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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter September 22, 2018 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles 1. Restructuring Corporate Offenses: Government Appointed Panel Suggests in-house adjudication system By: Legal Raasta Summary: A government-appointed panel has proposed restructuring corporate offenses to alleviate the burden on special courts overwhelmed by corporate fraud cases. The panel suggests introducing an in-house adjudication system to handle procedural and technical lapses, shifting 16 out of 81 compoundable offenses from special courts to this new system. The remaining serious offenses will stay under the special courts' jurisdiction. Additional recommendations include governance simplifications, such as de-registering companies for non-maintenance of registered offices, disqualifying directors exceeding their tenure, and enhancing disclosure requirements. These changes aim to improve the ease of doing business and streamline corporate judicial processes. 2. COLLECTION OF TAX AT SOURCE UNDER ‘GST’ By: DR.MARIAPPAN GOVINDARAJAN Summary: The Goods and Services Tax (GST) provisions, effective from July 1, 2017, mandate that electronic commerce operators collect tax at source on behalf of suppliers. As per Section 52 of the Central GST Act, operators must register and collect tax on the net value of taxable supplies, excluding certain services. Registration is compulsory, and operators must submit applications electronically. Amendments and cancellations of registration follow specific procedures. Operators are required to furnish monthly and annual statements detailing collected taxes and supplies. Non-compliance results in penalties, and discrepancies in tax details must be rectified promptly. News 1. Preventive Vigilance – The Key Tool of Good Governance at Public Sector Institutions (Urjit R. Patel, Governor, Reserve Bank of India - September 20, 2018 - at the Central Vigilance Commission, New Delhi) Summary: Preventive vigilance is emphasized as a crucial tool for good governance in public sector institutions, focusing on reducing the likelihood of governance lapses. It involves implementing safeguards to prevent violations, supported by detective and punitive vigilance to identify and deter lapses. The Reserve Bank of India (RBI) prioritizes preventive vigilance through comprehensive measures, including internal audits, ethical codes, and training programs. The RBI's Central Vigilance Cell coordinates these efforts, ensuring transparency and integrity. Preventive vigilance is deemed most effective in the public sector due to its ability to address lapses beyond employee control without demotivating staff. Notifications Companies Law 1. F. No. 01/22/2013 CL-V (Pt-III) - dated 20-9-2018 - Co. Law Companies (Appointment and Qualification of Directors) Sixth Amendment Rules, 2018 Summary: The Companies (Appointment and Qualification of Directors) Sixth Amendment Rules, 2018, issued by the Ministry of Corporate Affairs, Government of India, amends the Companies (Appointment and Qualification of Directors) Rules, 2014. The amendment changes the deadline in the proviso to rule 12A from "before 15th September, 2018" to "before 5th October, 2018." These rules are effective from the date of their publication in the Official Gazette. 2. F. No. 01/16/2013 CL-V (Pt-I) - 905 (E) - dated 20-9-2018 - Co. Law Companies (Registration Offices and Fees) Fifth Amendment Rules, 2018 Summary: The Government of India, through the Ministry of Corporate Affairs, issued the Companies (Registration Offices and Fees) Fifth Amendment Rules, 2018, effective from the date of publication in the Official Gazette. This amendment modifies the Companies (Registration Offices and Fees) Rules, 2014, specifically altering the fee structure in the Annexure, serial number VII. For the financial year 2018-2019, a fee of 500 rupees is applicable from September 21, 2018, to October 5, 2018, and a fee of 5,000 rupees is applicable on or after October 6, 2018. 3. F. No. 01/01/2009- CL-V (Part VII) - dated 20-9-2018 - Co. Law Companies (Indian Accounting Standards) Second Amendment Rules, 2018 Summary: The Companies (Indian Accounting Standards) Second Amendment Rules, 2018, issued by the Ministry of Corporate Affairs, amends the Companies (Indian Accounting Standards) Rules, 2015. Key changes include revisions to the treatment of government grants in financial statements. The amendments allow entities to record non-monetary government grants at nominal value and present grants related to assets by deducting them from the asset's carrying amount. These amendments apply to annual periods beginning on or after April 1, 2018. The changes affect several Indian Accounting Standards, including Ind AS 20, 12, 16, and 38, with specific modifications to paragraphs and appendices. GST 4. 23/2018 - dated 20-9-2018 - CGST Rate Seeks to insert explanation in an entry in notification No. 12/2017 – Central Tax (Rate) by exercising powers conferred under section 11(3) of CGST Act, 2017 Summary: The Government of India, under the powers granted by section 11(3) of the Central Goods and Services Tax Act, 2017, has issued Notification No. 23/2018 to amend Notification No. 12/2017 - Central Tax (Rate). This amendment, dated September 20, 2018, clarifies the scope and applicability of the original notification by inserting an explanation. It specifies that for the purpose of the exemption, the Central Government, State Government, or Union territory must own 50% or more of an entity, either directly or through a wholly-owned entity. 5. 24/2018 - dated 20-9-2018 - IGST Rate Seeks to insert explanation in an entry in notification No. 9/2017 – Integrated Tax (Rate) by exercising powers conferred under section 6(3) of IGST Act, 2017. Summary: The Government of India, through the Ministry of Finance, issued Notification No. 24/2018-Integrated Tax (Rate) on September 20, 2018. This notification amends Notification No. 9/2017-Integrated Tax (Rate) by adding an explanation to clarify the scope and applicability of certain exemptions. Specifically, it states that for the purpose of the exemption, an entity must have 50% or more ownership by the Central Government, State Government, or Union territory, either directly or through a wholly-owned entity. This amendment is made under the authority granted by section 6(3) of the IGST Act, 2017. 6. 23/2018 - dated 20-9-2018 - UTGST Rate Seeks to insert explanation in an entry in notification No. 12/2017 – Union Territory Tax (Rate) by exercising powers conferred under section 8(3) of UTGST Act, 2017. Summary: The Government of India, through Notification No. 23/2018, has amended Notification No. 12/2017 regarding Union Territory Tax (Rate) by adding an explanation under section 8(3) of the UTGST Act, 2017. This amendment clarifies that for the purpose of a specified exemption, an entity must have 50% or more ownership by the Central Government, State Government, or Union territory, either directly or through a wholly owned entity. The principal notification was originally published on June 28, 2017, and was last amended on July 26, 2018. GST - States 7. S.O. 242 - dated 20-9-2018 - Bihar SGST Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies Summary: The Bihar Government's Commercial Tax Department issued a notification on September 20, 2018, under the Bihar Goods and Services Tax Act, 2017. It mandates that electronic commerce operators, excluding agents, must collect a tax at the rate of 0.5% on the net value of intra-State taxable supplies facilitated through their platforms. This applies when the operator collects the payment for these supplies. The notification is issued by the order of the Governor of Bihar and is overseen by the Commissioner State Tax-cum-Secretary. 8. 23/2018-State tax (Rate)-S.O. 244 - dated 20-9-2018 - Bihar SGST Seeks to insert explanation in an entry in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017 Summary: The Bihar Government's Commercial Tax Department issued Notification No. 23/2018-State tax (Rate), dated September 20, 2018, to clarify the scope of Notification No. 12/2017-State Tax (Rate) from June 29, 2017. This amendment, made under the Bihar Goods and Services Tax Act, 2017, adds an explanation to the notification, specifying that for the purpose of the exemption, the Central Government, State Government, or Union territory must own 50% or more of the entity, either directly or through a wholly-owned entity. This clarification aims to better define the applicability of the tax exemption. 9. S.O. 240 - dated 13-9-2018 - Bihar SGST Bihar Goods and Services Tax (Tenth Amendment) Rules, 2018 Summary: The Bihar Goods and Services Tax (Tenth Amendment) Rules, 2018, effective from September 13, 2018, introduce FORM GSTR-9C to the Bihar Goods and Services Tax Rules, 2017. This form is a reconciliation statement for businesses to reconcile turnover and input tax credit as per audited financial statements with the annual return (GSTR-9). It includes detailed instructions for reconciling various financial figures and tax liabilities. The notification outlines the responsibilities of auditors in certifying the accuracy of financial documents and highlights the need for proper maintenance of accounts under the BGST Act, 2017. 10. S.O. 239 - dated 13-9-2018 - Bihar SGST Governor of Bihar, appoints the 1st day of October, 2018, as the date on which the provisions of section 52 of the Bihar Goods and Services Tax Act, 2017 shall come into force Summary: The Governor of Bihar has designated October 1, 2018, as the effective date for the implementation of section 52 of the Bihar Goods and Services Tax Act, 2017. This decision was made under the authority granted by sub-section (3) of section 1 of the Act. The notification was issued by the Bihar Government's Commercial Tax Department on September 13, 2018, as documented in S.O. 239. The order was executed by the Commissioner of State Tax-cum-Secretary on behalf of the Governor. 11. S.O. 238 - dated 13-9-2018 - Bihar SGST Supercession the Notification No. S.O- 181 dated 21st September, 2017 Summary: The Bihar Government, through its Commercial Tax Department, issued Notification S.O. 238 on September 13, 2018, to supersede a previous notification from September 21, 2017. This notification, under the Bihar Goods and Services Tax Act, 2017, appoints October 1, 2018, as the effective date for implementing section 51 of the Act. It applies to authorities, boards, or bodies with significant government participation, societies established by government entities, and public sector undertakings. The provisions concern specific persons outlined in section 51(1) clauses (a), (b), (c), and (d) of the Act. 12. 87/GST-2 - dated 18-9-2018 - Haryana SGST Governor of Haryana appoints the 1st day of October, 2018, as the date on which the provisions of section 52 of the Haryana Goods and Services Tax Act, 2017 shall come into force Summary: The Governor of Haryana has designated October 1, 2018, as the commencement date for the implementation of section 52 of the Haryana Goods and Services Tax Act, 2017. This decision is made under the authority granted by sub-section (3) of section 1 of the Act. The notification was issued by the Excise and Taxation Department of the Haryana Government on September 18, 2018, and is signed by the Additional Chief Secretary to the Government of Haryana. 13. 86/GST-2 - dated 18-9-2018 - Haryana SGST Under section 1(3) to bring Section 51 of the HGST Act (provisions related to TDS) into force with effect from 01.10.2018 under HGST Act, 2017 Summary: The Haryana Government, through its Excise and Taxation Department, has announced that Section 51 of the Haryana Goods and Services Tax Act, 2017, concerning Tax Deducted at Source (TDS), will be effective from October 1, 2018. This notification supersedes a previous one dated September 22, 2017, except for actions taken before the supersession. The provisions apply to authorities, boards, or bodies with significant government participation, societies established by the government, and public sector undertakings. The notification is issued by the Additional Chief Secretary to the Government of Haryana. 14. 84/GST-2 - dated 18-9-2018 - Haryana SGST Under section 148 to extend the due date for filling of FORM GSTR-1 for taxpayer having aggregate turnover up to ₹ 1.5 crores under HGST Act, 2017 Summary: The Haryana Government, under the Haryana Goods and Services Tax Act, 2017, has extended the deadline for filing FORM GSTR-1 for taxpayers with an aggregate turnover of up to 1.5 crore rupees. This notification supersedes previous notifications and specifies that registered persons can furnish details of outward supply of goods or services for various quarters from July 2017 to March 2019 by the specified deadlines. The details for the quarters July 2017 to September 2018 must be submitted electronically by December 31, 2018. Further deadlines for returns from July 2017 to March 2019 will be announced later. 15. EXN-F(10)-24/2018 - 51/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST Governor of Himachal Pradesh is appoint the 1st day of October, 2018, as the date on which the provisions of section 52 of the HP Goods and Services Tax Act, 2017 shall come into force Summary: The Governor of Himachal Pradesh has designated October 1, 2018, as the effective date for the implementation of section 52 of the Himachal Pradesh Goods and Services Tax Act, 2017. This decision was formalized through Notification No. 51/2018-State Tax, issued by the Excise and Taxation Department, under the authority granted by sub-section (3) of section 1 of the Act. The notification was signed by the Principal Secretary of Excise and Taxation, ensuring the relevant provisions of the Act are operational from the specified date. 16. EXN-F(10)-24/2018 - 50/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST Supersession of the notification No. 33/2017-State Tax, dated the 9th October, 2017 Summary: The notification issued by the Excise and Taxation Department of Himachal Pradesh, dated September 17, 2018, supersedes the previous notification No. 33/2017-State Tax from October 9, 2017. It announces that the provisions of section 51 of the Himachal Pradesh Goods and Services Tax Act, 2017, will come into effect on October 1, 2018. This applies to certain authorities, boards, bodies, societies, and public sector undertakings as specified in the Act. The notification is authorized by the Governor of Himachal Pradesh and signed by the Principal Secretary of Excise and Taxation. 17. EXN-F(10)-24/2018 - 49/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST Himachal Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2018 Summary: The Himachal Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2018, effective upon publication in the Official Gazette, introduces FORM GSTR-9C for reconciliation statements. This form requires detailed reconciliation of turnover, tax paid, and Input Tax Credit (ITC) between audited financial statements and annual returns. It includes sections for adjustments, reasons for discrepancies, and auditor recommendations on additional liabilities. The notification also outlines the responsibilities of auditors in certifying the reconciliation. The amendment aims to ensure accuracy in GST compliance and reporting for the financial year 2017-18. 18. S.O. No. 62-22/2018-State Tax(Rate) - dated 11-9-2018 - Jharkhand SGST Amendment in the Notification of the Government of Jharkhand, in the Department of Commercial Taxes, No.8/2017 – State Tax (Rate), dated the 29th June, 2017. Summary: The Government of Jharkhand has amended Notification No. 8/2017-State Tax (Rate) dated June 29, 2017, under the Jharkhand Goods and Services Tax Act, 2017. The amendment changes the deadline from September 30, 2018, to September 30, 2019. This change, made in the public interest on the Council's recommendation, is effective retroactively from August 6, 2018. The original notification and its last amendment were published in the Gazette of Jharkhand on June 29, 2017, and July 18, 2018, respectively. The amendment was ordered by the Additional Chief Secretary on behalf of the Governor of Jharkhand. 19. S.O. No. 61-35/2018-State Tax - dated 11-9-2018 - Jharkhand SGST Amendment in the notification of the Government of Jharkhand in the Commercial Taxes Department, No. 34/2018- State Tax, dated the 21th August, 2018. Summary: The Government of Jharkhand amended Notification No. 34/2018-State Tax, originally dated August 21, 2018, under the Jharkhand Goods and Services Tax Act, 2017. The amendment, effective from August 21, 2018, introduces a proviso requiring the electronic submission of FORM GSTR-3B for July 2018 via the common portal by August 24, 2018. This change was enacted following recommendations from the Council and is documented in Notification No. 35/2018-State Tax, dated September 11, 2018. 20. 19/2018 - dated 14-9-2018 - Karnataka SGST Seeks to bring section 52 of the CGST Act (provisions related to TCS) into force w.e.f 01.10.2018 Summary: The Government of Karnataka, under the Karnataka Goods and Services Tax Act, 2017, has announced that the provisions of Section 52, related to Tax Collected at Source (TCS), will be effective from October 1, 2018. This decision is formalized in Notification No. 19/2018, issued by the Finance Secretariat, and is authorized by the Under Secretary to the Government, Finance Department. 21. 18/2018 - dated 14-9-2018 - Karnataka SGST Supercession of the Government of Karnataka Notification (7/2017) No. FD 47 CSL 2017, dated the 15th September, 2017. Summary: The Government of Karnataka has issued Notification No. FD 47 CSL 2017, dated 14th September 2018, under the Karnataka Goods and Services Tax Act, 2017, superseding a previous notification from 15th September 2017. This notification appoints 1st October 2018 as the effective date for the implementation of Section 51 of the Act. It applies to specified authorities, boards, or bodies with significant government participation, societies established by the government or local authorities, and public sector undertakings. This action is authorized by the Governor of Karnataka and communicated by the Under Secretary to the Government, Finance Department. 22. 17/2018 - dated 10-9-2018 - Karnataka SGST Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores. Summary: The Government of Karnataka has extended the due date for filing FORM GSTR-1 for taxpayers with an aggregate turnover up to 1.5 crore rupees under the Karnataka Goods and Services Tax Act, 2017. This notification supersedes previous notifications and specifies that registered persons can file details of outward supplies for various quarters from July 2017 to March 2019 by specified deadlines. Special provisions apply to businesses in Kodagu district and those with a GST Identification Number obtained under a specific notification. The details must be submitted electronically through the common portal by the designated dates. 23. 01-T/2018 - dated 10-9-2018 - Karnataka SGST Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated. Summary: The notification issued by the Office of the Commissioner of Commercial Taxes in Karnataka extends the deadline for filing FORM GSTR-3B for taxpayers who have recently obtained their Goods and Services Tax Identification Number (GSTIN). These taxpayers, who are newly migrated, are required to file their returns for the period from July 2017 to November 2018. The filing must be completed electronically via the common portal by December 31, 2018. This amendment is made under the powers granted by the Karnataka Goods and Services Tax Act, 2017, and follows recommendations from the Council. 24. (01-S/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated. Summary: The notification issued by the Office of the Commissioner of Commercial Taxes in Karnataka extends the deadline for filing FORM GSTR-3B for newly migrated taxpayers. The amendment applies to those who obtained their Goods and Services Tax Identification Number (GSTIN) as per Notification (13/2018) dated August 6, 2018. These taxpayers are required to file their returns for the period from July 2017 to November 2018 electronically by December 31, 2018. This extension is made under the authority of section 168 of the Karnataka Goods and Services Tax Act, 2017, following recommendations from the Council. 25. (01-R/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated. Amendments in the Notification (1-C/2017)No. KGST.CR.01/17-18 dated the 08th August, 2017 and Notification (1-W/2017)No. KGST.CR.01/17-18 dated the 15thNovember, 2017. Summary: The notification issued by the Office of the Commissioner of Commercial Taxes in Karnataka amends previous notifications regarding the filing of FORM GSTR-3B for newly migrated taxpayers. It extends the deadline for filing returns for the period from July 2017 to November 2018. Taxpayers who have obtained a GST Identification Number under Notification (13/2018) must now file electronically by December 31, 2018. This amendment is made under the authority of the Karnataka Goods and Services Tax Act, 2017, following recommendations from the Council. 26. (01-Q/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST supercession the Notification (1-A/2017) No. KGST.CR.01/17-18 dated the 8th August, 2017, Notification (1-X/2017) No. KGST.CR.01/ 17-18 dated 15th November, 2017, Notification (1-D/2018) No. KGST.CR.01/17-18 dated 11thApri1, 2018, Notification (1-J/2018) No. KGST.CR.01/17-18 dated 10th August, 2018 Summary: The notification issued by the Office of the Commissioner of Commercial Taxes in Karnataka supersedes previous notifications and extends the deadlines for registered persons with an aggregate turnover of more than 1.5 crore rupees to furnish details of outward supplies in FORM GSTR-1. For the months from July 2017 to September 2018, the deadline is extended to October 31, 2018, and for October 2018 to March 2019, the deadline is extended to the eleventh day of the succeeding month. Additionally, taxpayers with a GSTIN obtained under a specific notification have until December 31, 2018, to submit details for July 2017 to November 2018. Further deadlines for returns under sections 38 and 39 will be announced later. 27. 16/2018 - dated 4-9-2018 - Karnataka SGST Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6. Summary: The Government of Karnataka, under Section 128 of the Karnataka Goods and Services Tax Act, 2017, waives late fees for specific taxpayer classes. This waiver applies to: registered persons who submitted but did not file FORM GSTR-3B for October 2017; those who filed FORM GSTR-4 for October to December 2017 on time but were erroneously charged a late fee; and Input Service Distributors who paid late fees for FORM GSTR-6 submissions between January 1 and January 23, 2018. This decision follows recommendations from the Council and is issued by the Finance Department. 28. (01-P/2018) No. KGST.CR.01/2017-18 - dated 4-9-2018 - Karnataka SGST Seeks to extend the time limit for making the declaration in FORM GST ITC-01 for specified classes of taxpayers. Summary: The Office of the Commissioner of Commercial Taxes in Karnataka has issued a notification extending the deadline for specified taxpayers to submit declarations in FORM GST ITC-01. This extension applies to registered persons who filed applications in FORM GST-CMP-04 between March 2, 2018, and March 31, 2018. The new deadline is extended by thirty days from the publication date of this notification in the Official Gazette, in accordance with section 168 of the Karnataka Goods and Services Tax Act, 2017, and rule 40 of the Karnataka Goods and Services Tax Rules, 2017. 29. (01-O/2018) No. KGST.CR.01/2017-18 - dated 4-9-2018 - Karnataka SGST Seeks to extend the time limit for making the declaration in FORM GST ITC-04. Summary: The notification from the Office of the Commissioner of Commercial Taxes in Karnataka extends the deadline for submitting FORM GST ITC-04. This form pertains to goods dispatched to or received from a job worker, or sent between job workers, for the period from July 2017 to June 2018. The new deadline for submission is set for September 30, 2018. This extension is issued under section 168 of the Karnataka Goods and Services Tax Act, 2017, and sub-rule (3) of rule 45 of the Karnataka Goods and Services Tax Rules, 2017, replacing the previous notification dated October 28, 2017. 30. (01-N/2018) No. KGST.CR.01/2017-18 - dated 29-8-2018 - Karnataka SGST Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of July, 2018 and August, 2018. Summary: The notification from the Office of the Commissioner of Commercial Taxes in Karnataka prescribes the due dates for submitting FORM GSTR-1 for taxpayers with an aggregate turnover exceeding 1.5 crores for July and August 2018. Specifically, registered persons whose principal place of business is in Kodagu district, Karnataka, must submit their returns electronically via the common portal by October 5, 2018, for July, and by October 10, 2018, for August. This amendment modifies a previous notification issued on August 10, 2018. 31. (01-M/2018) No. KGST.CR.01/2017-18 - dated 29-8-2018 - Karnataka SGST Seeks to extend the due dates for filing FORM GSTR-3B for the months of July, 2018 and August, 2018. Summary: The notification issued by the Office of the Commissioner of Commercial Taxes in Karnataka extends the due dates for filing FORM GSTR-3B for July and August 2018. Registered persons with their principal place of business in Kodagu district, Karnataka, are required to submit their returns electronically via the common portal by October 5, 2018, for July, and by October 10, 2018, for August. This amendment is made under the authority of the Karnataka Goods and Services Tax Act, 2017, following recommendations from the Council. 32. (15/2018) No. FD 47 CSL 2017 - dated 25-8-2018 - Karnataka SGST Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the quarter July, 2018 to September, 2018 Summary: The Government of Karnataka has issued an amendment to Notification (14/2018) under the Karnataka Goods and Services Tax Act, 2017. This amendment prescribes that taxpayers with an aggregate turnover of up to 1.5 crore rupees, whose principal place of business is in Kodagu district, must electronically submit their FORM GSTR-1 for the quarter of July to September 2018 by November 15, 2018. This notification, numbered 15/2018, was issued by the Finance Secretariat on August 25, 2018, under the authority of Section 148 of the Act. Circulars / Instructions / Orders GST - States 1. 05/2018-19 - dated 17-9-2018 Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in CCT Circular No. GST-02/2018-19 dated 16.04.2018 Summary: The circular issued by the Commissioner of Commercial Taxes, Karnataka, modifies procedures for intercepting conveyances for goods inspection, detention, release, and confiscation. It replaces "three working days" with "three days" for certain procedures and clarifies that physical verification of goods should not be repeated unless specific tax evasion information arises. Hard copies of notices can be used as proof of action initiation. Only goods violating GST provisions should be detained. Minor discrepancies in e-way bills, such as spelling errors or incorrect pin codes, should incur a penalty of Rs. 500 under the KGST Act, with records sent weekly to controlling officers. Highlights / Catch Notes GST Seizure Order Overturned Due to Missing E-Way Bill; No Intentional Law Violation Found by Petitioners Before Feb 2018. Case-Laws - HC : Seizure order - E-way bill not accompanied - neither it can be said that Petitioners have deliberately committed any fault or disobeyed law intentionally or fraudulently, particularly when respondent-authorities themselves were not very clear - Order of Seizure of goods for the period prior to 1.2.2018 set aside. Visit to Get Source State authorities can detain and seize goods during inter-state movement under IGST Act to prevent tax evasion. Case-Laws - HC : Jurisdiction of state authorities to detain and seize the goods under inter-state movement under IGST Act - Officers of State are also competent for search, seizure and imposition of penalty in respect of violation of Central Enactments. Moreover, provisions relating to search and seizure are not for the purpose of imposition of a new liability but to regulate fiscal statutory provisions in order to avoid evasion of tax. Visit to Get Source Turmeric commission agents' services to agriculturists under Heading 9986 attract 'NIL' CGST and SGST rates. Case-Laws - AAR : Levy of GST - The service by the Commission Agents as per the submissions of the applicant to the agriculturists of turmeric is service under the Heading 9986 and is taxed to 'NIL' rate of CGST & SGST Visit to Get Source Applicant Must Pay IGST on Vessel Transport via Reverse Charge; Addresses Ocean Freight Double Taxation Concerns. Case-Laws - AAR : Levy of GST on - applicability of Ocean freight Charges and System of double taxation with respect to import of raw materials - The applicant is liable to pay IGST on transportation of goods by vessel under Reverse Charge Mechanism (RCM) Visit to Get Source Copper XLPE Cable Not Eligible for Concessional GST Rate, Falls Outside Notification No. 03/2017-CT, SI. No. 1 Scope. Case-Laws - AAR : Classification of goods - Concessional rate of GST - supply of Copper XLPE insulated armoured low tension cables - Whether the power cables supplied by the Applicant would be covered under the scope of SI. No. 1 of Notification No. 03/2017-CT? - Held No Visit to Get Source Income Tax Undisclosed Hawala Trading Revision Upheld u/s 263 Based on VAT and Sales Tax Authorities' Information. Case-Laws - HC : Revision u/s 263 - undisclosed hawala trading - very reliable and genuine information was received from the VAT and Sales Tax authorities with regard to the operations with these dealers styled as 'hawala traders' - Revision proceedings sustained. Visit to Get Source AO to Re-compute Income Using Cash System; Credit TDS Prepaid Taxes Per Section 199 & Rule 37BA. Case-Laws - AT : Addition on account of difference in TDS receipts - AO directed to re-compute the income of the assessee in accordance with cash system of accounting, which is the system of accounting regularly employed by the Assessee; and to give credit for prepaid taxes on account of tax deducted at source, as per law, having regard to section 199 of I.T. Act r.w.r. 37BA of Income Tax Rules. Visit to Get Source Compensation for giving up lawsuit rights in a breach of development agreement is capital, not revenue income. Case-Laws - AT : Receipt towards compensation in lieu of ‘right to sue’ - capital receipt OR revenue income - breach of development agreement and a compensation was paid to avoid litigation - compensation received in lieu of ‘right to sue’ could not be regarded as revenue receipt Visit to Get Source Penalties under Income Tax Act Sections 271(1)(c) and 271AAB not applicable if return filing due date not expired. Case-Laws - AT : Levy of penalty u/s 271(1)(c) or u/s 271AAB - assessment u/s 153A - the deeming provisions of Explanation 5A cannot be applied because at the time of search for the relevant previous year under appeal, the due date of filing of the return of income had not expired. Visit to Get Source Court Rules on TCS Default Order Validity; Four-Year Limitation Deemed Reasonable u/ss 201(1) & 201(1A) IT Act. Case-Laws - AT : Validity of order U/s 206C(6)/206C(7) - default in TCS liability - When no limitation is provided in the statute then a period of four years is considered as reasonable for passing the order U/s 201(1)/201(1A) of the Act. Visit to Get Source Proposal to Add Unexplained Cash Credit Under Income Tax Act Fails Due to Insufficient Evidence of Unaccounted Money. Case-Laws - AT : Addition on account of unexplained cash credit U/s 68 r.w.s. 115BBE - in absence of any evidence, it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain - No additions. Visit to Get Source Debate on Retrospective Application of Section 43CA, Income Tax Act, for Pre-existing Sale Agreements and Non-cash Consideration. Case-Laws - AT : Addition invoking the provisions of section 43CA - agreement to sell entered into much prior to the date when provision came into effect - there is no way the assessee would have foreseen these provisions at the time of entering into the agreement to sell that it has to receive the consideration only by any mode other than cash. Visit to Get Source TDS on Director Commissions Deducted Post Liability Determination u/s 194J; No Extra Amounts Needed Mid-Year. Case-Laws - AT : TDS u/s 194J - provision for commission to directors - TDS can be deducted and paid, when actual liability is ascertained, which generally happens after five/six months from the end of the financial year. - No additions. Visit to Get Source Service Tax Chartered Accountant Faces Service Tax Demand Due to Extended Limitation Period; No Doubt on Applicability. Case-Laws - AT : Classification of Services - certain services provided by Chartered Accountant - Chartered Accountants are experts in the field of Service Tax and the issue involved in the instant case is not one wherein anybody can have any doubt - Demand confirmed invoking extended period of limitation. Visit to Get Source Appellant Entitled to Service Tax Refund for CRPF Barracks Construction, Not Residential Houses for NBCC. Case-Laws - AT : Refund of Service tax paid erroneously - the appellant has not constructed any residential houses on behalf of NBCC but has constructed Barracks for the purpose of training of CRPF mens - the refund claim cannot be rejected. Visit to Get Source No Service Tax on Transit Mixer Use for Delivering Ready Mix Concrete; Considered Truck Hiring, Not GTA Service. Case-Laws - AT : GTA Services - whether the “Transit Mixer” used by the respondents to transport the “ready mix concrete” manufactured by them to their customers would attract the mischief of levy of service tax under GTA services? - Held No - It is a case of mere hiring of Trucks. Visit to Get Source Central Excise Fake Trading Entries Don't Prove Clandestine Goods Removal; Demand Unsustainable Without Evidence. Case-Laws - AT : Clandestine removal - fake trading shown in the balance sheet - in the absence of any corroborative evidences, merely on the basis of fake entries which are to obtain loan from banks etc., it cannot be held that fake entries are of clandestine removal of goods - demand not sustainable. Visit to Get Source Allegation of Fact Suppression Dismissed; Extended Limitation Period Inapplicable Due to Department's Prior Knowledge and Permission. Case-Laws - AT : 100% EOU - Extended period of limitation - the department had full knowledge and permission was granted to the appellant for transfer of such items to the quarries - the allegation that the appellant is guilty of suppression of facts with intent to evade payment of duty cannot sustain. Visit to Get Source Case Laws: GST 2018 (9) TMI 1262 Seizure of vehicle alongwith Consignment - payment of tax already made - demand of other dues - Held that:- When the petitioner has already paid the tax, the vehicle which is seized along with the consignments should be released to the applicant/petitioner - Application disposed off. 2018 (9) TMI 1261 Seizure order - E-way bill not accompanied - various amendments brought in by various notifications - Notification dated 26.03.2018 - evasion of tax - Jurisdiction of state authorities to detain and seize the goods under inter-state movement under IGST Act. Held that:- Rule 138, as initially enacted and made effective from 29.6.2017 read with Government Notification dated 21.7.2017, prescribing procedure, came into force on 16.08.2017 by Commissioner s Circular dated 22.07.2017 read with Circulars dated 27.02.2017 and 09.08.2017, stood replaced by Rule 138 by Notification dated 31.01.2018 which came into force on 01.02.2018. Therefore, neither it can be said that Petitioners have deliberately committed any fault or disobeyed law intentionally or fraudulently, particularly when respondent-authorities themselves were not very clear. It also cannot be said that there is/was any intention of evasion of tax on the part of these petitioners. In the facts and circumstances, in all the writ petitions (except Writ Petition No. 87 of 2018), we are clearly of the view that seizure orders, show-cause notices issued under section 129 (3) and final orders, if any, are not sustainable in law. Jurisdiction of state authorities - Held that:- Officers of State are also competent for search, seizure and imposition of penalty in respect of violation of Central Enactments. Moreover, provisions relating to search and seizure are not for the purpose of imposition of a new liability but to regulate fiscal statutory provisions in order to avoid evasion of tax. Nothing has been placed on record to show that similar requirement of relevant documents was not provided by Central Government also in respect of inter-state transactions. There is also a principle that mere mention of a wrong provision will not make an order bad, if otherwise, power exists in the Statute. We are not satisfied that the provisions made by Governor vide Rule 138 read with Government s Notification dated 21.07.2017 and Commissioner s Circulars dated 22.07.2017 and 09.08.2017 are ultra vires of any Statute. Orders of Seizure of goods for the period prior to 1.2.2018 set aside. - Decided in favor of petitioners. Petition against seizure of goods that was challenged on the ground of Jurisdiction, dismissed - Decided against the petitioner. 2018 (9) TMI 1260 Input Tax Credit - input credit under TRANS 1 - credit of input tax on the stock of goods - technical glitches in the GST portal - Held that:- The respondent or its Nodal Officer as the case may be shall consider its grievances and pass appropriate orders in terms of the extent circular - petition disposed off. 2018 (9) TMI 1259 Seizure Order - Section 129 (1) of the Act - detention of goods on the ground that the goods against the bilty no. 226158 dated 27.03.2018 related to 131 boxes also accompanying the documents related to 81 boxes of the same party M/s Ahuja Radio which are to be delivered at Ranchi, Jharkhand and that the e-way bill has been generated on 27.02.2018 for delivery through other vehicle no. HR-38W-2581 - Held that:- It is on account of human error, the invoice related to goods to be transported from Delhi to Jharkhand related to 81 boxes has been mistakenly handed over to the goods transported from Delhi to Patna. There is no finding recorded by the seizing authority that except the said mistake the transaction in question was not found bonafide. There is no requirement of TDF Form-I for the purpose of moment of goods through the State of U.P. The requirement of TDF-I is not essential after the introduction of UPGST/CGST laws. The respondent no.4 is directed to release the goods in favour of the petitioner on furnishing of the indemnity bond to the extend of tax assessed by the respondent no.4 - petition disposed off. 2018 (9) TMI 1258 Levy of GST - service by the commission agents to the agriculturists for their sale or purchase of their produce not involving the agents - Whether service by the commission agents to the agriculturists for their sale or purchase of their produce not involving the agents as either a recipient of goods or as a supplier of goods are liable to tax or not? Held that:- It is clear that the agent, who is a member of the applicant stores the turmeric in their godown, the sales of which is as per the guidelines of EMC. Also from the invoices furnished, it is seen that the invoice is raised by the agent on the buyer wherein the agriculturist is mentioned as the seller and is signed by the Farmer, agent and the buyer. Further, it is seen that the buyer pays the agent who after deducting his commission for the services rendered passes on the sale proceeds to the farmer. It is evident that these activities of the applicant are those covered by the definition of Commission agent under The Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987 . From the supporting documents and materials filed by the applicant and the various statutory provisions, it is clear that the activities of the applicant are those services provided by an agent to the farmer, generally provided in relation to agricultural produce in the primary market regulated by a marketing committee. The applicant is only a Commission Agent providing support services for Agricultural produce and the services extended are rightly classifiable as Support service to agriculture.. under the Heading 9986 and the activity of the applicant attract NIL rate as per Sl. No. 24 (i) (i) (g) of the Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended and NIL rate of SGST as per Sl.N0. 24 (i) (i) (g) of G.O.(Ms) No 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 as amended. Ruling:- The service by the Commission Agents as per the submissions of the applicant to the agriculturists of turmeric is service under the Heading 9986 and is taxed to NIL rate of CGST as per Sl.No. 24 (i) (i) (g) of the Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended and NIL rate of SGST as per Sl.No. 24 (i) (i) (g) of G.O.(Ms) No 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 as amended. 2018 (9) TMI 1257 Levy of GST on goods/services/both - applicability of Ocean freight Charges and System of double taxation with respect to import of raw materials of fertilizers - exclusion of any component of expenditure upon imported goods (Ocean freight) - scope of Section 97 of CGST/RGST Act, 2017. Whether in the case of import of goods on CIF (COST, INSURANCE AND FREIGHT) basis, the Applicant (Importer) is liable to pay GST on the component of Ocean freight paid by the foreign supplier to the shipping company, as consideration for availing the service of transportation of goods by sea provided by the foreign shipping entity? Whether in the case of import of goods on FOB (Free on board) basis the Applicant (Importer), for the purpose of determination of value of goods for the payment of IGST on import of goods is required to exclude the value of the component of Ocean freight paid by the Applicant (importer) to the foreign shipping entity, on which already GST is paid by the applicant (importer) being the service recipient in order to avoid double taxation? Held that:- The services supplied by the foreign shipping entity of transportation of goods in a vessel to a port in India is an inter-state supply in terms of section 7 of the Integrated Goods and Services Tax Act, 2017. Hence, IGST is leviable on the same under Section 5 of the IGST Act. As per the charging section i.e. Section 5, IGST has to be paid by the taxable person - Thus, as per the Notification No. 10/2017- Integrated Tax (Rate) dated 28.06.2017, in the case of import of goods on CIF (COST, INSURANCE AND FREIGHT) basis, the Applicant (Importer) is liable to pay GST on the component of Ocean freight paid by the foreign supplier to the shipping company. Valuation of imported goods is to be done by the Customs Authority under the Customs Act, 1962 and this authority is not empowered to decide on the issue of valuation of imported goods. Therefore, this authority cannot give any findings regarding exclusion of any component of expenditure upon imported goods (Ocean freight) while determining the value of imported goods at the time of import - The question raised by the applicant is regarding the determination of valuation of imported goods at the port. The issue regarding determination of value as sought by the applicant does not fall under the purview of CGST/RGST Act, 2017 as this issue should be correctly dealt as per the relevant provisions of the Customs Act, 1962. Ruling:- The applicant is liable to pay IGST on transportation of goods by vessel under Reverse Charge Mechanism (RCM) under Notification No. 10/2017- Integrated Tax (Rate) dated 28.06.2017 - Regarding exclusion of any component of expenditure upon imported goods (Ocean freight) while determining their value at the time of import, the same falls beyond the purview of Section 97 of CGST/RGST Act, 2017. 2018 (9) TMI 1256 Classification of goods - supply of Copper XLPE insulated armoured low tension cables - Whether the power cables supplied by the Applicant would be covered under the scope of SI. No. 1 of Notification No. 03/2017-CT? Held that:- Notification provides concessional rate only for the goods falling under entry no. 1 to 24 subject to certain other specific conditions. Electric Cables, being accessories, stores, materials, consumables does not automatically qualifies them for enjoying concessional rates as mentioned in Notification no.03/2017-CT. - Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. It is agreed that cables supplied to ws Vedanta by applicant will be used to supply and transmit electricity for petroleum operations at work site (Block RJ-ON-90/1). But will these electrical cables supplied be used as accessories, stores, materials and/or consumables for goods ONLY covered under entry no. 1 to 23 is not clear from the documents and evidences submitted by the dealer. Even the applicant seems not sure of its uses. Concessional rate is conditional to terms and conditions of Notifications - It is a clear possibility that there are other machine and equipment and their accessories, stores, materials and consumables which though being used in process of petroleum operation but are not enjoining concessional rate as they are not covered under entry no. I to 23 of the notification yet being supplied electricity by these electrical cables to make them functional . Electrical Cables are generally used to set up a network of wires and cables which are usually permanent in nature through which electricity can flow, distributed and supplied to various points. To regard Electrical Cables as accessories, stores, materials or consumables for running of the goods specified in the List as mentioned in entry no. 24 of the notification is not rational by any stretch of imagination - If we regard Electrical Cables as accessories, stores, materials and/or consumables for running of the goods specified in the List, then going through this logic poles, insulators, transformers and all other equipments used to ensure flow of electricity at work site from the main source to the supply point are to be covered under this classification. The applicant has failed to identify/clarify as to under which category i.e. accessories, stores, materials or consumables as mentioned in S.No. 1 to 23 of the list, would electrical cables fall. Further he has not given any assurance regarding restricting the use of electrical cables as accessories, stores, materials, consumables to goods falling under entry no. I to 23 of the list, which is an essential pre requisite to claim concession. Ruling:- Electrical Cables do not fall under Entry no. 24 of list as material , accessories , consumables , and/or stores of SI. No. 1 of Notification No. 03/2017-central Tax (Rate) dated 28.06.2017. Income Tax 2018 (9) TMI 1255 Revision u/s 263 - Order set aside by the Commissioner of Income Tax (Appeals) and confirmed by the Tribunal by the orders impugned in these appeals, was passed consequent upon the remand made by the Commissioner of Income Tax-I under Section 263 and that the said remand order was set aside by the Tribunal - Held that:- Special Leave Petition is dismissed. Pending application(s), if any, stands disposed of accordingly. 2018 (9) TMI 1254 Revision u/s 263 - entitled to deduction under section 80P - Held that:- Considering the low tax effect we do not interfere in the matter. However, leaving the question of law open, the Special Leave Petition is dismissed. 2018 (9) TMI 1253 Revision u/s 263 - no business activity - assessee has not carried out any business activity and the business expenditure claimed in that year was disallowed - Held that:- Special Leave Petition is dismissed. 2018 (9) TMI 1252 Discretionary power u/s 197 r.w.r. 28AA of the Income Tax Rules - whether it is the Assessing Officer who has to be satisfied that the tax is to be deducted at 'Nil' or 'Zero rate' or 'Reduced rate' and that satisfaction of the Assessing Officer must be reflected from his order? - Held that:- The apprehension of the petitioner is that there was an exercise of a discretionary power in terms of subsection (1) of Section 197 and the deduction of income tax at the lower rate was justified earlier. Now, the rate has been fluctuating and for this year, the deduction is at the rate of 50% of the prescribed rate. This has not come about on an independent satisfaction of the Assessing Officer, but because of uncalled interference by his superior. For that reason, he would submit that we must direct the production of the original record. Revenue tendered the affidavit in reply on behalf of the respondents. That is affirmed by the Deputy Commissioner of Income Tax (TDS) Range2(3), Mumbai. He says that he is working in the office of the Commissioner of Income Tax (TDS) and urge that the Assessing Officer has recorded his satisfaction in terms of the legal provision. That is indeed to be found in the official record or file. If this is the position and the affidavit only reiterates or affirms what is stated or held by the Assessing Officer in his order, then, let that original record be produced for our perusal on the next date.We post this matter on 25th September 2018. The matter shall be listed on the 'Supplementary Board'. 2018 (9) TMI 1251 Addition u/s 68 - Held that:- The assessee cannot simply provide some details such as Permanent Account Number, business address, the account which was maintained and a Bank Statement, or a Company's Master Data maintained by the Registrar of Companies. The assessee is obliged to explain the surrounding circumstances and the backdrop in which the transactions took place. In the case of five entities, the Tribunal referred to these details and concluded that the assessee has failed to discharge the burden. When three out of the five assessee could not be served. The rest did not either give a reply, or gave a reply which was not at all satisfactory. The reasons assigned of the order under challenge do not suffer from such legal infirmity or perversity as would enable us to entertain this appeal. The concurrent findings of fact, therefore, are based on appreciation and appraisal of the evidence before the authorities. We cannot take a different view. All the more, when there are no errors of law apparent on the face of the record, particularly in understanding the ambit and scope of Section 68 of the I.T. Act. - Decided against assessee. 2018 (9) TMI 1250 Gain arising on account of securitization of lease receivables and credited to the Profit & Loss Account - whether a taxable receipt in the current assessment year? - assessee also contended that this notional income was in the nature of a capital receipt, and therefore, could not be subjected to tax - Held that:- We fail to see how the questions of law reproduced by us above, give rise to any substantial question of law. The finding given by the A.O. as well as CIT(A) and the ITAT are purely based on the factual aspects of the matter. As noted by the authorities below, the appellant – assessee itself treated the receipt of Rs. 1.69 Crores as an income in their profit and loss account. It was their contention before the authorities below that this receipt was a capital receipt and hence not taxable. This was answered by the authorities below, and in our view correctly so by relying upon the decision of the Supreme Court in the case of the Commissioner of Income Tax Vs. T.V. Sunderam Iyanger & Sons Ltd. [1996 (9) TMI 1 - SUPREME COURT]. This being the case, we do not find that the questions of law as proposed by Mr. Sheth, the learned counsel appearing on behalf of the appellant, raise any substantial question of law that require any consideration by us. Applicability of matching concept - whether appellant was entitled in law to spread over this income of Rs. 1.69 crores over a period from years 2002 to 2004 - Held that:- Whether the “matching concept” ought to have been applied in the present case is a mixed question of fact and law, the foundation of which has never been laid by the appellant – assessee before the authorities below. If the factual foundation for this argument has not been laid before the authorities below, no substantial question of law can arise therefrom. We, therefore, reject this argument at the very outset on this ground alone. 2018 (9) TMI 1249 Rectification of mistake u/s 154 - whether the issue of exclusion of export incentive from total turnover for the purpose of deduction under Section 80HHC is not a debatable issue and is rectifiable under Section 154? - Held that:- In the instant case, it is only a computation error and it is not an omission to make a claim for deduction. Furthermore, the identical relief was granted in respect of the assessment year 2000-2001 at the stage, when an appeal was filed against the assessment order before the Commissioner (Appeals) and additional ground was raised by the Assessee, which was permitted by the Commissioner (Appeals) and accordingly, the original claim made under Section 80HHC of the Act was modified by the Assessee. Thus, we are of the considered view that the Commissioner (Appeals) as well as the Tribunal rightly held that the Assessee was entitled to file an application under Section 154 of the Act to amend the intimation issued under Section 143(1) of the Act. - Decided in favour of assessee 2018 (9) TMI 1248 Revision u/s 263 - undisclosed hawala trading - Held that:- We do not find that in this case there is any substitution of the views of the Assessing Officer, but there was a clear failure to abide by the statutory mandate and by making an estimate so also accepting a vague and general explanation of the assessee, the assessment has been made, then, it will undoubtedly be erroneous insofar it is prejudicial to the interest of the Revenue. It is erroneous insofar as the same is prejudicial to the interest of the Revenue because the Assessing Officer has failed to carry out his statutory obligation and duty and failed to discharge it by holding further probe and inquiry. More so, when the assessee virtually had no answer to his notice. Secondly, very reliable and genuine information was received from the VAT and Sales Tax authorities with regard to the operations with these dealers styled as 'hawala traders'. This certainly brought the matter within the purview of section 263. No error of law or perversity is committed either by the Commissioner or the Tribunal. 2018 (9) TMI 1247 Set off of MAT Credit - MAT credit set off from the tax payable before setting off the Tax Deducted at Source and Advance Tax paid - Held that:- The issue has no longer res integra and has been settled by the Hon'ble Supreme Court in the case of CIT V. Tulsyan NEC Ltd.(2010 (12) TMI 23 - SUPREME COURT OF INDIA). The issue involved in the batch of appeals before the Supreme Court filed by the Department was relating to the question as to whether MAT Credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Section 234A, 234B and 234C - Substantial questions of law Nos.1 and 2 are answered in terms of the decision of the Hon'ble Supreme Court in Tulsyan NEC Limited [2010 (12) TMI 23 - SUPREME COURT OF INDIA]. Interest u/s 234D - Held that:- The date from which interest is leviable is not an issue before this Court and it is not a substantive question of law framed for consideration in this appeal. Nevertheless, the submission of the learned counsel for the Assessee has been noted because it would be a consequential proceedings, which will flow from the answers given by us to the substantial questions of law 3 and 4. Therefore, it is well open to the Assessee to canvass all these issues before the Assessing Officer, while computation of interest takes place. With the above observations, the Tax Case Appeal filed by the Revenue is allowed 2018 (9) TMI 1246 Entitled to deduction u/s. 80P(2)(a)(i) - Held that:- In view of the judgment in the case of Chirakkal Service Co-op Bank Ltd.[2016 (4) TMI 826 - KERALA HIGH COURT] we hold that the assessee-societies are entitled to the benefit of deduction u/s. 80P of the Act. 2018 (9) TMI 1245 Addition u/s 68 - discharge of onus or proof - Held that:- When more than 23 years have already elapsed since the investments were made by these shareholders in assesseee's share capital, no further opportunities can be given to the revenue to start fresh round of litigation more-so nothing incriminating has been brought on record by the authorities below. It is matter of record that these shareholders name, addresses, GIR/PAN etc are all on record along with their confirmation letter confirming that they made investments in the assessee company. These shareholders have also confirmed that these share investments were made out of their own capital and payments were all made by cheque. We are inclined to accept the contentions of the assessee by holding that the assessee has discharged its burden/onus as was cast u/s 68 of the 1961 Act with respect to share investment of Rs. 1, 00, 00, 000/- made in the assessee company. We order deletion of the additions. Unexplained income - Held that:- The onus as well burden is very heavy in the instant case on the assessee to bring on record cogent evidences to substantiate that there is no income component in the said differential amount of Rs. 91, 09, 444/- which is liable to be chargeable to tax within mandate of the 1961 Act. The assessee and revenue erred in ignoring the mandate of the 1961 Act, which is supported by Article 265 of the Constitution of India to bring to tax correct income of the assessee. Under these peculiar facts and circumstances of the case, we are constraint to set aside and restore this issue back to the file of the AO for fresh determination of the issue on merits in accordance with law. We in exercise of powers u/s 254 of the 1961 Act direct AO to admit all necessary evidences and explanations which the assessee files before the AO in denovo assessment proceedings in its defence and thereafter adjudicate the same on merits in accordance with law despite the fact that no revised return of income was filed by the assessee . 2018 (9) TMI 1244 Addition u/s 14A - Held that:- The investments have been classified by the assessee as Strategic investments, Stock–in-trade & investment in other Shares / Venture Capital Fund. The assessee has already offered suo-moto disallowance @0.5% against investment in other Shares / Venture Capital Fund and therefore, there is no dispute against this category of investment. The disallowance under dispute is against Strategic investments & Stock–in-trade. In the absence of adequate data before us, AO to compute disallowance @0.5% against Strategic investments & Stock–in-trade after excluding there-from those investments which have not yielded any exempt income during impugned AY or which were not, at all, capable of yielding any exempt income subject to a further condition that overall disallowance, in no case, shall exceed exempt income of Rs. 131.46 Lacs earned by the assessee during the impugned AY. This ground stand partly allowed in terms of our above order. Unexplained entries appearing in Annual Information Return [AIR] - Held that:- Assessee was unable to reconcile certain entries as appearing in Annual Information Return [AIR] and therefore, the same were added to the income of the assessee. The same, upon confirmation by Ld. first appellate authority, is under appeal before us. The Ld. Sr. Counsel submitted that keeping in view the voluminous nature of data, the same remained un-reconciled and a view may be taken. In the absence of complete factual matrix, we are unable to provide any relief to the assessee, in this regard. This ground stand dismissed. 2018 (9) TMI 1243 Disallowance of the amount paid as finance charges when the assessee has provided interest free loans to its subsidiaries - Held that:- There was no specific instance noted by the Assessing Officer in respect of any direct nexus between the borrowed fund and the said advances made to the subsidiaries. The Assessing Officer had made general observations without going into the depth of the matter and without pointing out any specific instance where an interest bearing borrowing was advanced to the subsidiaries or establishing that the borrowings made by the appellant were not for business purposes. Both appellate authorities below were of the view that the assessee had explained the sources of the advances and investments made to the subsidiaries, which could not be linked to the borrowed funds and that the advances were made out of the assessee's own capital. At the relevant time the assessee was found to be having an adequate non-interest bearing fund by way of share capital and reserves. See Bharti Televenture Ltd.[2011 (1) TMI 326 - DELHI HIGH COURT]. Addition made u/s 14A of the Act r.w.r 8D - Held that:- The undisputed fact is that there is no exempt income earned by the assessee during the year under consideration. As in the case of Shivam Motors Pvt. Ltd [2014 (5) TMI 592 - ALLAHABAD HIGH COURT] have categorically held that if there is no exempt income earned by the assessee during the year, there cannot be any disallowance u/s 14A r.w.r 8D of the Rules. 2018 (9) TMI 1242 Taxability of commission received in advance in respect of purchases accounted for in the next financial year - Held that:- The advance commission received in respect of purchases accounted for in the succeeding year should not be brought to tax in the year of receipt. The facts and circumstances of the instant ground are, admittedly, similar. In view of the foregoing and respectfully following the precedent, we hold that the ld. CIT(A) was justified in deleting the addition of Rs. 32.37 lac and erred in sustaining the remaining addition. Thus, the ground raised by the assessee is allowed and that by the Revenue is dismissed. Addition on account of Rebates and write offs - Held that:- The amount receivable from debtors was, admittedly, written off during the year for which necessary details were also produced before the ld.CIT(A) and, in turn, before the Assessing Officer in remand proceedings. The Hon'ble Supreme Court in the case of TRF Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT] has held that claim for bad debt has to be allowed on a mere write off and there is no further need to prove that the amount of debt became bad during the year. In view of the above binding precedent, we hold that the ld. CIT(A) was justified in deleting the addition. Addition of sales-tax along with surcharge and such sales-tax paid during the year was debited under the head ‘Repairs and renewals - Held that:- CIT(A) deleted the addition by noticing that Rs. 11,27,955/- was the amount of sales-tax paid by the assessee during the year in respect of sales-tax assessments completed and such amount was not of a penal nature. The ld. DR could not controvert the findings recorded by the ld. CIT(A) with any cogent evidence. Since the said sum represented the payment of sales-tax made during the year, the same, in our considered opinion, was rightly allowed by the ld. CIT(A). Disallowance on account of interest expenses as assessee has not capitalized proportionate interest cost allocable to Capital Work in Progress - Held that:- The ground reproduced above does not arise out of the impugned order. In fact, the Assessing Officer made two additions, namely, one u/s 14A to the tune of Rs. 1,83,397/- and another on account of advance commission amounting to Rs. 68,65,000/-, which the ld. CIT(A) dealt with in the impugned order. There is no reference whatsoever to subject matter encapsuled in the ground extracted above. The ld. DR also fairly admitted that this ground does not arise from the impugned order. Under these circumstances, we dismiss the ground taken above as not arising from the impugned order. 2018 (9) TMI 1241 Computation of income u/s 44BB - whether the service tax collected by the assessee shall form part of gross receipts for computing income under Section 44BB? - Held that:- We noticed that the learned CIT(A) has followed the decision rendered by the Hon'ble Delhi High Court in the case of Mitchell Drilling International (P) Ltd. (2015 (10) TMI 259 - DELHI HIGH COURT) in holding that service tax collected by the assessee cannot form part of gross receipts. - Decided against the revenue. 2018 (9) TMI 1240 Addition on account of difference in TDS receipts - Difference in gross receipts as per the form 26AS with gross receipts recognized in accordance with cash system of accounting - Held that:- Approach of Revenue was to wrongly invert the law by erroneously charging such amounts to tax which are not assessable as Assessee’s income of this year under cash system of accounting regularly followed by the Assessee, merely because Assessee has claimed credit for tax deducted at source on corresponding amounts; instead of following the correct approach whereunder Revenue should have allowed credit for tax deducted as source in respect of such amounts only which are assessable as income of this year in accordance with cash system of accounting regularly followed by assessee. We disapprove the approaches of both Assessee and Revenue. It is not permitted for anyone to either distort or to invert law. We set aside the orders of Ld. CIT(A) and the Assessing Officer and we restore this matter to the file of the Assessing Officer to re-compute the income of the assessee in accordance with cash system of accounting, which is the system of accounting regularly employed by the Assessee; and to give credit for prepaid taxes on account of tax deducted at source, as per law, having regard to section 199 of I.T. Act r.w.r. 37BA of Income Tax Rules. Disallowance of expenses out of Car Expenses, Telephone Expenses and Staff Welfare Expenses - Held that:- Assessee failed to bring any materials for our consideration to prove that the disallowances confirmed by the Ld. CIT(A) were excessive, unreasonable, erroneous or against law. The Ld. Counsel for Assessee failed to make a case for any interference with the order of Ld. CIT(A) on these issues. Therefore, grounds related to disallowances are hereby dismissed. - Appeal of the assessee is partly allowed. 2018 (9) TMI 1239 Addition denying the indexation on cost of acquisition while computing the long term capital gains - Held that:- A simple perusal of the orders of the authorities below suggest that the cost of acquisition of Rs. 4,19,533/- has been admitted and the long term capital gain have also been accepted. Therefore, the benefit of statutory indexation cost to offset the effect of inflation cannot be denied. Once, the cost of acquisition is determined and the land under sale was found to be a long term capital asset, indexation of cost of acquisition becomes automatic as per the statutory provisions of the Act. No rationale for denial of indexation benefits. Therefore, the aforesaid addition of Rs. 1,51,988/- arising on account of such denial requires to be reversed. The AO is directed to delete the addition on this score. Receipt towards compensation in lieu of ‘right to sue’ - Treatment as capital receipt OR revenue income - Claim of the Revenue that amount received towards relinquishment of such right is purely a revenue receipt - Held that:- We are disposed to hold that the receipt towards compensation in lieu of ‘right to sue’ is of capital nature which is not chargeable to tax under s.45 of the Act. This right/advantage accrued to the assessee was sought to be taken away from the assessee by way of sale of land. The prospective purchaser as well as the defaulting party (owner) perceived threat of filing suit by developer and consequently paid damages/compensation to shun the possible legal battle. The intrinsic point with respect to accrual of ‘right to sue’ has to be seen in the light of overriding circumstances as to how the parties have perceived the presence of looming legal battle from their point of view. It is an admitted position that the defaulting party has made the assessee a confirming party in the sale by virtue of such development agreement and a compensation was paid to avoid litigation. This amply shows the existence of ‘right to sue’ in the perception of the defaulting party. As find from the facts of the case that assessee has not received this amount under an agreement for not carrying out activity in relation to any business or not to share in knowhow, patent, copyright, trademark, license etc. as specified under s.28(va) of the Act enacted for its taxability under the head of business income. Consequently, we are of the considered view that compensation received in lieu of ‘right to sue’ could not be regarded as revenue receipt. Therefore, we find merit in the appeal of the assessee. 2018 (9) TMI 1238 Levy of penalty u/s 271(1)(c) or u/s 271AAB - assessee did not file any return of income under section 139 - due date for furnishing return of income - Held that:- In the instant case, considering the facts, Explanation 5A to Section 271(1)(c) is not applicable in the case of the assessee, as the due date of filing of the return in the case of the assessee was extended up to 30.11.2014, which has not expired on the date of search on 16.10.2014. The assessee has filed the return of income on 31.08.2016 under section 153A of the I.T. Act on receiving the notice under section 153A issued on 22.08.2016. The assessee is admittedly a partner in the firm M/s. Brijvasi Jewellers and accounts are to be audited under section 44AB of the I.T. Act, which is admitted by the A.O. in the assessment order. At the time of search on 16.10.2014, the due date of filing of the return for assessment year under appeal i.e., 2014-2015 had not expired because the due date of filing of the return was extended upto 30.11.2014. As evident that on the date of the search on 16.10.2014, neither the due date of filing of the return has expired which was 30.11.2014 nor assessee has filed the return of income which was filed on 31.08.2016 due to the fact that assessment for assessment year under appeal has abated on the date of the search because the assessee was governed by the provisions of Section 153A. Therefore, the assessee has correctly filed return of income after the issue of notice under section 153A of the I.T. Act within the time allowed under that Section. Thus, in the present case, the deeming provisions of Explanation 5A cannot be applied because at the time of search for the relevant previous year under appeal, the due date of filing of the return of income had not expired. Learned Counsel for the Assessee rightly contended that since due date of filing of the return under section 139 has not expired on the date of the search, therefore, assessee could not have filed the return of income under section 139 and as per law, assessee was required to file return of income under section 153A of the I.T. Act only. Thus we are of the view that Explanation 5A to Section 271(1)(c) of the I.T. Act is not applicable to the facts. Therefore, no penalty could have been levied by the Ld. CIT(A). The order of the Ld. CIT(A) is thus, liable to be set aside and quashed. Since in the case of the assessee, penalty proceedings initiated by the A.O. under section 271AAB of the Act was attracted, therefore, no penalty under section 271(1)(c) of the I.T. Act could have been levied by the Ld. CIT(A). On this count also, the Order of the Ld. CIT(A) cannot be sustained in law. CIT(A) failed to note that the A.O. has initiated the penalty proceedings under section 271AAB of the I.T. Act as per Law and did not initiate the penalty under section 271(1)(c) of the I.T. Act. Since, in this case the provisions of Section 271AAB are prima facie attracted, therefore, Ld. CIT(A) on misinterpretation of provisions of Section 271AAB of the I.T. Act, wrongly initiated the penalty proceedings under section 271(1)(c) of the I.T. Act in the appellate order. Once, the penalty proceedings are rightly initiated by the A.O. under section 271AAB of the I.T. Act, therefore, there is no question of levy of penalty under section 271(1)(c) of the I.T. Act against the assessee. - Decided in favour of assessee 2018 (9) TMI 1237 Disallowance u/s 14A r.w. Rule 8D(2)(ii) - Held that:- AO has only made some general observations on the fund flow position; but could not point out any specific transactions OR identify any funds flow, specifically linked to diversion of interest bearing funds to share investment activity. The Assessing Officer has not controverted the assessee's stated position that it had sufficient own funds and reserves for investment in mutual funds and shares and that its interest bearing fund were specifically invested in those assets for which purpose it was taken for non-exempt business activity which is not within the purview of section 14A. No reason to interfere with or deviate from the findings of the learned CIT (Appeals) in deleting the disallowance u/s 14A r.w. Rule 8D(2)(ii). Consequently, grounds raised by Revenue are dismissed. 2018 (9) TMI 1236 Deduction u/s 80P(2)(a)(i) denied - reasons for denying the benefit of deduction was that the assessee were doing the business of banking - Held that:- Identical issue was considered in the case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] wherein after considering the judicial pronouncements, held that the assessee is entitled to deduction u/s 80P(2) hen a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided in favour of assessee. 2018 (9) TMI 1235 Addition of bogus purchases - G.P. rate estimation - assessee is engaged in the business of trading and export of diamonds - Held that:- Keeping in view the fact that no discrepancies have been found in the account books maintained by the assessee in the due course of business; that AO has not disputed the purchase of diamonds but only disputed that the bogus bills were procured to avoid the payment of VAT and the fact that profit margin in the diamond business is around 2 to 3% and as has been held by the coordinate bench of Tribunal in the case of M/s. Naitik Gems (2017 (11) TMI 1708 - ITAT MUMBAI), we are of the considered view that in addition to the gross profit already declared by the assessee in assessment year 2012-13 and 2013-14 further addition of 3% in the GP rate on the bogus purchases is ordered to be made. The AO is directed to restrict the addition of GP to 3% of the disputed purchases over and above the GP rate already declared by the Assessee. 2018 (9) TMI 1234 Validity of order U/s 206C(6)/206C(7) - period of limitation - Held that:- When no limitation is provided in the statute then a period of four years is considered as reasonable for passing the order U/s 201(1)/201(1A) of the Act. The provisions of Section 206C of the Act are analogous and a measure for compliance of collection of tax at source as a similar measure for compliance of deduction of tax at source is provided U/s 201 of the Act. The department has accepted those decisions and consequently brought amendment to the provisions of Section 201 and thereby provided the limitation for passing the orders U/s 201(1)/201(1A) of the Act which was inline with the view taken by the Hon'ble High Courts on this issue. Though, subsequently an amendment vide Finance Act, 2014 was again brought in the said provisions of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. The liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly, we quash the impugned order passed U/s 206C(6)/206C(7) of the Act.- decided in favour of assessee 2018 (9) TMI 1233 Addition on account of unexplained cash credit U/s 68 r.w.s. 115BBE - Held that:- AO has not brought any material on record to controvert the fact duly established by the supporting evidence of purchase bills, payment of consideration through bank, dematerialization of shares in the DEMAT account, allotment of the shares amalgamated new entity in lieu of the earlier two companies of equal number of shares. Sale of shares from the DEMAT account through stock exchange and at the prevailing price as on the date of sale and further payment of STT on the transaction of sale has been duly established. In absence of any contrary fact, the mere reliance by the Assessing Officer on the report of Investigation Wing, Kolkata is not sufficient to establish the fact that the transaction is bogus. The finding of the Assessing Officer is based merely on the suspicion and surmises without any tangible material to show that the assessee has introduced his own unaccounted income in the share of long term capital gain even otherwise the reliance of the statements recorded by the Investigation Wing, Kolkata wherein without giving an opportunity of cross examination is a complete violation of principles of natural justice as held by the Hon ble Supreme Court in the case of CCE Vs Andaman Timber Industries [2005 (3) TMI 763 - SUPREME COURT]. The Coordinate Bench has also followed the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. Pooja Agarwal [2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] wherein duly considered the fact that the Assessing Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account. Therefore, in absence of any evidence, it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. Accordingly, in view of above facts and circumstances, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, this ground of revenue s appeal is dismissed. Unexplained commission expenses U/s 69C - Held that:- We have heard the ld DR as well as the ld AR of the assessee and considered the relevant material on record. This is a consequential issue to the addition made by the Assessing Officer U/s 68 treating long term capital gain as accommodation entries for bogus claim of exempt income and consequently the Assessing Officer has also made an addition on account of expenditure being unexplained commission expenses on such transaction of accommodation entries. 2018 (9) TMI 1232 TPA - ALP adjustment in respect of alleged international transaction on account of AMP expenses - bonafide business expenditure - Held that:- The inconsistency in the approach of the AO/TPO with respect to the AMP expenditure being in the nature of an international transaction as expenditure incurred on behalf of the assessee, including the quantum and nature of expenditure and including lack of any material to suggest that there was “an arrangement, understanding or action in concert” with respect of the expenditure incurred by the assessee and including the fact that, in our considered view, the expenditure incurred by the assessee was in nature of bonafide business expenditure in furtherance of its legitimate business interests, we are of the considered view that there is no legally sustainable basis for the TPO coming to the conclusion that there was an international transaction, under section 92B, on the facts of this case. It was only on the basis of bright line test that the impugned ALP adjustment was made but that approach has already been negatived by various Hon’ble Courts above. We see no reasons to remit the matter to the file of the TPO, as is prayed for by the learned Departmental Representative. A remand to the assessment stage cannot be a matter of routine; it has to be so done only when there is anything in the facts and circumstances to so warrant or justify. In any case, there are direct judicial precedents from Hon’ble jurisdictional High Court which clearly suggest that the matter regarding existence of international transaction under section 92B, as far as possible, should be decided at the level of Tribunal itself. - Decided in favour of assessee 2018 (9) TMI 1231 Addition invoking the provisions of section 43CA - applicability of provisions at the time of entering into the agreement to sell - Held that:- In the present case, where the date of agreement to sell in respect of the two flats is 9.4.2007, which is much prior to the financial year relevant to assessment year 2014-15 when the provisions of section 43CA have become effective, there is no way the assessee would have foreseen these provisions at the time of entering into the agreement to sell that it has to receive the consideration only by any mode other than cash. At the relevant point in time when it had entered into agreement to sell, there was no such requirement of receiving the whole of the consideration in mode other than cash. Therefore, in order to make the provisions of sub-section (4) workable, in our view, the provisions of sub-section (4) would be applicable in respect of agreement to sell for transfer of an asset which has been executed on or after 1st April, 2013 and thus, not applicable in the instant case. The matter is accordingly remanded back to the file of the ld CIT(A) to determine the valuation of the two properties in terms of sub-section (3) as on the date of agreement to sell which is 9.4.2007 and where it is so determined that such valuation is higher than what has been declared by the assessee, the same can be brought to tax in the year under consideration. - decided in favour of assessee for statistical purposes. 2018 (9) TMI 1230 Addition u/s 14A - Held that:- CIT(A) was justified in deleting the addition made u/s 14A on the ground that in the absence of any exempt income, resort cannot be made to the provisions of section 14A. 2018 (9) TMI 1229 TDS u/s 194C - amount reimbursed to regional distributors in respect of advertisement expenses incurred - amount paid from principal to principal - Held that:- In the present Assessment Year, the assessee during the previous year paid Rs. 18,35,15,604/- to regional distributors on account of reimbursement of expenses against third party bills, incurred by them for advertisement in relation to the assessee’s products sold by them on their own account. From the records it is seen that these expenses included manpower reimbursement to RDS, Salesman incentives and other reimbursement to RDS. Thus, the assessee raised the bill in the name of payee and the assessee also produced evidences before the Assessing Officer to establish that the parties to whom the reimbursement have been made had actually complied with the Provisions of Chapter XVII-V. Therefore, we are of the view that the CIT(A) has not looked into the evidences produced before the Assessing Officer as well as before CIT(A). - Decided in favour of assessee. TDS u/s 192 - amount paid towards salary, at average rate of tax, as well as short deduction of tax the interest levied on the basis of monthly shortage u/s 201(1A) - Levy of interest under Section 201(1A) - Held that:- The rate of tax deducted at source was calculated at “average rate of income tax” computed on the basis of the rates on the estimated income of the payee for the relevant financial year. AO proceeded to compute the amount of tax to be deducted on month to month basis of average tax deducted. This needs to be verified as the Ld. AR made submission before us that the Assessing Officer has not given any credit for interest where there is no surplus payment of TDS, while charging interest on deficit amount. Thus, this issue is remanded back to the file of the Assessing Officer for verifying as to whether the interest clause is applicable or not and if applicable whether there is surplus payment of TDS or not. After verifying the same the Assessing Officer decide this issue. Provisions made for recruitment expenses - TDS liability - Held that:- The assessee company made a provision for recruitment expenses, where TDS has been deducted at the time of actual payment or credit to the party. Thus, there is no default in TDS deduction. Therefore, the action of the Assessing Officer in treating the assessee as an “assessee-in-default” and levying interest under Section 201(1A) of the Act is not based on proper appreciation of the facts of the case. Ground of assessee is allowed. TDS u/s 194J - provision for commission to directors - Held that:- The assessee made a provision for commission to directors at the end of the year, which can be paid strictly in accordance with Section 211 of the Companies Act, 1956 and TDS can be deducted and paid, when actual liability is ascertained, which generally happens after five/six months from the end of the financial year. Further, in Finance Bill, 2012, Section 194J of the Income Tax Act, 1961 has been amended and a clause (ba) to sub section (1) of the Section 194J effective from 1st July, 2012 has been Introduced wherein tax is required to be deducted on the remuneration paid to director, which is not in nature of salary, at the rate of 10% of such remuneration. Thus, the contention of the Ld. AR that this clause is applicable w.e.f. 1.07.2012 is just and proper. Ground of assessee is allowed. 2018 (9) TMI 1187 Deduction u/s 80P(2)(a) - eligibility to trade income and income from CAMPCO - Held that:- There was no specific reasoning given by the assessee nor the CIT(A) for denying the benefit of deduction u/s 80P(2) of the I.T.Act. The trade income according to the assessee was earned by it on account of purchase and sale of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members. Income accrued from CAMPCO according to the assessee was on account of marketing of agriculture produce of its members. Therefore, it was submitted that such income was entitled to deduction u/s 80P(2)(a)(iii) and (iv) of the I.T.Act. Since the A.O. nor the CIT(A) has not given any specific reasons for denying the benefit of deduction claimed u/s 80P(2), we deem it appropriate to remand the case to the A.O. for fresh consideration. As regards the insurance commission assessee had received concerning the assessment years 2011-2012 and 2012-2013, there was no discussion by the A.O. nor the CIT(A) for disallowing the claim of deduction u/s 80P(2). It is the case of the assessee that it had earned commission from United India Insurance for crop insurance where the assessee-society was intermediary between the Insurance company and its members. Since there was no discussion by the A.O. nor by the CIT(A), we deem it appropriate to remit the issue to the Assessing Officer for de novo consideration.- Decided in favour of assessee for statistical purposes. Customs 2018 (9) TMI 1218 Rectification of mistake - Held that:- There is an error in mentioning the number of the appeal in Final Order No. 43344/2017. The said Final Order mentions the impugned order as Order-in-Appeal No. 1533/2014 and the appeal pertaining to this impugned order as per the records of the Registry is C/42528/2014. By some typographical error the Appeal No. was wrongly mentioned as C/42527/2014. Being an error apparent on the face of record, the same requires to be rectified. ROM Application allowed. Corporate Laws 2018 (9) TMI 1220 Seeking transfer of petition to the NCLT - Held that:- The present winding up petition is at an initial stage. This court on 15.05.2018 had revived the order appointing the OL as the provisional liquidator. The order appointing the OL was originally passed on 07.08.2015 which had been put in abeyance on account of settlement between the petitioner and, the respondent. Pursuant to this order of revival passed on 15.05.2018 the OL has taken steps and sealed the head office, as per ROC records, which is located at A-257, Road No.6, Mahipalpur, New Delhi-110037. Regarding the Factory premises, the possession of the same has already been taken over by the UCO Bank under the SARFAESI Act, 2002. Clearly the proceedings for winding up of the respondent company are at an initial stage. The other factor which is admitted by learned counsel for the parties is that other than the factory and land at District Rudrapur, Uttrakhand, there is no immovable or worthwhile movable asset of the respondent company. The registered office at Mahipalpur, New Delhi is a tenanted property which has been sealed by the OL. The landlord of the premises is seeking desealing of the suit premises. Thus in the facts and circumstances of this case, it would be in the interest of the creditors that the proceedings are transferred to NCLT and an attempt is made for initiation of corporate insolvency resolution. In case the same is successful, the same would be in the interest of creditors. To overcome any objection raised by the petitioner and the exdirectors, I also allow CA No. 741/2018 and implead UCO Bank as a party to the present company petition. The order appointing the OL as the provisional liquidator initially passed on 07.08.2015 and revived on 15.05.2018 is revoked subject to UCO Bank paying the expenses of Rs. 75,000/- which has been incurred by the OL.On payment of the expenses to the OL, the order appointing the OL as the provisional liquidator would stand revoked. 2018 (9) TMI 1219 Winding up petition - petitioner entered into a Distributorship Agreement with respondent company concluding with an outstanding debt - Held that:- At this stage, only note that learned counsel for the respondent has pointed out that the communication dated 6.10.2014 was written on the instructions of the petitioner. Reliance is placed on communication dated 28.8.2014 written by the petitioner to the respondent. Even if what has been pleaded is correct it does not take away the fact that on the instructions from the petitioner the respondent has admitted the dues. It is also an admitted fact that despite these communications no worthwhile payment has been made to the petitioner. In opinion thereof the defence raised is not bonafide. There are no reasons given as to why the debt is not payable. Admit the present petition. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published accirdingly. Insolvency & Bankruptcy 2018 (9) TMI 1228 Corporate insolvency proceedings - whether Corporate Debtor is liable to pay operational debt to the Petitioner/Operational Creditor? - Held that:- Section 3(23) defines “person” which includes entity established under a statute. Operational Creditor is shown as “M/s. Shruti Impex”, a sole proprietary firm. This firm is said to have been established under a statute. The copy of certificate of provisional registration GST certificate is filed. It is shown as Annexure-3 at page No.7. It is dated 28.06.2017. This certificate is issued under the provisions of an Act. The firm falls under Clause (g) of Section 3(23) Claim in respect of provision of goods supplied to the Corporate Debtor. Therefore, it is an operational debt. The Petitioner is an entity established under a Statute and comes within the definition of person. Therefore, Petitioner is an operational creditor. Thus, Operational creditor is entitled to maintain the present petition. The operational Creditor is able to establish that there is a default committed by the Corporate Debtor. Therefore, Petition is to be admitted. Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code. Petition admitted. 2018 (9) TMI 1227 Insolvency resolution process against the corporate debtor - Held that:- Last payment received from the corporate debtor was to the tune of Rs.4 lacs. There are then the balance confirmation letters admittedly executed by the corporate debtor before the expiry of 3 years taken from 21. 03. 2014. The Ledger Account statement was initially filed upto 01. 09. 2014 along with the main petition but copy of the ledger account for the subsequent period has been filed as Annexure A-15 with CA No. 316/2018 which also indicates that no further payment was received from the corporate debtor. Learned counsel appearing for the respondent does not dispute the authenticity of the aforesaid ledger account in view of the balance confirmation letters which have been relied upon by the petitioner. So, simply raising the issue of sub-standard goods in the reply cannot be taken as an ‘existence of a dispute’. As perused the written communication in Form 2 furnished by the registered Resolution Professional, proposed to be appointed as the Interim Resolution Professional and the same is found to be in order. All the ingredients required to be established are made out. In view of the above, the instant petition deserves to be admitted. The petition under Section 9 of the Code is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of Section 14(1) of the Code 2018 (9) TMI 1226 Overriding effect of provision of Insolvency and Bankruptcy Code, 2016 - attachment orders - Held that:- Proceeding under the sick industrial Companies (special provisions) repeal act 2003 was not, having overriding effect over other laws. But section 238 of the Insolvency And Bankruptcy Code 2016 specifically provides that the provisions of this Court shall effect, notwithstanding anything inconsistent in addition to that contained in any other law for the time being in force or any instrument affecting by any such law. Since the provision of Insolvency and Bankruptcy Code, 2016 has an overriding effect, and there exists a direct inconsistency between the provisions of liquidation as provided in Chapter 3rd of the I.B. Code, 2016 with the provision for attachment of assets for recovery of dues for supply of electrical energy under the U.P. Electricity Supply Code, 2005/ U.P. Government Electrical Undertaking (dues recovery) Act, 1956, therefore provisions of IB code shall prevail. The attached property is also a part of liquidation estate, under the purview of liquidation estate, which is available for benefit of all creditors as per provision of Section 36 (2) of the Code. If the attachment continues, the property would become available for the benefit of the respondents only, who are also secured operational creditors and ranks equally with other secured financial creditors under the Provisions of Section 53 of the Insolvency and Bankruptcy Code, 2016.Therefore, the property of the creditor which have been attached by the District Magistrate, Muzaffarnagar and Tehsildar, Muzaffarnagar is a part of liquidation estate. Since under liquidation process, it has to be sold and after that realised value will be distributed regarding provision of Section 53 of I.B. Code, 2016. It is also on record that by order of District Magistrate a notice board is on display at that attached property, which show that sale of the attached property is prohibited by order of the District Magistrate. In such situation, liquidator can never find any buyer to purchase the property. Therefore, we allow this company application and pass an order to the District Magistrate and Tehsildar Muzaffarnagar for immediate release of the attached property in favour of liquidator, so that he may sell the property, and after realisation of the value of the property it may be distributed in accordance with the relevant provisions of the I&B. Code, 2016. It is also to make clear that P.V.V.N.L also comes under the definition of secured operational creditor, who can realize their dues in the liquidation proceedings as per law after submitting their claim before the liquidator. 2018 (9) TMI 1225 Corporate Insolvency Resolution Process - Sufficient evidence of financial debt - Held that:- The applicant bank has also placed CRILC report in order to show that accounts of corporate debtor was reported as loss and doubtful account. It has been shown that the company has defaulted in repayment of the loan to the applicant and that huge debts are outstanding as reflected in the statement of accounts of the company. Certified copy of statement of account kept during the course of banking business basing on which the claim has been raised can be termed as sufficient evidence of financial debt. The material placed on record clearly goes to show that respondent corporate debtor has availed the loan facilities and has committed default in repayment of the loan amount. An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. What is material is that the default is at least 1 lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The applicant financial creditor has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. In terms of Section 7(5)(a) of the Code, the present application is admitted. 2018 (9) TMI 1224 Corporate insolvency resolution process - Held that:- The reply letter dated 25th January, 2017 written by the ‘Corporate Debtor’ cannot be taken into consideration having issued in reply to demand notice dated 14th January, 2017 given by the appellant under Section 8(1) of the I&B Code. The dispute raised on imaginary facts and circumstances while replying to the demand notice cannot be treated to be an ‘existence of dispute’ for rejecting the application under Section 9. In absence of any evidence relating to preexistence dispute i.e. prior to issuance of notice dated 14th January, 2017 under Section 8(1) of the I&B Code we hold that there was no dispute in existence. Further, in view of letter of engagement and terms and condition of engagement as discussed above we hold that the appellant comes within the meaning of ‘Operational Creditor’ as defined under Section 5(7) r/w Section 5(8). There being a ‘debt’ due to the appellant and in absence of any evidence of payment, it is to be accepted that there was a ‘default’. In such background it was the duty of the Adjudicating Authority to admit the application. 2018 (9) TMI 1223 Corporate insolvency resolution process - whether the 1st appellant is a ‘related party’ or not? - Held that:- The ‘debt assignment’ is a transfer of debt with all the rights and obligations associated with it from a creditor to a third party, who is’ assignee’. The ‘debt’ is in the form of loan from a ‘financial institution’, the debtor is referred as a ‘borrower’ and if the debt is in the form of securities, such as bonds, the debtor is referred to as an ‘issuer’. Undisputedly, the assignment is the transfer of one’s right to recover the debt of another person as a contractual right. Rights of an ‘assignee’ are no better than those of the ‘assignor’. It can be, therefore, held that ‘assignor’ assigns its debt in favour of the ‘assignee’ and ‘assignee’ steps in the shoes of the ‘assignor’. The ‘assignee’ thereby takes over the right as it actually did and also takes over all the disadvantages by virtue of such assignment. What cannot be achieved directly by Mr. Sudhakar Mulay, he did it indirectly assigning his debt in favour of the 1st appellant. Mr. Sudhakar Mulay being the ‘related party’, with the assignment of ‘debt’, the disadvantage also goes to the 1st appellant. For the reasons aforesaid, we hold that the issue has been rightly decided by the Adjudicating Authority and no ground has been made out to interfere with the impugned order. In absence of any merit, the appeal is dismissed 2018 (9) TMI 1222 Disallowing the representatives of the Corporate Debtor including the applicant to participate in the CoC meetings - Held that:- What appears to us is that this applicant/Director wants to delay these proceedings by projecting this as violation to the rights of this applicant. Assuming violation of provision has happened, then also the Applicant has to show not only violation of some provision of law but also to show that such violation will adversely affect the interest of him. Here, he has not shown any averment reflecting that violation of some provision will adversely affect the interest of him. After examining the orders passed by Hon'ble NCLAT, we are of the view that Hon'ble NCLAT has not given any direction in those two cases that resolution plan has to be provided to the suspended directors, in fact, the Hon'ble NCLAT has said that when it is a confidential information it need not be parted with the other contending resolution applicants. This indicates that if the information is confidential, COC could keep it to itself to maximise the valuation of the assets. If these kind of applications are entertained, it is difficult for the RPs as well as COC to complete the process within the time lines given under the Code. Notwithstanding the timelines, since we have not found any merit in this application moved by the suspended director, this application is disposed of with the directions below. This Application is hereby disposed of giving liberty to this applicant to attend the COC meetings but not to insist upon the COC or the Resolution Professional to provide information which is considered as confidential by the Resolution Professional or the COC. 2018 (9) TMI 1221 RTI application - information “held” and under the “control of public authorities” - appellant sought the information from the Insolvency and Bankruptcy Board of India with reference to recruitment of officer’s grade- A, year 2018 like Copy of online exam paper with given options (typically allotted to me), Suggested answers key for that paper and Copy of punch card, keys pressed by me Held that:- Information in respect of the specific query in para 2 in points (i), (ii) and (iii) above is not available with the Insolvency and Bankruptcy Board of India. Further, the Hon’ble Supreme Court of India in Thalappalam Ser. Coop. Bank Ltd. & Ors, v. State of Kerala & Ors. (2013 (10) TMI 1057 - SUPREME COURT), while interpreting the term “information” enshrined in Section 2(f) of the RTI Act, 2005 has observed that citizens have a right to get information, but can have access only to the information “held” and under the “control of public authorities”, with limitations. If the information is not statutorily accessible by a public authority, as defined in Section 2(h) of the Act, evidently, that information will not be under the “control of the public authority”. Service Tax 2018 (9) TMI 1216 Condonation of delay of 304 days in filing appeal - Case of the appellant is that the order which was challenged by the Tribunal was one of remand - Held that:- The appellant was obviously therefore, not being aggrieved by such order so as to challenge it. However, later on it was realised that such remand was not openended, giving rise to the challenge by the appellant - Tribunal is requested to hear the appeal on merits. 2018 (9) TMI 1215 Rectification of Order - Section 74 of the Act - main ground on which Ext.P5 order is attacked is that since the petitioner sought rectification in respect of Ext.P1 order, the same should have been considered by the second respondent, the original authority and not the first respondent - Held that:- In so far as the appeal preferred by the petitioner is dismissed for non payment of pre-deposit, there is no merger as pointed out by the learned Standing Counsel and that therefore, Ext.P4 application should have been considered by the original authority namely, the second respondent - petition allowed. 2018 (9) TMI 1214 Permission to make the pre-deposits required for the appeals preferred against the original orders - Held that:- There is no time limit prescribed for making the pre-deposit. As such, no further direction is required for the petitioner to make the pre-deposit in relation to the appeal preferred against Ext.P2 order. However, in so far as the petitioner has not made a pre-deposit till date and have expressed willingness to make the pre-deposit, it is directed that further proceedings pursuant to the impugned notices shall be deferred for a period of ten days from today so as to enable the petitioner to make the pre-deposit. The petitioner is permitted to make the pre-deposit within ten days - petition allowed. 2018 (9) TMI 1213 Classification of Services - certain services provided by Chartered Accountant - Management Consultancy Services or not? - N/N. 59/1993-ST - Time limitation - Held that:- Management and consultancy can be provided by any person and by being a chartered accountant one does not go out of the purview of the definition - In the instant case, the services provided by appellant have been described by the appellant themselves as preparation of project feasibility report including financial feasibility, profile of the concern, etc. It is seen that the above description does not fall under the category described in the clarification of the Ministry dated 20/08/1999 - Preparation of project report would squarely fall under the description „relating to conceptualizing devising of any working system of any organization and thus would squarely fall under the definition of Management of Consultancy firm - the services provided by the appellant are indeed covered under the definition of Management Consultancy Services. Time Limitation - Held that:- Even if appellant believed that the said services were exempted or non-taxable, it was necessary for him to declare the same in the ST-3 returns which they have failed to. Moreover, Chartered Accountants are experts in the field of Service Tax and the issue involved in the instant case is not one wherein anybody can have any doubt - invocation of extended period of limitation is also upheld. Appeal dismissed - decided against appellant. 2018 (9) TMI 1212 Refund claim - Place of Provision of Service Rules, 2012 - input services - insurance services - hotel accommodation invoices - denial of refund claims on the ground of nexus - Held that:- It is found that for the period pertaining to 15.12.2013 to 14.02.2014, two insurance coverage were obtained by the appellant and the conditions available on the overleaf of the insurance bond reflected that one is taken for property damage and other one is taken against legal protection that may arise due to dishonesty of employees, loss of documents, cover for defamation as well as intellectual property infringement made - Further, concerning hotel accommodation, the bills produced by the appellant indicate that one Prashant Reddy was accommodated in a Bangalore based hotel for four days, and the ld. Counsel submits that it was in connection with the business of the company which could have established in having given the chance to the appellant to substantiate the same before the adjudicating authority. The matter is remanded back to the adjudicating authority for fresh adjudication in terms of above observations - Matter remanded. 2018 (9) TMI 1211 Business Auxiliary Service or not - providing service on behalf of the principle of Information Technology Service - Held that:- On going through the agreement between eBIZ and the assessees, the activity undertaken by the assessees involved the promotion or marketing of the service of eBIZ and getting commission from the eBIZ of the same as the service provided by the assessees in relation to the operation of computer systems. In that circumstances, the assessees are covered by the explanation to Section 65(19) of the Finance Act, 1994, therefore, they are not liable to pay service tax. As the assessees are providing service in respect of operation of computer systems, the same is not covered under Business Auxiliary Service, therefore, they are not liable to pay service tax. Demand set aside - appeal allowed - decided in favor of appellant. 2018 (9) TMI 1210 Refund of Service tax paid erroneously - SCN not issued - Principles of natural justice - Held that:- n this case, no show cause notice has been issued to the appellant for rejection of their refund claim which shows that the appellant has not been given proper opportunity to defence their case. Moreover, the principle of nature justice has been violated by not granting any personal hearing at the time of consideration of the refund claim - in the absence of the issuance of the show cause notice, the refund claim is not rejected. Admittedly, in this case, the appellant has not constructed any residential houses on behalf of NBCC but has constructed Barracks for the purpose of training of CRPF mens, therefore, in terms of the Circular 332/16/2010-TRU- dated 24.05.2010, the refund claim cannot be rejected. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1209 Classification of services - services of loading and unloading of coal, transportation of coal, removal of over-burden coal within the mining area - whether classified under Mining Services or under Cargo Handling Services? - Held that:- In the case of Sarvmangla Construction Co. v. CCE & ST, Raipur [2016 (9) TMI 1023 - CESTAT NEW DELHI], identical services provided by the appellant to M/s.South Eastern Coalfield, were held as not taxable - appeal allowed - decided in favor of appellant. 2018 (9) TMI 1208 Sale of space or time for Advertising services - Levy of Service Tax - display of advertisement - whether service tax is leviable on the amount collected by Nagar Nigam, Kanpur for allowing display of advertisement under the category of ‘Sale of space or time for Advertising services’? Held that:- The issue is no more res-integra and stands settled by Hon’ble Gujarat High Court in the case of Selvel Media Services Pvt. Ltd. V/s Municipal Corporation of City of Ahmedabad [2010 (3) TMI 1011 - GUJARAT HIGH COURT] and it was held that grant of permission is part and parcel of function of Municipal Corporation in the form of public duty to ensure better Municipal governance and cannot be termed as services rendered to advertising agent. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1207 Sale of space or time for Advertising services - Levy of Service Tax - display of advertisement - whether service tax is leviable on the amount collected by Nagar Nigam, Kanpur for allowing display of advertisement under the category of ‘Sale of space or time for Advertising services’? Held that:- The issue is no more res-integra and stands settled by Hon’ble Gujarat High Court in the case of Selvel Media Services Pvt. Ltd. V/s Municipal Corporation of City of Ahmedabad [2010 (3) TMI 1011 - GUJARAT HIGH COURT] and it was held that grant of permission is part and parcel of function of Municipal Corporation in the form of public duty to ensure better Municipal governance and cannot be termed as services rendered to advertising agent. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1206 Application for early hearing - early hearing sought on the ground that the amount involved is more than Rs. 17 crores and that the issue is covered by the decision of the Hon'ble Supreme Court in the case of Union of India & Anr. Vs. Intercontinental consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] - Held that:- Early hearing application is allowed. 2018 (9) TMI 1205 Restoration of appeal - appeal was dismissed for non-compliance with pre-deposit - Held that:- There are no grounds to restore the appeal which has been dismissed for non-compliance of pre-deposit - Althrough, the appellant was represented by his counsel and therefore cannot contend that he was not aware of dismissal of appeal for non-compliance - appeal cannot be restored - restoration of appeal application dismissed. 2018 (9) TMI 1204 GTA Services - whether the “Transit Mixer” used by the respondents to transport the “ready mix concrete” manufactured by them to their customers would attract the mischief of levy of service tax under GTA services? - Held that:- On perusal of the agreement between the respondent and the Popular Cargo Movers, it becomes evident that the “Transit Mixer” have only been hired, for a period of 3 years with full possession and control vesting with the respondents - the original authority is correct in contending that the vehicles are only been hired and that no GTA service have been provided to them - appeal dismissed - decided against Revenue. Central Excise 2018 (9) TMI 1203 Maintainability of appeal - Condonation of 11 days delay in filing the appeal - Held that:- In the case of Commissioner of Central Excise Vs. Eon Hinjewadi Infrastructure (P) Ltd. [2018 (9) TMI 665 - BOMBAY HIGH COURT] it was held that the jurisdiction of this Court to entertain appeals under Section 35G of the Act is determined by the order passed by the Tribunal and not on the basis of the question framed by the appellant. This Court does not have jurisdiction to entertain the appeal. Therefore, it would be appropriate if the applicants also file their appeal from the impugned order to the Hon'ble Supreme Court, if they are so advised - Appeal dismissed as not maintainable. 2018 (9) TMI 1202 Time Limitation - Whether the demand of duty under the extended proviso to Section 11A(1) of the Central Excise Act 1944 and consequential penalties under Section 11AC of the Act on the assessee and under Rule 209A of the Central Excise Rule 1944 and on the supplier M/s.Bush Boake Allen India Limited as well as demand of appropriate interest under Section 11ab of the Act, is barred by limitation? Held that:- There is no infirmity in the order passed by the Tribunal, as there was no malafide pleaded by the appellant, in the show cause notice dated 03.01.2001 against the 1st respondent, to suppress the fact before the authority and ought to have made such statement to lead the Department to hold that the 1st respondent had intention to cause evasion of duty. Apart from that it could be seen from the records that only after the Hon'ble Supreme Court dismissed the department appeal in 1997, the 1st respondent had voluntarily applied for excise registration and only thereafter, the factory premises were inspected by the Department. In fact, though the 1st respondent had applied for registration during July 1997, which period itself, the factory premises were inspected by the Department and thereafter, only, the preventive department officials have inspected the respondent premises, i.e. 25 months after registration, and thereafter, 17 months later, the show cause notice dated 03.01.2001 came to be issued against the 1st respondent. It is clear from the plain reading of Section 11A, the Central Excise Officer shall, within 2 year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. In fact, the said two years period of limitation was substituted with effect from 14.05.2016 and prior to that, it was only one year - The show case notice dated 03.01.2001 sent, is belated from the date of registration with the department, during the month of 1997 itself, and therefore, the action of the department is time barred. The authorities have neither pleaded malafide nor suppression in the show cause notice, and moreover acted belatedly, against the 1st respondent. Appeal dismissed. 2018 (9) TMI 1201 CENVAT Credit - duty paying documents - photocopies of invoices - original documents was destroyed due to flood - Held that:- The second round of proceedings before the Commissioner, were circumscribed by the directions given in that order dated 3rd May, 2010 for denovo adjudication by the Tribunal. The contention urged by Mr. Dharmadhikari before us, cannot assist the Appellant in the present facts as these were all issues which were a subject matter of the first round of litigation, leading to the order dated 3rd May, 2010 of the Tribunal. Thus, in the absence of any further documents being submitted during the denovo proceedings, the impugned order dated 23rd November, 2015 calls for no interference. The question as framed does not give rise to any substantial question of law. Appeal dismissed. 2018 (9) TMI 1200 Monetary amount involved in the appeal - Held that:- As per the second proviso to Section 35 B of the Central Excise Act, the Tribunal has the discretion not to entertain an appeal if the total tax in dispute is up to Rs. 2 Lakh. The total Revenue in dispute is only to the extent of Rs. 46,091/- - In the present case since the total tax effect is far less than the threshold, appeal dismissed. 2018 (9) TMI 1199 CENVAT Credit - duty paying invoices - Duplicate Copy of Invoice - Rule 9(1) of the Cenvat Credit Rules, 2004 - Held that:- M/s. Bhuwania Associates Pvt. Ltd., have furnished the details of Bank Statement, payment particulars, gate register and statutory documents like JVAT certificate which show that the goods in question have been received in the appellant’s factory and used by them in manufacture of their final products. It is imperative to note that the mistakes occurred on the part of the dealers which were inadvertently made by their accountant in the course of filing details in the Triplicate copy of the invoices - the appellant is eligible for availing Cenvat Credit on the basis of these invoices - credit allowed. CENVAT Credit - credit availed on the basis of ‘Triplicate Copy’ of invoices - Held that:- The dealer has accepted their fault of retaining the duplicate copy of invoices and sending the Triplicate Copy. However, all the invoices along with other documents were seized by the Department - credit allowed. Cenvat Credit amounting to Rs. 6,72,583/- - Held that:- These invoices contained the details of the manufacturer (SAIL) and duty details. M/s. H. P. Exim Pvt. Ltd. is a registered dealer and the stock is duty paid. These purchases have been made against the old stock prior to registration - It is not the Revenue’s case that the input were not duty paid or were not received by them or do not stand utilized in the manufacture of final products. As such, denial of credit on the basis of discrepancies, which are treated as technical, is neither justified nor warranted - credit allowed. Appeal dismissed - decided against Revenue. 2018 (9) TMI 1198 Refund claim - assessment orders of refund claims not challenged - whether refund claims can be challenged by way of issuance of show cause notice under Section 11A of the Act or not? - Held that:- Wthout challenging the said refund claim in appeal, show cause notice cannot be issued under Section 11A of the Act as held by Hon'ble High Court of Gauhati in the case of CCE, Shillong vs. Jellalpore Tea Estate [2011 (3) TMI 11 - GAUHATI HIGH COURT] - provisions of Section 11A of the Act are not applicable to the facts of this case. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1197 SSI Exemption - clubbing of clearances - it is alleged that both DSD and DSW are the same, therefore their sales are to be clubbed together - Clandestine removal - fake trading shown in the balance sheet - actual sales - under valuation of final goods. Clubbing of clearances - Held that:- Both the units were manufacturing the same product and are Private Limited Companies. The Limited Company cannot be held to be a one Company. Moreover, both the units are situated at the distance of more than 20Kms. from each other and from time to time obtained Central Excise registration. As their clearances were below the SSI exemption limit, therefore, surrendered their Central Excise registration from time to time. The said registration was granted to them after ascertaining their correctness that the both the units are separate. In that circumstance, it cannot be said that the appellants are one unit merely on the basis of certain statements - It is not a case in the Central Excise wherein the assessee has to obtain registration for all the units therefore, the clearances made by one unit cannot be clubbed with the other unit - SSI exemption cannot be denied on account of clubbing of clearance. Clandestine removal - fake trading shown in the balance sheet - actual sales - Whether the fact of fake trading entries made in the balance sheet can be treated as clandestine removal or not? - Held that:- It is an admitted fact in the show cause notice itself recorded that both the units have shown fake trading. When Revenue itself is admitting in the show cause notice that entries are fake and without establishing the fact of manufacturing of the goods indicating how much inputs was required, how much goods have been produced, how much electricity has been consumed, in the absence of any such corroborative evidences, merely on the basis of fake entries which are to obtain loan from banks etc., it cannot be held that fake entries are of clandestine removal of goods - demand not sustainable. Under valuation - Revenue sought to include the value of hardware, labour charges and polishing charges done at the site of the buyers in assessable value - Held that:- As all these activities have been done at the buyer s place and are part of immovable property, in that circumstances, activity conducted at the end of buyer s place such as hardware fitting, labour charges for polishing etc. cannot be included in the assessable value of the goods. Therefore, the charge of undervaluation is not sustainable against the appellants. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1196 Finalization of Provisional assessment - Stock Transfer to Depots - Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Since the information in respect of such goods such as the cost of transportation from the factory to where the sale took place was not known in advance, Provisional Assessment was done. Held that:- The issue decided in appellant own case M/S UAL UTTAR PRADESH VERSUS COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD [2018 (8) TMI 781 - CESTAT ALLAHABAD], where it was held that after ordering Provisional Assessment for want of data on cost of transportation subsequently Revenue cannot change its stand and order finalization of assessment by invoking the said Rule 7. Matter remanded back to the Original Authority who shall re-determine either duty payable by the assessee or refund payable to the assessee by invoking provisions of the said Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. 2018 (9) TMI 1195 Refund claim - duty paid under protest - N/N. 67/1995 dated 16.03.1995 - Unjust Enrichment - Held that:- The question of applicability of Notification 67/1995 for exempting duty on end cuttings after the Brass circles are formed does not arise because the end cuttings were also be covered by the basic notification for exemption on brass articles. Further the Original Authority has already recorded that the duty was paid under protest. Unjust enrichment - Held that:- The entire proceedings were silent on the matter related to unjust enrichment and in any case the learned Counsel has shown few of the invoices on which there is a rubber stamp affixed stating that the “the duty was not recovered from buyer”. Therefore, in such a case the principle of unjust enrichment will not be applicable. Refund allowed - appeal allowed - decided in favor of appellant. 2018 (9) TMI 1194 Clandestine manufacture and removal - Revenue entertained a belief that Cenvated inputs did not tally with the recorded balance - Held that:- There has been no investigation as to out of which inputs the appellant manufactured the goods if Cenvated inputs are removed clandestinely since Central Excise duty was paid on the final products. Further, if shortage was found to whom such inputs were cleared and how the financial flow took place was not investigated - the contentions on the basis of which the said show cause notice was issued were not sufficient to frame charges against the appellant. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 1193 Adjustment of sanctioned rebate claims with the confirmed demands - Held that:- The assessee’s grievance is against such adjustments, which grievance is no longer available as the refunds have subsequently been sanctioned - As such, the impugned orders have become infructuous and the appeals are required to be rejected on the said short grounds itself. Demand of Interest - Held that:- Inasmuch as there is no interest issue involved in the present appeals, the refunds having been granted, the appellant are at liberty to approach the Revenue for grant of interest and the Original Adjudicating Authority would decide the same independently in accordance with law. Appeal disposed off. 2018 (9) TMI 1192 Area Based Exemption denied - N/N. 50/2003-CE dated 10.06.2003 - Cut-off date - period October, 2011 to September, 2012 - denial on the ground that the appellant had not started their commercial production before the cutoff date as provided under the said notification i.e. 31.03.2010 - In appellant own case for earlier period in the case of M/S VAIBHAV ISPAT PVT LTD VERSUS CC CE, MEERUT-I [2015 (8) TMI 59 - CESTAT NEW DELHI], it was held that the commercial production started before 31.03.2010 and as such the appellant is entitled to the benefit of the exemption in terms of the said area based notification. Following the decision, the appellant was entitled to exemption of said notification - appeal allowed - decided in favor of appellant. 2018 (9) TMI 1191 100% EOU - Extended period of limitation - It appeared to the department that the quantum of spares procured / imported without payment of central excise duties / customs duties removed from the bonded warehouse to the quarries and used in the quarry equipment had exceeded the limit of 5% of the value of the goods imported by the appellant - Benefit of exemption under N/N. 22/2003-CE as amended and also N/N. 52/2003-Cus. as amended. Whether the restriction of the 5% is applicable to the spares that are removed from EOU to the quarries or whether the said restriction of 5% is in respect of the spares that are procured / imported by 100% EOU? Held that:- There is no limit for the procurement of spares required for capital goods for use within EOU. The restriction of 5% is for removal of spares to the quarrying site. The ld. AR has been at pains to argue that DGFT circular is not binding upon the Customs department. However, it is pertinent to note that the above clarification has been issued only after consultation with, and clarification from, the Department of Revenue of which only CBEC is a wing - there is no violation of conditions of the Notifications and the allegation that the appellants have imported spares over and above 5% and thus is not eligible for the exemption of customs duties / central excise duties is without any legal basis. Time Limitation - Held that:- It is seen that the appellants have been furnishing fortnightly statements showing the movement of goods / spares to their quarries. Further, CT-3 certificates have also been issued in respect of the goods moved to the quarries - the department had full knowledge and permission was granted to the appellant for transfer of such items to the quarries - the allegation that the appellant is guilty of suppression of facts with intent to evade payment of duty cannot sustain. Appeals succeed both on merits and on limitation - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2018 (9) TMI 1190 Maintainability of appeal - the asssessing authority of the petitioners has suo motu amended the certificate of registration of the petitioners under the Act and revoked the authorization granted to effect interstate purchase of fuel - Section 7(4) of the Central Sales Tax Act. Whether an appeal lies under the VAT Act against an order issued under Section 16(10)? Held that:- It is seen that Section 55(1) of the VAT Act dealing with the right of appeal against orders issued under the said statute has been amended in terms of the provisions contained in the Finance Act, 2017 - the petitioners are entitled to prefer appeals challenging the orders issued under Section 7(4) of the Act. It is seen that the impugned orders have been rendered without taking note of the amendment introduced to Section 55(1) of the VAT Act in terms of the provisions contained in Finance Act, 2017. Petition allowed. 2018 (9) TMI 1189 Revised returns - case of the petitioner is that in the light of Circular No.14 of 2017 issued by the Commissioner of the State Goods and Service Taxes Department, the petitioner is entitled to submit revised returns in terms of the request made by them - Held that:- It is deemed appropriate to dispose of the writ petition directing the first respondent to take a decision on Ext.P2 request made by the petitioner, in the light of Circular No.14 of 2017. 2018 (9) TMI 1188 Violation of the principles of natural justice - Validity of assessment order - TNVAT Act, 2006 - Held that:- The petitioner filed their objections dated 17.10.2017, the Assessing Officer addressed to the third respondent on 10.11.2017 presumably requesting him to furnish certain details regarding stock variation pertaining to the petitioner. However, the petitioner was not informed about the said communication dated 10.11.2017 and in response to the same, the third respondent, by letter dated 06.12.2017, furnished 42 pages of stock details, which were stated to be furnished by the petitioner at the time of inspection. If the first respondent proposes to rely upon any documents, which he received from the third respondent and even if the documents were obtained by the officials of the Enforcement Wing from the petitioner during inspection, the first respondent, being the Assessing Officer, has a duty to furnish copies of the same to the petitioner and afford an opportunity to put forth their objections. The manner, in which, the assessment has been completed, is incorrect and will not stand to scrutiny of law. This is sufficient to set aside the impugned order. The matter is remanded to the first respondent for a fresh consideration - petition allowed by way of remand. Indian Laws 2018 (9) TMI 1217 Dishonor of Cheque due to insufficiency of funds - Section 138 of Negotiable Instruments Act - order of Acquittal - Held that:- The defence is not that the cheque was issued for debt and the same was misused. Contrarily, the defence is that the cheque was issued to one Muthulingam, that was stolen by the complainant, filled up and a private complaint was lodged under Section 138 of the Negotiable Instruments Act. In the absence of a complaint to the police regarding theft of the cheque and in the absence of any evidence to show how the cheque given to Muthulingam landed in the hands of the complainant, in the absence of any evidence, which would probabilise the subject cheque was not issued to the complainant to discharge an enforceable debt, the Trial Court and the appellate Court have rightly held that Ex.D.1 is a make belief document created in connivance of D.W.2 by the accused. Though the appellate Court has decided the appeal in the absence of the counsel for the petitioner, the reason for deciding the case on perusal of the records, has been justified in the Judgment of the appellate Court and also had reasoned out why the explanation of the defence does not probablised the reverse presumption. Revision petition dismissed.
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TMI Tax Updates - e-Newsletter September 22, 2018

Articles

1. Restructuring Corporate Offenses: Government Appointed Panel Suggests in-house adjudication system

2. COLLECTION OF TAX AT SOURCE UNDER ‘GST’

News

1. Preventive Vigilance – The Key Tool of Good Governance at Public Sector Institutions (Urjit R. Patel, Governor, Reserve Bank of India - September 20, 2018 - at the Central Vigilance Commission, New Delhi)

Notifications

1. F. No. 01/22/2013 CL-V (Pt-III) - dated 20-9-2018 - Co. Law

2. F. No. 01/16/2013 CL-V (Pt-I) - 905 (E) - dated 20-9-2018 - Co. Law

3. F. No. 01/01/2009- CL-V (Part VII) - dated 20-9-2018 - Co. Law

4. 23/2018 - dated 20-9-2018 - CGST Rate

5. 24/2018 - dated 20-9-2018 - IGST Rate

6. 23/2018 - dated 20-9-2018 - UTGST Rate

7. S.O. 242 - dated 20-9-2018 - Bihar SGST

8. 23/2018-State tax (Rate)-S.O. 244 - dated 20-9-2018 - Bihar SGST

9. S.O. 240 - dated 13-9-2018 - Bihar SGST

10. S.O. 239 - dated 13-9-2018 - Bihar SGST

11. S.O. 238 - dated 13-9-2018 - Bihar SGST

12. 87/GST-2 - dated 18-9-2018 - Haryana SGST

13. 86/GST-2 - dated 18-9-2018 - Haryana SGST

14. 84/GST-2 - dated 18-9-2018 - Haryana SGST

15. EXN-F(10)-24/2018 - 51/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST

16. EXN-F(10)-24/2018 - 50/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST

17. EXN-F(10)-24/2018 - 49/2018-State Tax - dated 17-9-2018 - Himachal Pradesh SGST

18. S.O. No. 62-22/2018-State Tax(Rate) - dated 11-9-2018 - Jharkhand SGST

19. S.O. No. 61-35/2018-State Tax - dated 11-9-2018 - Jharkhand SGST

20. 19/2018 - dated 14-9-2018 - Karnataka SGST

21. 18/2018 - dated 14-9-2018 - Karnataka SGST

22. 17/2018 - dated 10-9-2018 - Karnataka SGST

23. 01-T/2018 - dated 10-9-2018 - Karnataka SGST

24. (01-S/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST

25. (01-R/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST

26. (01-Q/2018) No. KGST.CR.01/2017-18 - dated 10-9-2018 - Karnataka SGST

27. 16/2018 - dated 4-9-2018 - Karnataka SGST

28. (01-P/2018) No. KGST.CR.01/2017-18 - dated 4-9-2018 - Karnataka SGST

29. (01-O/2018) No. KGST.CR.01/2017-18 - dated 4-9-2018 - Karnataka SGST

30. (01-N/2018) No. KGST.CR.01/2017-18 - dated 29-8-2018 - Karnataka SGST

31. (01-M/2018) No. KGST.CR.01/2017-18 - dated 29-8-2018 - Karnataka SGST

32. (15/2018) No. FD 47 CSL 2017 - dated 25-8-2018 - Karnataka SGST

Circulars / Instructions / Orders

1. 05/2018-19 - dated 17-9-2018

Highlights / Catch Notes

GST

Seizure Order Overturned Due to Missing E-Way Bill; No Intentional Law Violation Found by Petitioners Before Feb 2018.

State authorities can detain and seize goods during inter-state movement under IGST Act to prevent tax evasion.

Turmeric commission agents' services to agriculturists under Heading 9986 attract 'NIL' CGST and SGST rates.

Applicant Must Pay IGST on Vessel Transport via Reverse Charge; Addresses Ocean Freight Double Taxation Concerns.

Copper XLPE Cable Not Eligible for Concessional GST Rate, Falls Outside Notification No. 03/2017-CT, SI. No. 1 Scope.

Income Tax

Undisclosed Hawala Trading Revision Upheld u/s 263 Based on VAT and Sales Tax Authorities' Information.

AO to Re-compute Income Using Cash System; Credit TDS Prepaid Taxes Per Section 199 & Rule 37BA.

Compensation for giving up lawsuit rights in a breach of development agreement is capital, not revenue income.

Penalties under Income Tax Act Sections 271(1)(c) and 271AAB not applicable if return filing due date not expired.

Court Rules on TCS Default Order Validity; Four-Year Limitation Deemed Reasonable u/ss 201(1) & 201(1A) IT Act.

Proposal to Add Unexplained Cash Credit Under Income Tax Act Fails Due to Insufficient Evidence of Unaccounted Money.

Debate on Retrospective Application of Section 43CA, Income Tax Act, for Pre-existing Sale Agreements and Non-cash Consideration.

TDS on Director Commissions Deducted Post Liability Determination u/s 194J; No Extra Amounts Needed Mid-Year.

Service Tax

Chartered Accountant Faces Service Tax Demand Due to Extended Limitation Period; No Doubt on Applicability.

Appellant Entitled to Service Tax Refund for CRPF Barracks Construction, Not Residential Houses for NBCC.

No Service Tax on Transit Mixer Use for Delivering Ready Mix Concrete; Considered Truck Hiring, Not GTA Service.

Central Excise

Fake Trading Entries Don't Prove Clandestine Goods Removal; Demand Unsustainable Without Evidence.

Allegation of Fact Suppression Dismissed; Extended Limitation Period Inapplicable Due to Department's Prior Knowledge and Permission.

Case Laws:

GST

Income Tax

Customs

Corporate Laws

Insolvency & Bankruptcy

Service Tax

Central Excise

CST, VAT & Sales Tax

Indian Laws

Quick Updates:

TMI Tax Updates - e-Newsletter
September 22, 2018