assessment, therefore, A.O. recorded incorrect and non-existing reasons for reopening of the assessment in the matter. - Decided in favour of assessee

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• 2018 (8) TMI 265
  Addition on account of estimated excess consumption - rejection of books of accounts u/s 145(3) - Held that:- AO accepted book result of the assessee in preceding and subsequent Assessment Years 2007-08 and 2009-10 in scrutiny assessment u/s 143(3) of the Act and no additions of similar nature have been made. In Assessment Year 2010-11 also, AO accepted the book result of the assessee, as submitted, u/s 143(3) of the IT Act. Therefore instead of re-casting the trading account per month, AO should have brought some independent and concrete material on record to reject book results in Assessment Year in appeal. AO issued a show-cause notice for rejection of books of account on 29.12.2010. The assessee filed the reply as well as document and produced the books of account before the AO immediately on 31.12.2010, denying the allegation of the AO. The AO instead of appreciating the explanation of the assessee in a proper perspective with reference to the material available on record passed the assessment order on the same day on 31.12.2010. AO without verifying the fact from the books of accounts of the assessee and record nature of business of the assessee rejected the books of accounts without any just reasons. The reasons given by the AO were based only upon the data supplied by the assessee. AO on the basis of details supplied by the assessee prepared trading account monthly and also re-casted the stocks and other items for the purpose of rejecting the book result of the assessee. AO without bringing any material fact against the assessee on record made the addition against the assessee. It appears to be a case of hypothetical calculations made by the AO on the basis of entries in the books of accounts for making the additions against the assessee without any justification. Further, AO has not pointed out if assessee violated any accounting standards prescribed by rules for maintenance of books of accounts. It is a case of hurried assessment framed by the AO without verifying the facts from the record of the Revenue Department particularly when in preceding and subsequent assessment years, the similar claim of assessee have been accepted by the AO. CIT(A) on proper appreciation of facts and material on record correctly did not agree with the findings of the AO. During the proceeding before Tribunal, no material have been produced to rebut the findings on fact recorded by the Ld. CIT(A) in favour of the assessee - No justification for the AO to reject the books of accounts u/s 145(3) of the Act or to make the addition. - decided in favour of assessee

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• 2018 (8) TMI 264
  Denial of exemption u/s.11 - proof of charitable activities - activities of the assessee-trust are for advancement and development for the benefit of its members and public - Held that:- Considering that the activities of the assessee-trust are for advancement and development for the benefit of its members and public, the art, science, technology and engineering of plastics, natural and synthetic and other related materials which is achieved through regular technical lectures, seminars and workshop on topical interest, and international conference held in India by inviting foreign delegates and faculties, conducting one-year part-time Diploma Courses, conducting Plastics Processing Operators Training (PPOT) in 100 Govt. Industrial Training Institutes (ITI) all over India, conducting two-day short-term courses and publishing IPI Journals giving latest technological developments. Assessee trust it is not carrying on any activity which can be termed as "commercial activity" or an activity in the nature of trade, commerce or business by conducting an International Conference. The assessee is disseminating knowledge on the subject of plastics by different ways and means like holding courses, holding conferences, holding lectures, publishing literature on new subjects, publishing its journal, conducting diploma course, etc. Thus the activities of the assessee are purely of a general public utility inasmuch as it helps all those classes of persons connected with the plastics and its application with a useful knowledge and information from time to time. Accordingly, we do not find any merit in the action of the lower authorities for decline of claim of exemption in respect of excess of income over the expenditure which was transferred to the education fund. - Decided in favour of assessee

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• 2018 (8) TMI 263
  Denying the exemption u/s 11 - assessee is hit by section 13(8) of the Income Tax Act - holding of the Devis Cup Tie was not the object of the assessee - proof of charitable activities - Held that:- We find that except the above commercial exploitation of rights during the holding of Davis Cup match, there is no dispute that the pre-dominant object of the assessee society is promotion of game of tennis including the selection of players, training of players, and conduct of matches both domestic and international. We, therefore, do not think that the other income of the assessee such as from nominal registration fees or nominal coaching fees which is charged so as to attract only the genuinely interested trainees/players can be said to be its business income as it sans the profit motive. The Ld. Counsel has explained in detail that the holding of matches for commercial purpose is not a regular feature or regular activity of the assessee. Even the Davis Cup was also organized as part of the objects of the assessee and even the incidental income has been ploughed back and applied for carrying the aims and objects of the assessee society. Therefore, we hold that though the assessee Chandigarh Lawn Tennis Association is carrying out the activities towards the advancement of objects of general public utility, which is its dominant activity, however, it has also involved in carrying out the incidental activity in the nature of trade, commerce or business in the course of actual carrying out of advancement of object of general public utility by way of commercially exploiting the rights of hosting the “Davis Cup Match”. As per the amended provisions of section 2(15), 10(23C), 11(4), 11(4A), 13(8) and 143(3) and in view of our discussion and interpretation of the relevant provisions as given above, the income of the assessee from the incidental and commercial activity i.e. income from organizing of Davis Cup up to the limit prescribed as per the second proviso to section 2(15), which for the assessment year under consideration is ₹ 25 lacs, will be treated as income from ‘charitable purposes’ and the assessee will be entitled to claim the exemption u/s 11 of the Act up to that extent in respect of the said income along with other income, if any, from the non-business activity of the assessee. However, the income over and above amount for ₹ 25 lacs from the business activity i.e. from the exploitation of its right to hold Davis Cup will be treated as ‘business income’ of the assessee and will be liable to include in its total income. The assessing officer, therefore, is directed to bifurcate the income from commercial activity and non-commercial activity and assess the income of the assessee as directed above. - Decided partly in favour of assessee

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• 2018 (8) TMI 262
  Disallowance of expenditure claimed since assessee was still to set up its manufacturing facility - allowable busniss expenditure - Held that:- The learned Commissioner of Income-tax (Appeals) fell in error in accepting the contention of the assessee that it had set up its business. Just because learned Assessing Officer computed the income by making a disallowance on the returned loss would not entitle the assessee to claim that an expenditure otherwise not allowable under the Act has to be allowed. Expenditure claimed by the assessee was incurred prior to setting up its business. We therefore have no hesitation in setting aside the order of the learned Commissioner of Income-tax (Appeals) and restoring the order of the learned Assessing Officer. - Decided in favour of revenue

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• 2018 (8) TMI 261
  Levy of penalty under clause (k) of sub-section (2) of section 272A read with section 200(3) - whether section 273B of the Act which speaks of 'reasonable cause' for any defaults, does not include clause (k) of sub-section (2) of section 272A? - Held that:- In identical facts of the case in the case of CIT v. Accounts Officer, Telecom [2005 (5) TMI 22 - ALLAHABAD HIGH COURT] held that the delay in filing the prescribed returns are only technical nature and since there is no loss to the Revenue, the default is of only technical nature and the delay due to the ignorance of the appellant was accepted by the hon'ble High Court. Similarly, in the case of CIT (TDS) v. Executive Engineer [2009 (8) TMI 643 - PUNJAB & HARYANA HIGH COURT] and CIT v. Superintending Engineer, PWD [2002 (5) TMI 13 - RAJASTHAN HIGH COURT] in the cases involving identical facts, held to the similar effect. The hon'ble apex court in the case of Hindustan Steel Ltd. v. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] observed that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. The apex court further observed that penalty will not also be imposed merely because it is lawful to do so. The powers are to be exercised judiciously. - Decided in favour of assessee

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• 2018 (8) TMI 260
  Deduction u/s. 54 denied - no residential house in the old property - long term capital gain on transfer of the old property under the JDA - assessee submitted that there is clear evidence to show a building viz., a residential house existed over the old property and therefore the provisions of section 54 of the Act ought to have been applied - Held that:- As far as the question whether section 54 of the Act would apply, it is clear from the Settlement Deed dated 24.07.2002 under which the assessee got the property that there was a residential house in the property which was subject matter of JDA. The CIT(Appeals), however, proceeded on the basis that the JDA does not make any reference to any building. It cannot come to the conclusion that the subject matter of the JDA is only a land, because the reference is to property bearing Bangalore Mahanagara Palike Old No.66 & 67, New No.17 situated at Ittamadu Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore – 560 085. As far as the deduction u/s. 54F of the Act on the question whether if under a JDA multiple flats are given to the owner whether deduction u/s.54F of the Act can be given, the decision of the Hon’ble High Court of Karnataka and the other decision cited before us supports the plea of the assessee that deduction u/s. 54F of the Act cannot be denied on the ground that multiple flats are obtained by the assessee. See COMMISSIONER OF INCOME-TAX VERSUS SMT. KG. RUKMINIAMMA [2010 (8) TMI 482 - KARNATAKA HIGH COURT] as held it has to be construed as "a residential house" and the assessee is entitled to the benefit accordingly. In that view of the matter, the Court held that the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay Capital Gains tax as the case squarely falls under sec. 54 of the Income Tax Act, 1961. Also the conclusion of CIT(Appeals) that since the assessee did not file return of income making claim for deduction u/s. 54 of 54F of the Act, the same cannot be allowed, we are of the view that the CIT(Appeals) as an appellate authority cannot deny the benefit of deduction which the assessee is entitled to in law. As decided in DR. ASHWIN BALCHAND MEHTA VERSUS JOINT COMMISSIONER OF INCOME TAX, RANGE – 11 (2) , MUMBAI [2015 (11) TMI 1057 - ITAT MUMBAI] even if a claim is not made before the AO, it can be made before the appellate authorities. We are of the view that a lawful claim of deduction cannot be denied by the revenue authorities purely on technicalities. Tax is to be levied and collected in accordance with the law. If the assessee is entitled to deduction while computing the long term capital gain, that cannot be denied on the ground that such a claim was not before the AO - Decided in favour of assessee

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• 2018 (8) TMI 259
  TPA - selection of companies as comparable - activities mixed up for distorting the functionality and justifying the selection of channel owner companies - Held that:- The assessee is mainly engaged in the business of marketing and distribution of satellite channels of Cartoon Network, CNN, POGO, HBO, etc. i.e., TV channels owned by Turner International Inc. Its functions are primarily driven towards promoting the channels and associated proprietary intangible assets of Turner Group, thus companies functionally dissimilar need to be deselected. The Tribunal in assessee s own case for the Assessment Year 2007-08 and 2008-09 and also in Assessment Year 2006-07 have held that Satellite TV channels and cable network operators have significantly different operating models and provide earning model and once the Tribunal has held that such channel/content owner companies should not be included for the purpose of comparability analysis, then there is no reason why the TPO is again selecting such companies for the purpose of benchmarking the ALP of the assessee s distribution segment. Before us, the learned counsel has already clarified on the basis of material available on record that distribution activity and ancillary/production activity of the assessee are two distinct set of transactions for which, not only separate benchmarking has been done but also separate remuneration has been earned for each of the said activities. So far as production activity is concern, the same has been found at arm s length by the TPO and once these are two different segments then there is no justification to mix up the functions of such ancillary activities with that of distribution activity so as to justify selection of such channel/content owner companies, especially when transaction from such ancillary services constitutes only 4% of the value of the international transaction of the assessee. Apart from that, the assessee is providing these services as a captive service provider for which it is remunerated separately and ALP of such transaction is not in dispute. Accordingly, we reject the DRPs and TPO action for mixing the functionality of distribution and production activities which are in fact independent and also separately benchmarked. We are in tandem with the contention of the learned counsel that these two activities cannot be mixed up for distorting the functionality and justifying the selection of channel owner companies.

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• Customs

• 2018 (8) TMI 257
  Provisional release of the seized goods - Section 110A of the Customs Act, 1962 - Jurisdiction - action of the Commissioner granting the provisional release, whether valid or not? - Held that:- From the perusal of the provision of Section 110A and Circular No. 35/2017, it is quite evident that in case of provisional release of the seized goods is to be decided by the adjudicating authority who is competent to decide the case as per show cause notice - In this case, it is on record that Show Cause Notice has been issued by the Joint Commissioner of Customs who is also the adjudicating authority in the case. In the circumstances, it is not understood as to how and why the provisional release was granted by the Commissioner who as per Show Cause Notice is not the competent adjudicating authority in this case - the action of the Commissioner granting the provisional release itself is not sustainable and liable to be set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 256
  Principles of Natural Justice - appellant did not appear for the hearing nor was he represented by any counsel - Held that:- It is seen that this appellant was not represented even during the early hearings on 5.6.2018, 10.4.2018 and 07.03.2018. The only obvious inference that can be drawn is that the said appellant is not interested in pursuing the appeal - appeal was dismissed for non-prosecution. Penalty u/s 114 (i) of the Customs Act on CHA - Held that:- The matter has been more amply covered in their favour in the case of CC (Exports) Chennai Vs I. Sahaya Edin Prabhu [2015 (1) TMI 1032 - MADRAS HIGH COURT] wherein the Hon’ble High Court of Madras has held that for the failure of the CHA to discharge his functions, penalties are provided in the CHALR, and imposition of penalty under Section 114 (i) of the Customs Act is unwarranted. The adjudicating authority while dropping proposed penalty under Section 114AA has categorically found that no mens rea can be alleged against these appellants - the alleged infraction should at the most result, if at all, be initiation of proceedings under CHALR 2004 and surely not under the Customs Act, 1962. Appeal allowed in part.

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• Corporate Laws

• 2018 (8) TMI 258
  Oppression and mismanagement - Held that:- When major part of property of the Company has been shown as sold off by Respondent No.2 who had tendered resignation as Director but went ahead to execute the sale deed, there was oppression and mismanagement on the part of Respondents 2 to 4. Respondent No.7 was mother-in-law of Respondent No.3 who is brother of the Respondent No.2. Looking to such relationship of these parties and the fact that it is Private Limited Company, keeping in view the contradictory pleadings claiming exchange viz-a-viz the sale deed claiming that money had been paid, the transaction in favour of Respondent No.7 was apparently suspicious and transfer without authority. Respondent No.2 could not have passed title to Respondent No.7. If Respondent No.7 did not have legal title, she could not pass it to Respondent No.8. Respondent No.8 failed to verify if his vendor had duly acquired title and thus failed to act reasonably to show bona fides. The learned NCLT rightly set aside both the sale deeds dated 3rd November, 2015 and 4th November, 2016. The arguments on behalf of Respondents 3, 4 and 7 depending action of Respondent No.2 executing sale deed relying on Section 176 of the Companies Act, 2013 cannot be accepted. Section 176 provides that no act done by a person as Director shall be deemed to be invalid, notwithstanding that it is subsequently noticed that the appointment was invalid for reasons stated in the Section. In the present set of facts where it is shown that the Respondent No.2 had incurred disqualification and had also resigned, the act of such Respondent in subsequently going ahead and holding himself out as Director to execute sale deed cannot be protected. Such acts attract criminal liability. Although other allegations were made in the Company Petition but NCLT did not find any merits in the other contentions raised. Even before us, no sufficient material has been pointed out to examine the other averments of oppression and mismanagement made in the Company Petition and thus we do not find any reason to interfere in that part of the finding of NCLT where it rejected other reliefs sought by the Original Petitioner.

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• Service Tax

• 2018 (8) TMI 255
  Demand of service tax as a co-courier (co-loader) - appellants had realized service value from other couriers for providing service as co-courier (co-loader) - whether the appellant is liable to pay service tax as a co-loader? - Held that:- The Department cannot contend that the clarification issued vide Circular dt. 23.08.2007 would be applicable to the disputed period - As per the 1996 Circular, it is categorically clarified by the Department that a co-loader is not chargeable to service tax - The Tribunal in the case of United Business Xpress India P. Ltd. [2016 (12) TMI 440 - CESTAT NEW DELHI] has considered the very same issue and the applicability of both the Circulars. The issue was then held in favour of the assessee - the demand raised in respect of co-loader cannot sustain. Demand of service tax - reverse charge mechanism - Commission paid to foreign agent who delivered the couriers/packets booked by appellant to the foreign customers - Held that:- The said issue is squarely covered by the decision in the case of First Flight Couriers Ltd. [2016 (8) TMI 145 - CESTAT MUMBAI], where it is held by the Tribunal that the role of the overseas entity commences and ends beyond the border of India and therefore, Rule 3 of Taxation of Service Rules has no application - demand do not sustain. Impugned order cannot sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 254
  Renting of Immovable Property Service - appellants were renting out immovable properties such as commercial complexes, shops, etc., to private parties - principle of mutuality of interest - N/N. 06/2005-ST dt. 01.03.2005 was amended by N/N. 08/2008 - Held that:- It is seen that for the period 2007-08, when the threshold limit was 8 lakhs, the rent received from non-members is only ₹ 3,36,180/-. Similarly, for the period from 2008-09 to 2010-11, the rent collected from non-members is less than ₹ 5 lakhs. It is very much clear that the amounts collected from non-members would fall below the threshold limit and the demand of service tax on this ground cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 253
  Business Auxiliary Services - various services - Benefit of N/N. 08/2005 of 1st March, 2005 - whether the activities of the respective appellant are classifiable as business auxiliary service or as manufacture? - Whether the appellant is entitled for the benefit of exemption N/N. 6/05 dated 1st March, 2005? Held that:- In the present case, no doubt the raw-material in question has undergone the simple process of cutting of angles, punching of angles, notching, bending, drilling etc. but the fact remains is that those activities are being carried out with the sole objective of those raw-material to be customised into a particular shape and size, even in terms of the location of hole/punch there upon, to suite the design, specification of the final product that is the transmission tower in hand. The processes undertaken by the appellants on the raw-material provided to them by L & T in L & T’s own premises are nothing but the processes to convert the said raw-material into a customized part of the whole transmission tower and as such, the activity of the appellants is incidental/ ancillary to the completion of the manufactured product and thus, falls under Section 2 f (i) of Central Excise Act, 1944 - It is clear that it includes the activity which is production or processing of the goods for or on behalf of the client but does not include any activity that amounts to manufacture of excisable goods. Benefit of exemption N/N. 6/05 dated 1st March, 2005 - Held that:- It is an admitted fact that M/s. L & T had been performing further manufacturing activities on the semi finished goods processed by the appellants and have been clearing those goods on payment of duty as well as under the exemption Notification without payment of duty. The appellants have failed to provide the gross aggregate value received by them from M/s. L & T even before the first Appellate Authority. Resultantly, the authority has rightly denied the benefit of exemption N/N. 06/05 to the appellants - With respect to granting the benefit of exemption N/N. 08/2005-ST dated 1st March, 2005 also, there is no infirmity in the impugned order. The impugned activity is manufacture - Benefit of N/N. 08/2005 of 1st March, 2005, is confirmed, however, denying the benefit of N/N. 06/2005 dated 01.03.2005 - appeal allowed in part.

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• 2018 (8) TMI 252
  Classification of services - transport of passengers by air - whether the activity carried out by the appellant will fall under the category of STGS under Section 65(105)(zzzzj) or under Section 65(105)(zzzo) under the category of ‘Transportation of Passengers by Air’ within India? - Held that:- The entire helicopter has been given on hire for the use of charterer. It is evident from the other terms and conditions that the same is supplied alongwith licenced/ trained pilot and necessary engineering crew to operate the helicopter. It is noteworthy that individual seat is not offered by the appellant but the complete aircraft. Further, the aircraft has been allowed to be used by the charterer but the effective control and possession remains with the appellant. The appellant will charge the charterer on the basis of the actual time consumed on engine on to engine off. An identical issue regarding charter hire of helicopter came up before the Tribunal in the case of Global Vectra Helicorp Ltd. vs. CC (Import) Mumbai [2015 (2) TMI 974 - CESTAT MUMBAI (LB)], in that case the appellant therein claimed the classification of their service as Transportation of Passengers by Air Service. But, the Tribunal after very detailed discussion of the facts and various case law on the subject as well as CBEC Circular No. 20/2009 dt. 09.02.2009 came to the conclusion that the services will be rightly classifiable under the category of “Supply to Tangible Goods Service” - Thus, the classification of the service under the category of STGS upheld. Time Limitation - Held that:- The show cause notice dated 21.03.2011 has rightly invoked the extended period of limitation for raising service tax demand - The second SCN dated 24.04.2012 has been issued for demand of Service Tax only within the normal time limit. But the normal time limit at the relevant time (upto 28.05.2012) was one year. Hence, demand falling beyond one year period for SCN dated 24.04.2012, cannot be sustained and is set aside. Appeal disposed off.

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• 2018 (8) TMI 251
  Condonation of delay in filing appeal - sufficient explanation for delay not provided - Service of notice - the appellant denied receiving even the Show Cause Notice dated 20.11.2006 - GTA Service - non-payment of Service tax - Held that:- No doubt, the serving of notice vide original post is not the prescribed mode of service in view of Section 37C of CEA but the apparent fact remains is that the Order under challenge has been in furtherance of the Appeal of assesse itself who has been appearing throughout proceedings. He even marked his personal presence before the Commissioner(Appeals) on 25.02.2014 where after the matter was reserved for Orders. There is nothing on record by the appellant to explain as to why he has failed to inquire about the outcome of his proceedings till October 2014, i.e. for subsequent 10 months thereof. There is no explanation to this delay of 15 days. Law of limitation is absolutely settled that delay even of single day has to be explained - the applicant is held to have not observed the due diligence. Even after receiving the recovery notice, he failed to be prompt. Above all, as per Section 85 of Finance Act, Commissioner (Appeals) had no discretion to condone the delay beyond a period of 3 months. There is no apparent cause and no reasonable explanation by the appellant for the observed delay rather his conduct is observed as inaction and lack of due diligence since the stage of SCN itself - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 250
  CENVAT Credit - rent paid for the period, prior to registration - Held that:- The main reason why the Cenvat credit has been disputed by Revenue is that the premises for which rent was paid along with service tax was not part of the centralised registration till it was granted to the respondent with effect from 28.1.2015. It is further seen that the application for such centralised registration was submitted as early as on 9.1.2013, but the same was granted only in 2015. Similar issue decided by Tribunal in the case of CCE & ST Vs. Samsung India Electronics Pvt. Ltd. [2015 (11) TMI 1570 - CESTAT ALLAHABAD], where it was held that a service provider can avail Cenvat credit of Service Tax paid on various input services, as long as the said services are used for providing output-taxable services. Credit remains allowed - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 249
  Renting of Immovable Property Services or business support service - sharing of the infrastructure of the hospital - Held that:- It is apparent from record and is an admitted fact also that with three of the diagnostic centres the appellant has entered into separate agreements. The relevant extract has been mentioned in the show cause notice. The perusal thereof shows that the diagnostic centres are allowed by the appellant to install and operate their equipments in the space provided by the appellant within the Hospital premises with the condition and they shall be creating necessary infrastructure at their own cost as is required specifically for their equipment - there is no element of rent is involved in the transaction between the appellant and diagnostic centre. Business Support Service - Held that:- The appellant is providing the facilitation of customer relationship to the diagnostic centres by employing their own staff to collect the amount from the patients against the diagnostic services to be received by them but to be provided by the diagnostic centres in the appellants premises. Though the appellant herein has relied upon the fact that the health services are exempted from the Tax Net and diagnosis is included as the part of the health services, but the fact remains is that in the given arrangements/agreements with the diagnostic centres the appellant is not providing any health service. It is merely collecting money on behalf of the diagnostic centres for providing them the number of patients. Hence, the share of revenue so collected in the hands of the appellant cannot be categorized as a consideration for rendering the health service to the patients - considerations received undoubtedly is for such activities as are enumerated in the definition of the BSS. The Notification dated 20.06.2012 is also not applicable at least to the amount of consideration @ 25% of the total revenue collected by the appellant from the patients to receive diagnostic health services from the diagnostic centres using appellant s infrastructural. Management Maintenance Repair Services to the food courts (FC) in the appellant s premises - Held that:- The agreement of the appellant with the FCs is to provide basic amenities as water, electricity, air-conditioning, power back-up etc. It is also apparent that appellant while allowing the FCs to operate in its premises, it charges a fixed amount and also receives a fixed percentage from the sale of these FCs. The activity is opined to not to fall under definition of MMR in Section 65 (64) of the Act. It is rather an admitted fact that w.e.f. 01.06.2007, the appellant is discharging his liability as Renting of Immovable Property Services qua the consideration received from these FC s - demand set aside. The remaining findings qua imposition of interest and the penalties are held to have no infirmity as the appellant is a big health service provider and cannot be presumed to be ignorant of law nor is so permitted. Appeal allowed in part.

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• 2018 (8) TMI 248
  Small service provider - exemption upto ₹ 10 lacs - use of brand name of others - Benefit of N/N. 6/2005-ST - Business Auxiliary services - difference between the dealer price and the price at which the appellant ultimately sells the airconditioner - Installation and maintenance Service - activities of installation and maintenance carried out by the appellant for which consideration was received from M/s Voltas Limited - Held that:- The issue of taxability has never been raised before the lower Appellate Authority. A perusal of the impugned order reveals that the only issue raised before the lower authority was the entitlement to N/N. 6/2005 - the fresh argument on merits cannot be allowed to be raised at the stage of the present appeal. Entitlement of the appellant for the benefit of N/N. 6/2005-ST - Held that:- The service of installation and maintenance has been provided by the appellant on behalf of M/s Voltas, as per the agreement entered with them - there is no reason to interfere with the finding of the lower authority that the appellant is not entitled to the benefit of such SSI Notification since the appellant has provided the services under the brand of ‘Voltas’. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 247
  Renting of Immovable Property Service - notional interest accruing on the lumpsum amounts received by the appellant from M/s Vibrant Academy (India) Pvt. Limited. - The case of the Department is that in addition to the service tax payable on the rent, the liability for the tax also extends to the notional interest accruing on the lumpsum deposit received by the appellant from the lessee - Held that:- Such a stand is not justified particularly in view of the decision of the Tribunal in the case of Murli Realtors Pvt. Ltd. [2014 (9) TMI 461 - CESTAT MUMBAI], where it was held that notional interest on interest free security deposit cannot be added for the purpose of levy of service tax on renting of immovable property. There is no justification for inclusion of the notional interest in the consideration for payment of service tax - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 246
  Supply of Tangible Goods Services - non-payment of Service tax during the period 2006-07 to 2010-11 - demand on the ground that the terms of the lease were such that it amounts to deemed sale on which appropriate VAT has already been paid - Held that:- It cannot be held that the leasing of the goods were covered by the Supply of Tangible Goods Service - Demand set aside. Valuation - inclusion of value of diesel supplied by service recipient - Held that:- The issue is no longer res-integra and has been decided in favor of the respondent in the case of Gurmehar Construction V/s Commissioner of Central Excise, Raipur [2014 (7) TMI 849 - CESTAT NEW DELHI] - demand set aside. Supply of machines by the respondent which were used in connection with mining by M/s ASI - demand for period 2006-07 to 2007-08 - Held that:- The nature of the activity is Supply of Tangible Goods and such activity was made liable to payment of Service Tax only in w.e.f. 16/05/2008 - It is settled provision of law that the activity covered by a new service cannot be included in any other activity prior to such date - demand set aside. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 245
  Man Power Recruitment and Supply Agency Service - appellant was engaged in rendering Man Power Supply Service for cutting, packing, stitching, loading and unloading major textile articles - Held that:- The appellant has been supplying temporary labour to various companies such as M/s Relogistic India Pvt. Ltd. The consideration accounted in the balance sheet is towards supply of said temporary man power - Since the supply of temporary man power is covered by the definition of Manpower Recruitment of Supply Agency, the appellant is liable to discharge the Service Tax under the category. Cold storage facility for agricultural produce - Held that:- The appellant is not engaged in the activity of storage of agricultural produce - the benefit as storage of agricultural produce cannot be provided. A part of the demand has also been made against amounts which were reimbursed to the appellant towards expenses incurred. The demand of service Tax on such reimbursible expenses cannot be sustained. Penalties will be chargeable proportionately. Appeal allowed in part.

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• 2018 (8) TMI 244
  Penalty - the entire Service Tax amount demanded in the impugned order has already been deposited by the appellant along with applicable interest even before the issue of SCN - Time limitation - Held that:- It is seen that the entire account of Service Tax has been paid along with applicable interest prior to Show Cause Notice - there is no justification for penalty - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 243
  Taxability - Amount paid as Withholding Tax which was on top of the amounts paid to M/s Shell for the consultancy - Held that:- It is not in dispute that the entire consideration for consultancy, as per the agreement, has been offered for payment of Service Tax by the appellant - The Revenue’s view is that the withholding tax also needs to be included for payment of Service Tax is not justified as has been held by the Tribunal in the case of M/s Magarpatta Township Development & Construction Company Ltd. V/s Commissioner of Central Excise, Pune-III [2016 (3) TMI 811 - CESTAT MUMBAI] - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 242
  Cargo Handling Services - Activity of loading of material in vehicles, segregation of material, unloading, stacking and shifting of materials within the factory premises - Held that:- The Hon’ble Supreme Court has also in the case of Dy. Commissioner, Central Excise & Anr. vs. Sushil & Company [2016 (4) TMI 987 - SUPREME COURT] had an occasion to examine the similar case, where it was held that two conditions for considering any service to be 'Cargo Handling Service' need to be satisfied, namely; (1) there must be a cargo i.e. a packed or unpacked commodity accepted by a transporter or carrier for carrying the same from one destination to another. It is only after the commodity becomes a cargo, its loading and unloading at the freight terminal for being transported by any mode becomes a cargo handling service, if it is provided by an independent agency and; (2) the service provider must independently be involved in loading-unloading or packing-unpacking of the cargo. It is evident that moving of goods within the factory cannot be brought within the definition of “Cargo and Cargo Handling Service” - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 241
  Franchisee Services - appellant is a franchisee of trade name “Shemrock” owned by Dr. Bimla Arora. The appellant, in turn, entered into agreements with various parties wherein the name was licensed to run the Preparatory schools against consideration as per the terms and conditions agreed - Held that:- The similar case of M/s.Saanj and Savera Educational & Welfare Trust [2015 (10) TMI 1053 - CESTAT NEW DELHI] wherein under identical set of facts and clauses of agreement, the Tribunal has held that as per the agreement clauses, the transaction between the parties do not fall under the definition of Franchisee services due to non-satisfaction of the fourth condition - the demand for the period upto 16.06.2005 was set aside. Further, liability w.e.f. 16.06.2005, the adjudicating authority is directed to re-compute and recover the same alongwith interest. The appellant further has requested for the cum-duty benefit. The same may be extended in terms of Section 67. Appeal allowed in part and part matter on remand.

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• 2018 (8) TMI 240
  Club or association service - appellant, the Indian Medical Association, is held to have been rendering/ receiving services in lieu of membership of club or association service - Held that:- The appellant has been charged under the category of Club & Association Service which stands held as ultra vires by the High Court of Gujarat in the case of Sports Club of India [2013 (7) TMI 510 - GUJARAT HIGH COURT] as also by the High Court of Jharkhand in the case of Ranchi Club [2012 (6) TMI 636 - JHARKHAND HIGH COURT] - the demand for service tax on the appellant under the category of Club or Association Service, rendered to its members is set aside. Reverse charge mechanism - Levy on the account of appellant having been paid subscription in foreign currency for obtaining membership of World Medical Association under reverse charge mechanism - Held that:- We are unable to see clearly what is the nature of service received by the appellant from WMA - the demand of service tax on such amounts paid to WMA set aside and matter remanded to the original authority to examine whether any service has been received by the appellant from WMA which is liable for payment of service tax and pass denovo Orders on the subject - matter on remand. Appeal allowed in part and part matter on remand.

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• 2018 (8) TMI 239
  Time Limitation - Section 73(1) - suppression of facts or not? - Whether the CESTAT has committed an error of law in deciding the issue of limitation, especially on account of strong documentary evidence provided by the department? - Held that:- In the present case the period covered by the SCN was from January 1, 2010 to March 19, 2010. The SCN was dated 31.03.2013 - Similarly, for demand pertaining to 'development and supply of content service' the period involved was 2007-08 to 2010-11 and the SCN was issued after eighteen months limitation period invoking the extended period of limitation. SCN itself shows that every details was maintained by the respondent in their usual course of years. They had not suppressed or manipulated any fact to evade the payment of service tax or to avail Cenvat credit. When the ingredients of proviso to Section 73 (1) of the Act were not present, the invocation of extended period of limitation was not correct to issue SCN. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 222
  Outdoor catering service - only premise on which the impugned order came to a conclusion regarding non-liability to the service tax is on the basis of payment arrangement for the facilities like space, infrastructure provided by the club to the respondent - Held that:- There is no merit in the present appeal - The appeal is accordingly dismissed.

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• 2018 (8) TMI 214
  Taxability of club membership fees - Society registered under Society Registration Act, 1860 - service rendered by club to its members - Held that:- The appeal is dismissed on the ground of delay in terms of the signed order.

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• Central Excise

• 2018 (8) TMI 238
  CENVAT Credit - inputs - H.R. Coils, Zinc and LPG Gas - Department contended that process of galvanization carried out by the assesse does not amount to manufacture therefore, the Hot Dipped Galvanized Steel coils cleared by the appellants cannot be regarded as excisable goods and therefore, the CENVAT Credit availed on the same is not eligible. Held that:- CBEC vide Circular No. 19/19/1994-CX dated 09.02.1994 has clarified that galvanization does not amount to manufacture within the meaning of Section 2(f) of Central Excise Act, 1944 - Tribunal has also held that galvanization does not amount to manufacture. Tribunal in the case of Faridabad Iron & Steel Traders Association [2003 (11) TMI 107 - HIGH COURT OF DELHI] has held that merely because of change in tariff item, the goods do not become excisable goods - As the galvanization does not amount to manufacture, the inputs in the galvanization cannot be used in the manufacture of excisable goods; therefore, the credit of the same is not available to the appellants in terms of CENVAT Credit Rules, 2004. Credit not allowed - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 237
  Manufacture - Regeneration of platinum catalyst from spent platinum catalyst - Process of making colloidal platinum catalyst from pure platinum - processes amounting to manufacture - manufacturer - extended period of limitation - penalty u/r 209A of the Central Excise Rules, 1944. Whether in the facts and circumstances of the case excisable goods viz. colloidal platinum catalyst from platinum and also regenerated platinum catalyst from spent platinum catalyst amounts to manufacture? - Held that:- The process involves only conversion of spent platinum catalyst into regenerated/activated platinum catalyst. As a catalyst, by its very nature, does not participate in the chemical reaction but only facilitates the same, the spent platinum catalyst will still remain what it was before being used as a catalyst, namely, a platinum catalyst. By implication, regeneration of spent platinum catalyst into reactivated platinum catalyst will not bring about a new product in existence with a different name, character or use - the process of conversion of spent platinum catalyst into regenerated platinum catalyst cannot be considered as a process resulting in emergence of a new product having a different name, character or use - demand set aside. Conversion of pure platinum to colloidal platinum catalyst - Held that:- The appellants have converted metallic platinum into colloidal platinum for which there is a separate entry in Chapter Heading 28.4300 as “colloidal precious metals” of the Central Excise Tariff Act. It is but obvious that the metallic platinum by itself cannot be used for the purpose, as desired by MDPL, for which obviously only colloidal platinum will do the job as the catalyst of choice. The name, character and use of the raw material (metallic platinum) thus, changes by its emergence into colloidal platinum. In the event, the process is definitely one amounting to manufacture for the purpose of Section 2(f) of the Act - process amounts to manufacture - demand upheld. Whether M/s. MDPL, in whose premises the colloidal platinum catalyst and regenerated platinum catalyst are alleged to be manufactured are liable for any penalty under Rule 209A of the Central Excise Rules, 1944 - Held that:- Penalties imposed on CIL and MDPL are set aside since the disputes revolve around interpretations on whether the processes concerned amount to manufacturing or otherwise. Appeal allowed in part.

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• 2018 (8) TMI 236
  CENVAT credit - supplementary invoices issued by the manufacturer - suppression of facts or not? - Rule 9 (1) (b) of CCR 2004 - Held that:- The connected matters are pending adjudication before the Hon’ble Apex Court, issue being already sub-judiced the element of confusion cannot be ruled out - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 235
  Clandestine manufacture and removal - it is alleged that induction furnace units engaged in the manufacture of MS ingots as that of M/s.Ispat India, Noticee No.1 are showing consumption of electricity in excess to ideal limit and are also engaged in suppression of production and clandestine removal - Held that:- The initial demand of ₹ 9.57 Crore, the major part thereof i.e. ₹ 9.43 Crores has already been dropped - to that extent, the order under challenge is upheld. Remaining penalty of ₹ 50,000/- - Held that:- Appellant herein is merely a consignment agent that too for providing the raw material to the manufacturer i.e. M/s. Ispat India Ltd. The allegations of any clandestine removal of final products by M/s. Ispat India Ltd. are opined to have no bearing upon the appellant unless and until there is a corroborative cogent evidence to support the allegation of providing the raw-material without discharging the liability - the same is missing on the record - penalty not warranted. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 234
  CENVAT Credit - duty paying invoices - credit availed on the basis of supplementary invoices issued by M/s. SECL - suppression of facts or not? - Rule 9 (1) (b) OF Cenvat Credit Rules - Held that:- No doubt, it is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon’ble Apex Court. It is clear to hold that the issue of wrong availment on part of M/s.SECL is still a debatable issue. In such circumstances, the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 233
  CENVAT Credit - Whether the CENVAT credit of ₹ 3,03,35,302/- taken in the books of accounts by the appellant prior to making payment of service tax to the provider of the services can be denied to them as per the provisions of Cenvat Credit Rules, 2004? - Held that:- Though the credits might have been availed in the books of accounts their actually utilization have only started after the month of October, 2007 and before that the appellant have already made payment of service tax - there was no utilization of Cenvat credit without payment of service tax. - Reliance was placed in the case of India Cement Ltd. vs. CCE [2018 (5) TMI 603 - CESTAT HYDERABAD], where it was held that in the absence of any dispute that appellant has discharged the tax liability as per the provisions of service tax rules and there also being no dispute as to eligibility to avail CENVAT credit of the said service tax payable by them under reverse charge mechanism, availing CENVAT credit before few days in advance is only a procedural lapse - CENVAT Credit rightly allowed. CENVAT Credit - duty paying documents - whether CENVAT credit amounting to ₹ 1,24,80,608/- which has also been rejected on additional ground that same was not taken on the basis of prescribed documents as provided under Rule 9 (1) of Cenvat Credit Rules is available to them or not? - Held that:- The document on the strength of which Cenvat credit of ₹ 1,24,80,608/- was taken, are having all the particulars which are relevant for availing the Cenvat credit. The document has all the details such as name, service provider, service recipient, value of service and service tax amount paid - though the document may not be with the name of the prescribed document which are mentioned under Rule 9 (1) of Cenvat Credit Rules, 2004, however, all the particulars which are relevant have mention on it. Even if the document on the strength of which Cenvat credit is taken is not in the prescribed documents under Rule 9 of the Cenvat Credit Rules, 2004, the credit cannot be denied, if it has the necessary details - Since, the document of the appellant has all the relevant particulars as are the requisite under the above-mentioned proviso to Rule 9 (2), the credit cannot be denied to the appellant - credit allowed. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 232
  Liability of tax - replacement during warranty period - inclusion of amount received by the appellant from the principal by way of Credit Notes towards cost of the parts replaced during warranty period - Held that:- The contention of the appellant that replacement of motor vehicle part during warranty period by the appellant assessee is not covered in sale and, therefore, is not liable to tax, is not correct - the decision in the case of MOHD. EKRAM KHAN & SONS VERSUS COMMISSIONER OF TRADE TAX, UP. [2004 (7) TMI 341 - SUPREME COURT OF INDIA], is squarely applicable to the facts of present case, where it was held that the transaction was subject to levy of tax as has been rightly held by the High Court. Tax liability upheld - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 231
  Tax under the compounding scheme - Held that:- There are no merit in the present Special Leave Petitions - The Special Leave Petitions are accordingly dismissed.

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• 2018 (8) TMI 230
  Validity of the amendment to Rule 2(n) of the Kerala Abkari Shops Disposal Rules, 2002, introduced as per S.R.O.No.144/2007dated 14.2.2007, published in the Gazette Extraordinary dated 14.2.2007 and also the notification issued by the Government as S.R.O. No.145/2007 dated 14.2.2007, fixing the strength of ethyl alcohol in different types of toddy - Held that:- Application is dismissed.

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• 2018 (8) TMI 229
  Withdrawal of Civil Appeals - Taxability of PVC sheets - whether exempted under the notification pertaining to textile? - Held that:- In view of the prayer made in the application, the Civil Appeals are dismissed as withdrawn.

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• 2018 (8) TMI 228
  Penalty of the stoppage of four increments with cumulative effect - Held that: - There is no reason to entertain this special leave petition, which is, accordingly, dismissed.

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• 2018 (8) TMI 227
  Reassessment of tax - Section 21 of U.P. Trade Tax Act, 1948 - Change of Opinion - Held that:- The special leave petition is dismissed on the ground of delay.

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• 2018 (8) TMI 226
  Condonation of delay - Tribunal refused to condoned the delay of 448 days which occurred in filing of the Reference applications - Held that:- We are not satisfied that the delay that has occurred in filing the present Special Leave Petitions should be condoned - That apart, the delay of 448 days in filing the Reference Application(s) was refused to be condoned by the High Court on grounds which we consider to be good grounds - Special Leave Petitions are dismissed both on the ground of delay as well as on merits.

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• 2018 (8) TMI 225
  Extension of time to comply with the impugned order - petitioner states that the matter has become infructuous and seeks permission to withdraw the petition - Held that:- Permission is granted - The special leave petition is accordingly dismissed as withdrawn.

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• 2018 (8) TMI 224
  Stay application / request for waiver of the condition of pre-deposit - Time Limitation - petitioner states that the matter has become infructuous and seeks permission to withdraw the petition - Held that:- Permission is granted - The special leave petition is accordingly dismissed as withdrawn.

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• 2018 (8) TMI 223
  Jurisdiction - power of AO to pass order after almost 11 years from the end of the year which is beyond the period of limitation - Section 9(2) of the Central Sales Tax Act, 1956 read with Rule 5(6) and 5(10) of Central Sales Tax (Pondicherry) Rules, 1967 - Held that:- There is no legal and valid ground for interference - The Special Leave Petitions are dismissed.

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• 2018 (8) TMI 221
  Classification of goods - aloe vera juice - whether aloe vera juice is covered by the expression "processed or preserved vegetable"? - Held that:- The special leave petition is dismissed.

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• 2018 (8) TMI 220
  Classification of goods sold - rate of tax - Electrically Operated Anti-mosquito devices & repellents, Electrically Operated Anti-Mosquito Mat, Anti-Mosquito Coil, Rat Kill, “Harpic”, “Lizol”, “Dettol” Antiseptic - Held that:- The SLP is dismissed.

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• 2018 (8) TMI 219
  Delay in payment of tax - TNVAT Act and TNVAT Rules - sale of liquor - Form U notice / garnishee order - payment of arrear of tax in instalments - Held that:- Issue notice - In the meantime, there shall be stay of operation of the impugned order.

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• 2018 (8) TMI 218
  Converting, absorbing and regularising the petitioner’s services in an equivalent category post with all consequential benefits - Held that:- The Special Leave Petition is dismissed on the ground of delay.

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• 2018 (8) TMI 217
  Vires of Section 42(4) and 42(5) of U.P. Value Added Tax Act, 2008 - Validity of Rule 70(5) of U.P. Value Added Tax Rules, 2008 - Provincial Tax under Section 54(1)(1) - Held that:- Stay stands vacated - The special leave petitions are dismissed.

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• 2018 (8) TMI 216
  Recovery attempted as against the security bond executed by the petitioners/appellants - Held that:- Issue notice - In the meantime, there shall be stay of operation of the impugned judgment.

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• 2018 (8) TMI 215
  Imposition of purchase tax on sugarcane - Tax exemption - principle of promissory estoppel and legitimate expectation - Held that:- There are no grounds to interfere with the impugned order - The appeals are, accordingly, dismissed.

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• 2018 (8) TMI 213
  Sale of pledged articles taken as a security - Dealer or not? - levy of tax and penalty - Held that:- Issue Notice - Until further orders payment of tax/penalty amount by the petitioner shall remain stayed.

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