TMI Tax Updates - e-Newsletter
September 7, 2018

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• CSR activity as in input service, to be included within the definition of activities relating to business - CENVAT Credit allowed on CSR

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Articles

1. SUPPLY OF UPS WITH BATTERY: A CASE OF MIXED SUPPLY

   By: Dr. Sanjiv Agarwal

News

1. Issue of populist schemes needs to be considered in totality, North vs South debate is misleading – N. K. Singh

2. ‘Source India’ at 87th Izmir International tradeshow in Turkey

3. Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

4. Finance Commission of India holds third consultation with economists in Chennai, challenges in making projections for the award period discussed

Notifications

Customs

1. 77/2018 - dated 6-9-2018 - Cus (NT)

Exchange Rates Notification No.77/2018-Custom(NT) dated 6.9.2018

2. 19/2018-Customs (N.T./CAA/DRI) - dated 5-9-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

3. 18/2018-Customs (N.T./CAA/DRI) - dated 5-9-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

4. 17/2018-Customs (N.T./CAA/DRI) - dated 5-9-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

Circulars / Instructions / Orders

Customs

1. 30/2018 - dated 29-8-2018

Setting up of the Office of the Commissioner (Investigation-Customs) created under CBIC-regarding

Highlights / Catch Notes

Income Tax

• No Penalty Imposed for Late e-TDS/e-TCS Returns Due to Reasonable Cause Shown u/s 272A(2)(k).

  Case-Laws - AT : Levy of penalty u/s 272A(2)(k) - failure to deliver or cause to deliver a copy of the statement (e-TDS return and e-TCS return) within the time - assessee had a reasonable cause for failure to comply with the provisions of Law. - No penalty.
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• Court Allows Partial Deduction of Business Expenses Due to Insufficient Evidence, Disallows 50% as Unverifiable.

  Case-Laws - AT : Genuineness of expenses - although the said expenditure was not fully supported by the relevant supporting documentary evidence as pointed out by the authorities below making it unverifiable, the same cannot be entirely disallowed keeping in view the nature of the assessee’s business and it would be fair and reasonable to disallow the said expenditure to the extent of 50% for the unverifiable element involved therein.
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• Legal Equality: Challenging Misuse of Res Judicata to Prevent State from Shielding Wrongful Actions.

  Case-Laws - AT : No stretch of imagination the greater good of the society can be presumed to be served when identically placed individuals are meted with separate codes and actions. - The doctrine of resjudicata cannot be picked up and abused to shelter any and every wrong doing of the state.
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Customs

• New Office of Commissioner (Investigation-Customs) Launched by CBIC to Boost Customs Investigation Efficiency and Compliance.

  Circulars : Setting up of the Office of the Commissioner (Investigation-Customs) created under CBIC-regarding
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• Kindle e-readers do not qualify for exemption; they aren't "electrical machines with translation or dictionary functions.

  Case-Laws - HC : Classification of an item - Kindle e-reading devices - Kindle devices are not covered under the exemption notification as they were/are not “electrical machines with translation or dictionary functions”.
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Indian Laws

• Appellate Authority Not Liable for Penalties u/s 20 of RTI Act; CPIO Holds Responsibility for Information Disclosure.

  Case-Laws - HC : Levy of penalty under RTI Act for default in supply of information - The Appellate Authority is not the custodian of the information or the document. It is only a statutory authority to take a decision on an appeal with regard the tenability or otherwise of the action of the CPIO and, therefore, there is a conscious omission in making the Appellate Authority liable for a penal action under Section 20 of the RTI Act
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Service Tax

• Real estate agent's construction supervision role leads to service tax demand being set aside. Role exceeds advisory duties.

  Case-Laws - AT : Real Estate Agent Services - their role was to supervise the construction and if the contractor fails to meet the expectations of their principals to undertake the construction themselves therefore, it is not a mere advice ‘consultancy or technical assistance’ in respect of ‘management of real estate’ - Demand set aside.
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• Reverse Charge: Service Tax on Exchange Rate Variations Due at Transaction Record, Not Payment Time.

  Case-Laws - AT : Reverse charge - variation in the value due to exchange rate variation - the service tax in all such cases is required to be determined, immediately when the transaction between the Associated Enterprises get reflected in the books of account and not when the payment is made.
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Central Excise

• Micronutrient Fertilizers with Nitrogen Classified Under CETH 31.05 as Other Fertilizers.

  Case-Laws - AT : Classification of goods - micronutrients - In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05.
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• CSR Activities Qualify as Input Services Under CENVAT Credit Rules, Considered Part of Business Activities.

  Case-Laws - AT : CENVAT Credit - Whether CSR can be considered as input service and be included within the definition of “activities relating to business”? - Held Yes
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• Company's Consolidated CENVAT Credit Refund Claim Accepted Despite Procedural Deviation; Eligibility Proven for Each Quarter Separately.

  Case-Laws - AT : Refund of accumulated CENVAT credit - separate refund claims was required to be filed for each quarter - However, the appellant had filed a consolidated refund claim for two quarters at the end of six months mentioning their eligibility for each of the quarter - refund cannot be denied.
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Case Laws:

• Income Tax

• 2018 (9) TMI 294
  Revision u/s 263 - action taken u/s 263 is only on the basis of the audit party's note or report - Held that:- Admittedly, the CIT has not referred to any audit objection but in the light of the note, the Tribunal held that it would be a fair inference that his action under Section 263 was consequent upon the audit objection. This office note clearly shows that the Assessing Officer had taken all explanations and arguments of the Assessee into consideration before allowing deduction. This being the case, the CIT could not have merely substituted his own views for that of the Assessing Officer by invoking Section 263. - Decided in favour of the Assessee and against the Revenue

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• 2018 (9) TMI 293
  TPA - ALP determination - adopt 0.5% as the ALP of the guarantee commission charges provided by the Respondent Co. - Held that:- Referring to The Commissioner of Income Tax, Mumbai Vs M/s Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] held the considerations which applied for issuance of a corporate guarantee are distinct and separate from that of a bank guarantee, and accordingly, took a view that the commission charged cannot be called in question, in the manner Transfer Pricing Officer had done. It was the view of the Division Bench that the comparison is not as between like transactions but are between guarantees issued by the commercial banks on the one hand as against the corporate guarantee issued by a holding company for the benefit of its associated enterprise on the other. Money advanced to the AE as share application money to be considered as loan - this money was being utilized as working capital and not deposited in an escrow account in cases where monies are received in cases of share application - Held that:- There was a delay in issuing the shares against the share application money given by the assessee to its AE, however, the assessee has duly explained the cause of delay and it was not a deliberate delay for using the money by subsidiary in the garb of share application money or by providing the fund by the assessee in the garb of share application money. The delay was due to obtaining necessary approval from the securities and Exchange Commission, Phillipines. Finally, the shares were issued as per the share certificate dated 25.05.2008 which has been produced by the assessee as additional evidence. Since the document of issuance of equity shares in the name of the assessee by the subsidiary/AE vide share certificate were not before the authorities below, therefore, to the extent of limited purpose of considering the said document, we set aside this issue to the record of AO/TPO to consider the same.

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• 2018 (9) TMI 292
  Validity of reopening of assessment - whether notices ought to have been issued u/s 153C and not under Section 148? - Held that:- AO has passed the orders of assessment on the very same day, on which the said interim order was passed. It is stated that after passing the said order, the same was despatched on the very next day. When such being the position, the orders of assessment impugned in other two writ petitions cannot be sustained, since the same were not passed in consonance with the interim order passed on 28.12.2011. Since the assessment orders were passed on the very same day and communicated to the petitioner on the very next day, the petitioner was not in a position to file their reply/objections on merits also within the time granted by this Court. It is not in dispute that the said interim order granted by this Court has not been put to challenge by the respondents by way of an appeal. On the other hand, the said order is still in force. Therefore, this Court is of the view that the impugned orders of assessment have to be set aside and the matter be remitted back to the Assessing Officer to pass fresh order of assessment.

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• 2018 (9) TMI 291
  Revision u/s 263 - claim of deduction u/s 80-I - Tribunal holds that the issue of claim of deduction under Section 80-I including determination of ratio of captive power plant stands merged with the earlier order of the Tribunal. It is in these circumstances that a simple computation exercise would not have enabled the Assessing Officer to give a go-bye or by-pass the binding order of the Tribunal and it has refused to uphold the revisional exercise - Held that:- Looked at from this angle, we do not see how the Revenue can submit before us that the present Appeal raises substantial question of law. A mixed issue and whether the exercise of power under Section 263 was warranted in the light of the limited direction of the Tribunal has alone been considered in the impugned order. Such an exercise carried out by the Tribunal is a mixed one. The jurisdiction under Section 263 of the I. T. Act was not available to be invoked in the given facts and circumstances. That is how, the Tribunal interfered with it and refused to uphold it. Such an order of the Tribunal is neither perverse nor vitiated by any error of law apparent on the face of the record. Hence, we are not in agreement with Mr. Suresh Kumar that this Appeal raises substantial question of law.

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• 2018 (9) TMI 290
  Levying interest under section 234D - calculation of the tax payable by the assessee - including an amount towards refund already paid - Held that:- As the Assessee submitted that the amount of refund have been wrongly added as no refund was actually received by the assessee and it would require verification at the end of the A.O. It is also submitted that it would have impact on calculation of interest under section 234D - D.R. did not have objection for verification of the same at the level of the A.O. In view of the above, we set aside the Order of the A.O. and restore the matter in issue on Ground Nos. 3 and 4 above to the file of A.O. with a direction to verify the claim of assessee - Decided in favour of assessee for statistical purposes.

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• 2018 (9) TMI 289
  Levy of penalty u/s 272A(2)(k) - failure to deliver or cause to deliver a copy of the statement (e-TDS return and e-TCS return) within the time specified in sub-section (3) of Section 200 or the proviso to sub-section 3 of Section 206(c) - Held that:- The statement/returns to be furnished by the assessee within the time were entirely depending upon the information to be supplied by the purchasers. The assessee explained that the purchaser/licensee being small operator did not obtain PAN, therefore, particulars could not be filed in time. This was the reason for not filing the return/statement within the period of limitation. The Manager, Accounts was ill, therefore, there was delay in making compliance. These facts clearly show that assessee had a reasonable cause for failure to comply with the provisions of Law. On filing the belated returns/statements, Revenue has not suffered any loss because tax deducted was already deposited on time with the Revenue Department. Therefore, a technical or venial breach to the provisions contained in the Act for submitting return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case - Decided in favour of assessee.

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• 2018 (9) TMI 288
  Addition on account of investment in purchase of property - mother authorization to execute the sale deed - registration of sale deed - Held that:- The property in question is registered as sale deed for a cash consideration of Rs. 42,90,000/-. Thus, the claim of assessee cannot be accepted and appears to be an afterthought. The assessee did not produce any evidence on record in support of any of the contradictory explanation made before A.O. or before CIT(A). CIT(A) on examination of the GPA found that mother of the assessee was holding GPA for several properties and was authorized to execute the sale deed. There is no bar on GPA Holder to execute sale deed in Law when he is authorised to execute sale deed. Therefore, there is no infirmity in the orders of the authorities below in making and confirming the addition. Even before the Tribunal, assessee failed to explain the source of the investment in the above property. Assessee miserably failed to substantiate any of her explanation through any evidence or material on record. The appeal of assessee has no merit and the same is accordingly dismissed. - Decided against assessee.

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• 2018 (9) TMI 287
  Exemption u/s 80P - assessee-society has received interest from Saraswat Cooperative Bank Ltd., on making investment in FDR - Held that:- Saraswat Cooperative Bank Ltd., is a Cooperative Society. Therefore, the interest earned on by the assessee-society from its investment with the other Cooperative Society would be entitled for deduction under section 80P(2)(d) of the I.T. Act. The issue is covered in favour of the assessee-society by the Judgment of M/s. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and other decisions of various Benches of the Tribunal referred to above. In this view of the matter, we set aside the Orders of the authorities below and delete the addition. Further claim of deduction under section 80P(2)(c)(ii) - Held that:- There is no prohibition on the powers of the appellate authority to consider the claim of assessee, if assessee is entitled for such relief in accordance with law. The assessee-society relied upon decision of Hon’ble Supreme Court in the case of CIT Mahalaxmi Sugar Mills Co. Ltd.[1986 (7) TMI 83 - SUPREME COURT] and CBDT Circular No.14(XL-35) Dated 11.04.1995 above, which provides that it is the duty of the A.O. to apply relevant provision of the Act for the purpose of determining the true figure of assessee’s total income and consequently, tax liability. CIT(A) should not have refuse to exercise his discretionary power in the matter. The assessee-society is entitled for deduction of Rs. 50,000/-. Set aside the orders of the authorities below and direct the A.O. to allow deduction of Rs. 50,000/- out of interest income in favour of the assessee-society. This ground of appeal of assessee is allowed.

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• 2018 (9) TMI 286
  Excluding duty drawback from eligible income under section 80IC in respect of Kotdwar Unit-III - Held that:- CIT(A) accepted revised working of the assessee which was based on reasonable basis. A.O. was accordingly directed to re-compute the disallowance as per statement made by assessee. It, therefore, appears that the contention of the assessee now raised for deleting the addition of Rs. 11,35,150/- may be coming out of the appeal effect order passed by the A.O. which cannot be challenged in the present proceedings. CIT(A) has already allowed relief to the assessee, therefore, no further interference is called for in the matter. Disallowance of expenditure incurred in relation to exempt income by applying Section 14A read with Rule 8D - Held that:- AO has nowhere recorded any satisfaction about the incorrect claim having been lodged by the assessee with reference to its accounts. There is no discussion whatsoever about the examination of the assessee’s claim about actual incurring of expenses in relation to the exempt income. It can be seen from the impugned order that the AO even did not consider the correct amount offered by the assessee for disallowance at Rs. 4,01,209 (Rs.2,01,209 + Rs. 2,00,000). The authorities below have not rejected the claim of the assessee that it has not borrowed any funds for investment and that it was having sufficient own funds to make investment through Portfolio Managers - Ground of appeal of the assessee is allowed.

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• 2018 (9) TMI 285
  N.P. rate determination - rejection of books of accounts - non production of complete bills and vouchers - Held that:- The assessee did not make any compliance to the query of the AO and the Ld. CIT(A). Therefore, the sole contention of the Ld. Counsel for the assessee that books are subject to audit would not help the assessee in any manner. Since the expenses were claimed of Rs. 2.61 crores against turnover of Rs. 3.61 crores and the same have not been subjected to production of complete bills and vouchers, therefore, the claim of the assessee cannot be allowed as such. The Authorities Below were therefore justified in applying NP rate of 5%. The addition was made of Rs. 11,78,847/- to the returned income of assessee is reasonable as against huge claim of expenditure. Considering the totality of the facts and circumstances, we do not find any justification to interfere in the orders of the authorities below, therefore, we dismiss the appeal of the assessee.

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• 2018 (9) TMI 284
  Deduction u/ s 80P(2)(a)(i) - interest income received by the assessee on investments made with Sub -Treasuries, Banks etc. - whether interest income received by the assessee on investments with sub -treasuries and banks was liable to be assessed under the head “income from ot her sources” or “income from business” - Held that:- Co-operative societies engaged in providing credit facilities to its members had in course of business made investments with treasury, bank etc. and earned interest income, such income was eligible for deduction u/ s 80P(2)(a) (i). See Vaveru Co -operative Rural Bank Ltd. v CIT [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] In the instant case the assessee had made investments with sub -treasuries and banks in the course of its business of banking / providing credit facilities to its members. Therefore, it was entitled to deduction u/ s 80P(2)(a)(i) in respect of interest income that was received on such investments in view of the above judicial pronouncements. - Decided in favour of assessee.

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• 2018 (9) TMI 283
  100% depreciation on shuttering and centering material - depreciation claimed in the earlier year or not? - Held that:- If the assessee has claimed 100% depreciation on such shuttering and centering material in the earlier year then there will be no opening balances brought forward from the earlier year but it may be that shuttering and centering material which was put to use in the earlier year, 100% depreciation might have been claimed and allowed and only those material not put to use in the earlier year might have been brought forward in the present year. This may also be a fact that part of the assets might have been put to use for less than 180 days and in that situation, only 50% of depreciation is allowable and as a result, even if depreciation is allowed @ 100%, in fact, only 50% will be allowed in the earlier year and the balance 50% is to be allowed in the present year. Therefore, merely on this basis that there is opening balance of WDV, it cannot be concluded that 100% depreciation was not allowed in the earlier year. Hence we feel it proper to restore the matter back to the file of CIT (A) for fresh decision - Appeal filed by the assessee allowed for statistical purposes.

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• 2018 (9) TMI 282
  Deduction u/s 54 - non adherence to primary condition for making a claim - Held that:- The primary condition of having purchased a residential house within two years or constructed a residential house within three years after the date of sale or transfer of original asset is not satisfied by the assessee in order to claim exemption under section 54. We, therefore, uphold the impugned order of the ld. CIT(Appeals) in confirming the disallowance made by the Assessing Officer on account of assessee’s claim for exemption under section 54. - Decided against assessee. Income tax charged by AO wrongly at 30% instead of 20% on the long-term capital gain - Held that:- We direct the Assessing Officer to verify this aspect and allow appropriate relief to the assessee on such verification. Disallowance of promotion expenses - Held that:- A copy of the ledger account of the exhibition expenses shows that the expenditure in question was incurred by the assessee for participating in the exhibitions organized at Chennai, Ahmedabad and Rajkot. In our opinion, although the said expenditure was not fully supported by the relevant supporting documentary evidence as pointed out by the authorities below making it unverifiable, the same cannot be entirely disallowed keeping in view the nature of the assessee’s business and it would be fair and reasonable to disallow the said expenditure to the extent of 50% for the unverifiable element involved therein. We, accordingly, modify the impugned order of the ld. CIT(Appeals) on this issue and restrict the disallowance of Rs. 46,994/- made out of promotion expenses to Rs. 23,497/- - Decided partly in favour of assessee

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• 2018 (9) TMI 281
  TDS u/s 194C, 194J and 194I - chargeability of interest u/s. 201(1A) - Held that:- For AY 2007-08, it is stated by CIT(A) that effectively, the appeal is now directed against charging of interest u/s. 201(1A) only amounting to Rs. 1,05,73,063/-. Similarly in AY 2008-09 in Para 10 of his order, it is held by CIT(A) that the appeal with regard to charging of tax u/s. 201(1) is treated as allowed and decision in this year also is only regarding chargeability of interest u/s. 201(1A) of IT Act. Hence it is seen that in the impugned orders, CIT(A) has not examined this aspect at all as to whether TDS is deductible u/s. 194J, 194-I and 194C in Assessment Year 2007-08 and u/s. 194C in Assessment Year 2008-09. Under these facts, we feel it proper that this issue should go back to the file of CIT(A) for a decision on this aspect also as to whether the TDS is deductible or not under the relevant provisions of IT Act i.e. 194C in both years and 194J and 194-I in Assessment Year 2007-08 and therefore, we set aside the order of CIT(A) and restore the matter back to his file for fresh decision after examining this aspect also. - Appeals filed by the assessee are allowed for statistical purposes

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• 2018 (9) TMI 280
  Addition to income - Admission to offer income in the statement u/s. 132(4) - non conclusion of transaction for purchase of land - Held that:- No admission to offer any income in the said statement. The gist of the statement u/s. 132(4) of the Act has already been narrated in the earlier part of this order. In the letter dated 3. 6. 2014 filed by the Assessee he has agreed to declare Rs. 25 lacs as income and that such declaration is given only to purchase peace and that there was no basis for declaration of Rs. 25 lacs as income of the Assessee. There was no evidence found in the course of search by which it can be said that the Assessee earned income of Rs. 25 lacs. There is no other basis to come to such a conclusion. In such circumstances, the addition of Rs. 25 lacs is sought to be made only on the basis of the Assessee’s letter dated 3. 6. 2014. It is also a well-accepted principle that an admission is not conclusive evidence as to the truth of the matter stated therein. It is only a piece of evidence the relevancy of which is required to be judged based on the material evidence and circumstances in which it is made. The statement of the Assessee u/s. 132(4) of the Act shows that he is employee of Ess & Ess Infrastructure Pvt. Ltd. , who were the main persons who were searched u/s. 132. Assessee earns a monthly salary of Rs. 10, 000/-. He received Rs. 50 lacs from his employer for purchase of lands from farmers but could not conclude the transactions and returned the same to his employer. He is a person of no or very little means and not capable of earning Rs. 25 lacs. In such circumstances, no credence can be given to the admission of the Assessee that too in a letter. Such admission is not even in a statement u/s. 132(4) of the Act which has some evidentiary value. No addition to income to be sustained - Decided in favour of assessee

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• 2018 (9) TMI 279
  Penalty u/s 271(1)(c) - non serving of the notices for hearing issued by learned CIT(A) , his shifting of place after affixing new address at the address stated in form no 35, the breach of principle of natural justice - Held that:- CIT(A) had infact decided the appeal exparte in the absence of assessee mainly on the grounds of his non appearances and disbelieving the contention that the assessee voluntarily filed revised computation of income before the AO post issuance of notice u/s 143(2) and 142(1) by the AO during scrutiny proceedings - set aside and restore the matter to the file of learned CIT(A) for fresh adjudication of all the issues arising in this appeal on merits in accordance with law. Therefore, the appellate order of learned CIT(A) is set aside and all the issues restored to file of the learned CIT(A) to decide all issues afresh on merits in accordance with law - Appeal of the assessee is allowed for statistical purposes

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• 2018 (9) TMI 278
  Deemed dividend by invoking the provisions of section 2(22)(e) - accumulated profits - Held that:- A categorical finding has been given by CIT(A) that the conditions laid down in section 2(22)(e) of IT Act to treat the amount of loan given by a company M/s. Favorich Mark Pvt. Ltd. to the assessee as deemed dividend are satisfied. In view of this factual position, we find no reason to interfere in the order of CIT(A).- Decided against assessee.

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• 2018 (9) TMI 277
  Reopening of assessment - validity of notice - Held that:- The direction issued by the CIT(A) is against the spirit and order of the Tribunal. Such type of directions should not have been given by the CIT(A) as there was no reference in the order of the Tribunal for issuing such type of direction. Therefore, the notice under section 148 was not properly issued. If I consider it to be the fresh notice under section 148, it is also time barred. Therefore, no hesitation of holding notice issued under section 148 as invalid. Assessment framed consequent thereto is also invalid assessment. The jurisdiction of the AO was only to pass order on merit consequent to the direction of the Tribunal which he did not do. It is of the opinion that assessment framed by the AO by issuing invalid notice is not sustainable in the eyes of the law. Accordingly, annul the assessment. - decided in favour of assessee

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• 2018 (9) TMI 276
  Revision u/s 263 - error in the order of the A.O. passed u/s 143(3) in allowing the claim of the assessee for “provision for wage revision” - Held that:- The order of the Ld. CIT passed u/s 263 on the issue of “provision for wage revision” having already been set aside by the Tribunal restoring the order of the A.O. passed originally u/s 143(3) on this issue, the fresh assessment order passed by the A.O. u/s 143(3)/263 on this issue has become infructuous and there is no infirmity in the impugned order of the Ld. CIT(A) allowing the appeal of the assessee against the order passed by the A.O. u/s 143(3)/263 on this issue. Ground No. 1 of the revenue’s appeal is accordingly dismissed. Provision for leave encashment u/s 43B - Held that:- As per the proviso to section 43B(f) of the Act, any sum actually paid by the assessee on account of leave encashment on or before the due date of filing the return of income should be allowed as deduction. Keeping in view this decision of the Tribunal [2017 (5) TMI 1611 - ITAT KOLKATA], the Ld. CIT(A) vide his impugned order directed the A.O. to verify the claim of the assessee of having paid the amount of leave encashment to the extent of Rs. 57,87,806/- before the due date of filing of return of income for the year under consideration and allow deduction to the extent of such payment. No infirmity in the impugned order of the Ld. CIT(A) in giving the said direction to the A.O. on this issue and upholding the same, we dismiss ground no 2 of revenue’s appeal.

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• 2018 (9) TMI 275
  Sale of land - nature of land - agricultural land - Conversion of land before the Appropriate Authority initiated by purchaser M/s Uttar Development Pvt. Ltd. - Held that:- Though the AO and the CIT(A) take note of the fact that there were other co-owners alongwith the assessee. However, for reasons best known to the tax authorities these issues are left unaddressed. As noted no doubt res judicata does not apply strictly to the tax proceedings. The fact that the legitimate expectation of being treated similarly in identically placed facts by coowners at the same point of time cannot be out rightly ignored. The authority of the state rests on the assumption and the presumption that the state acts for the welfare of the individual. No doubt when the benefits of the individual are pitted against the benefits of the society the individual benefit has to yield to the greater good of the society. No stretch of imagination the greater good of the society can be presumed to be served when identically placed individuals are meted with separate codes and actions. There is presumption of legitimate expectation embedded in the social democratic frame work where individual can be presumed to have an inherent right of expecting similar treatment in the eyes of law for similar conduct. The doctrine of resjudicata cannot be picked up and abused to shelter any and every wrong doing of the state. To condone such an action would lead to eroding the trust and faith in the state action and clothe state functionaries as an alien exploitive machinery which lets loose unchecked the personal whims and fancies of the state functionaries - set aside the impugned order in toto and restore the issue back to the file of the CIT(Appeals) with the direction to denovo pass a speaking order in accordance with law in the light of the aforesaid directions

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• 2018 (9) TMI 237
  Addition of interest income on FDs u/s.56 - Held that:- As decided in assessee's own case [2018 (2) TMI 1152 - ITAT CUTTACK] the interest on fixed deposits are not taxable under income from other sources and, accordingly, we uphold the findings of the CIT(A) and dismiss the ground of appeal taken by the revenue for both the assessment years. - Decided in favour of assessee

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• Customs

• 2018 (9) TMI 273
  Classification of imported goods - HP Slate 6’ Voice Tab - Held that:- The appeal is dismissed on the ground of delay as well as on merits leaving the question of law open in terms of the signed order.

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• 2018 (9) TMI 272
  Classification of an item - Kindle e-reading devices - whether Kindle e-reading devices were “electrical machines with translation and dictionary function”? - Exemption Notification No. 25/2005-CUS dated 1st March, 2005 as amended by notification No. 133/2006-CUSTOMS dated 30th December, 2006. Held that:- The product is developed and designed to function as an e-book reader and is sold and bought as a e-book reader and not as a translator or as a dictionary. The e-book reader has an inbuilt dictionary feature, which is a secondary or additional feature, useful for the reader. This secondary or additional feature would not make it and qualify the e-reading machine as an “electrical machine with translation or dictionary function”. The word ‘with’ can have diverse and varied meaning depending upon the context in which it is used. A restricted meaning to the word “with” is in consonance with the judgments of the Supreme Court on strict construction of exemption notification. In the context of the present notification, we observe and hold that the words ‘translation’ and ‘dictionary’ functions qualifies the words ‘electrical machines’ with the mandate that translation or dictionary function should be the primary and relevant function of the said machine for which they are purchased and used. The exemption is restricted to machines which translate or perform dictionary functions and not to other machines that primarily perform some other function. The word “with” is equally capable of referring to the dominant or the main purpose and not the ancillary or the secondary function - the restrictive interpretation would be appropriate and inconsonance with principles of interpretation applicable to tariff items. Broad and wide ambit propounded by the respondent unintelligibly articulates a rather far-fetched interpretation. The exemption notification would apply where the device is an electrical machine covered under tariff item No.8543 89/8543 7099, and its primary and basic function should be to translate or perform dictionary function. Primary function of kindle device is to enable the user to read e-books. It is an e-book reading device and not a translator, and is not procured or purchased to perform dictionary function. No one purchases a kindle device because it is a translator or device “with” a dictionary function. E-book readers are purchased because a person wants to read e-books which are pre-loaded or can be downloaded from internet. Dictionary in a Kindle device enables the reader to make use of the dictionary while reading the e-book. E-book reader as such is not a dictionary or translator device. E-book readers would be appropriately classified in “others” as distinct from “electrical machines with translation and dictionary function”. Kindle devices are not covered under the exemption notification as they were/are not “electrical machines with translation or dictionary functions”. Whether our judgment should be made applicable with effect from the date on which the writ petition was filed or should have retrospective effect i.e. from the date of filing of the application by the Respondent before the AAR? - Held that:- There has been considerable delay and laches on the part of the Union of India in challenging the order of the AAR dated 15th May, 2015, as the present writ petition was filed only on 11th May, 2017. The order dated 15th May, 2015 had its consequences. The respondent could have verily believed that the government had accepted the order. As noticed above, e-book readers were granted specific exemption from basic excise duty vide Budget of 2014, but subsequently by Budget of 2016-17 the exemption was withdrawn with the e-readers attracting basic customs duty of 7.5%. The respondent had filed their application before the AAR on 8th June, 2012 and the pronouncement was by way of order the dated 15th May, 2015, when the e-book readers were themselves not attracting any basic customs duty - the respondent would not be entitled to benefit of exemption notification on e-book readers till 15th May, 2015 for this was a risk which the respondent had knowingly taken. In view of the delay and laches on the part of the petitioner in approaching the Court, hold that the respondent would not be liable to pay basic customs duty re-introduced by the Budget of 2016-17 for the period post-Budget 2016-17 till the filing of the present writ petition on 11th May, 2017. Petition allowed.

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• 2018 (9) TMI 270
  Extended period of Limitation - Section 28 of the Customs Act, 1962 - Valuation - various electrical switch gear products - section 4A of Central Excise Act, 1944 - Held that:- The proceedings initiated against the respondent under Central Excise Act, 1944 was settled by the decision of the Hon’ble High Court of Bombay against them in 2008 and can be said to have attained finality only then. That the decision of the Hon’ble High Court of Bombay upheld the contention of the investigating authority does not in any way dilute the existence of a dispute which had to be resolved by judicial process - scope for alleging suppression, misrepresentation or any of the other qualifications to justify the invoking of the extended period does not exist - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 269
  Confiscation - polyester filament yarn and partially oriented yarn - Held that:- We take notice that the findings against the two appellants are as tardy as those against the appellant in appeal no. C/510/2009 which had been remanded to enable findings on the basis of tested evidence - these two appeals are also remanded to the original authority for fresh disposal and in accordance with principles of natural justice.

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• 2018 (9) TMI 268
  Recovery of Redemption Fine - Prohibition on Revenue from encashing the bank guarantee - appellant deposited the amount of Rs. 7.5% of the duty in terms of section 129 E of Customs Act, 1962 - Held that:- It is apparent that Section 129E does not grant any stay or puts any restrictions on the rights of Revenue to recover any amount. It merely prescribes payments of certain amounts as conditions mandatory for filing appeal in Tribunal. However, it is seen that the Government vide circular no. 984/8/2014/CUS dated 16/09/2018 puts restrictions on themselves and provides certain guidelines for recovery of amounts during the pendency of appeals - A perusal of the circular shows that it has been issued with reference to section 35F of the Central Excise Act, 1944 and section 129E of the Customs Act, 1962. Both the sections prescribed the amount to be deposited with reference to the liability of duty and/or penalty imposed. There is no reference to redemption fine in the said section. There is no reason to interfere in the proceedings by encashment of Bank Guarantee to recover redemption fine, as no stay application has been filed by the applicant in the matter - application dismissed.

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• 2018 (9) TMI 267
  Relief from payment of Customs Duty alongwith Interest - N/N/ 93/2004-Cus dated 10th September 2004 - failure to furnish the ‘export obligation discharge certificate’ issued by the competent authority within the deadline stipulated therein - Held that:- There has been substantial compliance of export obligation by the appellant. With the furnishing of the redemption certificate, the consequential liability, to that extent, ceased to sustain - the demand, but for Rs. 88,716.17 of duty liability and Rs. 84,110.22 of interest, computed as proportionate to the short-fall in fulfillment of the export obligation, is set aside. Appeal disposed off.

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• 2018 (9) TMI 266
  Classification of goods - LCD panel - Held that:- The issue involved in the present appeal is regarding classification of LCD panel and the same issue is pending before the Hon’ble Supreme Court in C.A. NO.005622/2000 and D.No.017797/2000. Both parties agreed that without the final verdict of the Hon’ble Supreme Court, the present case cannot be decided. Liberty is granted to the appellant to come up in appeal after having final verdict from the Hon’ble Supreme Court but within the prescribed time - Appeal disposed off.

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• Corporate Laws

• 2018 (9) TMI 274
  Condonation of delay - period of limitation for person aggrieved by an Order to file appeal - time barred appeal - Held that:- A person aggrieved by an Order may file appeal within the period prescribed of 45 days from the date on which copy of the Order of the Tribunal is made available to the person aggrieved. The Appellate Tribunal can entertain appeal after expiry of the said period of 45 days but within further period not exceeding 45 days, if the Tribunal is satisfied that the Appellants were prevented by sufficient cause from filing the appeal within that period. Looking at the present matter, the Impugned Order is dated 14th August, 2017. We intend to ignore the argument of the learned counsel for the Respondents that after 14th August, 2017, the matter in NCLT had been posted on 21st September, 2017 as Order sheet of presence is not shown. Even if we take the date of 10th October, 2017 when Certified Copy was issued, as the basis for calculating the period of limitation, still we find there are obstacles for the Appellants to cross. Certified true copy issued free of cost was issued on 10.10.2017. The Praecipe filed for correction before NCLT is dated 27th December, 2017 as can be seen from Corrigendum Order. The period between 10.10.2017 to 27.12.2017 would be about 77 days. First the Appellants consumed 77 days to move the NCLT for rectification. The NCLT passed orders on 01.01.2018. Even if we ignore that period from 27.12.2017 to 01.01.2018 and give benefit to the Appellants, it does not help Appellants. The Corrigendum Order was passed on 1st January, 2018 (Page - 89 A) and the Appellants were given certified true copy of such Corrigendum Order on 2nd January, 2018. The appeal has been presented only on 31st January, 2018 and thus another about 28 days were consumed. Adding the earlier 77 days consumed and another 28 days consumed, the appeal is filed after 100 days. As such, the appeal is clearly time barred.

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• PMLA

• 2018 (9) TMI 265
  Offence under PMLA - provisional attachment orders - whether this Court has territorial jurisdiction to entertain the present petition? - Held that:- Although the impugned order has been passed by the Deputy Director, ED, from his office in Chandigarh, there is no dispute that the alleged offence of money laundering would have to be tried in Delhi. The impugned order is founded on the FIR which has been registered in Delhi. The Enforcement Case Information Report (ECIR) also indicates the place of occurrence of the alleged offence as “New Delhi and other places”. In the aforesaid circumstances, this Court is not persuaded to accept that this Court does not have the jurisdiction to entertain the present petition. Even otherwise, the rule of forum non conveniens does not denude the court of its jurisdiction; it only entails that a court will decline to exercise its jurisdiction if it is more convenient that the petition be considered by another court. It is a rule founded on convenience and self restraint by courts and not on lack of jurisdiction. Thus, the contention that the present petition is not maintainable in unmerited. Interference with the impugned order as warranted by this Court at this stage - Held that:- The impugned order is only a provisional order of attachment and the question whether the same has to be confirmed is now required to be adjudicated by the Adjudicating Authority in terms of Section 8 of the PML Act. In this view, this Court was initially reluctant to interfere at this stage. However, a plain reading of the impugned order clearly indicates that the impugned order is fundamentally flawed and is without authority of law. The impugned order of provisional attachment is founded on the allegation that the property sought to be attached has been used in commission of a scheduled offence and, therefore, is liable to be attached as proceeds of crime. However, it is obvious that merely because a property used in commission of crime, the same cannot be construed as proceeds of that crime. Any amount used in commission of a scheduled offence would fall within the expression “proceeds of crime” as defined under Section 2(1) (u) of the PML Act is fundamentally flawed. In the present case, the allegation against HEPL is that it had obtained allocation of coal block on the basis of misrepresentation. However, it is not disputed that mining of the coal from the block had not commenced, therefore, HEPL did not derive or obtain any benefit from the coal block. The ED has also not indicated any reason, which could lead one to believe that HEPL had derived any other benefit from the allocation of the coal block in question. Thus the petition is allowed and the impugned order is set aside. Consequently, the complaint dated 19.01.2018 made under Section 8 of the PML Act is also set aside.

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• Service Tax

• 2018 (9) TMI 295
  CENVAT Credit - input services - Department was of the view that the credit availed on the above input services is not eligible for the reason that the said input services are not used for providing output services - Scope of SCN - Held that:- In the instant case, what is alleged in the show cause notice is that as per Rule 2(l) of the CENVAT Credit Rules, 2004, input service means ‘any service used for providing output service’. As trading activity undertaken by the appellant is not taxable service, hence the appellant is not eligible to avail credit on the alleged / impugned input service. This being so, the appellants have clearly fallen foul of Rule 3 of the CENVAT Credit Rules, 2004 since that is the particular provision which lays down the types of duties or taxes or cesses suffered on input, input services etc. which alone can be availed as CENVAT credit. In the present case, only Rule 3 and Rule 6 has not been invoked. When credit is not admissible under Rule 3, the appellant cannot content that Rule 6 ought to have invoked and that trading is held to be exempted service prior to 1.4.2011. The appellant cannot blow both hot and cold. Wrong utilization of CENVAT credit - Demand of Rs. 35,91,928/- with interest - Held that:- Since this being only a part of the total credit amount of Rs. 3,22,07,534/-, the demand of which has already been upheld, it would cause double jeopardy, hence demand of Rs. 35,91,928/-, along with interest, will become a unjustifiable demand and therefore set aside. Penalty u/s 78 - Held that:- This issue involves interpretation whether the availment of impugned credits are in order or otherwise - penalties not warranted and is set aside. The impugned order is modified to the extent of setting aside the demand of Rs. 35,91,928/- and the penalty imposed under section78 of the Finance Act, 1994 without disturbing the remaining part of the impugned order except penalty - appeal allowed in part.

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• 2018 (9) TMI 263
  Reverse charge mechanism - Tour operator services - respondent performed part of their service outside - export of services or not? - Held that:- Leave granted - To be heard along with Civil Appeal No. 4285 of 2016.

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• 2018 (9) TMI 262
  Extended period of limitation - penalty - non registration, non payment and non filing of returns - bonafide belief - no suppression of facts - Whether the Department was justified in invoking the extended period of limitation and also imposing penalty? Held that:- In the instant case, there was no allegation of fraud or suppression or wilful mis-statement against the assessee. The Department, even in the said SCN, stated that the assessee was liable to pay service tax and get himself registered from the year 2007-08 whereas he got himself registered only in the year 2012. The law on the subject as to whether the extended period of limitation could have been invoked when there were two views within the Department itself i.e. when certain Original Authorities hold that the services are taxable services and certain Appellate Authorities hold otherwise - When there is scope for doubt in the mind of the assessee on a particular issue, the longer period under the Proviso to Section 11A of the Central Excise Act, 1944 cannot be invoked. Extended period cannot be invoked - Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 261
  Liability of Interest - short payment and belated payment of such duty - Held that:- The issue is still pending before the larger Bench and is yet to be considered by the larger Bench - In the interregnum the appellant has already paid the duty and interest demanded by the department-respondent. The appeal could be disposed of by reserving liberty to the appellant to approach the department for appropriate relief including refund after the consideration and disposal of the issue by the larger Bench - appeal disposed off.

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• 2018 (9) TMI 260
  Man Power recruitment or Supply Agency services - it was alleged that the appellant suppressed taxable value and short paid service tax for the period from 2009-10 to 2011-12 - Principles of Natural Justice - Held that:- The Original Authority did not take into consideration any defence by the appellant. The impugned order is passed in violation of principles of natural justice. Matter remanded to the Original Authority with a direction to offer the opportunity of submission of defence reply and subsequent to the same offer the opportunity of personal hearing to the appellant - appeal allowed by way of remand.

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• 2018 (9) TMI 259
  Real Estate Agent Services - Non-discharge of Service Tax - Managing projects of M/s. Mckino & M/s. Axa Business - Assignment & transfer income - Assessment & bifurcation fees Khata transfer fees - Forfeiture of amounts received - Held that:- On going through the agreement between the appellants as a real estate developers and prospective buyers, it is found that the contract is on a principal to principal basis - the amounts received by the appellants in respect of 3 activities undertaken by them i.e. ‘assignment transfer income’, assessment and bifurcation fees, ‘Khata transfer fees’ and ‘forfeiture’ amounts find their origin in the agreement with prospect to buyers in which the appellants are developers only and are not workings as real estate agents - the activity undertaken by them is not in the capacity of a real estate agent but undertaken as real estate developers - demand set aside. In the case of Ansal Properties and Infrastructure Ltd. [2017 (9) TMI 1071 - CESTAT NEW DELHI] it was held that demand pertaining to consideration received for change of name for flat owners by way of substitution new buyers name with the earlier flat owners is not chargeable to Service Tax. Management of construction of projects - Held that:- The appellants have been supervising the construction projects of M/s. Mckino & M/s. Axa Business Services - their role was to supervise the construction and if the contractor fails to meet the expectations of their principals to undertake the construction themselves therefore, it is not a mere advice ‘consultancy or technical assistance’ in respect of ‘management of real estate’ - no Service Tax can be demanded from the appellants on this count under the head ‘Real Estate Agent Service’ - demand set aside. The demands pertaining to the services are set aside along with interest and penalties - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 258
  Refund of service tax - Input services - denial of credit on the ground that certain input services are not covered by the definition of input services and also on the ground of nonsubmission of documents required to process the claim - Held that:- The Order-in-Original as well as impugned order, both have rejected the refund claims on other grounds which are not taken in the show-cause notices and therefore they have travelled beyond the showcause notices which is not legally permissible - further, the impugned order also violates the principles of natural justice because the appellant has not been given the reasonable opportunity to defend himself on the ground on which the refund claims have been rejected. Denial of refund on the ground that the appellant has not produced the approved list of specified input services from the UAC of SEZ - Held that:- Keeping in view the intention of the Government in enacting the SEZ Act and giving special fiscal concessions to SEZs, It is held that this is only a procedural and is not a mandatory condition as held by the Commissioner(Appeals) - this ground on the basis of which refund claims have been rejected is not tenable. CENVAT Credit - rejection on the ground that appellant has availed the cenvat credit and hence he is not entitled to file the refund claim - Held that:- The appellant has already reversed the CENVAT credit without any utilization and it has been shown in ST-3 return filed for the period April 2015 to September 2015 and once he has reversed the CENVAT credit without utilization, it tantamounts to not taking credit - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 257
  Penalty under Section 76 of the Finance Act, 1994 - the 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 SCN - Held that:- The issue arising out of the present dispute regarding the 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 under similar set of facts and circumstances, by invoking the provisions of Section 80 of the Act, the Tribunal has set aside the penalties imposed on the appellant therein - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 256
  Classification of services - Interior Decorator Services or Works contract Service? - non-payment of Service Tax - Held that:- The activities undertaken by the appellant do not fall in the definition of “Interior Decorator Service” and the same has been held in the case of Commissioner of Service Tax, Mumbai V. Indecor Slides [2014 (3) TMI 542 - CESTAT MUMBAI] - the activities undertaken by the appellant includes supply of material and labour as per the work order placed on record and therefore it constitutes works contract which came into service tax net w.e.f. 01.06.2007 and in the present case, the period of dispute is November 2003 to December 2005 therefore the demand of service tax is not legally sustainable against the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 255
  Refund of Service Tax - export of goods and services - Held that:- The appellant could not substantiate their claim for refund of service tax paid on various services claimed to have been used in or in relation to export of goods before the authorities below, resulting in rejection of the refund claims - in the interest of justice, to verify these documents, the matter is remanded to the adjudicating authority - appeal allowed by way of remand.

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• 2018 (9) TMI 254
  Imposition of penalty - delayed payment of Service Tax - Held that:- It is quite evident that Appellant was aware of his responsibility for payment of service tax. In fact he was collecting the same from his clients, (service recipients). However instead of depositing the same he was keeping the same with himself on the pretext that he was going through financial hardships. When the appellant was aware of his responsibility to the pay the tax as he was collecting the same from his customers clients. Further he was aware of his liabilities in the law as he was filing his returns indicating the tax liability - Since he was aware of his liabilities and was willfully not depositing the tax collected his conduct is not of simple ignorance but of will default to hold the tax money for personal gains - the conduct of Appellant cannot be justified and penalty as imposed by the commissioner needs to be upheld. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 253
  Reverse charge - variation in the value due to exchange rate variation - revenue neutrality - demand of service tax with interest and penalty - Revenue has sought to demand service tax only in respect of those payments which were in excess of the amounts booked in their book of accounts. However department has not given any credit were the amounts paid were actually less than the amounts booked in the book of accounts. - Held that:- the service tax in all such cases is required to be determined, immediately when the transaction between the Associated Enterprises get reflected in the books of account and not when the payment is made. This is view is also in line with AS-11 issued by the Accounting Standard Board of ICAI. Any other view would not be incorrect but also against the basic scheme of Service Tax Law, and would be only lead to arbitrage of tax, because any person will like to determine the taxable value in such transactions on the date when the exchange rate is minimum and thereby will reduce the tax payable. In our view the such tax arbitrage cannot be sound principle of taxation in any tax system. Undisputed fact is that demand has been made in respect of the gross amount after taking into account the exchange rate fluctuation less the amounts booked in the book of accounts on the receipt of invoice for the services received. Appellants have paid the service tax on the amounts actually calculated by taking into account the prevalent exchange rate and the gross invoice value, on the date when invoice was received and expenditure booked in the books of account - by insertion of section 67A, intention of legislature for laying down the date for determination of taxable value and tax incidence, on the date of providing the service or when the service has been agreed to be provided has been made crystal clear. In a way the determination of taxable value and tax incidence has been totally delinked from the date of payment of tax. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 252
  Rectification of mistake - Section 35C(2) of the Central Excise Act, 1994 - Since both the Members who have originally decided the Appeals have been transferred out of Mumbai, and it would not have been administratively and economically feasible and viable to place these ROM applications before the bench comprising of the same two members, this, matter has been listed before this bench and taken up for disposal. Held that:- From the wordings used in the Section it is quite evident that Appellate Tribunal can rectify any mistake apparent from record by amending the order passed by it. For invoking the jurisdiction under this section it has to be shown that what is being rectified is a mistake apparent from record - It is not the case of the Applicant that the pleas raised by them in appeal or argument have not been considered by the bench while disposing of the appeal, but they have filed this rectification application on the ground that tribunal has failed to consider and give a specific finding. In their appeal and during the course of arguments Appellants have raised the issue of limitation and has after considering the submissions have given a finding of fact that extended period of limitation has been rightly invoked. Now this finding of fact is sought to be rectified by this application for rectification of mistake. The powers vested in tribunal in terms of Section 35C(2) are very limited to rectification of mistakes without re-appreciating the entire facts, evidences and law on the subject matter of appeal. There are no merits in the applications for rectification of mistake filed in terms of Section 35C (2) of the Central Excise Act, 1944 in the present case - ROM application dismissed.

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• Central Excise

• 2018 (9) TMI 271
  SSI Exemption - Clubbing of clearances - dummy units - Held that:- It is apparent that all clearances of all manufacturers from one factory needs to be clubbed to arrive at the aggregate value of exemption available under Notification 08/2003. Similarly all clearances made by one manufacturer from more than one factory need to be clubbed to arrive at the aggregate value of clearances for the purpose of N/N. 08/2003-CE. The entire argument of Revenue is based on the fact that only one entity has factory/ machines and other two are creations on paper to avoid payment of tax. In these circumstances, recognition of separate existence by issue to SCN would have run counter to the allegation that they are dummy. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 251
  Maintainability of petition - alternative remedy of appeal - penalty u/r 26 of the CER upon the petitioner as a partner of M/s. Tuffware Industries - Held that:- The applicability of decisions relied upon by the petitioner, would have to be decided in the context of the facts and the law in the present case. This examination would more appropriately be done by the appellate Authority - in view of an efficacious alternative remedy available, we decline to exercise our extraordinary jurisdiction to entertain the petition under Article 226 of the Constitution of India. The issue urged before us would require examination and consideration at the hands of the appellate Authority. In these circumstances, bearing in mind the fact that the petitioner has approached this Court within a period of 60 days from the receipt of the impugned order and thereafter spent time in this Court bona fide prosecuting this petition, the delay in filing an appeal to the appellate Authority is condoned, if the same is filed within a period of 2 weeks from today - Petition disposed off.

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• 2018 (9) TMI 250
  Condonation of delay in filing appeal - petition was filed on 10th April 2017 i.e. admittedly within the 60 days - Held that:- Apex Court in M.P. Steel Corporation Vs. Commissioner of Central Excise (Appeals) [2015 (4) TMI 849 - SUPREME COURT] on an identical/similar facts arising under the Customs Act, 1962 has taken a view that even where the statute provides for a period of limitation including the extended period, yet the quasi judicial authorities such as Commissioner of Customs (Appeals) would have powers to condone the delay by invoking the principle of Section 14 of the Limitation Act, 1963 - the delay in filing the Appeal from the impugned order dated 31st January 2017 condoned, provided it is filed within a period of two weeks from today - petition disposed off.

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• 2018 (9) TMI 249
  CENVAT Credit - tractors were returned for defects - Manufacture or not? - Rule 16 (1) of Cenvat Excise Rules, 2002 - case of Revenue is that the said tractors were not subjected to the processes amounting to manufacture and therefore in terms of Sub-Rule (2) of Rule 16 ibid, the appellants are required to reverse the Cenvat credit availed on receipt of the said tractors into the factory - Held that:- Only those vehicles which are suffered heavy damages during transit are returned to the factory and they were completely dismantled and only the goods parts are salvaged and thereafter they were put to the assemble line for complete re-marking - in the present case, also the returned tractors were stripped of external assemble and then put on assemble line. Therefore, the process amounted to manufacture - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 248
  Classification of goods - Chelated Zinc as 12% - Chelated Iron as 12% Fe - mixture of Chelated substance - whether the said products are classifiable under 3105 as “other fertilizers or as “Plant Growth Regulators under CETA 3808 9340? - benefit of N/N. 4/2006-CE dated 1.3.2006. Held that:- The issue of classification of “micronutrients has been in confusion for a number of years - We find resonance in a recent decision of the Tribunal, in Commissioner of Central Excise, Hyderabad Vs. Aries Agrovet Industries Ltd. [2017 (7) TMI 289 - CESTAT HYDERABAD], where it was held that In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 247
  CENVAT Credit - input service or not? - payment made to a third agency i.e. M/s. Shree Kalamadevi Charitable Trust for imparting training to students of underprivileged section of society in discharge of corporate social responsibility - Held that:- CSR is not only a holistic approach but it has integrated the core business strategy since it addresses the wellbeing of all stake holders and not just companies shareholders - CSR is not a charity any more since it has got a direct bearing on the manufacturing activity of the company which is largely dependent on smooth supply of raw materials even from remote location or tribal belts (that requires no resistance in the supply chain from the community) and the same also augments the credit rating of the company as well as its standing in the corporate world. Whether CSR can be considered as input service and be included within the definition of “activities relating to business”? - Held that:- The answer is in the affirmative since to win the confidence of the stake holders and shareholders including the people affected by the supply of raw material from their locality say natural resources like mines and minerals etc. the hazardous emission that may result in production activities. Sustainability is dependent on CSR without which companies cannot operate smoothly for a long period as they are dependent on various stake holders to conduct business in an economically, socially and environmentally sustainable manner i.e. transparent and ethical - CSR which was a mandatory requirement for the public sector undertakings, has been made obligatory also for the private sector and unless the same is to be treated as input service in respect of activities relating to business, production and sustainability of the company itself would be at stake. CSR activity being held as input service that was maintained by the appellant through an agency(Trust), the other dispute relating to suppression etc. that would attract extended period is not required to be discussed in the appeal, nor the part acceptance of the duty liability by the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 246
  Rebate of Excise duty - export of goods - Jurisdiction - case of Revenue is that the goods were not cleared from the factory but from the warehouse in Raipur. The refund claim was filed with the Asst. Commissioner of Central Excise, Visakhapatnam, who neither has jurisdiction over the factory or the warehouse - Held that:- The issue involved relates to rebate of excise duty on goods exported out of India. CESTAT has no jurisdiction to decide appeals on orders passed by Commissioner (Appeals) on such matters as per the first proviso to Section 35B - appeal dismissed being not maintainable.

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• 2018 (9) TMI 245
  CENVAT Credit - reversal of credit on inputs which went into generation of exempted products - SCN alleges that they have not reversed the input service credit which has gone into production of several exempted products - Rule 6(3)(i) of CENVAT Credit Rules, 2004 - Held that:- Of these products, bagasse have already been held to be just waste and not an exempted product requiring reversal of CENVAT credit - There are also other products with respect to which the appellant claims that they have already reversed the CENVAT credit such as on electricity - There are products such as organic manure which the appellant claims to have cleared on payment of duty. Therefore, the proper course of action is to remand the matter back to the original authority to examine the claims of the appellant in respect to each product and re-determine the amount of duty, if any, to be recovered from them after following principles of natural justice - appeal allowed by way of remand.

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• 2018 (9) TMI 244
  Refund of accumulated CENVAT credit - filing of single refund application for 6 months (half year) instead of each quarter - N/N. 27/2012-CE(NT) dated 18.6.2012 - Rule 5 of the Cenvat Credit Rules, 2004 - Held that:- Though the condition of the notification stipulates that separate refund claims required to be filed for each quarter, however, the appellant had filed a consolidated refund claim for two quarters at the end of six months mentioning their eligibility for each of the quarter. There is no other allegation of violation of any other condition of the notification to make them ineligible for the claim - Appeal disposed off.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 243
  Validity of assessment order - it is contended that the present impugned order of assessment passed, based on the instruction received from the higher officials, rejecting the deviation proposal submitted by the Assessing Officer, is not an order passed with independent application of mind - Held that:- Both are one and the same and therefore, the said order is squarely applicable to the present case as well. It is stated that the said order has become final and the Revenue has not challenged the same any further - the matter is remitted back to the respondent for passing a fresh order of assessment on merits - Petition allowed by way of remand.

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• 2018 (9) TMI 242
  Penalty u/s 53(12) of Karnataka Value Added Tax Act, 2003 - contravention of Section 53(2) of the said Act - principles of Natural Justice - Held that:- Without establishing such allegations by holding the requisite enquiry in the matter, the Assessee could not obviously be saddled with the said penalty on the basis of such allegations - the matter deserves to be again looked into by the learned Tribunal, which as the final fact finding authority, can either itself hold such an enquiry or remit the matter to the concerned Assessing Authority in this regard - petition allowed by way of remand.

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• 2018 (9) TMI 241
  Input Tax Credit - Whether the Assessee was entitled to Input Tax Credit on the purchases of Electrical Goods like 3150 KVA Transformer, High Tension Cable supply and erection, Low Tension cable supply and erection, UPS and UPS Electrical, Civil and Erection under Schedule 5 to the Act r/w Section 11 of the Act? Held that:- Division Bench of this Court in the case of Hindustan Unilever Limited, Bangalore vs. State of Karnataka [2016 (6) TMI 859 - KARNATAKA HIGH COURT], has held that even the electrical and electronic goods or in puts used for generation of electricity or steam, provided such electricity or steam is used within the factory for manufacturing activity of the final product, the same would be covered and the Assessee would be entitled to Input Tax Credit with regard to tax paid on such electrical and electronic goods also. - The learned Advance Rulings Authority did not have the benefit of the aforesaid judgment of Division Bench of this Court which was delivered on 26.02.2016 just three days after the impugned order dated 23.02.2016 was passed by the aforesaid Authority. The said aforesaid view of the Division Bench is obviously binding on the said Authority and covers the controversy in hand. The equipments and items purchased by the Assessee namely Electrical Goods in question would be eligible for Input Tax Credit against the output tax liability of the Assessee - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 240
  Non-service of order - it was stated that as the Managing Partner of the petitioner was busy taking care of his grandmother, Ext.P1 notice was not brought to his notice by the staff of the petitioner who received the same - Penalty u/s 67(1) of KVAT Act - Held that:- The case of the petitioner, in the circumstances, that the Managing Partner of the petitioner was busy in taking care of his grandmother and consequently, the notice of hearing received from the first respondent was not brought to his notice by the staff members of the petitioner, is probable in the common course of human conduct - the interest of justice demands that the petitioner shall be given another opportunity to defend the proceedings initiated against them in terms of Exts.P6 and P7 notices - Petition allowed.

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• 2018 (9) TMI 238
  Validity of assessment order - TNVAT Act, 2006 - powers of Assessing Officer - the Joint Commissioner (ST), Enforcement-I, Chennai-6 vide proceedings dated 13.2.2018 rejected the deviation proposal and directed the respondent to implement the directions issued by the Enforcement Wing - Held that:- Assessing Officer is an independent officer, that no direction from a superior officer is binding on the Assessing Officers and that she is required to decide the case based on the reply filed by the dealer and the documents that may be produced. Therefore, the respondent should not be bound over by any direction issued by the Joint Commissioner and should be allowed to take a decision independently in the matter. The matters are remanded to the respondent for a fresh consideration - petition allowed by way of remand.

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• Wealth tax

• 2018 (9) TMI 239
  Exemption from wealth tax - whether 28 Acres of urban land comes under the ambit of the exemption clause of Section 2(ea) of the Wealth Tax Act, 1957? - person to be the owner - protective assessment - Held that:- The words belonging to are of wider import and more flexible than the narrower term of ownership . Sub-section (8) of Section 4 also permits the assets to be taxed in the hands of the Assessee, even if the asset is not yet fully de jure transferred to him and invoking the provisions of Section 53-A of the Transfer of Property Act, 1882, the Assessee retains the possession of such property in part performance of the contract. Section 8 deems such a person to be the owner of that building or property and allows taxability in his hands even though the title in favour of the Assessees is not yet crystallized. The intention of the Legislature is, therefore, obvious i.e. to throw the tax net under the provisions of the Wealth-Tax a little wider and not to cover only the owners of the assets stricto sensu. In this perspective, we find ourselves fortified in taking the view that the assets in question namely urban lands belonging to Assessees for which they are not only claiming ownership through litigation but are undoubtedly in possession, dominion and control but also in user of the land yielding income therefrom, they cannot be held to be outside the tax net under the Wealth-Tax Act, 1957. Protective Assessments - Held that:- As already noted above that the demands in question have been raised under the Protective Assessments only framed by the Assessing Authority and the recovery on the basis of the same is not enforceable as of now and therefore, the appellate Orders by the Appellate Tribunal and the Commissioner of Wealth-Tax (Appeals) even though decided the Questions on merits would remain in the character of the Protective Assessments only, but since the Tribunal has decided the question of law also, that is why it has given rise to the aforesaid Substantial Questions of law which we are called upon to decide. Question No.1 is answered in favour of the Revenue and against the Respondent Assessees and we hold that the Income Tax Appellate Tribunal (ITAT) was not justified in law in holding that 28 Acres of land located within the Corporation limits of the Bangalore City does not fall within the definition of Assets in Section 2 (ea)(b) of the Wealth-Tax Act, 1957 and no Wealth Tax on these lands is chargeable. We hold that the Wealth Tax would be chargeable for these Assessment Years in question in the hands of the Respondent Assessees as the urban lands in question belonged to the Assessees on the respective Valuation Dates relevant to A.Y. 1999-2000 to A.Y. 2004-05 in question. Question of law No.2 also in favour of the Revenue and against the Assessees and hold that there was no total prohibition against raising of any sort of construction of a Building on the lands in question either under the interim Orders of the Hon ble Supreme Court or by virtue of Karnataka Parks, Play Fields and Open Places (Preservation and Regulation) Act, 1985 and in view of the fact that temporary or semi-permanent constructions were raised from time to time on these lands in question, the urban lands in question belonging to the Assessees could not fall in the Exclusion Clause (b) of Explanation to Section 2 (ea) of the Wealth-Tax Act, defining the term Assets . Question of law No.3 in favour of the Revenue and against the Assessees and hold that the Income Tax Appellate Tribunal (ITAT) was not justified in setting aside the Protective Assessments made by the Assessing Authority for the Assessment Years A.Y. 1999-2000 to A.Y. 2004-05 in question. The Assessing Authority would be free to now proceed to make substantive assessments in the hands of the Respondent Assessee.

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• Indian Laws

• 2018 (9) TMI 264
  Levy of penalty under RTI Act for default in supply of information - Seeking of Information under the Right to Information Act, 2005 - CPIO came to the conclusion that it was not practicable to provide the information and denied the same - Held that:- Section 19(1) makes a provision for filing of an appeal if a person is aggrieved by a decision or inaction of the CPIO. The Appellate Authority in sub-section (1) of Section 19 is classified as an officer senior in rank to the CPIO meaning thereby that under the scheme of RTI Act, the CPIO is a different authority or officer different from an Appellate Authority to whom an appeal lies under sub-Section (1) of Section 19. If the legislative intent, as can be made out on a combined reading of various provisions are taken note of, it would be seen that the legislature only proposes for taking action against CPIO, and not against any other authority like the Appellate Authority or officer to whom the appeal lies. The CPIO being custodian of the information or the documents sought for, is primarily responsible under the scheme of the RTI Act to supply the information and in case of default or dereliction on his part, the penal action is to be invoked against him only. The Appellate Authority is not the custodian of the information or the document. It is only a statutory authority to take a decision on an appeal with regard the tenability or otherwise of the action of the CPIO and, therefore, there is a conscious omission in making the Appellate Authority liable for a penal action under Section 20 of the RTI Act and if that be the scheme of the Act and the legislative intention, there are no error in the order passed by the learned writ Court warranting reconsideration. Appeal dismissed.

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