TMI Tax Updates - e-Newsletter
September 14, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Works Contract - GST registration - A supplier of service will have to register at the location from where he makes Taxable supplies

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• Levy of GST by way of a circular without amendment in the notification is patently without jurisdiction and is violative of S. 3 of CGST Act

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• No Service Tax liability on services provided to its associate company having same PAN with separate ST registration in other state.

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Articles

• INPUT TAX CREDIT ON EXPENDITURE UNDER CORPORATE SOCIAL RESPONSIBILITY SCHEME
• Complete analysis-TDS Rates & Provisions for F.Y.2018-19

News

• Commerce Minister concludes Vladivostok visit

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• Investor Education and Promotion Fund Authority unveils new logo

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Notifications

Customs

• 46/2018 - dated 13-9-2018 - ADD
  Seeks to impose definitive anti-dumping duty on the imports of "Flat Base Steel Wheels" originating in or exported from China PR for a period of 5 years at prescribed rates.

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• 45/2018 - dated 13-9-2018 - ADD
  seeks to rescind notification No. 3/2013-Customs (ADD) dated 26.03.2013.

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GST

• 51/2018 - dated 13-9-2018 - CGST
  GST - Collection of tax at source (TCS) - Section 52 of the CGST Act comes into force w.e.f 01.10.2018

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• 50/2018 - dated 13-9-2018 - CGST
  TDS liability u/s 51 of CGST Act, 2017 come into force w.e.f. 01-10-2018 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

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• 49/2018 - dated 13-9-2018 - CGST
  Form GSTR-9C - Format of Reconciliation Statement issued - Central Goods and Services Tax (Tenth Amendment) Rules, 2018

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GST - States

• GST/62/2018 - dated 1-8-2018 - Arunachal Pradesh SGST
  State Government is pleased to appoint Commissioner / Secretary (Tax, Excise and Narcotice), Government of Arunachal Pradesh as a member of the Arunachal Pradesh Appellate Authority for Advance Ruling.

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• S.O. 237 - dated 10-9-2018 - Bihar SGST
  Amendments in Notification Number S.O. 225, dated the 10th August, 2018.

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• S.O. 236 - dated 10-9-2018 - Bihar SGST
  Amendment in the Notification No. S.O- 209, dated 10th October, 2017 and S.O- 157 dated the 23rd March, 2018.

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• S.O. 235 - dated 10-9-2018 - Bihar SGST
  Amendments in the Notification number S.O-169 dated 21st September, 2017.

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• S.O. 232 - dated 7-9-2018 - Bihar SGST
  Waives the late fee payable on FORM GSTR-3B, FORM GSTR-4, FORM GSTR-6

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• S.O. 231 - dated 7-9-2018 - Bihar SGST
  The Bihar Goods and Services Tax (Eighth Amendment) Rules, 2018.

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SEZ

• S.O. 4778(E) - dated 5-9-2018 - SEZ
  Central Government de-notifies an area of 8.96 hectares, thereby making resultant area as 3.62 hectares at Village Powai, District Mumbai in the State of Maharashtra

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Circulars / Instructions / Orders

GST

• 62/36/2018 - dated 12-9-2018
  Levy of GST on Priority Sector Lending Certificates (PSLC) – regarding

DGFT

• 38/2015-2020 - dated 13-9-2018
  Allocation of preferential export of sugar to USA under TRQ for the year 2018-19

Highlights / Catch Notes

GST

• Turnkey EPC Contract are not getting covered under supply of 'Solar Power Generating System' under Entry 234 of Schedule I of the Notification - The contract for Erection, Procurement and Commissioning of Solar Power Plant falls under the ambit “Works Contract Services” - attracts 18% rate of tax
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• Works Contract - Place of supply of service - A supplier of service will have to register at the location from where he makes Taxable supplies or is supplying Taxable services if his aggregate turnover in a financial year exceeds twenty lakh rupees (ten lakh rupees in any of special category states)
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• Classification of goods - Wet Baby Wipes - Wet Face Wipes - Bed and Bath Towels - Shampoo Towels - applicant has requested to classify the impugned goods under the GST Regime quoting the reason of overlapping entries in the GST Schedule. - To be classified under different headings - taxable at 09% CGST + 09% SGST = 18%
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• Imposition of any tax by way of a circular without making due amendment in the notification is patently without jurisdiction and is violative of the provisions of section 11 (1) read with section 3 of the CGST Act
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• Classification of activity - printing of leaflet - whether the goods/service - The said supply is a mixed supply as per Section 2(74) of the CGST Act, 2017 and in the mixed supply dominance is the message printed on the pamphlet - The printing of Pamphlet/leaflet falls under the category of Supply of Service falling under SAC No.9989.
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• Classification of goods - The ‘Polysulphide Sealant’ manufactured by the applicant and marketed under the trade name ‘AnabondTuffseald’ is classifiable under CTH 3214 10 00
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• Classification of goods - Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload - Cargo Trolley is classifiable under HSN 87168090
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Income Tax

• Even though the AO may say so that the petitioner is not entitled to raise the question of jurisdiction, while filing the appeal, but that will not prevent the petitioner from raising such ground, if the same is available to him in accordance with law.
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• Payment towards membership of OTC (Delhi stock exchange) - nature of expenditure - provision made for doubtful advance for membership - Assessee failed to prove its case - Additions confirmed.
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• Rate of depreciation on ‘film software library' - the asset which consists of ‘Copyrighted Films and Programmes’ is an ‘Intangible Asset’ eligible for depreciation at the rate of 25%.
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• Revision u/s 263 - not making the addition of unpaid service tax is erroneous as well as prejudicial to the interest of the revenue - Order of Pr. CIT on this issue confirmed.
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• Levy of penalty u/s. 271(1)(c) - claim of exempt u/s 10(34) - long term capital gains (LTCG) on the sale of shares (penny stocks) - The surrender of exemption by the assessee on repetitive queries would not amount to furnishing of inaccurate particulars of income.
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• Deduction u/s 80IC - Customer advances written back as income derived from industrial undertaking - Revenue could not show us any reason that why above sum cannot be income derived from industrial undertaking.
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• Amount received from the State Government in the form of grant-in-aid - Though large part of the funds were applied for salary and provident fund dues, the object of extension of assistance, it was argued before us, to ensure survival of the company. - Cannot be taxed as revenue receipt.
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• Claim of depreciation at enhanced rate - it was the case of the assessee that the assessee may not have let out its vehicles to third parties, but the assessee used the vehicles for transporting the goods pertaining to the business of the assessee - Claim of the assessee allowed.
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• Reopening of assessment - tangible evidence to reassessment - nondisclosure of the taxing event, i.e. allotment of shares - The TEP and investigation reports – of subsequent vintage (after completion of Mr. Gandhi’s assessment), therefore, constituted tangible material
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Customs

• Eligibility for drawback - There is substantial difference between ‘nuts and bolts’ and ‘sanitary fittings made of brass’. In the absence of any evidence other than the examination report, the ground on which the drawback was denied by the competent authority does not appear to have the sanctity of law.
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• Duty Credit Scrip (DCS) - period of validity - loss of the scrip - petitioner did not utilise or transfer it for over one year out of total period of six months - even after expiry of period of validity of 31-1-2015, the petitioner applied for extension of the validity period only on 17-4-2015. At all stages the petitioner had thus shown a degree of slowness. - No relief.
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• Provisional release of seized ship - Import of ship for breaking and its parts - Pending further investigation and adjudication continued seizure of the ship would result into great hardship to the petitioner beside mounting port charges, it would also delay the completion of ship breaking - To be released provisionally subject to conditions.
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Service Tax

• Liability of Service Tax - services provided to its associate company - services provided to M/s. CMST-BSNL, Jaipur which is having a separate service tax registration? - Since both are one having same PAN and same entity, service tax cannot be demanded.
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• Condonation of delay - Assessee cannot be left remediless solely on the ground that he has been turned down at the very threshold, that is, at the stage of delay condonation petition. What is important to note from the impugned order is that while dismissing the application for condonation of delay, the Tribunal dismissed the appeal itself.
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• Scope of SCN - in the Show Cause Notice, the demand was proposed, considering the service of Advertising Service, Whereas in the order in original, the demand was confirmed under Business Auxiliary Service - demand set aside since original traveled beyond the Show Cause Notice.
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• Refund claim - services consumed within SEZ - there is no dispute that the service tax was paid on such services which are otherwise exempted. Therefore the appellant is entitled for the refund but not under N/N. 9/2009-ST but under Section 11B of the CEA, 1944.
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• Place of provision of service - business of promoting/ selling medical equipments and also rendering after sales services like installation, commissioning etc. in India to a foreign party - it is not the place of performance but the location of the service receiver which will make it an export of services.
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Central Excise

• CENVAT Credit - the appellant has correctly availed Cenvat credit on inputs i.e. steel items which have been used for manufacture of capital goods which are exempted from payment of duty and the said capital goods were further used in the manufacture of final products
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• Classification of goods - Fiber Aluminium Bobbins Dynamically Balanced - to be classified under chapter heading 3923.90
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• Valuation - liquidated damages are admissible deductions from the assessable value in terms of Section 4 of Central Excise Act, 1944
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• Classification of goods - Diagnostics Kits - the product in question is classifiable under chapter heading 3002.00 and not under 3822.00
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• Reversal of Credit - All these HR Coils were exclusively used in manufacture of exempted pipes and were not used in any other duty paid pipes - the availment of CENVAT Credit will be barred by Sub-rule (1) of Rule 6 of the Rules - credit availed is required to be reversed
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• CENVAT Credit - manufacture of Cement and Cement Clinker - the railway track laid by the Appellant (which connects the railway siding outside the factory with the siding inside the factory) shall have to be treated to have satisfied the condition of ‘used in the factory’ - credit allowed.
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VAT

• Works Contract - rate of tax - construction of a petrol bunk - transfer of right in insulation material - whatever material was utilized should be treated as a composite contract and the artificial splitting by the Assessing Officer is uncalled for.
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Case Laws:

• GST

• 2018 (9) TMI 699
  Classification of goods - Cargo Trolley - whether the product of the applicant in question i.e. Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload, the trolley is rugged and is suitable and treated for outdoor use is to be classified under HS Code 87169090 or otherwise? - CBEC Circular No. 696/10/2003 dtd 19.02.2003. Held that:- HSN 8716 covers product Trailers and Semi Trailers; Other Vehicles, Not Mechanically Propelled; Paris thereof whereas the assessee manufacture product Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload. The trolley is rugged and is suitable and treated for outdoor use which is nearer to their product - thus, their product i.e. Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload. The trolley is rugged and is suitable and treated for outdoor use is merit classification under major head 8716. Circular No. 696/10/2003 dtd 19.02.2003 specifically direct that in the judgement in the case of Gujrat Industrial Trucks Ltd. Vs. CCE Baroda [2000 (9) TMI 473 - CEGAT, MUMBAI], it is clarified that the correct classification of the Hand Pallet Trucks/Trolley Is under Heading 87.16. The last sub beading under the major head of 6 digit HSN for the product is 87168090 is meant for “Others”. Therefore, the product in question i.e. Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload. The trolley is rugged and is suitable and treated for outdoor use is correctly classifiable under HSN 87168090. Ruling:- Cargo Trolley used to carry Cargo from one place to another, towable in nature and has solid tyre designed for transportation of baggage and light cargo with a minimum payload. The trolley is rugged and is suitable and treated for outdoor use is correctly classifiable under HSN 87168090.

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• 2018 (9) TMI 698
  Admissibility of Advance Ruling application - Jurisdiction - activities related to providing of education to Mentally Retarded Children - whether the Trust is liable to pay GST on receipt of Goods/Services, when the Charitable Trust is exempted under the GST Act 2017? Held that:- An applicant can seek an Advance Ruling Authority in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant - In the case at hand, the applicant is the proposed recipient of the proposed works contract and accordingly, does not fall within the definition of advance ruling. Hence, the Application is not liable for admission and therefore rejected without going into the merits Of the case, on the issue of lack of jurisdiction. Thus, The Application for Advance Ruling dated 18.06.2018 of Dr. Dathu Rao Memorial Charitable Trust, Chennai is not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017.

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• 2018 (9) TMI 697
  Admissibility of Advance ruling application - classification of goods - What is the appropriate classification for Aluminum foil disposable container manufactured by them under GST? Held that:- It is seen that the ruling is sought on the appropriate classification for Aluminium foil disposable container, which is already raised in the Show Cause Notice issued by the Department under the GST law and the proceedings are still pending - as the question raised by the applicant in the application is already pending proceedings, in the case of the applicant themselves, the application is not admissible under the said provisions and therefore liable for rejection. Ruling:- The application for Advance Ruling dated 13.06.2018 of M/s. Veeram Natural Products, Sivakasi is not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017,

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• 2018 (9) TMI 696
  Classification of goods - Wet Baby Wipes - Wet Face Wipes - Bed and Bath Towels - Shampoo Towels - applicant has requested to classify the impugned goods under the GST Regime quoting the reason of overlapping entries in the GST Schedule as notified by the Notification No. 1/2017-Central Tax(Rate) dated 28.06.2017 and Notification No. 1/2017- State Tax (Rate) dated 30.06.2017 as amended vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017 and the Notification No. 41/2017-State Tax(Rate) dated 14.11.2017. Wet Baby Wipes - Government vide F.No.332/2/2017-TRU dated 22.12.2017 - Held that:- The Government vide F.No.332/2/2017-TRU dated 22.12.2017 has clarified the matter and there is no more scope left for further discussion over this issue and accordingly the “Wet Face Wipes” is to be classified as under the HSN code- 3307 and as on date it will attract 18% GST rates. Wet Face Wipes - Held that:- Similar to the product “Wet Baby Wipes”, mentioned above at serial (A), the product in question namely “Wet Face Wipes” consists of Non-woven spun lace fabric of 40-60 grams per square made from 60-70% viscose(regenerated cellulose)fiber +30%-40% polyester fiber of standard size 150 mm x 200 mm - Since, the basic nature and working of the product “Wet Face Wipes” is almost the same as that of wet baby wipes i.e. gently cleaning the skin by removing the dirt and moistening it and on comparing the basic functions of the ingredients which is impregnated in the form of lotion over the non-woven fabric in respect of “Wet Baby Wipes”, the same is to be taken into the HSN Code -3307 as the ingredients in this case are almost same and function founds to be same - wet face wipes will fall under HSN code-3307 and as on date it will attract GST @ 18%.. Bed and Bath Towels - Held that:- The basic function of the aforesaid product is to clean and moisturizing the skin which may be use for body cleansing for a bed ridden person or who requires partial assistance - The classification of an item has to be under the heading of those items where it can be placed and can find a most suitable heading - product viz “bed and bath towel' merit classification in Chapter heading 3307 in as much as the other chapter headings (supra) do not give 'Bed and Bath Towels” its essential character i.e. ' cleaning and bathing” and the said product also covered in chapter note 4 of Chapter 33, Further, the basic nature and working of the product “Bed and Bath wipes” is almost the same as that of wet face wipes i.e. gently cleaning the skin by removing the dirt and moistening it , The said product is also impregnated in the form of lotion over the non-woven fabric. The rate of GST as on date is 18%. Shampoo towels - Held that:- The basic function of the aforesaid product is to clean and shampooing the hairs which may be use for a bed-ridden person or who requires partial assistance - the product in question has undergone a process which makes it a “preparation for use on hair” - the package of “Shampoo Towels” indicate that it is meant for application on hair and the said product is indeed manufactured for use on hair only - the product “Shampoo Towel,” merit classification under Chapter 3305 of GST Tariff Act, 2017 and the rate of GST applicable on the said product is 18% as on date. Ruling:- Wet Baby Wipes is classified under HSN Code 3307 and taxable at 09% CGST + 09% SGST = 18% - Wet Face Wipes under HSN Code 3307 and taxable at 09% CGST + 09% SGST = 18% - Bed & Bath Towels is classified under HSN Code 3307 and taxable at 09% CGST + 09% SGST = 18% - Shampoo Towels is classified under HSN Code 3305 and taxable at 09% CGST + 09% SGST = 18%.

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• 2018 (9) TMI 695
  Application for withdrawal of application - Supply or not? - Free tickets given as “Complimentary tickets” - Input tax credit - Whether free tickets given as “Complimentary tickets” falls within the definition of supply under the CGST Act 2017 and thus whether the Applicant is required to pay GST on such free tickets? Whether the Applicant is eligible to claim Input Tax Credit in respect of complimentary tickets? Held that:- Though the questions raised in the application need a detailed discussion in view of the prevailing law, since the Applicant have sought withdrawal of application on their own volition, we do not think either appropriate or incumbent upon us to delve into the matter at length - Thus while allowing the Applicant to withdraw the instant application, we refrain ourselves from commenting upon the merits of the case. The Application for Advance Ruling filed by the Applicant is dismissed as withdrawn at the behest of the Applicant.

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• 2018 (9) TMI 694
  Requirement to take registration - Works Contract - Place of supply of service - construction of cold storages at various parts of Country - appellant are expecting to do some construction work in the state of Rajasthan whereas they are located in the state of Gujarat and registered there in GST - whether the appellant is required to take registration in the state of Rajasthan? Held that:- As per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the CGST Act, 2017 shall be treated as a supply of services. Thus, there is a clear demarcation of a works contract as a supply of service under GST Act - As per section 12(3)(a) of IGST Act, 2017 in case of Works Contract Services Place of supply shall be the location at which the immovable property (construction site) is located. Ruling:- A supplier of service will have to register at the location from where he makes Taxable supplies or is supplying Taxable services if his aggregate turnover in a financial year exceeds twenty lakh rupees (ten lakh rupees in any of special category states) While supplying services if the supplier of services (i.e. applicant who in the given case is a Works Contractor and is registered in State of Gujarat) has any place of business/office in the State of Rajasthan i.e. has a fixed establishment for operation in State of Rajasthan (place where the services are to be provided) then he is required to get himself registered in State of Rajasthan.

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• 2018 (9) TMI 693
  Works Contract - Supply of goods or services - Turnkey EPC Contract - contract for Erection, Procurement and Commissioning of Solar Power Plant - Whether contract for Erection, Procurement and Commissioning of Solar Power Plant shall be classifiable as Supply of Goods or Supply of Services under the provisions of the Central Goods and Services Tax Act 2017 and Rajasthan State Goods and Services Tax Act 2017? If answer to the above question is supply of goods, then under which HSN Classification the said supply of solar power plant would fall and what shall be the rate of tax on it in accordance with the N/N. 01/2017-Central Tax 28-06-2017? - If the answer to the above question is supply of service, then under which HSN Classification the said supply of solar power plant would classify and what shall be the rate of tax in accordance with the N/N. 11/2017-Central Tax (Rate) ,dt. 28-06-2017? Held that:- Reliance placed in decision of M/s. T.T.G. Industries Ltd., vs Collector of Central Excise, [2004 (5) TMI 77 - SUPREME COURT OF INDIA] - The Hon. Supreme Court while holding the machines as immovable property took into account facts such that the machines could not be shifted without first dismantling it and then re-erecting it as another site. It was also sought to distinguish as to how a concrete base meant just to prevent wobbling of the machine would not place the machine in the category of 'immovable property' as something attached to the earth. The Solar Power Plant is a big project and has a permanent location as it is meant for onward sale of power to the consumer. Such plant would therefore have an inherent element of permanency - The output of the project i.e. power, would be available to an identifiable segment of consumer. Thus this output supply would involve an element of permanency for which it would not be possible and prudent to shift base from time to time or locate the plant elsewhere at frequent intervals - The Solar Power Plant cannot be shifted to any other place without dismantling the same. Further it is a tailor made system which cannot be sold as it is to the other person - Solar Power Plant includes civil work such as development of site, structure Structure for 110kv transmission , building cable trenches, foundation, civil work relating to invertors and control buildings, store rooms , canopies and such other civil structure and related activities as set out in Scope of work and the Technical Specifications. Civil structure cannot be dismantled and moved. Schedule II of Scope of work of Composite EPC Contract, clearly states that the “design and engineering of the project should be such that it is consistent with a design life of at least 25 years from the COD (commissioning date).” The applicant has himself agreed to be bound by this clause which reflects permanency of the instant Solar Power Plant. Contract between an EPC contractor and the counter-party is entered into on the premise that the plant would continue to be situated at the place of construction. The impugned transaction for EPC Contract for the Solar Power Plant which includes engineering, design, procurement, supply, development, testing and commissioning is a “works contract” in terms of clause (119) of section 2 of the GST Act - Since the impugned transaction for EPC Contract for the Solar Power Plant is a works contract under section 2(119) as supply of services hence question of principal supply does not arise and so GST tax rate of Solar power Generating System under notification No 01/2017-CT (Rate) dated 28.06.2017, at S. No. 234, under HSN Classification 84, 85 and 94 is not applicable. Ruling:- “Turnkey EPC Contract” are not getting covered under supply of 'Solar Power Generating System' under Entry 234 of Schedule I of the Notification no. 1/2017-Integrated Tax (Rate), Entry 234 of Schedule I of the Notification no. 1/2017 - Central Tax (Rate) both dated 28 June, 2017 and Entry 234 of Schedule I of the Notification no 1/2017 -State Tax (Rate) dated 29 June, 2017. EPC Contract for Solar Power plant comes under the purview of Works Contract as per Section 2(119) of GST Act - The contract for Erection, Procurement and Commissioning of Solar Power Plant falls under the ambit “Works Contract Services” (SAC 9954) of Notification no. 1 1/2017 Central Tax (Rate) dated 28 June, 2017 and attracts 18% rate of tax under IGST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%.

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• 2018 (9) TMI 692
  Maintainability of Advance Ruling Application - Supply of services - place of supply - Applicant are an Engineering consultancy organization, providing Engineering Services, mainly Design and Drawings to power and other projects, operating from Chennai and Bengaluru - whether CGST & SGST or IGST is payable on the said supply. i.e., whether the transaction is an inter-state supply or intra-state supply? Held that:- Section 97 of the CGST Act and Tamil Nadu GST Act (TNGST) has given the scope of Advance Ruling Authority, i.e, the question on which the Advance Ruling can be sought - apart from list provided in Section 97(2), no other issue can be decided by the Advance Ruling Authority and therefore the Acts limit the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) - The Application is therefore rejected without going into the merits of the case, on the issue of lack of jurisdiction. The Application for Advance Ruling dated 06.02.2018 of M/s. Fichtner Consulting Engineers (India) Private Limited is rejected, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017.

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• 2018 (9) TMI 691
  Classification of goods - Polysulphide sealants - There are five competing headings in which the said product can be covered. They are: Heading 3214; Heading 2830; Heading 3911; Heading 4002; Heading 3506. Held that:- The product in question, ‘Anabond Tuffseald, Polysuphide Sealant’contains two components, viz., polysulphide polymer (resin/rubber) and hardener (acts as the curing agent). Liquid polysulfide polymers form the basic ingredient of the sealant formulation and Manganese dioxide is the curing agent. Both resin and hardener are packed separately within the same container. - The base and the curing agent are presented in a single pack and are intended to be used together and complimentary to one another. Thereby, the conditions of the section Note 3 is satisfied. When the conditions are satisfied, then, if on mixing, the resultant is a product of Section VI or VII, then such sets are to be classified in the heading appropriate to that product ‘Mastics’ are spelt in heading 3214(under Section VI) of the Tariff. From the above, it is evident that the product in hand is classifiable under Heading 32141000 of the Customs Tariff. The other probable chapter heads under which the said product may be classified as stated by the applicant, do not merit the classification as Chapter 2830 90 20 covers Polysulphides. As per explanatory notes to HSN, the polysulphides classified here are mixtures of sulphides of same metal. The polysulphide in question is an organic compound and is a synthetic rubber. Therefore, the product under consideration is not classifiable under this heading - Chapter 3506 91 covers adhesives based on polymers of headings 3901 to 3913 or on rubber. As per explanatory notes to HSN, The heading excludes products having the character of mastics, fillings, etc., of heading 3214. Therefore the product under consideration is not classifiable under this heading - Chapter 3911 covers polysulphides. As per explanatory notes to HSN, Polysulphides are polymers characterised by the presence of monosulphide linkages in the polymer chain...In polysulphides each sulphur atom is bound on both sides by carbon atoms, as opposed to the thioplasts of Chapter 40, which contain Sulphur-sulphur linkages. In the case at hand, Sulphur-Sulphur linkages are present and therefore they are thioplasts. Hence, the product is not classifiable under this heading - Chapter 4002 covers “synthetic rubber and factice derived from oils, in primary forms or in plates, sheets or strip; mixtures of any product of heading 4001 with any product of this heading, in primary forms or in plates, sheets or strip”. The product in question contains polysulphide rubber/resin which is a synthetic rubber. In the present case, classification of the product can be done based on the Section, Chapter Notes and Headings and therefore classification under Heading 4002 is ruled out. Ruling:- The ‘Polysulphide Sealant’ manufactured by the applicant and marketed under the trade name ‘AnabondTuffseald’ is classifiable under CTH 3214 10 00 of the First Schedule to the Customs Tariff Act, 1975.

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• 2018 (9) TMI 690
  Classification of activity - printing of leaflet - supply of goods or supply of services - mixed supply - whether the goods/service (under question) has to be considered as supply of goods falling under Chapter Sub-heading No.4901 or as a supply of service falling under SAC No.9989? Held that:- It is on record that the applicant have submitted one of the sample of a printed pamphlet along with their defence reply which is made for “Norethindrone tablets USP,0.35 mg”. On simple reading of the said pamphlet it appears that the buyer of the product wanted to convey certain message through the said pamphlet which is supplied alongwith their product. In fact, the product pamphlet in itself is nothing but a media to convey the message and the message or script what is to be printed, is supplied by the buyer of the product. The said supply is a mixed supply as per Section 2(74) of the CGST Act, 2017 and in the mixed supply dominance is the message printed on the pamphlet. Para 4 of Circular 11/11/2017-GST dtd. 20.10.2017 specifically clarifies that in the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services. Accordingly pamphlets, brochures annual reports etc are covered under the services and the applicant is engaged in printing of pamphlets etc. hence, the correct classification of the product of the applicant is 9989. Ruling:- The printing of Pamphlet/leaflet falls under the category of Supply of Service falling under SAC No.9989.

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• 2018 (9) TMI 689
  Classification of goods - Heat Shrinkable Cable Jointing Kits - whether the product of the applicant in question i.e. Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8546 or 8547? Held that:- The Chapter Head description under existing law i.e. Central Excise, GST and Customs are one and the same. Further, it is worth mentioning here that, at all the material times the said goods were classified for the purposes of basic and other Customs Duty by the Customs deptt. under heading 85.47 of Customs Tariff Act - The assessee, during the course of personal hearing, have accepted that they are running the same business for the last many years and were classifying the goods under Chapter Heading 8547 for their product Heat Shrinkable Wrap Around Sleeve in the existing law. This fact has been verified from the ER-1 Return filed by the applicant for the month of April, 2017. The apex court in the case of M/s XL Telecom P. Ltd. V. Union of India, [1993 (3) TMI 123 - HIGH COURT OF JUDICATURE AT BOMBAY], wherein no scope of classification dispute is left, that the Cable jointing Kit is classifiable under Head 8547 of the GST Tariff. Thus, The fact remains that said material i.e. Cable Jointing Kits assembled from various components are classifiable under Chapter Heading No. 8547.00. Ruling:- Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8547.

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• 2018 (9) TMI 688
  Bail Application - Section 132(1)(b) of Central Goods and Services Tax Act, 2017 - fraudulent availment of ITC - fake purchase bills - Held that:- This Court is of the opinion, that learned counsel for the applicant could not point out any good ground for grant of bail to the applicant - the bail application filed on behalf of the applicant is hereby rejected - decided against applicant.

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• 2018 (9) TMI 687
  Imposition of tax by way of Circular - amendment in the notification not made - violation of section 11 (1) read with section 3 of the CGST Act - Held that:- Imposition of any tax by way of a circular without making due amendment in the notification is patently without jurisdiction and is violative of the provisions of section 11 (1) read with section 3 of the CGST Act - no coercive measures shall be taken against the petitioner till 17.9.2018 - decided in favor of petitioner.

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• 2018 (9) TMI 686
  Registration of petitioner under the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Act, 2017 - migration to GST Regime - Held that:- There is no dispute to the fact that the petitioner is a registered dealer previously under the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, 1956. However, after introduction of GST and during the process of migration into CGST, it appears that some mistake or short fall of information has crept in and that the petitioner did not make any efforts to rectify the same during the process of on-line migration. Now, as it is stated by the respondents 1 and 3 that such lapse on the part of the petitioner will also be considered by the concerned Nodal Officer, it is for the petitioner to utilise such opportunity and file such application with necessary details without loss of further time - The petitioner is directed to make an application with necessary details before the concerned Nodal Officer on or before 10.08.2018 - petition disposed off.

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• 2018 (9) TMI 685
  Unable to upload Form GST TRAN-1 - input tax credit - migration to GST regime - Held that:- It was brought to the notice of the Central Board of Indirect Taxes (CBIC) and Customs that about difficulties faced by section of tax payers owing to technical glitches on the GST and representations were given by the petitioners. Therefore, CBIC is setting up a Grievance Redressal Mechanism vide Circular No.39/13/2018- GST dated 03.04.2018. The procedure of appointment of Nodal Officers and identification of issues is to be done in the manner provided in Paragraph 5 of the Circular. Unless the Nodal Officers are appointed, jurisdictional officer of the Assessee, namely Assessing Officer would not be in a position to forward the representations/applications filed by the Assessee pointing out the glitches they are facing while availing the credit during the transition process. The respective Commissioner of GST and Central excise are directed to appoint the Nodal Officer / Officers for the State of Tamil Nadu, if not already appointed, within a period of 2 weeks from the date of receipt of a copy of this order - The petitioners/ Assessees are directed to submit their applications in accordance with Paragraph 8 of the Circular dated 03.04.2018 within a period of two weeks from the date of receipt of a copy of this order to their respective Assessing Officers / jurisdictional officer/GST Officers - petition disposed off.

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• 2018 (9) TMI 684
  Unable to upload Form GST TRAN-1 - input tax credit - migration to GST regime - Held that:- It was brought to the notice of the Central Board of Indirect Taxes (CBIC) and Customs that about difficulties faced by section of tax payers owing to technical glitches on the GST and representations were given by the petitioners. Therefore, CBIC is setting up a Grievance Redressal Mechanism vide Circular No.39/13/2018- GST dated 03.04.2018. The procedure of appointment of Nodal Officers and identification of issues is to be done in the manner provided in Paragraph 5 of the Circular. Unless the Nodal Officers are appointed, jurisdictional officer of the Assessee, namely Assessing Officer would not be in a position to forward the representations/applications filed by the Assessee pointing out the glitches they are facing while availing the credit during the transition process. The respective Commissioner of GST and Central excise are directed to appoint the Nodal Officer / Officers for the State of Tamil Nadu, if not already appointed, within a period of 2 weeks from the date of receipt of a copy of this order - The petitioners/ Assessees are directed to submit their applications in accordance with Paragraph 8 of the Circular dated 03.04.2018 within a period of two weeks from the date of receipt of a copy of this order to their respective Assessing Officers / jurisdictional officer/GST Officers - petition disposed off.

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• 2018 (9) TMI 683
  Attachment of Bank Account - recovery of tax and penalty in the assessment orders for the years from 2015-16 to 2017- 18 - It was found that there was no assessment order - Held that:- This Court considered the first ground and directed the learned Government Advocate to verify and report as to whether any assessment orders have been passed in respect of the relevant years. The learned Government Advocate, on instructions from the officer, who is present in court, has informed that the assessment orders have not been passed in respect of all the three relevant assessment years. Then, there cannot be a demand notice nor there can be any attachment of the petitioner's bank account. The impugned notice is set aside - petition allowed.

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• 2018 (9) TMI 682
  Maintainability of petition - matter pending adjudication - Held that:- Admittedly, the matter is pending before the Assistant Commissioner, Central Goods & Service Tax (CGST) Div.- Department, District Pali. In pursuance to the notice issued to the petitioner, a reply has already been filed but the present writ petition has been filed without awaiting the final order passed by the Assistant Commissioner. The petition is disposed of with a direction to the Assistant Commissioner, Central Goods & Service Tax (CGST) Div.- Department, District Pali to decide the matter after taking into consideration the pleas as raised by the petitioner in accordance with law and after following the principles of natural justice.

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• Income Tax

• 2018 (9) TMI 722
  Disallowance u/s 14A - Expenses in relation to income not forming part of total income - whether Tribunal erred in not appreciating that the disallowance as computed under Section 14A was in terms of the formula prescribed in Rule 8D of the Income Tax Rules, 1962? - Held that:- The present appeal is covered by the decision of this Court in Commissioner of Income Tax 5, Mumbai vs. Essar Teleholdings Limited [2018 (2) TMI 115 - SUPREME COURT OF INDIA]. Appeal dismissed.

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• 2018 (9) TMI 721
  Assessment of Non-Performing Assets - accrual of income - Held that:- Despite having been granted four weeks’ time, as a last chance, by the learned Registrar on 6-7-2018, learned counsel appearing for the appellant has not so far filed affidavit of valuation. Finally, two weeks’ time is granted for the purpose, failing which the Appeal shall stand dismissed without further reference to the Court.

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• 2018 (9) TMI 720
  Reopening of assessment - tangible evidence to reassessment - nondisclosure of the taxing event, i.e. allotment of shares - assessee contests that the allegations with respect to transaction value, being contrary to Section 56(2)(vii)(c) (ii) and in terms of Rule 11UA of the Income Tax Rules is plainly erroneous and cannot be the basis of a reassessment - Held that:- The entire premise of the reassessment notices in this case is that the nondisclosure of the taxing event, i.e. allotment of shares (and the absence of any declaration as to value) deprived the AO of the opportunity to look into the records. In the case of Mr. Rahul Gandhi, no doubt, the assessment originally completed, was under Section 143 (3). Had he disclosed in his returns or any related documents about the event (share acquisition) the primary fact would have been on the record; the AO’s subsequent action in pursuing that aspect or letting go of it, after inquiry might well have justified the charge of a second and impermissible opinion on the same subject. However, that is not the case. The TEP and investigation reports – of subsequent vintage (after completion of Mr. Gandhi’s assessment), therefore, constituted tangible material which in terms of the ruling in Commissioner of Income Tax vs. Kelvinator of India Ltd [2010 (1) TMI 11 - SUPREME COURT OF INDIA] justified reassessment. In the case of the other two assessees (Ms. Sonia Gandhi and Mr. Oscar Fernandes) the returns filed by them were processed under Section 143 (1). Such instances are not treated as “assessments”. Zuari Estate Development & Investment Co Ltd [2015 (8) TMI 480 - SUPREME COURT] is an authority on the subject. Writ petitions have to fail.

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• 2018 (9) TMI 719
  Order of assessment passed u/s 143(3) challenged - statutory right of appeal against the assessment order denied - inability of the petitioner to file appeal against the assessment order in view of the finding/observation made at paragraph No.5.0 - Held that:- Perusal of the said observation made by the AO would only indicate that according to the Assessing Officer, the petitioner is not entitled to raise the question of jurisdiction. The order of assessment does not prevent the petitioner from filing any appeal as such before the competent Appellate Authority. Even though the AO may say so that the petitioner is not entitled to raise the question of jurisdiction, while filing the appeal, but that will not prevent the petitioner from raising such ground, if the same is available to him in accordance with law. Needless to say that if any such ground is raised, it is open to the Revenue to oppose such ground before the Appellate Authority, who in turn, will decide the question of jurisdiction as well. Therefore, we do not think that the petitioner's apprehension is well founded in respect of filing an appeal before the Appellate Authority. This Court is of the view that the petitioner is entitled to file appeal against the impugned order of assessment before the Appellate Authority. With regard to the classification of the land is concerned, needless to say, it is absolutely a factual aspect of the matter, which has to be considered and decided by the next fact finding authority viz., Appellate Authority, while considering the appeal. Therefore, the contentions raised by the petitioner on the merits of the assessment cannot be gone into by this Court, as the petitioner has an effective alternative remedy of appeal before the Appellate Authority.

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• 2018 (9) TMI 718
  Computation of deduction u/s 80HHC - job work charges should be excluded from the profits of the business for the purpose of computation of deduction - Held that:- The above tax appeal is dismissed and the substantial question of law framed is answered in favour of the Revenue and against the assessee. However, taking note of the decisions in ACG Associated Capsules (P) Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA] and Kadri Mills Ltd.[2013 (11) TMI 428 - MADRAS HIGH COURT], the matter is remanded to the Assessing Officer for the purpose of computation of the deduction in terms of the aforementioned decisions. It is needless to state that the assessee shall provide all the details before the Assessing Officer in support of their contention.

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• 2018 (9) TMI 717
  Addition made on account of bogus opening stock - assessee had manipulated the stock and bogus opening stock was reported in the books of account and in ROI - ITAT deleted the addition - Held that:- As noted that the assessee had shown sale of such stock after May 2003, and the sale proceeds were also received during the year under consideration. The Tribunal noted that in the declaration before the Excise Authorities, the assessee had shown the stock of the same value pertaining to different kinds of gray fabric admeasuring 17,57,165 meters. The Tribunal also noted that such stock was cleared in subsequent period, for which, monthly declarations were filed. It can thus be seen that the entire issue is based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held on facts that the assessee's declaration was genuine. No question of law arises. Addition made on account of bogus credit - ITAT deleted the addition - Held that:- Tribunal while confirming the view of the Commissioner of Income Tax (Appeals), noted that there was sufficient evidence of the genuineness of the creditors. Further, such addition of the purchases would give distorted gross profit rate as compared to gross profit rate disclosed in similar type of business, interalia, on such grounds, the Tribunal dismissed the Revenue's appeal. Thus the issues are entirely based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held in favour of the assessee. No question of law arises.

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• 2018 (9) TMI 716
  Revision u/s 263 - Whether depreciation at the enhanced rate of 30% for a vehicle can be claimed by an assessee who does not run a business of hiring out the vehicle for consideration? - Held that:- A distinction ought to be made between the two parts to Section 263 - the first part which permits the Commissioner to enhance or modify the assessment and the second part which permits the Commissioner to cancel the assessment and direct a fresh assessment. There is an element of finality which is involved when the Commissioner exercises authority under the first part as indicated above. There is also an element of finality when the commissioner cancels the assessment, but there is no real prejudice to the assessee – other than the assessee suffering the process once again – in a fresh assessment being required to be undertaken. Since in this case the Appellate Tribunal looked into the documents that were furnished by the assessee in response to the show-cause notice issued under Section 263 and found, on facts, that the perceived bogus transactions were genuine, the order impugned does not call for any interference on such ground. The other ground pertains to the rate of depreciation that the assessee had claimed and the permissibility thereof. Appellate Tribunal took into consideration the fact that depreciation at the enhanced rate had been permitted in at least one subsequent assessment year. Further, it was the case of the assessee that the assessee may not have let out its vehicles to third parties, but the assessee used the vehicles for transporting the goods pertaining to the business of the assessee and such activity permitted the claim of enhanced depreciation. Decided against the revenue.

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• 2018 (9) TMI 715
  Revision u/s 263 - why the non-compete premium should not be assessed as capital gains in terms of Section 55(2)(a) read with Section 28(v-a) - Held that:- Prior to an amendment brought about with effect from April 1, 2003, non-compete premium was judicially regarded as a capital receipt and there is a Supreme Court judgment [2011 (3) TMI 6 - SUPREME COURT] confirming such legal position. However, even in such judgment, the Supreme Court noticed that upon the amendment being introduced and sub-section (v-a) being brought into Section 28 of the Act, non-compete premium had to be regarded as a business income or revenue receipt. The show-cause notice issued under Section 263 referred to the Supreme Court judgment but failed to make the distinction in the Supreme Court judgment as to the manner of treatment of any non-compete premium on the basis of whether such premium was received prior to Section 28 of the Act being amended to incorporate sub-section (v-a) therein. It is now sought to be suggested on behalf of the Revenue that in view of the proviso to Section 28(v-a) of the Act the non-compete premium in this case ought to have been chargeable under the head of capital gains. However, such argument cannot be accepted as it was not indicated in the show-cause notice which limited the reasons for issuance thereof in paragraphs 5 and 6 quoted above and referred merely to the Supreme Court judgment without the change of law that was noticed in such judgment. The Tribunal was guided by the same Supreme Court judgment and took into account the change in law upon the introduction of sub-section (v-a) in Section 28 of the Act. On the subject and the Tribunal dealing with the case as made out in the show-cause notice, the order calls for no interference as no substantial question of law arises therefrom.

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• 2018 (9) TMI 714
  Amount received from the State Government in the form of grant-in-aid - whether to be treated as revenue receipt, on the basis of application of funds so received, which was utilized for clearing salary, Provident Fund dues and flood relief? - Held that:- There is no separate business consideration on record between the grantor, that is the State Government and the recipient thereof being the assessee. The principle of law as laid down in the case of Siemens Pub. Communication Network P. Ltd. [2016 (12) TMI 507 - SUPREME COURT] is that voluntary payments made by the parent company to its loss making Indian subsidiary can also be understood to be payments made in order to protect the capital investment of the assessee company. Though the grant-in-aid in this case was received from public funds, the State Government being 100% shareholder, in our opinion, its position would be similar to that of, or at par with a parent company making voluntary payments to its loss making undertaking. No other specific business consideration on the part of the State has been demonstrated before us in this appeal. The assistance extended appears to us to be measures to keep the assesse company floating, the assessee being, for all practical purposes an extended arm of the State. Though large part of the funds were applied for salary and provident fund dues, the object of extension of assistance, it was argued before us, to ensure survival of the company. As regards the funds extended for flood relief, the same cannot constitute revenue receipt. Flood relief does not constitute part of business of the assessee. - Decided in favour of the assessee

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• 2018 (9) TMI 713
  Registration granted under Section 12A - whether benefit of exemption would continue even after the assessee society was found to be regularly involved in holding various commercial tournaments on behalf of BCCI and receiving payment from BCCI for TV and other rights? - Held that:- Issue stands concluded against the Revenue and in favour of the Respondent by the decision of this Court in the case of Director of Income Tax (Exemptions) Vs. Khar Gymkhana [2016 (6) TMI 489 - BOMBAY HIGH COURT] and The Commissioner of Income Tax – II, Thane Vs. The Mumbai Metropolitan Regional Iron and Steel Market Committee [2017 (7) TMI 920 - BOMBAY HIGH COURT]. Appeal is admitted on substantial question -(iii) “ Whether on the facts and circumstances of the case and in law, the Tribunal did not err in holding that even after addition to the objects clauses made without intimation to the department, the registration cannot be ipso facto cancelled in terms of Sec. 12AA(3) of the Act, without appreciating the fact that registration granted under Section 12A and the benefits flowing therefrom, cannot continue after amending the objects without the approval of the competent authority as the registration granted is to be objects prior to such amendment”?

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• 2018 (9) TMI 712
  Penalty u/s 271(1)(c) - proof of concealment of income or furnishing of inaccurate particulars - Held that:- The assessee after receiving the notice u/s 143(2) filed revised computation after coming to the knowledge that the assessee has not included the capital gains at the time of calculating computation and filing return of income, although the amounts were disclosed in the balance sheet prepared in support of return. The assessee has admitted the mistake before the AO could detect such omission. Thus, it is not a case of furnishing of inaccurate particulars or concealment of income before the AO. Section 271 comes into picture when there is a failure to furnish returns or there is concealment of income or furnishing of inaccurate particulars before the AO. But in the present case before the AO, all the relevant facts were already available and the mistake has been rectified by the assessee prior to the mistake pointed out by the AO to the assessee during the assessment proceedings. The order of the CIT(A) is not correct, as there is no concealment of income or furnishing of inaccurate particulars. The penalty levied u/s 271(1)(c) of the Act is therefore quashed. The appeal of the assessee is allowed.

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• 2018 (9) TMI 711
  Foreign exchange fluctuation eligibility for deduction u/s 80IC - Held that:- The issue is now squarely covered in favour of the assessee by the decision of CIT Vs. Priyanka Gems [2014 (3) TMI 938 - GUJARAT HIGH COURT] and CIT Vs. Metrochem Industries Ltd.[2016 (7) TMI 1374 - GUJARAT HIGH COURT]. Both these decisions have considered the decision of the Hon'ble Supreme Court in Liberty India Vs. CIT [2009 (8) TMI 63 - SUPREME COURT]. No infirmity in the order of the ld CIT(A) in holding that foreign exchange gain is income derived from industrial undertaking and is eligible for deduction u/s 80IC of the Act. Ground No 1 is dismissed. Customer advances written back as income derived from industrial undertaking - deduction u/s 80IC - Held that:- The customer advances are in the nature of advances against the various orders. When such jobs are cancelled by the customer the assessee recovers the cost of material and consumable supply to the customer from the advance received and shows it as advances written back. Therefore, this partakes the character of sale and hence is income derived from industrial undertaking. The ld CIT(A) has also given these reasons for deciding the issue in favour of the assessee. DR could not show us any reason that why above sum cannot be income derived from industrial undertaking. No infirmity in the order of the ld CIT(A) in holding that customer advances written back is income derived from the industrial undertaking as it has direct nexus with it, hence, eligible for deduction u/s 80IC Sundry balances of provisions written back as income derived from industrial undertaking and eligible for deduction u/s 80IC - Held that:- CIT(A)correctly decided the issue in favour of the assessee. As the provision made was considered as reduction in eligible profit its reversal should be considered as income of undertaking. Miscellaneous receipt received by the assessee is not income derived from industrial undertaking and therefore, same is not eligible for deduction u/s 80IC - Held that:- We have already decided this issue in appeal of the assessee for AY 2010-11 in this order. Therefore, following the same reasoning we hold that miscellaneous income of the assessee is not eligible for deduction u/s 80IC of the Act, accordingly, appeal of the assessee is dismissed.

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• 2018 (9) TMI 710
  Disallowance u/s 14A read with Rule 8D - Held that:- It has been held in various decisions that disallowance u/s 14A r.w. Rule 8D cannot exceed the actual dividend income received which has been claimed as exempt. Therefore, hold that the disallowance u/s 14A in the instant case cannot exceed ₹ 4280/- which is the actual exempt income received by the assessee during the year. We, therefore, set-aside the order of the ld. CIT(A) and direct the Assessing Officer to restrict the disallowance u/s 14A to the extent of actual exempt income received by the assessee which in the instant case is ₹ 4280/-. The ground raised by the assessee is accordingly partly allowed.

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• 2018 (9) TMI 709
  Levy of penalty u/s. 271(1)(c) - assessee has furnished inaccurate particulars of income and has introduced her own unexplained money in the guise of bogus long term capital gain on sale of penny stocks - Assessee had surrendered the claim of exemption u/s. 10(34) - Held that:- In the computation of income the assessee has duly disclosed all the particulars of her income and under the head “Income with full exemption” the assessee has claimed dividend income as exempt and also long term capital gain on which STT is paid which is also exempt from tax. Further find that during the course of scrutiny assessment proceedings the AO has proceeded by the assumption that the shares purchased and sold by the assessee comes into the category of penny stock companies. AO has drawn support from outside information. The surrender of exemption by the assessee on repetitive queries would not amount to furnishing of inaccurate particulars of income. The assessee has claimed exemption as per the provisions of law, though surrendered during the course of assessment proceeding - No penalty to be levied - decided in favour of assessee

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• 2018 (9) TMI 708
  Addition on account of operating margin added on support services provided by the assessee to its group concern - Held that:- If the assessee is entitled to charge markup over the total cost incurred then the learned assessing officer is correct in making such adjustment. If the agreement between two resident companies do not provide for any such markup on the total cost then such addition cannot be made. In the paper book filed before us details of other income is also not provided. It was also not shown to us that how the other income is computed and what it comprises of and what are the relevant documents by which the assessee has shown such income and estimation thereof - relevant documents are not available before us, we set aside 2nd ground of appeal back to the file of the learned assessing officer to decide it afresh after. Disallowance at the rate of 10% of travelling and conveyance expenditure - Held that:- Regarding the details of the expenditure not submitted by the assessee where the learned assessing officer has asked for the elaborate details of the travelling and conveyance expenditure, we are of the opinion that many a times details are asked by the revenue in such a manner, which is very difficult to compile. Further, such extensive compilation of the details is also not required by the income tax act or the corresponding rules. Further as per the detailed submitted by the assessee before the learned assessing officer, the learned AO could not point out any instances where the expenditure incurred by the assessee are not incurred for the purposes of the business. Without pointing out such instances, it is not possible for us to uphold any percentage disallowance out of expenditure incurred by the assessee claimed by it is allowable under section 37 (1) of the act. Addition on account of deemed dividend u/s 2(22)(e) - Held that:- Payment in this case is to be treated as payment to the shareholder, holding company, i. e. Verizon Asia Pacific Holdings Pvt Ltd, Singapore, if at all. When payment has been made to any concern as loan or advance, such payment shall be deemed to have been made to the shareholder and the payment shall take the character of "deemed dividend”. The person liable in such situations would be the shareholder and not the person or entity to whom the money may have actually been paid as loan. In view of above findings, we reverse the findings of the ld AO and direct to delete the addition of ₹ 64037615/- in the hands of the assessee u/s 2 (22)(e). Accordingly, Ground no 4 of the appeal of the assessee is allowed.

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• 2018 (9) TMI 707
  Denying the assessee registration u/s. 12AA - relevance of objects and genuineness of the assessee's activities - Held that:- CIT(E) has not examined the MoA/bye-laws in-as-much as his order bears that out. His order cannot therefore be upheld. Registration, for which the satisfaction of the competent authority with the objects and genuineness of the activities is a prerequisite, does not therefore follow automatically. That is, while we find no basis for dissatisfaction in the absence of the examination of the relevant material, there is no specific satisfaction for granting registration in terms of s. 12AA(b)(i), which is to be recorded in writing. Why, the assessee’s objects, as their perusal reveals, contain religious objects as well, and which would also have to be taken into account. Further, not only is the said authority obliged to examine the same, but, where not satisfied, confront the assessee with his objections, following the principles of natural justice, besides being mandated by law. Restore the matter for the purpose back to the file of the competent authority, with a further direction to dispose of the assessee’s application, which is thus pending since long - Assessee’s appeal is allowed for statistical purposes.

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• 2018 (9) TMI 706
  Revision u/s 263 - non deduction of TDS on the borrowings u/s 194A - Held that:- As seen from the assessment order, the AO has examined the issue with regard to the TDS on the borrowings and observed that the assessee has not deducted the TDS on a sum of ₹ 58, 350/- and the same was added back to the income u/s 40(a)(ia). As per the details submitted by AR during the hearing, the total amount of interest paid was ₹ 9, 02, 287/- out of which for the sum of ₹ 7, 18, 508/- the provisions of section 194A are applicable and the assessee had M/s Ardee Hi-Tech Private Ltd., Visakhapatnam deducted the TDS on the payment of ₹ 6,60,159/- and the remaining amount of ₹ 58, 350/- was disallowed by the AO in the assessment proceedings. There is no error in the assessment order which is prejudicial to the interest of the revenue. Revision u/s 263 - addition of unpaid service tax - Held that:- The assessee has debited a sum of ₹ 9, 14, 594/- under service tax and a sum of ₹ 1, 15, 694/- remained unpaid at the end of the year which required to be disallowed under section 43B. There was no dispute that the said amount attracts disallowance u/s 43B of the Act and the issue was not verified by the AO. The contention of the Ld. AR that the disallowance of a sum of ₹ 1, 15, 694/- results into reducing the loss and finally does not result in positive income and the same is not prejudicial to the interest of the revenue is not acceptable and has potential tax effect to the extent of income under assessed. Therefore, not making the addition of unpaid service tax is erroneous as well as prejudicial to the interest of the revenue, and hence, we uphold the order of the Ld. Pr. CIT on this issue and dismiss the appeal of the assessee.

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• 2018 (9) TMI 705
  Cost of production of TV serials and programmes relating to the year under consideration claimed as revenue expenditure - Held that:- As relying on case of Prism TV Pvt. Ltd. [2016 (6) TMI 419 - ITAT HYDERABAD] AO directed to treat the expenditure incurred by the assessee on cost of production of TV programmes as revenue expenditure as the future likelihood of these resources being a possible source of revenue, cannot in the opinion of this Court justify its inclusion in the capital stream. Excess depreciation claimed on ‘film software library' - AO observed that since the assessee is in the business of satellite television and the film software library forms an important apparatus of its business which squarely fall within the definition of ‘plant and machinery and accordingly allowed depreciation @ 15% and disallowed excess deprecation @ 25% - Held that:- This issue is squarely covered in assessee’s own case for AY 2007-08 [2016 (3) TMI 820 - ITAT HYDERABAD] as held that the films and TV programmes are essential for the assessee company to carry on its business of telecasting of films and other programmes, but there is no caveat that the assessee company has to telecast only these films and programmes and none other for assessee’s business. Further, not only the films and programmes in the ‘Film Software Library’, but the assessee may also telecast any other programmes or films on its channels. By purchasing the library, the assessee is gaining exclusive right over the asset but this library cannot be held as a tool for carrying on of its business as assessee can carry on its business even without the ‘Film Software Library’. Therefore, we hold that the asset which consists of ‘Copyrighted Films and Programmes’ is an ‘Intangible Asset’ eligible for depreciation at the rate of 25%. - Decided against revenue TDS u/s 194H - non deduction of tds on commission amount - Held that:- As decided in assessee's own case [2014 (1) TMI 250 - ITAT HYDERABAD] TDS is not required to be made on payments made by TV channels/News paper companies to the advertising agency for booking or procuring or canvassing for advertisement. In view of that, we do not see any reason to defer from the findings. Disallowance of part of depreciation claim on computers/peripherals - Held that:- Similar issue came up for consideration in assessee’s own case for AY 2002-03 and 2003-04 [2013 (10) TMI 1376 - ITAT HYDERABAD] decide this issue in favour of the assessee by holding that depreciation claimed at 60% on printers, scanners, modems, switches, hubs, cables/cards and software etc., should not be disallowed as these devices are used along with the computer and their functions are integrated with the computer. Depreciation claimed on non-compete fee - assessee submitted that non-compete fee rights acquired by it are ‘intangible assets’ u/s 32(1)(ii) of the Act eligible for depreciation @ 25% - Held that:- As decided in assessee's own case [2014 (12) TMI 7 - ITAT HYDERABAD] - Neither the AO nor the CIT(A) has examined the effect of acquisition of 39% of equity shares by another entity - without examining the impact of investment made in equity shares to the extent of 39% by the domestic investor and condition imposed by it, the conclusion drawn by the CIT(A) that there is no necessity of payment of non-compete fee as the same person is controlling the assessee company as well as UKT and UKM is without proper appreciation of facts and evidences brought on record cannot be sustained - as the impact of acquisition of 39% of equity shares by M/s Equator Trading Enterprises Pvt. Ltd. has not at all been examined by AO at the time of assessment proceeding or by the CIT(A) while disposing of assessee's appeal and further as the additional evidences produced before us were not examined either by the AO or by CIT(A), which certainly have a crucial bearing on the issue as to whether the payment of non-compete fee is genuine and necessary – the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of assessee for statistical purposes..

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• 2018 (9) TMI 704
  Addition made on account of personal and unverifiable expenses - Held that:- Assessee has produced bills in support of foreign travel expenses incurred by it. Further it is observed that foreign travel has been undertaken by Directors or other officials alone, and A.O. has not been able to establish any infirmity/discrepancy in evidences filed by assessee. CIT(A) categorically observed that assessee provided Ledger account of telephone expenses which contained telephone numbers and mobile numbers of assessee, having installed, either at factory, or offices, or mobiles, used by directors/senior officers. Regarding local travel expenses, CIT (A) categorically observed that Ledger account does not indicate any personal expenditure. In respect of vehicle running expenditure and depreciation is concerned, it has been observed by CIT (A) that assessee itself has made suo moto disallowance on account of perquisite value for use of vehicles for personal reasons in the computation of income. Disallowance being restricted under section 36 (1) (iii) - Held that:- Having regard to balance sheet of assessee for year under consideration, assessee had sufficient funds of its own, and therefore presumption by Ld.AO without any supportive documents/evidences is unacceptable. Referring ratio held by Hon’ble Supreme Court in case of Hero Cycles Pvt.Ltd Vs.CIT [2015 (11) TMI 1314 - SUPREME COURT OF INDIA], we do not find any infirmity in the decision of Ld. CIT (A). However at this juncture we direct Ld.AO to allow the netting of interest. Accordingly, this ground raised by revenue stands dismissed. Disallowance on account of under valuation of closing stock - Held that:- CIT(A) categorically observed mistake in valuation of closing stock adopted by AO by using FIFO method. It is observed that Ld.AO has not granted adjustment of opening stock and slow moving items, which has been held to be unjustified by plethora of decisions. On the basis of the above detailed observations by Ld. CIT (A), we do not find any infirmity in deleting addition made by Ld.AO. Ld.AO is directed to value closing stock after eliminating opening stock for the year, slow moving & obsolete items at cost price or market price whichever is lower. - Decided against revenue

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• 2018 (9) TMI 703
  Validity of the proceedings u/s 153C - non recording of satisfaction note - Held that:- As relying on assessee's own case [2017 (11) TMI 909 - ITAT DELHI] we quash the proceeding initiated under section 153C of the Act on the ground that satisfaction note was not recorded by the Assessing Officer in the capacity of Assessing Officer of searched person and in any case since there is no satisfaction recorded of any seized documents being "belonging to" the assessee, hence, the other grounds on merits challenging the additions have become academic, which do not require adjudication. As a result, the appeal of the assessee stands allowed.

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• 2018 (9) TMI 702
  Payment towards membership of OTC (Delhi stock exchange) - nature of expenditure - AR submitted that membership of OTC enables assessee to use its facilities and do not result in creation of asset of enduring nature so as to held expenditure as capital in nature - provision made for doubtful advance for membership - Held that:- Assessee in present facts of case has written off a sum of ₹ 20 Lacs, which is alleged to have been given to Delhi Stock Exchange, towards its membership, which was denied. As these were non-refundable in nature, Delhi stock exchange did not refund the said amount to assessee. Assessee before us has not established by way of documentary evidences regarding its dealing in commodities exchange/shares etc., for which it could have benefited from membership of Delhi stock exchange. Further reason for rejection of its membership by Delhi stock exchange is also not known. It is further observed that assessee has not taken any steps to recover the money from Delhi stock exchange and therefore under such circumstances we do not see necessary fulfilment of section 36(1)(vii) of the Act, in any manner whatsoever. We therefore do not find any reason to interfere with observations of Ld. CIT (A) and the same is upheld. Accordingly ground raised by assessee stands dismissed.

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• 2018 (9) TMI 701
  Disallowance on a repayment of loan to Assessee’s namesake in, Bangalore - Held that:- Repayment done by the assessee was from its overdraft account and there was no use of any funds from its partner for such repayment. The addition was made on a wrong presumption by AO. The said addition in our opinion was rightly deleted by the ld. Commissioner of Income Tax (Appeals). - Decided against revenue

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• 2018 (9) TMI 700
  Addition u/s 14A - assessee not earned any exempt dividend income - Held that:- As in the earlier and subsequent assessment years also, there was no disallowance u/s 14A of the Act even though the investments were made by the assessee. Therefore,we hold that the provisions of Sec. 14A are not applicable to the case of assessee, as it has not earned any exempt dividend income during the relevant assessment year. Disallowance of the balance of the interest expenditure which has not been disallowed u/s 14A - Held that:- The assessee has given interest free loans to its sisters concerns but the advances are not out of interest bearing funds and the nexus between the loan taken from SBI on the hypothecation of sundry debtors is clearly proved. Therefore, we do not see any reason as to why the CIT(A), should have remitted the matter back to the A.O for verification. Ground of appeal No. 3 accordingly allowed. TDS u/s 195 - payments been made to the non-resident outside India, for the services rendered by her outside India - Held that:- We find that the assessee has paid commission to Mrs. Sandhya Prakash for the liasioning work done by her outside India. The argument of the assessee that for making disallowance u/s 40(a)(ia) the presumption is that the same is allowable u/s 37 of the IT Act was not raised by the assessee before the authorities below. Even if the same is acceptable and the said expenditure is allowable u/s 37 of the Act, the applicability of Sec. 40(a)(ia) of the IT Act requires the assessee to prove that the income of the recipient is not taxable in India. None of the authorities below have examined this issue and the assessee has also not filed any documents to disprove the finding of the Revenue. Therefore, accepting the assessee’s plea that the assessee, may be given an opportunity to produce the relevant documents to prove that Mrs. Sandhya Prakash has rendered services to the assessee warranting the payment of commission, we deem it fit and proper to remand this issue to the file of the A.O

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• Customs

• 2018 (9) TMI 677
  Quantum of penalty - whether the penalty imposed under Section 114AA of the Customs Act is excessive? - Held that:- The appellant’s role was of greater involvement; the CESTAT noted that he was closely associated with Sunny Jain, the mastermind of evasive operation as proprietor of M/s. Dex Logistics - the exercise of jurisdiction by the CESTAT in not reducing the penalty amount further in the appellant’s case is neither unreasonable nor erroneous - appeal dismissed.

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• 2018 (9) TMI 676
  Provisional release of seized ship - Import of ship for breaking and its parts - ship was seized as being prohibited from entering any port of Member State - The case of the Department is that the vessel imported by the petitioner at the time of its import was subjected to such sanctions. India being one of the signatories to the convention was required to honour such sanctions. Held that:- By the time the seizure memo was issued on 3.5.2018 by the respondents, the ship was partially broken. This can be gathered from the seizure memo itself which refers to the fact that when the officers of the DRI visited the site, the imported vessel was found broken. Photographs of the condition of vessel are also attached to the seizure memo. Pending further investigation and adjudication continued seizure of the ship would result into great hardship to the petitioner beside mounting port charges, it would also delay the completion of ship breaking. In half broken condition it would also not be possible to remove the ship from the yard for being sent away. The respondents are directed to provisionally release the goods by lifting both the seizure memos on the condition that the petitioner shall deposit with the Customs Authority 25% of the declared value of the ship and provide bond for the remaining amount - Petition allowed in part.

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• 2018 (9) TMI 675
  Rejection of Settlement Application - illicit diversion of duty free foreign liquor meant for consumption of diplomats, etc. to third persons - seizure of imported foreign liquor - settlement application rejected on the ground that the petitioner had not deposited the entire additional amount of Customs duty along with interest as he had failed to deposit the interest element of ₹ 18,635/-. Held that:- The petitioner had deposited admitted duty liability of ₹ 3,24,233/-. Failure to deposit interest of ₹ 18,635/-, it is apparent, was based upon legal advice and understanding of the experts consulted by the petitioner - The High Court while issuing notice on the writ petition vide order dated 13th November, 2007 had directed the petitioner to deposit ₹ 19,000/- with the Registrar General of this Court. The said deposit was made on 20th November, 2007. The writ petition has remained pending since then and was admitted to hearing vide order dated 4th August, 2009. Time limitation - Held that:- The impugned rejection order has adversely commented upon the lack of instructions and failure of Mr. Murari Kumar, Advocate, to furnish authorization for appearance before the Settlement Commission. Apparently, the petitioner was not properly guided on the strict time lines prescribed. Applications before the Settlement Commission have to be taken up for hearing in a time-bound manner. As per Section 127C, the Settlement Commission, on receipt of application under Section 127B has to issue notice to the applicant within seven days and pass an order within fourteen days from the date of notice. Rs. 19,000/- deposited by the petitioner in this Court along with interest accrued would be paid to the Customs Department and treated as payment towards and on account of the settlement application. The petitioner would be also liable to pay difference in the interest accrued on ₹ 19,000/- and interest payable on ₹ 18,635/- in terms of the Customs Act - petition allowed.

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• 2018 (9) TMI 674
  Duty Credit Scrip (DCS) - period of validity - loss of the scrip - extension of time for such clearance - Did the facts justify such extension and whether the Committee committed a serious error in refusing to exercise such powers? Held that:- DCS and similar scheme are in the nature of exporter incentives in order to encourage export, providing the exporters with certain additional benefits in terms of credit which could be utilised for making imports in future. Such scrips are often times freely transferable. In order to manage the fund flow, scrips would necessarily have validity period. Such incentive cannot be made available with no reference to the period before which the utilisation must be made - While reconsidering the petitioner’s request and after granting personal hearing, the Committee in its later decision dated 3-1-2017 cited additional reasons namely, the duty credit scrip is a transferable instrument having specific validity. The petitioner had the option to sale or transfer it within its validity period. The petitioner did not do so initially for a period of over 12 months. The petitioner did not apply for issuance of duplicate scrip with all necessary documents. No genuine hardship is noticed. No justification for not utilising the scrip for 12 months is given. While recognising the powers of the Committee to revalidate the period of scrip, we must recognise its discretionary nature. As noted, when the scrip gives certain financial benefits to an exporter as an incentive, simultaneously, the policy makers having provided a specific period of validity of utilisation thereof, the extent of discretion of the concerned authority to extend the period of validity or not gets considerably enlarged. Unless it is shown that the exercise of such power borders to the level of perversity, the Court would show a healthy restraint in such matters. In the present case, it may be that some time was consumed by the Government bodies in responding and granting duplicate DCS, nevertheless, we cannot lose sight of the fact that after its first issuance, the petitioner did not utilise or transfer it for over one year out of total period of six months. Once again it was the petitioner or its CHA who was responsible for loss of the scrip. Finally even after expiry of period of validity of 31-1-2015, the petitioner applied for extension of the validity period only on 17-4-2015. At all stages the petitioner had thus shown a degree of slowness. Petition dismissed.

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• 2018 (9) TMI 673
  Liability of administrative charges - appellant stored 7785.925 MT of Molasses in their storage tank inside the Chennai Harbour - It is the contention of the appellant that the procurement is only for export and there is no requirement either to take ML-5 licence or to pay administrative charges under Rule 7(2) of Molasses Control Rules for transit whether the appellant is liable to pay the administrative charges treating the transaction as one covered under ML-5 licence? Held that:- The appellant appears to be under the impression that import would mean only the import from outside the country and export out of the country. There is absolutely no basis in the contention taken by the appellant - It is very clear that exporter like the appellant even for exporting Molasses to a place outside Andhra Pradesh shall pay the administrative fee for export. The state is not concerned as to whether export is to a foreign country. In short, the exporter like the appellant must pay administrative charges to the excise authorities at Andhra Pradesh for exporting molasses to a place outside the state of Andhra Pradesh. The payment made by M/s. Sudalagunta Sugars Limited on behalf of the appellant should be considered in the context of the definition for the term “export” under the Andhra Pradesh Molasses Rules. The Tamil Nadu Molasses Control and Regulation Rules very clearly provides that every dealer desiring to import molasses from places outside the State and every dealer desiring to export molasses outside the State must procure licence in Form ML-5 on payment of administrative charges - There is no dispute that the appellant imported molasses to the State of Tamil Nadu for the purpose of exporting it into a place outside the State. There are two elements involved in this process; one relating to the import of molasses from Andhra Pradesh and another exporting the molasses outside the State. The term export/import must be interpreted in the light of the definition given to the said term in the Tamil Nadu Prohibition Act, 1937. There are no documents produced before us to show that while taking the export permit from the excise authorities at Andhra Pradesh, the appellant declared that it was intended for export to a particular country. The appellant conveniently failed to produce the export permit and produced only the receipt with a view to deprive this Court of the vital information as to whether the export was to the State of Tamil Nadu or it was to a foreign country. The fact that the appellant paid the export fee in the State of Andhra Pradesh would not stand in the way of the Prohibition and Excise Department in the State of Tamil Nadu to collect the administrative charges treating it as an export from the State of Tamil Nadu - there is absolutely no merit in the contention taken by the appellant. Appeal dismissed.

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• 2018 (9) TMI 672
  Eligibility for drawback - goods that were exported as brass sanitary fittings valued at ₹ 76,75,321/- - Held that:- The shipping bill, at the time of export of the goods, did not vary the original description of brass sanitary fittings . Had the goods been something other than that conformed to this description, it was incumbent upon the assessing authorities to have this description amended to that which was appropriate to the report of examination before allowing the export - There is substantial difference between nuts and bolts and sanitary fittings made of brass . In the absence of any evidence other than the examination report, the ground on which the drawback was denied by the competent authority does not appear to have the sanctity of law. It is difficult to accept the contention of Revenue that the goods that were exported were not brass sanitary fittings - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 671
  Furnishing of bank guarantee of 100% of differential duty - is the deposit is towards seizure of the goods or towards any past liability? - Held that:- The deposit is towards the seizure of the goods. Moreover, as observed since there is no demand otherwise exist, this deposit has to be considered against the seizure of the goods in the present case - the Respondent - Commissioner is directed to accept the bank guarantee of 100% unpaid differential duty after adjusting the deposit already made - application allowed.

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• 2018 (9) TMI 670
  Rectification of Mistake - appellant submits that in the preamble of the order, the name of the appellant was wrongly mentioned as "Equinox Semiconduction Ltd." whereas the correct name is "Equinox Semiconductor Ltd." - Held that:- It is agreed that there is a mistake in the preamble of the order, the name of the appellant stands changed to Equinox Semiconductor Ltd. - ROA application allowed.

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• Corporate Laws

• 2018 (9) TMI 679
  Status of a beneficial interest holder - Status of foreign company - make the trustees of the holders of the respective shares involving beneficial interest as absolute owners - Consolidation and deconsolidation of defendant No.2 a foreign entity governed by the laws of Dubai - jurisdiction to institute the suit within the jurisdiction of this Court - Held that:- Admittedly, the defendant No.2 is a foreign entity governed by the laws of Dubai. The plaintiffs are its shareholders. Any dispute between them will have to be resolved under the laws of Dubai. Hence, the contention of the learned Senior Counsel appearing for the plaintiffs that they are stepping into the shoes of the defendant No.2 seeking a relief against the defendant No.1 cannot be countenanced. This is also for the reason that there must be a declaration in clear terms qua the status of a beneficial interest holder before seeking a relief against the defendant No.1. More so, when defendant No.2 itself denies it. In the case on hand, the fundamental and core facts are not in dispute. They are with respect to the consolidation and deconsolidation of defendant No.2 by the defendant No.11. Similarly, a decision of the general body of a ETA Group, the Board of Directors and the participation of the plaintiffs in that are also not in dispute. These undisputed happenings lead to the draft financial statement of the defendant No.11. This draft financial statement confirms two things. One is with respect to the deconsolidation and the other is removal of status over the shares held by the individuals. The decision was to implement it with retrospective effect from 10.01.2014. It is an admitted case that the decision of the ETA Group and the draft financial statement of defendant No.11 would make the trustees of the holders of the respective shares involving beneficial interest as absolute owners. The plaintiffs may have grievance over this, but their remedy will lie elsewhere. That is the reason why one of the plaintiffs after issuing notice on behalf of the defendant No.11 to defendant No.1, has chosen to file the suit along with the other in the status of shareholders. May be it is also for the reason that the defendant No.11 cannot wriggle out of the decision of ETA Group followed by its draft financial statement. If we see the cause of action as recorded above, it is abundantly clear that what has triggered the present suit is the aforesaid facts. After all, the relief that is sought against the defendant No.1 is a mere consequential one. When once the plaintiffs succeed against defendant Nos.2 to 7 then defendant No.1 is bound to give effect to it. For doing so, the remedy for the plaintiffs against defendants Nos.2 to 7 lies elsewhere. When the status of defendant No.2 being the foreign company is not in dispute, no relief either direct or indirect can be sought against it under the Indian Law. We are not concerned with the ultimate relief but the issues leading to it. What we are dealing is nothing but a fight between two groups. Defendant No.2 is controlled by defendant Nos.3 and 5 to 7 whereas, defendant No.11 is by the plaintiffs. This explains the letter sent by the defendant No.11 through the plaintiff No.2 to the defendant No.1 dated 01.06.2017. A perusal of the cause of action as indicated in the plaint would show that it started happening only from the date of deconsolidation. Monies were sent by the defendant No.2 and on its behalf by defendant No.12 atleast till 2011. Though prima facie, the payment made was not in dispute, the entity from which it emerged actually cannot be decided here. The very fact that payments were made by defendant No.12 on behalf of defendant No.2 followed by book adjustment itself would vouch for the fact that such things have happened involving the other entities of the ETA Group as well and atleast defendant No.2 and its subsidiaries. These issues also cannot be looked into by this Court. As against the defendants 8 to 10, the situation stood changed after a decision made in the meeting held by the ETA Group which was given effect in 2016. That is the reason why, the cause of action has been mentioned to be starting from 2016 onwards. Therefore, the alleged role of the defendant Nos.8 to 10 will not give any jurisdiction to this Court. Defendant No.11 who is stated to be in possession of the shares, is situated in Dubai. As the plaintiffs felt the importance of the defendant No.11 who would in all probability support their case, it has been accordingly arrayed. We have to keep in mind the notice dated 01.06.2017 signed by the plaintiff No.2 on behalf of defendant No.11 on the very issue. What has to be seen at this stage is the averments in the plaint along with the documents filed. Therefore, there is no difficulty in accepting the submission made by the learned Senior Counsel appearing for the plaintiffs in this regard. However, in the light of the discussion made above, a mere situs of the share in the first defendant's company alone cannot give jurisdiction to institute the suit within the jurisdiction of this Court. Thus, we find that the reasons assigned by the learned single Judge cannot be sustained in the eye of law, particularly, with reference to the provisions of the Companies Act, 1956/2013, the examination of the books of defendant No.1 qua the declaration made, flow of funds and the allegations of fraud made against defendants 7 to 10.

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• 2018 (9) TMI 678
  Company affairs being conducted prejudicial to the public interest - Respondent Companies and their directors having caused wrongful loss of rupees above ₹ 11, 400 crores by fraudulent means - business of the Company is being conducted with intent to defraud its creditors, members etc. - Tribunal considering question of modification or vacating the interim order - Held that:- In the present case, the Central Government by letter dated 17th February, 2018 has directed the SFIO to investigate into the affairs of the Respondent Company, among other 114 entities. The investigation is currently undergoing and as such, as on date, being satisfied if so required, it is always open to the Central Government to file application under Sections 241(2) read with Section 242 of the Companies Act, 2013 before the Tribunal. In the interest of regulating the conduct of the Company’s affairs the interim order cannot be restrictive to any particular or individual person, including the Company/companies, existing or erstwhile Officers and employees of the Companies if investigation for alleged fraud is pending. For the purpose of passing interim order the Tribunal cannot fix the personal liability of delinquent Directors or Managers or Officers or other employees in absence of any specific evidence. Therefore, during the process of investigation and pendency of an application under Section 241(2) read with Section 242 of the Companies Act, 2013 and in view of powers conferred under Section 221, the Tribunal is not only empowered to pass appropriate interim order against the Company but also against any person or individual, including the order to desist. An application made by the Central Government alleging affairs of the Company are being conducted in a manner prejudicial to public interest, the Tribunal can pass any order in terms of Chapter XVI, which includes Section 242 and other provisions under the said Chapter. Section 246 is part of Chapter XVI, the provisions mentioned therein will be also covered by sub-section (2) of Section 241. Therefore, in an application made by the Central Government alleging conduct of the Company in a manner prejudicial to public interest, the provisions of Sections 337 to 341 will be also applicable mutatis mutandis to an application made to the Tribunal under Section 241 or Section 245. If sub-section (4) of Section 242 is read with Sections 339 & 340 and Section 221, it is clear that apart from ‘freezing of assets of company on inquiry and investigation’, it is also open to the Tribunal to freeze the assets of any person, including other companies and individuals, even during inquiry and investigation of fraud under Section 212 of the Companies Act, 2013. In so far as the order dated 2nd April, 2018 is concerned, we find that by the said order the Tribunal, while modified its earlier order dated 23rd February, 2018, practically exonerated Mr. Sujal Shah (Respondent No. 43); Mr. Gopal Krishnan Nair (Respondent No. 44); Mr. Suresh Senapathy (Respondent No. 51); Mr. Gautam Mukkavilli (Respondent No. 52) and Mr. Sanjay Rishi (Respondent No. 53) by holding that those Respondents had no complicity in the matter and they had no role to play in the financial fraud in question. The Tribunal failed to appreciate that it was dealing with the question of vacating the interim order passed under sub-section (4) of Section 242 read with Sections 221, 241(2), 339 and 340 of the Companies Act, 2013. While considering the question of modification or vacating the interim order, it was not open to the Tribunal to pass an order which is final in nature, amounting to exonerating one or other Respondent particularly, when the allegation of fraud of this nature is pending investigation by the SFIO. Though it was brought to the notice of the Tribunal that the Respondent Companies, individuals including existing and erstwhile Directors, partners, trustees, beneficiaries and their associates or subsidiaries and firms had exposure with the PNB and are prima facie found to be beneficiaries of the fraud, as noticed at paragraph no. 6 of this Judgment, without waiting for the report of the SFIO it was not open to the Tribunal to exonerate some of the Respondents from the charges. For the reasons aforesaid, we set aside the impugned order dated 2nd April, 2018, so far as it relates to Mr. Sujal Shah (Respondent No. 43); Mr. Gopal Krishnan Nair (Respondent No. 44); Mr. Suresh Senapathy (Respondent No. 51); Mr. Gautam Mukkavilli (Respondent No. 52) and Mr. Sanjay Rishi (Respondent No. 53). In so far as Mr. Anil Umesh Haldipur (Respondent No. 35) and Mrs. Nazura Yash Ajaney (Respondent no. 38) are concerned, the Tribunal has already held that a prima facie case has been made out against them but while giving such finding, the Tribunal has modified the order dated 23rd February, 2018 permitting Mr. Anil Umesh Haldipur (Respondent No. 35) to withdraw ₹ 2, 00, 000/- (Rupees Two Lakhs only) per month and Mrs. Nazura Yash Ajaney (Respondent no. 38) to withdraw an amount to the extent of ₹ 1, 00, 000/- (Rupees One Lakh only) per month from their Bank accounts. Rest part of the order dated 23rd February, 2018 restraining them and others from removal, transfer or disposal of funds, assets and properties of the entities and individuals until further orders is continuing.

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• Insolvency & Bankruptcy

• 2018 (9) TMI 681
  Corporate insolvency process - petition under section 9 of the Insolvency & Bankruptcy Code, 2016 - Corporate Debtor pointed out the pendency of the suit - existence of dispute or pendency of the suit - Held that:- We are unable to accept the submissions of the Ld. Counsel for the Operational Creditor that the Corporate Debtor ought to have raised such dispute or filed suit at the earlier point of time, i.e. when the first proceeding of winding up was filed by them in the Hon'ble High Court. Hold that it cannot be said that it was necessary for the Corporate Debtor to raise the dispute at earlier point of time only and not later on. The provisions of I&B Code, 2016 under section 8(2)(a) allows him to show the existence of dispute or pendency of the suit within 10 days from the receipt of demand notice from the Operational Creditor. It has been done in this case. Moreover, the Corporate Debtor has elaborately stated what is exact dispute in between them. It is not necessary to go into that details but suffice to mention herein is that the dispute cannot be said to be feeble on facts or unsustainable as based only on the legal arguments. Hence, hold that this petition under section 9 of I&B Code, 2016 is not maintainable. The petition under section 9 of the I&B Code, 2016 filed against the Corporate Debtor stands rejected

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• 2018 (9) TMI 680
  Initiation of Corporate Insolvency Resolution Process - whether the corporate debtor succeeds in establishing pre-existing disputes as alleged in the reply affidavit? - proof of compliance as required under Section 9(5) of the Code - Held that:- Borne in mind the principle laid down in the Mobilox Innovations Private Limited -Versus- Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT OF INDIA] it appears to me that the dispute regarding the quality of goods raised on the side of the corporate debtor is a genuine pre-existing dispute. The corporate debtor succeeds in proving that the dispute was existing prior to the issuance of the demand notice. What is the amount liable to be paid by the corporate debtor is yet to be determined after resolving the disputes in between the corporate debtor and the operational creditor. In such view of the matter we can come to a right conclusion that the operational creditor failed in proving that the demand notice has been delivered to the corporate debtor and that the corporate debtor succeeds in establishing existence of a dispute between the corporate debtor and operational creditor regarding the quality of the goods and regarding the amount liable to be paid and, therefore, the application is liable to be rejected u/s. 9(5)(i)(a) and (d) of the I & B Code. Application rejected.

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• FEMA

• 2018 (9) TMI 669
  Jurisdiction under FEMA v/s FERA - appeal lies to the Special Director (Appeals) or Deputy Director - appellant stated that as the appeal was filed under FERA before FEMA came into existence, the appeal should be heard by the Tribunal as under FERA there was no such provision for appeals going to the Special Director (Appeals) - Held that:- As decided in the case of Premier Limited vs. Union of India [2006 (7) TMI 326 - HIGH COURT OF BOMBAY].in Section 49(5)(a) of FEMA the legislature has provided that notwithstanding the repeal, actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In Section 49(5)(b) the legislature has provided that the appeals pending before the Appellate Board shall be transferred to the Appellate Tribunal constituted under FEMA. Reading Sub-section (a) and (b) of Section 49(5) of FEMA together, it is evident that unless specifically provided, all actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In this view of the matter, the adjudication orders passed by the Assistant Director/Deputy Director of Enforcement under FERA are deemed to be the adjudication orders passed under FEMA and accordingly the appeals against the orders passed by the Assistant Director/Deputy Director of Enforcement under FERA would be maintainable before the Special Director (Appeals) Hence appeals are to be filed/heard by the Special Director (Appeals). Accordingly, dismiss the appeal with liberty to the appellant to file the same before the Special Director (Appeals)

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• PMLA

• 2018 (9) TMI 668
  Attachment orders - whole case was booked against assessee's husband against whom there are number of FIRs lodged for offences of murder, extortion etc. and we need to first go into the history of the FIRs - Held that:- Appellant has made a prima facie case in their favour in as much as the property is in the joint name of her and her husband, that the property has been bought after her marriage and that FIRs are lodged against her husband for various offences including extortion and is also a defendant in the present impugned order of the adjudicating authority, and that presently also he was in jail. Accordingly do not find any reason to stay the impugned order. No undue/financial hardship has been pleaded.

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• Service Tax

• 2018 (9) TMI 666
  Export of services or not? - Place of provision of service - business of promoting/ selling medical equipments and also rendering after sales services like installation, commissioning etc. in India to a foreign party - liability of Service Tax - services are consumed in India and not at place outside India - Whether on the facts and circumstances of the case and in law, was the Tribunal justified in holding that the services provided by the Respondent herein qualify as export of service under the provisions of Export of Services Rules, 2005? Held that:- This Court in SGS India Pvt. Ltd., [2014 (5) TMI 105 - BOMBAY HIGH COURT] has held that where services were rendered in India to a foreign party, then such service is not liable to tax as it would be export of service - the Central Board of Excise & Customs has issued a clarification by Circular No.111/2009 dated 24th February, 2009 that in terms of Rule 3(1)(iii) of Export of Service Rules 2005, it is not the place of performance but the location of the service receiver which will make it an export of services. It clarified that word 'outside India' to mean that the benefit should accrue outside India. The aforesaid Circular of CBDT is completely in favour of the Respondent. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 665
  Maintainability of appeal - Valuation issue - Nature of activity - sale or service - supply of electricity - Whether the Tribunal is correct in holding that the supply of electricity by the Respondent herein to their tenants / clients amounts to “sale of goods” and “not supply of service”? - Whether the supply of electricity by the Respondent herein to their tenants / clients is an essential and integral part of the service namely “Renting of Immovable Property Services”, as provided under Section 65 (105) (zzzz) of Finance Act, 1994? Held that:- The questions raised by the Revenue whether the sale of goods would amount to supply of service for purpose of valuation is an issue which directly relates to valuation of goods. It is relevant to note that the Central Government had issued a Notification No. 12/03 ST dated 20th June, 2003 exempting supply of good from service tax. This prima facie would suggest that otherwise the value of goods supplied by a service provider may be included in the valuation of the services, in the absence of the Notification. However, these are all issues relating to valuation and not within the jurisdiction of this Court. The common impugned order relates to valuation of services for the purposes of assessment under the Act - The challenge to the impugned order dated 18 April, 2013 cannot be entertained by us in view of Section 35G (i) of the Central Excise Act, 1944 as made applicable in terms of Section 83 of the Act. The appeal, if any would be before the Hon'ble Supreme Court in terms of Section 35L(1) (b) of the Central Excise Act, 1944 read with Section 83 of the Act. The Appeal is disposed of as not maintainable with liberty to the Revenue to approach the Hon'ble Apex Court, if so advised.

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• 2018 (9) TMI 664
  Maintainability of appeal - Condonation of delay - Whether dismissal of appeal by rejecting the application seeking condonation of delay in filing of appeal in the facts and circumstances of the case and in law could not be countenanced and appeal needs to be restored to the file of the CESTAT for decision afresh affording opportunity of hearing to the appellants to secure the ends of justice? Held that:- Admittedly, in the instant case, the appeal was filed well beyond the period of limitation, to be precise, 1557 days after the expiry of the limitation period. Undoubtedly, the Tribunal has power to condone the delay, if sufficient cause is shown by the Assessee. The Tribunal in the impugned order held that the cause shown by the Assessee is neither persuasive nor convincing and the delay being inordinate, rejected the application - The Assessee cannot be left remediless solely on the ground that he has been turned down at the very threshold, that is, at the stage of delay condonation petition. What is important to note from the impugned order is that while dismissing the application for condonation of delay, the Tribunal dismissed the appeal itself. Since the mandatory pre-deposit is paid, the appeal is numbered along with the application to condone the delay and this is precisely the reason why the Tribunal, while rejecting the condonation of delay application, has dismissed the appeal. Therefore, the order passed in the condonation delay petition, in effect, is an order passed in the appeal petition filed by the Assessee challenging the Order-in- Original dated 30.11.2012, and thus, it is a final order for all purposes, as against which, an appeal is maintainable under Section 130 of the Act. The substantial question of law, as framed for consideration, is answered in favour of the Assessee and against the Revenue - appeal allowed.

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• 2018 (9) TMI 663
  Construction Services - construction of staff quarters for Singareni Colleries Company Limited and construction of housing complex for the Government of Jharkhand for conducting national games - whether the said services would be taxable under the head construction of residential complex service or otherwise? Held that:- On cursory perusal of the contract awarded to the appellants, it indicates that it is a composite contract and can merit classification under the category of works contract services. It seems that the adjudicating authority has not considered the issue from this angle - Since the question of classification needs reconsideration, without expressing any opinion on the merits of the case as to the rejection of refund claims filed by the appellant, the impugned order is set aside and matter remitted back to the adjudicating authority to reconsider the issue afresh, after following the principles of natural justice. Appeal allowed by way of remand.

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• 2018 (9) TMI 662
  Liability of Service Tax - services provided to its associate company i.e. M/s. CMST-BSNL - services provided to M/s. CMST-BSNL, Jaipur which is having a separate service tax registration? Held that:- For the provision of service there has to be a service provider as well as a service recipient - No doubt appellant is a service provider and M/s. CMST, BSNL is service recipient and that both have different service tax registration, but the fact remains is that they both have the same PAN number as such both have same incorporation i.e. both are the one and the same entity. This observation make it clear that mandatory requirement for service tax that is of existence of two different entities is absolutely missing in the case in hand. Hence the transaction between the two cannot be termed as provision of service and hence no service tax is payable - Once this is the situation Section 67 of the Act has no applicability nor will be relevant the explanation in sub section 4 thereof. The adjudicating authority below has wrongly relied upon the concept of book adjustment which is relevant only when the event is taxable. Extended period of limitation - Held that:- Once no taxability is involved question of evasion of tax does not arise. The question for assessee to suppress or mis-represent the fact with the intent to evade tax also retains no relevant - the department was not entitled to invoke the extended period of limitation. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 661
  Construction services - construction of commercial or industrial building and civil structures - Department alleged that the appellant had received ₹ 2,40,77,168/- against exempted services and ₹ 7,48,08,499/- against above said taxable services during the period 2006-07 to 2010-11. The appellant neither obtained the registration for being service provider nor had filed ST-3 Returns during the period April 2006 to September, 2007. - composition scheme - benefit of abatement. Held that:- The demand confirmed qua the work orders in respect of construction as well as the maintenance of the road including the Hanumangarh Sangria Road Project is liable to be set aside - Appellant is held entitled for the benefit of the composition scheme. Appeal allowed in part.

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• 2018 (9) TMI 660
  Penalties u/s 77 and 78 of FA - Service tax paid on being pointed out - Appellants have assailed the impugned order on the ground that since they had already paid full amount of service tax along with interest before issuance of show-cause notices, the amount of penalties imposed are liable to be set aside - Held that:- It is an admitted fact on record that the entire adjudged service tax along with interest was deposited by the appellants before issuance of show-cause notices. The issue with regard to leviability of service tax on construction of residential complex was contentious and the said issue was resolved by the Hon’ble Bombay High Court in the case of Maharashtra Chamber of Housing Industry [2012 (1) TMI 98 - BOMBAY HIGH COURT] in favor of Revenue. Since non-payment of service tax was due to the genuine and bonafide belief that such service will not be excisable to service tax, the benefit of Section 80 of the Finance Act, 1994 can be extended in these cases, for waiver of penalties. Penalties set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 659
  Liability of Service tax - commission received by the distributors - whether the appellant being distributors of Amway India Enterprise Pvt. Ltd. is liable to pay the service tax on the gross amount of commission received by the distributors? Held that:- The appellant is similarly placed distributors of Amway India Enterprise Pvt. Ltd, as the various distributors involved in the judgment of Charanjeet Singh Khanuja [2015 (6) TMI 585 - CESTAT NEW DELHI] wherein the principle was laid down that which commission will attract the service tax and which will not, since the demand made on the consolidated amount for the purpose of verification and re-quantification, the matter was remanded to the adjudicating authority. The matter is remanded to the adjudicating authority to pass a fresh order on the line of observation made in the case of Charanjeet Singh Khanuja - appeal allowed by way of remand.

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• 2018 (9) TMI 658
  Reverse charge mechanism - service of Technical Testing, Business Exhibition And Legal Consultancy services received from abroad - section 66A of Finance Act, 1994 read with section 2(1)d(iv) of Service Tax Rules, 1994 - scope of SCN - Held that:- We find in the SCN that the service in question were not explicitly classified under particular head, moreover the adjudicating authority in the Order in Original also not decided the classification of the service, since the issue of classification depends on the nature of service, the adjudicating authority should have verified all the documents and come to the conclusion that what should be the classification of the service. The matter needs to be re-considered by the Original Authority - appeal allowed by way of remand.

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• 2018 (9) TMI 657
  Business Auxiliary Services - appellant is providing table space to the banks and financial institutions for sell of their loan products for which the appellant is getting incentive - Held that:- The appellant have deposited the service tax suo-moto under the head Business Support Service, for the period 01.04.2006 to 31.03.2008 which is not being contested by the appellant. Therefore, we are not going into the merits of the case and the demand for the period 01.04.2006 to 31.03.2008, as has been paid by the appellant along with interest, the same is upheld. Demand for the period 01.07.2003 to 31.03.2006 - Extended period of limitation - Held that:- As the issue was not free from doubts as there were conflicting decisions and the issue was finally decided by the Larger Bench of the Tribunal in the case of Pagariya Auto Center [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)], the demand for the period 01.07.2003 to 31.03.2006 is set aside on the ground of limitation. Appeal allowed in part.

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• 2018 (9) TMI 656
  Valuation - Tour Operator Service - inclusion of Hotel Booking in assessable value - whether in the case of Hotel Booking by a Tour Operator, the value there of is includible in the value of tour operator service or otherwise? Held that:- On plain reading of definition or Tour Operator, pre and post amendment, it is clear that in the earlier definition the hotel accommodation was not covered which was brought into the definition w.e.f. 10.09.2004 in the amended definition. The Board also clarified the same vide its clarification dated 17.01.2005. In view of the clear position of law on tour operator no service tax is leviable before 10.09.2004. Since the period is covered upto 31.03.2005 the service tax and corresponding penalties, interest is payable for the period from 10.09.2004 onwards - appeal allowed in part.

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• 2018 (9) TMI 655
  Condonation of delay in filing appeal - time limitation - Held that:- The rules of limitation are not meant to destroy the rights of the parties. They are meant to see that the parties do not resort to dilatory tactics, but seek their remedy promptly. In the present case, it is application for condoning the gap of more than an year for challenging the order. It is an admitted fact that despite the order was received on 27.7.16 and was handed over to the consultant for further action (as mentioned) the appellant did not take any action till in January, 2018 i.e. till they have received notice from department for recovery of dues. There is no explanation for this long silence of the appellant himself nor there is any communication of the appellant with his consultant Shri Daga, pursuing his appeal to be filed in time. There is apparent mistake on the part of the counsel for the said delay - delay cannot be condoned - COD Application dismissed.

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• 2018 (9) TMI 654
  Benefit of N/N. 19/2003-ST as amended and 01/2006-ST - denial of benefit on the ground that they have contravened the condition of notification inasmuch as they have availed CENVAT credit on some inputs and also the value of some consumables was not included in the gross value of the service - Held that:- The submission of the Ld. Counsel that they have included the value of goods is apparently false and incorrect on the face of the records - the appellant have raised the bill for their installation charges @ of ₹ 54 per meter. However as per the purchase order, the value of material purchase, Roofing sheet and other material was not included, therefore, they have clearly violated the condition of Notification 1/2006-ST - On violation of this condition itself, the Notification No. 1/2006-ST is not admissible to the appellant. The appellant is really not entitle for the exemption N/N. 1/2006-ST. - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 653
  Refund claim - services consumed within SEZ - in respect of services consumed within the SEZ unit, whether the Service Tax paid on such services is refundable even before the amendment of notification 09/2009-ST by amendment N/N. 15/2009-ST dated 20.05.2009? Held that:- Identical issue came up in the case of M/S. SEARS IT & MANAGEMENT SERVICES (I) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2017 (9) TMI 888 - CESTAT MUMBAI], where it was held that there is no dispute that the service tax was paid on such services which are otherwise exempted. Therefore the appellant is entitled for the refund but not under N/N. 9/2009-ST but under Section 11B of the CEA, 1944. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 652
  Refund claim of excess Service Tax paid - unjust enrichment - Held that:- Considering the fact that, the appellant is not entitled to avail Cenvat credit of service tax paid on goods transportation charges, therefore, there is no question arises of passing of the Cenvat credit to the buyer - as the appellant has not availed Cenvat credit on service tax paid on transportation charges, he entitled to claim refund claim on access service tax paid by them - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 651
  Management, Maintenance or Repair Service - activity of repair of roads - exempt service or not? - Held that:- Considering the fact that as per Section 97 of the Finance Act, 2012, the activity of management, maintenance or repair of roads has been exempted from Service Tax w.e.f. 16.06.2005 to 26.07.2009, whereas period in dispute is 2006-07; - the appellant is not required to pay service tax under the category of ‘Management, Maintenance or Repair Service’ as repair of roads is an exemption service - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 650
  Valuation - Benefit of N/N. 15/2004-ST dated 10.09.2004 - inclusion of cost of free supply material by the service recipient - For availing the Exemption Notification No.15/2004-ST dated 10.09.2004, as per explanation inserted vide notification No.4/2005-ST whether the cost of free supply material by the service recipient has to be included in the gross value of service or otherwise? Held that:- The issue is no longer Res-Integra in the light of the Hon’ble Supreme Court judgement in case of Bhyana Builder [2018 (2) TMI 1325 - SUPREME COURT OF INDIA], according to which the value of the free supply material by service recipient of Commercial or Industrial Construction Service need not to be included in the gross value, for the purpose of Notification No. 15/2004-ST. - the appellant is entitled for the abatement provided in the Notification - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 649
  Scope of SCN - order in original traveled beyond the Show Cause Notice - in the order in original the demand was confirmed under the head of Business Auxiliary Service, whereas in the SCN, the demand of Service Tax was proposed under Advertising Services. Held that:- From the reading of both the paragraph of the Show Cause Notice as well as order in original it is clear that in the Show Cause Notice, the demand was proposed, considering the service of Advertising Service, Whereas in the order in original, the demand was confirmed under Business Auxiliary Service. Accordingly, the order in original traveled beyond the Show Cause Notice which is not permissible under the settled Law by the various Court - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 648
  Time Limitation - Business Auxiliary Services - promotion/marketing of Auto Loan products of the financial institution - Held that:- There is no dispute that the issue was not free from doubt, there were conflicting opinion from different bench and the matter was referred to Larger Bench. The issue was also clarified by the board Circular No. 87/5/2006 dated 06.11.2006. In these circumstances, the entertaining bonafied belief by the appellant appears to be reasonable - the malafide intention cannot be attributed to the appellant. The impugned order is set aside only on ground of limitation - appeal allowed.

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• 2018 (9) TMI 647
  Jurisdiction - power of the Commissioner to remand the matter to the original authority - Refund of unutilized CENVAT Credit - export of services - Rule 5 of Cenvat Credit Rules 2004 read with Notification 5/2006 - Held that:- Gujarat High Court in the case of Commissioner of Service Tax Vs. Associated Hotels Ltd. [2014 (4) TMI 406 - GUJARAT HIGH COURT] held that the Commissioner (Appeals) has the power to remand the case back to the original authority for de novo adjudication - there is no infirmity in the impugned order remanding the case back to the original authority and consequently all the three appeals of the assessee are dismissed. Refund claim - time limitation - Section 11B of the Central Excise Act - Held that:- This issue is no more res integra and has been settled by the Larger Bench of this Tribunal in the case of CCE & CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] wherein the Larger Bench has held that the relevant date for the purpose of deciding the time limit for consideration of refund claims under Rule 5 of Cenvat Credit Rules can be taken as the end of the quarter in which the FIRC’s received in cases where refund claims are filed on a quarterly basis. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 646
  Whether the appellant being deemed the service provider in respect of GTA service is entitled for exemption No. 32/2004-ST dated 03.12.2014? Held that:- Board’s letter No. B1/6/2005-TRU dated 27.07.2005 clarified that the declaration submitted by the transporter to the appellant is sufficient to comply with the condition of notification - appellant is entitle to exemption N/N. 32/2004/ST. - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (9) TMI 645
  SSI exemption - N/N. 8/2003, dated 01-3-2003 - use of brand name of others - Held that:- Four weeks’ time is granted to the learned counsel appearing for the appellant to file deficit court fee of ₹ 48,560/, failing which the Appeal shall stand dismissed without further reference to the Court.

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• 2018 (9) TMI 644
  Provisional assessment finalized or not? - Whether the CESTAT was right in holding that the assessment was provisional and was not finalized for the relevant period? - Held that:- The impugned order of the Tribunal on the basis of the record available before it, and on the appreciation of the same, has rendered a finding of fact that the Assessment during the relevant period were provisional. This finding of fact is not shown to be perverse in any manner. On the available facts, the view taken by the impugned order of the Tribunal is a possible view - this being a question of fact which is not shown to be perverse, would not give rise to any substantial question of law. Thus not entertained. Penalty - Held that:- Revenue, having specifically stated that the Revenue does not agitate the issue of penalty not being imposable even when the Assessment is provisional, renders the question academic in the present facts. Thus, not entertained. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 643
  Demand of Excise Duty - demand set aside on the ground of death of proprietor - Held that:- The demand of excise duty under the impugned order of the learned Commissioner could not be set aside solely on the ground of death of the proprietor and the learned Tribunal ought to have allowed the legal representative of the proprietor Mr. Harilal M. Patel himself to either contest the said appeal on merits or the learned Tribunal should have decided the appeal on its own merits, after the legal representative was taken on record. Since the legal representative son, Mr. Ashok Patel himself moved the said application before the Tribunal, he was very much available to be heard in the matter. Therefore, we are of the opinion that the learned Tribunal has erred in allowing the said appeal simplicitor on account of the death of the proprietor of the assessee in question. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 642
  Monetary amount involved in the appeal - Maintainability of appeal - Held that:- The present appeal is not maintainable now due to the tax effect involved in the present case being less than the prescribed monetary limit of ₹ 50,00,000/- and that the present case does not fall under the exception category of Notification dated 17.08.2011 referred in paragraph No.4 of the aforesaid Instructions dated 11.7.2018 - The appeal filed by Revenue are, accordingly, dismissed as withdrawn/not pressed.

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• 2018 (9) TMI 641
  CENVAT Credit - inputs/input services/capital goods - manufacture of spirally welded steel pipes for Water Supply Projects and Gas Projects - N/N. 06/2006-CE dated 01.03.2006 - Time limitation. Under-valuation of pipes manufactured on job work basis - Held that:- Appellant is correct in his assertion that the issue is fully covered by the decision of CESTAT Chennai in M/s. Bhavani Enterprises and Ors. [2018 (2) TMI 139 - CESTAT CHENNAI], where it was held that Rule 8 of the Central Excise Valuation Rules will not be applicable in respect of the job work activities done by the appellants therein. - the demand of ₹ 40,70,960/- with interest, cannot be sustained and is, therefore, set aside. Ineligible credit availed on HR Coils - Held that:- HR Coils were used only in manufacture of water pipes which were not in the exempted or non-dutiable category. In fact, from the facts on hand, from para 3.4 of the Show Cause Notice, it is evident that the appellants were being supplied HR Coils with size 10 X 1250 MM. by M/s. Koya Ltd. along with duty paid invoices and they also themselves procured HR Coils with sizes 11 X 1147 MM and 14.2 X 1553.4 MM. All these HR Coils were exclusively used in manufacture of exempted pipes and were not used in any other duty paid pipes - the availment of CENVAT Credit will be barred by Sub-rule (1) of Rule 6 of the Rules - credit availed is required to be reversed - the appellant has to be given adjustment of the amount already reversed as above. For this limited purpose of re-quantification of demand on this issue, after giving adjustment of the amount already reversed by the appellant, we remand the matter to the adjudicating authority. Time Limitation - Held that:- There is no positive evidence to show suppression of facts with intention to evade payment of duty attracting the ingredients for invocation of extended period. In such event, the demand for the extended period with respect to the issues which are not contested on merits requires to be set aside as being time barred - the appellant is liable to pay the duty demand falling under the normal period. Penalties also set aside. Appeal allowed by way of remand.

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• 2018 (9) TMI 640
  Classification of goods - Diagnostics Kits - whether it is classifiable under chapter head 3822.00 or 3002.00 of first schedule to the Central Excise Tariff Act, 1985? Held that;- This Tribunal has considered the same issue in the appellant’s own case M/S. RECKON DIAGNOSTICS VERSUS COMMISSIONER OF CENTRAL EXCISE, VADODARA [2011 (10) TMI 93 - CESTAT, AHMEDABAD] and decided that the product in question is classifiable under chapter heading 3002.00 and not under 3822.00 - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 639
  Valuation - admissibility of deduction of liquidated damages from the assessable value - Held that:- The issue is settled in the case of COMMISSIONER OF CUSTOMS & CENTRAL EXCISE VERSUS VICTORY ELECTRICALS LTD [2013 (12) TMI 81 - CESTAT CHENNAI], where it was held that liquidated damages are admissible deductions from the assessable value in terms of Section 4 of Central Excise Act, 1944 - appeal allowed. Refund of excise duty paid - denial on the ground of failure of appellant to produce the credit notes by which the said liquidated damages were transferred to the buyer - Held that:- If the credit notes are indeed on account of liquidated damages, the deduction of the same shall be allowed - matter remanded to the original adjudicating authority to examine the above issue as well as the issue of unjust-enrichment and limitation. Appeal allowed in part and part matter on remand.

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• 2018 (9) TMI 638
  PPMF Yarn - Benefit of N/N. 30/2004-CE dated 09.07.2004 - The case of the department is that, during the period 15.07.2004 to 21.10.2004, the appellant have cleared PPMF Yarn at nil rate of duty and at the same time, they availed Cenvat credit also - Held that:- The appellant have reversed the credit on fortnightly basis. It is also observed that the credit which was supposed to be reversed, against which the Cenvat credit balance was much higher than the credit reversed. Therefore, prima-facie, the appellant has reversed the credit without utilization of the same, in terms of Rule 6, sub-clause (7). Hon'ble Supreme Court in the case of Commissioner vs. Bombay Dyeing and Mfg. Company Limited [2007 (8) TMI 2 - SUPREME COURT], held that if the credit is reversed even after clearance of the goods and before utilization of the credit, the exemption under Notification No. 30/2004-CE is available to the assessee. It is observed from the order of both the lower authorities that they have not verified the regarding the non-utilisation of Cenvat credit and reversal of credit on fortnightly basis, therefore, only for that purpose, the matter needs to be remanded - appeal allowed by way of remand.

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• 2018 (9) TMI 637
  Finished goods lost in fire - Demand - claim of remission of duty was pending before the authorities below for consideration but the show cause notice was issued to the appellant to demand duty on the goods lost in fire and the matter was adjudicated - Held that:- Considering the fact that claim of remission of duty on finish goods is still pending for adjudication. In that circumstances, the impugned order is not sustainable in the eyes of law as same as premature - the matter is remanded back to the adjudicating authority with the direction to decide the issue of claim of remission duty on finish goods first and later on to decide the show cause notice in question - appeal allowed by way of remand.

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• 2018 (9) TMI 636
  Penalty u/s 11AC of the Central Excise Act, 1944 - area based exemption as per N/N. 56/2002-CE dt. 14.11.2002 - Held that:- Nowhere it is coming out that the impugned goods on which erroneous refund has been sanctioned to the appellant have ever reached Jammu & Kashmir state with documentary evidence and there is any manufacturing activity took place in the state of Jammu & Kashmir. In these circumstances, onus lies on the appellant to prove that the goods came to Jammu and they did some manufacturing activity on the said goods in Jammu. Admittedly, the appellant has failed to do so and has not paid the penalty as directed by the adjudicating authority in the impugned order. In these circumstances, the appellant is liable to pay the penalty to the tune of 100% of the duty under Section 11AC of the Act - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 635
  Valuation - inclusion of royalty, towing excise duty, transit fee, MPGATSDA tax, terminal tax, entry tax, etc. collected from its customers in assessable value - Held that:- Identical issue came up before the Tribunal in the case of M/S WESTERN COALFIELDS LIMITED VERSUS CCE AND ST, BHOPAL [2017 (1) TMI 1611 - CESTAT NEW DELHI], where it was held that This issue is sub judice before the Hon’ble Supreme Court in Mineral Area Development vs. Steel Authority of India and Others [2011 (3) TMI 1554 - SUPREME COURT]. The appellants are at liberty to come again after having final verdict from the Supreme Court, within a prescribed time, if advices so.

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• 2018 (9) TMI 634
  Classification of goods - Fiber Aluminium Bobbins Dynamically Balanced - whether the goods namely Fiber Aluminium Bobbins Dynamically Balanced manufactured by the appellant classifiable under chapter heading 7616.90 or 8448.00? Held that:- The subject goods manufactured by the appellant is correctly classifying under 3923.90 - issue is no more res-integra in view of the decision in the case of M/S PIONEER INDUSTRIES VERSUS C.C.E. & S.T. -BHAVNAGAR [2017 (4) TMI 687 - CESTAT AHMEDABAD], wherein the classification of the goods in question has been decided under chapter heading 3923.90 - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 633
  CENVAT Credit - input/input services - manufacture of Cement and Cement Clinker - Railway track, material & works contract services etc. - Consultancy and Manpower Supply Services used in the laying of Railway Lines - Held that:- The definition of ‘capital goods’ as well as ‘inputs’ mandate the usage of goods within the factory. It has been held in a catena of judgement that where pipelines, rope-ways and other material handling equipment and their parts are partially located within factory and partially outside, then the portion which is outside the factory has to be treated as an extension of the portion which is inside the factory. Accordingly, the condition of ‘used in factory’ gets satisfied and the Cenvat Credit is admissible - the railway track laid by the Appellant (which connects the railway siding outside the factory with the siding inside the factory) shall have to be treated to have satisfied the condition of ‘used in the factory’. The issue about works contract services availed for laying down the Railway line is also no more res-integra in view of the judgement in the case of The India Cement Ltd. v. CCE, Chennai-I [2018 (6) TMI 581 - CESTAT CHENNAI], wherein it was held that The laying of railway tracks does not fit into sub-clause (a) or (b) of exclusion Part (A) in the definition of input service. Thus the disallowance of credit, alleging that these services are excluded from the definition, is without any legal basis. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 632
  100% EOU - Refund of cenvat credit of Central Excise duty - export of goods - Rule 5 of the CCR 2004 - Held that:- The Hon’ble High Court in Commissioner of Customs and Excise Jaipur-I Vs Continental Engines Limited, DB [2018 (2) TMI 1769 - RAJASTHAN HIGH COURT] has held that 100% EOU is entitled to take cenvat credit on goods/inputs procured in the industry, and when they were not in a position to utilise the same, they are entitlement for benefit of refund under Rule 5 of CCR 2004 - refund allowed - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 631
  CENVAT Credit - capital goods - angles, channel, CR coil, plates, etc. - Rule 2(a) of Cenvat Credit Rules, 2004 - Whether the appellant is entitled to avail Cenvat credit on inputs used in the fabrication of capital goods which are exempted from payment of duty in terms of Notification No.6/06-CE dt.1.3.2006 and Notification No.67/05-CE dt.16.3.1995 and further used in the manufacture of final products? Held that:- Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004 is relevant to decide the issue. As per Explanation 2 to Rule 2(k), the inputs used in the manufacture of capital goods which are further used in the factory of manufacturer are entitled to avail Cenvat credit. Admittedly, in the case in hand, the inputs have been used by the appellant for fabrication of capital goods which are ultimately used in their factory for manufacture of final goods. In that circumstance, it is clear that in terms of Explanation 2 to Rule 2 (k), the appellant is entitled to avail Cenvat credit. Similar view taken in the case of HINDALCO INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM [2008 (5) TMI 202 - CESTAT BANGALORE], where it was held that credit cannot be denied merely for the fact that steel tank are exempted under Notification No. 67/95. Thus, the appellant has correctly availed Cenvat credit on inputs i.e. steel items which have been used for manufacture of capital goods which are exempted from payment of duty and the said capital goods were further used in the manufacture of final products - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 630
  SSI Exemption - Clubbing of clearances - two units/dummy units - mutuality of Interest - Rule 9(2) of the Rules read with Section 11A of the Central Excise Act, 1944. Held that:- All the business affairs of both M/s. HBC and M/s. HCW like purchase of raw material, production, despatch, collection of sale proceeds etc were managed by Sh Montoo and Sh Jai Prakash. They are members of one family running both the units though these units have different family members as their partners. It is also evident that goods were moved in same vehicle under same invoices/kachha slip by the same salesman. Amount collected by the salesman (sometimes in parts) cannot be seggregated between the two units. The Benami accounts maintained with Oriental Bank of Commerce were used for transactions in respect of both the units. Since financial transactions cannot be segregated between the two units mutuality of interest is thus clearly established. The appellant is contesting only that the clearances of M/s.HCW be not clubbed and inclusion of other partners, namely, Ms.Geeta Rani, Sh. Jai Prakash and Sh. Kaushal Kumar. It is contended that attribution to Geeta Rani about private records does not attribute criminality to her as she was only a sleeping partner - It is found that the private records amongst other places were recovered from the residential premises of Smt Geeta Rani and this fact of recovery of the records from her residence was admitted by her in her statement dated 14.10.1996. The adjudicating authority has correctly appreciated the facts and the evidence and therefore uphold the clubbing of clearances of M/s.HBC and M/s.HCW in the impugned order - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 629
  Penalties on co-noticees - Clandestine removal - the ground of defense of Shri Rinki S. Gandhi is that he has not physically dealt with the goods being Managing Director of the Company and therefore, penalty under Rule 26 cannot be imposed - Held that:- The beneficiary of the entire amount of ₹ 1,24,91,612/- would have been Shri Rinki S. Gandhi directly or indirectly. In these circumstances, the penalty on Shri Rinki S. Gandhi is rightly leaviable. However, the penalty of ₹ 25 Lakhs imposed on the appellant is disproportionate - quantum of penalty reduced. Penalty imposed on Shri V.K. Vora and Shri H.S. Nagraj - Held that:- The investigations pointed out that Shri H.S. Nagraj, Manager (Sales and Administration) was maintaining regular invoices as well as the other invoices on which clandestine removal was done and also maintaining the record of illicit clearances by pencil in a private record. He was also giving directions for removal of the goods. Similarly, Shri V.K. Vora, President (Material) of M/s. Motorol Speciality Oil Limited was also giving direction for removal of inputs to job workers for which no entries were made in the Central Excise records. He was also instrumental in directing the employees of M/s. Motorol Speciality Oil Limited for appropriating the job work challans showing a huge quantity returned as residue - thus, they were directly involved in the entire activities of evasion - however, quantum of penalty is reduced. Penalties have also been imposed on M/s. M/s. Motorol Speciality Oil Limited, Halol and M/s. Motorol Lubricants Pvt. Limited, Vadodara under Rule 26 of Central Excise Rules, 2002 - Held that:- The quantum of penalty is reduced. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 628
  Sub-contract - levy of tax - Whether the Tribunal was justified in confirming levy of tax on the balance amount of profit arising out of expenses, when 1% of the amount was earmarked for meeting the expenses of the consortium and when the entire contract was given to the subcontractor for execution? Held that:- It is evident that the documentary evidence required for a proper and correct determination of the controversy could have been called for by the Tribunal or it could have given an opportunity to the appellant to do so. This is not a satisfactory and happy manner to deal with the Appeals, particularly in tax matters involving complex transactions. In the event tax is payable or any deduction claimed, but has to be disallowed, then, the Tribunal is obliged to consider the matter in a holistic manner. It must not, as a last fact finding authority, leave anything to the parties. If a point is squarely raised or a point is framed by the Tribunal itself on the pleadings, then, on the basis of the record, the Tribunal must render complete justice or atleast attempt to do it. We do not find this to be done in the present case. We remand the matter to the Joint Commissioner of Sales Tax, who shall pass a fresh order on merits and in accordance with law, after giving the appellant a full opportunity to produce any documents other than, which are already on record - appeal allowed by way of remand.

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• 2018 (9) TMI 627
  Works Contract - rate of tax - Civil Works Contract or not? - Reopening of assessment - whether the assessment could have been reopened on the allegation made against the dealer and as to whether there was any transfer of property in goods by way of transferring the insulation material while in the process of executing a civil works contract? - transfer of right in insulation material. Held that:- It is evidently clear that the revision of assessment made by issuing the revision notice dated 11.6.2008 is a clear case of change of opinion. The Revenue preferred an appeal before the Tribunal. The Tribunal once again considered the entire factual position and held that there was absolutely no evidence on the file of the Assessing Officer to come to a conclusion that there was a transfer of right in insulation material. The Assessing Officer does not dispute the fact that the Indian Oil Corporation had awarded a contract in favour of the dealer for construction of a petrol bunk. Thus, whatever material was utilized should be treated as a composite contract and the artificial splitting by the Assessing Officer is uncalled for. The Tribunal rightly dismissed the appeal filed by the Revenue - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 626
  Validity of Assessment Order - assessment years 2010-2011 to 2015-2016 - Held that:- It is evident that the Assessing Officer, has not acted with independent application of mind, while passing the impugned orders of assessment. On the other hand, it is apparent that he has been carried over by the report filed by the Enforcement Officials, which course, in the considered view of this Court, is not sustainable - matter remitted back to the Assessing Officer to re-do the assessment, once again, on merits and in accordance with law, after giving due opportunity of hearing to the petitioner - petition allowed by way of remand.

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• Indian Laws

• 2018 (9) TMI 667
  Dishonor of Cheque due to insufficiency of funds - Offence under Section 138 of the Negotiable Instrument Act - Maintainability of Complaint - Jurisdiction - delegation of power - Managing Director has given powers to the Accounts Manager to file the present complaint. Held that:- In the present case on hand, the power delegated to its Managing Director by its Board of resolution has been sub-delegated to the Accounts Manager of the company through the power of attorney to file complaint on behalf of the company - It is clear that in the case on hand, the Managing Director has given powers to the Accounts Manager to file the present complaint. The Managing Director is the delegate of the Board of Directors and he is nothing but a delegate and as per the Board resolution, he cannot delegate his power or duty in favour of the Accounts Manager. Therefore, the present complaint is not legally maintainable. Also, it is clear that the accused were not partners of the said firm and as such, they are not liable to be prosecuted on behalf of the partnership firm of S.S.Agency. The relief sought for in the petitioiner can very well be maintained by exercising the inherent jurisdiction of this Court under Section 482 of Cr.P.C. Though it is not proper for this Court to consider the defence of the accused or conduct a roving enquiry in respect of merits of the accusation, but if on the face of the document which is beyond suspicion or doubt, placed on record by the accused and if it is considered that the acusation against the petitiners cannot stand, in such a matter, in order to prevent injustice or abuse of process, it is incumbent on this Court to look into those documents, which have a bearing on the matter even at the initial stage and grant relief to the persons concerned by exercising jurisdiction under Section 482 of Cr.P.C. Petition allowed.

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