TMI Tax Updates - e-Newsletter
September 20, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

  ---

Articles

• TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News

• Voluntary Reporting of Estimated Current Income and Advance Tax Liability

  ---

• RBI Reference Rate for US $

  ---

• Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

  ---

• Auction for Sale (Re-issue) of Government Stocks

  ---

Notifications

Customs

• 45/2017 - dated 18-9-2017 - ADD
  Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

  ---

GST - States

• CCT/26-2/2017-18/8/2021 - dated 29-8-2017 - Goa SGST
  Amendments in the Notification No. CCT/26-2/2017-18/7 dated 18th August, 2017.

  ---

• 38/1/2017-Fin(R&C)(11) - dated 1-8-2017 - Goa SGST
  The Goa Goods and Services Tax (Fourth Amendment) Rules, 2017.

  ---

• 38/1/2017-Fin(R&C)(2/2017-Rate)(Corri.) - dated 20-7-2017 - Goa SGST
  Corrigendum - Notification No. 38/1/2017-Fin(R&C)(2/2017-Rate) dated 30-6-2017

  ---

• 38/1/2017-Fin(R&C)(1/2017-Rate)(Corri.) - dated 20-7-2017 - Goa SGST
  Corrigendum - Notification No. 38/1/2017-Fin(R&C)(1/2017-Rate) dated 30-6-2017.

  ---

• 02/2017-GST - dated 18-9-2017 - Gujarat SGST
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Gujarat Goods and Service Tax Rules, 2017

  ---

• 35/2017-State Tax - dated 15-9-2017 - Gujarat SGST
  Time Limit for Filling of GSTR3B For August to December 2017.

  ---

• 34/017-State Tax - dated 15-9-2017 - Gujarat SGST
  The Gujarat Goods and Services Tax (Seventh Amendment) Rules, 2017.

  ---

• 33/2017-State Tax - dated 15-9-2017 - Gujarat SGST
  Appointed date for section 51 participation by way of equity or control, to carry out any function.

  ---

• 32/2017-State Tax - dated 15-9-2017 - Gujarat SGST
  Handicraft goods exemption for obtaining registration.

  ---

• (GHN-79)GST-2017-R123(1)-TH - dated 7-9-2017 - Gujarat SGST
  Constitution Of State Level Screening Committee For Anti-Profiteering.

  ---

• 81/ST-2 - dated 6-9-2017 - Haryana SGST
  Constitution of Standing Committee on Anti-profiteering under GST.

  ---

• 80/ST-2 - dated 5-9-2017 - Haryana SGST
  The Haryana Goods and Services Tax (Sixth Amendment) Rules, 2017.

  ---

• EXN-F(10)-18/2017 - dated 15-9-2017 - Himachal Pradesh SGST
  Amendments in the Notification No.11/2017- STATE TAX (RATE), dated the 30th June, 2017. - Composite supply of works contract.

  ---

• EXN-F(10)-18/2017 - dated 15-9-2017 - Himachal Pradesh SGST
  Amendments in the Notification No.12/2017- STATE TAX (RATE), dated the 30th June, 2017.

  ---

• EXN-F(10)-18/2017 - dated 15-9-2017 - Himachal Pradesh SGST
  Amendments in the notification No.13/2017- STATE TAX (RATE), dated the 30th June, 2017.

  ---

• EXN-F(10)-18/2017 - dated 15-9-2017 - Himachal Pradesh SGST
  Amendments in the notification of No.17/2017- STATE TAX (RATE), dated the 30th June, 2017.

  ---

• 04/2017-GST - dated 8-8-2017 - Jammu & Kashmir SGST
  Time period for filing of details in FORM GSTR-3B.

  ---

• 03/2017-GST - dated 8-8-2017 - Jammu & Kashmir SGST
  Time period for filing FORM GSTR-3

  ---

• 02/2017-GST - dated 8-8-2017 - Jammu & Kashmir SGST
  Time period for filing of details of inward supplies in FORM GSTR-2

  ---

• 01/2017-GST - dated 8-8-2017 - Jammu & Kashmir SGST
  Time period for filing of details of outward supplies in FORM GSTR-1

  ---

• Va Kar/GST/04/2017-S.O. No. 079 - dated 19-9-2017 - Jharkhand SGST
  Related to due date of GSTR-6 in the month of July & Aug., 2017

  ---

• Va Kar/GST/04/2017-S.O. No. 078 - dated 19-9-2017 - Jharkhand SGST
  July return for Data base access or retrial services from outside India

  ---

• Va Kar/GST/04/2017-S.O. No. 076 - dated 13-9-2017 - Jharkhand SGST
  Extends the time limit for furnishing the details or return.

  ---

SEZ

• S.O. 3066(E) - dated 12-9-2017 - SEZ
  SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

  ---

Circulars / Instructions / Orders

GST - States

• Trade Circular No. 1 of 2017 - dated 2-8-2017
  Submission of Bond/Letter of Undertaking by the Exporter in respect of Exports without payment of Integrated Tax under IGST Act.

GST

• 02/2017-GST-Order - dated 18-9-2017
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

Highlights / Catch Notes

GST

• GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC
  Visit to Get Source

  ---

• Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular
  Visit to Get Source

  ---

Income Tax

• Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.
  Visit to Get Source

  ---

• Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification
  Visit to Get Source

  ---

• Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC
  Visit to Get Source

  ---

• Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC
  Visit to Get Source

  ---

• TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC
  Visit to Get Source

  ---

• Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC
  Visit to Get Source

  ---

• Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society
  Visit to Get Source

  ---

• Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.
  Visit to Get Source

  ---

Customs

• Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.
  Visit to Get Source

  ---

• Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences
  Visit to Get Source

  ---

Service Tax

• Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission
  Visit to Get Source

  ---

• Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.
  Visit to Get Source

  ---

• Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.
  Visit to Get Source

  ---

Central Excise

• Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit
  Visit to Get Source

  ---

Case Laws:

• GST

• 2017 (9) TMI 1044
  Detention of goods - it was alleged that there were no nexus between the documents accompanied and the actual goods under transport - Section 129(3) of the Central/State Goods and Services Tax Act, 2017 - Held that: - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication. When the statute itself provides for such a mechanism, a deviation therefrom cannot be ordered. If that be so, the provisional release in the manner as is ordered in the judgment under appeal cannot be sustained. The provisions of Rule 140 (2) obliging a dealer to produce the goods as and when demanded, and considering the inconvenience and prejudice that is likely to be caused on account of the delay, we need hardly emphasise the necessity for an expeditious adjudication even in cases goods are released provisionally - the respondent directed to produce a copy of this judgment before the second appellant, who thereupon, will issue necessary notice and conduct physical verification in the presence of the respondent and complete adjudication, at any rate, within one week - petitioner is also given liberty to comply with Rule 140(1) and get provisional release on that basis.

  ---

• Income Tax

• 2017 (9) TMI 1043
  Claim of weighted deduction under Section 35 (2AB) - Held that:- Having held that the R&D expenditure as claimed by the Assessee ought to have been allowed, there was no question of remanding the matter to the AO for returning a finding on whether the expenditure was of revenue or capital nature. This is because, under Section 35 (2AB) of the Act, both revenue and capital expenditure are allowable in their entirety, excluding expenditure in the nature of cost of any land or building. There was going to be no purpose served in analysing whether the expenditure was of revenue or capital nature. In fact, the AO himself had allowed 100% of the expenditure both of revenue and capital nature and the disallowance was only the additional 50% amount which, again, the CIT (A) had found and correctly so, in the opinion of this Court, ought not to have been disallowed. Recently, in Maruti Suzuki India Limited Vs. UOI & Anr case [2017 (9) TMI 387 - DELHI HIGH COURT] has held "The legislative intent behind this provision is to encourage innovation, research and development in India and non-grant of the benefit under Section 35 (2AB) defeats the legislative intent." In that view of the matter, the Court has no hesitation in holding that the Assessee is entitled to the full benefit of Section 35 (2AB) and that the ITAT was in error in remanding this issue to the AO for a fresh decision. Disallowance made under section 14A - assessing officer failure to record his satisfaction in terms of Section 14A(2)/(3) and establish direct/ proximate nexus of expenses with the earning of exempt dividend income? - Held that:- In this case, a perusal of the AO's reasoning shows that the AO has merely conjectured that there is an inbuilt cost even in passive investment as also incidental expenditure like collection, telephone, follow up etc., The AO thus concludes that the expenses are embedded as indirect expenses. This is not as per the requirements of Rule 8D. There is no satisfaction recorded `based on the accounts of the assessee'. The AO simply presumes that since the exempt income exists and is being claimed by the Assessee, some portion of the expenses ought to be added back. This is not sufficient as per the law. Once this mandatory requirement is itself not fulfilled, in terms of the law explained by this Court in Maxopp Investment Ltd. v. CIT, [2011 (11) TMI 267 - Delhi High Court] the question of remanding the matter to the CIT(A) and to call for a remand report from the AO for the purposes of rectifying this jurisdictional defect simply did not arise. In this context, the Court also notices that in the order passed by the AO on 28/30th December 2016 pursuant to the impugned order of the ITAT on remand, the AO had simply repeated his entire assessment order passed in the first instance. Be that as it may, the Court is of the view that the ITAT erred in overlooking the correct legal position in remanding the matter to CIT (A). Appeal in favour of the Assessee and against the Revenue

  ---

• 2017 (9) TMI 1042
  Reopening of assessment - reasons to believe - whether the respondent was duty bound to pass a separate speaking order on the objections raised by the petitioner for reopening? - Held that:- The Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (2002 (11) TMI 7 - SUPREME Court) held that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. This procedure has been carved out in GKN Driveshafts (supra) binds not only the assessee, but the revenue as well. Thus, the procedure, which was required to be followed by the respondent is to dispose of the petitioner's objections by passing a speaking order. Admittedly, in the instant case, this has not been done by the respondent, but the respondent seeks to sustain the impugned assessment order stating that in the first few paragraphs of the order, he has dealt with objections and disposed of accordingly. Unfortunately, the manner in which the respondent has decided the issue is wholly unsustainable in law. The purpose for passing a separate speaking order on the objections is with a view to afford an opportunity to the assessee to question such an order, if he is aggrieved. The respondent by passing the impugned order has taken away such valuable right from the petitioner inasmuch as the impugned proceedings is an order of assessment under Section 143(3). Therefore, if an order of assessment has to be challenged, necessarily an appeal has to be preferred and only in rarest of rare case, Courts would entertain challenge to assessment orders in writ proceedings. Thus, the procedure adopted by the respondent is completely flawed, which goes to the root of the matter, thereby, vitiates the entire proceedings. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 1041
  Revision u/s 263 - validity of notice - notice issued on wrong address - Held that:- Held that:- The notice having been given initially at the wrong address and thereafter posted to the correct address just two days prior to the said hearing and the said notice also having been returned unserved due to the reasons which are not decipherable, the requirement under Section 263 (1) of the Act is not satisfied. In Chandra Agencies (2010 (10) TMI 849 - Delhi High Court ) this Court has gone to the extent of holding that refusal by the Assessee’s son to receive the notice under Section 148 of the Act does not constitute good service. This Court has also examined the question as to whether an opportunity of hearing could now be afforded to the Appellant. However, Section 263 (2) of the Act is a clear bar for any order being passed pursuant to a notice under Section 263 of the Act, after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Thus, there is an outer limit in the statute under Section 263 which, in the present case, is 31st March, 2013. Since, no useful purpose will be served in giving an opportunity to the Appellant of being heard at this stage, this Court answers question No.1 in the negative i.e. in favour of the Assessee and against the Revenue.

  ---

• 2017 (9) TMI 1040
  Transfer of cases u/s 127 - reasons for change in jurisdiction - Held that:- Even though an assessee may not have a vested right to insist that his assessment be completed only at one place or by a particular Assessing Officer, nevertheless, the reasons for transfer must be weighty enough to offset against such personal inconvenience of an assessee. In exercise of power under section 127 thus we are concerned with larger public interest on one hand and personal inconvenience on the other. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a different conclusion would be extremely limited. It is by now well settled that judicial review against the administrative order in exercise of writ jurisdiction, the Court is concerned with the decision making process and not the final decision itself. Unless the reasons which prompted the competent authority to transfer the case can be stated to be wholly irrelevant or arbitrary, the Court would not interfere with such reasons. The petitioner is a part of group companies which were subjected to common search action. The assessments of all 42 group companies are being centralised at one place. In view of the judgment of this Court in case of Shree Ram Vessel Scrap P. Ltd.(2013 (10) TMI 982 - GUJARAT HIGH COURT) we find no reason to interfere.

  ---

• 2017 (9) TMI 1039
  Scope of revision u/s 263 - order erroneous and prejudicial to the interest of Revenue - Held that:- Without commenting in any manner and concluding that the invocation of the power was justified, the Tribunal has disposed of the matter. In a way it has made a short shrift or resorted to a shortcut. We do not think that this is a satisfactory way of deciding appeals and as a last fact finding authority. It was incumbent on the Tribunal to have gone into the facts and circumstances and equally the legal issue in depth and it could have arrived at a different conclusion or could have maintained the order of the Commissioner but with independent and satisfactory reasons. There being no independent application of mind, we do not think that the initial order can be sustained. Hence, we proceed to admit this appeal on the following substantial questions of law: “(A) Whether, on the facts and in the circumstances of the case, and in law, the revision under section 263 of the Income Tax Act of the assessment order was called for? (B) Whether, on the facts and in the circumstances of the case, and in law, the revision order passed by the Respondent under section 263 of the Income Tax Act, 1961 was bad, illegal and without jurisdiction?”

  ---

• 2017 (9) TMI 1038
  Disallowance of liquidated damage - allowable business expenditure u/s 37 - nature of expenses - Held that:- Section 37 of the Act is the residuary provision granting deduction of an expenditure not being expenditure of the nature of capital expenditure or personal expenses of the assessee, which is laid out or expended wholly and exclusively for the purposes of business or profession and not specified in the preceding sections 30 to 36 of the Act. Explanation to section 37(1) would clarify that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. Where an assessee has to pay damages to other party to fulfill the contract entered into by him in the ordinary course of his business, the amount of damages to be paid is allowable deduction if it is in the ordinary course of business and is not opposed to public policy. See Jamna Auto Industries vs. Commissioner of Income Tax reported [2008 (1) TMI 62 - PUNJAB & HARYANA HIGH COURT] As noted, the expenditure in question was purely in relation to the assessee's normal business activity and was inherent part of its business transactions. The expenditure was certainly not incurred for any purpose which is an offence or which is prohibited by law. The Tribunal therefore was perfectly justified in granting such expenditure. - Decided in favour of the assessee

  ---

• 2017 (9) TMI 1037
  TDS liability - payment to the parties who brought the samples for testing and reports at the assessee's door steps - arrangement as a principal to agent relationship - Tribunal assumes by terming the whole arrangement as a principal to agent relationship, that it is the appellant/assessee who is paying the money and therefore, for such services for which money is paid, the assessee is obliged to deduct tax at source Held that:- The appellant/assessee says that it is a sample testing laboratory. The samples are not collected from the patients directly by the appellant/assessee. Instead, the assessee renders services to those sample collectors who visit the patients and thereafter, the samples are brought for testing by such sample collectors to the appellant/assessee. There is no privity of contract between the appellant and the patients. Secondly, the sample collectors do not collect samples exclusively for the appellant and they are free to send the samples collected by them for testing to any other laboratories. Therefore, this is a principal to principal relationship. The decision of the coordinate Bench of the Tribunal at Delhi in the case of SRL Ranbaxy Ltd. (2011 (12) TMI 84 - ITAT DELHI ) would therefore, bind the authorities. We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by this single paragraph conclusion. There is absolutely no discussion of the law and why the coordinate Bench decision rendered at Delhi is either distinguishable on facts or inapplicable. There is no discussion, much less any finding and conclusion that the order of the First Appellate Authority is perverse or is contrary to law. There are no infirmities, much less serious errors of fact and law noted by the Tribunal in the order of the Commissioner, which the Tribunal is obliged to and which order is therefore interfered by the Tribunal. The Tribunal should have, independent of the statements, referred to such of the materials on record which would disclose that the assessee has entered into such arrangements so as to avoid the obligation to deduct the tax at source. If the arrangements are sham, bogus or dubious, then such a finding should have been rendered. Therefore, we are most unhappy with the manner in which the Tribunal has decided these Appeals. We have no alternative but to set aside such order and when the last fact finding authority misdirects itself totally in law. It fails to perform its duty. It has also not rendered a complete decision. Once the Tribunal was obliged in law to examine the matter and reappraise and reappreciate all the factual materials, then it should have performed that duty satisfactorily and in terms of the powers conferred by law.

  ---

• 2017 (9) TMI 1035
  Reopening of assessment - sufficiency of material available with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment - bogus purchases - Held that:- When fresh material was unearthed by the department through the investigation wing who had inquired into the transactions of M/s. S.R. Sales Corporation neither the question of change of opinion nor the concept of full disclosure may have a bearing. If the purchases of the assessee from M/s. S.R. Sales Corporation were bogus, sales and the entries were in the nature of accommodation entries, merely because the assessee disclosed such entries in the return filed and also showed such purchases in the books of accounts would hardly be sufficient to advance the arguments of full and true disclosure. The question of sufficiency of material available with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment must be seen in light of limited jurisdiction, review and the self restraint imposed by the courts at the threshold stage. In a writ petition, the court would be primarily concerned with the question whether the Assessing Officer had information enabling him to form a bonafide belief that income chargeable to tax had escaped assessment. The court would not evaluate the evidence at that stage nor is the Assessing Officer expected to demonstrate with certainty that the addition will certainly be sustained in the reassessment proceedings. What is required at this stage to enable the Assessing Officer to issue the notice for reopening the assessment is the tangible material on record upon consideration of which he can form a reasonable belief that income chargeable to tax had escaped assessment. Such belief has to be one which is formed bona fide upon perusal of the materials at his command and unless it can be stated that the formation of the belief is perverse in the sense no reasonable person could on the available material on record form such a belief, the court would not interfere with the notice for reopening. - Petition dismissed.

  ---

• 2017 (9) TMI 1034
  The Appeal admitted on the following substantial question of law : “(1) On the facts and circumstances of the case and in law the Hon'ble I.T.A.T. erred in holding that the assessment was bad in law when it had itself in its order held that there was a typographical error while taking approval in the sense that the year was wrongly mentioned as Asst. Year 2001-2002 instead of 2000-2001 ignoring that the mistake is remedial in view of section 292B of the Income Tax Act and does not render the assessment illegal and null and void ?” The Registrar (Judicial) / Registrar, High Court, Original Side, Bombay to ensure that the original record in relation to this Appeal is summoned from the Tribunal and offered for inspection of the parties. This paper-book is treated sufficient for the purpose of admission of this Appeal. However, the Registry must further ensure preparation of complete paperbook in accordance with the Rules. The Registry, in the first instance, must send intimation of admission of this Appeal, enclosing therewith a copy of this order so as to enable the Tribunal to act accordingly.

  ---

• 2017 (9) TMI 1033
  Application for registration under section 12-AA - the date of application for registration under section 12-AA would be the date on which the application was originally made i.e. 20/21.11.2000 or the date on which subsequent application/representation dated 30.09.2004 was filed - Held that:- When registration is granted it will be operative from the date of the order and the benefit of sections 11 and 12 of the Act on the basis of registration would accrue from the date of the commencement of the financial year in which the said order is passed or the application is moved provided nothing contrary to it is prescribed in the order directing for registration of the society/institution. Thus in the present case as the society was granted registration under section 12AA of the Act specifically w.e.f. 30.09.2004, the benefit of sections 11 and 12 of the Act available on registration would be effective from 01.04.2004 the date of the commencement of the said financial year. The date of filing the original application for registration by the society has no relevance more particularly when the said application was rejected and the proceedings has commenced de novo with the filing of another application for the registration by the society. - Decided in favour of the revenue.

  ---

• 2017 (9) TMI 1032
  Exemption u/s 11 eligibility - proof of charitable activities - Held that:- First Appellate Authority has rightly concluded that Eklavya Foundation is engaged in social cause without any profit motive and A.O. alleged that it is not an educational institution and is carrying out business activities and it is not maintaining separate books of accounts, all these allegations are misconceived notions of the A.O. After going through the impugned order we find that the Ld. First Appellate Authority has rightly allowed the appeal of the assessee, after taking into consideration the impugned order, case laws cited, paper book filed. We find no infirmity in the impugned order which accepted the contentions of the assessee that Eklavya Society is engaged in charitable purpose as defined u/s 2(15) of the Act. After going through the rules and regulations of Eklavya Foundation it appears that the society is purely engaged for charitable purpose and the society is also granted registration u/s 12A of the Act vide order no.1696 of DIT(E) dt. 15.12.1984 and notified u/s 80G(5) of the Act dt. 27th August,2007. The society is solely engaged in charitable activities and is not running with any profit motive. - Decided against revenue

  ---

• 2017 (9) TMI 1031
  Exemption u/s 11 - denial of claim because the assessee transferred the net profit for non-charitable purpose which is clear violation of section 11(1) and 11(1)(b) - Held that:- We have noted that assessee is just transferred the above money to the infrastructure development fund as well as general reserve fund to be used for the purpose of the object of the trust of the assessee society and not for any other object other than the object of the society. Therefore, the observation of the Ld. assessing officer to this extent is incorrect. Further more, the assessee has merely passed the accounting entries in books of accounts transferring from the excess of income over expenditure account to these 2 different accounts. Therefore according to us there is no infirmity in the order of the Ld. CIT (A) in holding that assessee has not applied the profit for noncharitable purposes. In the result ground No. 1 of the appeal of the revenue is dismissed. Allowance of the depreciation on fixed assets the cost of which has already been allowed to the assessee as application of funds originally - Held that:- Allowance of depreciation on assets on assessee trust allowed. No double deduction. See DDIT versus Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT ] Caution money unexplained - Held that:- The brief facts of the case is that assessee has received ₹ 3.27 lakhs. During the year on account of caution money which are held by the Ld. assessing officer as business. As the Ld. CIT appeal has already held that assessee is not carry on any business but carrying on activities of education covered under section 2 (15) of the income tax act, which is remained unchallenged the amount of caution fee is also part of the educational activities. Therefore, we do not find any infirmity in the order of the Ld. CIT (A) in holding that caution money is for the educational activities and part of that on which exemption cannot be denied. - Decided against revenue

  ---

• 2017 (9) TMI 1030
  Exemption u/s 11 - transport and hostel facilities surplus considered as business income of the assessee society - proof of charitable activities - Held that:- As observed that the statutory obligation of maintenance of the hostel, which involved supply, and sale of food was an integral part of the objects of the Institute nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Further meals being supplied in a hostel to the scholars, visitors, guest faculty etc. can not be exigible to sales tax where main activity is academics as held in Scholars home Senior Secondary School [2014 (6) TMI 793 - UTTARANCHAL HIGH COURT] We are also not averse to considering the latest legal developments too where in the recently introduced new legislation of Goods and service tax it is provided that no GST would be chargeable on the hostel fees etc recovered from the Students, faculties and other staff for lodging and boarding as they are engaged in education activities. Therefore we reverse the finding of the lower authorities and held that transport and hostel facilities surplus cannot be considered as business income of the assessee society which is mainly engaged in business activities and these activities are subservient to the main object of education of the trust. In the result 1 – 3 of the appeal of the assessee are allowed. Disallowance of depreciation on the assets which have already been claimed and allowed to the assessee as application of funds - Held that:- Allowance of depreciation on assets on assessee trust allowed. No double deduction. See DDIT versus Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] - Decided in favour of assessee.

  ---

• 2017 (9) TMI 1029
  Penalty u/s 271(1)(c) - additional income included in the return filed under section 153A - disclosure made in the statement of Sh. Dharmendra Bhandari, Director of the assessee company recorded under section 132(4) - effect of amendment in Explanation 5A to Sec 271(1)(c) - Held that:- There cannot be any dispute to the fact that once a return is filed pursuant to notice under section 153A, the same is treated as return filed under section 139 of the Act [refer clause (a) of section 153A(1)]. Further, concealment/ furnishing of inaccurate particulars of income/undisclosed income, has to be necessarily seen vis-a-vis return filed by the appellant Once, income it is declared which is accepted as such under section 139 r.w.s. 153A of Act, then, the question of there being concealment/ furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the present case the entire 'undisclosed income' was declared by the appellant in the statement recorded during search and the same was also disclosed in the return filed pursuant to notice issued under section 153A, clearly goes to show the bona fides of the appellant, not warranting imposition of penalty under section 271 (l)(c) of the Act. See Alok Bhandari case [2017 (9) TMI 954 - ITAT DELHI] Also the amendment in Explanation 5A to Sec 271(1)(c) made effective by Finance Act, 2009 with retrospective effect from 01.06.2007 cannot be made applicable to assessee’s case because both original return and the revised return u/s 153A of the Act have been filed before the amended provisions were brought into the statute (which received assent of President on 13.8.2009). - Decided in favour of assessee.

  ---

• 2017 (9) TMI 1028
  Disallowance of labour wages expenses, embroidery charges, fabrication expenses, and power and fuel expenses - assessment u/s 144 - AO has made the disallowances at the rate of 50% of all the expenditure - Held that:- In view of the fact that assessee is shown a receipt of ₹ 25 Lacs and out of which all these expenditures have been incurred by the assessee. Had the assessing officer has any doubt about the payment in cash, then such doubtful expenditure should have been disallowed and not ad hoc expenditure should be disallowed. It was also not pointed out by the Ld. assessing officer that whether there was any violation of the provisions of section 40A (3) of the income tax act, then also only such expenditure are disallowable which are hit by that provision otherwise the case payments are not prohibited as per the income tax act if they are below the limit specified therein. Further, the assessee has provided the details addresses of those service providers as appearing on the printed copy of the bills received by the assessee from those embroiderers and fabricators. There confirmation was also submitted at the time of original assessment. It was also not informed to the assessee that such persons were issued any notices and they have not remained present. It is also required to look that the nature of the business of the assessee, which is in the nature of a very small scale, and the assessee is getting work done through these small workmen who do not have any permanent place of residence. In view of this, we do not find any reason to disallow ad hoc expenditure by the Ld. assessing officer. - Decided against revenue. Unexplained cash credit - Held that:- As assessee has failed to discharge its initial onus with respect to credit of these parties were not trade creditors but lenders to the assessee for payment of sums to the other labourers, in absence of any confirmation, the addition has been correctly made by the Ld. assessing officer under section 68 of the income tax act - Decided against revenue.

  ---

• 2017 (9) TMI 1027
  Unexplained credits received by the assessee company from Shri SK Gupta - Held that:- The facts of the relevant issue involved in the appeal are similar to the facts discussed in the appeal of the assessee for assessment year 2004 – 05. During the year the information found from the laptop of Mr. S. K. Gupta was that assessee has obtained and accommodation entry of ₹ 5 255000 from that particular person. The assessee could not produce the basic details before the Ld. assessing officer on the issue. The facts of the impugned addition remain the same as they were in the appeal of the revenue for assessment year 2004 2005. The CIT A also deleted the addition on the reasons given by him in the appeal of the assessee for assessment year 2004 – 05 before him. As we have already confirmed the addition allowing the appeal of the revenue for assessment year 2004 – 05, we do not have any reason to deviate from the reasons for decision stated therein. In view of this, we allow the appeal of the revenue for assessment year 2005 – 06 reversing the finding of the Ld. CIT appeal in deleting the addition of ₹ 52555000/-on account of unexplained income with respect to accommodation entries provided by Sh. S. K. Gupta, who is beneficiary is assessee.

  ---

• 2017 (9) TMI 1026
  Reopening of assessment - eligibility deduction under section 80 IB - Held that:- CIT(A) has categorically held that assessee’s investment in plant and machinery is below the specified limit and therefore it is entitled to deduction under section 80 IB of the income tax act. It was further held by him that in earlier years. The deduction has not been disturbed and therefore the eligibility conditions of the assessee are satisfied. Ld. departmental representative could not point out any infirmity in the order of the Ld. CIT(A) before us with respect to deduction under section 80IB claimed by the assessee. He also could not controvert that investment in plant and machinery of the assessee is higher than the prescribed limit. In view of this we do not find any infirmity in the order of the Ld. CIT(A), in allowing the appeal of the assessee by allowing the relief under section 80 IB On reopening issue Before us no arguments were advance by the Ld. authorised representative. With respect to the same and we have also perused the order of the Ld. CIT(A), wherein this particular argument with respect to the jurisdiction was also not challenged. In view of this we are not inclined to accept the claim of the assessee against the jurisdiction assumed by the assessing officer. In view of this we dismiss the cross objection of the assessee. Validity of assessment under section 144C - TPA - period of limitation - need for draft assessment order - Held that:- It is an admitted fact that Ld. Transfer Pricing Officer has not proposed any variation to the arm’s length price of the international transactions entered into by the assessee. Therefore, the right course of action for the Ld. assessing officer was to pass an assessment order under section 143(3) of the Income Tax Act and not to pass the draft assessment order. The above issue is squarely covered in favour of the assessee by the decision of the Hon’ble Delhi High Court in case of ESPN STAR SPORTS MAURITIUS S. N. C. ET COMPAGNIE(Now Known as Ess Advertising (Mauritius) S. N. C. ET Compagnie) [2016 (4) TMI 45 - DELHI HIGH COURT ] The final assessment order passed by the Ld. assessing officer is beyond the limitation period which should have been passed on or before 31st. December 2012, but was passed on 16/12/2013. In the result ground No. 1 of the appeal of the assessee is allowed and the assessment order passed by the Ld. assessing officer is quashed.

  ---

• 2017 (9) TMI 1025
  Rejecting application u/s 80G (5) - non charitable activities - non providing proper opportunity before rejecting the application for registration - Held that:- We find that the Ld. A.R. has filed an affidavit of Shri Amit Kumar Singhal who is an employee of the Samiti in which he has stated that he was fully acquainted with the facts of the case and produced salary registers and other books of accounts before the Ld. CIT(E) which have been examined by the Ld. CIT(E). It was also submitted that voucher of travel expenses of ₹ 4,970/- incurred for travel to Lucknow on 22.8.2016 was also filed. The Ld. CIT(E) has clearly stated that no books of accounts, salary details and that the society has not provided any details. In view of the totality of the facts and circumstances of the case, the matter is sent back to Ld. CIT(E) for a fresh hearing in accordance with law after affording an opportunity to the assessee. Appeal filed by the assessee society is allowed for statistical purposes.

  ---

• 2017 (9) TMI 1024
  TPA - comparable selection - Held that:- Assessee is primarily engaged in providing technical support to its associated enterprises (AEs). The technical support services provided by the assessee to its AEs relate to provision of erection, installation, commissioning, warranty administration, operation and maintenance, inspection, renovation and modernization services for power plants and turbines, this companies functionally dissimilar with that of assesse need to be deselected from final list. Tax deductible at source raised by the DRP and the consequential disallowance u/s 40(a)(i) - AR submits that while computing the disallowance u/s 40(a)(i) of the Act the AO should have considered the factual situation that has a bearing on the computation of disallowance u/s 40(a)(i) - Held that:- From a reading of the assessment order, we find that the AO did not consider any further facts while complying with the directions of the DRP, as such, this fact needs verification at the end of the AO, after affording an opportunity to the assessee to furnish the requisite details that have a bearing on the disallowance u/s 40(a)(i) of the Act. We, therefore, set aside this aspect to the file of the AO.

  ---

• 2017 (9) TMI 1023
  Transfer pricing adjustment in respect of international transaction related to purchase of capital goods - deferred revenue expenditure - Held that:- We find that the first contention of the assessee in this regard is that the same computation of the assessee with regard to purchase of capital assets was accepted by the Revenue in preceding assessment year as well as in subsequent assessment year. This proposition has not been disputed by the Revenue. In these circumstances we note that there is no change in the facts and circumstances of the case. No reason has been brought out by the authorities below as to why they are making deviation. There is no doubt that res judicata does not apply to taxation proceedings. Still Courts have uniformly held that unless there is a change in the facts or law, rule of consistency and uniformity needs to be adhered. Selection of comparable - Held that:- Assessee is not engaged in any full-fledged trading activity of heavy machinery, rather are engaged in simpler functions of purchasing the fixed asset from its associated enterprise which the AE purchases from third party. The Associated Enterprise purchase fixed on behalf of the assessee and sell them with cost plus mark-up of 10%, thus companies functionally different with that of assessee need to be deselected from final list of comparability. Disallowance with respect to advertisement and sales promotion expenses - Held that:- Assessee has incurred expenditure on advertisement and sales promotion. The assessing officer & DRP have held on an adhoc basis that a certain portion out of the above is aimed at brand building and the same is to be held as capital expenditure and the assessee can be granted depreciation their upon. When this is considered in light of the fact that the brand doesn't belong to the assessee and it is not the case of the revenue that assessee has incurred expenditure aimed at benefiting the associated enterprise this addition is clearly not sustainable. When the brand doesn't belong to the assessee there is no question of incurring expenditure over building of brand and assessee creating any intangible rights assignable over a number of years. Deferred revenue expenditure - there is no question of disallowance of the same as it is also settled law that in taxation laws there is no concept of deferred revenue expenditure. The case laws referred by the learned Counsel of the assessee duly indicate that expenditure incurred by the assessee company to maintain its corporate image which resulted in increased sales of the product is to be allowed as revenue expenditure. We find that these case laws are duly applicable to the facts of the present case. We set aside the orders of the authorities below which allocated ad hoc percentage out of advertisement and sales promotion as depreciable capital expenditure. We hold that the entire expenditure is a revenue expenditure allowable as such.

  ---

• 2017 (9) TMI 1022
  Revision u/s 263 - Claiming deduction u/s 80IB(10) and sec. 80IA(4) - profits related to TDR receipts less cost related thereto in the form of purchase of land, construction of flats etc. - the assessee determined the cost relating to TDR sales on estimated basis and allocated the same against the proceeds of TDR sales, accordingly it computed profit from TDR sales and claimed the same as deduction u/s 80IA(4) as it is the claim of the assessee that it is involved in development of infrastructure facility - Held that:- In the instant case, the Ld Pr. CIT has not, for the reasons discussed in the preceding paragraph, shown that the view taken by the assessing officer was not sustainable in law. On the contrary, the assessee has demonstrated that it was constrained to make additional claim in view of the cancellation of the airport contract and further the said additional claim was not in the form of any additional expenses as presumed by Ld pr. CIT, but in the form of allocation of actual expenses. We have noticed that the assessee had earlier allocated the estimated expenses between the two streams of income, viz., (a) TDR receipts and (b) Commercial space in Airport. After cancellation of airport contract, it had allocated actual expenses against TDR receipts. It is quite common in the case of construction contracts that the income and expenses are disclosed on estimated basis in the initial years. When the whole scenario changed, the Tribunal found merit in the plea of the assessee that the allocation of expenses on the basis of then prevailing conditions should be changed. We have already expressed the view that the claim of the assessee as well as acceptance of the same by the AO cannot be said to be unsustainable in law, if one considers the principle of taxing the real income. Hence we agree with the contentions of the assessee that the view taken by the AO is a possible view, in which case, the impugned revision orders cannot be sustained. Accordingly we set aside the impugned revision orders passed by Ld Pr. CIT. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 1021
  Addition u/s 68 - unexplained cash deposits - proof of gifts receipts - Held that:- CIT(A) after considering the facts of the case has rightly held that the assessee has only formulated a story to explain the cash deposits in the bank account, which was rightly rejected by the first appellate authority. The Ld. CIT(A) has also rejected the plea of the assessee with regard to peak amount to be adopted as ‘unexplained cash deposits’ on the ground that the said plea is only possible if the assessee would have proved it by any evidence regarding the nexus of cash deposits with that of withdrawals and was again deposited in the bank account but since assessee has failed to submit reconciliation statement and nexus between cash withdrawal and cash deposits, therefore, the entire plea raised by the assessee was rightly found to be unsustainable and unreliable. Apart from that, no new evidence or material have been brought before us to prove and support their plea put forth before us and, therefore, we do not see any reason to deviate from the finding given by the CIT(A) while dealing with the said issue. In our considered view, the first appellate authority has passed a well-reasoned order and we do not find any reason to take a different view. However, since it is not in dispute that the out of 33 Parties 17 Parties have confirmed the gifts having been given to the assessee, we are of the view that these gifts should be treated as genuine and they should not be treated as unexplained cash credits u/s 68 of the Act. Accordingly, we direct the Assessing Officer to delete the addition to the extent of the gifts received from these 17 parties as listed out in the assessment order and pass orders accordingly. - Decided partly in favour of assessee.

  ---

• 2017 (9) TMI 1020
  Addition u/s. 68 - basis of AIR information, the assessing officer issued notice to the assessee under section 143(2) and further issued notice under section 142(1) - Held that:- Assessee has furnished copy of cash book before us showing the deposit of ₹ 5,00,000/- on 15.11.2010 and further ₹ 5,00,000/- on 12.01.2011 with Tamilnad Bank (P) Ltd. We have seen that the assessee filed detailed reply before the AO along with cash book and again before the ld. CIT(A) vide submission dated 21st July 2014. From the orders of authorities below, we noticed that the addition was made by AO solely on the basis of AIR Information and without any corroborative evidence. The Revenue/AO has not made any independent enquiry. Instead of examining the evidence furnished before the assessing officer, the assessing officer merely relied upon the AIR Information which is not sustainable in the eyes of law. Revenue has not made any enquiry to find out whether the AIR information was correct or not. The additions made solely on such borrowed information are not sustainable in the eyes of law. Addition u/s 68 is not sustainable - Decided in favour of assessee. Addition u/s 40A(2)(b) - AO disallowed the interest payment in excess of 12% - assessee failed to prove the nexus of Directors remuneration as well as the interest expenses - Held that:- The Hon’ble Allahabad High Court in Abbas Wazir (P) Ltd. Vs. CIT [2003 (9) TMI 50 - ALLAHABAD High Court ] held that while invoking the provision of section 40A(2) of the Act the reasonableness of the expenditure for the purpose of business has to be seen from the point of view of businessmen and not that of Revenue, the approach has to be seen that the reasonableness must be looked into from the businessmen’s point of view. We have seen that the assessee paid interest @ 15% to 18% to related parties. In our considered opinion the interest paid by the assessee is not unreasonable. The assessing officer has not given any specific reason as to why the interest paid by assessee is unreasonable. Considering the peculiarity of the facts of the case the disallowance is deleted.

  ---

• Customs

• 2017 (9) TMI 1019
  EPCG scheme - whether under FTP 09-14 read with Handbook of Procedures, the export obligation under the applicable EPCG scheme is to be computed as multiple of the duty saved, as claimed by the petitioner, or as multiple of the depreciated value on the capital goods as insisted upon by the respondents? - amendment of the Authorisation enhancing the export obligation - jurisdiction. Held that: - the purpose of Circular No. 35 (RE-99)/99-2000 was to clarify the manner in which export obligation was to be computed in case of a firm or a company having multiple units and entities having a standalone unit. The FTP as applicable prior to FTP 04-09 provided for computation of export obligation on the basis of multiple of the capital value of the goods imported. Thus, the mention of export obligation as equivalent to six times or eight times the depreciated value, in the circular no. 35, was in conformity with the FTP applicable at the material time. A plain reading of CIRCULAR NO. 84 (RE:2008/2004-09), indicates that the central purpose of the circular was not to define the quantum of export obligation but to provide a clarification with regard to maintenance of annual average turnover. Clause (i) of the aforesaid circular clarified that a standalone unit was not required to maintain an annual average export obligation - However, in case where the firm or a company had multiple units, average export obligation after debonding of unit would be fixed by excluding the exports made by the debonded units from the total exports of the firm. If the said circular is read in the context of the FTP 04-09, it is at once clear that the reference to computation of export obligation on the basis of depreciated value of machinery, is inapposite and contrary to the provisions of the FTP 04-09. However, it appears that this error had crept into the circular because a similar clarification was provided by the Policy Circular no. 35 issued on 01.10.1999 and that circular (Circular no. 35) referred to additional export obligation to be six times or eight times the depreciated value of goods (which was in conformity with the then FTP). The same measure seems to have been copied in Circular no. 84 completely ignoring the material change in the manner of calculating the export obligations as effected by FTP 04-09; the measure of export obligations as provided in FTP 04-09 and FTP 09-14 had changed to multiple of duty saved and not the value of capital goods. There is thus much merit in Mr. Parikh’s contention that reference to the export obligation as being equivalent to six / eight times the depreciated value in Circular no. 84 dated 30.04.2009 is erroneous. However, even if it is accepted that the same is not an inadvertent error - which in this court’s view it is - but a conscious decision taken by the DGFT, the same is nonetheless not sustainable as such provision runs contrary to the applicable FTP (FTP 09-14). it is not necessary to examine the question, whether DGFT had the power to amend the authorisation - petition allowed - decided in favor of petitioner.

  ---

• 2017 (9) TMI 1018
  100% EOU - Scrap - SION - generation of scrap at abnormally high levels - undervaluation of scrap - interpretation - Held that: - It is clear from the decision of the committee that it decided to ratify the norms for the items manufactured by the assessee. It is also noted in said letter that the norms were also supported by actual consumption/scrap data - expression Ratification means the making valid of an act already done. DGFT has retrospective validated higher norms for the appellant. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1017
  Project import - concessional rate of duty - import of second hand capital goods without a license under the import policy only under Project Import Regulations on actual user basis - confiscation - penalty - Held that: - it is evident that the second hand capital goods were used in the project, for which concessional rate of duty was availed - the provisional assessment which were ordered at the time of import were finalized denying the benefit of concessional rate of duty. Accordingly, differential duty has been demanded and the same has also been paid by the appellant. In the case of the appellant, the goods were allowed to be imported at concessional rate and relaxation of Import Trade Control Regulations, only subject to actual user condition and observance of the Project Import Regulations. Since the appellant has failed to satisfy the associated condition, it is to be considered that the goods are liable for confiscation under the provisions of Section 111(o) ibid - The appellant has claimed that second hand capital goods were allowed for import freely and further that actual user condition will no longer be applicable since five year period after import is already over. Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated. Consequently, we are of the view that the confiscation of the goods ordered by the Adjudicating Authority under section 111(o) ibid is to be upheld - keeping in view the fact that the goods were imported a long time ago in the year 1998-1999, the redemption fine and penalty imposed u/s 125 and 112(a) ibid are on the higher side - redemption fine reduced to ₹ 1.00 Crore u/s 125 and the penalty to ₹ 50.00 lacs u/s 112(a). Appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (9) TMI 1016
  Revocation of CHA license - forfeiture of security deposit - failure in observance of the time limit - Regulation 20 of the Customs Brokers Licensing Regulations - Held that: - Regulation 20 stipulates that after issuance of SCN, an Inquiry Authority has to be appointed to look into the allegation, who is required to submit inquirty report within 90 days of this appointment as per Regulations 20 (5) - In the present case, it is seen from the records that the Inquiry Officer has submitted his report on 16.03.2017, after a delay of eight months and six days. The time taken by the Inquiry Officer is very much beyond the limit of 90 days prescribed in Regulations 20 (5) - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1015
  Penalty u/s 112 (a) of the Customs Act, 1962 - case of Revenue is that the importer situated in Maharashtra has chosen to import the sensitive items through ICD Tughalakabad. The CHA having full knowledge of the provisions of Customs Act have not taken adequate and necessary precautions to avoid such imports in violation of various provisions of Customs Act - Held that: - Section 112(a) stipulates that a person shall be liable to penalty, who, in relation to any goods does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an act - in absence of prior knowledge of possible mis-match of the documents and the goods, the CHA has no way of knowing the violations before hand - in the proceedings before the Commissioner, no evidence has been brought out about the prior knowledge of the appellants regarding violation of the provisions of Customs Act. Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences under Section 112 (a). For imposition of penalty under Section 112 (a), a positive act or omission is to be established - penalty set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1014
  Valuation - import of used garments - appellant did not have import license as required by DGFT - confiscation - Held that: - the present imports are in violation of import policy prevalent during the material time. As such, importer/appellant is liable for penal action. The goods are liable for confiscation. There can be no legal dispute on this aspect. It is relevant to note that the appellant/importer is fully aware of background and the quantum of enhancement and chose to waive the requirement of written show cause notice as well as the opportunity of being heard before a decision is taken by the Original Authority. In the present appeal, they assert summarily, contesting the findings of the lower authorities. The appellant did not offer any material evidence to support his claim that the used garments imported by them are any different from the used garments which were compared as per the standing instructions and prevailing import value during the material time. They were of fully aware of the background of enhancement including the violation of import policy with reference to the import consignments. The import in violation of import policy has been made with full knowledge. There is no sustainable ground in the present appeals to merit consideration - appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 1013
  Export of prohibited goods - red sanders - absolute confiscation - penalty - Held that: - it is clear that M/s. Max Shipping has failed to safely transport the customs cleared container to the gateway port. M/s. Max Shipping along with Shri S P Singh and Shri Navneet Bohra, MD have handed over the cargo to unauthorised persons which has facilitated the smuggling of ‘red sanders’ out of the country. Hence, all the three persons are liable to penalty for abetting the smuggling of red sanders under section of 114 (i) of the Customs Act. Hence the penalties imposed are upheld. The adjudicating authority has observed that Shri Tatar has failed to provide the contact details of Shri Abdul Jaffer Sattar. By his conduct and actions, Shri Tatar has facilitated Abdul Jaffer Sattar in fraudulent export of contraband ‘red sander’, therefore, penalties levied u/s 114(i) ibid on him are liable to be upheld. Appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 1012
  Jurisdiction - power of DRI to act as ‘proper officer’ and to issue SCN - Held that: - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

  ---

• 2017 (9) TMI 1011
  Exemption from payment of CVD - N/N. 30/2004-CE dated 09.07.2004 - denial on the ground that the condition of non-availment of Cenvat credit by the foreign manufacturer does not stand satisfied by the importer - Held that: - the assessee had not claimed the benefit of the notification at the time of filing Bills of Entry - The Hon'ble Supreme Court in the case of Share Medical Care vs. UOI [2007 (2) TMI 2 - SUPREME COURT OF INDIA], has observed that even if the claim of benefit under a particular notification is not made at the initial stage, the assessee cannot be estopped from claiming such benefit at a later stage - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1010
  Stay of Refund granted - evidence to co-relate the figures certified by Chartered Accountant and the Commissioner (Appeals) - Held that: - Chartered Accountants' certificate is not conclusive evidence as has been held by Hon'ble High Court of Madras in the case of Commissioner of Customs (Exports), Chennai V. BPI Ltd. [2010 (7) TMI 66 - MADRAS HIGH COURT], But Id. Commissioner (Appeals) has examined the Balance Sheet of the appellant to rule out bar of unjust enrichment since refund in question appears in the Balance Sheet as recoverable from the Departments - appeal dismissed - decided against Revenue.

  ---

• 2017 (9) TMI 1009
  Revocation of CHA license - forfeiture of security deposit - time limit as prescribed under Regulation 20 of Customs Brokers Licensing (Amendment) Regulations (CBLR), 2013 - Held that: - Regulation 20(5) provides the preparation of report by the enquiry officer within 90 days from the date of issuance of the notice under Regulation 20(1) of Customs Brokers Licensing (Amendment) Regulations, 2013 - In the present case, the enquiry officer has taken 8 months - Further, Regulation 20(7) provides that the Commissioner of Customs may pass the order within 90 days from the date of submission of the enquiry report. In this case, it has taken more than four months. The legislature has prescribed the time limit for taking steps in each and every stage in the sub-Regulations of Regulation 20. The Commissioner of Customs cannot ignore such time limit without assigning any reason or in an unusual situation - It is well settled principles of law that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1008
  Penalties u/s 112 (a) & 112 (b) of the Customs Act, 1962 - It was found that JVL diverted the imported goods in the open market in violation of the conditions of the exemption notification M/s JVL and its directors - Held that: - there is no serious attempt on behalf of the appellants to refute the findings of the Adjudicating Authority - It is apparent on the face of the records, that the appellants were involved in the evasion of Customs duty. Hence, the impositions of penalties on the appellants are justified - appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 1007
  Jurisdiction - pre-deposit - section 35F of the Central Excise Act - power of Tribunal to waive pre-deposit - Held that: - after the amendment of section 35F of the Central Excise Act, requiring an appellant to deposit per centage of the duty or penalties confirmed against them, Tribunal has no power to dispense with the condition of pre-deposits - appeal dismissed - decided against appellant.

  ---

• PMLA

• 2017 (9) TMI 1006
  Complaint u/s 5(5) of the Prevention of Money Laundering Act - Provisional Attachment Order - overriding effect of SARFAESI Act, 2002 viz. a viz. the provisions of PMLA-2002 - Held that:- Admittedly, neither the banks nor employees of these appellants are accused in any criminal proceedings nor any allegations against them that they are involved in the commission of alleged crime or generating proceeds of crime. The amounts of loan sanctioned are public money and they are entitled to get back their money by selling the mortgaged property as a first change. In these appeals, the appellant have raised the question of overriding effect of SARFAESI Act, 2002 over the PMLA-2002. The Adjudicating Authority has not discussed anything about the same. The Parliament has amended the SARFAESI Act, 2002 by inserting the section 31 B in the said Act w.e.f. 01.09.2016. The effect of the said amendment as already been discussed in our judgment dated 14th July, 2017. The facts and the legal issues involve in the present appeals are identical to the facts and the legal issues involved in the groups of matter which has been decided by this tribunal on 14.07.2017 . Thus we are of the considered view that the Impugned Order dated 16.06.2016 and the Provisional Attachment Order dated 17.12.2015 are not legally correct and liable to be set aside. In the light of above, the schedule ‘A’, ‘B’ and ‘C’ properties are released from the attachment and the appellant Banks may take the possession of these properties mortgaged with them as secured assets. It is noted here that PNBHF Ltd. Bank and ICICI bank, appellants in FPA- PMLA-1388/JL/2016 and FPA-PMLA-1423/JL/2016 respectively, during the course of pendency of the appeal prayed this tribunal to allow them to sell the mortgaged properties i.e. scheduled ‘A’ & ‘B’ properties below and after selling and adjustment of their dues to deposit the surplus, if any, with the respondent i.e. Enforcement Directorate. The State Bank of Patiala has not filed any such application. However, in the interest of justice, it is hereby ordered that the appellant banks to sell the schedule ‘A’, ‘B’ & ‘C’ properties in the presence of nominated officers of the respondent. The appellant banks after sell and adjustment of dues shall deposit the surplus amount with the respondent.

  ---

• Service Tax

• 2017 (9) TMI 1005
  Event management service - Reverse charge mechanism - Held that: - It is clear that the appellants are not having any transaction directly with the eminent speakers, who are to give speech in the Annul Summit organized by the appellant. Arranging such eminent speakers is one of the important ingredients of event management. In this aspect, the agents in foreign countries ensured the availability of persons to such event, for a fee. Such fee is a total gross amount to be paid by the appellant to the agent. The claim of the appellant is that such agents are acting as representative of the speaker and as such should be considered as one of the same, with no separate role in between - the activities of the foreign agents is covered by the statutory scope of event manager. Management Consultancy Services - pure agent - Held that: - It is clear that to be “Pure Agent”, that the provider of service has to make payment to the third party on behalf of the principal (service recipient) and such arrangement should be on actual basis with prior knowledge, in terms of the agreement. Conditions No.(iii) read with (iv) will make it clear that if the appellant is making payments as authorized by the service recipient on actual basis then such expenses shall not form part of the taxable value - On perusal of the documents submitted by the appellant in support of their claim for consideration as Pure Agent and also upon perusal of the agreement dated 1.8.2008 between these two parties, the impugned order is not sustainable in rejecting the claim of the appellant for consideration as pure agents. Business Support Services - re-imbursement from group companies for expenditure incurred on their behalf - Held that: - The appellants did not provide any infrastructure support service using any of their infrastructure or providing any service to other group companies. The infrastructure facilities were commonly shared and the third party was paid by the Nodal Company (appellant). Thereafter the said expenditure was apportioned with other group companies, who availed the same service - the appellants and other group companies are service recipient though the considerations were initially paid by the appellant and proportionately thereafter, distributed to other group companies - tax liability withheld. Interest on delayed payment of service tax - services provided to associated enterprises - Held that: - admittedly the appellants made entries of taxable considerations in their books of accounts. These entries relate to the period prior to the date of the said amendment. However, the appellants discharged the service tax liability much belatedly in Jan. 2009 and March, 2010 and March, 2011. These tax payments were with reference to entries made prior to 10.05.2008. The Original Authority confirmed the interest w.e.f. that date. The Board vide Circular dated 29.02.2008 clarified that for transaction between associated enterprise any credit/debit in the books of account shall be considered for tax liability in case of provision of taxable service - for entries made prior to 10.05.2008, no interest liability will arise. Time limitation - penalty - Held that: - The service tax liability was held to be enforceable on reverse charge basis only w.e.f. 18.04.2006. In such situation, it will not be correct to allege willful mis-statement, suppression or fraud against the appellant to demand tax for the extended period. The demand for normal period in terms of Section 73 can only be sustained - penalty also set aside. Appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (9) TMI 1004
  Valuation - reimbursable expenses - includibility - Held that: - the nature of services are such the appellants are managing participation of clients in certain mela, fairs, promotional activities of merchandise, managing events with a aim to propogate the products of the clients etc. - Held that: - exclusion of reimbursement expenditure should be based on pre-arrangement and on actual basis without any mark up. The appellants should have incurred expenditure and got the same reimbursed on actual basis, with supporting document, from the clients. Perusal of various work orders indicate that no such arrangement exist in the present case - Perusal of various work orders indicate that no such arrangement exist in the present case - The appellants are liable to service tax on the gross amount received. They cannot restrict their tax liability to only agency commission in view of the details given in the work orders examined by us. Time limitation - Held that: - A perusal of various work orders clearly shows that the appellants deliberately chose to discharge service tax only on the agency commission or fee which is a small portion of the gross amount. The claim for exclusion of other consideration on the ground that they are reimbursable expenditure is found not tenable. The appellant’s action of not paying service tax on the gross value and claiming bonafide belief is not acceptable - appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 1003
  Valuation - second contract - abatement of value - N/N. 1/06-ST dated 1.3.2006 - The Revenue sought to deny concession as claimed by the appellant on the ground that the gross value on the full taxable service has not been considered by the appellant while arriving at the abatement - Held that: - It is the claim of the appellant that they have all documentary evidence in support of their claim that such sale has in fact been done by them in pursuance of the second contract - there is no finding by the Original Authority on this aspect. The appellant are aggrieved - the Original Authority directed to re-examine the issue for a clear finding on the eligibility of the appellant for the benefit under N/N. 12/2003-ST. CENVAT credit - duty paying documents - denial on the ground that the input service did not mention PAN based registration number, which makes the document as ineligible to support the credit - Held that: - Though the appellants only pleaded that the eligibility of the credit cannot be denied on this ground as the fact of payment of service tax is not in dispute, we find this aspect also can be verified by the Original Authority. The fact of discharge of service tax by the appellant should be verified for invoking discretion under Rule 9 based on evidences submitted by the appellant. Appeal allowed by way of remand.

  ---

• 2017 (9) TMI 1002
  Business Auxiliary Services - appointment of general sales agents (GSAs) to perform various tasks - Held that: - there is no dispute on the fact that the appellant appointed general sales agents (GSAs) to perform various tasks on their behalf as mentioned in the relevant agreement - General Sales Agents on behalf of the appellant were required to perform various functions which are mainly in the nature of promotion and marketing of business of the appellant in their respective territories and towards their main function of promotion of the business of the appellant, the GSAs could undertake incidental and ancillary activities related to the main function. Services which have been mentioned above and which are covered under the definition of “Business Auxiliary Service (BAS)” and under the definition of “Maintenance or Repair Service” have been factually received by the appellant, though receipt is outside India. The appellant does not dispute the fact of receipt of these services. The appellant contests that these services have been provided to them wholly outside India and they have been received by their branches/entities outside India; therefore, they cannot be taxed under reverse charge mechanism contained in Section 66A of the Finance Act, 1994. However, the agreement made with the foreign vendors in case of repaired maintenance service also makes an express provision that service was to be provided both outside India and within India. But this provision that service was to be provided both outside and inside India will not affect the liability of Service Tax of the appellant. The fact is that the appellant was provided these services outside India and under “reverse charge mechanism” (Section 66A of the Finance Act, 1994) the appellant is liable for payment of Service Tax for such services - thus, from the provisions of Section 66A given above, it is clear that the appellant is liable for payment of Service Tax on subject services received with effect from 18/04/2006, when the provisions of Section 66A of the Finance Act, 1994 came into force, mainly for the reason that they have their main established business, fixed establishment and permanent address in India only. There is no dispute that the appellant is located in India. There is also no dispute that the services of GSAs and the foreign vendors providing repair and maintenance service have been received and consumed by the appellant; the appellant paid for the same to GSAs & foreign vendors and they are the beneficiary of the same. The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India and benefits have been received by the appellant, who has got their fixed establishment and permanent address in India only. Thus they fulfill the conditions mentioned in the provisions of Section 66A of the Finance Act, 1994 for levying the Service Tax under the reverse charge mechanism provided therein for the subject services. As per the facts on record the appellant fails to establish their bonafide belief, therefore, they cannot find any relief in law either from liability of payment of service tax, or imposition of penalty, even when the SCN has been issued for the extended period of five years in terms of Section 73 (1) of the Finance Act of 1994 - Further the appellant has failed to prove their bonafides and when the lapse of non-payment of Service Tax cannot be attributed to any bonafide belief or genuine reason on the part of the appellant, they are not entitled to the benefit of waiver of penalty under the provisions of Section 80 of the Finance Act, 1994 also. Appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 1001
  Classification of services - commercial or industrial construction service or works contract service - Held that: - the construction service provided by the appellant is with material and they have also paid the VAT tax on works contract service. They have taken the registration under Works Contract on 1.7.2008 which has been accepted by the department. In these facts, the demand raised under commercial or industrial construction service is wrong. The adjudicating authority also extended the benefit of abatement N/N. 15/ 04-Service Tax, 19/05-ST dated 7.8.2005 and 1/2006-ST. This clearly shows that the service in question is of works contract service, which was not taxable upto 1.6.2007 - demand for the period upto 1.6.2007 set aside. As regards the period after 1.6.2007, since the demand was raised under ‘commercial or industrial construction service, whereas admittedly the service is correctly classifiable under works contract service, the demand raised under wrong head of service cannot sustain. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 1000
  Refund of unutilized CENVAT credit - rejection on the ground that the services on which they have availed cenvat credit on Professional Indemnity Insurance Services have no direct nexus with output service - Held that: - The Revenue fairly agreed that no proceedings were initiated against the respondent for denial of cenvat credit on Professional Indemnity Insurance, as no proceedings in this case for denial of cenvat credit initiated against the respondent, therefore, at the stage of filing refund claim of un-utilized cenvat credit in their cenvat credit account cannot be challenged - appeal dismissed - decided against Revenue.

  ---

• 2017 (9) TMI 999
  100% EOU - refund claim - input services availed for the services exported - denial on the ground that the export realization is shown in Indian Currency - Rule 3(2)(b) of Export of Service Rules, 2005 - Held that: - merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Service Rules, 2005. Since the Indian rupee is received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, the receipt of Indian rupee shall be treated as convertible foreign exchange - Further, it is also clearly certified in the FIRC issued by the Standard Chartered Bank that remittances are in convertible foreign exchange. Similar issue decided in the case of Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I [2015 (5) TMI 885 - CESTAT MUMBAI], where it was held that even though the appellant received the payment in Indian rupees but in view of the FEMA Notifications issued by the RBI, the same is deemed to be in convertible foreign exchange and accordingly the condition as provided under Rule 3(2) of Export of Service Rules, 2005 stands complied. Payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 998
  Penalty - case of appellant is that the assessee’s appeal on the demand has been allowed by the Tribunal which was reported as Inox Air Products Ltd. Vs. Commissioner of Central Excise, Raigad [2015 (1) TMI 460 - CESTAT MUMBAI]. Therefore the present appeal on penalty which is consequent to the demand also deserves to be allowed - Held that: - In the present appeal, the appellant is contesting the penalty related to the same case, which is consequential to the demand. Since the demand case has been decided in favor of the appellant, the present appeal also deserves to be allowed - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 997
  Cargo Handling Services - Goods transport Agent Services - payment of tax with interest before issuance of SCN - penalty - Held that: - there is no material on record which suggests that the appellant has an intention to evade the payment of tax as the appellant is a small time trader and during the relevant time service tax was newly introduced and he had a bona fide belief that he is not liable to pay the service tax but when it was pointed out by the department, he paid the service tax along with interest which shows his bona fide. Once the appellant has paid the entire service tax along with interest before the issue of SCN, he is not liable to pay the penalty under Section 78 and therefore, by giving him the benefit of Section 80 - penalty set aside. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 996
  CENVAT credit - input services - civil and structural services - architectural services - maintenance and repair service used for civil work like compound wall roofing, false ceiling, canopy work - Held that: - all the services used by the appellant are in the nature of repair and maintenance of various machinery installed at the factory of the appellant used in or in relation to the manufacture of finished goods as per the requirement of Drugs Act - reliance placed in the appellant own case M/s. Cipla Ltd Versus Commissioner of Central Excise, Customs and Service Tax, Bangalore-I [2017 (8) TMI 705 - CESTAT BANGALORE], where this Tribunal has allowed credit on all the input services involved in the present case for the period October 2012 to September 2013 - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 995
  Classification of services - movement of coal within the mines from pitheads to the dispatch point - whether mining services or transport of goods by road services? - Reverse Charge Mechanism - Held that: - the issue is no more res integra, in view of the decision of this Tribunal in the case of Arjuna Carriers Pvt. Ltd. [2014 (11) TMI 1048 - CESTAT NEW DELHI], wherein this Tribunal has held that the transportation and handling of coal within the mining area would not be classifiable under Mining Service - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 994
  Restoration of appeal - appeal was dismissed non-compliance of the pre-deposit order - Held that: - the appellant could not comply with the predeposit order due to financial hardship as well as the demise of her husband who was earlier looking after the business - taking into consideration the delay, the appellant has to be put on terms - the appeals shall be restored on condition that the appellant deposits ₹ 40,000/- with respect to Appeal No. ST/40400/2013 and ₹ 10,000/- with respect to Appeal No. ST/40401/2013 as costs to the respondent on or before 14th August 2017 - appeal restored - application for restoration of appeal allowed subject to fulfillment of condition.

  ---

• 2017 (9) TMI 993
  Sub-contract - whether the sub-contractor is liable to pay service tax on the taxable service provided by it, irrespective of the fact that the main contractor had discharged the service tax liability on providing such service? - Held that: - CBEC vide Circular dated 23.08.2007 has clarified that the services provided by the sub-contractor is a taxable service, even if the same is used for completion of the work by the main service provider. Thus, for providing the taxable service, the sub-contractor is liable for payment of service tax on provision of such service. Time limitation - Held that: - the SCN was issued on 30.11.2011, seeking confirmation of service tax demand for the period April 2007 to September 2010. The issue of non-payment of service tax by the sub-contractor, when the same was paid by the main contractor was debatable, subject to various interpretations. Accordingly, favorably interpreting the provisions that the sub-contractor is not liable to pay service tax, the Commissioner (Appeals) has dropped the service tax demand - the respondent cannot be saddled with liability beyond the normal period of limitation - For computation of the service tax demand within the normal period of limitation, the matter remanded back to the original authority for necessary computation. Appeal allowed by way of remand.

  ---

• 2017 (9) TMI 992
  Restoration of appeal - appeal was dismissed non-compliance of the pre-deposit order - Held that: - due to absence on the part of the appellant as well as non-compliance of pre-deposit, the appeal was dismissed on 26.11.2015, for non-compliance of pre-deposit order - Today also the appellant has no case that they have complied with the pre-deposit order - application for restoration of appeal is dismissed.

  ---

• Central Excise

• 2017 (9) TMI 991
  Clandestine removal - recovery of Central Excise duty with interest and penalties - Held that: - We do not find that the Tribunal understood the Commissioner's order as being passed solely on the Chartered Engineer's certificate. According to the Tribunal, this was one of the important grounds which weighed with the Commissioner in dropping the proceedings. The perusal of the order of the Commissioner would establish that the Tribunal's observations are correct - The Commissioner did refer to other evidence on record, nevertheless, his findings were based heavily on the Chartered Engineer's certificate indicating the production capacity of the unit and the fact that the department had alleged total clearance worth nearly three times the maximum capacity. The Tribunal granted opportunity to the department to verify and if found inaccurate, controvert the Chartered Engineer's certificate. The onus is thus on the department to produce such material if so desired - appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 990
  Maintainability of petition - alternative remedy of appeal - Held that: - Although there exists a statutory alternative remedy, a writ petition is still maintainable, if it can be established that, the fundamental rights stand breached, or that the order in original is wholly without jurisdiction or that, the impugned order was passed in breach of the principles of natural justice, or that the impugned order is non-speaking, or that the order impugned is vitiated by fraud or malice - In the facts of the present case, non-consideration of judgments on behalf of the petitioners, ipso facto, does not lead one to infer that there is a failure of justice or that the principles of natural justice stands vitiated. The allegations of perversity levelled against the impugned order remains unsubstantiated. The reasons for imposition of penalty and the adjudication are appearing from the impugned order. Petition dismissed.

  ---

• 2017 (9) TMI 989
  CENVAT credit - M.S.Channels, M.S.Angles/Joists/Beams, Welding Electrodes etc. - Held that: - relying the decision in the case of Singhal Enterprises Pvt. Ltd. Vs. Commr. of Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, the credit is allowed. Penalty - Held that: - the same is on interpretation of law, hence not sustainable. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 988
  Liability of interest - period from November 1996 to March 1999 - Section 11AB of the CEA, 1944 - Held that: - CBEC vide Circular No. 655/46/2002-CEX dated 26.06.2002 clarified Section 11AB(2) has been substituted w.e.f. 11.05.2001 by the Finance Act, 2001, making it now very clear that Section 11AB will apply only to cases where duty had become payable or ought to have been paid after 11.05.2001 - the demand of duty was raised prior to 11.05.2001, and therefore, the demand of interest under Section 11AB cannot be sustained - demand set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 987
  Clandestine removal - appellant case is that the impugned order has been passed without giving to the appellant copies of the relevant seized records - Held that: - several incriminating documents, relating to removal of finished goods without accounting the same in the Central Excise records and removing the same without payment of duty, were recovered by the Department during search. The entries in the private documents did not tally with the statutory records maintained in the factory - The allegations of clandestine clearance have been supported by the records un-earthed by the departmental officers during investigation. The receipt of clandestinely cleared goods have also been corroborated by the recipient through various statements. The quantification of the duty demand have also been made only on the basis of private records maintained by the assessee himself. From the evidences unearthed in the present case, it is possible to arrive at the conclusion that clandestine clearances have been done by the appellant. The documents unearthed also leads to the determination of quantum of such clandestine clearance. MODVAT/CENVAT credit - input - EVA - Synthetic Resin - Held that: - by way of chemical test of the samples of the final product, it was established by Department that both EVA & Synthetic Resin, were absent in the final product. The above facts have established that the claim of the appellant was fraudulent and such inputs have not been utilized in the manufacture of final product at all - reversal of credit upheld. Appeal dismissed - decided against appellant.

  ---

• 2017 (9) TMI 986
  CENVAT credit - MS Plate, iron and steel plates, MS Low carbon diff. sheet / coils, galvanized T L - denied on the basis of invoice which does not bear the vehicle number and on the premises that inputs in question are not inputs for manufacturing of final products by the appellant - Inputs received from the registered dealers are not inputs for the appellant for manufacturing goods - demand of duty for Shortage of inputs as well as finished goods - Held that: - No investigation was conducted at the end of the supplier of the said goods. Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit - appellant is entitled to avail Cenvat Credit on the invoice issued by M/s. Ganpati Enterprises. Input received from registered dealer - Held that: - no investigation was conducted with the registered dealer whether they have supplied goods or not. Merely on the ground that these inputs cannot be the inputs for manufacturing of final goods and the process is very costly for manufacturing final product cannot be the grounds to deny Cenvat Credit - credit allowed. Shortage of inputs as well as finished goods - Held that: - no panchnama was drawn for verification of the finished goods and it is not coming out from the impugned order whether stock verification was done physically or on sample basis - also, the shortage is negligible in quantity - duty cannot be demanded on the mere shortage of the inputs as well as of finished goods. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 985
  CENVAT credit - By-product - Bagasse, Press-mud, Boiler Ash and Compost - Rule 6(3) of CCR - case of the department is that since no duty has been paid on these by-products in terms of Rule 6(3) they are required to pay 6% of the sale value of these by-proudcts - Held that: - all the goods which are cleared without payment of amount under Rule 6(3) are either by product or waste - In case of by product or waste the decision of Jurisdictional High Court of Bombay in the case of Rallies India Ltd. [2008 (12) TMI 46 - HIGH COURT BOMBAY] settled the issue that in case of by product or waste cenvat credit cannot be denied - in case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 984
  CENVAT credit - duty paying invoices - different address was mentioned in the invoice - Held that: - except that the invoices were issued on the different address of the appellant’s own company and not at the address of the appellant, however, receipt and use of the services is not under dispute - It is not the case of the Revenue that same credit was availed by some other location of the appellant. The only condition is that same credit should not be taken twice at two different location, which is not the case here - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 983
  CENVAT credit - M.S. Ingots, beams, channels, HR Plates, M.S. Joists etc. - whether Cenvat credit on structural steel such as M.S. Ingots, beams, channels, HR Plates, M.S. Joists etc. is admissible to the appellant for the period May, 2006 to February, 2011? - time limitation - Held that: - all the invoices on which appellant have been taking credit in respect of steel items were presented before the Jurisdictional Superintendent who has verified all the invoices and thereafter issued certificate therefore the fact of availment of Cenvat credit on the said steel items was very much in the knowledge of the department - the demand is clearly hit by limitation - demand for normal period is recoverable - appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (9) TMI 982
  Clandestine removal - case of Revenue is that Assessee-respondent failed to prove that it had not followed questionable modus operandi - Cross verification of investigation result with evidence gathered from the premises of third party corroborated the malafides of the respondent proving evasion - Held that: - It is strange to notice that learned Commissioner (Appeals) did not look into the incriminating evidence gathered by investigation in the course of search. He superficially held that private records do not establish the clandestine removal since those are not considerable as evidence - If certain materials are of inevitable necessity for somebody, he keeps such materials with him for which he is answerable when the contents in the said materials have nexus to the clandestine removal. Investigation has brought out that the real data relating to clandestine removals were concealed in a games file known as Games LX 01-02. Such symbolic abbreviation was the design of the respondent to retrieve the data for its own use. Ld. Commissioner (Appeals) failed to appreciate that respondent had not accounted for fabric processed by it and cleared the same without payment of duty. He has only worked hard with a misplaced sympathy to grant relief to the respondent without testing the intensity and gravity of the seized electronic record as well as statements recorded having bearing to the contents therein. The chain of evidence brought out by investigation were given burial death by ld. Commissioner (Appeals). When clandestine removal was backed by plethora of evidence, gathered by investigation, it was the respondent who was to defend its case leading evidence to discard the same. Burden of proof was not discharged by it to rebut the allegations of Revenue based on evidence nor the respondent came out with clean hands to prove that it was innocent and there was no clandestine removal. Appeal allowed - decided in favor of Revenue.

  ---

• 2017 (9) TMI 981
  Rectification of mistake - It is submitted that the Tribunal did not discuss the issue with regard to classification of “Dhanda Dhavana Choornam” and had analyzed only the issue in respect of other products - Held that: - the Tribunal has mentioned that the issue arising in the appeal is with regard to classification of products including the product namely “Dhanda Dhavana Choornam” - there is no omission on the part of the Tribunal to discuss the issue with classification of “Dhanda Dhavana Choornam” as contended by the department - ROM application dismissed.

  ---

• 2017 (9) TMI 980
  Rectification of mistake - Default in payment of duty - applicability of Rule 8 (3A) - Held that: - we cannot find any substance in the contention of the department that the issue is not similar to the issue in other appeals disposed together with this appeal. In any case the department has a remedy to file appeal if aggrieved - In various judgments it has been held that if the application for rectification is filed in the guise of review petition or if long drawn process of argument and reasoning in required to find out the error sought to be rectified, then the same cannot be said to be an error apparent on the face of record - there is no apparent error which needs rectification - ROM application dismissed.

  ---

• CST, VAT & Sales Tax

• 2017 (9) TMI 979
  Interpretation of statute - refund - reversal of input tax credit - Section 19 (2) (v) of the Tamil Nadu Value Added Tax Act, 2006 - Held that: - similar issue decided in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) [2017 (3) TMI 279 - MADRAS HIGH COURT], where it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned - the respondent directed to take note of the decision of the Court in M/s. Everest Industries Ltd.'s case and pass decision on merits - petition allowed by way of remand.

  ---

• 2017 (9) TMI 978
  Interpretation of statute - refund - reversal of credit - Rule 8 (6) of TNVAT Rules, 2007 - Held that: - similar issue decided in the case of M/s. CBC Fashion (Asia) Pvt. Ltd. Versus The Assistant Commissioner (CT) [2017 (8) TMI 1203 - MADRAS HIGH COURT], where relying in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) [2017 (3) TMI 279 - MADRAS HIGH COURT], it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned - the respondent directed to consider the petitioner's letter/representation, dated 01.06.2017, filed on 05.06.2017, taking note of the decision of the Court in M/s. Everest Industries Ltd.'s case - petition allowed by way of remand.

  ---

• 2017 (9) TMI 977
  Exemption from payment of central sales tax - The case set up by the petitioner is that though some other concessions were granted to the petitioner, however, the benefit of concessional rate of central sales tax was not granted, as a result of which the petitioner per force paid 4% central sales tax to the State - Held that: - No doubt, the petitioner was granted Letter of Intent and agreement was also signed with the State for grant of certain benefits, but for non-compliance of certain formalities, the benefit of concessional rate of central sales tax could not be availed of by the petitioner - It is undisputed that the petitioner has charged central sales tax @ 4% from its customers and paid the same to the State. If the petitioner was aggrieved of any in-action on the part of the State at the relevant time when the expanded unit came into production, on account of which he could not avail of the concession, the grievance could be raised but the petitioner continued making representations and charged and paid tax @ 4% - petition dismissed - decided against petitioner.

  ---