TMI Tax Updates - e-Newsletter
September 21, 2017

Case Laws in this Newsletter:

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

TMI Short Notes

• Income Tax:

  Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

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News

• Notification regarding GST rate for branded cereal, pulses and flour

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• Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

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• Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

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• RBI Reference Rate for US $

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• Anti-dumping duty on import of bus/truck tyres from China

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Circulars / Instructions / Orders

GST

• C. No. IV/16/122017-CCO(TVM) - dated 19-9-2017
  Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.
• F. No. D-22011/AP/1/2017/1120-1167 - dated 19-9-2017
  Constitution of National Anti-profiteering Authority (NAA) under GST-reg.
• F. No. D-22011/AP/1/2017/892-939 - dated 7-8-2017
  Constitution of National Anti-profiteering Authority under GST - reg.

DGFT

• 26/2015-2020 - dated 20-9-2017
  Amendments in Hand Book of Procedures 2015-20 –reg.

Highlights / Catch Notes

GST

• Notification regarding GST rate for branded cereal, pulses and flour
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• Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice
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Income Tax

• It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC
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• Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.
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• When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32
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Customs

• Anti-dumping duty on import of bus/truck tyres from China
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DGFT

• Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.
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Indian Laws

• Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan
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Service Tax

• Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.
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• BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.
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• Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.
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Case Laws:

• Income Tax

• 2017 (9) TMI 1108
  TPA - ALP of international transaction - comparable selection and remand proceedings - there are a large number of issues on which there is no finding by the ITAT - as per assessee a mere remand to the TPO of those issues for a fresh determination would undue delay the entire exercise and resultant in multiplicity of proceedings - Held that:- The Court finds merit in the contention of learned counsel for the Assessee. The practice of remand to the TPO should be resorted to by the ITAT only where it is absolutely necessary. It could be either because of lack of clarity on factual aspects or because some facts have emerged since the order of the TPO that require to be taken into consideration since it would have a bearing on the outcome. Further the remand order in such circumstances should clearly spell out what the scope of the remand is. Where all the relevant facts are already before the ITAT and the parties have no new material to provide, simply remanding the issue to the TPO without rendering a finding thereon would be an abdication of the functions of the appellate body. The Court finds from the impugned order that indeed with regard to the issue concerning exclusion of Sasken, there is no finding by the ITAT. That issue ought not to have been remanded without recording a finding. Likewise, with regard to the exclusion of Mahindra and WAPCOS and inclusion of Kirloskar as a comparable for the TSS segment the ITAT has simply remanded the matter to the TPO without a finding. Thus the impugned order of the ITAT is modified by directing the following issues will not be remanded to the TPO but will be decided by the ITAT itself on merits after hearing both the parties - issue concerning exclusion of WAPCOS and Mahindra and inclusion of Kirloskar as comparables for the TSS segment, issue regarding exclusion of Sasken as comparable for the CDS segment, issue of denial of working capital and risk adjustment in both the segments, i.e., TSS and CDS and issue of proportionate adjustment in the TSS segment

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• 2017 (9) TMI 1107
  Settlement Commission order - Settlement Commission has applied the principles of best judgment - claim of bogus expenditure - Held that:- An order under Section 245(D) is not an order of regular assessment. Chapter XIXA contemplates the taxability determined with respect to undisclosed income only by the process of settlement/arbitration. The process of arrival of the liability of the assessee to pay tax under Chapter XIXA of the Act of 1961 being different to that of a regular assessment, the Settlement Commission should factor the same while considering an application for settlement. It is obliged to give reasons for arriving at a particular figure. It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission. In the facts of the present case, the Settlement Commission not having disclosed the reasons for arriving at the figures which to its best judgment are the figures to be added to the income of the private respondent, the impugned order is set aside. The settlement application is remanded to the Settlement Commission for fresh consideration. The issue is answered accordingly.

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• 2017 (9) TMI 1106
  Fringe Benefit Tax (FBT) - Writ of Declaration to declare Sections 115 WA to WL of the Income Tax Act, 1961 as introduced by the Finance Act 2005, as well as the Rules made in the Income Tax Rules, 1994, as ultra vires Articles 14, 19(1)(g) of the Constitution of India - Held that:- The petitioner is directed to abide by the decision of the Hon'ble Supreme Court where the challenge to the impugned provisions are pending. It is made clear that in the event the Hon'ble Supreme Court upholds the impugned legislation and the Department initiates action or proceeds with the action already initiated, the petitioner/assessee is not entitled to plead limitation and the period during which this Writ Petition is pending as well as the period till the matter is decided by the Hon'ble Supreme Court, shall stand excluded for computation of limitation

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• 2017 (9) TMI 1105
  TDS credit - Liability to pay interest on the delayed remission of the above TDS amount - Held that:- The accounts have been reconciled and the necessary rectification orders have been passed allowing the TDS credit as per Form-26AS details in the case of the Petitioner. In that view of the matter, no further directions are called for as far as the Income Tax Department is concerned. In the considered view of the Court, the liability to pay interest to the Petitioner on the delayed remission of the above TDS amount constitutes an independent cause of action for which this writ petition involving the Income Tax Department need not be kept pending. Liberty is, however, granted to the Petitioner to pursue the claim for interest independently against the CDA. It is made clear that the Court has not expressed any opinion on the merits of such claim of the Petitioner.

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• 2017 (9) TMI 1104
  Undisclosed investment - iniquity of capital gain - non-genuine transaction - Held that:- AO has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all the material facts available on record does not help much. The AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohi. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain made by the appellant before the AO is not approved. The AO is therefore, directed to accept claim of short term capital gain as shown by the appellant - Decided in favour of the assessee

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• 2017 (9) TMI 1103
  Rectification of mistake u/s 154 - capital gains tax - exclusion of interest u/s 28 of the LA Act from the returned income - Section 10(37) applicability - Held that:- CIT was in error in holding that Section 10(37) of the Act did not apply. There was no dispute that at the time when it was acquired by the Government of Haryana the Assessee’s land was both an agricultural land and a ‘capital asset’ within the meaning of Section 2 (14) (iii) which defined ‘capital asset’ to mean, inter alia, property of any kind held by the Assessee but did not include agricultural land that was not situated within the jurisdiction of a municipality. In other words, agricultural land situated within a municipality would constitute a ‘capital asset’ and therefore would be subject to capital gains tax upon the transfer of such asset. In the present case, the agricultural land of the Assessee that was acquired was situated within the Hisar municipality and, in terms of Section 2 (14) (iii) (a), was a capital asset, the transfer of which would attract capital gains tax under Section 45 of the Act. However, in terms of Section 10 (37) (i) income chargeable under the head ‘capital gains’, arising from transfer of such agricultural land located within the municipal limits, would not form part of the total income. Consequently, the impugned order of the CIT which holds to the contrary is both factually and legally erroneous. The Court is also unable to accept the stand of the AO that the decision of the Supreme Court in Ghanshyam (HUF) (2009 (7) TMI 12 - SUPREME COURT) was prospective and did not apply to the Assessee’s case. The said decision is law declared by the Supreme Court which is binding on all authorities under Article 141 of the Constitution. For the purpose of Section 154 of the Act, the AO had to apply the said decision and permit the Assessee to exclude the interest component from the returned income. This was very much within the purview of Section 154 of the Act as this would not require any adjudication of a disputed question on the part of the AO.

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• 2017 (9) TMI 1102
  Addition on account of unconfirmed credit balance - Held that:- In the remand report the AO confirmed that the assessee vide its reply dated 30.12.2011 contended that the corresponding journal entry was passed in the books of account of the assessee on 01.04.2009 by debiting M/s Anil Agency and crediting M/s Shree Uma Electricals. The ld CIT(A) concluded that the journal entry was passed on 01.04.2009 in the books of the assessee debiting M/s Anil Agency and crediting M/s Uma Electricals cannot explain the transaction for AY 2009-10. We have seen that the observation of ld CIT(A) is unfounded. The assessee has properly explained the reconciliation. Moreover, there is no revenue effect in such inter- group transaction. The AO has not brought any material if there would be any loss of revenue in transfer of such entry. Considering the fact that the assessee has duly reconciled the entry which has been admitted the by AO in its remand report dated 23.10.2013, this ground of appeal is allowed. Addition of unconfirmed loan - Held that:- We have seen that in the remand report the AO submitted that the difference was rightly added as the documents were not on record during the assessment proceedings. From the contents of the remand report it is clear that the evidence related with journal entry in the books of account of M/s Uma Electricals was filed only at the stage of remand report. The only objection of the AO was that the journal entry in the books of account of M/s Uma Electricals was not filed during the assessment proceedings. Considering the fact that the assessee has properly reconciled the transfer entry and there is no revenue effect in either of the concern. Moreover, the AO has not brought on record any adverse material on record against the assessee this ground of appeal is allowed. Disallowance of depreciation on Truck - AO disallowed the depreciation holding that the Registration Certificate (RC) of the vehicle was issued only on 01.04.2009 and CIT-A holding that unless the vehicle is registered the assessee cannot use it - Held that:- Considering the facts that no evidence with regards to put to use the vehicle was brought on record before the lower authorities, hence, we do not find any illegality or infirmity in the finding of ld CIT(A) qua this ground of appeal. In the result this ground of appeal is dismissed. Disallowance of depreciation on factory shed - assessee has not substantiated with documentary evidence that addition was made in the factory building of the assessee - Held that:- We have seen that the AO has not disputed the ‘work in progress’ (factory shed) in FY 2007-08 claimed by the assessee. The AO further not disputed for put to use the asset during the relevant financial year relevant to the assessment year under consideration. In our view the assessee is entitled for the depreciation as the asset/ factory shed was added in the asset of assessee during the relevant financial year related with the assessment year under consideration. Thus, this ground of appeal is allowed.

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• 2017 (9) TMI 1101
  Addition u/s 271(1)(c) - validity of notice - without specifying the specific charge under which the penalty is proposed - Held that:- It is mandatory on the part of the AO to point out the specific charge and strike off one of the two charges contained in the notice issued u/s 271(1)(c) r.w.s. 274 falling which the proceedings u/s 271(1)(c) and consequent order were to be quashed. CIT V/s Manjunath Cotton and Ginning Factory reported in [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that the AO has to mention specific charge in the notice whether the penalty is for concealment of income or for furnishing inaccurate particulars of income and has to strike off the charge not applicable. Thus we are of the considered view that the proceedings initiated by the AO without specifying the specific charge under which the penalty is proposed to be initiated is bad in law and so is the consequent order.- Decided in favour of assessee.

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• 2017 (9) TMI 1100
  Unexplained cash deposit in bank account u/s 68 - Held that:- As the assessee has explained cash deposit of ₹ 2,50,000 on 07-05- 2009 out of opening cash balance brought forward from previous financial year. We find tht opening cash balance of ₹ 3,17,000 has been explained as out of cash withdrawal from Citi Bank in February, 2011. We further observe that these bank accounts are declared in the regular return filed for the relevant assessment year. Therefore, we are of the view that the assessee has filed necessary evidences to explain the source of cash deposit for ₹ 2,50,000; hence, we direct the AO to delete additions of ₹ 2,50,000 out of total addition sustained by the CIT(A) of ₹ 3,35,000. Insofar as balance amount, though the assessee claims to have source, failed to file necessary evidence to explain cash deposit on various dates. Therefore, we sustain the balance amount of ₹ 85,000 as unexplained cash credit u/s 68. Enhancement made towards low household expenses - Held that:- We do not find any merits in the arguments of the assessee for the reason that when an assessee is having a total income of ₹ 1,30,69,630 as income, an expdenditure of ₹ 24,000 per annum for his household expenses cannot be relied upon. As rightly observed by the CIT(A), the assessee is residing in posh are of Mumbai City for which ₹ 2,000 pm is not at all sufficient to manage his household expenses. At the same time, the estimate made by the Ld.CIT(A) is also on higher side. Keeping in view all the facts and circumstances of the case and also the fact that the assessee is a member of joint family, a reasonable estimate towards household expenses would meet the ends of justice. Accordingly, we direct the AO to estimate ₹ 30,000 per month toward household expenses of the assessee. Accordingly, the ground raised by the assessee is partly allowed.

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• 2017 (9) TMI 1099
  Exemption u/s. 54EC - investment in tax exemption bonds of ₹ 50 lakhs in one financial year and further ₹ 50 lakhs invested in next financial year, but within the stipulated period of six months from the date of sale of the asset - Held that:- A similar issue has been considered in CIT vs Coramandel Industries Ltd (2014 (12) TMI 852 - MADRAS HIGH COURT) wherein observed that it is clear from the First Proviso to section 54EC(1) that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference if the restriction on the investment in bonds to ₹ 50 lakhs is incorporated in section 54EC(1) of the Act itself. The ambiguity has been removed by the legislature wef 01-04- 2015 in relation to AY 2015-16 and subsequent years. In yet another case, the Hon’ble Madras High Court has taken a similar view and observed that before amendment to provisions of section 54EC(1) by the Second Proviso wef AY 2015-16 and subsequent years, the law is clear in respect of investment in 54EC and hence even if the assessee invests more than the prescribed amount in one financial year or two financial year, if such investment is within a period of six months from the date of sale as provided in section 54EC(1), then, the assessee is eligible for exemption u/s 54EC. In this view of the matter the assessee is eligible for investment in tax exemption bond u/s 54EC for the entire amount if such investment is made within six months from the date of sale. Therefore, we direct the AO to allow exemption u/s 54EC to the total investment made by the assessee. - Decided in favour of assessee.

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• 2017 (9) TMI 1098
  Deemed dividend income u/s 2(22)(e) - loans and advances given to societies registered u/s 12A - whether the assessee was beneficially entitled to 20% or more of the income of Swami Devi Dayal Hi-tech Education Academy ? - Held that:- Swami Devi Dayal Hi-tech Education Academy is a charitable trust registered u/s 12AA of the Act. That the assessee is a trustee in the said trust has also not been disputed and the fact that there are no interest of any member of the said society in the Trust is also not disputed. In the said circumstances, we are left with no option but to agree with the Ld. CIT(Appeals) that second limb or requirement of section 2(22)(e) of the assessee having substantial interest in the concern to which loan or advance has been given has not been established and, therefore, the said advance cannot be treated as deemed dividend in the hands of the assessee. The arguments of the Ld. DR that the documents seized during the course of search show that the funds had been utilized by the members of the society, and therefore, assessee derived personal benefit is of no consequence since the requirement of section 2(22)(e) is not whether the assessee has actually derived any personal benefit from the said concern but is that the assessee is beneficially entitled to not less than 20% of the income of the said concern. The word entitled means having a legal right to something. Since such legal right is absent in the case of the present society, in the absence of such legal right of the assessee in the said society the amount advanced cannot be treated as deemed income as per section 2(22)(e) of the Act. Moreover even as per the argument of the Revenue the documents found during search only establish that the assessee has derived benefit from the said societies and not substantial benefit, as is the requirement of the section. - Decided in favour of assessee. Unexplained deposit in Oriental Bank of Commerce - addition on account of advance received on sale of land - CIT-A deleted both addition - Held that:- Above additions have been deleted by the CIT(A) on the basis of the cash flow statement which was never produced before the AO and was furnished for the first time before the CIT(A). The cash flow statement clearly is an additional evidence the admittance of which is governed by Rule 46A. The Revenue has not challenged the admission of the additional evidence. However, sub clause 3 of Rule 46 clearly requires the CIT(A) to allow the AO a reasonable opportunity to examine the evidence or document before taking it into account. In view thereof, we consider it fit to restore both the issues back to the file of the Assessing Officer to examine the additional documents/evidences filed by the assessee with respect to both the grounds and thereafter adjudicate the issue in accordance with law.- Decided in favour of revenue for statistical purposes. Addition in respect of capital introduced by assessee - CIT-A deleted disallowance - Held that:- Since the Revenue has pleaded that the cash flow statement was accepted by the CIT(Appeals) without confronting it to the Assessing Officer, the same ought to be sent back to the Assessing Officer for verification, in the interest of justice and drawing parity from the same, the issues in the present appeal also should be sent back to the Assessing Officer to decide after verifying the cash flow statement submitted by the assessee. Addition on account of seized documents - Held that:- Undeniably, during assessment proceedings the assessee had not been able to produce its cash flow statement to explain various transactions which were noticed by the Assessing Officer during the course of search which was undertaken at the assessee premises. The cash flow statement was subsequently submitted to the Ld.CIT(Appeals) during the course of hearing before him and on the basis of which the Ld.CIT(Appeals) upheld certain additions/disallowances and also deleted certain additions/disallowances. Further it is also a fact that the Ld.CIT(Appeals) did not confront the said cash flow statement to the Assessing Officer before passing his appellate order. Thus we accept the pleadings of the Ld. DR to restore the additions deleted by the Ld.CIT(Appeals) to the Assessing Officer for verification of the cash flow statement.

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• 2017 (9) TMI 1097
  Disallowance on account of 'Bogus Purchase u/s. 69C' for 'Unexplained Expenditure' - expenditure incurred on purchase of raw material used for trading and/ or manufacture of goods - Held that:- We find that the assessee has placed on record the documents pertaining to purchase of material from the parties. We have noticed that the AO has not issued notice u/s 133(6) of the I.T. Act to the bank of the assessee or of the suppliers to verify whether immediate cash had been withdrawn against the payments made by the assessee. We have further noticed that the AO has not rejected the assessee’s books of accounts u/s 145(3) of the Act and moreover no opportunity to confront or cross-examine the parties which were declared as hawala dealers by the Sales Tax Authorities was provided to the assessee. Merely because the assessee could not produce the stock records in the required form in 3CD do not prove that the purchases were not genuine. Under the above circumstances, we are of the considered view that non-producing of the supplier or stock register by the assessee is not the ground to declare the expenses /purchases as ‘unexplained expenditure’. Considering that the assessee had already supplied corroborative documents like copy of invoices, name and address of suppliers and details of bank transactions, we are of the considered view that the entire additions of ₹ 44,44,022 is unreasonable. Therefore in such circumstances, the ends of justice would be met in case the additions are restricted @ 12.5% of the total purchases. We direct the AO to restrict the additions to the extent of 12.5% of the total purchases

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• 2017 (9) TMI 1096
  Addition u/s 14A r.w.s.Rule 8D - calculation of disallowance - non recording of satisfaction with reference to the books of accounts - Held that:- In view of this fact and settled legal position, we are inclined to hold that invocation of provision of section 14A r.w.r.8D(2) is not justified without recording any satisfaction with reference to the books of account maintained by the assessee on the basis of which the assessee has not made any disallowance at all. However, we are of the considered view that a reasonable disallowance could be made attributing to the earning of the exempt income which in the present case is ₹ 2,50,000/-.

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• 2017 (9) TMI 1095
  Deduction u/s 10A - reducing the link charges from "the export turnover" by the virtue of clause (iv) of Explanation 2 of Section 10A without making the similar adjustment from" the total turnover" - providing Business Process Outsourcing (BPO) services and export of ITES - Held that:- Identical issue in favour of the assessee by following the decision rendered by ITAT, Delhi Bench in case of DCIT vs. Binary Sematics [2007 (3) TMI 306 - ITAT DELHI-D ] wherein it is held that, “the total turnover in the denominator and export turnover in the numerator have to be read in the same manner and directed the AO to exclude these items from the total turnover also while computing the deduction u/s 10A of the Act.” Since this issue has already attained finality the link charges from the export turnover are to be reduced while making similar adjustment from the total turnover as well as export turnover. So, following the decision rendered by the coordinate Bench in the assessee’s own case for AY 2004-05 Depreciation of networking equipments / computer peripherals, covered under the Computers - 60% OR 25% - Held that:- Following the decision rendered by Hon’ble jurisdictional High Court in case of CIT vs. BSES Rajdhani Powers Ltd.(2010 (8) TMI 58 - DELHI HIGH COURT) we are of the considered view that the assessee is entitled for depreciation of computer / integral equipments @ 60% as against 25% allowed by the AO. Depreciation on electrical installation - @ 25% applicable on the plant and machinery - AO allowed the depreciation @ 15% on the electrical installation used for more than 180 days and @ 7.5% for the installation used less than 180 days - Held that:- Hon’ble Supreme Court in case cited as CIT vs. Taj Mahal Hotel (1971 (8) TMI 2 - SUPREME Court) and Anand Theatres (2000 (5) TMI 4 - SUPREME Court) held that electrical installations are to be regarded as plant and machinery for the purposes of depreciation in the scheme of section 32 of the Act. So, when electrical installations are treated as plant the depreciation has to be allowed @ 25% as per provisions contained u/s 32 of the Act. Deduction u/s 10A is required to be taken before setting off brought forward losses and unabsorbed depreciation. See CIT vs. Yogokawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court ]

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• 2017 (9) TMI 1094
  Eligible business expenditure under section 37(1) - contribution made by the assessee to SPARSH Trust - Held that:- contribution made by assessee to this trust is an expenditure incurred wholly and exclusively for the purpose of business which is allowable u/s 37(1). Disallowance for depositing the employee’s contribution to PF and ESI beyond the prescribed limit provided in the respective Acts - Held that:- Admittedly, contribution to PF & ESI has been paid by the appellant, in all instances, before the due date of filing the return of income u/s 139(1). This fact is therefore, not in dispute. In view of the judgments of the Rajasthan High Court in the case Jaipur Vidhyut Nigam Ltd.(2014 (1) TMI 1085 - RAJASTHAN HIGH COURT) the claim of the appellant is allowable. - Decided against revenue

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• 2017 (9) TMI 1045
  Sale of right in the land through power of attorney - addition u/s 50C after having held that the transaction was transfer u/s 2(47) read with Section 50(c) - Held that:- AO was not justified in applying the provisions of Section 50C of the I.T. Act for increasing the short terms capital gain. The Ld. CIT(A) was justified in deleting the increase in the value of short term capital gain. It is not the case of the Revenue that the assessee has received more consideration as shown in the agreement. In case there was any evidence to show that the consideration received by the assessee was more than the consideration mentioned in the agreement then the Revenue could have increased the short term capital gain. On the basis of Section 50C of the Act, the AO was not justified in enhancing the short term capital gain. It will not be out of place to mention here that those transactions which are shown as transaction under Section 50(C) [Explanation-2], even if taken into consideration, the transaction which take place as short term capital gain in total consideration of the payment after sale agreement was determined as ₹ 1.35 crores and it cannot be assessed. Therefore, both the authorities have committed no error in reaching the conclusion. Neither the stamp authority has assessed the complete charges because transaction has not taken place, and in our considered opinion, the valuation which was determined by the AO is nothing but harassment to the honest tax payers of a transaction which has been rightly reversed by the CIT(A) and confirmed by the Tribunal. In this view of the matter, both the CIT(A) and Tribunal have not committed any error. The issue is answered in favour of the assessee and against the department.

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• Customs

• 2017 (9) TMI 1093
  Summon issued under Section 108 of the Act - The challenge to the impugned summons is on very limited ground stating that no useful purpose would be served by directing the petitioner to appear before the second respondent, inasmuch as, already the petitioner has appeared and statement has been recorded - mis-declaration of value of imported second hand machinery - natural justice - Held that: - Much earlier, the third respondent inspected the business premises of the petitioner and has also recorded statement and seized documents, mobile phones, computer hard disks etc., and once again to summon the petitioner for the very same purpose is only with a view to harass the petitioner and some how make the petitioner accept that he/they has/have under valued the value of the imported goods. According to the petitioner, he has fully complied with the requirement and furnished the necessary document. However, I find that in the impugned summons, there is no direction to the petitioner to produce any documents, which is under his control. Thus, if the petitioner s presence is required for further questioning pertaining to certain information, which they have subsequently secured, the same should have been made known in the impugned summons. However, this may not invalidate the summons by itself, but can be stated to be in violation of the principles of natural justice. As mentioned earlier, the summons cannot be quashed as no investigation can be interfered or thwarted at the very threshold. Petition dismissed - decided against petitioner.

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• 2017 (9) TMI 1092
  Maintainability of appeal - Jurisdiction - Principles of Natural Justice - Classification of imported goods - EL-S-PR Railway Coach-TC (Coach) - re-classified as Not Self-Propelled- passenger coaches, under CTH 8605 of the first Schedule to the Customs Tariff Act, 1975 or otherwise? - if the appellate jurisdiction of this Court has been specifically excluded, when it pertains to determination of the value or regarding the classification of the goods (good), whether this Court exercising jurisdiction under Article 226 of the Constitution would be justified in testing the correctness of the impugned order? - Held that: - Under Section 130(1) of the Customs Act, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after 01.07.2003, not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment. Thus, even in exercise of the appellate jurisdiction, the Division Bench of this Court should be satisfied that the case involves a substantial question of law when an appeal is filed against an order passed by the appellate Tribunal, CESTAT. The jurisdiction of the Court is excluded when such an order of CESTAT relates to determination of the rate of duty of customs or the value of the goods for the purposes of the assessment. In the case of Commissioner of Customs (Exports), Chennai vs. D.S.Metal (P) Ltd., [2015 (9) TMI 924 - MADRAS HIGH COURT], an appeal was preferred by the Revenue challenging the order passed by the CESTAT setting aside the demand by allowing the benefit of an exemption notification in favour of the respondent importer having fulfilled post importation condition of submitting end-use certificate. The Division Bench while considering as to whether appeal was maintainable on such an issue referred to the decision of the Hon'ble Supreme Court in the case of Navin Chemicals Manufacturing and Trading Co., Ltd., vs. Collector of Customs, [1993 (9) TMI 107 - SUPREME COURT OF INDIA] and held that the issue which arise for consideration is what will be the rate of duty that is payable by the importer, but for the notification in question and by applying the law in the case of Navin Chemicals Manufacturing and Trading Co., Ltd., and taking note of Section 130 of the Customs Act, it was held that the appeal is not maintainable, as the question has a direct and proximate relationship to the rate of duty and to the value of goods for purposes of assessment. The Writ Petition is not maintainable and the petitioner has to avail the remedy provided under the Act. This is sufficient to dismiss the Writ Petitions and relegate the petitioners to appellate remedy provided under Section 129A(1) of the Customs Act. The proper officer of customs while assessing a bill of entry has to be necessarily guided and mandatorily to follow the appropriate tariff as per the Customs Tariff Act and collect duty at the applicable rate. If on the contrary, pursuant to a bilatory treaty, the Government had amended the tariff heading, it would have been a different matter. Therefore, this issue has to be agitated by the petitioner before the appellate forum and not in a Writ Petition. Petition dismissed being not maintainable.

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• 2017 (9) TMI 1091
  Release of detained goods - Held that: - no proceedings have been initiated against the petitioner for the quantity of cargo already released. That apart, the petitioner has been regular importer of the very same goods, and on an earlier occasion, the goods detained were released by obtaining a bond from the petitioner - It appears that, in the instant case, the test report, which has to be obtained by the petitioner based on which, goods covered under 7 Bills of Entry, dated 17.03.2017 released based on simple bond, is the same product and the test report being well within the period of six months, there can be no difficulty for the Department to accept the said report, and provisionally release the cargo. Thus, merely because, the petitioner has given a letter, dated 06.06.2017, stating that 15% of the goods may be detained, cannot operate as estoppel against the petitioner - respondents are directed to release the goods - decided in favor of petitioner..

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• 2017 (9) TMI 1090
  Release of goods seized - smuggling - undeclared prohibited goods - Held that: - the writ petition is disposed of with a direction to the respondents 1 and 2 to take note of the report of the Directorate of Revenue Intelligence, consider the petitioner's application dated 13.07.2017 for provisional release of the goods and pass appropriate orders in this regard within a period of two weeks.

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• 2017 (9) TMI 1089
  Scope of SCN - mis-declaration of goods - DEPB benefit - Held that: - the question of DEPB benefit is not the subject matter of the present appeal inasmuch as the same has been left for the DGFT authority to decide, even by the original adjudicating authority. It is well settled that the claim of wrong entry or a benefit, which is not available to the assessee, cannot be considered to be a mis- description on a mala-fide. The appellant have claimed the entry, and it was for the Revenue to adjudge the assessee s claim. The benefit was claimed by the assessee, according to his knowledge and belief and by making a clear representation to the Revenue. If the customs were of the opinion that such benefit is not available to the assesse, they were within their powers and jurisdiction to examine the same and to deny it. Similarly, a claim made by the assessee, which have not been found favour with by the Revenue, cannot be adopted as a ground to penalise the assessee. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1088
  Refund of SAD - time limitation - Refund claim was rejected by the adjudicating authority as refund claim was said to be filed after the expiry of one year from the date of payment of duty by the respondent - Held that: - reliance placed in the case of Sony India Pvt. Ltd. Versus The Commissioner of Customs [2014 (4) TMI 870 - DELHI HIGH COURT], where it was held that In the absence of specific provision of Section 27 being made applicable in the said notification, the time-limit prescribed in this section would not be automatically applicable to refunds under the notification - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1087
  Manufacture - whether all the components imported by the appellant namely Cylinders / Piston / connecting rods / crank shaft / exhaust valves constitutes the complete engine? - Held that: - In the instant case old record is not available but inspiration can be drawn with another order passed by the Commissioner in the subsequent assessment year 10.01.2002 to July 2003 in the assessee’s own case where It has been categorically mentioned in these certificates that without these components as listed, the internal combustion engine cannot function or have any of the essential features of an IC engine and give the required performance - the Commissioner (A) has rightly granted the relief to the appellant - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1086
  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.

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• 2017 (9) TMI 1085
  Jurisdiction - power of DRI to issue SCN - proper officer - 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.

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• 2017 (9) TMI 1084
  Jurisdiction - power of DRI to issue SCN - proper officer - 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.

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• 2017 (9) TMI 1083
  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.

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• 2017 (9) TMI 1082
  Jurisdiction - power of DRI to issue SCN - proper officer - 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.

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• 2017 (9) TMI 1081
  Jurisdiction - filing of Drawback claim before wrong forum - rejection on the ground of time limitation - Held that: - the period of one year got consumed for no fault of the Appellant - since the appellant had filed their claim within time before the wrong forum, and thereafter repeatedly filed before the authorities as per direction of the concerned authority, therefore, there is no delay in filing drawback claim - matter is remanded to the ld. Commissioner of Central Excise for adjudicating the claim in accordance with its merit - appeal allowed by way of remand.

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• 2017 (9) TMI 1080
  Docket order - reduction in quantum of penalty - validity of second order - Held that: - although vide letter dated 19.10.2009, a fair order is said to have been placed before the Member (Judicial) by the SPS, we do not find any such order as part of the records. We are not able to say whether the said order was signed or approved by any Member. Thus, we conclude that the first docket order is not supported by any reasons and therefore is withdrawn - the appeal filed by appellant Shri Haren Choksey having been remanded, has to be heard on merits.

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• 2017 (9) TMI 1079
  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.

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• Corporate Laws

• 2017 (9) TMI 1076
  Strike off the name of the petitioner company from the register of Registrar of Companies - seeking restoration of name - Held that:- The primary grievance made by the petitioner is that no notice in terms of provisions Section 560 (1) & (2) has been issued and the principles of natural justice stand violated whereas the stand taken by the Registrar in its reply is that notice under Section 560 (5) of the Companies Act, 1956 was issued giving a warning to the petitioner company that its name would be struck off the register of the Registrar of Companies. Therefore, all notices prior to notice under Section 560(5) are deemed to have been served because it was a necessary consequence of notices issued under Section 560 (1), (2), (3) & (4) of the Companies Act, 1956. After bestowing our thoughtful consideration on the submissions made at the bar, we are of the view that the provisions of Section 560 (1) to (4) are deemed to be the whole procedure culminated in publishing a Notification dated 23.06.2017 followed. There is no room to doubt about any lapse on the part of the Registrar of Companies, The record being old has been shifted to Manesar and is reported to be untraceable. The basic ground available under Section 560 (6) for restoring a company to its original name is completely impeded because the petitioner has admitted in para 12 of the petition that for the last twelve years no operation has been carried out by the company. The company has not been carrying on business or in operation and therefore, the benefit of the grounds available for restoration cannot be extended to the petitioner. We also find that it is not just and proper to restore the name of the petitioner No. 1 Company on the register of the Registrar of Companies under Section 560(6) of the 1956, Act particularly when another company with the same name stand already incorporated.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 1078
  Corporate Insolvency Resolution Process - provisions of Insolvency & Bankruptcy Code, 2016 - pendency of the winding up petitions - Held that:- Taking into consideration all and more particularly the differing views taken by coordinate benches of this Tribunal, this Special Bench is of the considered view that the matter should be placed before the Hon'ble President of NCLT for the purpose of being transferred to a Larger Bench or as the Hon'ble President may deem fit in accordance with the second proviso to sub-section (2) of Section 419 of the Companies Act, 2013 and the question to be referred to such Bench as the Hon'ble President, NCLT may deem fit and proper is as follows:- “1. Whether the process under the Insolvency and Bankruptcy Code, 2016 can be triggered in the face of the pendency of the winding up petitions before the respective High Courts or it is to be considered as an independent process? 2. In case the process is considered to be not independent, whether the petition filed under the Code is required to be transferred to the concerned High Court which is having seisin over the winding up proceedings or await the outcome of the winding up proceedings by adjourning it sine die? 3. Whether the Code gives any room for discretion to be exercised for adjourning it sine die in view of the statutory mandate given under Sections 7, 9 and 10 of the Code for expeditious disposal of cases by either admitting or rejecting it within the fixed time frame? 4. In case if the petition is adjourned sine die and if the winding up petition is dismissed or set aside in appeal subsequently, whether there is scope in such an eventuality for power of revival within the frame work of the Code conferred on this Tribunal?” The Registrar, NCLT, New Delhi is directed to place the above reference made by this Special Bench, NCLT, New Delhi by virtue of second proviso to sub-section (2) of Section 419 of the Companies Act, 2013 as expeditiously as possible before the Hon'ble President

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• 2017 (9) TMI 1077
  Corporate insolvency procedure - application under Sec.9 of Insolvency and Bankruptcy Code, 2016 - pre-existing dispute between the parties - Held that:- In this case admittedly the petitioner has not given any document to prove the date of service of notice on the corporate debtor. Operational creditor has also failed to file affidavit to show that there is no compliance of sub-clause (c) of Clause (5) Rule 9. There is also no compliance of sub-clause (d) of Clause (5) of Rule 9, because operational creditor has not filed any affidavit to specify whether he has received any notice of dispute from the corporate debtor. Compliance of this provision is mandatory and not discretionary. Since the operational creditor has failed to comply with the statutory provision so on the above grounds the petition cannot be admitted. It is pertinent to mention that this petition has been filed on account of unpaid salary dues from May, 2016 to February, 2017 and total claim of the operational creditor is ₹ 35,00,000/-. It is also pertinent to mention that the claim of the petitioner is based on the basis of order passed by NCLT on 18/8/2016. This clearly shows that the claim of the operational creditor is mainly on the basis of existing dispute between the parties, which is pending in NCLT. Sub-section 3(b) of Sec.9 provides that operational creditor has to file an affidavit to the effect that there is no notice given to the corporate debtor relating to dispute of unpaid operational debt. In this case the operational creditor has not submitted any affidavit in compliance of sub-clause (3)(b) of Sec.9 and the documents which have been filed by the corporate debtor in reply clearly indicates that dispute is pending between the parties before the NCLT and claims of operational creditor is based on the order of the NCLT in that case. In case of pre-existing dispute, provision of Sec.9 of IB Code cannot be invoked. It is thus clear that the application under Sec.9 is not maintainable on account of pre-existing dispute between the parties.

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• Service Tax

• 2017 (9) TMI 1075
  Jurisdiction - authority of the DGGSTI (as the DGCEI is now known) to proceed with the impugned SCN - Validity of the SCN issued by the DGCEI (and now continued by the DGGSTI) - classification of servicesHeld that: - it appears prima facie that unless the Respondents are able to satisfy the Court that the DGGSTI (earlier DGCEI) is duly authorised in terms of the FA to proceed with the SCN, the continuation of the proceedings would amount to a parallel exercise of determination of service tax liability for a past period in respect of which the Petitioner’s returns have already been assessed by the jurisdictional Commissionerate - it is directed that till the next date of hearing further proceedings pursuant to the SCN dated 2nd December, 2016 shall remain stayed.

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• 2017 (9) TMI 1074
  Power of Commissioner of Central Excise (Appeals) to condone delay - Section 35(1) of the Central Excise Act, 1944 - condonation of delay - the delay was caused on account of illness of the concerned official of the petitioner-company - Held that: - In view of the limitation of the respondent- authority by a statutory provision, even the genuine cases for condonation of delay cannot be considered and that is why such delays have been condoned by this Court in some cases - Since the present case is also of the same nature, the present petition is also disposed of in same terms and condoning the delay - similar issue decided in the case of M/s. Apotex Research Pvt. Limited, M/s. Surfa Coats (India) Private Limited Versus The Union of India, The Commissioner of Central Excise (Appeals-I) , The Additional Commissioner of Central Excise [2017 (1) TMI 872 - KARNATAKA HIGH COURT]. The matter is restored to the said respondent-Commissioner of Central Excise (Appeals), Mysore, for deciding the appeal on merits - delay condoned - petition allowed - decided in favor of petitioner.

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• 2017 (9) TMI 1073
  Non-payment of service tax - case of appellant is that the appellants were doing the job work as well as the work of maintenance and repair. Due to bona-fide mistake, they showed the maintenance and repair charges under the ledger relating to job work - Held that: - The appellants, who are registered under this service and regularly paying the Service Tax for this service, are expected to be aware of repair charges and job work. They failed to establish that the job charges as reflected in the balance sheet are different from the repair and maintenance service charges. Besides, there is no job work challans or any other documentary evidence to justify the receipt of so called job work charges. Hence, we hold that the appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability. Since they had deliberately and knowingly suppressed the value of taxable services in the guise of job charges and mis-declared the value, we find no infirmity in the order of the Ld. Commissioner (Appeals) upholding the demand, interest and penalty under Section 78 of the Finance Act. However, the appellants would be entitled to the benefit of 25% of the reduced penalty in view of the ratio laid down in the judgment of the Hon'ble Punjab & Haryana High Court in the case of M/s Sunshine Steel Corporation Vs. CCE, Chandigarh-I [2017 (4) TMI 34 - PUNJAB AND HARYANA HIGH COURT] - Section 78(I) is pari-materia to Section 11AC and the second and third proviso to Section 78 of the Finance Act, 1994 are pari-materia to first and second proviso respectively of Section 11 AC of the Central Excise Act. Since they had already paid the full amount of duty determined under Section 73(2) and the interest before the issue of show cause notice thereby meeting the requirement of second proviso of Section 78 of Finance Act, 1994, the appellants are entitled to the benefit of reduced penalty. As for the simultaneous penalty under Section 76 and 78, the Hon'ble Punjab & Haryana High Court in the case of CCE Vs. First Flight Courier Ltd. [2011 (1) TMI 52 - PUNJAB AND HARYANA HIGH COURT] has held that penalty under Section 76 may not be justified if the penalty has already been imposed under Section 78 of the Finance Act 1994. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1072
  Classification of services - Cargo Handling Services or Manpower Recruitment Agency service - case of Revenue is that the appellant has not provided any evidence on record except a contract dated 25.10.2005 awarded to them by JCT for internal handling and movement of raw material, finished goods, husk feeding and misc. jobs - Held that: - even in terms of the said contract, services to be provided by the appellant were internal movement of the cargo in the factory of the JCT. There is no dispute on the above scope of the services provided by the appellant - the issue stands decided in the case of Gaytri Construction Co. Vs. CCE, Jaipur [2011 (9) TMI 481 - CESTAT, New Delhi], where it was held that shifting of goods within the factory premises and the manpower supplied by the service provider cannot be held to be classifiable under Cargo Handling Service. The appellants have contended the service fall under the category of Manpower Recruitment Agency, which were brought under the service tax w.e.f 16.06.2005. The appellant was also registered with the said category w.e.f. 28.06.2005 by the department itself and thereafter, no objection has been taken by the Revenue. These facts support the appellants claim that they were providing Manpower Recruitment Agency service even during the period prior to their date of registration. Extended period of limitation - Held that: - No specific instances or evidence of any suppression or mis-statement with a mala-fide intention stands attributed to the appellant, except a bald statement that they did not get themselves registered and did not follow the due procedure, so as to justifiable invoke the longer period of limitation - extended period not invocable. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1071
  Management consultancy service - real estate agent service - demand of service tax - Held that: - On careful consideration of the scope of the agreement, we note that there is no consultancy service with reference to improvement of organizational efficiency of the client - It is clear that transfer of know-how by the respondent to the client does not amount to management or business consultant service, as seen from the terms of agreement in the present case - reliance placed on the decision of the Tribunal in Castrol Ltd. Vs. CCE, Raigad [2007 (3) TMI 140 - CESTAT, MUMBAI], where it was held that said activity can't covered under 'MCS'. Real Estate Agent Service - Held that: - There is nothing in the show cause notice or the relied upon documents to show that the respondent acted in a capacity of “real estate agent” between the earlier owner and the new buyer of the flat. The changes made in the records of the respondent are not causative factors for such sale or purchase - no service tax liability can be confirmed against the respondent under this category. Maintenance or repair service - Held that: - Advice or consultancy rendered by the appellant is not covered by maintenance or repair of immovable property. Admittedly the appellants are not involved in any activity of management, maintenance or repair. Maintenance charges attributable to the money collected from the owners of plot/flat/office for maintenance of the said properties - Held that: - the entire building which was maintained and managed by the appellant/assessee for a consideration is for the collective benefit of the owners of the individual units in the building. Each owner is collectively and severely got the benefit of said maintenance - the consideration paid by the owners of flat/plot/office is liable to service tax - demand upheld. Time limitation - Held that: - the appellant/assessee is a well organized large scale real estate developer. As such, it is not tenable for them to submit that they were not fully aware of the legal implications of various service tax entries applicable to them - there is no bonafide belief in the present case for non-payment of service tax in time - extended period rightly invoked. Appeal dismissed - decided partly in favor of assessee.

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• 2017 (9) TMI 1070
  Commercial Training or Coaching Service - claim of the appellants is that they will not be covered by the above definition since IIMT is owned and run by different entities during the period under consideration, however these entities were being run with no profit motive - whether the activities carried out by IIMT will be covered within the definition of Commercial Training or Coaching Centre as above? - Held that: - from the very fact that the explanation was inserted retrospectively, and is qualified by the words “for removal of doubts” it is evident that there were doubts regarding applicability of the definition as it stood before the insertion of the explanation. It is also a settled position of law that there can be no allegation of evasion when such doubt existed in the interpretation of the definition. It is also well settled that demand for service tax cannot be created with retrospective effect by insertion of explanation - the demand for service tax has to be restricted to that falling within the normal time limit. Whether they will be entitled to benefit of exemption notification issued for vocational training? - N/N. 9/2003 as well as N/N. 24/2004 - Held that: - The appellant will be entitled to benefit of N/N. 9/2003 as well as N/N. 24/2004 only in respect of the courses such as VLSI design as well as Food & Beverage service and nor to other courses leading to award of degree by U. K. University. Demand upheld only for normal period - Matter is remanded to the adjudicating authority only for re-quantification of the service tax demand within the normal time limit - appeal allowed in part.

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• 2017 (9) TMI 1069
  Penalty - service of air transport of passengers - natural justice - Held that: - it is clear that the adjudicating authority has not taken enough care to examine thoroughly all the submissions raised before him in relation to the show cause notice. The adjudicating authority has not made the detailed analyses to convincingly arrived the liability of tax to be recovered from M/s Japan International Airlines. CENVAT credit - input services - Held that: - the adjudicating authority has not examined the plea of the assessee that ‘subject input services are related to the output services’. When it is so, the impugned order is set aside and the matter is remanded back to the Original Adjudicating Authority. Appeal allowed by way of remand.

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• 2017 (9) TMI 1068
  Business Auxiliary services - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - contention by the Revenue in their appeals is that the Original Authority erred in holding that the respondent were not liable to service tax under BAS finding the nature of service as statutory and sovereign, as provided by the Governments - Held that: - Admittedly, the smart card for vehicle registration is issued by Government of Maharashtra. The applicant for such smart card cannot be considered as a client to be covered under BAS tax entry. The registration of vehicle is a statutory obligation and non-compliance will attract penal consequences. GOM is implementing such statutory provision. The fee for issuing such card is fixed in terms of motor vehicle regulations and as noted by the Original Authority on payment of such fee only the process of preparation of smart card can be initiated. The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work does not take away the merit that the whole process of issue of smart card for applicant is statutory function which only the Government Road Transport Authority can do - there is no scope for application of clause (vi) of Section 65 (19) in the scheme of things, as discussed above, there is no provision of service on behalf of the client in the present case. The Hon’ble Madhya Pradesh High Court in the case of CCE, Bhopal Vs. Smart Chip Limited [2015 (7) TMI 886 - MADHYA PRADESH HIGH COURT] relying on the decision of the Tribunal in CCE, Indore Vs. Ankit Consultancy Limited [2006 (10) TMI 61 - CESTAT, NEW DELHI] held that the activities of the appellant with reference to service centres in different offices of the transport department cannot be taxed under Business Auxiliary Service. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1067
  Mining services - activity of excavation of overburden and earthwork, and shifting of the same from mine pit to other areas within the factory - demand for the period before 01.06.2007 - Held that: - the mining service was made taxable w.e.f. 01.06.2007. After this date, the department has accepted the services provided by the appellant as mining services. Hence, prior to 01.06.2007, the same cannot subject to service tax under a different service - similar issue decided in the case of M/s National Construction Company Versus CCE, Jaipur [2014 (3) TMI 79 - CESTAT NEW DELHI], where it was held that service tax demand for the period prior to 16/6/05 is not sustainable at all - the demand for the period prior to 01.06.2007 pertaining to the mining services set aside. Valuation - Free supply of diesel by the customers - Held that: - similar issue decided in the case of M/s Bhayana Builders (P) Ltd. & Others Versus CST, Delhi & Others. [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], where it was held that The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994 - decided in favor of appellant. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1066
  Sharing of expenses - Business Auxiliary Service - promotion of business of group companies - expenses relating to sales, marketing and general business promotion of all the group companies and the said expense was shared in proportion to the turnover, with the said group companies - Held that: - The appellant is not per-se engaged in promoting sales or business of group companies. No evidence to that effect has been brought out. In fact, the arrangement is all group companies will benefit from a sales promotion and other related activities of third parties, for which expenses are to be borne by the appellant and thereafter to be shared with other group companies. In such arrangement, there is no scope for tax liability on the part of the appellant under the category of BAS. The Hon’ble Supreme Court in Gujarat State Fertilizers and Chemicals Ltd. and Anr. Vs. CCE [2016 (12) TMI 103 - SUPREME COURT], examining a similar set of facts, held that sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement. There is no taxable service in the arrangement as discussed in the present appeal - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1065
  Penalty u/s 76 and 78 - appellant have paid full service tax with applicable interest before the adjudication of the tax liability - invocation of section 80 - interpretation of statute - Held that: - the reasonable cause for non-payment of service tax during the material time has already been taken note of by the Original Authority. Further, the appellant who is a Government of India Undertaking has fully discharged the service tax with applicable interest before even the service tax liability was confirmed in the first adjudication order - appellant being a Government company creates a rebuttable presumption of nonexistence of any malafide on their part. Though Section 76 penalty is not with reference to malafide intend, this is also a penal provision for non-payment of service tax in time - Section 80 provides for waiver of penalty under Section 76 if reasonable cause is shown for non-payment of tax in time - penalty u/s 76 waived - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1064
  Classification of services - Cargo Handling Services - appellants have entered into an agreement with M/s Rajasthan State Mines and Minerals Limited, Jodhpur for providing services of loading limestone gitties into trucks, transportation from Sonu Landstone Mines- I & II to Jaisalmer railway station, unloading the same at railway plots, stacking and then loading these gitties into railway wagon - Held that: - The qualification to undertake the work for the client, as mentioned in the pre-qualifying criteria for tendering, makes it clear that the tenderer should be basically a fleet operator with minimum of 50 trucks, though equipment and experience for mechanized loading in railway wagons is also one of the criteria - the pre-qualification makes it clear that the contract is essentially for transportation and incidentally for loading of transported cargo into the railway wagons. The service agreement now under consideration is essentially for transportation of lime stone over a long distance, by trucks. The appellant is not paid any consideration for loading which is automatically done from the hoppers. They are involved in stacking and loading of lime stone in the railway yard after transportation - the proposal of the Revenue to demand service tax on the whole of consideration received by the appellant treating the same is cargo handling service is not legally sustainable - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (9) TMI 1063
  Clandestine removal - parallel invoices issued by the appellant no.1 - demand also on the basis of batch register, RG-1 register and various statements - Held that: - it is an admitted fact that the appellant had clandestinely cleared the goods worth ₹ 33,27,015/- involving the Central Excise duty of ₹ 5,32,322/-. This is also undisputed that parallel invoices were found from the records resumed from the factory and in follow-up searches at the Delhi sale depot. The fraudulent clearances on these invoices as per the table given on the preceding pages were fairly admitted by the Ld. Advocate during his oral submissions - the order of the Ld. Commissioner (Appeals) in so for as it relates to the demand of ₹ 5,32,322/- on account of these fraudulent invoices is upheld. Application for extended period for this demand is also upheld. he rest of the demand is mainly based on figures in the Batch Register and the statements of various company officials. While the appellants have pleaded that there was selective reading of the Batch Register and no finding have been given by the adjudicating authority on the statement of the chemist, I also find that the finding of the Ld. Commissioner (Appeals) on the retraction of the statements extracted below, shows that there is element of assumption and presumption while appreciating the evidence - the demand of ₹ 25,48,526/- is set aside and the matter is remanded to the adjudicating authority for de novo adjudication. Decided partly against appellant and part matter on remand.

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• 2017 (9) TMI 1062
  Refund of unutilised CENVAT credit - denial on the ground that the assessee had not exported the OTS Cans themselves - Held that: - there is no dispute that the assessee manufactured and cleared OTS cans under the cover of ARE-3 and the Bond furnished by the fruit pulp manufacturers for export of goods - Rule 5 of CCR, 2004 allowed refund of Cenvat Credit, where the input or input service is used in the manufacture of final product which is cleared for export under Bond. In the present case the OTS cans were cleared under Bond to the fruit pulp manufacturers, who, in turn exported the goods. In any event, it is required to be verified from the records of the export of the goods - the matter is remanded to the adjudicating authority to decide afresh - appeal allowed by way of remand.

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• 2017 (9) TMI 1061
  CENVAT credit - Duty paying invoices - fake invoices - M/s.HSAL had only supplied invoices to various parties without supplying the goods - Held that: - the fictitious nature of transfer taken of inputs recorded by the Ld. Commissioner (Appeals), is completely contradictory to his conclusion at the end of order that the inputs were actually received by the appellant and the department did not prove that inputs were not received in the factory, categorically. The provisions of Section 9D of the Central Excise Act, 1944 have not been followed by the adjudicating authority, which were required to be followed as per law at that time. It is well settled principle that the adjudicating authority cannot straightaway rely on the statement recoded during investigation unless the conditions set out in Section 9D are fulfilled. The matter requires to be adjudicated afresh by the adjudicating authority after following the procedure laid down under Section 9D of the Act and by following the principles of nature justice - appeal allowed by way of remand.

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• 2017 (9) TMI 1060
  N/N. 214/86 CE dated 25 March, 1986 - job-work - whether the appellant have violated the provisions of job work and/or the scheme of job work as notified under N/N. 214/86 CE dated 25 March, 1986? - Held that: - there is no allegation in the show cause notice of the violation of any of the conditions of the N/N. 214/86 CE - proper declarations have been filed by the principal manufacturer, which have been accepted by the Department, particularly by the Assistant Commissioner of Central Excise having jurisdiction over the factory of the appellant - the learned Commissioner have observed that there is only a venial or technical breach and the whole situation is Revenue neutral. There being no malafide intention on the part of the appellants to evade payment of duty, the SCN is misconceived and not maintainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1059
  CENVAT credit - input services - civil construction of work, construction of office buildings, godowns, draining system, residential complex etc - denial on account of nexus - Held that: - admissibility of Cenvat Credit of service tax paid on construction of compound wall, construction of rest rooms and construction of dormitory for staff are settled issues, therefore, in respect of said three issues covered by commercial or industrial construction service, credit is allowed. Insofar as the credit distributed by ISD is concerned the submissions by learned counsel established that the services for which credit was distributed were eligible as per the definition of input service under Rule 2 (l) of Cenvat Credit Rules, 2004 - credit allowed. Penalty is also set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1058
  Valuation - includibility - it appeared to Revenue that the said goods cleared under DGS&D rate contract were inclusive of excise duty and such excise duty was collected by appellant but was not credited to exchequer - Held that: - it was held that what is stated in the contract document for supply of the goods indicating that what will be the excise duty is immaterial and whether the provisions of Section 11D are invocable or not is to be examined of the basis of documents which are mentioned in Section 12A of CEA, 1944 - appeal allowed.

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• 2017 (9) TMI 1057
  Clandestine removal - Medicines - SSI exemption - The case of the Revenue is based on rough register maintained by Chemist Shri R A Singh - Held that: - the presumption taken by the revenue that such quantity has been produced is without any positive evidence - demand has been confirmed against the assessee based on Annexure D to the show cause notice which shows that entries made in the register as well as entries made in RG 1 register and difference thereof is demanded. Revenue has failed to explain why there are double entries and why they have taken the quantity as cleared clandestinely and how the quantity was arrived. No corroborative evidence has been produced by the Revenue. Therefore, the said register maintained by Chemist is a rough register and the same cannot be a piece of evidence to allege clandestine clearance of goods and in the absence of corroborative evidence - the said register cannot be the basis of clandestine removal of goods. Certain statements were also relied upon to allege clandestine clearance of goods by the assessee. the said statements cannot be relied upon in the absence of any corroborative evidence. No other corroborative evidence has been produced by the Revenue to allege clandestine clearance of the goods - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1056
  Valuation - goods supplied in bulk packing to the appellant's processor for re-packing into retail packs - to be classified under the provisions of Section 4 (i)(a) or under section 4 (i)(b) of the Central Excise Act, 1944? - applicability of Rule 6 (b)(i) of the Central Excise (Valuation) Rules, 1975 - Held that: - the product manufactured by the appellant is derived by chemical process of raw materials and further precise processing. The manufacturing process and technology adopted by the appellant, may be different from that adopted by M/s Laxman. The valuation cannot be adopted on the basis of the price at which M/s Laxman has sold the goods to the appellant. It would be more appropriate to determine the value on the basis of the cost of production including profits, if any - the valuation has been determined only by adopting a notional profit of 10% on the cost of production which is reasonable. Time limitation - Held that: - the adjudicating authority has recorded categorical finding in Para 5.10 for price declaration for the year 1997 and the subsequent years that the price is based on comparable goods purchased from other manufacturers - this case is to be one of willful mis-statement - time limitation not applicable. Appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1055
  Clandestine removal - the case has been booked against the appellants alleging clandestine removal of the goods on the basis of investigation conducted on 11.10.2007 in the factory premises as well as residential premises and at the places of various buyers etc. - Held that: - There is no evidence on record how the goods were removed from the factory of the appellant - It is also a fact on record that the appellant is also trading certain electronic items like iron and toaster. No effort has been made to find out the value and clearance of iron and toaster. It is evident on record that the appellant are engaged in the activity of trading iron and geyser and other electronic appliances. It is a fact on record that the appellant is manufacturing only ceiling fans, exhaust fans and geyser. Therefore, without establishing the fact that the appellant has manufactured the goods, the duty cannot be demanded - in the Show Cause Notice one of the allegation is that the appellant have been procured raw material in clandestine manner to manufacture of the goods. That is based on the documents recovered from the residential premises of the appellants. Those documents does not pertain to the period in dispute and no other evidence is available on record for procurement of the said raw material clandestinely. Therefore, in the absence of any corroborative evidence, the documents recovered from the residential premises cannot be the basis to allege manufacture and clandestinely removal of goods. Further, the documents recovered from the residential premises does not form part of the relied upon documents, therefore the said documents cannot be relied upon - the charge of clandestine removal of goods is not sustainable - penaltyv also set aside. Confiscation of the Indian currency - Held that: - no documents has been placed on record that the said Indian currency is the sale proceeds of clandestine manufacture and removal of goods, therefore, the Indian currency recovered from the premises of Shri Ish Kumar is not liable for confiscation. Confiscation of finished goods which were not recorded in their stock - Held that: - it is an admitted fact on record that the goods worth ₹ 10,76,721/- were lying in the factory in finished condition and have not been recorded in statutory records. Therefore, the said goods are liable for confiscation - however, the redemption fine imposed on the appellant is on higher side, therefore, the same is reduced to Rs. One lakh - the penalty is also confirmed on the charge of confiscation EEPL of ₹ 1,72,275/- is on higher side. Therefore, the same is reduced to ₹ 50,000/-. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1054
  CENVAT credit - railway construction materials and wagons which were used to maintain railway tracks and for transportation of raw materials, finished goods within the factory premises, respectively - Held that: - the identical issue pertaining to the Railway track came before the Tribunal in the case of assessee, Tata Steel Ltd. vs. Commr. Of Central Excise, Jamshedpur [2016 (1) TMI 1059 - CESTAT KOLKATA], where the cenvat credit was allowed on railway track material used for handling raw materials, process goods - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1053
  Liability of interest - whether the appellant is required to pay interest against reversal of inadmissible credit? - time limitation - Held that: - the appellant had reversed the credit on 18.6.2010 and demand notices were issued on 13/19-7-2011 which is beyond the period of limitation as prescribed under Section 11A of CEA, 1944 for recovery of interest on the credit without allegation of suppression, mis-declaration etc. - demand of interest do not sustain - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1052
  CENVAT credit - time limitation - Held that: - from the Show Cause Notice that the audit was conducted during the period 26.09.2008 to 30.09.2008 and Show Cause Notice was issued on 23.12.2011 demanding the Cenvat Credit for the period 2006-07 to 2008-09 - The Tribunal in the case of Ultratech Cement Ltd. [2016 (1) TMI 520 - CESTAT NEW DELHI] on the identical issue held that the demand for the extended period is not sustainable - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1051
  CENVAT credit - input services - Banking and Financial Service Charges - Mobile Charges - Courier Charges - Repair and Maintenance Charges - Held that: - The admissibility of CENVAT credit of the service tax paid on aforesaid services had been considered by the High Court/Tribunal Cadila Healthcare Ltd’s case [2013 (1) TMI 304 - GUJARAT HIGH COURT] and Nash Industries’s case [2016 (6) TMI 155 - CESTAT BANGALORE] and it has been held that credit on the said services is admissible being satisfies the definition of input service prescribed u/r 2(l) of CCR, 2004 - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1050
  CENVAT credit - duty paid by the 100% EOU M/s Reliance Industries Ltd admittedly without availing the benefit of N/N. 23/2003CE- dt 31.03.2003 - case of Revenue is that irrespective of the fact that whether the appellant availed the benefit of N/N. 23/2003)-CE dt 31.3.2003, the credit be restricted to the extent calculated, in accordance with the formula prescribed u/s 3(7) of CCR, 2004 - Held that: - the notification states that when the 100% EOU unit has paid excise duty under Section 3 of the Excise Act,1944 read with Sr. No 2 of the N/N. 23/2003-CE dt 31.3.2003 the admissible quantum of Cenvat Credit be calculated in accordance with the formula prescribed under the said Rule - In the present case, the show cause notice itself admits that the supplier unit has not availed the benefit of concessional rate of duty mentioned at Sr. 2 of N/N. 23/2003-CE dt.31.03.2003 - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1049
  Refund of unutilised CENVAT credit - denial on the ground that the inputs were not used in a particular month, for the manufacture of exported goods, but used in the subsequent months - Held that: - undisputedly the inputs were used in the manufacture of finished goods which were ultimately exported resulting into accumulation of the Cenvat Credit on which the appellant claimed cash refund as per Rule 5 of CCR, 2004 - It is not the intentions that there should be one-to-one relationship between the inputs and the finished goods in claiming cash refund of the credit, accumulated due to export - the appellant’s are eligible to the cash refund of the accumulated credit, except the amount of credit availed on ‘sugar cess’, included in the said refund claim - decided partly in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 1048
  Penalty u/s 27(3) of TNVAT Act, 2006 - deemed assessment - while dealing with penalty, the respondent has pointed out that the petitioner is a registered dealer only with effect from November, 2013. If the petitioner was not a registered dealer before November, 2013, then, obviously, the petitioner could not have been deemed to have been assessed under Section 22 of TNVAT Act, 2006, prior to the said period - whether the respondent was justified in imposing penalty @ 150% of the tax due, on the petitioner? Held that: - to impose penalty, it would be sufficient to merely mention that there was wilful non-disclosure on the part of the petitioner and that, but for audit, the matter would not have come to light. What is required to be examined is whether the conduct of the assessee was wilful - In the case on hand, except alleging that there has been wilful non-disclosure of assessable turnover, there is nothing on record to show that the petitioner had deliberately acted with an intention to avoid payment of tax. In fact, all the materials have been gathered from the monthly returns filed by the petitioner and there is no other allegation to show that the petitioner had wilfully suppressed the turnover or refused to pay tax an intentionally avoided payment of tax. In such circumstances, the question of levy of penalty on the petitioner for the assessment years 2012-2013 & 2015-2016 does not arise - petition allowed - decided in favor of petitioner.

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• 2017 (9) TMI 1047
  Jurisdiction - sale of a going concern - exemption u/s 2(41) of the TNVAT Act, 2006 and the CST Act, 1956 - Held that: - The effect of the slump sale agreement dated 05 October, 2009, and the question relating to the acceptance of the unregistered slump sale agreement by the Income Tax Department are all matters to be considered on facts. The appellant miserably failed to plead and prove that the issue revolves on the jurisdictional matter alone and the same does not require adjudication by the appellate authority. There are no grounds made out by the appellant to bypass the statutory remedy available - petition dismissed being not maintainable.

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• 2017 (9) TMI 1046
  Jurisdiction - scope of powers under Section 55 of the TNGST Act - rectification of error - Held that: - what was required to be done by the assessing officer is to consider the petition filed by the petitioner under Section 55 of the Act, examining as to whether the notification sought to be relied upon is applicable to the case of the petitioner and whether there is any error apparent on the face of the record. The scope of powers under Section 55 of the TNGST Act is not to review an order passed by it and the requirement being that the error should be apparent on the face of the record to be rectified. The writ petitions are allowed and the impugned orders are set aside and the matters are remanded back to the respondent for fresh consideration, who shall consider the petitioner's application for rectification - petition allowed by way of remand.

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