TMI Tax Updates - e-Newsletter
September 24, 2018

Case Laws in this Newsletter:

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

Articles

• TCS PROVISIONS ON ELECTRONIC COMMERCE OPERATOR w.e.f. 01.10.2018
• ARBITRATION COUNCIL OF INDIA
• INDUS MOBILE DISTRIBUTION PRIVATE VS DATAWIND INNOVATIONS PVT. LTD: A CASE COMMENT

Notifications

GST - States

• 52/2018-State Tax - dated 20-9-2018 - Gujarat SGST
  TCS by Electronic Commerce Operator at 0.5 Percent

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• 23/2018-State Tax (Rate) - dated 20-9-2018 - Gujarat SGST
  Explanation in the Serial Number 41 in Notification No-12-2017

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• GSL/GST/RULE-138(14)/B.19 - dated 19-9-2018 - Gujarat SGST
  E-Way bill for Intra-State Movment of All Goods

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• 51/2018-State Tax - dated 14-9-2018 - Gujarat SGST
  Seeks to bring into effect section 52 of the GGST Act (Provisions related to TCS) From 01-10-2018

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• 50/2018-State Tax - dated 14-9-2018 - Gujarat SGST
  Seeks to bring into effect section 51 of the GGST Act (Provisions related to TDS) From 01-10-2018

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• 49/2018-State Tax - dated 14-9-2018 - Gujarat SGST
  Gujarat Goods and Services Tax (Tenth Amendment) Rules, 2018

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• 09/2018-State Tax - dated 13-9-2018 - Kerala SGST
  Movement of Tiles and Sanitary wares accompanied by expired e-Waybill from Cochin Port to destination of recipient is exempted from e-Waybill till 30/09/2018.

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• F.A-3-61-2017-1-V-(77) - dated 4-9-2018 - Madhya Pradesh SGST
  Amendments in this department's Notification No. F-A-3-61-2017-1-V-(50), dated 31st May 2018.

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• F.A-3-28-2018-1-V-(76) - dated 30-8-2018 - Madhya Pradesh SGST
  Payment of taxes for discharge of tax liability as per FORM GSTR-3B.

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• F.A-3-27-2018-1-V-(75) - dated 29-8-2018 - Madhya Pradesh SGST
  To extend the due date for filing of FORM GSTR -1 for taxpayers having aggregate turnover above ₹ 1.5 crores.

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• F.A-3-26-2018-1-V-(74) - dated 29-8-2018 - Madhya Pradesh SGST
  Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

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• 51/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  Seeks to bring section 52 of the MGST Act (provisions related to TCS) into force w.e.f 01.10.2018.

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• 50/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  Seeks to bring section 51 of the CGST Act (provisions related to TDS) into force w.e.f 01.10.2018.

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• 49/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Tenth Amendment) Rules, 2018.

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• 48/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Ninth Amendment) Rules, 2018.

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• 43/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores.

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• 41/2018-State Tax - dated 18-9-2018 - Maharashtra SGST
  Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6.

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• JC/(HQ)-1/GST/2017/Noti/18/ADM-8 - dated 14-9-2018 - Maharashtra SGST
  Corrigendum to Notification No.18 /2017-ST,19/2017-ST,20/2017-ST,21/2017-ST,24/2017-ST,27/2017-ST,29/2017-ST,30/2017-ST,34/2017-ST.

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• 47/2018-State Tax - dated 14-9-2018 - Maharashtra SGST
  To extend the due date for filing of FORM GSTR-3B for newly migrated (obtaining GSTIN vide Notification No. 31/2018-State Tax, dated 06.08.2018) taxpayers [Amends Noti. No. 34/2018 - ST].

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• 46/2018-State Tax - dated 14-9-2018 - Maharashtra SGST
  To extend the due date for filing of FORM GSTR-3B for newly migrated (obtaining GSTIN vide Notification No. 31/2018-State Tax, dated 06.08.2018) taxpayers [Amends Noti. No. 35/2017 and 16/2018 - ST].

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• 45/2018-State Tax - dated 14-9-2018 - Maharashtra SGST
  To extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide Notification No. 31/2018-State Tax, dated 06.08.2018) taxpayers [Amends Noti. No. 21/2017 and 56/2017 - ST].

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• 44/2018-State Tax - dated 14-9-2018 - Maharashtra SGST
  To extend the due date for filing of FORM GSTR -1 for taxpayers having aggregate turnover above ₹ 1.5 crores.

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• 41/2018-State Tax - dated 12-9-2018 - Mizoram SGST
  Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6.

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• 39/2018-State Tax - dated 12-9-2018 - Mizoram SGST
  The Mizoram Goods and Services Tax (Eighth Amendment) Rules, 2018.

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• 12894/CT.,/Pol-41/1/2017-Policy - dated 18-9-2018 - Orissa SGST
  Extending time to submit declaration in form GST TRAN-1

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• POL-41/1/2017-POLlCY /12710/CT - dated 10-9-2018 - Orissa SGST
  Ammending the earlier notification no-12250 dt-08.08.2017 & no-16673 dt-15.11.2017

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• POL-41/1/2017-POLlCY /12705/CT - dated 10-9-2018 - Orissa SGST
  Amendment in the Notification no-11872/CT dated the 10th August, 2018

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• POL-41/1/2017-POLlCY /12700/CT - dated 10-9-2018 - Orissa SGST
  Amendment in Notification No. 14031/CT dated the 16th September, 2017 and No. 4724/CT dated the 22nd March, 2018

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• 29219-FIN-CT1-TAX-0034/2017/FIN-S.R.O. No. 380/2018 - dated 10-9-2018 - Orissa SGST
  The Odisha Goods and Services Tax (Ninth Amendment) Rules, 2018.

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• 29215-FIN-CT1-TAX-0043/2017/FIN-S.R.O. No. 379/2018 - dated 10-9-2018 - Orissa SGST
  To extend the due date for filing of FORM GSTR -1 for taxpayers having aggregate turnover above ₹ 1.5 crores.

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• POL-41/1/2017-POLlCY /12598/CT - dated 9-9-2018 - Orissa SGST
  Extension of time for filling of application in form GST-CMP-04

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• POL-41/1/2017-POLlCY /12553/CT - dated 9-9-2018 - Orissa SGST
  Extension of time for filling of application in form GST-ITC-04

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• 28715-FIN-CT1-TAX-0043/2017/FIN-S.R.O. No. 375/2018 - dated 4-9-2018 - Orissa SGST
  Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6.

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• POL-41/1/2017-POLlCY /12281/CT - dated 23-8-2018 - Orissa SGST
  Amendment of notification no-11872 dt-10.08.2018 filling of return in form GSTR-3B

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• 50/2018 – State Tax - dated 13-9-2018 - Sikkim SGST
  Supercession the Notification No.33/2017-State Tax, dated the 15th September, 2017

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Highlights / Catch Notes

GST

• Every electronic commerce operator, not being an agent, shall collect an amount calculated at a rate of one per cent. of the net value of inter-State taxable supplies made through it by other suppliers
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• Taxable Supply - Borrowing Cost - Whether Consideration represented by way of Borrowing Cost received from members to whom loan was sanctioned, amounts to taxable supply? - Held Yes
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• Pure services contract - Services provided to Local Authority or Governmental Authority or Government Entity - PMC shall review detailed designs prepared and submitted by the Contractor for execution purposes keeping in view the applicable technology, applicable regulations and guidelines and the Employer's Requirements. - Eligible for exemption.
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• Catering Service - Applicant is engaged in supplying food and beverages at the canteen of their customers - liable to tax at the rate of 5% without ITC.
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• Classification of goods - The product 'Cattle feed in cake form' manufactured by the Applicant is classifiable under Chapter Heading 23099010 and stands exempted from GST
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• Levy of GST - Rent payable by a Hospital - whether GST is leviable on the rent payable by a hospital supplying lifesaving services (cardiology and emergency services)? - Held Yes.
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• Supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of a solar power plant - Nature of supplies made by sub-contractors - the supplies made by the sub-contractor to the Appellant are independent supplies - applicable rate of tax to be decided accordingly.
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• Composite supply - natural bundling - The supply of the PV module which is the major component of the Solar Power Plant is not naturally bundled with the supply of the remaining components & parts of the Solar Power Plant and the supply of the services of Erection, Installation and Commissioning of the Solar Power Plant.
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• Input tax credit - railway freight - ATF and other non-taxable supplies from the Applicant’s Haldia Refinery to the export warehouse of Indian Oil Corporation Ltd at Raxaul are not zero rated supplies. They are non-taxable supplies - ITC of the GST paid on the railway freight not allowed.
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• Classification of goods - ‘Leno Bags’, made by the Applicant and declared by them to be made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 63053300.
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Income Tax

• Reopening of assessment - addition u/s 68 - there is absence of link between alleged tangible material and formation of belief. At the most, it could be inferred that the belief of the A.O. was based on mere imagination, speculation and suspicion - it is not a fit case for initiation of reassessment proceedings under section 147/148.
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• Undisclosed income - The alleged TDS was reflecting in the form 26AS of the assessee as his PAN number was quoted in the bank records. Audited and financial statemesnt of the society clearly shows that the fixed deposits as well as interest accrued thereon belong to the society only and not to the assessee - No additions.
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• Rejection of books of accounts - the assessee has not included expenses related to the cartage and freight in his books of accounts, by this it has distorted the correct figure of profit - rejection of books of accounts sustained.
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• Addition towards write off of rent deposits - the negotiated settlement for the lock in period can only be treated as business loss as the premises was taken on rent for the purpose of business.
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• Ad-hoc disallowance at 10% on account of personal use - assessee filed books of accounts, vouchers and bank statements before Ld.AO. If Ld.AO was not satisfied with details filed by assessee, he could have pointed out at assessment stage itself. - No additions.
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• Provision for warranty - Assessee has explained the basis for working of the provision for warranty based on past experience and it is not on adhoc basis - Claim of expenditure allowed.
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• Determination of compounding fee u/s 279 - When the CBDT circular refers to the amount sought to be evaded, it must be seen and understood in light of the provisions contained in section 276C(1) and in turn must be seen as amount sought to be evaded. 100% of tax sought to be evaded would be the basic compounding fees.
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• Penalty u/s. 271AAA - undisclosed income - failure to prove the manner in which income has been earned - disclosure made with the consent of the family members and all partners - the declaration that the income was earned by the group out of land related transactions which was not previously recorded in the books is sufficient compliance - No penalty.
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• Addition of suppressed sale - additions of income made on the basis of SCN issued under the Central Excise - There is no independent material brought on record by the Assessing Officer other than those which were already collected by the Excise department and which, as noted earlier, are yet to be verified. - No additions.
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Customs

• Valuation of imported goods - assorted belt buckles - appellant’s contention is that the buckles found by the officers were not of prime quality and the same were in the nature of scrap - Is enhancement of value justified? - Held No
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• Refund of SAD - In is not necessary that, VAT should be paid from the importer’s pocket only. - The payment of VAT on the imported goods is the substantive condition of the Notification and the same having been paid by the consignment agent would satisfy the said condition of the notification.
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• Penalty u/s 117 - gold imported by the appellant did not bare engraving of weight in metric unit for claiming exemption - The imposition of penalty under Section 117 of the Act is discretionary. When the authority exercises its discretion to impose penalty, no question of law would arise from such imposition of penalty, in the absence of allegation of arbitrary or malafide exercise of discretionary power.
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• Alternative statutory remedy of appeal - right to appeal against determination of dumping for imposing anti-dumping duty - Negative finding - Even in the absence of notification, the plaintiff has equitable efficacious alternate remedy to challenge the impugned order under Section 9C of the CT Act before the Appellate Tribunal
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Corporate Law

• CSR Policy - Rule 6 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 - as amended.
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• CSR Committees without an Independent director if not covered u/s 149(4) - Rule 5 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended.
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• Definitions / Meanings of certain terms - Rule 2 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 - as amended
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• Directors KYC - e-Form DIR-3 KYC allowed to be submitted on or before 5.10.2018 - Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014
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• LATE FEE FOR FILING e- Form DIR-3 KYC - Annexure of the Companies (Registration Offices and Fees) Rules, 2014 - Relief granted for certain period.
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• Intangible Assets - Ind AS-38 of the Companies (Indian Accounting Standards) Rules, 2015 as amended.
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• Property, Plant and Equipment - Ind AS-16 of the Companies (Indian Accounting Standards) Rules, 2015 as amended
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• Income Taxes - Ind AS-12 of the Companies (Indian Accounting Standards) Rules, 2015 as amended
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• Accounting for Government Grants and Disclosure of Government Assistance - Ind AS-20 of the Companies (Indian Accounting Standards) Rules, 2015 - As amended.
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Service Tax

• Demand of service tax under the construction of Toll Plaza and Lanes under the category of ‘Commercial or Industrial Construction Services’ is not sustainable.
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• Valuation - includibility - inclusion of value of the goods used in providing the said services in assessable value - the value of the goods used in providing repair of Transformers are not to form part of the value of the services so provided by assessee
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• Supply of Tangible Goods - lease of railway wagons to the railways - inasmuch as the lease agreement for supply of tangible goods was one time event which acted prior to introduction of this taxable service w.e.f. 16.05.2008, no liability to pay service tax would arise against the assessee.
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• Supply of services or not? - third party software - The approach of commissioner while dealing with the issues is in accordance with the international practices of treatment of the software related transactions. Thus the order of the Commissioner holding that these services are classifiable under the category of ‘Information Technology Software Services’ after 16.05.2008 and prior to that under the category of ‘Intellectual Proper Services’ cannot be faulted with.
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Central Excise

• Non-Compliance of Pre-deposit - time limitation - Appellate Authority could not have dismissed the appeal on the ground that the prescribed mandatory appeal was made beyond the condonable period
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Case Laws:

• GST

• 2018 (9) TMI 1343
  Classification of goods - Polypropylene Leno Bags (or mesh bags) - Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 63053300 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975. Held that:- From the explanatory notes and clarification provided for determination of classification of goods it is seen that two main factors, apart from the raw materials, are to be considered, namely, the width of the tape used in the weaving and whether or not there is a layer/lining in these bags. The specifications of the PP Leno Bags being manufactured by the Applicant, therefore, become an important feature for determining their classification for the purpose of GST - IS 16187:2014 issued by the Bureau of Indian Standards specifies that, PP Leno Woven sacks for packaging and storage of fruits and vegetables should have range of width from 2.0 to 2.5 mm. Since, the Ruling sought for is specifically for PP Leno Bags used for packing agricultural produce such as potato and onions, the BIS for fruits and vegetables is considered solely. Ruling:- ‘Leno Bags’, made by the Applicant and declared by them to be made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 63053300.

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• 2018 (9) TMI 1342
  Input tax credit - railway freight for transportation of the goods from the its Haldia Refinery to the its export warehouse at Raxaul - export or not - distinct persons. Whether or not the products transported and supplied by the Applicant are “non- GST products”, “non-taxable supplies” “exempt supplies” or “zero rated supply of goods”? Whether the transportation to Raxaul warehouse is to be considered to be for export of supply to Nepal or transfer of goods to Indian Oil Corporation’s Bihar Unit for ultimate export to Nepal? Held that:- The exporter, registered as export warehouse, can store goods that may be diverted for home consumption. As the nature of clearance, whether for home consumption or export, is finally determined only at the time of removal from the export warehouse, the Excise Authority shifts the incidence of duty to the time of clearance from the export warehouse. Duty free removal from the factory is, therefore, allowed under prescribed procedure for goods being moved to the export warehouse - It is, therefore, not correct that submission of endorsed copies of ARE-3 to the concerned Excise Authority at Haldia, where the Applicant’s factory is located, is evidence of export. It is evidence of re-warehousing of the goods cleared duty free from the factory. Actual evidence of export is ARE-1, endorsed by the Customs Authority, submitted before the appropriate Excise Authority at the export warehouse, failing which the exporter is liable to pay the duty with interest. Removal without paying duty (under Bond) from Haldia Refinery to the export warehouse at Raxaul, therefore, does not as such amount to export. The goods re-warehoused at Raxaul Depot are not moved from Haldia under specific export order and can be either cleared for home consumption or exported. It is, therefore, far from a mere transit point, but the point of storing and final clearance. The final clearance being made from the export warehouse at Raxaul, it is the Bihar Unit that is responsible for export or payment of duty if diverted to home consumption - Clearly, the transportation from Haldia to the export warehouse at Raxaul is no measure of actual export. Input tax credit - export or not - distinct persons - Held that:- Transfer of ATF and other non-taxable supplies from Haldia Refinery to Raxaul Depot are not, therefore, export of goods in terms of section 2(5) of the IGST Act, but exempted supplies from the West Bengal Unit to the Bihar Unit of the Applicant, who are distinct persons in terms of section 25(4) of the GST Act - Sections 16(1)(a) and 16(2) of the IGST Act are, therefore, not applicable. The Applicant cannot claim credit of the GST paid on the input services like railway freight on ATF and other non-taxable supplies from West Bengal to his Bihar Unit. Ruling:- ATF and other non-taxable supplies from the Applicant’s Haldia Refinery to the export warehouse of Indian Oil Corporation Ltd at Raxaul are not zero rated supplies. They are non-taxable supplies from the Applicant to the Bihar Unit of Indian Oil Corporation Ltd, who are distinct persons in terms of section 25(4) of the GST Act. The Applicant cannot claim credit of the GST paid on the railway freight for transportation of ATF and other non-taxable supplies from West Bengal to the Bihar Unit.

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• 2018 (9) TMI 1341
  Supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of a solar power plant - Composite supply - natural bundling of services - rate of GST - Benefit of Concessional rate of duty - Nature of supplies made by sub-contractors. Whether supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of a solar power plant wherein both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of the CGST Act, 2017? If yes, whether the principal supply in such case can be said to be of “Solar Power Generating System”, which is taxable at 5% GST? Whether, benefit or concessional rate of 5% on Solar Power Generation System and parts thereof would also be available to sub-contractors? Held that:- In the instant case there is no dispute that the contract in question involves a supply of both goods and services. However in order for the supply to be termed as a ‘composite supply’, what is required is that the supply of the goods and the services should at least be bundled, more specifically be ‘naturally bundled’ and supplied in conjugation with each other. The term ‘naturally bundled’ has not been defined in the GST Act - the concept of composite supply under the GST law is similar to the concept of naturally bundled services that prevailed under the service tax regime, and the same was understood to refer to those transactions involving an element of provision of service and an element of transfer of title in goods in which various elements are so inextricably linked that they essentially form one composite transaction. The supply of PV module is a distinct transaction by itself and Cannot be said to be naturally bundled with the supply of the remaining parts required for setting up the Solar Power Plant. The contract itself makes it abundantly clear that the term “equipments” does not cover “free issue equipment”. Therefore, the Contract itself recognises the supply by the owner as a distinct transaction which is separate from the supply of the other equipments and components by the contractor - the concept of natural bundling does not apply to the instant envisaged supply of the PV module in terms of the draft contract in question. Once the contract in question is that of a multistage supply as already discussed, having been already vivisected into the supply of the PV module by the owner as free issue to the Appellant, what remains to be executed by the Appellant is undertaking the supply of the remaining equipments and components and parts of the Solar Power Plant and supplying the services of design, erection, installation and commissioning of the Solar Power Plant - the supply of this remaining portion of the contract in question (involving the supply of the balance components and parts as well as the service portion) can still be termed as a ‘composite supply’ in terms of Section 2(30) of the CGST Act, 2017 since the supply of these components and parts as well as the services of erection, installation and commissioning appear to be naturally bundled. If the dominant nature of the remaining portion of the contract in question which is executed by the Appellant is principally a supply of services of design, erection, installation and commissioning, then the tax rate will the rate as applicable to the services if they form the principal supply of the remaining portion of the contract. Benefit of concessional rate of 5% GST on the supply of solar power generating systems and its parts to sub-contractors - Held that:- The supplies made by the sub-contractor to the Appellant are independent supplies. If the supply by the sub-contractor to the Appellant is of goods which can be termed as ‘parts’ of the Solar Power Generating System, then the rate applicable will be 5% in terms of Sl. No. 234 of Notification No. 01/2017 Integrated Tax (Rate) dated 28.06.2017. However, if the supply by the sub-contractor to the Appellant is a composite supply, then the rate applicable to the dominant nature of the supply will prevail. Ruling:- The supply of the PV module which is the major component of the Solar Power Plant is not naturally bundled with the supply of the remaining components & parts of the Solar Power Plant and the supply of the services of Erection, Installation and Commissioning of the Solar Power Plant. The supply of PV module is a distinct transaction from the supplies in contract in question as it is the owner whose responsibility it is to procure and supply the PV module. This PV module is to be supplied as free issue material over and above the plant being supplied by the contractor. The owner is responsible for transportation of the PV module from the point of origin till plant site and he bears the other risks and rewards of ownership. The PV module which is procured by the Project owner on High Sea Sale basis and imported by availing Customs duty exemptions and later supplied to the Appellant as a free issue for use in the setting up of the Solar Power Plant. The supply of the remaining portion of the contract in question by the Appellant Which involves the supply of the balance components and parts of the Solar Power Plant and the supply of services of Erection, Installation and Commissioning of the Solar Power Plant is viewed as a ‘composite supply’ as the supply of goods and services are naturally bundled. The tax liability on this portion of the contract in question (other than PV module) which is termed as a ‘composite supply’ will be determined in terms of Section 8 of the CGST Act, 2017 wherein the rate applicable to the dominant nature of the supply will prevail.

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• 2018 (9) TMI 1340
  Levy of GST - Rent payable by a Hospital - whether GST is leviable on the rent payable by a hospital supplying lifesaving services (cardiology and emergency services)? - input tax credit - challenge to AAR Decision. Held that:- The healthcare services which the appellant provides as his outward supply, is exempted from GST by virtue of entry Sl. No 74 of Notification No 12/2017 CT (R) dated 28.06.2017 as amended. No GST is payable on outward healthcare supplies, as these are exempted supplies - “Renting in relation to immovable property” has been defined under the definition clause 2(zz) of the CGST Notification No 12/2017- Central Tax (Rate) dated 28-06-2017 and KGST Notification (12/2017) No FD 48 CSL 2017 Bengaluru dated 29-06-2017. By virtue of these Notifications, services by way of renting of residential building for use of residence only is exempt from levy of GST vide Sl.No.12 of the said Notifications. In terms of CGST Notification No 11/2017 - Central Tax (Rate) date 28-06-2017 and KGST Notification (11/2017) No FD 48 CSL 2017 Bengaluru dated 29-06-2017. GST is leviable @ 18% (CGST @ 9% + SGST @ 9%) on the rent paid / payable for premises taken on lease by the Applicant for running the hospital vide Sl.No.16 (Real Estate Services) of the said Notifications. Input tax credit - Held that:- There was no question raised before the AAR seeking a ruling on the aspect of ITC used in providing exempted supplies and refund of Input Tax credit. This issue has been raised for the first time before us in appeal - there can be no appeal on issues on which no ruling was sought before the Authority for Advance Ruling under section 97 of the Act and which was not examined by the AAR. Ruling:- The AAR decision upheld; that is; GST is leviable on the rent paid / payable for premises, taken on lease by the applicant.

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• 2018 (9) TMI 1339
  Supply of goods or services - Works Contract - transaction of setting up an operation of Solar Photovoltaic Plant - indivisible contract - transfer of immovable property. Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as solar power generating system at 5% and services at 18%? - Held that:- While the contracts are ostensibly two separate contracts, one for supply of material and other for rendering works and services, they are in fact one single indivisible contract. The goods supplied to the owner by the appellant are specifically brought for the purpose of the erection of the system. The appellant is entrusted with the work mainly for their expertise in erection and installation of the plant in the execution of turnkey project. The function relating to the supply of material and the rendering of services of erection and installation are integrally connected and interdependent. The terms of supply clearly show that the implementation schedule is not only for supply but also for erection, testing and commissioning of the plant. Schedule A of the supply agreement part II makes it clear that the complete supplies required for the construction of the 60MW (AC/81 MW DC) Solar PV project shall be in the scope of the supply. The supply of the goods and the supply of works are inextricably linked with each other. It is not that the appellant has been assigned with the work of supply of goods only. But the appellant has been given the task of setting up the Solar generating system . Thus, though the agreements are made separately, it is one indivisible contract for the setting up of the solar power generating plant - The functions relating to the supply of goods and the installation thereof are clearly inter-dependent and though distinct agreements are made they are linked to each other and are indivisible. Whether the contract for the setting up of the solar power generation plant is a composite supply ? - Held that:- By making two separate agreements - one for the supply of goods and the other for the supply for services what is purported to be done is an artificial division of contracts which though done, cannot take away the true and inherent nature of the contract. It is a single supply of a SOLAR POWER GENERATING SYSTEM consisting of two or more taxable supplies - This is clearly a case of composite supply of goods and installation thereof. The entire transaction of providing the goods and the services are naturally bundled- it is natural and also a practice to expect that a contractor who will supply the goods may also supply the services along with it. Immovable property or not - What would be the principal supply and whether it would be a supply of services or supply of goods? - Held that:- The erection of the solar power generating system is not as simple or movable as it is made out to be. It is an entire system comprising a variety of different structures which are installed after a lot of prior work which involves detailed designing, ground work and soil survey. As said earlier, the amount of drawings done indicates the magnitude of the work done. Solar systems tend to be tailored specifically to fit the dimensions and orientation of the needs of the project. It is not easy to move them from one place to the other. Rather moving them from one place to other would be imprudent. Moving them to a new location would mean retrofitting the system on to a property they simply weren t designed for, meaning that they would be much less efficient. It would not be in the interest of the buyer to move it from one place to the other. Thus, the project fulfills both the conditions of an immoveable property - The mode of annexation shows that the groundwork, being the necessary foundation, is an important part of the project. In the present case, we have seen that the detailing of the system being what it is, it cannot be called a simple machine by any stretch of imagination. The PV module may be an important part of the system but what is intended to be bought is not the PV module but an entire system - the conclusion drawn by the ARA that the Agreements made lead to the erection of a Solar Power generating System, is affirmed. The clear legislative intent is that at all levels, from part to system, GST will be payable at 5%. In fact, the effective rate for such contracts even prior to GST was approx. 3%, and an application of the equivalence principle also affirms that the intent of the Government was never to tax the entirety of the goods and services in relation to setting up an SPGS at a significantly higher rate of 18%. Whether parts supplied on standalone basis (when supplied without PV modules) would also be eligible to concessional rate of 5% as parts of solar power generation system? - Held that:- The Advance Ruling Authority had not given any ruling on the above on the following grounds, In the absence of any document before us, we would not be able to deal with this question in the present proceedings. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? - Held that:- The Advance Ruling Authority had not given any ruling on the above on the following grounds, In the absence of any document before us, we would not be able to deal with this question in the present proceedings. Ruling:- The agreements tendered in support of this question are for setting up and operation of a solar photovoltaic plant and are in the nature of a works contract in terms of clause (119) of section (2) of the GST Act. Schedule II ( Activities to be treated as supply of goods or supply of services) treats works contract u/s 2 (119) as supply of services .Depending upon the nature of supply, intra-state or inter-state the rate of tax would be governed by the entry no 3(ii) of the Notification No 8/2017-Integrated Tax (rate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) or the Notification no 11/2017 Central Tax/State Tax (Rate)under the CGST Act and MGST Acts. The rate of tax would be 18% under the IGST Act and 9% each under the CGST Act and the MGST Act, aggregating to 18% of CGST and MGST Act. Other two issues not decided in the absence of documents.

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• 2018 (9) TMI 1338
  Application for withdrawal of Advance Ruling application - Valuation - includibility - Whether amortization of value of free tools/ dies received form customer to be included for valuation of goods or not? - If the GST is applicable on the amortized value, what is the procedure for calculating the GST and reflecting the same in GST invoice format? - How to declare the transactions in GSTR-1 & GSTR -3 and GSTR-3B. Held that:- As the query is clarified by CBIC, they requested that the application be treated as withdrawn. The application filed by the Applicant for advance ruling is dismissed as withdrawn.

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• 2018 (9) TMI 1337
  Classification of goods - Disc Brake Pads - What is the appropriate classification of ‘Disc Brake Pads’ under GST? Whether ‘Disc Brake Pads’ supplied by the Applicant is covered under Sl.No. 170 of Schedule IV of N/N. 1/2017 dated 28.06.2017- Integrated Tax (Rate), i.e., under Tariff Heading 8708 attracting GST at 28% or under Sl.No.182 B of Schedule III of the Rate Notification i.e., under Tariff Heading 6813 attracting GST Rate of 18%? Held that:- Friction Material in the form of discs or pads or any other form consisting of mineral materials with or without textiles are classifiable under CTH 6813 if they are not mounted. But when they are mounted including friction material fixed to a metal plate provided with circular cavities, perforated tongues or similar fittings for disc brakes, these are classified as parts of the machines or vehicles for which they are designed. In the present case, the product consists of a friction material (made up of organic fibers and minerals, graphite) which is bonded with a steel backing plate forming an integrated component. Heading 6813 specifically excludes such mounted brake linings which are rightly classifiable as parts of vehicles for which they are designed - Thus the product to be classified ‘Disk brake Pads’, a part of the motor vehicle, classifiable under Heading 87083000 as ‘Brakes and servo-brakes; parts thereof’. The product attracts 14% CGST covered under Sl.No. 170 of Schedule IV of Notification No. 01/2017 dated 28.06.2017- C.T. (rate) as amended and 14% SGST under Sl.No. 170 of Schedule IV of G.O. (Ms) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 respectively for intra state supply. Ruling:- ‘Disc Brake Pads’ manufactured and supplied by the Applicant are classified under Heading 87083000 and covered under S. No. 170 of Schedule IV of Notification No. 01/2017 CT (Rate) dated 28.06.2017 and Sl.No. 170 of Schedule IV of G.O. (Ms) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 attracting 14% CGST/14% SGST respectively.

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• 2018 (9) TMI 1336
  Classification of goods - Exemption under GST Act - Cattle Feed in Cake form - Whether the product is classifiable under Ch. 2305 or under Ch. 2309? Held that:- The product is not merely groundnut oil cake/residue but is manufactured by combining groundnut oil cake with broken rice, jaggery, salt and water and leaving the mixture for condensing itself into solid form and finally steamed. Further, the applicant states that the product is meant for domestic animals or birds as an essential raise for the maintenance of life, but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as re-production, for production of milk, eggs, meat, wool or feathers and in the case of animals, also for efficient output of work. The product in hand, the 'Cattle feed' is manufactured using 'Groundnut oil cake' as a raw material along with other raw materials. Further, as per the test reports, the content of ash, protein, salt, fat, moisture, calcium, phosphorous etc in a sample of groundnut oil cake vary in percentage from a sample of the product as furnished by the applicant in the test reports furnished by them. Also, from the invoices raised by them the product is identified as 'Cattle feed' and not as 'groundnut oil cake'. By applying the General rules for interpretation of Customs Tariff as applicable to GST Tariff, the product in hand is correctly classifiable under Chapter Heading 2309 of the GST Tariff as 'Preparation of a kind used in Animal Feeding'- 'Compounded animal feed, 2309 90 10. The same is exempted in case of intra-state supplies vide sl.no. 102 of Notification No.2/2017-Central Tax(Rate) dated 28th June 2017 as amended and Sl.No. 102 of Notification. Ruling:- The product 'Cattle feed in cake form' manufactured by the Applicant is classifiable under Chapter Heading 23099010 and stands exempted as per vide Sl.No. 102 of Notification No. 2/2017-Central Tax(Rate) dated 28th June 2017 as amended and Sl.No. 102 of Notification. No.II(2)/CTR/532(d-5)/2017 dated 29th June 2017 as amended and in case of interstate supplies vide Sl.No.102 of Notification No. 2/2017-lntegrated Tax(Rate) dated 28th June 2017 as amended.

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• 2018 (9) TMI 1335
  Catering Service - Applicant is engaged in supplying food and beverages at the canteen of their customers - Whether the supply of the applicant falls under 7(i) of Notification No. 11/2017 dated 28.06.2017 or under 7(v) of the said Notification? - Applicability of Notification No. 46/2017-C.T. (Rate) dated 14th November 2017. Held that:- From the contracts furnished, it is seen that the Applicant supplies the food in the place of business of the Service Recipient. The charges are received from the companies monthly basis on the coupons collected. In short, it is deciphered that the Applicant is vested with management of the canteen facilities. The Applicant himself does not get paid for by the consumers of the food and beverages. The Recipient of the services are the companies who enter into contract with the applicant. Supply of food is classified under 9963. It is clear that the instant case of the applicant is making supply of services in the dining space of the industrial units and offices which is squarely covered in the Explanation 1 to Sl.No 7(i) and SI.No 7(v) now only covers supply at functions which are occasional and event based. The supply of food to institutions which were earlier covered under entry at Sl.No. 7(v) has been included under Sl.No. 7(i) of the Notification No. 11/2017-CT (Rate) with effect from 27th July 2018 and thereupon is liable to tax at the rate of 5% subject to the condition that credit of input tax charged on goods and services used in supplying the services are has not been taken read with Explanation (iv) of said Notifications. Ruling:- The services of the applicant of supplying food and beverages on the premises of industrial unit/office, which are on the terms of the contract with M/s. Kone Elevators and such other contracts, are liable to tax at the rate of 9% CGST under SI.No. 7(v) of Notification No. 11/2017 -C.T. (Rate) dated 28.06.2017 and 9% SGST under Sl.No. 7(v) of G.O.(Ms) No 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 for the period upto 26.07.2018 and from 27.07.2018 onwards at the rate of 2.5% CGST under SI.No. 7(i) of the Notification No. 11/2017-C.T. (Rate) as amended and at the rate of 2.5% SGST under SI.No. 7(i) of G.O.(Ms) No 72 dated 29.06.2017 No.II(2)/CTR/532(d-14)/2017 as amended subject to the condition that credit of input tax charged on goods and services used in supplying the services are has not been taken read with Explanation (iv) of said Notifications.

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• 2018 (9) TMI 1334
  Classification of services - Works Contract - Pure services - Services provided to Local Authority or Governmental Authority or Government Entity - PMC shall review detailed designs prepared and submitted by the Contractor for execution purposes keeping in view the applicable technology, applicable regulations and guidelines and the Employer's Requirements. - Applicability of a notification issued under the provisions of this Act - determination of the liability to pay tax on any goods or services or both. Whether service provided by ws PDCOR Ltd is correctly classified under SAC Code 9983? - Held that:- The services provided by M/S PDCOR Ltd is classifiable under SAC Code 9983 Whether Jaipur Development Authority falls under the definition of Local Authority or Governmental Authority or Government Entity? - Held that:- Jaipur Development Authority (JDA) is a Governmental Authority. Whether the PMC services to JDA for Rejuvenation of Amanishah Nallah (Dravyavati River), Jaipur will attract GST or will be exempt from GST as per Serial No. 3 of CGST Notification No. 12/2017 dated 28th of June, 2017? - Held that:- From the scope of services provided by the applicant to the JDA it is clear that these services are pure services and hence exempt under S.No.3 for Notification No. 12/2017-Central Excise (Rate) dated 28th June 2017 - the Jaipur Development Authority is Governmental Authority and PMC Services provided by M/s. PDCOR to JDA in relation to “Rejuvenation of Amanishah Nallah (Dravyavati River), Jaipur” are found to be covered under services mentioned at Sl. No.3 of CGST under Notification 12 /2017 Central Tax (Rate) dated 28/06/2017 (Notification No. F. 12 (56) FD/Tax/2017-Pt-I-50 Dated 29/09/2017 issued by the Government of Rajasthan.). Ruling:- The PMC Services provided by M/s. PDCOR Ltd. to the JDA in the “Project Management Consulting Services (PMCs) for Rejuvenation of Amanishah Nallah (Dravyavati River), Jaipur” are correctly classified under SAC Code 9983. Jaipur Development Authority (JDA) is a Governmental Authority. The PMC Services provided by M/S PDCOR Ltd. to JDA under the “ “Project Management Consulting Services (PMCs) for Rejuvenation of Amanishah Nallah (Dravyavati River), Jaipur awarded to them vides their MOA dated: 01.09.2017 are covered under Sl. No.3 of GST under Notification 12 /2017 Central Tax (Rate) dated 28/06/2017 (Notification No. F.12 (56) FD/Tax/2017-Pt-1-50 Dated 29/09/2017 issued by the Government of Rajasthan.) and hence exempt from GST.

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• 2018 (9) TMI 1333
  Rate of tax on supply of goods/services/both - Solar Power Generating Systems and parts - Works Contract - Whether Supply, commissioning, installation and maintenance of Solar Water Pumping System would be taxable at the rate of 5% considering it as a composite supply where the principle supply being that of goods i.e. supply of Solar Power generating system having HSN Code 84 or 85? - Whether separate bills can be raised by the Applicant with respect to Supply and Goods and Supply of Services Purely in respect of the contract of the Applicant with RHDS enclosed herewith? - Will the said transaction be classified as a “Works Contract” and taxable at the rate of 18% being Supply of Services? Held that:- Solar Photovoltaic (SPV) water pumping system has a permanent location (at specified farmer’s field in Rajasthan) as its works is undertaken on instructions of the Rajasthan Horticulture Development Society under subsidy scheme wherein the Solar Water Systems are required to be installed at the farmer’s field meant for supply of water using solar energy. Such plant would therefore have an inherent element of permanency - The output of the project i.e. water, using solar energy would be available to an identifiable consumer. Thus this output supply would involve an element of permanency for which it would not be possible and prudent to shift base from time to time or locate the plant elsewhere at frequent intervals - The Solar Photovoltaic (SPV) water pumping system cannot be shifted to any other place without dismantling the same. Further it is tailored made system which cannot be sold “as it is” to the other person. Contract also includes civil work such as development of site, structure foundation for mounting PV modules on metallic structures and fencing of the system to ensure security and safety and such other civil structure related activities as set out in Scope of work and in the Technical Specifications. Civil structure cannot be dismantled and moved away. The applicant has to supply a “Functional Solar Photovoltaic (SPV) water pumping system” as a whole which includes supply, installation and commissioning, maintenance for 10 years, hence instant transaction is neither a supply of i) “Solar Power Generating System” and nor a supply of ii) “Solar Power Based Devices” - the above entry under the notification describes the Tax rate on ‘Goods’. If the transaction is supply of goods i.e. supply of either “Solar Power Generating System” or supply of “Solar Power Based Devices” then the applicable Schedules would have to be seen but the intent of parties in instant case is always for supply of a “Functional Solar Photovoltaic (SPV) water pumping system” as a whole which includes supply, installation and commissioning at the site of farmer along with maintenance for 10 years and is not chattel sold as chattel. Hence cannot be treated as “Composite Supply” as contended by the applicant. The impugned transaction for supply of Solar Photovoltaic (SPV) water pumping system which includes procurement, supply, development, testing, commissioning and providing maintenance service for 10 years is a “works contract” in terms of clause (119) of section 2 of the GST Act - Since the impugned transaction for supply and commissioning of Solar Photovoltaic (SPV) water pumping system is a “works contract” u/s 2(119) as supply of services, hence question of principal supply does not arise and so GST tax rate of Solar power Generating System or Solar Power Based Devices under notification No 01/2017-CT (Rate) dated 28.06.2017, at S.No. 234, under HSN Classification 84, 85 and 94 is not applicable. Ruling: The scope of work includes procurement, supply, development, testing, commissioning and providing maintenance service for 10 years in respect of supply of a Solar Photovoltaic (SPV) water pumping system. Accordingly it is not getting covered under supply of ‘Solar Power Generating System’ under Entry 234 of Schedule I of the Notification no. 1/2017 - Central Tax (Rate), dated 28th of June, 2017 under HSN code 84 or 85. “Supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the purview of Works Contract as per Section 2(119) of GST Act. In instant case as per terms and conditions of agreement, it is a single contract of supply, installation, commissioning and maintenance of Solar Water Pumping Systems and hence cannot be split in two separate contracts. Hence in instant case separate bills for supply of goods and supply of services cannot be raised. The contract for “supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the ambit of “Works Contract Services” which comes under the purview of Works Contract as per Section 2(119) of CGST Act and attracts 18% rate of tax under IGST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%.

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• 2018 (9) TMI 1332
  Taxable Supply - Borrowing Cost - Whether Consideration represented by way of Borrowing Cost received from members to whom loan was sanctioned, amounts to taxable supply? Ruling:- In Service Charge or any other type of liability, loan or any other borrowings vide Sl. No. 27 of N/N. 12/2017 is not exempt - resultantly these services are liable to GST.

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• 2018 (9) TMI 1331
  Prayer for payment of GST in installments due to financial difficulty - Held that:- NOTICE, returnable on 17.10.2018. On the condition that before the returnable date the petitioner deposits 20% of the outstanding amount and further continues to deposit 5% thereof between 1st and 5th of every month thereafter until any other order is passed, there shall be stay against coercive recoveries of the dues. Direct service is permitted.

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• 2018 (9) TMI 1330
  CENVAT credit - main grievance of the petitioners is that the credit of the duties for the period prior to 01.07.2017 though reflected in the declaration filed by the petitioner no.1 in Tran1 form is not shown in the electronic credit ledger account - Held that:- NOTICE, returnable on 11.10.2018. Direct service is permitted.

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• 2018 (9) TMI 1329
  Time Limit for filing Declaration in terms of Rule 117 of the CGST Rules - Case of the petitioner is that the declaration in terms of Rule 117 was filed within time but certain necessary details were not provided - Held that:- Without recording separate reasons since we have already given elaborate reasons in the separate judgement, this challenge is not entertained - petition dismissed.

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• Income Tax

• 2018 (9) TMI 1328
  Claim of weighted deduction under Section 35 (2AB) - Disallowance made under section 14A - assessing officer failure to record his satisfaction in terms of Section 14A(2)/(3) and establish direct/ proximate nexus of expenses with the earning of exempt dividend income? - Held that:- Special Leave Petition is dismissed.

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• 2018 (9) TMI 1327
  Rejection of books of accounts - assessee has failed to produce the complete bills & vouchers for expenses many of them being unverifiable - Held that:- No material is commended at to dispel the findings arrived by the Assessing Officer as regard to the defective unidentified, unverified method of accounting adopted by the assessee, which led the Assessing Officer to apply the best judgment assessment. Presently, the entire case turn on facts. No material being commended at to establish the verifiable account method adhered at by the assessee, the conclusion drawn by the Assessing Officer, being inevitable, no substantial question of law arises for consideration.

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• 2018 (9) TMI 1326
  Addition of suppressed sale - additions of income made on the basis of SCN issued under the Central Excise - assessee contended that - Proceedings under central excise could not be finalized - Held that:- Similar issue came up for consideration before this Court in [2018 (5) TMI 1274 - GUJARAT HIGH COURT] AO cannot be expected to defer completion of assessment awaiting final order of adjudication in excise proceedings at the risk of his assessment getting time barred. Even otherwise, in a given case, the material that may be brought on record in excise proceedings may be different from that which may form part of the assessment proceedings though the both may, to some extent, be common. In addition to confronting the assessee with the contents of the show-cause notice issued by the Excise department, the Assessing Officer has done little else. By merely producing the copies of the statements of the witnesses accompanying the show-cause notices, such statements and the veracity thereof does not get automatically established. AO merely cosmetically gave an opportunity to the assessee to meet with such allegations, virtually, shifting the burden of proving the evasion of duty that had taken place on the assessee. We have perused the entire order of assessment. There is no independent material brought on record by the Assessing Officer other than those which were already collected by the Excise department and which, as noted earlier, are yet to be verified. - Decided against the revenue.

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• 2018 (9) TMI 1325
  Block Assessment - Undisclosed income u/s 158BA - whether in the course of search under Section 132, the material throwing new light on otherwise concluded assessments are disclosed and seized? - Held that:- Referring to the mandate of Section 158B(b), the sum of ₹ 42 lakhs brought to tax by the AO in the entire circumstances of the case was reasonable given the materials seized, the survey conducted and the statements recorded during the course of assessment proceedings. All these clearly reveal that the security deposit was a mere camouflage or a devise to postpone tax liability towards an uncertain date, at the convenience of the assessee. Clearly, the amount received pursuant to the agreement and the conveyances executed thereafter, showed that the intent of the parties was to treat it as a final consideration payable and paid in presenti. For these reasons, the first question is to be answered in favor of the Revenue Whether the seized diary per se could result in the addition of ₹ 30 crores? - Held that:- The assessee’s explanation consistently was that ₹ 30 crores was towards internal and external development charges. This was an aspect which could be easily decided by securing relevant information from the statutory authority, i.e. HUDCO who received the payments. Independent corroboration of these too could have been sought otherwise the relevant books of account could have been checked. Furthermore, the statute does not compel the Revenue to raise a presumption; even when a tax authority does so, the sole basis of an addition entirely hinging upon the interpretation of certain figures in a diary would be flawed. For these reasons, this Court is of the opinion that since the inference drawn with respect to findings are based on essentially factual materials which were analyzed by the CIT and the ITAT, there is no reason to interfere with those findings. This question is accordingly answered against the Revenue and in favor of the assessee. Addition denoting unaccounted cash reflected in the seized cash slips - Held that:- this question pertains to pure finding of fact which concerns inferences to be drawn on the basis of material found. The CIT(A) and the ITAT felt that the amounts reflected in the seized slips were fully explained in the relevant cash balances found in the books of accounts and the bank statements of the assessee. Furthermore, the ITAT has remitted the issue with respect to verification of the extent of addition after having upheld the CIT(A)’s order. Thus, the question only is whether the sum to be added back is ₹ 6,35,525/- or something more. Given the intensely factual nature of analysis, the Court is of the opinion that there is no substantial error calling for interference. This question of law is, therefore, answered in favor of the assessee Addition of commission payable - Held that:- The facts clearly indicate that ₹ 92 lakhs was claimed as commission payable to Televista and reflected duly in the documents and books filed along with the returns. These was subjected to normal assessment at the time when they were reported. The block assessment did not bring out any fresh material except the invoices for the AO to deduce any further undisclosed income. In these circumstances, the addition made by the AO was, in the opinion of this Court, correctly set aside by the lower appellate authorities. This question of law too is answered against the Revenue

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• 2018 (9) TMI 1324
  Penalty u/s. 271AAA - undisclosed income - failure to prove the manner in which income has been earned - disclosure made with the consent of the family members and all partners - Held that:- Answer of partner to the addition to confirming the disclosure of undisclosed income, further stated that the income was earned by the group out of land related transactions which was not previously recorded in the books. This was thus specifically in compliance with the requirement of establishing the manner, in which, the income was earned. It is true that at this stage, he could not give the break up of such income person wise or firm wise citing the reason of sealing of the bank locker. In our opinion, this would not be of much relevance. Firstly as noted, the answer was in sufficient compliance of requirement of manner of earning income. Secondly, as recorded by the CIT (A), AO had made additions taxing the admitted amounts in respective hands. We are primarily of the view that there is substantial compliance by the assessee. We do not see any reason to disturb the Tribunal's order, however, for the reasons somewhat different from those recorded by the Tribunal. The addition outside of the disclosures by the assessee are not significant.

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• 2018 (9) TMI 1323
  Revision u/s 263 - as assessee itself having offered net profit at 27.48%, the Assessing Officer could not have computed profit at the rate of 15% of the total receipt - Held that:- AO had after detailed inquiry, come to the conclusion that the assessee's projection of 12.5% of profit on the gross receipts was not substantiated. He therefore rejected the assessee's accounts and proceeded to estimate the net profit independently. That is how he came to the conclusion that 15% would be a reasonable profit and that is how he taxed the assessee. Assessee who was aggrieved by this order and carried the matter before the Commissioner (Appeals). Commissioner (Appeals) substantially confirmed the view of the Assessing Officer but placed the matter back before the Assessing Officer for recomputation of scheme or project-wise profit at the same rate of 15% of net profit ratio. In terms of the Clause (c) in Explanation 1 to subsection 1 of Section 263, the powers of the Commissioner would extend to such matters as had not been considered and decided in an appeal arising out of such order of assessment. In the present case, this issue having been subject matter of appeal and duly discussed by the Appellate Authority, was beyond the purview of the Commissioner's revision powers. Addition of statutory payments Assessing Officer had taken a holistic picture and arrived at the net profit percentage that the assessee could be reasonably expected to have earned out of the ventures. While doing, so he had also examined various aspects, including the payments such as for commission, for interest etc., and whether the assessee had deducted tax at source on such payments. Thus, the element of disallowing certain expenditure was in the mind of the Assessing Officer. It is true that with respect to statutory payments which may have bar of Section 43B of the Act on claiming without actual deposit with the Government revenue, there was no direct inquiry during the assessment or discussion in the order of assessment. Commissioner merely referred to some possibility on such expenditure not being allowable without collecting proof of payment in the Government revenue. He did not even prima facie come to the conclusion that in absence of such deposit the expenditure was not allowable. His order exercising revisional powers therefore on such grounds cannot be sustained. - Decided against revenue.

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• 2018 (9) TMI 1322
  Determination of compounding fee u/s 279 - Penalty under section 271(1)(c) - disallowance of claim of deduction for the provisions of income tax - Wilful attempt to evade tax - what would be the basic compounding charges that the petitioner must pay in order to avail the offer for compounding the offense? - Held that:- Section 279 of the Act pertains to the prosecution to be at instance of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Subsection (1) of section 279 provides that a person shall not be proceeded against for offenses under various sections including section 276C of the Act except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. Subsection (2) of section 279 provides that any offense under this chapter may, either before or after institution of the proceedings be compounded by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or the Director General. In terms of such compounding powers, the CBDT has been issuing circulars for providing guidelines for compounding offenses under the Act. We are concerned with the latest guideline issued on 23.12.2014 issued by the CBDT. This circular contains detailed provisions and procedure for compounding offenses under the Act. When the CBDT circular refers to the amount sought to be evaded, it must be seen and understood in light of the provisions contained in section 276C(1) and in turn must be seen as amount sought to be evaded. 100% of tax sought to be evaded would be the basic compounding fees which in the present case would be ₹ 2,71,000/and not ₹ 8,70,000/as computed by the departmental authorities. The rest of the computation is consequential and automatic. The impugned communication dated 20.03.2018 is therefore set aside. The respondent shall carry out fresh computation of the petitioner's liability to pay compounding charges in terms of this order. We are informed that, to avoid any complication, the petitioner has under protest, paid up the entire amount of ₹ 10,49,000/as demanded by the department. Once such fresh computation is made, the excess would be refunded by the department to the petitioner latest by 31.10.2018.

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• 2018 (9) TMI 1321
  Scrutiny assessment - notice u/s 143(2) was issued to the petitioner - Held that:- With regard to status of the order of assessment dated 21.01.2016. It is for the petitioner to approach the Tribunal once again, by challenging the present impugned order, by raising all these contentions, so that the Tribunal will be in a position to clarify the effect of the earlier order passed, while considering the appeal to be filed against the present impugned order. Any such clarification by the Tribunal, with regard to the status of the assessment order dated 21.01.2016, would certainly have a bearing on further proceedings including the present impugned order. Since this Court finds that it is for the Tribunal to clarify the above position, without expressing any view on the merits of the contention raised by both parties in respect of the status of the assessment order passed on 21.01.2016, these writ petitions are disposed of, by granting liberty to the petitioner to file a statutory appeal against the impugned order dated 31.12.2017 before the Income Tax Appellate Tribunal, within a period of four weeks from the date of receipt of a copy of this order. If any such appeal is filed, the Tribunal shall consider the same and pass orders on its own merits and in accordance with law, uninfluenced by any of the observations made in these writ petitions and also without reference to the period of limitation.

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• 2018 (9) TMI 1320
  TPA - exclusion of Media Research Users Council (‘MRUC’) from the list of comparables for making transfer pricing adjustment - Held that:- The reasons recorded for excluding MRUC from the list of comparables are multiple and not confined and restricted to the fact that MRUC was a not-for-profit organization. Reference to ‘not for profit’, motive was to show that major source of income earned by MRUC was in form of membership and subscription fee for Indian Readership Survey (IRS) and Indian Outdoor Survey (IOS) reports. The element of quid pro quo or payment of consideration commensurate with the service given was missing and absent. The surveys undertaken by MRUC were on behalf of members of MRUC, consisting of advertisers, publishers, advertising agencies and broadcast and other media, totaling 249 in number. In a way, the MRUC was rendering services and working for its members. The MRUC was also outsourcing most of its activities to a third party research agency. The working pattern and model adopted by MRUC was unlike a commercial organization and completely different. The dissimilarities are too striking and apparent to be ignored. The Transfer Pricing Officer had also contradicted himself as recorded in paragraph 19 of the impugned order. Tribunal, in our opinion, was justified in excluding the MRUC from the list of comparables.

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• 2018 (9) TMI 1319
  Claim of expenditure as provision for warranty - whether provision was made on a scientific basis on the basis of actual warranty cost incurred in the year and the outstanding warranty risk and not an adhoc estimate? - Held that:- Assessee filed a paper book containing the movement in provision for warranty and note on allowability of provision for warranty with annexures, which were placed before the Assessing Officer, CIT(A) as well as the Tribunal. The relevant details, which are contained in the movement in provision for warranty were culled out in the form of a separate sheet from which, we find that the exposure to warranty risk has been done on a scientific basis. The assessee has been able to produce the details from the year 2001 onwards. Thus, the CIT(A) was perfectly correct in coming to the conclusion that the Assessee has explained the basis for working of the provision for warranty based on past experience and it is not on adhoc basis and moreover, it is based on the turnover of the last three years and based on provision for expenses on repairs during the warranty period as contemplated in the sale agreements. We are of the considered view that the Tribunal has erroneously reversed the order passed by the CIT(A) that too without assigning any reasons and without considering the materials, which are available on record. - Decided in favour of assessee.

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• 2018 (9) TMI 1318
  Revision under Section 264 - Held that:- Though an exception is taken by the petitioner against the affidavit filed by the Revisional Authority justifying the order, which as per the petitioner is impermissible, as the order under challenge has been passed by the Authority concerned in her capacity of quasi-judicial Authority. Respondents fairly submits that the petitioner/assessee had raised a ground regarding non-service of notice under Sections 148, 142(1) and 144 of 1961 Act, which is not being considered, the Revision has been dismissed on merit. In view of the submissions made on behalf of the respondents, we are of the considered opinion that the matter deserves to be remitted to the Revisional Authority for fresh consideration of the Revision filed by the petitioner dwelling on all the issues raised therein. The impugned order is set aside. The matter is relegated to Principal Commissioner of Income Tax, Gwalior, for reconsideration of Revision preferred by the petitioner. Principal Commissioner of Income Tax, Gwalior, shall, after affording opportunity of hearing, decide the Revision in accordance with law meeting out the contentions raised in the Revision.

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• 2018 (9) TMI 1317
  Ad-hoc disallowance at 10% on account of personal use - Held that:- The present assessee before us is a company and is an entity recognised by law, as a legal person, that exist in eyes of law independently with rights and liabilities. Thus no element of personal expenses by the Directors/Office bearers can be attributed, without, there being sufficient evidence in support. Admittedly, Ld.AO neither pointed out any instance of inflation in expenditure claimed by assessee, nor has given any finding regarding expenditure claimed by assessee being capital in nature, for purposes of disallowance. It is further observed that CIT(A) made general observation for sustaining addition made by Ld.AO. It is observed from assessment order that assessee filed books of accounts, vouchers and bank statements before Ld.AO. If Ld.AO was not satisfied with details filed by assessee, he could have pointed out at assessment stage itself. - Decided in favor of assessee. Disallowance computed by Ld.AO under section 14A read with Rule 8D - Held that:- Admittedly assessee has not earned any exempt income during relevant assessment year under consideration. See case of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT]. - Decided in favor of assessee.

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• 2018 (9) TMI 1316
  Addition of low house hold withdrawals - Held that:- The assessee has disclosed total income of ₹ 4,59,640/- against total turnover of ₹ 10.28 crores (approx) and no cash has been withdrawn by her towards household expenses. The contention of the Ld. Counsel that assessee’s husband took care of total household expenditure cannot justify that the assessee was not required to make any withdrawal for household expenses. In this give facts we find no inconsistency in the findings of Ld.CIT(A) confirming the addition of ₹ 1,00,000/-. Assessee’s Ground No.2 stands dismissed. Disallowance u/s 40A(3) - Held that:- The alleged transactions of making cash transactions as well as the modus operandi of the assessee of entering such transactions of M/s. Sai Impex of making huge purchase, huge sales and making the payments only in cash other than the bank holidays needs extensive verification. A.O also need to cross verify from Ms/. Sai Implex as to whether similar transactions of cash have been shown on the very same date in their books of accounts. We accordingly set aside this issue of disallowance u/s 40A(3) to the file of AO to make necessary verification along with the application of the provision of 40A(3) on all these transactions of cash payment in the light of various judgments referred and relied by the Ld. Counsel for the assessee during the course of hearing before us. Disallowance u/s 40A(3) is allowed for statistical purpose

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• 2018 (9) TMI 1315
  Addition against commission payments on sale - Commission paid was for marketing and increase of sales and sales has increased due to commission Paid for marketing efforts - allowable expenses - Held that:- In fact the HUF has not deployed any asset towards earning commission income. It has further been noted that the resultant tax paid by HUF is nominal and on the other hand substantial tax has been saved by the appellant, who falls in the highest tax bracket. The tax saved on this transaction with HUF is around ₹ 2,00,000. The further plea that the payment of commission had been accepted in a later assessment also does not carry weight, firstly, as the principle of res judicata does not apply to proceedings under Income-tax Act, and secondly the cited assessment order of A.Y.2012-13 does not carry any discussion on the issue of commission paid to HUF, hence there is no finding or opinion formed on the issue. The commission paid to the said HUF is at the rate of 5% of sales made to NEC during the year and similar payment of commission has been made to the Karta in his individual capacity also, which has been allowed. Considering the entire gamut of facts and the decisions cited, it is held that the payment of commission of Sanjay Palaria HUF is not allowable as the exertion, if any, for earning any commission has been made by Sh. Sanjay Palaria only, for which he has been paid commission in his individual capacity and also no resources of HUF have been deployed for earning the said commission. Accordingly the addition on account of disallowance of commission payment upheld - decided against assessee.

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• 2018 (9) TMI 1314
  Revision u/s 263 - erroneous claim of depreciation @ 30% instead of 15% - Held that:- We find that the assessment order was completed u/s 143(3) of the Act and the AO had called for certain details in his questionnaire, but the details with regard to the issues pointed out by the Pr. CIT in his order u/s 263 were not called for and verified by the AO. Assessee, in fact, in reply to the notice u/s 143(3) rws 263 had admitted that it had made an erroneous claim of depreciation @ 30% instead of 15%. Thus, it is clear that on this issue itself, the AO has not made any verification. Similarly, with regard to other issues also we do not find any verification made by the AO. Although the ld. Counsel for the assessee filed additional grounds of appeal and also argued that revision cannot be done on the basis of audit objection, there is no material before us with regard to such audit objection on the basis of which revision has been made. Addition u/s 14A - Held that:- We find that the issue raised in these grounds is covered in favour of the assessee by the decisions of the coordinate benches of this Tribunal and also by the decision of The Hon’ble Delhi High Court in the case of Cheminvest Ltd., (2015 (9) TMI 238 - DELHI HIGH COURT) wherein it has been held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year. Therefore, subject to verification that the assessee has not earned any exempt income during the relevant P.Y., ground treated as allowed and other grounds are not adjudicated as it would only be an academic exercise. Capitalization of interest - Held that:- Assessee submitted that interest expenditure debited to the P&L A/c is for the loan taken for specific purpose and not for the purpose for the capital work-in-progress, therefore, capitalization of interest is not called for. Assessee has filed financial statement and as seen from the schedule 20 thereof, assessee has paid interest on term loans and other interest of bank and finance charges. Assessee’s contention that the interest paid is towards a particular loan, is not established. As assessee submitted that this issue may be remanded to the AO for verification. We remand this issue to the file of AO with a direction to verify assessee’s contention that capital work-n-progress of ₹ 1,00,18,000/- was from out of the cash generated from operations/internal accruals and not from interest bearing funds. Ground as allowed for statistical purposes.

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• 2018 (9) TMI 1313
  Addition towards write off of rent deposits - whether not in the nature of a revenue loss allowable as a deduction? - Held that:- Rental advance in the given case, is not unrecoverable but it was adjusted towards agreed rent for lock in period as per agreement between the assessee and landlord. Therefore, in our considered view, the assessee has taken conscious decision to vacate the leased property and as per agreement, assessee has obligation towards lock in period as per the lease agreement. Therefore, the negotiated settlement for the lock in period can only be treated as business loss as the premises was taken on rent for the purpose of business. The facts in the case of Triveni Engg. Industries Ltd. (2010 (9) TMI 26 - DELHI HIGH COURT) were that the company was amalgamated and in the amalgamated company, advances given for securing the premises could not be recovered. Therefore, the unrecovered advances of rent was not allowed as revenue in nature. But, in the given case, it was recovered and settled for the rent for lock in period. Therefore, it is distinguishable on facts to the case of the assessee. Hence, the grounds raised by the assessee are allowed.

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• 2018 (9) TMI 1312
  Difference between the figure in the profit & loss account and in Form 26AS - Held that:- The amount of sundry debtors as on 31/03/2009 tallies with the amount of bills raised at the close of earlier year except for a small difference in the amount of Birla Sunlife Insurance Co. This information also supports the contentions of assessee. AO has partly utilized this information to allow part relief and has conveniently ignored the part reply which is not correct as per law. In view of these facts and circumstances it can safely be said that there is no major difference between the figure in the profit & loss account and in Form 26AS as the figures had been duly reconciled. At the most the addition could have been made to the tune of ₹ 38,933/- which is the difference between ₹ 71,64,243/- and ₹ 72,25,310/-. The addition of ₹ 16,11,266/- is restricted to ₹ 38,933/- as the balance difference was duly reconciled and the reconciliation was already with Assessing Officer. Addition u/s 68 - Held that:- For making addition u/s 68 the Assessing Officer has to satisfy himself that the sum credited in the books of the assessee are unexplained. or the explanation offered by him is not satisfactory. In the present case we observe that assessee has received huge amounts as fee for providing services to these parties and therefore, payments received from these companies cannot be termed as ingenuine. The Assessing Officer in his order has not doubted the creditworthiness, identity or genuineness of transactions. He has made the addition only due to difference in amounts relating to two companies and for remaining two companies he had made addition as the notices issued to them u/s 133(6) had returned back. This action of Assessing Officer is not justified as the differences in balances confirmed in two companies cannot be termed as unexplained credits without doubting the identity, creditworthiness and genuineness of transactions. Moreover, only the difference has been added back u/s 68 whereas transactions has not been doubted. This difference coulc have been due to debit or credit notes. Moreover, the Assessing Officer did not confront these confirmations to assessee. Therefore, no addition could have been made by Assessing Officer due to differences u/s 68 of the Act.

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• 2018 (9) TMI 1311
  Denial of benefit of section 11 and 12 - denial on the ground that the activities of the assessee are commercial in nature and proviso to section 2(15) are attracted - assessee association is receiving income from corporate boxes, Champion League T-20 matches, income from IPL matches, membership subscription fee, tournament subsidy and sponsorship money. It is also receiving income from sale if liquor etc. - Held that:- Since the Assessing Officer following his order for assessment year 2009-10 has denied the benefit of section 11 and 12 of the assessee and since the order for assessment year 2009-10 has already been decided in favour of the assessee by the Tribunal, therefore, in absence of any contrary material brought to our notice by the DR against the order of the Tribunal, the order of the ld. CIT(A) allowing the benefit of section 11 and 12 to the assessee is upheld. The grounds raised by the Revenue are accordingly dismissed.

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• 2018 (9) TMI 1310
  Short Term Capital Gain addition applying provisions of Section 50C - FMV determination - calculating the sale consideration of the industrial land sold by the assessee on the basis of the value adopted by the stamp valuation authorities - Held that:- Direct the CIT(A) to adjudicate this issue afresh after procuring the valuation report from the Departmental Valuation Officer about the fair market value of the impugned industrial land situated at Bhagirathpura Industrial area, Indore as on the date of sale and also after appreciating the documents which are related to the unauthorized possession of the industrial land owned by the assessee and the litigation carried between the assessee and other parties. Needless to say that a proper opportunity of being heard should be given to the assessee to furnish necessary documents and details of the property to the Departmental Valuation Officer as well as Ld.CIT(A). Ground of appeal of the assessee is allowed for statistical purposes.

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• 2018 (9) TMI 1309
  Penalty u/s. 271(1)(c) - invalid of notice - Held that:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. Imposition of penalty cannot be sustained. The assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided in favour of assessee.

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• 2018 (9) TMI 1308
  Reopening of assessment - non supply of reasons for reopening - Denial of exemption claimed u/s 10(38) - Held that:- We find that the respective assessee had asked for the reasons for reopening of the assessment in a letter dated 13.10.2016 and it is also not in dispute that the reasons for reopening were not supplied to the assessee. The Hon'ble Supreme Court in the case of GKN Driveshaft India Ltd vs. ITO (2002 (11) TMI 7 - SUPREME COURT), has clearly held that the AO has to supply the reasons for reopening of the assessment to the assessee, if it is asked for, and if the assessee filed its objections to the said reasons for the reopening, the AO has to dispose of the said objections before proceeding to complete the assessment. In the case before us, clearly such a procedure had not been followed by the AO and even before the CIT (A), the assessee's have not been given the copy of the reasons for reopening. Since the assessee’s are already in possession of the reasons for reopening, we are of the opinion that the assessee should be given an opportunity to raise their objections against such reopening, if they so desire - set aside the assessment order to the file of the AO with a direction to allow the assessee to file their objections to the reasons for reopening and upon such receipt, shall dispose of the objections by a speaking order - Decided in favour of assessee for statistical purposes.

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• 2018 (9) TMI 1307
  Rejection of books of accounts - assessee has not included expenses related to the cartage and freight in his books of accounts - Held that:- There is no dispute with regard to the fact that the A.O. would be within his power to reject books of accounts, if he is satisfied that the books of accounts placed before him do not give the correct figure of the profit. In the present case, admittedly, the assessee has not included expenses related to the cartage and freight in his books of accounts, by this it has distorted the correct figure of profit. Therefore, in our view, the assessing officer was justified in the present case to reject the books of accounts. Ground No.1 of the assessee’s appeal is dismissed. Profit estimation - adoption of gross profit on the basis of past history - Held that:- CIT(A) has adopted the profit on the basis of past history of the assessee. The only contention of the assessee in the present year is that gross turnover of the assessee has increased, therefore, the profit cannot be estimated merely on the basis of the past history. We are unable to accept the submissions of the assessee as the Ld. CIT(A) has rightly adopted the gross profit on the basis of past history and the impact of not taking into account the expenses related to freight and cartage. This ground of appeal of the assessee is also dismissed.

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• 2018 (9) TMI 1306
  Disallowance of financial charges - genuineness of claim - Held that:- On perusal of the documents filed by the assessee, we are of the view that the assessee established the fact that it incurred the financial charges during the course of its business, which are genuine. Moreover, in its own case (formerly known as M/s Global Forgings Ltd. similar issue came up for consideration before the Tribunal and the Tribunal dismissed the appeal of the revenue wherein held only reason for the disallowance made by the Assessing Officer was that the assessee has incurred the expenditure, while discounting the bills from outside parties and providing goods to its sister concerns on credit basis. In our view, the conclusion. drawn by the Assessing Officer is based on mere presumptions and surmises, rather than evidence - decided in favour of assessee

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• 2018 (9) TMI 1305
  Addition of bad debts written off - Held that:- As regards the bad debts, the CIT(A) following the decision of ITAT in the case of Shriram Chits (P) Ltd.[2013 (5) TMI 227 - ITAT HYDERABAD] on which reliance placed by the assessee, directed the AO to rework the disallowance of bad debts and allow accordingly. We do not find any infirmity in the findings of CIT(A) and hence, upholding the same, we remit the issue to the file of AO with a direction to rework the disallowance and allow the same in accordance with law. Disallowance on account of belated remittance of PF and ESI - the assessee stated before the CIT(A) amounts towards PF & ESI were paid beyond the due dates but paid before the end of FY therefore, directed the AO to verify whether the amounts were paid before the end of FY and if they are paid, the same may be allowed - Held that:- It is a settled position of law that if the contributions towards PF & ESI are paid beyond the due date but before filing of the return of income u/s 139(1) of the Act, no disallowance can be made. Therefore, upholding the stand taken by the CIT(A), we remit this issue also to the file of the AO to verify whether the amounts paid before filing of the return of income, if so, disallowance may be deleted.

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• 2018 (9) TMI 1304
  Addition u/s 69 - unexplained cash deposits in the bank account - Held that:- Records asserts the fact that the alleged transaction of cash deposits belonged to the society namely M/s Laxmi Sakh Sahakarita Maryadit Society. The society was holding six bank accounts and in one of the bank Narmada Jhabua Gramin Bank, Kukshi bearing No.3612 in the computer system of the bank the PAN of the assessee was mentioned who was the President of the society as at that point of time the society was not allotted the PAN number. CIT(A) examined the issue in detail and also noted that the society was allotted the PAN No. AAAAL4305L and also allotted registration certificates given by MP Autonomous Corporation as well as MP Co-operative Society Ltd. CIT(A) rightly deleted the addition as the alleged cash belonged to M/s Laxmi Sakh Sahakarita Maryadit Society and was deposited in the bank account held by the society and the alleged cash transactions are duly reflected in the cash book maintained by the society. - Decided against revenue Unexplained fixed deposit credited in the bank - AO made additions as they were appearing under the PAN Number of the assessee - Held that:- It is an admitted fact that in the instant appeal the addition were made only because of quoting PAN of President in the bank account held by the society. All details of the alleged fixed deposits have been filed and placed on record which have been duly examined by the first appellate authority and thereby concluding that the society was having fixed deposit of ₹ 50 lakhs in the maturity and interest of ₹ 5,42,838/- was received after deduction of tax at source. The alleged TDS was reflecting in the form 26AS of the assessee as his PAN number was quoted in the bank records. Audited and financial statemesnt of the society clearly shows that the fixed deposits as well as interest accrued thereon belong to the society only and not to the assessee. Therefore we find no inconsistency in the findings of Ld.CIT(A) in deleting the addition - Decided against revenue

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• 2018 (9) TMI 1303
  Denial of exemption of long term capital gains - gain arising on transfer of shares - exemption claimed u/s.10(38) - treating such sum as unexplained income u/s.68 - denial of natural justice - Held that:- As relying on MR. VIMALCHAND GULABCHAND, MR. PRAVEEN CHAND, MR. GATRAJ JAIN & SONS (HUF) , MR. MAHENDRA KUMAR BHANDARI VERSUS THE INCOME TAX OFFICER, CHENNAI [2018 (4) TMI 701 - ITAT CHENNAI] The transactions claimed by the assessee whether real or sham, requires a revisit by the ld. Assessing Officer. Useful reference may be made to the law laid down by Hon’ble Apex Court in the case of CIT vs. Sunita Dhadda [2018 (3) TMI 1610 - SUPREME COURT OF INDIA] while affirming a judgment of Hon’ble Rajasthan High Court in the case of CIT vs.Smt. Sunita Dhadda [2017 (7) TMI 1164 - RAJASTHAN HIGH COURT] where the importance of providing an opportunity to cross examine the witness has been stressed. Their lordship held that this was an important constituent of natural justice. Only after all the steps required under law is complete, it can be ascertained whether claim of capital gains was bogus or not. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.

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• 2018 (9) TMI 1302
  TPA - AMP expenses - Held that:- TPO has resorted to segregation of AMP expenses as a separate international transaction requiring independent bench marking by considering the same set of comparables as adopted by the assessee. As in the case of Soni Ericsson Mobile Communication India [P] Ltd Vs. CIT [2015 (3) TMI 580 - DELHI HIGH COURT] has held that once the Assessing Officer/TPO accepted and adopted TNMM but chooses to treat a particular expenditure like AMP as a separate international transaction without bifurcation/segregation, it would lead to unusual and incongruous results as AMP expenses was the cost or expenses and was not diverse. Even if the AMP expenses incurred by the appellant company are bench marked on a separate basis, no adjustment on account of AMP expenses would survive. No plausible reason for TP adjustment on account of AMP expenses. We, accordingly, direct the Assessing Officer to delete the impugned adjustments. - Decided in favour of assessee.

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• 2018 (9) TMI 1301
  Reopening of assessment - addition u/s 68 - addition is made because the entries contained in the pen-drive have not been entered into the books of account of the assessee-company despite the entries have no co-relation with the assessee-company - Held that:- It is an admitted fact that alleged pen-drive was recovered during the search from the possession of Shri Chetan Gupta by Punjab Vigilence Bureau on the reasons that Shri Chetan Gupta was keeping the black money earned by Capt. Amarinder Singh, Chief Minister of Punjab. The Department has also proceeded against Shri Chetan Gupta in various assessment years on the basis of the entries contained in the pen-drive recovered from him. The Tribunal decided several appeals of Shri Chetan Gupta and finally the appeal of Shri Chetan Gupta was decided [2018 (6) TMI 957 - ITAT DELHI] wherein addition on account of peak credit confirmed. All the entries in the pen-drive were considered for calculating the peak credit entries in the hands of Shri Chetan Gupta and as such Learned Counsel for the Assessee has rightly contended that when the peak credit has been considered entirely in the hands of Shri Chetan Gupta, there were no question of making any addition against the assessee-company. Further, Shri Chetan Gupta has not made any statement against the assessee-company, if any entries belong to the assessee-company. Nothing is brought on record in this regard. A.O. has failed to establish as to how assessee-company has incurred the expenses. The assessee-company has not debited any expenditure in the profit and loss account and also did not claim deduction of the same in its books of account. How the entries in the pen-drive were connected with the assessee-company have also not been established. It, therefore, appears that A.O. did not apply his mind to the alleged pen-drive before initiating the re assessment proceedings in the matter. Thus, there is absence of link between alleged tangible material and formation of belief. At the most, it could be inferred that the belief of the A.O. was based on mere imagination, speculation and suspicion. Therefore, it is not a fit case for initiation of reassessment proceedings under section 147/148 - Decided in favour of assessee.

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• 2018 (9) TMI 1300
  Entitled to deduction u/s 80P(2) - Whether the interest income received from investments with co-operative banks is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act? - Held that:- In the case of ITO v. The Chengala Service Co-operative Bank Ltd. [2018 (4) TMI 339 - ITAT COCHIN] after elaborately considering all the judicial pronouncements had decided the issue in favour of the assessee. As regards the interest received on investments with cooperative Banks, we are of the view that the deduction u/s 80P(2)(d) can be granted only if the interest income is received out of investments made with co-operative societies. In the instant case, it is not clear that the interest income was received out of investments made with co-operative societies. Therefore, we are of the view that deduction u/s 80P(2)(d) of the I.T.Act cannot be granted. Further, we find that the investments are made by the assessee-society in the course of its banking business / providing credit facilities to its members and hence such income will form part of banking activities of the assessee and same is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act. On identical facts, the Cochin Bench of the Tribunal in the case of The Azhikode Service Cooperative Bank Ltd. & Ors.[2017 (7) TMI 1138 - ITAT COCHIN] after considering all the judicial pronouncements had decided the issue in favour of the assessee. Co-operative societies engaged in providing credit facilities to its members had in course of business made investments with treasury, bank etc. and earned interest income, such income was eligible for deduction u/s 80P(2)(a)(i). See Saveru Co-operative Rural Bank Ltd. v CIT [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT]. In the instant case the assessee had made investments with co-operative banks in the course of its business of banking / providing credit facilities to its members. Therefore, it was entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act in respect of interest income that was received on such investments in view of the above judicial pronouncements. - Decided against revenue.

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• 2018 (9) TMI 1299
  Addition on concealed consultancy fees - excess receipts - Held that:- It is observed that the explanation now offered on behalf of the assessee before the Tribunal was offered by the assessee even during the course of assessment proceedings, but the Assessing Officer could not appreciate the same and proceeded to treat the excess receipts as concealed consultancy fees of the assessee without properly verifying the explanation of the assessee from the relevant documentary evidence. Similarly, CIT(A) also failed to appreciate the submissions of the assessee as regards the alleged excess receipts in the right perspective and proceeded to confirm the addition made by the A.O. by treating the said receipts as concealed consideration fees of the assessee on irrelevant consultancy. Keeping in view all these facts of the case, we are of the view that the revenue cannot be given the second innings especially when a period of more than 15 years has already lapsed and the fault for the same does not lie with the assessee. - Decided in favour of assessee.

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• Customs

• 2018 (9) TMI 1295
  Penalty u/s 112 of CA and u/s 114AA of CA - misdeclaration of goods - Held that:- There is no merit in the present Special Leave Petition. The Special Leave Petition is accordingly dismissed.

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• 2018 (9) TMI 1294
  Alternative statutory remedy of appeal - right to appeal against determination of dumping for imposing anti-dumping duty - Negative findings - Absence of Notification - Section 9C of the Customs Tariff Act, 1975 - The writ petitioner resists and questions the plea of alternative remedy, stating that the appellate remedy under Section 9C of the CT Act cannot be invoked against the termination order under Rule 14 of the Rules. Held that:- Section 9C of the CT Act in the present case has to be interpreted in a manner so as not to frustrate its purpose i.e. to provide appellate remedy both in cases of "order of determination" and review. Accordingly, it will be contrary and would be against the legislative intent to hold and interpret that there is no right to appeal under Section 9C of the CT Act, when the Designated Authority does not propose imposition of anti-dumping duty. As the Central Government is bound by the final finding of the Designated Authority, the final finding of the Designated Authority becomes the final finding and "order of determination" passed by the Central Government for the purpose of Section 9C of the CT Act - the statute i.e. Section 9C would be interpreted in a manner that it would effectuate and not frustrate the purpose of the legislation that a party should have a right of appeal against the quasi judicial determination in relation to orders determining existence, degree and effect of any subsidy or dumping of articles imported into India. Section 9C does not state and provide that an appeal is maintainable against customs notification. However, it refers to and states that an appeal would lie against the "order of determination" regarding existence, degree and effect of dumping. The words "existence, degree and effect of dumping" are significant. The final finding of the Designated Authority in the said aspect can be in positive i.e. when it recommends imposition of anti-dumping duty or may be in negative when it finds and holds that no anti-dumping should be imposed. Upon negative finding by the Designated Authority no further action is contemplated and required by the Central Government - Contention of the petitioner that the "order of determination" would mean notification imposing anti dumping tax and not a negative final finding of the Designated Authority under Rule 17, which is not recommendatory but the final determination, is erroneous and bad in law. In case of negative determination the finding of the Designated Authority is binding, it gives no discretion to the Central Government. Thereupon, the determination becomes the determinative order in the sense that no anti-dumping duty can be imposed - Negative finding of the Designated Authority does not require a notification, a legislative act, ergo the said final finding gets stamped and approved by the Statute itself as binding decision of the Central Government. The argument of the petitioner that Section 9C postulates an appeal only against "order of determination" in the form of notification imposing anti dumping duty and not against the negative final finding of the Designated Authority, is therefore rejected. Thus, the plaintiff has equitable efficacious alternate remedy to challenge the impugned order under Section 9C of the CT Act before the Appellate Tribunal - liberty given to the petitioner to file an appeal under Section 9C of the CT Act. Petition dismissed being not maintainable.

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• 2018 (9) TMI 1293
  Penalty u/s 114 of CA - failure to comply Public Notice No. 17/2- 12 dated 2.3.2012 issued by the Commissioner of Customs, Jawaharlal Nehru Customs House, Nhava Sheva - Smuggling of Red Sanders. Held that:- Regulation 2009 clearly states that these Regulations apply to customs cargo service provider. Regulation 2(b) of the Regulation defines customs cargo service provider to mean any person engaged in receipt, storage, delivery, despatch or otherwise handling imported and exported goods. Regulation 5 of the Regulation provides the conditions which have to be fulfilled by the Customs Cargo Service Provider within the meaning of which the Appellants undeniably falls. In fact, it provides that Customs Cargo Service provider will meet such conditions as required by the Commissioner of Customs (Exports) inter alia in case of export cargo. Thus, the source of power to issue said Public Notice is found in the Regulation which is issued under the Act. Thus in view of the above self evident position the question as proposed does not give any rise substantial question of law. Thus not entertained.

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• 2018 (9) TMI 1292
  Penalty u/s 117 of CA - gold imported by the appellant did not bare engraving of weight in metric unit for claiming exemption - goods were allowed to be exported - discretionary power to impose penalty - Principal Commissioner has held that the imported goods are not eligible for duty exemption and further it is also observed that the appellant and the supplier/exporter are related parties and the importer does not have any prior registration of the case with the Special Valuation Branch - Import of gold bars under advanced authorization - exemption under N/N. 12/2012-Cus dated 17.03.2012. Held that:- The imposition of penalty under Section 117 of the Act is discretionary. When the authority exercises its discretion to impose penalty, no question of law would arise from such imposition of penalty, in the absence of allegation of arbitrary or malafide exercise of discretionary power. No such arbitrariness or malafide exercise of discretionary power is alleged nor it is the case of the appellant that the Principal Commissioner of Customs has exercised his discretionary power under Section 117 of the Act in an arbitrary manner or in a malafide exercise of power. Appeal dismissed.

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• 2018 (9) TMI 1291
  Recovery of Customs Duty - Rule 8 of Customs (IGCRDMEG) Rules, 1996 - The said Rule 8 was not only referred and discussed by both the parties below in detail, but the learned Tribunal without going into the said Rule 8 and effect thereof, just allowed the appeal of the Assessee, finding that there was no allegation against the assessee that the import of the batteries was diverted and that they were not properly accounted for. Held that:- There is neither any finding of the Tribunal in this regard as to how the batteries in question were used in the manufacture of handsets or not, nor any discussion on the applicability of Rule 8 quoted above is made, which goes to the root of the matter - the impugned order of the learned Tribunal cannot be sustained and the matter deserves to be remanded back to the learned Tribunal for deciding the appeal again on merits, in accordance with law. Appeal allowed by way of remand.

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• 2018 (9) TMI 1290
  Smuggling - import of Raw Cashew Nuts (RCN) without payment of Customs Duty - N/N. 18/2015-Cus. - Diversion to other units which have not been authorized for the purpose of processing RCN imported duty-free - The primary allegation of the Department is that RE have diverted/sold 2801.41 MTs of imported RCN out of a total of 3073.331 MTS imported by them. Held that:- It is not known how in para 7.1 of the Show Cause Notice it has been alleged that RE had received only 81.05 MTs of RCN and hence it appears to reason that this conclusion may be a deduction arrived at from the documents seized - In the same para 7.1 it is alleged that RE used 190.48 MTs of RCN to process 47.62 MTs of cashew kernels for export. From para 5.4 of the Notice, we find that the quantity of 190.48 MTs of RCN receipts in RE is also a deduction based on quantity of 47.62 MTs of processed cashew kernels exported vide Shipping Bills 8243331/13.06.2016, 8317986/17.06.2016 and 8354161/18.06.2016 - these two allegations are at variance and are contradicting one another. Another allegation in the Notice is that RE were directly sending imported RCN to various units of RA or to other firms at Kollam/KK district directly from the port of import in violation of the procedures prescribed in para 4.35 of HBP and condition (x) of Notification 18/2015-Cus. At the same time, the Show Cause Notice elsewhere alleges that RE had “sold” the imported RCN to commission agents/other buyers. There is also an allegation that in some cases such sales have been effected under sales invoice and even payment of sales tax. There is a finding that RCN processed by processing units were sold in the local market; that RA have sold cashew kernels processed out of imported cashew nuts to different firms, etc. However, as in the other allegations of sale of imported RCN directly from the port, no evidences to corroborate these allegations have been brought forth or adduced. Credence is also found in the appellants’ submission that they regularly export pre-dominantly to the USA and the cashew kernels which are exported to that country have to meet the stringent USA Regulatory Approvals, apart from high quality specifications required by the customers. For this reason only the appellants are importing RCN in shell from abroad because the export orders require a better quality of cashew kernel which is not available in India. If this be the case, we wonder what the appellants would achieve by selling the imported RCN, since the cashew kernel of Indian origin would not be accepted by the buyers abroad. The non-inclusion of all the supporting manufacturers in the Advance Authorizations are then only a procedural aberration that can surely be condoned. The allegations raised in these proceedings and consequential demand and penalties confirmed by the impugned Order against RE cannot be sustained and will have to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1289
  Refund of SAD - N/N. 102/2007-Cusdated 14.09.2007 - Board Circular No.16/2008-Cus dated 13.10.2008 - Held that:- It is well settled law that no extraneous conditions can be introduced in the notification by the Executive by way of any circular. The only condition of the notification is that VAT should be paid on the resold goods which condition stand satisfied by the appellant. The fact that the said condition 2(d) uses expression importer cannot be interpreted in a manner that VAT should be paid from the importer’s pocket only. The payment of VAT on the imported goods is the substantive condition of the Notification and the same having been paid by the consignment agent would satisfy the said condition of the notification. The Adjudicating Authority has referred to the Chartered Accountant’s certificate clarifying that the appellant has reimbursed the VAT amount to his consignment agent and the Revenue has not produced any evidences to rebutt the above findings of the Adjudicating Authority. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1288
  Valuation of imported goods - Heavy Melting Scrap - enhancement of value based on NIDB data for re-rollable scrap - Held that:- The appellant have explained that so called re-rollable scrap was old used and defective materials which were imported for the purposes of utilization in furnace, as Heavy Melting Scrap - further, the value was enhanced by referring to NIDB data on which has been held to be not in accordance with law, by umpteen number of decisions of the Tribunal - enhancement of value not justified. Mis-declaration as regards the quantity of the material - Held that:- The excess quantum is almost one third (1/3) of the total weight of the goods declared by the assessee, thus calling for their confiscation and imposition of penalty upon the appellant. The said excess goods would be cleared by the appellant on payment of duty leviable thereon by adopting the declared value. Redemption fine - Penalty - Held that:- Commissioner has confiscated the entire consignment on the findings of under valuation with an option to the appellant to redeem the same on payment of redemption fine of ₹ 12 lakhs as has imposed penalty of ₹ 6 lakhs - quantum of redemption fine and penalty reduced. Appeal allowed in part.

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• 2018 (9) TMI 1287
  Valuation of imported goods - Aluminium scrap classified as tough/taboo - goods were not of prime quality - enhancement of value - appellant’s contention is that the slabs found by the officers were not of prime Aluminium and the same were in the nature of scrap - is enhancement of value justified? Held that:- An identical case of the same assessee was dealt by the Tribunal in the case of Vardhaman Sales Agency [2018 (3) TMI 563 - CESTAT ALLAHABAD], where, the charges of mis-declaration and the consequent enhancement of value were set aside by holding that there is no intention of the appellant to mis-declare the goods for the reason that the appellant under-took to mutilate the goods which were objected to be of prime nature by Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1286
  Valuation of imported goods - assorted belt buckles - appellant’s contention is that the buckles found by the officers were not of prime quality and the same were in the nature of scrap - is enhancement of value justified? Held that:- An identical case of the same assessee was dealt by the Tribunal in the case of Vardhaman Sales Agency [2018 (3) TMI 563 - CESTAT ALLAHABAD], where, the charges of mis-declaration and the consequent enhancement of value were set aside by holding that there is no intention of the appellant to mis-declare the goods for the reason that the appellant under-took to mutilate the goods which were objected to be of prime nature by Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1285
  Valuation of imported goods - Ordinary Plywood with Veneer Face Grade B - enhancement of value - no rejection of Transaction Value - Held that:- Revenue has nowhere attacked the transaction value and has not produced any evidence to show that the transaction value was wrong. It is well settled law that for rejecting the assessable value declared by the importer on the basis of the invoices so raised by the foreign supplier. Revenue has to first reject the said transaction value by the production of sufficient evidence to disapprove the same. In the present case, there is no effort by the Revenue to first reject the transaction value. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2018 (9) TMI 1298
  Corporate Insolvency Resolution Process - financial debt - Held that:- There is no document to show that the respondent company either accepted or undertook to repay the loan with interest. The applicant has failed to justify as to how without any provision of interest, the debt claimed in the application can be termed as a financial debt. Therefore, neither the present claim can be termed to be a financial debt nor does the applicant come within the meaning of financial creditor . Once the applicant does not come within the meaning of financial creditor , he becomes ineligible to file the application under Section 7 of the Code. For the reasons stated above this petition fails and the same stands dismissed as not maintainable. We make it clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the Applicants before any other forum shall not be prejudiced on account of dismissal of the instant application.

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• 2018 (9) TMI 1297
  Corporate Insolvency Resolution Process - Whether the ‘Axis Bank Ltd.’ was also ‘Counter Corporate Guarantor’, comes within the meaning of ‘Financial Creditor’ as defined under Section 5(7) & (8) of I&B Code? - Held that:- Section 25 provides the duties of Resolution Professional. As per Section 25(2)(e), the Resolution Professional is required to maintain an updated list of all the claims. Aforesaid fact also suggests that the maturity of a claim or default of debt are not the guiding factors to be noticed for collating or updating the claims. The matter can be looked from another angle. It is only in case of ‘debt’ and ‘default’, a ‘Financial Creditor’ or ‘Operational Creditor’, may file applications under Section 7 or 9. The ‘Corporate Applicant’ has also right to file application under Section 10 for initiation of Corporate Insolvency Resolution Process against itself, if it has defaulted to pay the ‘debt’. It does not mean that the persons whose debt has not been matured cannot file claim. The ‘Financial Creditors’ or ‘Operational Creditors’ or ‘secured or unsecured creditors’ all are entitled to file claim. Therefore, we hold that maturity of claim or default of claim or invocation of guarantee for claiming the amount has no nexus with filing of claim pursuant to public announcement made under Section 13(1)(b) r/w Section 15(1)(c) or for collating the claim under Section 18(1)(b) or for updating claim under Section 25(2)(e). For the purpose of collating information relating to assets, finances and operations of Corporate Debtor or financial position of the Corporate Debtor, including the liabilities as on the date of initiation of the Resolution Process as per Section 18(1), it is the duty of the Resolution Professional to collate all the claims and to verify the same from the records of assets and liabilities maintained by the Corporate Debtor. EXIM Bank Matter - Held that:- Admittedly, JEKPL has given the ‘Counter-Indemnity Obligation’ by way of Guarantee (Counter Guarantee) and thereby it falls within clause (h) of Section 5(8). Such ‘Counter-Indemnity Obligation’ in respect of Counter Guarantee has been given by JEKPL as the EXIM Bank disbursed the debt against the consideration for the time value of money in favour of the Principal Borrower (JENV).In view of the said provision we hold that EXIM Bank come within the meaning of ‘Financial Creditor’ as defined under Section 5(7) r/w Section 5(8) of the I&B Code. The claim of EXIM Bank having been wrongly rejected by the Adjudicating Authority by impugned order the said order is set aside. Axis Bank - Held that:- Having held that the ‘Export Import Bank of India’ is ‘Financial Creditor’ in relation to ‘JEKPL Pvt. Ltd.’ (Corporate Debtor) and ‘Axis Bank Limited’ is ‘Financial Creditor’ in relation to ‘Edu Smart Services Pvt. Ltd.’ (Corporate Debtor), we hold and direct respective ‘Resolution Professionals’ and ‘Adjudicating Authorities’ to treat the Appellant Banks as members of their respective Committee of Creditors, who in their turn are directed to hold meeting of Committee of Creditors in accordance with law and reconsider/consider the Resolution Plan(s) submitted in each Corporate Insolvency Resolution Process which are in accordance with Section 30(2) of the I&B Code. Both the ‘Committee of Creditors’ now cannot go for rebidding, the respective Resolution Plans, having already been opened. All the appeals are allowed with aforesaid observations and directions.

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• 2018 (9) TMI 1296
  RTI Application - information from the Insolvency and Bankruptcy Board of India relating to the examination for the recruitment of the officer’s grade- A, year 2018 (i) “marks obtained by me and (ii) Cut-off marks of the written test.” - Held that:- RTI appeal has been examined and have perused the response provided by the respondent in respect of the queries raised in the RTI application. In this context, as find that information in respect of the specific query in para 2 in point (i) and (ii) above has been put in the public domain on the website of the Board, i.e., www.ibbi.gov.in accessible to all. Once the information is available in the public domain, it cannot be said to be ‘held’ or ‘under the control of’ the public authority and thus ceases to be an information accessible under the RTI Act, as held by the Hon’ble CIC in matter Shri K. Lall Vs. Shri M.K. Bagri (Order dated April 12, 2007) wherein it held: “… once an information is voluntarily disseminated it is excluded from the purview of the RTI Act and, to that extant, contributes to minimizing the resort to the use of this Act…”.

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• Service Tax

• 2018 (9) TMI 1282
  Renting of immovable property - Before the tribunal, Municipalities accepted the tax liability - Whether the Tribunal is right in dismissing the appeal even though the retrospective amendment with regard to the payment of service tax is pending before the Hon’ble Apex Court? Whether the Tribunal is right in dismissing the appeal without considering the legal aspect that the retrospective amendment with effect from previous date could only create a tax liability but not the liability to pay interests and penalties retrospectively? Whether the Tribunal is right in dismissing the appeal without discussing the aspect of limitation for the demand notice? Held that:- Prima facie, the aforestated questions of law go against the tone and tenor of the order under appeal which records, in no uncertain terms, that the appellant Municipality conceded that it was liable to pay the service tax along with interest thereon and also sought time to do so - there is no question of law, much less a substantial one, arising for consideration in this appeal - appeal dismissed.

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• 2018 (9) TMI 1281
  Scope of remand order - Whether the order-in-original while confirming the demand raised by the first three show-cause notices have travelled beyond the scope of remand order or Commissioner was right in confirming the said demand as has been done by him? - Held that:- Only after going through all these documents, correct service tax determination was to be done and matter was remanded for taking into account of documentary evidences which would submit in support of their claim of having discharged of service tax liability. - While passing the order, Commissioner has done the same. He has considered looking into agreements and has concluded what he deemed fit in respect of leviability of service tax. The remand order does not conclude anything in respect of the nature of the software supplied or to say that these could not have been leviable to service tax. Accordingly, the order of Commissioner cannot be faulted on this count. Supply of services or not? - third party software - taxable under the head ‘Information Technology Software services’ or not? - Held that:- It is settled law that software is nothing but an Intellectual Property of a person who has developed the said software. The right to use the software is something what gets transferred and not software has per se. Even if it is provided on a media such as CD or Hard Drive. Software cannot be altering, modified or reproduced by the user of the said software. He can only use the same for the purposes authorized by the rightful owner and in the manner authorized and this is further supported by the fact that in each case the recipient enters into an End User License Agreement (EULA) which is binding in nature before he can make use of the said software - The approach of commissioner while dealing with the issues is in accordance with the international practices of treatment of the software related transactions. Thus the order of the Commissioner holding that these services are classifiable under the category of ‘Information Technology Software Services’ after 16.05.2008 and prior to that under the category of ‘Intellectual Proper Services’ cannot be faulted with. Valuation - inclusion of value of hardware provided in terms of Section 67 of the Finance Act, 1994 in assessable value - Held that:- The value of goods used for provision of the taxable service cannot be excluded from the gross amount charged as consideration for the services provided just for the reason that sales tax / VAT has been paid on such goods and value of goods is shown separately. However when the goods are sold as part of provision of service and are shown separately then will the abatement in respect of the same shall be admissible or not needs to be considered. Notification No 12/2003-ST provided for such abatement - While concluding that with regards to the hardware when commissioner has upheld that they are the part of taxable service and their value should be included in the value of taxable services provided, Commissioner needs to consider the argument in respect of the abatement of the value if admissible under rules or notification applicable at the relevant time. Demand under the category of Intellectual Property Services for period prior to 16.05.2008 and under the category Information Technology Services from 16.05.2008 - the party had submitted that the demand cannot be made ahead which is not proposed in the show-cause notice - Held that:- It is settled principle in law to proceed against any person, the basic requirement is that he should be put to sufficient notice about his contravention and allowed to make proper defense. Since the first show cause notice dated 19.10.2009 has been issued demanding service tax under the category of “Management, Maintenance & Repair Service”, the confirmation of demand under any other category, namely “Intellectual Property Right Services” for the period prior to 16.05.2008 cannot be justified and the order to that extent is definitely not maintainable - In the present case in three show-cause notices in respect of the same issue were proposed under Information Technology Software services and the party was having sufficient notice to answer the same under the said head in respect of the 1st show-cause notice dated 19.10.2009. When there is opportunity available to the extent, their stand in respect of a particular heading the order of Commissioner cannot be faulted with on that account - when sufficient notice has been given, it cannot be said that adjudicating authority has travelled beyond the scope of show cause notice while upholding the demand under the said head at least from 16.05.2008. Time Limitation - Noticee have contended that the notice dated 19th October 2009 is barred by limitation as they were under bonafide belief that the amount received by them under these Acts were not leviable to service tax - Held that:- The said argument with regards to bonafide belief cannot be allowed. During the entire period, noticee was aware about leviability of service tax on the said products and in case they had any doubt they could have sought clarification from the concerned authorities - Without seeking such clarification and on his own deciding not to pay the tax cannot be a bonafide reason - time limitation rightly invoked. Demand of Interest - Held that:- As the demand of taxes is liable to be confirmed for the period after 16.05.2008 appellant are required to pay the interest also. It is settled law that interest liability flow from the liability to pay tax if not paid in time. Penalty - Held that:- In the present case the penalty imposed are mandatory penalties provided in law, they are to be held as civil liability accordingly. Reliance on Section 80 would be of no help in this case - however Commissioner should reconsider the issue of penalty afresh and determine whether the same can be imposed under section 78. Appeal allowed by way of remand.

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• 2018 (9) TMI 1280
  Refund of Service tax paid - time limitation - Section 11B of the Central Excise Act, 1944 - refund claims rejected on the ground that the refund claims were not filed within the time limit of one year and the claimant has not fulfilled the conditions as prescribed at para 3(III)(e) of N/N. 12/2013-St dt. 01/07/2013 - Principles of Natural Justice. Held that:- In the present case, the Commissioner(Appeals) while rejecting the refund claims of the appellant has violated the principles of natural justice and has not afforded opportunity of hearing to the appellant to explain the justifiable reasons for filing refund claims after the periods specified in the notification - Further, the Commissioner(Appeals) has totally ignored the Notification No.12/2013 under which the appellant has filed the refund claims rather the Commissioner(Appeals) has wrongly considered the refund claims of the appellant under Rule 5 of the CENVAT Credit Rules read with Notification No.5/2006-CE(NT) dt. 14/03/2006 which was not the case of the appellant at all. Matter remanded back to the original authority to decide the claims of refund of the appellant within a period of three months from the date of receipt of certified copy of this order - appeal allowed by way of remand.

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• 2018 (9) TMI 1279
  Supply of Tangible Goods - lease of railway wagons to the railways - Held that:- Tribunal in the case of Petronet LNG Ltd. vs. Commissioner of Service Tax, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI] has considered an identical situation and held that inasmuch as the lease agreement for supply of tangible goods was one time event which acted prior to introduction of this taxable service w.e.f. 16.05.2008, no liability to pay service tax would arise against the assessee. Admittedly in the present case, the agreements entered into by the appellant with the Railways are upto the year 2000 i.e., much prior to 16.05.2008. The ratio of the above decision of Tribunal is fully applicable to the facts of the present case. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1278
  Penalty - Business Auxiliary Service - commission/incentives received from institutions in respect of loans given to the buyers of the motor vehicles - Held that:- The Tribunal in the case of Roshan Motors Ltd. v. Commissioner of Central Excise, Meerut [2008 (11) TMI 55 - CESTAT, NEW DELHI], while upholding the demand on identical activities has set aside the penalties imposed upon the assessee by observing that the issue was a bona fide issue of interpretation of question of law and no suppression or misstatement or mala fide can be attributed to the assessee - Penalty set aside. Demand of ₹ 1,29,460/- confirmed against the appellant by comparing the ST-3 figures with the figures available in the balance sheet - Held that:- It is well settled that such comparison of ST-3 figures with balance sheets figures cannot lead to confirmation of any demand of duty in the absence of any evidence to establish that such income, as reflected in the balance sheet was on account of the services rendered by the assessee - there is no justification for the demand. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1277
  Penalty u/s 78 of FA - non-payment of Service Tax - the fact came to the notice of the Revenue by comparing the ST-3 Returns figures with the entries made in profit and loss account as also in balance sheet - Held that:- There is no evidence on record to reflect upon any mala fide of the assessee so as to invoke the penal provisions against them. Further the appellant is a public sector undertakings of Government of India and as such cannot have any mala fide intent to evade payment of duty - penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1276
  Short paymnet of Service Tax - appellant was collecting Service Tax from their clients on gross value of the services whereas less Service Tax was being paid by them on the reduced assessable value - demand of differential amount alongwith interest and penalty. Held that:- The appellants have not disputed the fact that they have collected extra Service Tax from their clients. As such the same is required to be paid by the assessee and accordingly the demand along with interest confirmed. Penalty - Held that:- There can be a bona fide belief on the part of the assessee that the tax is required to be paid only on the assessable value of the services and in the absence of any evidence to reflect any mala fide on them, penalty set aside. Appeal allowed in part.

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• 2018 (9) TMI 1275
  Valuation - includibility - inclusion of value of the goods used in providing the said services in assessable value - Held that:- The issue is no more res-integra and stands settled by the Hon’ble Allahabad High Court in the case of Commissioner of Customs And Central Excice V/s J.P. Transformers [2014 (9) TMI 307 - ALLAHABAD HIGH COURT], where it was held that the value of the goods used in providing repair of Transformers are not to form part of the value of the services so provided by assessee - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1274
  GTA Service - reverse charge mechanism - transportation of biscuits - Held that:- The payments were made to individual labourers and there was no issue of any consignment note in whatever form - the said transaction is not covered by GTA Service - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1273
  Business Auxiliary Services - activity of computerization of Excise and Taxation Technical Service Agency, the authority of Punjab Government - period from 2010-11 to 2011-12 - Held that:- The issue has been examined by this Tribunal in their own case for the earlier period in TATA CONSULTANCY SERVICES LIMITED VERSUS C.S.T. -DELHI [2018 (6) TMI 1013 - CESTAT NEW DELHI], where it was held that appellant is not liable to pay service tax on the amount received from Punjab Government for renovation of Technical Programme given by them for Excise and Taxation Technical Service Agency. The services provided by the appellants do not qualify as ‘Business Auxiliary Services’, therefore, the demands against the appellants are set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1272
  Commercial or Industrial Construction Services - construction of Toll Plaza - period October, 2007 to October, 2009 - Extended period of limitation - Held that:- The issue of construction of Toll Plaza is a taxable service or not came before this Tribunal in the case of Jagdish Prasad Agarwal vs. CCE, Jaipur-I [2017 (5) TMI 702 - CESTAT NEW DELHI], where it was held that Commercial or Industrial Construction service provided in respect of roads are specifically excluded from the purview of levy of service tax in terms of clause (25b) of Section 65 ibid. Demand of service tax under the construction of Toll Plaza and Lanes under the category of ‘Commercial or Industrial Construction Services’ is not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1271
  Issuance of second SCN on same set of facts by invoking Extended period of limitation - validity of the second SCN - Held that:- On the same set of facts the show cause notice dated 21.10.2010 was issued invoking proviso for extended period - Reliance placed in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2006 (4) TMI 127 - SUPREME COURT OF INDIA], where it was held that When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Thus there was no suppression of facts on the part of the assessee/appellant, and SCN would not be valid. Second SCN not valid - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1270
  Levy of Service tax - remittance to suppliers to outside India - whether the appellant, who have imported goods and remitted amount to its suppliers outside India, whether they can be liable for payment of service tax on such remittances? Held that:- There is no finding and/or averment by the Commissioner that they have received any service from outside India, on which service tax is chargeable - the impugned order is cryptic and vague, as without there being any finding of receipt of service from outside India service tax have been demanded - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (9) TMI 1269
  Non-Compliance of Pre-deposit - time limitation - appeal dismissed on the reason that the required pre-deposit was made belatedly after a period of 7 months from the date of filing of the appeal - Section 35F of the Central Excise Act, 1944. Whether the appeal presented within time can be rejected on the ground that pre-deposit was made belatedly? Held that:- The issue has already been considered by the Division Bench of this Court in MR. RAMKI VERSUS THE ADDITIONAL COMMISSIONER OF CUSTOMS (PAU) , THE COMMISSIONER OF CUSTOMS (APPEALS I) [2017 (7) TMI 832 - MADRAS HIGH COURT], wherein the Division Bench after taking note of various decisions, including the Full Bench decision relied on by the respondents, held that The proviso to Section 128 (1) of the 1962 Act, empowers the second respondent to adjudicate upon an appeal filed beyond the period of 60 days, but, within a further period of 30 days, provided sufficient cause is shown for the delay in presenting the appeal. Section 129 E (i) on the other hand, provides that the second respondent shall not entertain any appeal under sub-section (1) of Section 128, unless the appellant has deposited 7.5% of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an Officer of Customs, lower than the rank of Commissioner of Customs. Since the Division Bench has also taken into consideration of the Full Bench decision relied on by the respondents and has come to the above conclusion that the Appellate Authority could not have dismissed the appeal on the ground that the prescribed mandatory appeal was made beyond the condonable period, this Court, bound by the above decision of the Division Bench, cannot take a different view. The matter is remitted back to the second respondent to take up the appeal and pass orders on the same on merits - appeal allowed by remand.

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• 2018 (9) TMI 1268
  Area Based Exemption - substantial expansion - N/N. 33/99-CE dated 8.7.1999 - Held that:- It is true that no one appeared on behalf of the appellants on the date when the case was called for hearing but the fact remains having regard to the nature of legal issues raised and the huge amount involved in the matter the Tribunal ought not to have decided the same on merits and that too by a cryptic order - the matter remanded to the Tribunal for its decision afresh on merits after giving an opportunity of hearing to the appellants - appeal allowed by way of remand.

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• 2018 (9) TMI 1267
  Clandestine removal - third party evidences - charge of clandestine clearance has been raised by Revenue on the basis of the evidence in the form of diaries maintained by Sh. S. K. Pansari, Commission Agent - Held that:- The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - the findings of clandestine removal cannot be upheld based upon only the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1266
  Condonation of delay of 610 days in filing the appeal - Section 14 of Limitation Act, 1963 - delay occurred on the ground that the impugned order was challenged initially before the Hon'ble High Court though writ petition in the Civil Writ Petition No. 12919/2016 dated 29.06.2016 and the said writ petition has been withdrawn by the applicant on 06.04.2018 and thereafter on 15.05.2018, they filed an appeal before this Tribunal. Held that:- It is a fact to be taken on record that while approaching to the Hon'ble High Court, the Hon'ble High Court has entertained such writ petition and decided the issue in the case of M/s Ambika International [2016 (6) TMI 919 - PUNJAB AND HARYANA HIGH COURT] and granted the relief to the petitioner. Admittedly, the applicant approach to the Hon'ble High Court on 29.06.2016 relying on the decision of the Hon' ble High Court in the case of M/s Ambika International. In that circumstance, it cannot be said that the applicant was not under bonafide belief that they can seeking remedy before the Hon'ble High Court, therefore, benefit of the provision of Section 14 of the Limitation Act, 1963 is entitled to the applicant. The application for condonation of delay is allowed.

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• 2018 (9) TMI 1265
  Refund claim under N/N. 56/2002-CE dated 14.11.2002 - rejection on the grounds that the appellants are not entitled to self credit/ refund of education/ higher education cess paid by them in terms of N/N. 56/2002-CE dated 14.11.2002 and also on the ground that in terms of Notification Nos. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008, there are some restrictions for refund/ self credit to the appellants, instead self credit/ refund of duty paid through PLA. Refund/ self-credit of education cess/ higher education cess - Held that:- The issue is settled in the case of M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], wherein it has been held that education cess/ higher education cess is continuation of duty paid by the assessee. If the assessee is entitled to refund of duty paid through PLA, then for the education cess/ higher education cess also, the assessee is entitled to claim refund/ self-credit - refund allowed. In terms of N/N. 19/2008- CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008, whether the appellants are entitled to claim refund/self-credit as restricted by these notifications or not? - Held that:- The notifications in question have been examined by the Hon’ble J & K High Court in the case of Reckit Benckiser vs. UOI [2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT], wherein the Hon’ble High Court quashed the notifications in question. Therefore, in terms of Notification No. 56/2002-CE dated 14.11.2002, the appellants are entitled to claim refund/ self-credit of duty paid through PLA - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1264
  Valuation - inclusion of third party instruction charges - whether third party inspection charges done under the instructions of the customers are includible in the assessable value or not? - Held that:- The extra inspection is being done by the assessee under the direction of their customers and as such is optional in nature. Regular inspection is being done by the appellant in their in-house facilities which is not the subject matter of the present appeal - the confirmation of demand of duty against the appellant is not sustainable. Time Limitation - Held that:- The demand is barred by limitation inasmuch as no justifiable reasons for invoking the longer period stand given by the Revenue. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 1263
  Consumption of Diesel Oil - manufacture and sale of Sugar and Bagasse - manufacturing activity or not? - Held that:- There is no merit in SLP and the SLP is dismissed.

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• Indian Laws

• 2018 (9) TMI 1284
  Order of Acquittal - Dishonor of Cheque - Section 138 of NI Act - Held that:- This Court with the able assistance of the learned counsel on either side, has, with studied care and incision, evaluated the entire evidence on record. The solitary reason assigned by the learned trial Court, hence, for recording an order of acquittal, upon, the accused, is, anvilled upon, the proprietary concern, nomencaltured as M/s Deepak Electrical Store, not being owned by the accused, rather, it, as depicted by Ex.DW2/A, and, by Ex.DW2/B, being owned by one Deepika Aukta. The aforesaid reason, for the reasons to be ascribed hereinafter, is grossly fallacious; (a) the complainant, in his testification, comprised, in his examination-in-chief, rendering clear echoings, vis-a-vis, accused No.1, visiting his commercial establishment, located at Parwanoo, and, his thereat supplying electrical items, to him; (b) his making an apposite entry in his apt register(s); (c) the dishonoured negotiable instruments, respectively, borne in Ex.CW1/A, and, in Ex.CW1/B, being signatured, in his presence by the accused. The learned trial Court, merely, upon anvil, of reflections, borne, in Ex.DW2/A, and, in Ex.DW2/B, proceeded, to record, an order of acquittal upon the accused. However, the placing, of, reliance thereon, is, grossly inappropriate - this Court holds that the learned trial Court has not appraised the entire evidence on record in a wholesome and harmonious manner, apart therefrom, the analysis of the material on record by the learned trial Court, suffers, from, a gross perversity or absurdity of mis-appreciation and non appreciation of evidence on record. Appeal allowed.

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• 2018 (9) TMI 1283
  Principle of Double of Jeopardy - Criminal breach of trust - cheating and criminal conspiracy - main allegations appears to be to receive the amount from respondent No.2 to siphon off the money with intention to receive wrongful gain and with intention to cheat the respondents the amount has been siphoned off in the name of some other person (grand son of petitioner No.1) by way of gift - dishonor of Cheque - Section 138 of NI Act. Held that:- Exercise of judicial restrained was mandated by the Apex Court while entertaining petitions under Section 482 of Cr.P.C. - Besides that, one more aspect, is infant stage of investigation because investigation is yet to be unfolded. From perusal of the case diary, it appears that interrogation/ statements of the petitioners are yet to be taken therefore, it would be too early to jump to the conclusion about role of the petitioners and since the plea of double jeopardy was discarded in the preceding paragraphs therefore, scope of interference on merits constricts to the detriments of petitioners. It is for the investigating officer to decide and take the call. He is free to take appropriate decision as per law. No such directions can be given to the authority at this juncture. In the cumulative analysis and considered opinion of this Court, scope of interference at this juncture regarding quashment of FIR does not exists. Scope of section 482 of Cr.P.C. is to be used sparingly in those matters where, no case is made out at the threshold. Petition dismissed.

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