TMI Tax Updates - e-Newsletter
September 19, 2020

Case Laws in this Newsletter:

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

Articles

1. CHALLANS UNDER INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

2. Adhoc Monthly-Quarterly SMS charges and GST on it levied by banks on Cores of banking accounts and its appropriateness

   By: shivaprasad chhatre

3. Eligibility of Recipient to Claim ITC in case of Mis-Classification by Supplier

   By: Chitresh Gupta

4. Decoding Equalisation Levy 2.0 - Tax on Digital Economy

   By: Manisha Kabra

News

1. Implementation of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 with effect from 21st September 2020

2. Impact of Covid-19 on E-commerce

3. Funds to Boost Agriculture Exports

4. One District One Product Concept for Encouraging Domestic Manufacturing

5. Steps to Promote Export during Pandemic

6. Shifting of Base to India by MNCs

7. Tender to Local Companies

8. THE BANKING REGULATION (AMENDMENT) BILL, 2020 - As PASSED BY LOK SABHA ON 16.9.2020

9. Govt again cuts import duty on masoor dal

10. Press Note No. 4 (2020 Series), reviewing Foreign Direct Investment (FDI) Policy in Defence Sector

Notifications

Companies Law

1. F. No. 2/1/2018-CL-V - dated 17-9-2020 - Co. Law

Constitution of the Company Law Committee

Customs

2. 34/2020 - dated 17-9-2020 - Cus

Seeks to further amend notification No. 50/2017-Customs dated 30.06.2017 so as to reduce the Basic Customs Duty on Lentils (Mosur) for the period from 18th September, 2020 to 31st October, 2020.

3. 90/2020 - dated 17-9-2020 - Cus (NT)

Amendment to Bill of Entry (Forms) Regulations, 1976

4. 89/2020 - dated 17-9-2020 - Cus (NT)

Seeks to amend Notification No. 40/2012-Customs (N.T.), dated the 2nd May, 2012

5. 44/2020-Customs (N.T./CAA/DRI) - dated 14-9-2020 - Cus (NT)

Appointment of CAA by Pr. DGRI

DGFT

6. 32/2015-2020 - dated 17-9-2020 - FTP

Insertion of Policy condition in Chapter 85 and 94 of ITC (HS), 2017, Schedule – I (Import Policy)

GST - States

7. 52/2020 – State Tax - dated 4-9-2020 - Jharkhand SGST

Amendment in Notification No. 76/2018–State Tax, dated the 24th January, 2019

Circulars / Instructions / Orders

Income Tax

1. F.No.225/126/2020/ITA-II - dated 17-9-2020

Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2020-21 - conduct of assessment proceedings in such cases

FEMA

2. 01 - dated 17-9-2020

Exim Bank's Government of India supported Line of Credit (LoC) of USD 215.68 million to the Government of the Republic of Malawi

3. Press Note No. 4 (2020 Series) - dated 17-9-2020

Review of Foreign Direct Investment (FDI) Policy in Defence Sector

Companies Law

4. 25/2020 - dated 25-6-2020

Clarification on CSR contribution to PM CARES Fund

Highlights / Catch Notes

GST

• Vehicle Repair Services Taxed at 18% GST Rate Under SAC 9987, Confirms Authority for Advance Rulings (AAR) Decision.

  Case-Laws - AAR : The repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % - AAR
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• Applicant Misclassifies Maize Bran as Cattle Feed; It's a Component, Not Feed Itself, Says Submission.

  Case-Laws - AAR : Classification of goods - Maize Bran (cattle feed) - The maize bran supplied by them to the farmers would not be directly fed to cattle but be mixed with the cattle feed before feeding it to the cattle. In view of the above, it can be seen that maize bran in itself is not a cattle feed but is a major ingredient used in the manufacture of cattle feed as submitted by the applicant. Thus, the applicant by themselves have contradicted their contention through their submission. - AAR
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• Agent Supplying Goods Under Another's Brand Must Register for GST per Section 24(vii) of CGST Act 2017.

  Case-Laws - AAR : Requirement to take GSTIN - Agent - the applicant is only authorized to supply the goods and service under the brand name other taxable person - applicant covers under the Sr. No. (vii) of the Section 24 of CGST Act, 2017. Therefore, applicant is liable for taking GST registration. Since applicant is liable for GST registration, he is required to pay GST on supply of goods and services. - AAR
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• Court Upholds Authority's Discretion to Deny Document Copies u/s 67(5) CGST Act, Aligns with Natural Justice Principles.

  Case-Laws - HC : Principles of Natural Justice - denial of supply of copies/extracts of the seized documents - Once it is held that discretion available to the competent authority u/S. 67(5) of the CGST Act had been reasonably exercised while refusing to accede to the request for supply of copies/extracts of seized documents, it cannot be said that the competent authority has travelled beyond it's jurisdictional purviews prescribed by law - HC
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• Court Allows Withdrawal of Writ Petition to Pursue Matter with AAR; Imposes Rs. 5 Lakhs Cost on Petitioner.

  Case-Laws - HC : Permission for withdrawal of writ petition and grant liberty to pursue the matter before advance ruling authority (AAR ) - while dismissing the writ petitions, the learned Single Judge has imposed cost of ₹ 5 Lacs - it is always ordinarily an acceptable position that the Court should not proceed to adjudicate the matter and permit withdrawal on such conditions that may be necessary. - HC
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• Court Upholds Bank Account Attachment Due to Potential Tax Default Concerns u/s 83 GGST.

  Case-Laws - HC : Provisional attachment of Bank Accounts of petitioner - Prima facie, there is reasonable apprehension that the petitioners may default in the ultimate collection of the demand that is likely to be raised on completion of the assessment. It appears that prima facie there is sufficient material on record to justify the satisfaction in view of denial of the petitioner no. 2 with regard to the transactions carried out by the petitioner no.1 which is a proprietary concern of petitioner no.2. - no interference is required to be made in exercise of powers u/s 83 of the GGST - HC
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Income Tax

• No TDS u/s 195 for UAE Agent's Commission; Section 40(a)(ia) Addition Not Applicable.

  Case-Laws - AT : TDS u/s 195 - sales promotion expenses - Addition u/s 40(a)(ia) - there is no evidence that the non-resident agent has rendered any managerial service to the assessee and the agreement indicates only services on commission basis. Accordingly, provisions of section 195 are not attracted on payment of reimbursement of expenses made to its agent in UAE. - AT
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Customs

• Revenue's Strict Conditions for Provisional Release of Overvalued Goods Ruled Unjustifiable After 18-Month Delay.

  Case-Laws - AT : Provisional release of the seized goods - it was opined that the goods were grossly overvalued to claim undue benefits of enhanced IGST refund and Drawback - when the goods have not been released even after the lapse of 18 months, there are no justification for imposing such harsh conditions by the Revenue while permitting provisional release of the goods - AT
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• Department's 100% Penalty Challenged; Appellant Entitled to 15% Penalty u/s 28(5) for Short-Paid Duty.

  Case-Laws - AT : Penalty - instead of issuing the show cause notice for recovery of the 15% amount of penalty, the department had proceeded against the appellant for confirmation of the 100% penalty in respect of the short paid amount of duty - Since, there is no ambiguity in interpretation of the provisions of sub-section (5) of Section 28 ibid, with regard to the quantum of penalty to be deposited, the benefit of reducing amount of penalty of 15% should be available to the appellant. - AT
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Indian Laws

• Cheque Dishonor Case: Plaintiff Fails to Prove Loan Existence or Cheque Issuance for Loan Settlement, Suit Dismissed.

  Case-Laws - HC : Dishonor of Cheque - defendant failed to prove that plaintiff falls within the definition of ‘money-lender’ under the Act and also failed to prove that various recovery suits instituted by the plaintiff pertained to that kind of loan which is included under the definition of loan - However, separate findings recorded by both the learned Courts below in dismissing the suit of appellant on merits are based upon correct interpretation of law and facts. Plaintiff has not been able to prove that he had loaned to the defendant or that towards satisfaction of this loan amount, the defendant had handed him the cheque in question. - HC
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Service Tax

• Crude oil transport by seller not subject to service tax due to lack of provider-recipient relationship.

  Case-Laws - AT : Levy of Service Tax - Transportation of Goods through Pipelines / Conduit Services - the transportation of crude oil has been undertaken by the appellant assessee in the capacity of being a seller not a service provider. Further, since there is no service provider - service recipient relationship, there cannot be any question of service tax levy and thus, the demand cannot be sustained - AT
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Central Excise

• High Court Examines if Assessee's Actions Constituted Suppression After Following Departmental Advice; Extended Limitation Period in Question.

  Case-Laws - HC : Extended period of Limitation - suppression of relevant facts or not - We fail to understand that when the Assessee had changed its method of valuation on the advice of the Department's Authority himself based on some Audit objection as indicated in the communication dated 17.1.2008, how by turning the tables on the Assessee, the Adjudicating Authority, without referring to the said communication dated 17.1.2008, could invoke the extended period of limitation and hold that the Assessee is guilty of suppression of relevant facts - HC
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• Revenue Authorities Fail to Prove Clandestine Removal of Kraft Paper; Duty Demand Based on Printouts Unjustified.

  Case-Laws - AT : Clandestine Removal - shortage of finished goods - Kraft Paper - The charge of clandestine removal in respect of major quantity could not be established by the revenue. Accordingly, consequential demand of duty worked out from computer printout is not sustainable - AT
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• CENVAT Credit Misuse Allegations: Forged Invoices and Unproven Proprietor-Director Links; Export Proceeds and Evidence Discussed.

  Case-Laws - AT : CENVAT Credit - inputs not received - forged and fake invoices - The Revenue has placed strong reliance on the facts that the proprietor /directors of the appellants companies are related or relatives, but such observations in itself do not prove the case of the Revenue in view of the fact of the manufacture and clearance of the finished goods is on payment of duty. Further, there is no allegation of any flow back of money after the payment has been made through banking channels. Further, the appellant manufacturers have exported their goods and have received the export proceeds, although at some delay and have produced deficit BRCs, which have been annexed in the appeal paper books. - AT
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• Excise Duty Recovery on Steel Tanks for Oil Companies Deemed Legal; Tanks Considered Movable Property Under Normal Limitation Period.

  Case-Laws - AT : Recovery of Short paid duty - fabrication of steel tanks for Oil Companies - immovable property or not - The impugned goods are liable to excise duty and the opinion expressed by the learned Member(Technical) is in accordance with law - In view of the majority decision, Central Excise demand is legally sustainable on merits for the normal period of limitation - AT
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• Court Rules Duty on Ethanol Must Be Separately Shown and Recovered u/s 11D of Central Excise Act.

  Case-Laws - AT : Recovery of amount u/s 11D - even if it is assumed that the process of blending of ethanol with motor spirit does not amount to manufacture under Section 2(f) of Central Excise Act, 1944, even than the duty paid on motor spirit (EBP) cannot be construed as duty paid separately on Motor spirit and proportionate duty applicable to ethanol in the total duty be recoverable u/s 11D of Central Excise Act, 1944, when the price charged was inclusive of duty, and the duty attributable to Ethanol is not shown and recovered separately in the invoice - AT
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VAT

• Court Rules No Penalty for Petitioner Who Withheld Entry Tax Due to Bona Fide Belief Under Prevailing Law.

  Case-Laws - HC : Levy of penalty - Entry tax - this is the case where the Entry Tax was not paid by the petitioner on the first instance, in view of the prevailing law at that point of time - In such circumstances, when there are bona-fides on the part of the importer in refraining from paying the tax, no penalty could be levied - HC
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• Court Rules on Tax Arrears Recovery and Validity of Property Sale; Orders Return of Undivided Share to Petitioner.

  Case-Laws - HC : Recovery of tax dues (arrears) - Validity of Sale of property in public auction - The respondents by themselves permitted the petitioner to participate in the Amnesty Scheme and intimated to the petitioner the amounts to be paid to the Government to settle the issue of sales tax arrears. - equity demands that the undivided share purchased by the respondents is restituted to the petitioner. - HC
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Case Laws:

• GST

• 2020 (9) TMI 689
  Classification of supply - supply of services or not - treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others - rate of GST - service Code (tariff) for above stated activity of body building carried out on another person s chasis of motor vehicle - If not supply of services, what will be the nature of this supply, tariff code and rate of GST for such supply? Whether the applicant s activity amounts to supply of goods (motor vehicle) that merits classification under HSN 87 (depends upon the type of vehicle supplied) or amounts to Supply of Services classifiable under SAC 9988? - HELD THAT:- In the instant case, the applicant procures various goods such as raw steel etc. as inputs for fabricating the bus body on the chasis supplied by the principal on delivery challan. The applicant uses the said material for mounting/fabricating the body and once the body is built and mounted on the chassis, the vehicle is sent back to principal. At no stage, the ownership of the chassis is transferred by the principal to the applicant. The applicant charged the lump sum charges of fabrication including cost of certain material that was consumed during the process of mounting of Bus Body on the chassis. The applicant supply of complete built vehicle to the principal i.e. owner of chasis would amount to composite supply and the taxability would depend upon the predominated element - Accordingly, the activity of mounting/fabrication of body on the chasis supplied by the principal would be supply of service as principal supply and Section 8(a) of CGST Act, 2017 determines tax liability on composite supply The question raised has been suitably clarified and dealt with Circular No. 52/26/2018-GST issued by Government of India, Ministry of Finance, Department of Revenue dated 9th August, 2018 where it is clarified that in case as mentioned at Para 12.2(a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly. It is evident from Para 12.2(b) of the said circular that if the body is built on the chassis provided by the principal/customer and the fabrication charges, has been charged then the activity amounts to Supply of Service and attracts 18% GST - In the instant case, in terms of the process explained by the applicant, the fabrication of body is built on the chassis provided by the owner and as stated fabrication charges are charged from the owner of the chasis. Therefore, the instant question is answered by the provisions of Para 12.2(b) of the said circular and the activity merits classification as supply of service attracting GST @ 18%. Classification of the said Service provided by the applicant - HELD THAT:- The classification of Service is provided in Annexure attached to the Not. No. 11/2017-CT (Rate) dated 28.06.2017. The applicant is engaged in the manufacturing of body building on the chasis supplied by the owner of the chasis. Therefore, the said service would be classified under Service Accounting Code 9988 Manufacturing Service on Physical Inputs (Goods) owned by others - on fabrication of bus body on the chassis supplied by the owner of chasis i.e. Principal on delivery challan, on which body is fabricated on chasis by collecting job work charges including inputs required for such fabrication work and in no case the ownership of the chassis is transferred by principal to the applicant merits classification under SAC 998881 - Motor vehicle and trailer manufacturing services and under Entry No. 26(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as Manufacturing services on physical inputs (goods) owned by other and it is taxable @ 18% [9% under CGST and 9% under SGST Act]. Whereas, in other situation, supply of complete body built motor vehicle merits classification HSN 8707 and it is taxable @28%. The nature of service received by the application is covered under the Service Accounting Code 998714. Accordingly, Sr. No. 25 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribing tax rate of 18% on Maintenance, repair and installation (except construction) services. The contention of the applicant that the said service would be covered under Service Code (Tariff) 998729 that includes Maintenance and repair service of other goods nowhere else classified is not tenable as such Service Accounting Code 998714 defines the maintenance and repairing service of motor vehicles like cars, trucks, vans and buses. Therefore, the repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % in terms of Sr. No. 25 of Not. No. 11/2017-CT (Rate) dated 28.06.2017.

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• 2020 (9) TMI 688
  Classification of goods - Maize Bran (cattle feed) - chargeable to CGST @2.5% under Sl. No. 103 A of N/N. 01/2017-CT (Rate) or Chargeable to NIL rate as per Sl. No. 102 of N/N. 02/2017? - HELD THAT:- Maize Bran is used as a major supplement for cattle feed. The word supplement is defined in dictionary as a thing added to something else in order to complete or enhance it. Therefore, Maize Bran is a product which is added to cattle feed to complete it or enhance it. This literally means that Maize Bran is not a cattle feed in itself but is added to cattle feed to enhance or improve its quality/nutritional value or to complete it. It is also seen from the submission of the applicant that they are time and again stressing on the fact that the maize bran produced by them is cattle feed and should be rightly classified on the basis of its use and be exempted under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. However, they have failed to clarify as to how the said product can be considered as cattle feed when the definition itself says that it is used as a major supplement for cattle feed. The maize bran supplied by them to the farmers would not be directly fed to cattle but be mixed with the cattle feed before feeding it to the cattle. In view of the above, it can be seen that maize bran in itself is not a cattle feed but is a major ingredient used in the manufacture of cattle feed as submitted by the applicant. Thus, the applicant by themselves have contradicted their contention through their submission. The applicant has supplied 10.9510 tonnes of Wet Bran to Gopal Co., Kathwada, Gujarat, India. The applicant is classifying their product Wet Bran and not as cattle feed . It is also seen that Maize Bran is specifically mentioned in Sub-heading No.23021010 of the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) and the word Bran is specifically mentioned in Sr.No.103A of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. In view of the above, the product maize bran does not warrant classification under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) as the product does not classify as cattle feed and is correctly classifiable as Bran under Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 for the reason that it cannot be considered as a cattle feed by definition. The product Maize Bran manufactured and supplied by M/s. Sayaji Industries Ltd. is covered under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which rate of GST chargeable is 5%.

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• 2020 (9) TMI 687
  Requirement to take GSTIN - Agents - Requirement to take registration under GST - Supply of goods or services on behalf of other taxable person - Section 22 of CGST Act, 2017 - Section 24 of CGST Act, 2017 - HELD THAT:- The applicant is required to fulfill the requirements of infrastructure and manpower before commencement of operations of the Centre as per the instructions of the Company and will continue to possess it during the whole tenure and it s renewal of this contract; the applicant shall permit the representatives of the Company to conduct spot checks in order to ensure that the applicant is functioning in compliance to the Company s instructions rules regulations and as per the directions of the Company; shall not use any other course material other than those supplied by the company; the applicant undertakes to conduct only the Company s courses and utilize only the materials provided by the Company at its course center and shall not conduct any unauthorized or similar type of course that Company [Xplore Knowledge Resources LLP] has; the applicant also undertakes not to conduct, run and engage in any other courses or activities else than licensed in this agreement, that the company possess and franchisees; the applicant shall only use the application forms, receipt books, fees lists etc. supplied by the Company and shall not attempt to print its own material. All the payments from the students are collected in name of the applicant on receipts printed by the Company. The applicant also collects Student Registration fee from every student on behalf of the Company and remits the same to the Company. Thus, the applicant is only authorized to supply the goods and service under the brand name of ALOHA and cannot supply the other goods and service. Hence applicant is supplying the goods and service on behalf of the taxable person i.e. Xplore Knowledge Resources LLP - applicant covers under the Sr. No. (vii) of the Section 24 of CGST Act, 2017. Therefore, applicant is liable for taking GST registration. Since applicant is liable for GST registration, he is required to pay GST on supply of goods and services.

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• 2020 (9) TMI 686
  Principles of Natural Justice - denial of supply of copies/extracts of the seized documents - denial of reasonable opportunity to defend - Section 67(5) of the CGST Act, 2017 - HELD THAT:- From order sheets as detailed, ever since conduction of search till passing of the impugned order, it is evident that due and sufficient opportunity was afforded to petitioner to produce the remaining relevant documents which had not been recovered during search. The explanation given by petitioner for not producing documents sought by Revenue was that the same are maintained in soft copy in computer while in regard to other documents sought by the Revenue, there was no explanation. This obviously gives an impression that the remaining relevant documents which could not be seized during search are still in possession of petitioner and therefore supply of copies or extracts of the seized documents to petitioner can enable the petitioner to carry out interpolations for reducing or depressing tax liability and with corresponding loss to the Revenue. The formation of this opinion is founded upon reasonable apprehension in the mind of the competent authority that supply of copies/extracts of seized documents can lead to adversely affecting the investigation. Once it is held that discretion available to the competent authority u/s. 67(5) of the CGST Act had been reasonably exercised while refusing to accede to the request for supply of copies/extracts of seized documents, it cannot be said that the competent authority has travelled beyond it s jurisdictional purviews prescribed by law and therefore in the absence of jurisdictional error in the order impugned, no interference is called for, especially in the face of unavailed alternative statutory remedy of appeal. Petition dismissed.

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• 2020 (9) TMI 685
  Profiteering - Constitutional Validity of Section 171 of the Central Goods and Services Tax Act, 2017 and Rules 122 to 137 of the Central Goods and Services Tax Rules, 2017 - Procedure and Methodology issued under Rule 126 by the respondent no. 3-NAPA. HELD THAT:- Issue Notice. No ground for stay of payment is made out in the present case. Respondent no.3 is directed to verify the claims made by the petitioner with respect to passing on the commensurate benefit amounting to Rs. 35,28,744/-.

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• 2020 (9) TMI 684
  Permission for withdrawal of writ petition and grant liberty to pursue the matter before advance ruling authority (AAR ) - Acceptance of a bid - award of a contract - application for advance ruling - While dismissing the writ petitions, the learned Single Judge has imposed cost of Rs. 5 Lacs - HELD THAT:- the learned Single Judge in order to draw a curtain on the litigation at that stage had already been offered an opportunity to dismiss the writ petition as withdrawn. In our view, once such a request has been made, and unless there are any unrepresented third party rights that may be affected, or any of the contingencies mentioned in the judgments referred to herein above exist, it is always ordinarily an acceptable position that the Court should not proceed to adjudicate the matter and permit withdrawal on such conditions that may be necessary. In the instant case, we find no party unrepresented in the litigation being affected by the appellant seeking liberty to pursue his application before the Advance Ruling Authority. To this extent, the fourth respondent cannot have any objection, in as much as he has no locus to question the moving of an application by the appellant before the Advance Ruling Authority and pursuing the same, which application admittedly was not disposed of due to the pendency of the writ petition itself. There are no valid reason for imposing costs on the appellant - appellant, therefore, had a right to withdraw the writ petition and having exercised that right, there was no legal impediment in granting permission to the appellant to withdraw the writ petition. The writ petition stands dismissed as withdrawn - Appeal allowed.

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• 2020 (9) TMI 683
  Detention of goods - goods detained for the reason that goods have been unloaded at a place other than the recorded destination - HELD THAT:- The petitioner has not been served with a detention order so far, though the goods were detained from 09.09.2020. In the facts of the case, this Court is of the firm opinion that to meet the ends of justice, the petitioner get release of all goods and conveyance, on providing bank guarantee for the amount involved. The learned Government Pleader submits that the amount of tax and penalty together will come to Rs. 2,34,500/-. The writ petition is therefore disposed of directing the respondent to release the goods and conveyance on the petitioner, providing bank guarantee for an amount of Rs. 2,34,500/-.

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• 2020 (9) TMI 682
  Validity of assessment orders - Section 62 of the GST Act - HELD THAT:- Inasmuch as, admittedly, the said returns were filed more than 30 days after the receipt of the orders by the petitioner, the petitioner cannot be heard to contend that Ext.P2 series of orders ought to be set aside in terms of Section 62 of the GST Act. Accordingly, without prejudice to the right of the petitioner to impugn Ext.P2 series of assessment orders before the appellate authority under the GST Act, the writ petition in its challenge against the said orders is dismissed. Recovery steps for recovery of the amounts confirmed against the petitioner by EXt.P2 Series of assessment orders shall, however, be kept in abeyance for a period of three weeks from the date of receipt of a copy of this judgment, so as to enable the petitioner to avail his appellate remedy in the meanwhile.

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• 2020 (9) TMI 681
  Validity of assessment orders - Section 62 of the GST Act - HELD THAT:- Inasmuch as, admittedly, the said returns were filed more than 30 days after the receipt of the orders by the petitioner, the petitioner cannot be heard to contend that Ext.P2 series of orders ought to be set aside in terms of Section 62 of the GST Act. Accordingly, without prejudice to the right of the petitioner to impugn Ext.P2 series of assessment orders before the appellate authority under the GST Act, the writ petition in its challenge against the said orders is dismissed. Recovery steps for recovery of the amounts confirmed against the petitioner by EXt.P2 Series of assessment orders shall, however, be kept in abeyance for a period of three weeks from the date of receipt of a copy of this judgment, so as to enable the petitioner to avail his appellate remedy in the meanwhile.

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• 2020 (9) TMI 680
  Maintainability of petition - availability of statutory appeal under Section 107 of the Act - Provisional release of the goods and conveyance under Section 67(6) of the Act - perishable goods - HELD THAT:- The client of Mr. Vora should prefer statutory appeal under Section 107 of the Act against the order passed under Section 130 of the Act. Mr. Vora would submit that his client would be filing an appeal in near future. Such application could have been preferred only after filing of the appeal under Section 107 of the Act. Be that as it may, if an appeal is filed, the authority concerned shall immediately take up the application filed by the writ applicant for provisional release of goods and conveyance under Section 67(6) of the Act and pass appropriate order in accordance with law, within a period of 8 days thereafter.

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• 2020 (9) TMI 679
  Vires of Rule 86A of Central Goods and Services Tax Rules, 2017 - power to block the Input Tax Credit - HELD THAT:- Having gone through the material on record, for the present, we are inclined to issue notice to the respondents with respect to the reliefs prayed in the draft amendment and paras-8(B) and 8(C) of the main petition. Let notice be issued to the respondents returnable on 14th September 2020.

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• 2020 (9) TMI 678
  Refund of ITC - zero-rated supply - Section 54 of the CGST Act, 2017 - periods of July, August, September, October and November 2017 - HELD THAT:- The respondent had, in a cryptic manner, rejected some of the proposals by stating that, as per Section 54 (8)(a), the ineligible goods or services are not directly used for making zero-rated supply. Apart from this, there is absolutely no other reasons adduced in the order. It is a settled proposition of law that whenever an application of this nature is made, the statutory authority are bound to consider the claim made and pass a reasoned order. In the present case, the petitioner had made an application for refund under Section 54 of the Act and when the respondent had issued notice to them for rejection of the ineligible goods and services of SGST, CGST and IGST, they have given a detailed reply, objecting to the notices - All these objections were required to be dealt with by the authority, before taking a final call, which is conspicuously absent. As such, the order itself can be termed to be a non speaking order and therefore, are liable to be set aside. The impugned orders are set aside and the matter is remanded back to the respondent for fresh consideration - Petition allowed by way of remand.

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• 2020 (9) TMI 677
  Provisional attachment of Bank Accounts of petitioner - It is the case of the petitioners that the bank accounts of the petitioners have been provisionally attached under section 83 of the Gujarat GST Act, without considering the provisions of section 83 of the GGST Act, as in the case of the petitioners no proceedings are pending under any of the sections mentioned therein - HELD THAT:- The petitioners have issued very large number of E-Way bills within a short period of time between their associate concern without movement of goods like cement, iron, tiles, brass etc. From the report, submitted to the Enforcement department of the respondent authorities, it is also revealed that the petitioners were involved in carrying out the transactions on paper without actual physical movement of goods. It is also pertinent to note that petitioner no.2 has shown total ignorance with regard to the transactions which were reported to be fictitious, more particularly, when the petitioner no.2 is the owner of the petitioner no.1 firm. Exercise of powers under section 83 of the GGST Act for provisional attachment by the respondent authorities - HELD THAT:- This Court in case of VALERIUS INDUSTRIES VERSUS UNION OF INDIA [ 2019 (9) TMI 618 - GUJARAT HIGH COURT] has given guidelines for invoking the powers under section 83 of the GGST Act which states that authority before exercising power under Section 83 of the Act for provisional attachment should take into consideration two things: (i) whether it is a revenue neutral situation (ii) the statement of output liability or input credit . Having regard to the amount paid by reversing the input tax credit if the interest of the revenue is sufficiently secured, then the authority may not be justified in invoking its power under Section 83 of the Act for the purpose of provisional attachment. Prima facie, there is reasonable apprehension that the petitioners may default in the ultimate collection of the demand that is likely to be raised on completion of the assessment. It appears that prima facie there is sufficient material on record to justify the satisfaction in view of denial of the petitioner no. 2 with regard to the transactions carried out by the petitioner no.1 which is a proprietary concern of petitioner no.2. It also emerges from the materials on record that this is a fit case to invoke the provisions of section 83 of the GGST Act as apparently the petitioners seem to have been indulging in bogus billing causing loss to the Revenue and as such it cannot be said that passing of the impugned order under section 83 of the GGST Act is for recovery of dues but it is only for the purpose of protecting the Government revenue as the petitioner has failed to produce on record to show as to the capacity to pay the tax dues which may be levied upon the petitioners on completion of the assessment proceedings - it cannot be said that the respondent authorities have no reason to form an opinion as required by section 83 of the GGST Act for passing the impugned order of provisional attachment. Thus, once an opinion is formed by the competent authority as stipulated in section 83 that there is a reasonable apprehension that the petitioners may default in ultimate collection of demand that is likely to be raised on completion of the assessment, then it was incumbent upon the respondent authorities to exercise powers under section 83 of the GGST Act - no interference is required to be made in exercise of powers under section 83 of the GGST Act by the respondent authorities while exercising extraordinary powers under Articles 226 and 227 of the Constitution of India. Petition dismissed.

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• Income Tax

• 2020 (9) TMI 676
  Deduction u/s 80IB - specific definition for the term built-up area - Car parking inclusion calculation of built-up residential units - HELD THAT:- As decided in C. SUBBA REDDY (HUF) [ 2010 (12) TMI 248 - ITAT, CHENNAI] Section 80IB(10) of the Income Tax Act speaks about the residential unit having a maximum built-up area of 1500 sq.ft. to claim deduction. CIT(Appeals) has correctly held that built-up area is only the inner measurement of the residential units at the floor level plus projections and balconies plus thickness of the walls. But, the car parking area is not a living space and it is a common area which can be accessed by anyone since it has no boundary wall. No justification in including the car park in the definition of the built-up area of the residential unit for the purpose of determining the maximum built-up area. In such view of the matter, we are inclined to accept the reasoning of the Commissioner of Income Tax (Appeals) drawing support from the Tamil Nadu Apartment Ownership Act, 1994, which was confirmed by the Tribunal. See SHRI. SUBBA REDDY (HUF) [ 2015 (2) TMI 257 - MADRAS HIGH COURT Assessee is entitled to the benefit of deduction under Section 80IB of the Act. Accordingly, the Appeal filed the Revenue is liable to be dismissed and the same is hereby dismissed. The question of law is answered in favour of the Assessee.

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• 2020 (9) TMI 675
  Addition u/s 14A - Recording of satisfaction - Whether Tribunal was right in not considering the fact that the assessee has incurred interest expenditure and made investment more than its reserves and surpluses? - HELD THAT:- Bombay High Court in the case of Godrej Boyce Manufacturing Company Limited, Mumbai Vs. Deputy Commissioner of Income Tax [2010 (8) TMI 77 - BOMBAY HIGH COURT] AO must, in the first instance, determine whether the claim of the assessee in that regard is correct and the determination must be made having regard to the accounts of the assessee. The satisfaction of the AO must be arrived at on an objective basis. It is only when the AO is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. Sub-s. (3) of s. 14A provides for the application of sub-s. (2) also to a situation where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under the Act. The above legal position has been rightly followed by the tribunal while deciding the assessee s case and therefore, rightly dismissed the appeal filed by the revenue. Substantial Question of Law has to be answered against the revenue and in favour of the assessee.

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• 2020 (9) TMI 674
  Exemption u/s 11 - Denial of exemption u/s 11 due to the activities not in accordance with the objects - allowance of 50% of salary to the Secretary granted by the CIT(A) - Substantial question of law - HELD THAT:- We find that the CIT(A) has not assigned any reasons as to why only 50% of the addition made by the Assessing Officer should be sustained. It is not clear as to why the Revenue did not file any appeal to sustain the entire addition. If according to the CIT(A), AO committed an error in making the entire addition and the same requires to be interfered or modified, then the CIT(A) is expected to assign reasons. We find that there is no such reason assigned by the CIT(A) in its order dated 04.11.2016 and therefore, the relief granted by the CIT(A) to the assessee is based on personal opinion of the CIT(A) and not supported by any facts or legal precedence. However, since the Revenue is not on appeal, we refrain from making any further observations in this regard. Tribunal decided the correctness of the decision of the CIT(A) by which, it sustained only 50% of the addition to the tune of Rs. 4,47,500/-. The Tribunal pointed out that the allowance of 50% of salary to the Secretary granted by the CIT(A) was not disputed by the Department in their appeal before the Tribunal and therefore, found no reason to interfere with the order passed by the Tribunal. We find that no such contention was advanced based upon the documents, which are now pressed into service. Much reliance was placed on the Grant Contract with the European contributors and the conditions contained therein and contended that the payments made were in accordance with the terms of the contract and there is no possibility for the assessee to deviate. The documents, which were not placed before the CIT(A) if are to be placed before the Tribunal, then leave of the Tribunal should have been sought for. Appeals before us are under Section 260A of the Act and we are to decide as to whether a substantial question of law arises for consideration in these appeals. We are not here to exercise powers as a third appellate authority. We have set out the relevant facts in the preceding paragraphs to demonstrate that the entire matter, which culminated in the order of Tribunal, is fully factual. On consideration of the fact situation, the Assessing Officer completed the assessment drawing certain conclusions, which were wholly adverse to the assessee-Society. CIT(A) granted partial relief. Whatever relief granted by the CIT(A) was affirmed by the Tribunal on re-examination of the facts, added to that one of the additions with regard to the rent paid for the Accountant was deleted, certain issues have been remanded to the CIT(A) for fresh decision. Thus, we find, there is no question of law, much less substantial question of law arises for consideration in these appeals. No substantial questions of law

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• 2020 (9) TMI 673
  Reopening of assessment u/s 147 - change of opinion - whether AO had not formed any opinion in the first instance on the issue relating to transferred capital assets? - whether Tribunal was justified in quashing the re-opening of the assessment? - land fell within the limits of the Corporation of Chennai and the classification cannot be a agricultural land - HELD THAT:- We found that the assessee vide letter dated 06.01.2014 during the original assessment proceedings had brought the entire details about the sale of the land in Uthandi Village and also noted the fact that the Gazettee notification issued by the Government of Tamilnadu was very much available when the original assessment was completed and the assessing officer had no new tangible material to clarify its reopening. By relying upon the decision in the case of NKV Krishna 2013 (9) TMI 1258 - ITAT CHENNAI it was held that the land sold was an agricultural land. A crucial aspect was taken note of the Tribunal, i.e., in the case of assessee s spouse, who was also co-owner of the very same property, the property was treated as agricultural land and the assessment was completed under Section 143(3) and the said finding remain undisturbed. The above will clearly show that the re-opening of the assessment in the instant case was a clear case of change of opinion and the Tribunal was justified in allowing the assessee s appeal. Eligibility of the assessee to claim deduction u/s 54(F) - property, which was a residential property was let out for commercial purpose to run the restaurant - HELD THAT:- There are several instances where residential properties are put to use for non-residential purposes and this cannot be a test to decide the nature of the property under the provisions of the Income Tax Act, especially, in assessee s case, where the letting out of the property for non-residential purpose was much after the purchase on 03.02.2011 and the lease agreement was on 21.03.2011. So far as the Wealth-Tax assessment is concerned, it may be true that in the assessment, the property is shown as commercial complex, as on the relevant date, 31.03.2011, the property was leased out for commercial purpose. Therefore, the Tribunal was right in holding that the assessee would be entitled to claim deduction under Section 54F of the Act and also rightly restricted to the residential portion only. - Decided against revenue.

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• 2020 (9) TMI 672
  Revision u/s 263 - AO while computing the quantum eligible for deduction u/s 80IB(10), omitted to examine the vital aspects and parameters - JDA agreement - power of PCIT to invoke revision - HELD THAT:- We find that the issue involved in the matter is wholly factual. AO formed an opinion initially and completed the assessment under Section 143(3) - PCIT thought fit to invoke his power u/s 263 and doubted the value adopted in the transaction and that the Partnership Firm was a device made to divert the excess profit to the sons of the land owners and this according to the PCIT was clearly hit by Section 80 IA(10) and the excessive deduction had to be deleted. Tribunal on its part re-examined the factual position and opined that there is nothing to indicate that the land was transferred at the guideline value so as to shift the profit to the Partnership Firm and in the absence of any material to substantiate the same, there was no ground to interfere with the Assessment Order by invoking the power under Section 263 of the Act. PCIT faulted the land owners for having sold the land at the guideline value. There was no material available before the PCIT that such guideline value was ridiculously low. Profit is being computed based on the sale which were effected during the assessment year under consideration, AY 2012-13, that is more than five years after entering into the Joint Development Agreement, four years after the Partnership Firm came into being. In the absence of any material to show that the assessee had so arranged the business and made transaction to produce more than the ordinary profits and the same having not been established by the Revenue, there was no ground for the PCIT to exercise its power under Section 263 of the Act. PCIT power u/s 263 - The Statute mandates twin conditions to be fulfilled while exercising such power and therefore there is no room to invoke such a power and in the absence of any material before the PCIT to term the Partnership Firm to be a device adopted by the assessee to earn more than the ordinary profit, there was no reason for the PCIT to interfere with the Assessment Order under Section 143(3) of the Act. That apart, the Tribunal has elaborately considered the factual position and granted relief to the assessee. - Decided in favour of assessee.

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• 2020 (9) TMI 671
  Claim for exemption u/s 10AA - Profit derived from a unit situated at SEZ - definition of trading and what it means import for the purpose of re-export - HELD THAT:- As decided in DCIT Vs. Boommidal Enterprises Pvt. Ltd [ 2017 (4) TMI 867 - ITAT VISAKHAPATNAM] Profit derived from a unit situated at SEZ that is engaged in the business of trading in the nature of import and re-export falls within the definition of services, hence eligible for deduction u/s 10AA. Profit derived from the units situated at SEZ, engaged in the business of trading activity in the nature of import and re-export of goods falls within the definition of the term services as defined in section 10AA. Consequently, the assessee is eligible for exemption u/s. 10AA of the Act, towards export profit derived from eligible unit located at SEZ. CIT (A), after considering the relevant provisions of the Act, has rightly deleted additions made by the A.O. towards disallowance of exemption u/s. 10AA of the Act. We do not find any error in the order passed by the CIT (A). Hence, we uphold CIT (A) order and reject the ground raised by the revenue. Similar view is also taken in case in Solitaire Diamond Exports [ 2019 (11) TMI 513 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2020 (9) TMI 670
  Deduction u/s 80P - assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee - AO concluded that the assessee cannot be treated as co-operative society - HELD THAT:- After perusing the narration of the loan extracts in the statutory audit report for assessment years under consideration, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. Narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. At the time of assessment, the judgment of Chirakkal Service Cooperative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT] was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P of the I.T.Act. In the light of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the AO as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2). Appeals filed by the assessee are allowed for statistical purposes

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• 2020 (9) TMI 669
  Penalty u/s 271(1)(c) - disallowance of depreciation on leased asset - HELD THAT:- This issue has already been set aside by the coordinate bench to the file of Ld. AO for re-examination. Further, the penalty on identical issue has been deleted by Tribunal for AY 1995- 96,[ 2018 (8) TMI 1981 - ITAT MUMBAI] wherein it was held that since the addition on the basis of which the penalty was levied does not survive, the penalty would not be sustainable.Respectfully following the same, we confirm the deletion of penalty, albeit on a different ground. Penalty on disallowance of deduction u/s 80M - We find that penalty on identical issue has been deleted by the Tribunal in the case of ICICI Limited [ 2017 (4) TMI 1509 - ITAT MUMBAI] . Respectfully following the same, we confirm the deletion of penalty. This ground stand dismissed. Disallowance of expenditure for increase in share capital - We find that penalty on identical issue has been deleted by the Tribunal in assessee s own case for AY 1993-94 wherein it was held that the issue was debatable one and the same would not constitute concealment of income or furnishing of inaccurate particulars of income by the assessee. Respectfully following the same, we confirm the stand of Ld. CIT(A) in deleting the penalty on this issue. Disallowance of claim u/s 35D - We find that the assessee claimed deduction of preliminary expenses u/s 35D which was rejected by AO in terms of decision of Hon ble Madras High Court in Agro Cargo Transport Ltd. V/s CIT [ 1997 (8) TMI 31 - MADRAS HIGH COURT]. We find that this issue was debatable one and the mere rejection of assessee s claim would not necessarily tantamount to concealment of income or furnishing of inaccurate particulars of income as held in CIT V/s Reliance Petroproducts Ltd . [ 2010 (3) TMI 80 - SUPREME COURT] The assessee made a bona-fide claim which was not accepted by the revenue. However, same would not be good ground for levy of penalty unless it was demonstrated that there was any concealment of income / furnishing of inaccurate particulars of income by the assessee. - Decided in favour of assessee.

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• 2020 (9) TMI 668
  TDS u/s 195 - payments made for services provided by SII, USA were in the nature of technical services liable for deduction of tax at source - income deemed to accrued or arise in India - CIT(A) confirming the action of ITO that services provided by System Integration Inc. USA are covered as fees under the India-USA double taxations avoidance agreement (DTAA) and hence taxable under Article 12 of DTAA - HELD THAT:- Payment made by the assessee to Non resident company SII is not for any fee for technical services and the payment was only towards commission for procurement of orders and reimbursement of incidental charges incurred. Since the payment was not for fees for technical services and further the payment was made to the Non residential company having no permanent establishment or business connection in India, the alleged payment for procurement of orders are not subject to deduction of tax at source u/s 195. CIT(A) erred in confirming the action of the Ld. A.O. - alleged payments to SII in USA during Financial Year 2014-15 and 2015-16 respectively are only towards the charges for procurement or orders and reimbursement of expenses and are not in the nature of fees for technical services and thus do not fall in the ambit of Section 9 of the Act and thus Section 195 of the Act is not applicable in these payments - Decided in favour of assessee.

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• 2020 (9) TMI 667
  Sales tax subsidy received as per UP Govt. Scheme - Revenue or capital receipts - HELD THAT:- Keeping in perspective the principle laid down in Ponni Sugars [ 2008 (9) TMI 14 - SUPREME COURT] case referred to above, if we examine the U.P. Government subsidy scheme under which the assessee has received the sales tax incentive it is to be noted that the purpose of the subsidy scheme is to attract people to invest and take part in industrialization of certain areas in the State. The subsidy scheme nowhere states that it is for the benefit of generating product purchase from the town I district of U.P. As held by the Hon ble Supreme Court in case of Ponni Sugars (supra), if the object scheme, was to enable the assessec to set-up a new unit or to expand the unit then the receipt of subsidy was on capital account. The same is the case with the assessee as the U.P. Government subsidy scheme was for enabling the assessee to expand / modernize Grasim Industries Limited its existing unit. We hold that the sales tax subsidy received by the assessee being a capital receipt is not taxable. This ground is allowed.

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• 2020 (9) TMI 666
  Disallowance u/s 14A - net interest expenditure - AR submitted that disallowance u/s 14A is attracted only when assessee incurs any expenditure for earning the income which is not forming part of total income - HELD THAT:- In this AY, there is net interest income but it may not be the same situation in all the AYs. The transaction with the Head Office and Branch, which is dealing with themselves has to considered like Mutual Concerns and all the transaction with them should be eliminated for taxation purpose, not just the income but also the expenditure. When the whole transaction is eliminated with the Head Office, it is important to note that it is the main business of the assessee i.e., Banking, all the relevant expenditure for carrying out these transaction also to be eliminated. We do not agree with the assessee that only exempt income which is not part of total income alone should be considered to disallowance u/s 14A. As per the provision of section14A at that point of time, it clearly says that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. Nowhere it says it is confine to exempt income which is not form part of total income. Therefore, we are also incline to remit this issue back to AO to quantify the disallowance u/s 14A by eliminating the expenditure relevant for earning the above said income, it may not the interest expenditure alone, it will include the administrative and other expenditure. We urge the AO that the disallowance cannot be more than the income earned by the assessee as it is judicial precedent that the disallowance cannot be more than the income earned by the assessee. Accordingly the ground raised by the assessee is remitted back to AO to quantify the disallowance u/s 14A based on the above direction.

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• 2020 (9) TMI 665
  TDS u/s 195 - disallowance of reimbursement of sales promotion expenses - Addition u/s 40(a)(ia) - HELD THAT:- Assessee has entered into an agreement with M/s Pharmark Consulting FZE, UAE and appointed them as their agent for the business in Russia. The agents appointed the employees/staffs for promotion of assessee s products, for identifying new customers and carry out marketing and sales promotion in Russia. Expenses incurred by the agent in Russia, the assessee has reimbursed to its agent operating from UAE. CIT(A) appreciated the total fact and judicial precedents and came to the conclusion that the agent provided the marketing support service as per marketing and promotion strategies devised by the assessee. The assessee retains full control over all the marketing activities in Russia and the agent was simply implemented the same. The above said agent incurs the expenses on behalf of the assessee and assessee reimburses the same to the agent i.e., M/s Pharmark Consulting FZE in the nature of reimbursement of expenses Payment made to non-resident/foreign company towards services rendered outside India, payee has no business connection in India and the services provided by the agents are not managerial in nature - payment made for the said services are not covered under section 9 (1)(vii) and not chargeable to tax as fees for technical services in India - there is no evidence that the non-resident agent has rendered any managerial service to the assessee and the agreement indicates only services on commission basis. Accordingly, provisions of section 195 are not attracted on payment of reimbursement of expenses made to its agent in UAE. Disallowance under section 40(a)(i) of the Act cannot be made in the case of the assessee. Accordingly, he directed the assessing officer to delete the addition. After considering the complete facts and the judicial precedents, we are in agreement with the findings of the Ld CIT(A) and we do not see any reason to interfere with the decision. Accordingly, the ground raised by the revenue are dismissed.

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• 2020 (9) TMI 664
  Addition on account of valuation of a property - assessee jointly purchased the commercial property having 1/6th share along with the other five co-owners - Addition on the basis of the DVO s report - HELD THAT:- Rate adopted in the DVO s report at Rs. 77,640/- per sq. mtr is without any basis. Our attention has also been drawn towards the Preliminary valuation report by the DVO, whose copy has been made available at page 5 onwards of the Paper Book. Annexure-2 to the said report refers to seven comparable sale instances with per sq. mtr sale rate at Rs. 84,859/-, Rs. 57,498/-, Rs. 63,223/-, Rs. 56,740/-, Rs. 71,443/-, Rs. 59,613/- and Rs. 41,130/- . In the absence of any elaboration of the rate adopted by the DVO in his final report, we consider it expedient to restrict the fair market value rate at the average of the seven sales instances given in the Preliminary report, which comes to Rs. 62,073/-. Assessing Officer is directed to adopt this as per sq. mtr. fair market rate and then work out addition, if any, u/s 56(2)(vii) of the Act accordingly. The impugned order is set-aside to this extent.

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• 2020 (9) TMI 663
  Estimation of income - bogus purchases - HELD THAT:- We notice that assessee has already declared GP ratio of 9.68% and 14.63% from the purchases made from Pravesh Enterprises and Rajat Trading Company respectively and on an average, assessee has already declared 9.5% of GP. We are inclined to direct the AO to estimate the income @ 3% of the alleged purchases. Accordingly, we direct the AO to estimate the income of the assessee @ 3% of the alleged purchases.

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• 2020 (9) TMI 662
  Capital gain computation - Incorrect computation of the indexation cost of acquisition of the property in question acquired by the assessee under a Gift from Grandmother - AO has also considered the JDA development expenses incurred by the Grandmother as well as the construction cost of the property - AO has taken the indexation only from the date of gift till the sale of the property as against from the date of acquisition of the property by the Grandmother of the assessee - HELD THAT:- AO has applied provisions of section 49(1) which is applicable in this case as the mode of acquisition by the assessee is Gift and, therefore, the cost of acquisition of the property has to be considered as in the hands of previous owner. AO was right in considering the actual cost of acquisition in the hands of the previous owner, however, while calculating the indexed cost, the AO has applied the indexed cost from 2008-09 instead of 1988 when the property was acquired by the previous owner. CIT (A) has not looked into the issue that the indexation cost computed by the AO is not taken from the year of acquisition of the property by the previous owner but was taken from the year when the property was gifted by the Grandmother to the assessee. Accordingly, we find that the orders of the AO as well as LD. CIT (A) are suffering from gross error to the extent of calculating indexed cost of acquisition. We direct the AO to compute cost of acquisition by taking the year of acquisition as 1988 when the property was acquired by the previous owner and not the year of Gift. Accordingly, ground no. 1 of the assessee s appeal is allowed. Disallowance of expenditure - Commission paid to the Agent at the time of transfer of the property - assessee claimed that the same is an allowable deduction under section 48 of the IT Act being the expenditure incurred in connection with transfer of the property - HELD THAT:- Property agent is not merely helping in registration of the property but he is also instrumental in finding out the buyer and seller as well as ensuring the clear title as well as the payment of the consideration.Once the transfer of the immovable property requires documentation, scrutiny of the documents and title, then the expenditure is bound to be incurred in respect of such work performed by the real estate Agents. Hence in the facts and circumstances of the case, we allow the expenditure @ 2% of the sale consideration which is a prevailing rate for such type of transactions while computing the Long Term Capital Gain. The AO is directed to allow 2% of the sale consideration as the expenditure on account of Commission paid to the real estate Agent. Ground no. 2 is partly allowed. Deduction u/s 54 - payment made by the assessee towards furniture and fixtures purchased by the assessee along with new house property - Assessee has filed an application for admission of additional evidence in support of this plea of allowing deduction under section 54 towards the payment made for furniture and fixtures - HELD THAT:- The assessee has not claimed such a payment as part of the investment made in the new residential house for the purpose of deduction under section 54 of the IT Act. Even before the LD. CIT (A), the assessee has not raised such a ground and only two grounds which are raised before the Tribunal were raised before the LD. CIT (A). Therefore, such a plea which is completely new and requires investigation of new facts not brought before the AO or LD. CIT (A) cannot be accepted at this stage. The assessee has even not raised any additional ground before us. Therefore, in these facts and circumstances, the assessee cannot be permitted to set up a new case based on entirely new facts which were not brought before the authorities below. Hence, we do not accept this new plea raised by the assessee at this stage. The same is rejected.

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• Customs

• 2020 (9) TMI 661
  Valuation of imported goods - old and used Digital Multifunctional Devices - rejection of transaction value - enhancement of the value of the imported goods on the basis of Chartered Engineer s Certificate - non-submission of specific licence for importation from the DGFT - CBEC Circular No.4/2008-Cus dated 12.02.2008 - HELD THAT:- The ld. Commissioner (Appeals) has relied upon the CBEC Circular No.4/2008-Cus dated 12.02.2008, which deals with valuation of second hand machinery/capital goods and has upheld the enhancement of the declared value based on the valuation done by the Chartered Engineer at the instance of the Department. In the same circular in Clause 2(iii), it has been provided that however the transaction value of Rule (3) cannot be rejected by ab initio application of Rule 9, in as much as, one cannot, before rejecting the transaction value of Rule 3 with sufficient evidences, straight away arrive at notional value under Rule 9. Rule 3 read with Rules 12 requires that where the proper officer has reason to doubt the truth or accuracy of the declared value in relation to the imported goods, he may ask the importer to furnish further information including the documents or other evidences. If after receiving such further information, or in the absence of the response of the importer, the proper officer still have reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of Rule 3 (1) - In the present case, no such exercise has been done by the proper officer. Thus, rejection of the transaction value is held to be arbitrary and thus, the same is set aside and the declared value restored for the purpose of assessment. Confiscation of goods - HELD THAT:- The same is upheld as the goods imported, admittedly, fall under the category of restricted goods under the Import Policy of the relevant period and the appellant, as required, failed to produce specific import licence from DGFT - the appellant had obtained permission from the Ministry of Environment Forest vide O.M. F.No.23-85/2012/HSMD dated 10.09.2013, wherein they are permitted to import 1500 nos. of digital multifunctional print and photocopying machines, subject to the conditions that MED must have residual life of 5 years as certified by Chartered Engineer, which has been certified - the order of confiscation upheld. The redemption fine reduced to 10% and penalty under Section 112 (a) reduced to 5% of the assessable value - appeal allowed in part.

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• 2020 (9) TMI 660
  100% EOU - benefit of exemption Notification No. 53/97- Cus dated 3.6.1997 - benefit denied observing that the respondent had not procured the necessary permission from the competent authority i.e. Development Commissioner to clear the goods in DTA by availing the concessional benefit under EPCG Scheme - whether the respondents are to be denied the benefit of exemption Notification No. 53/97-Cus dated 3.6.1997, allowed at the time of import two DG Sets in 1997, on clearance of said two DG Sets on being obsolete in DTA to EPCG License holders at concessional rate of duty? HELD THAT:- The adjudicating authority simply denied the benefit of Notification No. 53/07-Cus dated 3.6.1997 observing that the respondent had not procured the necessary permission from the competent authority i.e. Development Commissioner to clear the goods in DTA by availing the concessional benefit under EPCG Scheme. The learned Commissioner (Appeals) has elaborately dealt with the said finding of the adjudicating authority. After applying the Circular issued from time to time, the learned Commissioner (Appeals) has held that the appellants have cleared the 2 DG Sets in question bearing Sl. No. 2DN-00890 and DN-00915, under due permission for clearance into DTA as granted/permitted by the Development Commissioner, SEEPZ, vide letter No. SEEPZ/28/EOU/77/99-2000/ Vol-III/6876 dated 19.08.2004. I also hold that the appellants have fulfilled the conditions laid down in the said letter that (i) the appellants shall maintain the stipulated export obligation and NFE; and (ii) the appellants shall pay the applicable rate of duty on the value assessed by the Customs/Central Excise authorities. I further find that the appellants are eligible for the concessional rate of duty on the clearances effected to EPCG License holder unit. No contrary evidence has been produced by the Revenue to rebut the aforesaid findings of the learned Commissioner (Appeals) - there are no merit in the appeal filed by the Revenue - appeal dismissed - decided against Revenue.

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• 2020 (9) TMI 659
  Provisional release of the seized goods - IGST refund - duty drawback - it was opined that the goods were grossly overvalued to claim undue benefits of enhanced IGST refund and Drawback - Section 113(i) and 113(ia) of the Customs Act, 1962 - HELD THAT:- From the facts available it appears that while determining the quantum of bank guarantee, departmental authorities have taken into account the amount of IGST paid and would be admissible as refund on exportation of the impugned goods. The prima facie case of the department is that appellant have overvalued the goods to claim higher export benefits. If the goods have been overvalued then the appellants would have paid the higher IGST at the time of the clearance of goods for export. We do not find any merits in inclusion of the IGST amount paid while determining the quantum of bank guarantee. The amount of IGST which may be refunded is available with the revenue. Revenue may continue investigating the case against the appellant and finalize their refund only after completion of investigation. If we deduct the amount of Rs. 35,19,450/- from the total value of Rs. 38,14,125/- recorded in order of Commissioner (Appeal) the case of overvaluation to claim undue benefit against the Appellants will be of Rs. 2,94,675/-. In the present case when the goods have not been released even after the lapse of 18 months, there are no justification for imposing such harsh conditions by the Revenue while permitting provisional release of the goods - the appellant is directed to execute a bond equivalent to the value of the seized goods as has been directed by the Revenue vide its letter dated 02.05.2019 supported by a bank guarantee of Rs. 5,00,000/- only, which is in accordance with the spirit of the Board Circulars referred. The appeal is disposed of, by modifying the letter dated 02.05.2019 to the extent that the value of bank guarantee to be executed is reduced to Rs. 5,00,000/-.

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• 2020 (9) TMI 658
  Penalty - Anti Dumping Duty (ADD) deposited with interest before issuance of SCN - validity of SCN - quantum of penalty - HELD THAT:- The appellant had deposited the entire amount of Anti Dumping Duty along with interest before issuance of the show cause notice. Since the department has accepted such facts, that as per the provisions of sub-section(5) of Section 28 ibid, the appellant was required to be issued with the show cause notice only for deposit of the penalty amount of 15% of the short levy duty. However, instead of issuing the show cause notice for recovery of the 15% amount of penalty, the department had proceeded against the appellant for confirmation of the 100% penalty in respect of the short paid amount of duty - Since, there is no ambiguity in interpretation of the provisions of sub-section (5) of Section 28 ibid, with regard to the quantum of penalty to be deposited, the benefit of reducing amount of penalty of 15% should be available to the appellant. The impugned order, to the extent it has upheld the adjudged demand of penalty confirmed in the adjudication order is set aside and the appeal to such extent is allowed in favour of the appellant, holding that the appellant should liable to pay penalty of 15% of the adjudged amount of duty confirmed/paid by it before initiation of the show cause proceedings - Appeal allowed in part.

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• Corporate Laws

• 2020 (9) TMI 657
  Winding up proceedings - Section 481 and Section 555 of the Companies Act, 1956 - HELD THAT:- This Company Court is of the opinion that it is just and reasonable in the circumstances of this case to order dissolution of said company. To be noted, there is one limb of prayer for deposit of this meagre amount also in the appropriate account in Reserve Bank of India under Section 555 of said Act. Before this Court does that, it is to be noticed that one limb of the prayer in captioned application, namely limb (b) talks about C.A.No.390 of 2013, which has been filed against ex-directors inter alia under Section 454(5)(A) of said Act. This captioned application and captioned CP are disposed of.

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• 2020 (9) TMI 656
  Sanction of Scheme of Arrangement - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and does not violate of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the CP(CAA) No.965/MB-I/2020 is made absolute in terms of prayer made in the Company Scheme Petition. Hence ordered. The Scheme with an appointed date fixed as 1st April 2020, is hereby sanctioned. It shall be binding on the Petitioners Companies involved in the Scheme and all concerned including their respective Shareholders, Secured Creditors, Unsecured Creditors/Trade Creditors and Employees.

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• 2020 (9) TMI 655
  Sanction of Scheme of Amalgamation (Merger by Absorption) - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned have come forwarded to oppose the Scheme of Merger - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No C.P.(CAA) 3217/MB/2019 filed by the Petitioner Companies has been made absolute in terms of prayer clause (a) to (c) of the Company Scheme Petition. Petitioner Companies are directed to lodge a copy of this order and the Scheme duly certified by the Deputy/ Assistant Registrar, National Company Law Tribunal, Mumbai Bench, Mumbai with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within 60 working days from the date of the receipt of the certified copy of the Order, for the purpose of adjudication of stamp duty payable - Petitioner Companies are further directed to lodge a copy of this order along with the copy of the Scheme with the concerned Registrar of Companies, electronically, along with e-form INC-28 in addition to the physical copy within 30 days from the date of issuance of the certified copy of the Order by the Registry, duly certified by the Deputy Registrar or the Assistant Registrar, as the case may be, of the National Company Law Tribunal, Mumbai Bench. The Scheme is sanctioned, and the appointed date of the Scheme is fixed as 1st April,2019 for Transferor Company 1 and 1st June, 2019 for Transferor Company 2.

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• 2020 (9) TMI 654
  Sanction of Scheme of Amalgamation (by way of Merger by Absorption) - convening and holding of various meetings - HELD THAT:- The Applicant Companies to serve the notice upon the Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai Maharashtra, pursuant to Section 230(5) of the Companies Act, 2013 as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - The Applicant Companies to serve the notice upon the Registrar of Companies, Mumbai, pursuant to Section 230(5) of the Companies Act, 2013 as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - The Applicant Companies to serve the notice on the concerned Income Tax Authority within whose jurisdiction, the Applicant Company No. 1 PAN:- AABCN1024D having his address at The Income Tax Officer, Range Code 923, AO Number 1, Ward 2(3)(1), Aayakar Bhawan, Churchgate, Mumbai-400020 and the Applicant Company No. 2 PAN:- AAACU7182L having his address at The Income Tax Officer, Range Code 921, AO Number 3, Ward 2(1)(3), Aayakar Bhawan, Churchgate, Mumbai-400020 wherethe respective Applicant Company s assessments are made, pursuant to Section 230(5) of the Companies Act, 2013 as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The appointed date is 14th August, 2019 - Connected Company Petition shall be filed on or before 24.02.2020.

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• 2020 (9) TMI 653
  Sanction of Amalgamation Scheme of Merger by Absorption - Sections 230 to 232 of Companies Act - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, CSP NO. 2987 OF 2019 is made absolute in terms of prayers clause (a) to (d). Petitioners are directed to lodge a copy of this Order along with a copy of the Scheme of Merger by Absorption with the concerned Registrar of Companies, electronically along with E-Form INC-28, in addition to physical copy, as per the relevant provisions of the Companies Act , 2013 - The Petitioner Companies to lodge a copy of this Order and the Scheme duly certified by the Deputy Registrar or Assistant Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable within 60 days from the date of receipt of the order, if any.

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• Insolvency & Bankruptcy

• 2020 (9) TMI 652
  Liquidation of the Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- J K Bank with 20.71% vote share voted for the extension of period of CIRP. The Yes Bank however could not vote on the agenda on account of their internal issues of the appointment of an Administrator for the Bank. They could not decide on the said agenda as they did not have a mandate to take any decision due to the restructuring that was underway. Therefore, Yes Bank requested for deferring the issue. Thus, the view of the majority vote share holder was not available. Hence, the scheduled meeting was, after consultation with CoC members, adjourned to 13.06.2020 - The adjourned meeting was convened on 13.06.2020 through a conference call and the Resolution for liquidation of Corporate Debtor was adopted with 100% vote share and the RP was authorised to make necessary Application in that regard. The Applicant submits as the lockdown due to Covid-19 was continuing, the resolution passed in the adjourned meeting convened on 13.06.2020 be considered as a part of the meeting originally scheduled on 11.03.2020. The Applicant Resolution Professional has given his consent to act as Liquidator. However, it is noticed that the proposed fee of the Liquidator has been rejected by the CoC. The Applicant who was present during the virtual hearing submitted that he is ready and willing to work as Liquidator on the fees provided as per the IBBI Regulations. This Bench is satisfied that this Application is in consonance with section 33(2) of the Code. Orders for liquidation of the Corporate Debtor needs to be passed - application allowed.

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• Service Tax

• 2020 (9) TMI 651
  Levy of Service Tax - Transportation of Goods through Pipelines / Conduit Services - the transportation charges are being separately recovered from the buyers in addition to the base price of crude oil - HELD THAT:- The question of service tax levy would arise only in the situation covered in the former case and not definitely in the later case. We find that the whole purpose of the arrangement is to execute the sale transaction in terms of MOU entered by the appellant with the customers like Indian Oil Corporation, for purchase and sale of crude oil, sample copies of which are annexed with the appeal paper book. We are of the view that had there been no arrangement for sale of crude oil to the buyer oil companies, there would have been no case for the appellant assessee to undertake the transportation of goods. It is only in order to honour the mandate of sale transaction to deliver the goods at delivery point, the transportation activity has been undertaken by the appellant assessee. The learned Commissioner has categorically accepted the fact that the appellant is under contractual obligation to supply and deliver the goods at the buyer s premises which has been referred as Custody Transfer Point or the point of delivery. However, he confused the whole matter with the concept of place of removal to hold that the transportation charges is not liable to be included in the value of crude oil, which is not the subject matter of dispute herein for the reason that the demand in this case is not on the crude oil but on the transportation charges which though separately recovered is to solely honour the sale transaction by delivering the goods at the buyers premises. Thus, the transportation of crude oil has been undertaken by the appellant assessee in the capacity of being a seller not a service provider. Further, since there is no service provider - service recipient relationship, there cannot be any question of service tax levy and thus, the demand cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2020 (9) TMI 650
  Classification of services - Business Auxiliary services or not - appellants are having authorized service station to carry out repairs, reconditioning or restoration of four wheeled motor vehicles manufactured by M/s Hero Honda Ltd. - services of promotion or marketing to the Bank/Non-banking Financial Institutions and Insurance Companies, who are providing loans to the customers - HELD THAT:- The Tribunal in various cases has consistently held that promotion and marketing of loans and finance on behalf of the banking and non-banking financial institutions should appropriately be classifiable as Business Auxiliary Service and service tax liability is required to be discharged on such taxable service - In this case, admittedly the appellants did not pay the service tax into the Government exchequer and thereby, contravened the statutory provisions. Reliance can be placed in the case of ADDIS MARKETING VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2016 (11) TMI 19 - CESTAT MUMBAI ] - there are no infirmity in the impugned order passed by the learned Commissioner (Appeals). Appeal dismissed.

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• 2020 (9) TMI 649
  Condonation of delay in filing appeal - sufficient reason for condonation of delay given or not - removal of defects including the requirement of pre-deposit - HELD THAT:- It is apparent from a reading of the delay condonation application that only casual statements have been made without any details or supporting documents. According to the Appellant, an accountant had been entrusted to file the appeal but since he had suddenly gone on leave, a new counsel was consulted. The Appellant has not stated as to how the Appellant acquired knowledge that the accountant had not filed an appeal. The Appellant has also not stated on which date the Appellant acquired knowledge that the appeal had not been filed by the accountant. We are not impressed by the facts stated in the Application that the Appellant had been prevented by sufficient cause from filing the appeal within the stipulated period Application rejected - appeal dismissed.

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• 2020 (9) TMI 648
  Taking up Tax Appeals for final hearing on a particular date - HELD THAT:- All the four appeals have been admitted on few substantial questions of law involved in the matter. We also take notice of the order passed by a Co-ordinate Bench of this Court in the Civil Applications preferred by the original appellant seeking interim-relief. It is not in dispute that the original appellant has deposited 25% of the amount of demand with interest with the department. It is also not in dispute that the larger issue involved in these appeals is being looked into by the Supreme Court and the Supreme Court is yet to decide the same. The decision of the Supreme Court should be awaited for the better adjudication of the substantial questions of law involved in the present Tax Appeals. It would not be appropriate to fix the Tax Appeals for final hearing. Let the decision of the Supreme Court be pronounced.

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• Central Excise

• 2020 (9) TMI 646
  Extended period of Limitation - suppression of relevant facts or not - Section 11A of Central Excise Act - valuation under Rule 8 of the Central Excise (Valuation) Rules 2000 - HELD THAT:- The extended period of limitation in the present case was not available to the Revenue Authorities and therefore, the Show Cause Notice issued to the Assessee on 19.8.2010 could not cover the period in question viz., 2007-2008 to 2009-2010 except to the extent of one year from the date of issuance of Show Cause Notice on 19.8.2010 and therefore, the learned Tribunal was justified in holding in favour of the Assessee to that extent. We fail to understand that when the Assessee had changed its method of valuation on the advice of the Department s Authority himself based on some Audit objection as indicated in the communication dated 17.1.2008, how by turning the tables on the Assessee, the Adjudicating Authority, without referring to the said communication dated 17.1.2008, could invoke the extended period of limitation and hold that the Assessee is guilty of suppression of relevant facts viz., the Steel Bars were supplied to their Sister Concerns for the construction work and not for further manufacture of excisable goods, and thereby impose the duty following the Rule 4 Valuation and not Rule 8 Valuation as advised by the Department s Authority itself, while the Assessee had followed the said advice/suggestion of the Department and changed its valuation method from Rule 4 to Rule 8 (110%) of the cost of transfer of goods - The Revenue Authority cannot be allowed to take a different stand at different point of time to suit their convenience and impose Additional Duty on the Assessee without establishing any suppression of facts on the part of the Assessee. Appeal dismissed - decided against appellant.

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• 2020 (9) TMI 645
  Clandestine Removal - shortage of finished goods - Kraft Paper - main evidence for making allegation of clandestine removal and raising demand is computer printouts - Corroborative evidences or not - reliability of statements - period from April, 2009 to July, 2012 - HELD THAT:- As per section 36B of Central Excise Act, 1944, printed material produced by the computer shall be admissible as evidence only when the condition mentioned in Sub-section (2) and other provision contained in the said section 36B are satisfied. As per the condition laid down in subsection (2) the statement of computer printout must be produced by the computer during the period for which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer. In the present case it is admitted by the revenue itself that the statement was not produced in the computer which was seized, it is only having the backup data the data originally produced in different computer. As per the department the hard disc of the said computer was destroyed. Therefore it is clear that the computer which was seized, the data was not produced on the seized computer. No evidence was brought on record that the data retrieved from the computer was originally produced on different computer and the hard disc of the same was destroyed. It is only as per the statement of the director which was claimed by the appellant having been taken under duress and threat. As per clause (b) of Sub-section (2) of Section 36B the information must be regularly supplied to the computer during that period - In the present case the period involved is April, 2009 to June, 2012 during that period the computer which was seized was not in use therefore, clause (b) is not satisfied. Similarly, since the seized computer was not in use for the material period clause(c) is also not satisfied. Even the seized computer is not the computer to which the data was supplied in the ordinary course of the said activities, therefore, clause (d) is also not satisfied. In the present case also the undisputed fact is that the computer seized by the department, the data was not supplied in the said computer. Therefore, in terms of the Section 36B(2) the computer printout in the present case cannot be accepted as admissible evidence. Reliability on statements - HELD THAT:- The Adjudicating Authority has heavily relied upon the statements of directors and various alleged raw material supplier and buyers of goods. We find that the appellant have requested for cross-examination of all the witnesses but none of the witness was allowed to be cross-examined by the adjudicating authority. We find that since the entire basis of demand is computer printout and the statements of third parties, it is incumbent on the adjudicating authority to allow the cross-examination as required not only under Section 9D of the Central Excise Act but also to follow the Principle of Natural justice. As per statutory provision under Section 9D and also settled law, all the statements which were retracted in the form of reply to Show Cause Notice and without allowing the cross-examination of the witnesses cannot be used as admissible evidence, therefore all the statements are discarded. The major demand is based on the computer printout and various statements. Since both are not admissible evidence as discussed above the charge of clandestine removal is not established against the appellant. The appellant also made a submission that they were involved in the trading of kraft paper, since we have discarded the computer printout being not admissible evidence, we need not to discuss about the content of the data available in the printouts therefore, we need not to give finding on the aspect of trading of kraft paper, whether the same was factually carried out by the appellant or otherwise. The charge of clandestine removal in respect of major quantity could not be established by the revenue. Accordingly, consequential demand of duty worked out from computer printout is not sustainable - In respect of the co-appellants a penalty under Rule 26 was imposed. This penalty is consequential to the demand confirmed by the Adjudicating Authority. Since the major demand of duty confirmed itself is not sustainable penalties of co-appellants are also not sustained. Appeal allowed in part.

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• 2020 (9) TMI 644
  CENVAT Credit - inputs not received - forged and fake invoices - chain of company/firm(s) created by Shri Gaurav Mungad - such cenvat credit was utilised towards payment of duty on the goods exported, and thereafter obtained undue rebate claim - proper opportunity of hearing not given - principles of natural justice - HELD THAT:- The case of Revenue is mainly based on the statements of the aforementioned persons. In spite of the categorical request for cross examination of the aforementioned persons, in the adjudication proceedings and also of some other persons connected with the investigations, who had verified the cenvat credit records and the documents of the appellants as well as the officers involved in scrutiny and sanctioning of the rebate claims. But this request of the appellants have been arbitrarily refused by the ld. Commissioner observing that the allegations of the Revenue are also corroborated by other independent evidences and hence cross examination is not required. This stand of the Adjudicating Authority is a clear violation of the mandate of Section 9 D of the Central Excise Act read with Ruling of the Hon ble Punjab Haryana High Court in the case of Jindal Drugs [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT ] and the requirement of cross examination reiterated by the Hon ble Supreme Court in its ruling in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT ] . Thus, there is mis-carriage of justice causing prejudice to the appellants. The contention of the appellants that they have received their raw materials under dispute, is also established by the fact that they have manufactured the finished goods, which have been mainly cleared for export. The Revenue has failed to discharge the onus as regards the source of receipt of raw materials from any other alternative source rather have made a bald allegation on the manufacturers that they have received bazaar scrap on payment in cash - there is no basis for such allegations except assumptions and presumptions. The cross examination in the facts and circumstances of the present case, was required also for the following reasons:- (i) The appellant-manufacturers had cleared the goods for export under bond (ARE-I) and thereafter, they have filed the export promotion copy containing the evidences of the Port Officer, certifying the factum of export. (ii) The goods exported from ICD, Pithampur or Mandideep have been examined either in the factory at the time of stuffing by the officers or at the port by the customs officers. Further, samples were also drawn. In the course of investigation, no inquiry has been made from such officers, who were involved in the supervision and sealing of the containers for export. (iii) The manufacturers appellants have made payments for the raw materials /inputs through regular banking channels and no irregularity has been found on this aspect. In the facts of the present case, the examination of the raw materials suppliers, transporters and the proprietors of the Prerna Enterprises and Ocean Impex was essentially required as their statements are the main evidence relied upon by the Revenue. As the examination and cross examination have not been done in the course of the adjudication proceedings, in spite of this being the second round of litigation, it is held that none of the aforementioned statements can be relied upon for proving the allegations against the appellants. After discarding the statements, as aforementioned, we find that other than the bald allegations, there is no other cogent and corroborative evidences on record in support of the allegation of the Revenue. The appellants have satisfied the requirement of receipt of inputs along with cenvatable invoices and accordingly, the cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules - before sanction of the rebate claims by the jurisdictional Asstt. Commissioner, the payment of duty on the goods exported was verified by the Range Superintendent and it was found that the appellants have taken proper cenvat credit and the same was utilized. Thus, the rebate claim was sanctioned only after verification of the cenvat credit as per the procedure. The Revenue has placed strong reliance on the facts that the proprietor /directors of the appellants companies are related or relatives, but such observations in itself do not prove the case of the Revenue in view of the fact of the manufacture and clearance of the finished goods is on payment of duty. Further, there is no allegation of any flow back of money after the payment has been made through banking channels. Further, the appellant manufacturers have exported their goods and have received the export proceeds, although at some delay and have produced deficit BRCs, which have been annexed in the appeal paper books. Dispute of quantitative details of the manufacture and sales - HELD THAT:- Such allegations are vague and not based on any cogent evidence or standard input out norms. The allegation of the Revenue as regards the inflation of sale price of the finished goods is also vague. The Revenue has only disputed the sale price with respect to the metal price of Aluminum on LME, which is only a bald allegation. Sale price are the result of market force including demand and supply, among others. No buyer will pay any abnormal high price to please the seller. There is no allegation of hawala transactions in the export made by the exporter, being fake or made to their related party. The allegations of the Revenue against the appellant are not substantiated - Appeal allowed - decided in favor of appellant.

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• 2020 (9) TMI 643
  Recovery of Short paid duty - fabrication of steel tanks for Oil Companies - allegation that the appellants did not obtain Central Excise Registration even after exceeding the SSI exemption limit of turnover Rs. 1.00 Crore - Extended period of limitation - whether the tanks fabricated by the assessee are goods and whether they are liable to Central Excise duty? - Difference of Opinion - Majority decision. HELD THAT:- The appellant manufacture tank in their factory, although some parts of the tanks are finally attached at the buyers premises only. I agree with the submission of the learned counsel for the appellant that the impugned goods when left the factory is incomplete and unfinished tanks. But they are still classified as tanks and is liable to excise duty under CETH 73090090 of CETA. The learned Member(Technical) has considered the definition of goods and the definition of attached to earth and has rightly relied upon the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID CORRECT ENGINEERING WORKS ORS. [ 2010 (4) TMI 15 - SUPREME COURT ] where it was held that the plants in question were not immovable property so as to be immune from the levy of excise duty. Further the issue involved in the present case is squarely covered by the Division Bench decision of the Delhi Tribunal in the case of M/S V.D. ENGINEERING VERSUS CCE, JABALPUR [ 2018 (6) TMI 863 - CESTAT NEW DELHI ] relied upon by the learned AR wherein identical goods were involved. Though the decision was rendered prior to the decision of this case, the same was not brought to the notice of the Bench at the time of hearing the matter - It was held in the case that Inasmuch as the storage tanks have arisen in the factory of the appellant, the liability for payment of excise duty gets fastened on the appellant. The impugned goods are liable to excise duty and the opinion expressed by the learned Member(Technical) is in accordance with law - In view of the majority decision, Central Excise demand is legally sustainable on merits for the normal period of limitation and the appeals are disposed of as follows: (i) Demands for normal period, is confirmed in both the impugned orders. (ii) Demands for extended period is set aside. (iii) Cenvat credit is available to the assessees. (iv) The prices received by them may be taken as cum-duty prices and duty calculated accordingly. (v) All penalties are set aside. (vi) Appeals are remanded to the original authority for the limited purpose of computation.

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• 2020 (9) TMI 642
  Hearing of appeal - supply of necessary documents - HELD THAT:- The appeal is taken up for hearing after handing over the necessary statements relied upon by the adjudicating authority in passing the impugned order to the Appellant. Valuation - short payment of duty - allegation that even though their Miraz unit sold Motor Spirit blended with Ethanol and collected duty on the whole quantity of Motor spirit including duty on Ethanol, but failed to discharge the excess duty collected on ethanol under Section 11D of Central Excise Act, 1944 - whether the appellants are required to deposit the amount of Rs. 75,94,886/- on the quantity of ethanol of 712.290 KL blended with 13533.580 KL of Motor Spirit(Petrol),when the resultant quantity of 14245.850 KL of EBP was sold as Motor Spirit ,under Section 11D, and interest under Section 11DD of Central Excise Act, 1944? - HELD THAT:- The Miraj unit receives duty paid motor spirit from their manufacturing Unit at Vasco, Goa and also duty paid ethanol from independent distillers. The Motor spirit and ethanol was blended in the ratio of 95:5 at the time of clearance from the Miraj unit to the customers in tankers. The price per KL of EBP (which was mentioned in the invoice as motor spirit) was similar to the price charged by the appellant for unblended motor spirit to the customers. The Commissioner while adjudicating the demand notice for recovery of excess duty alleged to have been collected on the quantity of ethanol blended with Motor spirit, took cognizance of the fact about the activity/process of blending, whether amounts to manufacture or otherwise. Following the order of the Commissioner of Central Excise and Customs, Goa, he was also of the view that the activity of blending of motor spirit with ethanol amounts to manufacture under Section 2(f) of Central Excise Act, 1944. However, he has proceeded to observe that the appellant had failed to deposit the excess amount of duty collected from the customs on the quantity of EBP blended with motor spirit. There are no merit in the reasoning of the learned Commissioner in confirming the amount under Section 11D of the Central Excise Act, 1944. Once it is held that the activity of blending 5% of the ethanol with 95% of motor spirit results into manufacture of motor spirit (EBP), the identity of ethanol islost in the process of manufacture of the EBP. Therefore, the price charged on the invoices which includes duty at the rate applicable to motor spirit, if not paid is recoverable under Sec. 11A of CEA,1944 as duty short paid. The approach of theoretically calculating duty on non-excisable portion of the Motor spirit( i.e.ethanol), the raw material used in the manufacture of EBP, and demanding the same under Section 11D of Central Excise Act, 1944, in our considered opinion, cannot be sustained being contrary to the scheme of the Act. Also, alternatively even if it is assumed that the process of blending of ethanol with motor spirit does not amount to manufacture under Section 2(f) of Central Excise Act, 1944, even than the duty paid on motor spirit (EBP) cannot be construed as duty paid separately on Motor spirit and proportionate duty applicable to ethanol in the total duty be recoverable under Section 11D of Central Excise Act, 1944, when the price charged was inclusive of duty, and the duty attributable to Ethanol is not shown and recovered separately in the invoice - In the present case, the Revenue could not show that the appellant after blending ethanol with duty paid motor spirit collected separately, mentioning the duty on ethanol in the invoices, but not paid to the Government. Therefore, Section 11D of CEA,1944 cannot be said to have been attracted. Statements of Shri Subbara - HELD THAT:- In all his statements, it is stated that the duty in the invoices prior to the disputed period were shown separately, whereas during the disputed period, it was shown as inclusive of duty. On further being asked by the department, he has stated that the resultant EBP which contains 5% of ethanol since not suffered duty but after blending with motor spirit duty was collected on the total quantity of EBP, therefore, the duty attributable to ethanol theoretically in the total duty paid on the price of motor spirit is payable but not paid - there are no merit in the said understanding of the Shri Subbaraj in stating that excess duty collected is payable but not paid under Sec. 11D of CEA,1944 because of change in the pattern of reflecting duty on the invoice. Therefore, his understanding of the applicability of Sec.11D cannot be the basis for confirming the demand. Appeal allowed on merits.

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• CST, VAT & Sales Tax

• 2020 (9) TMI 647
  Levy of penalty - Failure to pay Entry Tax in time due to bonafide opinion - import of three heavy road laying vehicles - HELD THAT:- The law, as on date, is to the effect that the imported vehicles brought into the State of Tamil Nadu for use or for sale would be subjected to payment of Entry Tax. Previously, the Hon ble Division Bench of the Kerala High Court in the case of FR. WILLIAM FERNANDEZ VERSUS STATE OF KERALA AND OTHERS [ 1998 (1) TMI 501 - KERALA HIGH COURT] had held, in the year 1998, that entry of vehicles from abroad, is outside the scope of Entry Tax Act and therefore not liable for payment of Entry Tax. There are no fault with the petitioner when they had not paid the Entry Tax at the time of import. Furthermore, when the Enforcement Wing of the respondents had insisted for payment of the Entry Tax, the petitioner had immediately paid the Entry Tax of Rs. 22,59,619/- on 26.10.2005 itself. However for such omission, the second respondent herein had now invoked Section 15(1) of the Entry Tax Act and proposed a penalty, at twice the amount of the Tax. It is no doubt true that the second respondent is empowered to levy such a penalty. However, this is the case where the Entry Tax was not paid by the petitioner on the first instance, in view of the prevailing law at that point of time - In such circumstances, when there are bona-fides on the part of the importer in refraining from paying the tax, the Hon ble Apex Court in EID. PARRY (I) LTD. OTHERS VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER [ 1999 (12) TMI 708 - SUPREME COURT] had held that the levy of penalty was not justified. This Court is of the affirmed view that the proposed levy of penalty is unjustifiable - Petition allowed - decided in favor of petitioner.

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• 2020 (9) TMI 641
  Validity of assessment proceedings - allegation is that the impugned proceeding is made on the basis of the Audit Reports/Inspection Proposals proceeded from the Enforement Wing or from ISIC Authorities - HELD THAT:- Circular No.3 dated 18.01.2019 has empowered the Assessing Officers to henceforth independently deal with the assessment without being influenced by the proposals of the higher officials. In view of the Circular No.3 dated 18.01.2019 issued by the Commissioner of State Tax, Chennai, all the impugned proceedings in these Writ Petitions, which proceeds on the basis of the proposals/reports of the Enforcement Wing/ISIC, are set aside and consequently, the matters are remanded back to the Assessing Officer. The Assessees are granted liberty to file their objections with all supporting documents, within a period of 30 days from the date of receipt of a copy of this order. Petition allowed by way of remand.

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• 2020 (9) TMI 640
  Restriction on Input Tax Credit (ITC) - Form W - June to September 2014 - Prior sufferance of Taxes - ITC on reversal on wastage - Ineligible claim of ITC on goods. Restriction of the amount for prior sufferance of taxes - Assessing Officer was of the view that some of the sellers from whom the petitioner had purchased the goods had not paid tax to the Government - HELD THAT:- This issue has been dealt with in the case of ASSISTANT COMMISSIONER (CT) , PRESENTLY THIRUVERKADU ASSESSMENT CIRCLE, KOLATHUR, CHENNAI VERSUS INFINITI WHOLESALE LTD. [ 2016 (9) TMI 1431 - MADRAS HIGH COURT] wherein it has held that Input Tax Credit cannot be disallowed on the ground that the seller has not paid tax to the Government, when the purchaser is able to prove that the seller has collected tax and issued invoices to the purchaser. As such, restriction of the amount of Input Tax Credit on this ground, cannot be sustained and requires re-consideration. ITC on reversal on wastage - HELD THAT:- This Court in the case of M/S. SHRI RANGANATHAR VALVES PRIVATE LIMITED VERSUS THE ASSISTANT COMMISSIONER (CT) [ 2016 (12) TMI 510 - MADRAS HIGH COURT] it is open to the Assessing Officer to issue a show cause notice to the petitioner calling for his objections with regard to Input Tax Credit on reversal on wastage and Ineligible claim of ITC on goods are concerned. The impugned orders are set aside and the issue with regard to restriction of the amount of Input Tax Credit for prior sufferance of taxes is remanded back to the Assessing Officer for fresh consideration - Assessing Officer shall, before taking a final decision, extend due opportunity of personal hearing to the petitioner and endeavour to complete the proceedings, atleast within a period of twelve weeks from the date of receipt of a copy of this order. Petition allowed by way of remand.

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• 2020 (9) TMI 639
  Recovery of tax dues (arrears) - Validity of Sale of property in public auction - Improper bidding of the 1/5th share of the petitioner over his ancestral property - Section 50(2)(i) of the Kerala Revenue Recovery Act - HELD THAT:- The attachment of the property and the sale thereof held on 03.10.2008 were in respect of undivided share of the petitioner in the property. The petitioner was not in actual and exclusive possession of the property when the sale was effected and the Government purchased the land. The pleadings would show that the petitioner has been trying to raise funds sufficient for the payment of sales tax arrears. Ext.P2 letter dated 25.03.2017 would show that the petitioner has been making representation to the respondents for reconveyance of the property - At any rate, the petitioner has approached the respondents submitting himself to the Amnesty Scheme. The respondents by themselves permitted the petitioner to participate in the Amnesty Scheme and intimated to the petitioner the amounts to be paid to the Government to settle the issue of sales tax arrears. Such intimation was not pursuant to any orders of this Court. This Court passed an interim order only 18.07.2017 making it clear that payment made by the petitioner in terms of Ext.P4 intimation of the State Tax Officer will be subject to further orders to be passed by this Court. In this case, though the State bought the land for a consideration of Re.1, what was bought by the State is only the undivided share of the property belonging to the petitioner. The State was not at any point of time had the actual the possession of the land. In the meanwhile, the respondents permitted the petitioner to participate in the Amnesty Scheme and offered to settle the sales tax disputes by the petitioner paying an amount of Rs. 9,58,610/-, as per Ext.P4. In the circumstances, equity demands that the undivided share purchased by the respondents is restituted to the petitioner. The writ petition is allowed directing the respondents to issue orders immediately and take action to return the property covered by Ext.P1 order, after cancelling the sale and orders of confirmation, if any.

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• Indian Laws

• 2020 (9) TMI 638
  Dishonor of Cheque - legal presumption under sections 118 and 139 of Negotiable Instrument Act - In the absence of specific evidence led by defendant qua maintainability of suit in terms of section 3 of H.P. Registration of Money Lenders Act, Whether the findings of Ld. Court below holding that the suit is barred by section 3 of H.P. Registration of Money Lender Act is legally sustainable? HELD THAT:- Instant suit filed by the plaintiff cannot be held to be not maintainable under Section 3 of the H.P. Registration of Money Lenders Act as the defendant failed to prove that plaintiff falls within the definition of money-lender under the Act and also failed to prove that various recovery suits instituted by the plaintiff pertained to that kind of loan which is included under the definition of loan in terms of the Act ibid. Therefore, findings in that regard of both the learned Courts below holding the suit to be not maintainable are quashed and set aside. However, separate findings recorded by both the learned Courts below in dismissing the suit of appellant on merits are based upon correct interpretation of law and facts. Plaintiff has not been able to prove that he had loaned Rs. 3,00,000/- to the defendant or that towards satisfaction of this loan amount, the defendant had handed him the cheque in question. The defendant has explained the circumstances under which the blank cheque in question signed by him was handed over by his father to the plaintiff. Defendant has also highlighted various suspicious aspects regarding manipulations in the cheque including filling of the amount, account number, name and signature in different ink on the cheque besides apparent addition of zero in the amount mentioned therein. Defendant has successfully rebutted the presumption attached to the cheque under Sections 118 and 139 of the Negotiable Instruments Act. There is no perversity or illegality in the concurrent judgments and decrees passed by learned Courts below in dismissing the suit of the appellant on merits. Appeal disposed off.

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• 2020 (9) TMI 637
  Dishonor of Cheque - offence punishable under Section 138 of Negotiable Instruments Act, 1881 - Whether the complainant has proved beyond reasonable doubt that the accused has committed an offence punishable under Section 138 of N.I.Act as alleged in the complaint? - HELD THAT:- In the instant case, apart from the legal presumption as per Section 139 of the N.I. Act coming into operation, the complainant through oral and documentary evidence has also shown that the supplies of goods to the accused were made and towards the same, the accused was in arrears of payment of money, towards which, he had issued the cheques at Exs.P-3 and P-4. Therefore, the finding of the Trial Court that PW-1 had no authority to lead evidence and the complainant failed to establish the existence of a legally recoverable debt proves to be an erroneous finding. The complainant has proved that the accused towards legally enforceable debt, had issued two cheques at Exs.P-3 and P-4, which came to be returned due to the closure of the account of the drawer and the complainant has complied the statutory requirements of issuance of notice within time. The Trial Court judgment deserves to be set aside and the accused is held to be guilty of the offence punishable under Section 138 of the N.I. Act. Appeal allowed.

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• 2020 (9) TMI 636
  Application filed belatedly - matter is pending for more than five years - Dishonor of Cheque - application under Section 311 Cr.P.C. by petitioner/accused no.3 for recall of complainant for further cross examination was dismissed - principles of natural justice - HELD THAT:- The filing of application at belated stage which does not prejudice to the rights and contention of the petitioner, such application is delay tactics to get the trial delayed.There are no illegality and perversity in the impugned order dated 29.08.2020 passed by the Trial Court - petition dismissed.

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• 2020 (9) TMI 635
  Grant of Anticipatory bail - Sections 420, 467 471 of Indian Penal Code, 1860 - Dishonor of Cheque - fake E-way bill - HELD THAT:- Though the counsel for the petitioner has vehemently contended that on the E-way bill generated by the petitionerGST was also deposited, however, learned counsel for the petitioner is not in a position to deny the document Annexure R-2/5 which is an electronically generated document which depicts that the E-way bill dated 04.01.2020 was rejected by the complainant on 05.01.2020. He is also not able to explain as to what was the necessity of depositing the GST on the rejected bill. The petitioner prima facie appears to have not only fabricated the E-way bill but has also, in order to create evidence, filed his GST returns on a bill which stood rejected by the complainant on the very next day. The present petition is dismissed - It is, however, made clear that nothing observed herein is to be construed as an expression of opinion on the merits of the case.

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