TMI Tax Updates - e-Newsletter
September 25, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

TMI SMS

• RCM - service tax cannot be levied merely because a person had made remittances in foreign currency outside India if no service is involved

  ---

• Jurisdiction - Competency to issue SCN - Officers appointed under State GST Act are authorized to be proper officers for the purpose of IGST

  ---

Articles

• Presumptive taxation – An analysis under different scenario
• FIRST FORMAL NOTICE U.S. 143.2 – LONG TIME SHOULD BE ALLOWED- time allowed of few days is un-necessarily putting pressure on all- is it just to harass assesses and tax professionals?
• BLOCK JOINING MORTAR: GST @ 18%, NOT 28%
• NOTARY PUBLIC

News

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

  ---

• Extension of date for filing of Income Tax Returns and Audit Reports from 30th September, 2018 to 15th October, 2018

  ---

Notifications

GST - States

• G.O.Ms.No. 477 - dated 20-9-2018 - Andhra Pradesh SGST
  DATE ON WHICH TCS PROVISION OF SECTION 52 WILL COME INTO FORCE.

  ---

• G.O.Ms.No. 476 - dated 20-9-2018 - Andhra Pradesh SGST
  THE ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017 (ACT No. 16 OF 2017) - DATE ON WHICH TCS PROVISION OF SECTION 51 WILL COME INTO FORCE.

  ---

• G.O.Ms.No. 475 - dated 19-9-2018 - Andhra Pradesh SGST
  Prescription of Certain Procedure for Obtaining GSTIN by Certain Tax Payers.

  ---

• G.O.Ms.No. 474 - dated 19-9-2018 - Andhra Pradesh SGST
  Amendment in the Notification issued vide G.O.Ms.No.585, Revenue (Commercial Taxes-II) Dept., Dated : 25-07-2018.

  ---

• 38/1/2017-Fin(R&C)(73) - dated 21-9-2018 - Goa SGST
  Government of Goa appoints the 1st day of October, 2018, as the date on which the provisions of section 52 of the Goa Goods and Services Tax Act, 2017

  ---

• 38/1/2017-Fin(R&C)(72) - dated 21-9-2018 - Goa SGST
  Supersession of the Government notification No. 38/1/2017-Fin(R&C)(16)/2407 dated the 21st September, 2017

  ---

• 38/1/2017-Fin(R&C)(71) - dated 21-9-2018 - Goa SGST
  Goa Goods and Services Tax (Tenth Amendment) Rules, 2018

  ---

• 38/1/2017-Fin(R&C)(23/2018-Rate) - dated 21-9-2018 - Goa SGST
  Seeks to insert explanation in an entry in Notification No. 38/1/2017-Fin(R&C)(12/2017-Rate) dated 30th June 2017

  ---

• 38/1/2017-Fin(R&C)(70) - dated 11-9-2018 - Goa SGST
  Goa Goods and Services Tax (Ninth Amendment) Rules, 2018

  ---

• 38/1/2017-Fin(R&C)(69) - dated 11-9-2018 - Goa SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores

  ---

• 38/1/2017-Fin(R&C)(68) - dated 11-9-2018 - Goa SGST
  Waives the late fee payable on FORM GSTR-3B, FORM GSTR-4, FORM GSTR-6

  ---

• 38/1/2017-Fin(R&C)(67) - dated 11-9-2018 - Goa SGST
  Goa Goods and Services Tax (Eighth Amendment) Rules, 2018

  ---

• POL-41/1/2017-POLlCY/12548/CT - dated 4-9-2018 - Orissa SGST
  Extension of time for filling of application in form GST-CMP-04.

  ---

• 28719-FIN-CT1-TAX-0034/2017/FIN-S.R.O. No. 376/2018 - dated 4-9-2018 - Orissa SGST
  The Odisha Goods and Services Tax (Eighth Amendment) Rules, 2018.

  ---

• F.12(56)FD/Tax/2017-Pt-II-117 - dated 20-9-2018 - Rajasthan SGST
  Rate of TCS to be collected by every Electronic Commerce Operator U/s 52(1) of RGST Act, 2017.

  ---

• F.12(56)FD/Tax/2017-Pt-II-116 - dated 20-9-2018 - Rajasthan SGST
  Amendment in Notification No F.12(56)FD/Tax/2017-Pt-I-50 dated 29.06.2017.

  ---

• F.12(46)FD/Tax/2017-Pt-V-114 - dated 13-9-2018 - Rajasthan SGST
  Notification to bring into effect section 52 (provisions related to TCS) of the RGST Act, 2017 with effect from 01.10.2018.

  ---

• F.12(46)FD/Tax/2017-Pt-V-113 - dated 13-9-2018 - Rajasthan SGST
  Notification to bring into effect section 51 (provisions related to TDS) of the RGST Act, 2017 with effect from 01.10.2018.

  ---

• F.12(46)FD/Tax/2017-Pt-V-112 - dated 13-9-2018 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Tenth Amendment) Rules, 2018.

  ---

• F.17(131)ACCT/GST/2017/3842 - dated 10-9-2018 - Rajasthan SGST
  Amendments in the Notification Number F.17(131)ACCT/GST/2018/3765 dated the 10th August, 2018.

  ---

• F.17(131)ACCT/GST/2017/3841 - dated 10-9-2018 - Rajasthan SGST
  Amendments in the notification number No. F 17(131)ACCT/GST/2017/2472 dated the 15th September, 2017: and notification number F.17(131)ACCT/GST/2017/3179, dated the 23rd March. 2018.

  ---

• F.17(131)ACCT/GST/2017/3840 - dated 10-9-2018 - Rajasthan SGST
  Amendments in the Notification number F.17(131)ACCT/GST/2017/2309 dated the 08th August, 2017; and notification number F.17(131)ACCT/GST/2017/2857 dated the 15th November, 2017.

  ---

• F.12(46)FD/Tax/2017-Pt-IV-111 - dated 10-9-2018 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Ninth Amendment) Rules, 2018.

  ---

• F.12(46)FD/Tax/2017-Pt-IV-110 - dated 10-9-2018 - Rajasthan SGST
  Prescribing the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 Crore.

  ---

• F.12(46)FD/Tax/2017-Pt-III-093 - dated 4-9-2018 - Rajasthan SGST
  Waiving the late fee paid under section 47 by certain class of taxpayers.

  ---

• F.12(46)FD/Tax/2017-Pt-III-092 - dated 4-9-2018 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Eighth Amendment) Rules, 2018.

  ---

• G.O. Ms. No. 123 - dated 12-9-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Section 52 relating to Collection of tax at source - Bringing into force - Notification - Issued

  ---

• G.O. Ms. No. 122 - dated 12-9-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Section 51 relating to Tax deduction at source - Bringing into force - Notification - Issued

  ---

• G.O. Ms. No. 121 - dated 12-9-2018 - Tamil Nadu SGST
  Tamil Nadu Goods and Services Tax (Tenth Amendment) Rules, 2018

  ---

• G.O. Ms. No. 118 - dated 10-9-2018 - Tamil Nadu SGST
  Tamil Nadu Goods and Services Tax (Ninth Amendment) Rules, 2018

  ---

• G.O. Ms. No. 117 - dated 10-9-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Rules, 2017 - Return filing procedure for registered persons having aggregate turnover of upto 1.5 crore rupees - Notification - Issued.

  ---

• G.O. Ms. No. 113 - dated 4-9-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Waiver of late fee payable under Section 47 - Notification - Issued

  ---

• G.O. Ms. No. 112 - dated 4-9-2018 - Tamil Nadu SGST
  Tamil Nadu Goods and Services Tax (Eighth Amendment) Rules, 2018

  ---

• G.O. Ms. No. 111 - dated 3-9-2018 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Constitution of the Tamil Nadu Authority for Advance Ruling - Notified - Erratum - Issued.

  ---

• 17/2018 - dated 10-9-2018 - Telangana SGST
  Extension of time for filling of application in form GST-CMP-04

  ---

• 16/2018 - dated 10-9-2018 - Telangana SGST
  Supercession the Notification No. 25/2017 - State Tax, dt. 02-11-2017

  ---

• 15/2018 - dated 10-9-2018 - Telangana SGST
  Amendment in Notification No. 14/2018, dt. 16-08-2018

  ---

• 728/2018/5(120)/XXVII(8)/CTR-18 - dated 20-8-2018 - Uttarakhand SGST
  Amendment in Notification No. 514/2017/9(120)/XXVII(8)/2017, dated 29th June, 2017

  ---

• 727/2018/5(120)/XXVII(8)/CTR-17 - dated 20-8-2018 - Uttarakhand SGST
  Insert explanation in the Notification No. . 525/2017/9(120)/XXVll(8)/2017, dated 29th June, 2017

  ---

• 726/2018/5(120)/XXVII(8)/CTR-16 - dated 20-8-2018 - Uttarakhand SGST
  Amendment in Notification No. 527/2017/9(120)/XXVII(8)/2017 dated 29th June 2017

  ---

• 725/2018/5(120)/XXVII(8)/CTR-15 - dated 20-8-2018 - Uttarakhand SGST
  Amendment in Notification No. 526/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

  ---

• 612/2018/4(120)/XXVII(8)/2018/CTR-12 - dated 18-7-2018 - Uttarakhand SGST
  Amendment in Notification No. 522/2017/9(120)/XXVll(8)/2017, dated 29th June, 2017

  ---

VAT - Delhi

• F. No. W-71/Notification/2018-19/T&T/246-251 - dated 14-9-2018 - DVAT
  Notified for general information that the declaration forms “F” are declared to be obsolete and invalid for all purposes with effect from the date of issue of declaration forms “F”

  ---

Circulars / Instructions / Orders

GST - States

• 3114/GST-II, - dated 19-9-2018
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Haryana Goods and Services Tax Rules, 2017 in certain cases

Highlights / Catch Notes

GST

• Jurisdiction - Competency to issue SCN - absence of any notification under Section 4 of IGST Act - 2017 - The officers appointed under the MPGST Act are authorized to be proper officers for the purpose of IGST
  Visit to Get Source

  ---

• Classification of goods/services/both - rate of tax - coverage of various items used in the sprinklers and drip irrigation systems sold individually as well as part of a complete system - Laterals of drip irrigation system will attract GST 12% (CGST 6% + SGST 6%) - Laterals of sprinklers will attract GST at 18% (CGST 9% + SGST 9%).
  Visit to Get Source

  ---

Income Tax

• Status of the assessee as ‘Company’ or in the status of “An association of Persons” - The definition of ‘Company’ under the Income Tax Act, 1961 is given u/s 2(22A) of the Act. This definition does not include a company registered under the Companies Act of Sikkim, 1961. - it has to be assessed as an ‘Association of persons’ and not as a ‘Company’.
  Visit to Get Source

  ---

• TDS u/s 194J OR 194C - payment received by BET towards the work carried on under Phase II of the agreement, will not fall under the definition of the term professional services as no new technical consultancy has been offered by BEL to assessee - TDS was rightly deducted u/s 194C
  Visit to Get Source

  ---

• Reopening of assessment - claim of deduction u/s 10A denied - scrutiny assessment was conducted - It was not be open for the Assessing Officer to reopen such assessment on the principal claim of the petitioner for deduction on the ground that some other elements or aspects of the claim were not examined. This would clearly be a case of change of opinion.
  Visit to Get Source

  ---

• Condonation of delay - appeal of the assessee against the levy of late filing fee u/s 234(E) was dismissed at the admission stage on account of delay in filing the appeal - bonafide explanation for delay - merely technicality should not come in the way of discharge of substantial justice - We accordingly condoned the delay in filing the appeal
  Visit to Get Source

  ---

• Penalty u/s 271D - while framing the assessment it was held as the monies advanced and assessed as undisclosed income and when the appellate authorities deleted the addition holding that the said sum represents loans borrowed, the department has made the ‘U’ turn and initiated penalty proceedings u/s 271D. - Not permissible - No penalty.
  Visit to Get Source

  ---

• PIL - alleged undeclared income - The present Public Interest Litigation is not a genuine Public Interest Litigation, but a politically motivated litigation, which deserves to be dismissed with exemplary cost.
  Visit to Get Source

  ---

• Registration u/s 12A - Condonation of delay - Ignorance of law is no excuse. The provision of Section 12A, being a beneficial provision to the Assessee, requires strict interpretation. Therefore, the Assessee should have been in a position to explain the delay, which is more than 18 years in the instant case.
  Visit to Get Source

  ---

• Depreciation on machinery not listed in New Appendix-I Depreciation Schedule – Part-III (xia) eligible for depreciation @ 40% - Neither AO nor the CIT (A) has rendered a finding that the stand taken by the assessee stating that the tabulated items form part of the listed items in the schedule is either factually incorrect or a wrong submission. - Claim of depreciation allowed.
  Visit to Get Source

  ---

Customs

• 100% EOU - eligibility for depreciation on capital goods - failure to comply with prescribed export obligation - As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise & Customs, the value of capital goods would be nil. Consequently, no duty liability would arise.
  Visit to Get Source

  ---

Indian Laws

• Extension of date for filing of Income Tax Returns and Audit Reports from 30th September, 2018 to 15th October, 2018
  Visit to Get Source

  ---

Service Tax

• Adjustment of sanctioned rebate against alleged interest - un-adjudicated and un-confirmed Interest - there was no interest proceeding initiated against the assessee. - adjustment of sanctioned rebate claims against the non adjudged interest amount is not permissible.
  Visit to Get Source

  ---

• Reverse Charge Mechanism - appellants had made remittances in foreign currency - Revenue could not make out the case that the remittances were for the purpose of receiving any services from foreign country - on the said remittances service tax was not leviable.
  Visit to Get Source

  ---

• Business Auxiliary Services - place of supply of service - the entire expenditure incurred by the appellant was for hiring of stall in a foreign country and participating in the exhibitions - there is no evidence on record to establish that any part of the services thereof were performed in India.
  Visit to Get Source

  ---

• CENVAT Credit - Rule 6(3) of CCR - If the appellant has not availed Cenvat credit in respect of ‘Common Cenvatable Input Services’ the provisions of Rule 6(3) would not get invoked.
  Visit to Get Source

  ---

Central Excise

• Classification of machine - capability to perform function of sewing machine and/or to perform function of embroidery machine - In case the machine worked for both the functions, they have to be held as sewing machine classifiable under the head 84.52 and entitled to the exemption.
  Visit to Get Source

  ---

• Reversal of Cenvat Credit - Admittedly, in this case exemption is not absolute. In that circumstances, the provisions of Rule 11 (3) (2) are not applicable to the facts of this case, therefore, the Cenvat credit lying unutilized on 01.04.2006 shall not lapse and same can be utilized by the appellant latter on.
  Visit to Get Source

  ---

• Reversal of CENVAT Credit - in respect of clearance of Rectified Spirit, Un-denatured Ethyl Alcohol and Ethyl Natural Alcohol, there was not even need to pay 8% or 10% of the value of the said goods in terms of the Rule 6 (3) (b).
  Visit to Get Source

  ---

• Exemption from duty of Central Excise - captive consumption - ‘naphtha’ - ‘Bombay High gas oil’ - BHGO and naphtha used in the generation of electricity, which in turn has been used for purposes other than manufacture of excisable goods, the appellant would be liable to Excise duty thereon.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2018 (9) TMI 1418
  Classification of goods/services/both - rate of tax - coverage of various items used in the sprinklers and drip irrigation systems sold individually as well as part of a complete system - N/N. 01/2017 dated 28.06.2017 as inserted vide N/N. 06/2018 dated 25.01.2018 - applicant has contended that along with nozzles later vide notification no. 06/2018 dated 25.01.2018 a new entry was introduced as entry no 195B “Sprinklers; drip irrigation system including laterals; mechanical sprayers” which included all the lateral parts of these irrigation systems into Schedule II also. Held that:- The laterals related only to drip irrigation systems have been covered under this entry and laterals of sprinklers are not covered under the amended entry - Sprinklers is not in itself a complete irrigation system but constitutes an essential component of a Sprinkler Irrigation System which when assembled with other laterals and accessories makes a complete functional sprinkler irrigation system. Risers, adopter, bend, coupler ,end cap, PCN(C-Type), group nipple, reducer bare, socket, Bush, Y(bere), Latch clamps, C clamps, Riser Pipes, Rubber Rings, Tee, Clamps, Foot button, Ripit, Nozzle are all laterals to the sprinklers which when assembled with sprinkler constitutes Sprinkler Irrigation System. In case of drip irrigation system as per entry No.195A and 195 B of the schedule II of Notification No. 1/2017 - CT (Rate) dated 28-6-2017, later amended by Notification No.27/2017 CT- (Rate) dated 22.09.2017 and 6/2018 - CT (Rate) dated 25-1-2018 respectively, covers “Nozzles for drip irrigation equipments” and “drip irrigation system including laterals” and would attract GST (CGST 6% + SGST 6%) - In case of Sprinklers as per entry No. 195A and 195 B of the schedule II of Notification No. 1/2017 - CT (Rate) dated 28-6-2017, later amended by Notification No. 27/2017 CT- (Rate) dated 22.09.2017 and 6/2018 - CT (Rate) dated 25-1-2018 respectively covers only “Nozzles for Sprinkler” and “Sprinklers” which would attract GST 12% (CGST 6% + SGST 6%) - Risers ( which connects sprinkler to laterals) along with all other laterals such as adopter, bend, coupler ,end cap, PCN(C-Type), group nipple, reducer bare, socket, Bush, Y(bere) , Latch clamps ,C clamps, Riser Pipes, Rubber Rings, Tee, Clamps, Foot button, Ripit, Nozzle etc. are not covered under entry no. 195A and 195 B. Ruling:- As per entry No. 195 B of the schedule II of Notification No. 1/2017 - CT (Rate) dated 28-6-2017, as amended by Notification No. 06/2018 - CT (Rate) dated 25-1-2018, Laterals of sprinklers such as clamps, bends, tee, coupler, bush, foot button, latch, clamp, riser pipe, socket etc. are not covered to attract GST 12% (CGST 6% + SGST 6%) but instead will attract GST at 18% (CGST 9% + SGST 9%). Laterals of drip irrigation system will attract GST 12% (CGST 6% + SGST 6%).

  ---

• 2018 (9) TMI 1417
  Jurisdiction - Competency to issue SCN - sole contention of the learned counsel for the petitioner is that in absence of any notification under Section 4 of IGST Act, 2017, the respondent No.4 is not competent to issue show cause notice and the impugned seizure memo dated 15.07.2018 is wholly without jurisdiction - Held that:- The officers appointed under the MPGST Act, 2017 was authorized to be proper officers for the purposes of the IGST Act. The officers appointed under the MPGST Act are authorized to be proper officers for the purpose of IGST and, therefore, the contention of the petitioner that no notification was issued and in absence of any notification under Section 4 of the IGST Act has no force, the contention of the petitioner cannot be accepted that the action of the respondent No.4 is wholly without jurisdiction. Petition dismissed with liberty to avail the remedy of appeal provided under the statute.

  ---

• 2018 (9) TMI 1416
  Condonation of delay of 12 days in filing appeal - Held that:- We fail to understand that if the Government machinery requires time for switching over or change why the people at large would not be granted the same time for such change. The Department should give a thought on this aspect of the matter - in the interest of justice, as the delay in filing the appeal is not willful or deliberate, the delay is condoned, subject to payment of a cost of ₹ 500/- payable to the respondent by the next date. Delay condoned - COD application allowed.

  ---

• Income Tax

• 2018 (9) TMI 1415
  Reopening of assessment - claim of deduction u/s 10A denied - scrutiny assessment was conducted - petitioner’s Unit is not situated in the Software Technology Park, Gandhinagar and the petitioner’s claim, therefore, for deduction under section 10A for its standalone unit was not valid also the petitioner midway changed claim of deduction from section 10B to 10A - Held that:- The return filed by the petitioner was scrutinized before the order of assessment was passed. During such scrutiny assessment, detailed correspondence took place between the petitioner and the Assessing Officer. The petitioner’s principal claim of deduction under section 10A came up for specific attention of the Assessing Officer. From the petitioner’s letter written during the assessment proceedings it would reveal that the petitioner had given detailed reply with respect to the query raised by the Assessing Officer with respect to his claim. In the order of assessment that the Assessing Officer passed after such scrutiny on 20/12/2012 with respect to petitioner’s claim of deduction under section 10A of the Act, with respect to its different Units. Thus, it was after a detailed scrutiny, the Assessing Officer had originally accepted the petitioner’s claim for deduction under section 10A of the Act. Not only that he raised multiple queries, such queries were replied to by the petitioner. In the order of assessment also, he had given brief reasons for accepting the petitioner’s claim. It would now, therefore, not be open for the Assessing Officer to reopen such assessment on the principal claim of the petitioner for deduction on the ground that some other elements or aspects of the claim were not examined. This would clearly be a case of change of opinion. - Decided in favour of assessee.

  ---

• 2018 (9) TMI 1414
  Depreciation on machinery not listed in New Appendix-I Depreciation Schedule – Part-III (xia) eligible for depreciation @ 40% - Held that:- The manner in which the Assessing Officer and the CIT(A) have dealt with the issue is incorrect. When the assessee takes a specific stand stating that all the equipments are forming part of the life saving equipments, the Department would not be justified to high-off few of the equipments stating that the computer software, server, etc., will not form part of life saving equipments. If such a narrow interpretation is to be given, then the purpose and purport of granting higher rate of depreciation at 40% itself would stand defeated. Furthermore, we find that AO nor the CIT (A) has rendered a finding that the stand taken by the assessee stating that the tabulated items form part of the listed items in the schedule is either factually incorrect or a wrong submission. AO as well as the CIT (A) did not examine the issue from that point of view. This exercise was done by the Tribunal and the Tribunal has gone through the paper book submitted by the assessee running about 224 pages explaining the nature of equipment, purchase of equipment, various write-up of the equipments, bills, vouchers, etc., and after having been satisfied that they all form part of the life saving equipments, granted the relief. Thus, we find that the Tribunal was fully justified in granting the relief of depreciation at 40%. Hence, the finding rendered by the Tribunal on the said issue is confirmed. Deduction of payments made to doctors, who referred patients for diagnosis, as they are illegal payments and prohibited under the Medical Council (Professional Conduct, Etiquette and Ethics) - assessee contended that the disallowance of the expenses incurred especially the component of expenses relatable to providing gifts to medical doctors cannot be made straightaway by applying the Board's circular without examination of the income tax file of the beneficiary medical doctors - Held that:- Tribunal was not justified in directing the Assessing Officer to delete the addition. The learned counsel for the assessee would submit that the assessee has got entire details with them and they are ready to produce the details before the Assessing Officer. In the light of the above, so far as the second question is concerned, we are of the view that the matter requires to be remanded to the Assessing Officer to consider the materials that will be placed by the assessee to establish their stand that gifts were given to their doctors and it is not a prohibited practice and it is not for the purpose of referring or canvassing patients. The assessing Officer shall afford an opportunity to the assessee and re-do the assessment under the said head.Regulations, 2002. Disallowance made under Section 40A(3) - Tribunal allowed the assessee's appeal solely on the ground that the expenditures were negligible considering the turnover of the assessee being ₹ 39.00 crores - Held that:- Tribunal failed to note that the assessee themselves stated that they have incurred expenses towards consumables, repairs and maintenance, for which bills and vouchers are available. Therefore, the Tribunal should have remanded the matter for fresh consideration to examine the documents available with the assessee towards the expenditures and ought not to have straightaway deleted the disallowance by referring to the turnover for the relevant assessment year. Therefore, the disallowance under Section 40A(3) is required to be re-done by the Assessing Officer.

  ---

• 2018 (9) TMI 1413
  Rejection of application for Registration u/s 12A - Condonation of delay - delay is more than 18 years and it is inordinate and unexplained - Held that:- The reason, which was stated by the Assessee, is that the Founder Trustee is an elderly person suffering from several ailments and they were under the impression that the Trust has been registered under the Act, the failure to file the application for registration was not wilful, but due to genuine mistake. Ignorance of law is no excuse. The provision of Section 12A, being a beneficial provision to the Assessee, requires strict interpretation. Therefore, the Assessee should have been in a position to explain the delay, which is more than 18 years in the instant case. As rightly pointed out by the Commissioner, the reasons assigned by the Assessee for the delay are clearly inadequate and not sufficient. Unless and until the Assessee has shown sufficient cause for condonation of delay, the question of condoning the delay does not arise. In the facts and circumstances of the case, the nature of relief sought by the Assessee does not warrant an liberal approach. Commissioner has pointed out that despite opportunity being granted to the assessee, they did not appear. Power to review an order passed under Section 12A and power to cancel or recall an order was introduced only with effect from 01.10.2004 - Learned counsel for the Assessee would contend that what they seek for is not a review, but rectification. This contention does not merit acceptance for the reasons assigned by us earlier - the effective date, having been fixed as 01.04.2007, is attempted to be pushed back by more than 18 years. This would amount to review of the order dated 06.11.2007, which is impermissible. Proviso to Section 12A as introduced with effect from 01.06.2007 and on the date, when the Commissioner passed the order on 06.11.2007, he had no jurisdiction to pass such an order - Held that:- It is to be pointed that in the instant case, the application was filed on 30.05.2007. Therefore, it is not the date of order, which is relevant, but the date of application. In any event, need to consider such an issue does not arise in this case, as we are fully satisfied that the Commissioner had rightly allowed the registration with effect from 01.04.2007 and the reasons assigned by the Commissioner in the order dated 14.12.2007 declining to condone the inordinate delay is also just and proper. Hence, in the facts and circumstances of the case, the Tribunal committed an error in remanding the matter for fresh consideration. An order for reconsidering the issue already decided cannot be mechanically passed, unless and until, the superior authority or the Court is convinced that the exercise of discretion either improper or illegal. As pointed out earlier, personal opinion has no room in such matters. Thus, the Tribunal ought not to have remanded the matter for fresh consideration and the order of remand deserves to be set aside. - decided in favour of revenue

  ---

• 2018 (9) TMI 1412
  PIL - Vide present petition which is filed in public interest, the petitioner seeks direction for an enquiry to be caused by the Enforcement Directorate and the Central Bureau of Investigation in respect of alleged undeclared income - offence under the prevention of corruption act against respondent - Held that:- Since income, said to be the “unaccounted” by the present petitioner, has been subjected to judicial review and there are orders in favour of the assessee, we fail to appreciate the contention raised by the petitioner of its being earned through corrupt practice. The petitioner besides being a practicing lawyer of the court is an ex-MLA, and on enquiry he reveals of belonging to a national political party which does not rule out the fact that it is to gain political mileage which is implicit, rather any public interest. The present Public Interest Litigation is not a genuine Public Interest Litigation, but a politically motivated litigation, which deserves to be dismissed with exemplary cost, we intend to impose rupees one lakh cost so that the petitioner is deterred from filing such frivolous litigation. However, we are assured by the petitioner that in future he will be careful in not indulging in frivolous litigation.

  ---

• 2018 (9) TMI 1411
  Deduction claimed on account of the provision for wages u/s 43B- Allowable as a deduction since it was quantified based on a consultant's advise - whether the claim for deduction made by the assessee was allowable as deduction or whether it was only an estimation and could be claimed only in the year when the expenditure is occurred. The above question was answered by the High Court of Delhi, while interpreting the very same? - Held that:- Useful reference can be made to the decision in the case of Bharat Heavy Electrical Limited [2012 (9) TMI 515 - DELHI HIGH COURT], wherein, the assessee claimed a provision for wage revision, which was disallowed by the Assessing Officer. When the same was put to challenge, it was held that the provision for wage revision was based on past experience, previous Pay Commission's Reports and other relevant factors and the deduction claimed for the period between the expiry of one Wage Board settlement or agreement cannot be termed as contingent because the wage and the probable revision or rates of revision would be within the fair estimation of the employer. Thus, deduction claimed on account of wage revision was held to be permissible. What is important is not the date of signing the agreement nor the later approval granted by the Government, but the effective date of commencement of the wage revision under the agreement and it was held that the liability for wage increase really accrued for the assessee would be the effective date. In the instant case, on the advise given by the Consultant, the assessee estimated the liability, which became payable with retrospective effect, i.e., from April 1998. - Decided in favour of assessee Levy of interest under section 234D of the Act, the assessee does not dispute the fact that the decision in the case of Infrastructure Development Finance Company Ltd.[2011 (9) TMI 591 - MADRAS HIGH COURT] has answered the question in favour of the Revenue and against the assessee.

  ---

• 2018 (9) TMI 1410
  Grant of Registration u/s 12A rejected - none of its object are covered within the definition of charitable purpose as given in Section 2(15) - Held that:- Since, before the CIT(Exemptions), the assessee has not elaborated the documentary evidences in respect of aims and objects of the assessee Institute regarding education provided to the general public order of the CIT(Exemptions) is also not elaborate as to how the assessee fail to conduct the object of the assessee Institute. The contentions taken by the Ld. DR are the principles of law but it can be followed when the proper adjudication of the matter is done. In the present case CIT(Exemption) has not taken proper cognizance of the correct state of the assessee society’s purpose and object. Thus, it will be appropriate to remand back these issues before the CIT (Exemptions) for looking into the same and the assessee also should provide all the required evidences before the CIT(Exemptions). - Decided in favour of assessee for statistical purpose.

  ---

• 2018 (9) TMI 1409
  Penalty u/s 271D - change of stand by the Revenue - nature of transaction - assessee had advanced the money from unaccounted sources and assessed the same as undisclosed income in the hands of the assessee - Held that:- Department has taken two different stands i. e. while framing the assessment it was held as the monies advanced and assessed as undisclosed income and when the appellate authorities deleted the addition holding that the said sum represents loans borrowed, the department has made the ‘U’ turn and initiated penalty proceedings u/s 271D. The department is expected to take the consistent view on the facts of the case but not resort to approbate and reprobate stands. The department having held that he assessee has advances the sums outside the books of accounts on two rounds of appeal cannot hold that the said sum represents the loans accepted in cash without bringing the tangible evidence. On the similar facts in the case of Commissioner of Income-tax Vs. Standard Brands Ltd [2006 (7) TMI 126 - DELHI HIGH COURT] held that the Revenue could not on the one hand, contend that the amount as undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of ₹ 20, 000/-. - Thus we cancel the penalty levied u/s 271D of the Act and uphold the order of the CIT(A). - Decided in favour of assessee

  ---

• 2018 (9) TMI 1408
  Addition u/s 36(1)(v) r.w.s 40A(7) relating to the contribution to gratuity fund to Life Insurance Corporation of India - Held that:- As in assessee’s own case [2018 (4) TMI 553 - ITAT VISAKHAPATNAM] and allowed the appeal of the assessee holding that the assessee is entitled for deduction for payment of gratuity to LIC on actual payment basis.

  ---

• 2018 (9) TMI 1407
  Condonation of delay - appeal of the assessee against the levy of late filing fee u/s 234(E) was dismissed at the admission stage on account of delay in filing the appeal - bonafide explanation for delay - Held that:- The present appeal relates to intimation passed u/s 200A of the Act dated 25th December, 2013 and undisputedly, at that point in time, the said intimation was not appealable before the ld. CIT(A) u/s 246A of the Act. Thereafter, w.e.f 01.06.2015, the said intimation issued u/s 200A has been made appealable hence when there is no provision to file an appeal against a particular intimation, the assessee cannot be expected to approach the CIT(A) who would have rejected the appeal for want of necessary jurisdiction. The assessee in his affidavit has submitted that he has sought the advice of the Tax Consultants and initially, he had advised there was no provision to file an appeal and subsequent in November, 2016, he advised the assessee that provisions have now been provided in the statue to file such an appeal and thereafter, the assessee has filed the present appeal on 22.11.2016. The said explanation of the assessee in delay in filing the appeal is a bonafide explanation and we see no reasons to see any malafide in the same. The assessee has relied on the advise of his Chartered Accountant and an affidavit in this regard has been filed by the assessee which is not disputed by the Revenue, we find that there is a reasonable cause for the delay in filing the appeal by the assessee before the ld. CIT(A). The Courts have also held from time to time that merely technicality should not come in the way of discharge of substantial justice - We accordingly condoned the delay in filing the appeal and the matter is set aside to the file of the ld. CIT(A) who shall adjudicate the matter on merit - Decided in favour of assessee for statistical purposes.

  ---

• 2018 (9) TMI 1406
  Direct Marketing Agent’s Commission - allowable busniss expenses or not - Held that:- Hon’ble Supreme Court in the case of Taparia Tools Ltd. [2015 (3) TMI 853 - SUPREME COURT] after considering its decision in the case of Madras Industrial Investment Corporation [1997 (4) TMI 5 - SUPREME COURT ] has held that notwithstanding the accounting treatment followed by an assessee, expenditure incurred during the year has to be allowed in full irrespective of the action of the Assessee of amortizing it . No infirmity in the order of CIT(A) for allowing deduction of Direct Marketing Agent’s commission paid to the Direct Marketing Agent. As the facts and circumstances in all the three assessment years i.e., 2007-08, 2008-09 and 2011-12 are same, following the reasoning given hereinabove, the ground taken by the Revenue is dismissed. Disallowance of provision for leave encashment u/s.43B(f) - Held that:- CIT(A) has confirmed the disallowance in view of the decision of Hon’ble Supreme Court wherein SLP filed by the Department was accepted against the order of Calcutta High Court in case of Exide Industries Ltd.. [2007 (6) TMI 175 - CALCUTTA HIGH COURT]. As the issue is pending before the Hon’ble Supreme Court with regard to allowability of claim of provision for leave encashment, we direct the AO to decide the issue only after the decision of Hon’ble Supreme Court on this issue. We direct accordingly. Disallowance of provision for post retirement benefits u/s.43B(b) - Held that:- Thus issue is squarely covered by the decision of Delhi High Court in the case of Ranbaxy Laboratories Ltd., [2011 (3) TMI 1032 - DELHI HIGH COURT] as held that the pension scheme of the assessee did not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provided that pension would be paid by the assessee to its employee on his or her attaining the retirement age or resigning after having rendered services for a specified number of years. Thus, where the liability on this account accrued from year to year, it was payable on retirement/resignation of the eligible employees. It could not be disallowed under section 43B. where the liability on this account accrues from year to year, the same is payable on retirement/ resignation of the eligible employees. - decided in favour of assessee Disallowance u/s. 40(a)(ia) - non-deduction of TDS on account of reimbursement of advertisement and training expenses incurred by the assessee’s dealers - Held that:- TDS is required to be deducted in respect of alleged expenditure incurred by the assessee. AO as well as CIT(A) has recorded a finding that assessee has failed to show that these are mere reimbursement of expenses and no evidence was filed to show that TDS has been deducted by the parties to whom reimbursement has been made at the time of payment made by them. The finding so recorded by AO and CIT(A) has not been controverted by learned AR by bringing any material on record. Accordingly, we do not find any reason to interfere in the findings so recorded by lower authorities. Hence ground taken by assessee is dismissed. Disallowing administrative expenditure u/s.14A by invoking Rule 8D(2)(1) - Held that:- Referring to contention of learned AR that the Assessing Officer's invocation of Rule 8D(2)(i) is patently erroneous. If at all any disallowance is called for it can be made only under Rule 8D(2)(iii) of the Rules, PROVIDED THAT the conditions of Rule 8D(2){iii) of the Rules are met, we restore the matter back to the file of the AO with a direction to compute disallowance of administrative expenses in terms of 8D2(iii). Claim of adjustment on account of delinquency support receipts - contention of learned AR that this ground arises on account of a rejection, by the Assessing Officer, of the Assessee's claim for such relief during the assessment proceedings for AY 2013-14, which were concluded on 30 March 2016 - Held that:- As the Assessee's claim was rejected in AY 2013-14, the Assessee has raised an additional ground in AY 2008-09, because a part of the Assessing Officer's rejection of the claim made by the Assessee in AY 2013-14 pertains to AY 2008-09. No merit in the above contention of learned AR, however, learned AR is free to raise ground while filing an appeal for the A.Y.2013-14. We direct accordingly.

  ---

• 2018 (9) TMI 1405
  Addition u/s 14A r.w.r. 8D - availability of own funds - Held that:- As examined the availability of interest free funds with the assessee and has found that as against investment made of ₹ 43.97 crore the assessee had interest free surplus funds of ₹ 398.79 crore. Being satisfied with the factual position that assessee had enough interest free surplus funds to take care of the investment, he has deleted the disallowance of interest expenditure made under Rule 8D(2)(ii) of the Act. As AR indicating the availability of funds with the assessee, we find that right from A.Y. 1992-93 to A.Y. 2008-09, each year assessee had sufficient interest free funds available with it, which is more than the investments made. Therefore, applying the ratio laid down by the Hon’ble Jurisdictional High Court in the case of CIT vs. Reliance Utilities Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT) and CIT vs. HDFC Bank Ltd.(2014 (8) TMI 119 - BOMBAY HIGH COURT), no disallowance of expenditure can be made under Rule 8D(2)(ii). That being so, we do not find any infirmity in the decision of the learned CIT(A) in deleting the disallowance made under Rule 8D(2)(ii) read with section 14A of the Act. This ground is dismissed. Applicability of section 14A r.w.r. 8D while computing book profit u/s. 115JB - Held that:- After analyzing the provisions contained u/s. 115JB we agree with the learned CIT(A) that computation of book profit u/s. 115JB cannot be made by taking recourse to the provisions of section 14A read with Rule 8D, except, as stipulated under clause (f) of Explanation 1 of section 115JB of the Act, in so far as it relates to expenditure attributable to exempt income. This view has also been expressed by the ITAT, Delhi, Special Bench in case of ACIT vs. Vireet Investment Private Ltd. (2017 (6) TMI 1124 - ITAT DELHI). Uphold the decision of the learned CIT(A) by dismissing the ground raised.

  ---

• 2018 (9) TMI 1404
  Validity of issue of notice u/s 148 and the subsequent completion of assessment - Held that:- We notice that the assessment completed u/s 143(1) and not u/s 143(3) and there was no opportunity for the AO to form an opinion. Subsequently, it was noticed by the AO that the income was escaped assessment. Accordingly, notice was issued and assessment was completed u/s 143(3) r.w.s. 147. We do not see any issue with the completion of assessment or issue of notice u/s 148. Therefore, ground raised by the assessee is dismissed. Estimated the income - assessee, an individual, deriving income from business in purchase and sale of liquor - AO rejected the audited books of account of the assessee and completed the assessment by estimating the income from business @ 8% of cost of goods put to sale in case of Bar and Restaurant and @ 5% in case of wine business - Held that:- We direct the AO to adopt 3% of the cost of goods sold as the income of the assessee relating to Wine business. As regards estimation of income @ 8% of cost of sales in the case of Bar & Restaurant, we confirm the findings of AO as the same was in line with the provisions of section 44AD.

  ---

• 2018 (9) TMI 1403
  Unexplained cash flow deposits and withdrawals - source of the deposit and the destination of the withdrawal - Held that:- Perusal of the cash flow statement reveals that the assessee has made the cash deposits and also withdrawals and stated to be made the redeposit in the bank account out of the withdrawls, without giving explanation for the source of the deposit and the destination of the withdrawal. The purpose of the withdrawal, whether the amount was spent or not? was not explained by the assessee. As observed that the assessee claimed the source for deposits out of small amounts of withdrawals also which is not reliable and not the practice of a customer of the bank to withdraw the small amounts without the requirement for expenditure. The assessee required to explain the source of each credit and the destination of debit independently. Every debit cannot be taken as a source. The said details were not furnished by the assessee before the CIT(A) or before the AO, therefore, the Ld.CIT(A) has rightly rejected the claim made by the assessee with regard to the cash flow statement and explanation of the sources. - Decided against assessee. Peak credits - sources of such deposits and withdrawals unexplained - Held that:- For considering the peak credit, every debit and credit entries are required to be explained independently to hold that the withdrawal has come back as a source for the deposit. This exercise was not done either by the Ld.CIT(A) or by the AO. The assessee did not cooperate with the AO and did not furnish the details. Therefore, we set aside the entire issue and remit the matter back to the file of the AO to reconsider the issue afresh on merits and direct the AO to consider all the bank accounts. The assessee is directed to submit the details and not to resort to the non cooperative attitude like in the original assessment proceedings - Appeal of the assessee is allowed for statistical purpose.

  ---

• 2018 (9) TMI 1402
  Reopening of assessment - non specification of reasons - addition u/s 68 - other addition apart from information received - Held that:- AO himself has noted that assessee had furnished PAN and had also furnished information regarding filing of original return of income. AO wanted assessee to furnish source of cash deposits to which assessee did not reply. As find that AO should have applied his mind from the documents already on record and should have compared the information which was in his possession and only after verifying such information should have arrived at the conclusion regarding escapement of income. The mere deposit of cash in the bank account cannot give rise to a belief of Assessing Officer that income had escaped assessment as the cash deposit can be from any other source other than income. Such satisfaction was needed by the Assessing Officer which has not been made. Assessing Officer has not made any addition on account of cash deposits in the bank and has made addition on other grounds which fact is verifiable from assessment order. Lucknow Bench of the Tribunal in the case of Anita Srivastava vs ACIT [2018 (2) TMI 1774 - ITAT LUCKNOW]has held that where a case has been reopened u/s 148 on account of some information and if addition is not made on account of that information then no other addition can be made on any other ground. Thus quash the assessment order as the notice issued u/s 148 is void ab initio and assessment is also void ab initio therefore, all the proceedings are illegal. - Decided in favour of assessee.

  ---

• 2018 (9) TMI 1401
  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.

  ---

• 2018 (9) TMI 1400
  Denial of exemption claimed u/s 10(23C)(iiiab) - income received on behalf of educational institution being run by it solely for educational purposes and not for profit and which is substantially financed by the Government - Held that:- Lower authorities have not examined this aspect. It is the claim of the assessee that separate books of account are being maintained in respect of educational institution run by it and that it is substantially financed by the Government and is not run for profit. The matter requires to be remanded back to the file of the Assessing officer to correctly apply the provisions of section 10(23C)(iiiab) and to examine and verify whether the educational institution run by the assessee, irrespective of the other activity of running of the hotel of the assessee, is run solely for educational purposes and not for profit and whether the said institution is substantially financed by the Government - Decided in favour of assessee for statistical purposes.

  ---

• 2018 (9) TMI 1399
  TDS u/s 194J OR 194C - non tds on payments made by the assessee company as professional fees - whether services received by assessee from BEL falls within the ambit of “professional and technical services”? - Held that:- Section 194J refers to definition of ‘fees for technical services’, as having same meaning as per Explanation 2 to sub clause (vii) of subsection (1) of section 9. In this case the agreement very clearly spells out that BEL undertook assembling of raw materials provided by assessee in respect of module M1 and M2, as per specifications provided by assessee. No doubt certain training has been provided by assessee to the engineers of BEL, however these rendering of training has been separately remunerated by BEL to assessee. Thus payment received by BET towards the work carried on under Phase II of the agreement, will not fall under the definition of the term professional services as no new technical consultancy has been offered by BEL to assessee. No fault in the observations of Ld.CIT (A) in holding that the work undertaken by BEL is covered under the provisions of section 194C. Accordingly we dismiss the ground raised by the revenue.

  ---

• 2018 (9) TMI 1398
  Status of the assessee as ‘Company’ or in the status of “An association of Persons” - Held that:- The undisputed facts of the case is that the assessee company is registered as a Private Limited Company under the Registration of Companies Act Sikkim 1961. The definition of ‘Company’ under the Income Tax Act, 1961 is given u/s 2(22A) of the Act. This definition does not include a company registered under the Companies Act of Sikkim, 1961. Reliance placed by the ld. D/R, on the 145th Report of the Parliament of India (Rajya Sabha) Petition praying for Protection of interest of Bona Fide Indian National Residing in Sikkim Prior to its merger with India in 1975, presented on 6th August, 2013, has no relevance as far as this issue is concerned. The Indian Income Tax Act, 1961, has been extended to the State of Sikkim w.e.f.01/04/1989. The revenue has not brought on record any evidence of merger of the Companies Act of Sikkim with the Indian Companies Act, 1956. Hence, the propositions of law laid down by the Tribunal extracted above still holds the field. Hence, we uphold the contention of the assessee that it has to be assessed as an ‘Association of persons’ and not as a ‘Company’. - Decided in favour of assessee.

  ---

• 2018 (9) TMI 1397
  Penalty u/s 271(1)(c) - enhancement made by the CIT(A) to the income of the assessee to the extent of ₹ 1 lac - Held that:- We find that since the addition made on which penalty was levied by the CIT(Appeals) having been deleted by the I.T.A.T., no basis remains at all for levying penalty and the same is directed to be deleted - Decided in favour of assessee.

  ---

• 2018 (9) TMI 1393
  Addition of suppressed sale - additions of income made on the basis of SCN issued under the Central Excise - assessee contended that - Proceedings under cenrtal excise could not be finalized - Held that:- We noticed that previously such an issue had come up for consideration before this Court in THE PRINCIPAL COMMISSIONER OF INCOME TAX RAJKOT-3 VERSUS VRUNDAVAN CERAMICS PVT. LTD. [2018 (5) TMI 1274 - GUJARAT HIGH COURT] as held 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. - Decided against revenue

  ---

• 2018 (9) TMI 1392
  TPA - exclusion/inclusion of comparables - Held that:- Exclusion of companies of high brand value and operated on an economic upscale. Assessee is into performing medical transcription services thus companies functionally dissimilar with that of assessee need to be deselected from final list.

  ---

• Customs

• 2018 (9) TMI 1388
  Classification of goods - ‘stamping foil’ - Appellant contends that the first appellate authority had failed to take into consideration various submissions made by them - Held that:- The appellant has not appreciated that the findings in the impugned order cover all the grounds pleaded then by the appellant - The appellant is not in a position to controvert the visual evidence of the impugned goods being imported with the labels ‘stamping foil’ as unearthed during examination. Appeal dismissed - decided against appellant.

  ---

• 2018 (9) TMI 1387
  100% EOU - eligibility for depreciation on capital goods in the computation of liability to duty upon failure to comply with prescribed export obligation - Held that:- The goods had been imported without payment of duty in accordance with notification no. 13/81-Cus dated 9th February 1981 which, while binding the appellant to fulfill the conditions stipulated therein, could be invoked only upon exiting the scheme in the Export-Import Policy (now referred to as Foreign Trade Policy). On the issue of eligibility for full depreciation on capital goods, when subject to proceedings for failure to comply with prescribed export obligation, the Tribunal has, in Shriram Grape Growers Cooperative Society Ltd v. Commissioner of Central Excise & Customs, Nasik [2018 (3) TMI 205 - CESTAT MUMBAI] hes held that As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise & Customs, the value of capital goods would be nil. Consequently, no duty liability would arise. The annual export obligation is a function of the cost of inputs and the depreciation for the year; thus the value of the imported machinery is compensated by exports over a period of 10 years and any shortfall in any of those years, attributable to mismatch with the amortisation for the year, would result in recovery of proportionate duty for that year. Disallowance of depreciation, in these circumstances, to the full extent would be tantamount to recovery of tax/duty in excess of that which has foregone. The appellant is entitled to depreciation up to the date of payment of duty and, which being more than ten years, to the full extent. Consequently, there is no duty liability and other detriment action would also fail to sustain - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1386
  Penalty u/s 112(b) of the Customs Act, 1962 - penalty was imposed based on the statement recorded under summon from the Country Manager of the importer - Held that:- On perusal of the statements recorded from both the officers of the importing firm, it is found that one Shri Alok Gulla (CHA firm M/s. R.B. Ramnath) had advised the importing firm to change the classification of the impugned goods. The statements recorded under Section 108 of the Act from the above persons do not specifically mention the name of the appellant for misguiding the importer for effecting any change in the classification of impugned goods. The provisions of Section 112(b) of the Act cannot be invoked for imposition of penalty on the appellant - Appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2018 (9) TMI 1391
  Winding up petition - non performance of obligation - Held that:- None of the said e-mails dated March 21, 2012 or April 25, 2012 can be construed to contain any admission by the company to pay the amount claimed by the petitioner in this application. Considering all these facts, we find it difficult to conclude that the petitioner had performed its obligation under the said agreement dated October 6, 2009 within time or that the defence put up by the company in its letter dated May 12, 2014 lacks bonafide. Though , in the application the petitioner has denied to have received the notice dated February 17, 2011 but in the facts of the present case, as discussed above all the issues, including the one with regard to receipt of the said notice has to be decided after considering the evidence of the parties by the competent civil Court in a suit. As noted that on an earlier occasion by an order dated October 30, 2015 of the learned Single Judge of this Court, the present winding application was dismissed. The petitioner carried the said order dated October 30, 2014 in appeal being APO which was allowed by the Division Bench by the order dated January 5, 2015. As considered the earlier order dated October 30, 2014 as well as the order dated January 5, 2015 passed by Division Bench of this Court. However, none of the said orders records the findings, which I have arrived in the present case. For the reasons as aforesaid, although the company remain unrepresented, find no merit in the present application.

  ---

• 2018 (9) TMI 1390
  Winding up petition - manner in which the expenses incurred in connection with the winding up of a Company are to be paid, shared, recouped or recovered is dealt with in Rule 292 of the Companies (Court) Rules, 1959 (Rules) and Section 529 of the Companies Act, 1956 - Held that:- If the secured creditor surrendered the security to the Liquidator and decides to prove whole of the debt as an unsecured creditor, then he shall be entitled to be reimbursed the entire security expenses incurred by him and if the liquidator has incurred, the liquidator cannot call upon the said secured creditor to reimburse the expenses incurred but the expenses will be distributed among all unsecured creditors including the secured creditor who has surrendered the security to the liquidator. Therefore, though the Liquidator had, in his Report, sought to grant certain security expenses, the same cannot be paid over to SICOM as SICOM is liable to pay the same since it is exclusively entitled to the realization proceeds of its security. Hence no amount under this headsecurity is now payable by the liquidator to SICOM. Liability of claim - Held that:- By operation of law, the liability of the company is capped at ₹ 47,25,598/­. Admittedly, the guarantor has paid ₹ 50,50,000/­ which is ₹ 3,24,402/­more than the liability of the company (in liquidation). Therefore, SICOM cannot claim from the company the amount that it has already received from the guarantor. The official liquidator need not pay this amount to SICOM. SICOM has a decree against the guarantor. There is no decree against the company (in liquidation). It is entirely left upon SICOM to execute the decree against the guarantor and recover its entire decretal amount from the guarantor. There could be a situation that SICOM recovers the entire amount and the guarantor would step into the shoes of SICOM and the guarantor may or may not claim the amount of ₹ 47,25,598/­ from the liquidator. Even assuming that guarantor makes such a claim, still the claim of the guarantor will rank pari pasu with other unsecured creditors. The guarantor having paid off the entire liability of the company (in liquidation), it will be open to the guarantor to lodge its claim with the official liquidator to that extent and the official liquidator will consider the claim and adjudicate it in accordance with law. It is clarified that I have not made any observation on the merits of such claim and that will be decided independently by the official liquidator. To ensure to the benefit of all unsecured creditors who may or may not get their entire claim, SICOM should be directed to pay interest @ 9% per annum on ₹ 31,11,101/­ from the date SICOM received that amount upto date it deposited the amount with the Official Liquidator. This amount to be paid over to official liquidator within four weeks. In view of the above, the official liquidator is directed to rework the amounts mentioned in Paragraphs 22 to 24 of the official liquidator's report and take further steps to make payments. At this stage, Shri Kanade states that SICOM should be permitted to sit with the official liquidator to rework the actual amount spent on security expenses. If the expenses incurred was to preserve the security of SICOM and SICOM has stood outside winding up and realized this security for its sole benefit, as stated earlier, the question of recovering any amount from the official liquidator does not arise. Therefore, I see no reason why SICOM should sit with the official liquidator to rework the security charges. This will extend to Canara Bank also.

  ---

• 2018 (9) TMI 1389
  Public Interest Litigation against the allotment of land admeasuring 40 acres to respondent no.5 (M/s. Patanjali Ayurvedic Ltd. Padarth) - Violation to the provisions of the M.P. State Industrial Land and Building Management Rules, 2015, Industrial Promotion Policy, 2014 and Action Plan and is in violation to Article 14 and 21 of the Constitution of India - Held that:- In the case in hand, the land has been allotted to the respondent No.5 in accordance with the Rules in force and Industrial Promotion Policy, 2014, there is no violation of any policy or statutory right as the Rules referred by the petitioner are for allotment of commercial land and not for the industrial land. Learned Senior counsel for the petitioner has failed to point out any violation of the Industrial Policy. On completion of the entire statutory procedures the MPAKVN (I) Ltd, executed a lease deed in favour of the respondent No.5 of the said plots No.804, 806 and 807 admeasuring 40 acres (161880 Sq. Mtrs.) and consequently, the possession was handed over to respondent No.5. The present writ petition has been filed by the petitioner in grave abuse of process when two writ petitions seeking similar relief have already been dismissed vide common order dated 17.10.2016. In view of the above discussion, we therefore, of the considered view that the writ petition filed by the petitioner has no merit and is accordingly, dismissed with cost of ₹ 10,000/-. The said cost amount, deposited by the petitioner shall be donated in the Government of Kerala, Chief Minister's Distress Relief Fund.

  ---

• Insolvency & Bankruptcy

• 2018 (9) TMI 1396
  Corporate insolvency process - Held that:- The application has been opposed by filing a counter affidavit on behalf of non applicant-respondent no. 1. A precise submission made in the counter affidavit is that the encashment of the bank guarantees is dependent on an independent agreement and therefore, it is a lawful act permissible in law. The Corporate Insolvency Resolution Professional pending before us relates to the applicant-Energo Engineering Projects Limited. The answering respondent has not been a party to the same. The bank guarantees has already been encashed and the amount stood transferred to the bank account of respondent no. 1 on 16.12.2017. The application in any case has been rendered infructuous. Having heard the learned counsel for the parties and perusing the pleadings with their able assistance we are of the view that the application would not warrant acceptance. The question of law raised in the instant application would not survive for consideration as the Legislation itself has taken care of the situation like the one in hand. Provision would make it patent that moratorium would not apply to a surety in a contract of guarantee to a Corporate Debtor. It is therefore evident that Section 14(1) of the Code, 2016 would not come in the way of the non applicant-respondent no. 1 to encash the bank guarantee. When the aforesaid principles are applied to the facts of the present case it becomes evident that the performance guarantee furnished by State Bank of India and Bank of Maharashtra would not enjoy the benefit of moratorium as envisaged under Section 14 of the Code, 2016 and therefore, those guarantees have been rightly invoked. There is thus no doubt left that the interim order dated 08.03.2018 would also stand vacated. As a sequel to the above discussion, this application fails and the same is dismissed. In the peculiar facts and circumstances of this case the parties are left to bear their own cost.

  ---

• 2018 (9) TMI 1395
  Corporate insolvency process - Resolution Plan approval - Held that:- An affidavit swearing that the resolution applicant is not disqualified as per the amended section 29A of the I & B Code has been annexed. The Resolution Professional also certified that the Resolution Applicant is not ineligible to submit a Resolution Plan under Section 29A of the I & B Code. The mandatory disclosure seen enclosed. Workmen dues and employees dues agreed to be paid within 30 days of the date of approval of the Resolution Plan. No infirmity seems to have brought out upon screening of the Resolution Plan and, therefore, the Resolution Plan submitted being meets all the requirement to be satisfied under Section 30(2) of the I & B Code the Adjudicating Authority has no other alternative other than to approve the Resolution Plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stake holders involved in the Resolution Plan. (i)The Resolution Plan of Shri Ram Residency Private Limited, which is approved by the CoC with 99.67 voting percentage, is hereby approved under provisions of sub-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016, which will be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. (ii) The revival plan of the company in accordance with the approved Resolution Plan shall come into force with immediate effect. (iii) The moratorium order passed under Section 14 shall cease to have effect. (iv) The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database.

  ---

• 2018 (9) TMI 1394
  Corporate Insolvency Resolution Process - Held that:- As regards occurrence of default, it is the case of applicant that the authorized signatory of the respondent had admitted, acknowledged and confirmed that ₹ 1,15,90,31,434 and ₹ 1,86,58,93,228 in the respective Term Loan Accounts are outstanding as on 31.03.2017. A copy of the Balance Confirmation Letter signed and executed by the respondent confirming balance outstanding as on 31.03.2017 has been placed on record. The material on record clearly goes to show that respondent has availed the loan facilities and has committed default in repayment of the loan amount. An application under Section 7 of the Code is acceptable so long as the debt is due and there has been occurrence of existence of default. What is material is that the default is at least 1 lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The applicant bank has also filed the relevant statement of accounts duly certified in accordance with Banker Books Evidence Act, 1891 as per the requirement of Form 1 part V column 7 of the application. The detailed outflow and disbursements made from the accounts pertaining to respective loan facilities are reflected in the relevant bank statements. Certified copy of statement of account kept during the course of banking business basing on which the claim has been raised can be termed as sufficient evidence of financial debt. As seen from the statement of account and loan documents that the loan was sanctioned, loan agreements were executed and charge and securities were created to secure the loan. Respondent company utilised and enjoyed the loan facility and due to non-payment and non-refund of the outstanding dues, the account of the corporate debtor was declared NPA. The applicant bank has also placed CRILC report in order to show that accounts of corporate debtor was reported as loss and doubtful account. The applicant ‘financial creditor’ has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted.

  ---

• Service Tax

• 2018 (9) TMI 1385
  Jurisdiction - power of Commissioner (Appeals) to make further enquiry in the matter of assessment of tax liability - Extended period of limitation - short payment of Service Tax - Commissioner (Appeals) had not taken those into consideration that the appellant had indeed filed reply to the show cause notice which was not taken on record by the lower authority and ultimately he confirmed the order of the lower authority even after acknowledging the fact that appellant had submitted photocopies of invoices and Cenvat Credit available in its account. Held that:- The order of Commissioner (Appeals) is not in conformity to the legal position and the power confered on him. Hence, the order passed by the Commissioner (Appeals) dated 30.01.2018 in order no. NGP/EXCUS/000/APPL/684/17-18 is hereby set aside. The matter is remitted back to the Commissioner (Appeals) for fresh adjudication upon exercise of his power of adjudicating authority in the matter of assessment of service tax liability of the appellant on proper verification of documents available in the record - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1384
  Penalty u/s 76 of FA - appellant did not discharge its tax liability within stipulated time frame and the same was deposited into the Government exchequer subsequently, but before the issuance of show-cause notice - invocation of section 80 - Held that:- The service tax for the disputed period was paid by the appellant before issue of show-cause notice and the interest amount was paid subsequently, before the adjudication of the matter. The issue arising out of the present dispute regarding imposition of penalty under Section 76 of the Act, under similar set of facts, is no more res integra, in view of the decision of this Tribunal in the case of Virtual Marketing (India) Pvt Ltd. [2016 (11) TMI 18 - CESTAT MUMBAI], where it was held that appellant showed the reasonable cause for non payment of service tax on due time. Interest on the said service tax also paid by the appellant separately as per the direction of this Tribunal, appellant is entitled for waiver of penalty under Section 76,77 and 78 in terms of Section 80 of the Finance Act, 1994. The benefit of Section 80 of the Act should be extended to the appellant for non imposition of penalty under Section 76 of the Act - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1383
  Refund of Service tax paid - residential complex service - refund was denied placing reliance on some statements given to the divisional authorities - principles of natural justice - Held that:- It transpires from the available records that copy of the statement has never been supplied to the appellant before adjudication of the matter. Thus, the original order has been passed by the Asst. Commissioner (Refund) in gross violation of principles of natural justice. The learned Commissioner (Appeals) has not acceded to the specific request made by the appellant for verification of the statement submitted to the divisional authorities - ends of justice will be met, if the matter is remanded to the original authority for readjudication of refund issue - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1382
  Refund of unutilized CENVAT Credit - export of services - Input services - catering service - denial of refund on the ground of nexus of the service with the output service - Held that:- The fact is not on dispute that the appellant had availed the services of the caterer for providing the catering facility to its employees, working within its business premises. Since providing catering facilities to the employees within the business premises is as per the Human Resource Policy, adopted by the appellant, the service tax paid on such service, should be considered as input service for the purpose of availment of refund benefit. Refund allowed - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1381
  CENVAT Credit - Rule 6(3) of CCR - plea of appellant is that they have not availed credit of input services for use in exempt final products - Held that:- If the appellant has not availed Cenvat credit in respect of ‘Common Cenvatable Input Services’ the provisions of Rule 6(3) would not get invoked. As such for verification of the above plea of the assessee, the impugned order is set aside and matter remanded to Original Adjudicating Authority for fresh decision based upon the outcome of factual verifications - matter on remand. Demand in respect of outward transportation of the goods is not disputed by appellant and is upheld. Penalty - Held that:- Inasmuch earlier orders of the Authorities were in favour of the assessee, there could not be any mala fide so as to attract the penal provisions - penalty set aside. Appeal disposed off.

  ---

• 2018 (9) TMI 1380
  Extended period of limitation - Repair and maintenance services - Inclusion of value of the goods used in the said services - demand raised by invoking extended period - Held that:- The appellant were duly registered with the department and were filing the ST-3 returns by showing payment of Service Tax on the value of the services as indicated in the contracts entered by them with the said Public Sector Undertaking. In such a scenario the appellant was entertaining a bona fide belief and there was no mala fide on their part so as to justifiably invoke the longer period of limitation. Demand beyond normal period set aside - As a part of demand falls within the limitation period, the adjudicating authority is directed to re-quantify the demands against all the appellants for which purpose, the matter is remanded to him - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1379
  Business Auxiliary Services - appellant have remitted foreign exchange for engaging themselves in exhibition in foreign country - reverse charge mechanism - Held that:- There is no evidence on record that services have been partly performed in India. Further, the entire expenditure incurred by the appellant was for hiring of stall in a foreign country and participating in the exhibitions - there is no evidence on record to establish that any part of the services thereof were performed in India. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1378
  Refund of Credit of Service tax paid - export of I.T. Services - refund rejected on the ground that credit on catering services is not admissible to the assessee and also on the ground that further description of some of the services is not mentioned on the body of the invoices. Catering services - Held that:- The catering services which have been held to be cenvatable by the larger bench’s decision in the case of Commissioner of Central Excise, Mumbai-V V/s GTC Industries LTD. [2008 (9) TMI 56 - CESTAT MUMBAI] - catering services are cenvatable and as such the credit so availed by the appellant is refundable to them - refund allowed. Description of the services not being specified in the body of the invoices - Held that:- Such services were received by their Foreign Service Providers and by paying the service tax on reverse charge basis they have given the full description of the said services along with the accounting number. If that be so, the credit cannot be disallowed to the appellant on the procedural technical issue - Credit allowed. Refund of small amount also denied on the ground that the Name of the assessee has been wrongly shown in the invoices issued by the services provider instead of showing the correct name of the appellant - Held that:- The amount being on the lower sides, appellant is not contesting the same. Appeal allowed in part.

  ---

• 2018 (9) TMI 1377
  Works Contract Service - construction of water storage tank was for distribution of water to the public - non-payment of service tax - extended period of limitation - Held that:- Reliance placed in Tribunal’s decision in the case of Larsen & Toubro Ltd. V/s CST, Ahmedabad [2011 (1) TMI 188 - CESTAT, AHMEDABAD], where it was held that laying down that work of pipeline laying for water supply under contract with Gujarat Water Supply and Sewerage Board cannot be held to be primarily for commerce or industry. Taking into consideration the fact that the issue stand decided by the precedent decision of the Tribunal, as also the various certificates issued by the Government Agencies certifying that the construction of water storage tank was for distribution of water to the public, it is held that the said demand is not sustainable - demand set aside - penalty also set aside. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1376
  Commercial Coaching Or Training Services - training to the employees of member Banks and also to the employees of other Banks - extended period of limitation - Held that:- Identical issue decided in the case of M/S NATIONAL INSTITUTE OF BANKING STUDIES CORPORATE MANAGEMENT VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, NOIDA AND VICE-VERSA [2018 (7) TMI 1290 - CESTAT ALLAHABAD], where the demand falling behind the normal period of limitation is set aside along with setting aside of penalty and the matter is remanded to the Original Adjudicating Authority for re-quantification of the demand falling within the limitation period - demand upehld for normal period. Penalty - Held that:- In the light of the divergent views during the relevant period, it has been held that the appellant cannot be held guilty of any suppression of mistatement and the penalty stands set aside. Appeal disposed off.

  ---

• 2018 (9) TMI 1375
  Levy of Service Tax - advance received from the service recipient, called “Mobilization Charges” - Held that:- Inasmuch as in the present case, the Commissioner (Appeals) has remanded the matter for verification of the factual aspects, disputed legal issue can also be remanded for fresh consideration in the light of the earlier remanded matters - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1374
  Security Agency Services - it was alleged that there was suppression of value of the said services provided by them to their various clients, resulting in evasion of service tax - Held that:- Once the personnels are supplied by the appellant to their clients, the utilization of their services as security persons or otherwise will not turn the service provided by the appellant into the security agency services. Not only that, the service recipient have also clarified that the mention of the same as security services in their ledgers is out of ignorance on the part of the person responsible for maintaining such records. The appellant have accepted their liability to the extent of ₹ 3.10 lakhs which is on account of suppression of the value of Security Agency Service. As such, the confirmation of the same along with imposition of penalty of identical amount is upheld - balance amount confirmed is set aside - appeal allowed in part.

  ---

• 2018 (9) TMI 1373
  Reverse Charge Mechanism - appellants had made remittances in foreign currency on 11.12.2008, 26.08.2009 and 03.11.2009, to the total extent of ₹ 11,03,167/- - Revenue treated the said amount to be amount towards payment of services received from a foreign entity - Held that:- Revenue could not make out the case that the remittances were for the purpose of receiving any services from foreign country - on the said remittances service tax was not leviable - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1372
  Rate of duty - Works Contract Service - case of appellant is that the rate of duty for composition scheme taken into consideration for the year 2007-08 while arriving at the decision by learned Commissioner (Appeals) was 4.12% adv. whereas during the year 2007-08 the rate of service tax under composition scheme was @ 2.06% adv. of the consideration received by the service provider. Held that:- The matter is remanded back to the Original Authority to examine whether during the year 2007-08 the rate of service tax was @ 2.06% under composition scheme and if so re-calculate the service tax payable by the appellant for the year 2007-08 - penalties are set aside as there are no malafide intent - appeal allowed in part and part matter on remand.

  ---

• 2018 (9) TMI 1371
  Classification of Services - services of painting the outer wall on newly constructed buildings - whether classifiable under Maintenance and Repair Services or under Works Contract Services? - extended period of limitation. Held that:- With the introduction of “Works Contract” category of service w.e.f. 01.06.2007, the appellant had started discharging its service tax liability under the said category - Hon’ble Supreme Court decision in the case of Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], held that the assessee cannot be held liable to pay service tax under a different category prior to 01.07.2007, if the service falls under “Works Contract”. Extended period of Limitation - Held that:- The entire facts were revealed to the Revenue and were in their knowledge in which cases the extended period of limitation cannot be invoked against the assessee. Demand set aside both on merits as well as on limitation.

  ---

• 2018 (9) TMI 1370
  Principles of natural justice - there was neither a defence reply by the appellant on record nor the personal hearing was attended by him though lot of opportunities were afforded by the Adjudicating Authority - Held that:- Inasmuch as admittedly there is no defence reply submitted by the assessee and no hearing stands attended by them, the impugned order is set aside and matter remanded to the Adjudicating Authority for fresh decision - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1369
  Manpower recruitment services - bills raised for fabrication charges in respect of shoe/garments - Revenue entertained a view that the appellant was not having any infrastructure for fabrication, the Bills were essentially for manpower supply - Held that:- Inasmuch as the impugned order of Commissioner(Appeals) is based upon the precedent decisions of the Tribunal as also on the analysis of the contract entered between assessee and the service recipient in terms of which the payments have to be made on the fabrication of per piece and the clarifications issued by the Board, there is no justifiable reasons to interfere in the impugned order of Commissioner(Appeals) - appeal dismissed - decided against Revenue.

  ---

• 2018 (9) TMI 1368
  Reduction of penalty u/s 78 - whether equal penalty imposed under section 78 of Finance Act, 1994 can be reduced to 25%, when such penalty was not deposited within 1(one) month from the date of passing of original order? Held that:- Hon’ble Allahabad High Court in the case of K.A. Forward Shoes Factory v. Assistant Commissioner of Central Excise [2017 (8) TMI 106 - ALLAHABAD HIGH COURT] has held that if 25% of the penalty amount is not deposited within 30(thirty) days of the order, then it means that the appellant was not entitled to the benefit of reduced penalty under second proviso to sub-section 11AC of Central Excise Act, 1944. The provisions of section 11AC of Central Excise Act, 1944 and those of section 78 of Finance Act, 1994 are peri materia. Appeal dismissed - decided against appellant.

  ---

• 2018 (9) TMI 1367
  Penalty u/s 77 and 78 of FA - service tax with interest paid before issuance of SCN - invocation of sub-section (3) of Section 73 of the Act for non-issuance of SCN with respect to penalties - Held that:- The authorities below have not specifically made the issue regarding involvement of the appellant in the activities of fraud, suppression etc, with intention to defraud the Government revenue - the benefit of Section (3) of Section 73 of the Act should be extendable to the appellant for closure of subsequent proceedings, upon payment of service tax along with interest. Since the department initiated show cause proceedings only for appropriating the amount already paid by the appellant and for imposition of penalties, such action on the part of the authorities below cannot be sustained for judicial scrutiny. Penalties set aside - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1366
  Construction of Residential Complex Service - non-payment of service tax - Penalty - Held that:- The learned Commissioner (Appeals) has recorded the fact regarding payment of service tax amount along with interest by the respondent. Thus, he should have considered the aspect only with regard to imposition of penalty. However, in the order portion, the learned Commissioner (Appeals) has set aside the whole adjudication order and has also granted consequential relief to the respondent. Further, the learned Commissioner (Appeals) has not specifically recorded any findings with regard to invocation of the provision of Section 78 for imposition of penalty under the facts and circumstances of the case - thus, the matter should go back to the learned Commissioner (Appeals) for passing a reasoned and speaking order considering the aspect whether the penalty can be imposed on the appellant on the circumstances of the case - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1365
  CENVAT Credit - appellant had not paid the value of the services to the service providers - contravention of Rule 4(7) of Cenvat Credit Rules, 2004 - Revenue’s sole ground is that instead of taking the credit during the period involved in the appeal, the same was available to the assessee subsequently i.e. after making payments for the services. Held that:- It is seen that during intervening period the credit availed remained as a paper entry only and was not utilized by the assessee. Though in such a case even the interest was not required to be paid in terms of the Hon’ble Karnataka High Court decision in the case of Bill Forge Pvt. Ltd. vs. CCE & ST, LTU, Bangalore [2011 (4) TMI 969 - KARNATAKA HIGH COURT]. Wrong availment of ₹ 1.28 lakhs - Held that:- There could be a bona fide belief on the part of the assessee that inasmuch as the services stand availed by their sister concern only, they were in a position to avail the credit. While confirming the demand along with confirmation of interest, the penalty of ₹ 56,74,746/- imposed upon the appellant is set aside. Appeal allowed in part.

  ---

• 2018 (9) TMI 1364
  Classification of Services - whether the services would fall under Commercial & Industrial Construction Service or under Works Contract Services? - Held that:- The Tribunal in the case of Gambhir Construction Company [2017 (6) TMI 1107 - CESTAT ALLAHABAD] has observed that inasmuch as in the show cause notice, there was no proposal to confirm the demand under the category of “Works Contract” for the period 01/06/2007 onwards, the demand cannot be confirmed under the said category - demand set aside. Demand for the period prior to 01/06/2007 under Commercial & Industrial Construction Service - Held that:- Hon’ble Supreme Court decision in the case of CCE & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], laying down that prior to 01/06/2007, the services cannot be held to be taxable under the category of ‘Commercial & Industrial Construction Service’ - demand set aside. Appeals disposed off.

  ---

• 2018 (9) TMI 1363
  Penalty u/s 76 - Bonafide intent - Abatement in terms of N/N. 32/2004 dated 03.12.2004 - GTA Services - Reverse Charge Mechanism - Held that:- The demand on service tax is liable to be paid by them on reverse charge basis, as recipient of GTA Services. Inasmuch as, the appellant was not service provider, there could be a bonafide intention in his mind, as regards his liability to pay service tax - also, the disputed issue was subject matter of litigation before various authorities and was ultimately settled - penalty not justified and is set aside - appeal allowed.

  ---

• 2018 (9) TMI 1362
  Adjustment of sanctioned rebate against alleged interest - un-adjudicated and un-confirmed Interest - Held that:- There is no dispute on the factual position that the Original Adjudicating Authority sanctioned the rebate claim but adjusted it against the alleged liability towards interest. It is also a fact that there was no interest proceeding initiated against the assessee. In such a scenario, the adjustment of rebate claim against un-adjudicated and unconfirmed interest is not adjustable - Karnataka High Court’s decision in the case of Commissioner of Central Excise, Bangalore-III Vs Stella Rubber Works [2011 (3) TMI 571 - KARNATAKA HIGH COURT] vide which in an identical situation, the Hon’ble High Court held that adjustment of sanctioned rebate claims against the non adjudged interest amount is not permissible. Appeal dismissed - decided against Revenue.

  ---

• Central Excise

• 2018 (9) TMI 1361
  Exemption from duty of Central Excise - captive consumption - ‘naphtha’ - ‘Bombay High gas oil’ - applicability of rule 6 of CENVAT Credit Rules, 2004 - Held that:- The issue stands settled by the decision in the case of BHARAT PETROLEUM CORPORATION LTD. VERSUS COMMR. OF C. EX., MUMBAI-II [2014 (7) TMI 1117 - CESTAT MUMBAI], where it was held that the dutiability of BHGO and naphtha used in the generation of electricity, which in turn has been used for purposes other than manufacture of excisable goods, the appellant would be liable to Excise duty thereon. The matter remanded back to the original authority, determination of the duty liability after ascertaining availment of CENVAT credit in the manufacture of electricity that is captively consumed, reversal of non-entitled CENVAT credit, and to the extent that the power so generated is not utilized for manufacture of excisable goods - appeal allowed by way of remand.

  ---

• 2018 (9) TMI 1360
  Clandestine removal - parallel invoices - shortage of raw material and finished goods - Held that:- The appellant can have no grievance against the present impugned order in as much as the disputed balance amount of duty already stands set aside by the Commissioner (Appeals) and the confirmation is only to the extent to which the demand was confirmed vide the earlier order of Commissioner(Appeals), which was not challenged and which had attained finality. There are no merits in the contention of ld. Adv. that by remanding matter to Commissioner (Appeals) on the Revenues appeal, the entire proceedings before Commissioner (Appeals) get reopened, in as much as the appellant never challenged the earlier order of Commissioner (Appeals) and the Revenue’s appeals was only on the short ground of the powers of Commissioner( Appeals) to remand. Appeal dismissed - decided against appellant.

  ---

• 2018 (9) TMI 1359
  Valuation - inclusion of ‘dharmada charges’ in assessable value - Held that:- Hon’ble Supreme Court of the decision of the Tribunal in Collector v. Golden View Electrical Industries [1997 (3) TMI 430 - CEGAT, NEW DELHI] that ‘dharmada charges’ are not liable to be included in the assessable value for the purpose of section 4 of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1358
  Exemption/refund of education/higher education cess - Area based exemption availed by appellant under N/N. 56/2002-CE dated 14/11/2002 - Held that:- The issue stands settled by the Hon’ble Supreme Court in M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted. Valuation of excisable goods manufactured and cleared by the appellant - Inclusion of freight component in the transaction value - place of removal - Held that:- In the present case the appellant is claiming that the goods were sold on FOR basis and as such the place of removal is the delivery point to the buyer. The freight element incurred by the appellant should form part of the assessable value in such FOR sale - Hon’ble Supreme Court in CCE, Nagpur vs. Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] held that under no circumstances can the buyer’s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case - the question of paying duty on such value addition to be covered by the exemption under Notification 56/2002-CE does not arise. The appellant will succeed with reference to their entitlement of refund claim for education/ higher education cess in terms of N/N. 56/2002-CE - With reference to transaction value, the appellant will not succeed. Appeal disposed off.

  ---

• 2018 (9) TMI 1357
  Remission of duty - destruction of finished goods - Held that:- This bench has already decided the issue arising out of the impugned order of the Commissioner (Appeals) in respect of the appeal filed by the respondent. The appellant in the present case, i.e. department has not preferred any appeal on the same. The Assistant Commissioner has allowed the destruction of the goods without payment of any duty permitting the remission of duty as contained in Section 22 of the Customs Act, 1962. Therefore, nothing survives in the appeal. Appeal dismissed - decided against Revenue.

  ---

• 2018 (9) TMI 1356
  Penalty - CENVAT Credit reverses on being pointed out - bonafide intent - Held that:- The fact of availment of credit was also dully reflected by the appellant in their ER-1 report. In fact the fact of availment of credit has come to the notice of the Revenue only from the scrutiny of ER-1 return itself. As such it cannot be said that the credit was availed by appellant with any mala fide. The issue being a bona fide issue, the invocation of penal provisions against the assessee cannot be appreciated - penalty set aside - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1355
  Clandestine manufacture and removal - Deshi Gutkha - assessee’s stand is that having rented out the premises, they have not carried out manufacturing activity. Held that:- Learned Advocate has not been able to show us and establish that the goods were actually not manufactured by the appellant but by Shri Umesh Chandra. The goods illegally manufactured having been recovered from the premises belonging to the appellant and rent agreement produced by him having been established to be a false fabricated document, the onus gets shifted to the appellant to show that the Gutkha in question was not manufactured by him. There is no evidence to rebutt the above allegations of the Revenue. Appeal dismissed - decided against appellant.

  ---

• 2018 (9) TMI 1354
  Condonation of delay in filing appeal - time limitation - Held that:- Inasmuch as there was a delay of 10 months in filing appeal before the Commissioner (Appeals), the Appellate Authority has rightly observed that he has no powers to condone the delay - the issue settled in the case of M/s. Singh Enterprises Vs CCE Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] - appeal dismissed.

  ---

• 2018 (9) TMI 1353
  Enhancement of quantum of reduced penalty - Held that:- The same impugned order was also appealed against by the respondent in M/S SPACECHEM ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE & S.T., GHAZIABAD [2018 (9) TMI 1194 - CESTAT ALLAHABAD], where their appeal stands allowed by setting aside the demand as also penalty of 25%, and the impugned order stand set aside - Revenue’s appeal for enhancement of penalty has become infructuous - appeal dismissed - decided against Revenue.

  ---

• 2018 (9) TMI 1352
  Reversal of CENVAT Credit - manufacture of Denatured Spirit, Rectified Spirit and Ethyl Natural Alcohol - Revenue entertained a view that instead of clearing the said spirits in terms of provisions of Rule 6 (3) (b), the assessee should have reversed the credit availed in respect of Molasses, which stands utilized in the manufacture of the said Spirit - Held that:- An identical issue stands considered by the Tribunal in the case of Commissioner of Central Excise, Salem, Vs M/s Salem Co-Operative Sugar Mills Ltd. [2016 (8) TMI 942 - MADRAS HIGH COURT] laying down that in respect of clearance of Rectified Spirit, Un-denatured Ethyl Alcohol and Ethyl Natural Alcohol, there was not even need to pay 8% or 10% of the value of the said goods in terms of the Rule 6 (3) (b). There is no justifiable reason to uphold the demand even for the period up to 01.03.2005. Appeal dismissed - decided against Revenue.

  ---

• 2018 (9) TMI 1351
  Classification of goods - Chlorinated Paraffin Wax - to be classified under Chapter Sub Heading 38 24 90, or under Chapter Sub Heading 38122090? Held that:- Inasmuch as there cannot be any grievance on the part of the assessee vide the said order of Commissioner which has vacated the show cause notice and has dropped the proceedings, we find no justifiable reasons to interfere in the impugned order - appeal disposed off.

  ---

• 2018 (9) TMI 1350
  Penalty u/r 26 of CER on Director - Revenue stand is that being a Director it cannot be presumed that he was not aware of the illegal activities of manufacturing unit - Held that:- In the absence of any evidence to show the involvement of the Director, penalty cannot be imposed upon him on the sole ground of him being the Director - also, penalty has been imposed under Rule 26 of the Central Excise Rules without there being any proposal in the show cause notice for confiscation of the goods or any order of the confiscation by the Adjudicating Authority - penalty u/r 26 is not justified - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1349
  CENVAT Credit - inputs/capital goods - various Iron & Steel articles - Welding Electrodes - Held that:- The issue of Cenvatability of Welding Electrode and Cement used for construction of foundation stand covered in favour of the assessee by various decisions - One such reference can be made to the Hon’ble Madras High Court decision in the case of Tamil Nadu Newsprints & Paper Ltd. vs. CCE, Tiruchirapalli [2017 (6) TMI 574 - MADRAS HIGH COURT] - Credit allowed. CENVAT Credit on Light Fittings - Held that:- The amount being on the lower side i.e. ₹ 19,753/-, appellant is not contesting the same. Penalty - Held that:- The demand having been set aside and the issue of availment of credit on Light Fittings being a bona fide issue of interpretation of law, there is no justification for imposition of penalty. Appeal allowed in toto.

  ---

• 2018 (9) TMI 1348
  Reversal of Cenvat Credit - Absolute exemption or not? - Applicability of Rule 11(3) of Cenvat credit Rule, 2004 - Utilization of CENVAT credit lying unutilized - N/N. 30/2004 Central Excise date 09.07.2004 - Held that:- Notification No. 30/2004 Central Excise date 09.07.2004 do not grant exemption in absolute. In fact, it is a conditional exemption that if the assessee has not availed Cenvat credit on inputs, the exemption is available. The provision of Rule 11 (3) clause 2 are applicable only in a situation where exemption is absolute. Admittedly, in this case exemption is not absolute. In that circumstances, the provisions of Rule 11 (3) (2) are not applicable to the facts of this case, therefore, the Cenvat credit lying unutilized on 01.04.2006 shall not lapse and same can be utilized by the appellant latter on. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1347
  Refund/abatement of excess duty deposited - manufacture of Pan Masala & Gutka - Compounded Levy Scheme - Section 3A of the Central Excise Act, 1944 read with Notification No. 30/2008-CE(NT) dated 01.07.2008 - Held that:- Under the Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008, the period of assessment is ‘Month’. Hence, all the provisions for computation of duty have to be read with respect to period of assessment, which is defined as ‘month to month’ under the scheme of the compounded levy. It is an admitted fact that the Appellants have started production of a new RSP of ₹ 1/- on two machines w.e.f. 12th April, 2013 and further started production on additional two machines of same RSP of ₹ 1/- w.e.f. 17th April, 2013 - Accordingly, in terms of proviso 4 to Rule 9 of the Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 read with Section 3A of the Act, the duty for the month of April, 2013 is payable on pro rata basis for the number of days the machines were in operation. Appellant is entitled to refund - appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1346
  Classification of goods - Roop Amruta - Daant Pari - case of Revenue is that the said goods are classifiable under cosmetic and it was classified under Chapter 33 of the Central Excise Tariff Act - Extended period of limitation - Held that:- The rate of duty under Chapter 30 as well as Chapter 35 is same. Further, the fact is also noted that the appellants are filing their ER-1 returns at the time of clearance of goods showing the classification under Chapter 30 of Central Excise Tariff Act and the same has been accepted by the Department at the time of assessing the returns. Extended period of limitation - Held that:- As the search was conducted in the factory premises of the appellant on 28/03/2006 and goods were also seized on 28/03/2006 that the show cause notice was only issued on 16/03/2007. Thereafter, the show cause notice is highly barred by limitation as no malafide is attributable to the appellants - demand barred by limitation. Confiscation - redemption fine - Held that:- The goods in question which have been seized, have not cleared from the factory and there is no malafide attributable against the appellants, therefore, the goods are not liable for confiscation, consequently, no redemption fine is imposable on account of seizure of the goods. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (9) TMI 1345
  Misdeclaration of manufactured goods - Manufacture of Sewing machines or not - exemption under N/N. 6/2002 dated 01.03.2002 - Revenue case is that the appellant was actually manufacturing Embroidery Machines and were misdeclaring the same as Sewing Machines and were wrongly availing the benefit of exemption notification - Held that:- The machines manufactured by the respondent performed both the functions i.e. Embroidery as well as Sewing. The Appellant Authority has also examined the working of the machines and have observed that whereas embroidery machine cannot perform the function of sewing machine, a sewing machine can perform both the functions. The HSN explanatory notes has been well adopted by appellate authority to conclude that it is only those machines which can be only used for embroidery would were fall under the category of embroidery machines. In case the machine worked for both the functions, they have to be held as sewing machine classifiable under the head 84.52 and entitled to the exemption. Appeal dismissed - decided against Revenue.

  ---

• 2018 (9) TMI 1344
  Clandestine removal - short found raw material - Non-registration of new premises - entire order of the Commissioner in confirming the demands is on the sole ground that the said two plots E-60 and 61 were not registered with the central excise department and as such raw materials stored therein cannot be taken note of - Held that:- Though it may be a technical offence on the part of the appellant not to get the newly acquired plots registered with the Revenue, but it is also a fact that the information regarding new plots was duly given to the Revenue under the cover of their letter dated 22.05.2007. As such the fact that the raw materials were found in excess in the said new premises cannot be ignored. Inasmuch as the raw materials were in excess at the new premises, the shortages detected by the officers at the registered premises were not real, but pseudo shortages - thus, it cannot be concluded that short found raw materials have been used in the manufacture of the final product. The findings of clandestine removal on the basis of shortages detected by the visiting officers cannot be upheld. Appeal allowed - decided in favor of appellant.

  ---