TMI Tax Updates - e-Newsletter
October 12, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Levy of GST - naturally bundled services - classification - Principal supply is the transfer of right to use of any goods for any purpose

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Highlights / Catch Notes

GST

• Renting of immovable property service - Small Business Exemption - Co-owners - collection of rent jointly - Whether small business exemption under Section 22 of the GST Act is available to all owners separately in case of jointly owned property? - Held Yes
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• Classification of service - Intermediary Services or not - The contract of services supplied are not pure and mere promotion and marketing services and the services provided is of the nature of facilitating the supply of goods, and hence would amount to “intermediary services”
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• Levy of GST - Supply or not? - naturally bundled services - placement of specified medical instruments to unrelated customers being hospital/ laboratory - The principal supply is the transfer of right to use of any goods for any purpose and is liable to GST
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• ITC - construction services - The Input Tax Credit availed in respect of the GST paid on goods and/or services used/consumed for the development of the land, in respect of the plots sold after the issuance of Completion Certificate is liable to be reversed on pro rata basis.
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• Supply of works contracts awarded by Government attracts 12% GST. - Supply of work awarded by M/S. HLL Infra Tech Services Ltd. For the construction of Biotech lab and administrative block at Life Science Park, Trivandrum attracts 18% GST.
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Income Tax

• Deduction u/s 80I - Rectification of mistake u/s 154 - if the interpretation sought to be given by the assessee is to be accepted, then it would mean that the Assessing Officer should virtually sit in the office of the assessee and help the assessee file the return.
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• Certificate of exemption from TDS u/s 197 - AO allowed TDS @1% at concessional rate as against 10% - We do not accept the contention of the petitioner that the notes put up by the Assessing Officer suggesting collection of tax at reduced rate of 1% was expression of his final decision.
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• TDS liability on re-insurance premium paid by the assessee to the non-resident re-insurance companies - the profit of non-resident re-insurance company or the person in India who has standing contract with underwriters, who are members of the Lloyds, is taxable in India - TDS liability confirmed.
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• Default in collecting tax at source (TCS) - Even though there are no specific limitation provisions prescribed in Section 206C of the Act, however, the present proceedings under section 206C can be reasonably guided by the limitation provisions as contained in Section 201(3) of the Act.
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• Entitled to claim long term capital gain on transfer of rights in the Flats - Deduction u/s 54 against capital gains arising out of sale of flats - the right over the property in question enjoyed by the assessee, the sale of the said property, the consideration was necessarily in the nature of Long Term Capital Gain - Benefit of LTCG allowed.
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• Disallowance of R & D Expenditure - Claim of deduction on the expenditure on Research and Development u/s.35(1) - Since no approval of prescribed authority is available, the assessee’s claim for deduction is not allowable
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• TDS u/s 195 - when a non-resident agent operates outside the country no part of his income arises in India and since payment is remitted directly abroad and merely because an entry in the books of accounts of the assessee is made, it did not mean that non-resident has received any payment in India
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• Validity of scrutiny assessment - Non-service of the notice on the assessee - notice served through affixture - Assessing Officer failed to serve the notice to the assessee at his last known address and therefore not in confirmatory with the provisions of the Order-5, Rule -17 & Rule-20 of the C.P.C .
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Customs

• Special Drive Fortnight to rectify errors relating to IGST refunds.
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• Initiation of Sunset Review - Anti-Dumping duties (ADD) on Ductile Iron Pipes - while deciding an application for a review, the designated authority’s order should reflect in such decision making process, the parameters of determination, as laid out under Rules 10, 11, 16 and 17.
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• Penalty u/s 114 of CA - duty drawback - There is nothing on record to indicate the appellant M/s Exim Services had instructed/aided M/s Suryakiran International Limited for claiming ineligible drawback on the export of mis-declared and overvalued Denim Garments - No penalty.
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• Refund of anti-dumping duty paid - test of unjust-enrichment - With the invalidation of imposition of anti-dumping duty, the duty collected in consequence should not, in these circumstances, have been credited to the Consumer Welfare Fund - Refund allowed.
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• Import of restricted item - various categories of skin shave gel in semi liquid form - The decision of the Customs Authorities with respect to the lawfulness of imports at ICD Dadri per se cannot be faulted - absolute confiscation not justified - the penalty imposed (to the tune of 100%) appears to be excessive.
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• Duty Drawback u/s 74 of the Customs Act, 1962 - the test reports which were sought to be relied upon at the behest of the petitioner before the adjudicating authority were disbelieved. The reasons for disbelieving the same have been stated by the authorities. - No question of law.
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Service Tax

• Condonation of delay in filing refund application - refund of service tax - SEZ Unit - There is no limit laid down in the said clause during the relevant period. In the case in hand, the adjudicating authority should have exercised this power granted to him for condoning the delay by appreciating the factual matrix in a broader perspective
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• Though the services rendered by the appellant being the services of a non-governmental organisation with no profit motive, the services would definitely be classified under the category of “Manpower Recruitment and Supply Agency Services”
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• C&F agent services - amount received from the service recipient as reimbursement for the maintenance of generators, electricity, AMC and insurance apart from the commission for the services of C&F agent - Bonafide belief - Invocation of extended period and penalty not justified.
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• Nature of activity - machining and grinding of castings purchased - The activities undertaken by the Appellant fall within the ambit of manufacturing and thus beyond the purview of the Business Auxiliary Service
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• Levy of penalty - The issue whether renting of immovable property is liable to service tax was under litigation - The matter is still pending before the Hon’ble Supreme Court - penalty imposed under Section 78(1) of the Act cannot sustain and requires to be set aside.
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• Levy of Penalties - Renting of immovable Property Services - Case of appellant is that when the levy of service tax was introduced, it was difficult for the municipality to immediately intimate the tenants to make necessary alterations to collect service tax - penalties set aside.
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• CENVAT Credit - input services - insurance services (errors and omission policy taken by the appellant for indemnifying the errors / omissions or defects in the software products supplied by them) - Credit allowed.
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Central Excise

• Valuation - related person or not - the Private Limited Company is not a living person and partnership firm is consist on various partners - The appellants are not related person in terms of Section 4(3)(b)(ii) of the Central Excise Act, 1944.
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• Penalty u/r 25 or 26 of CER - Mentioning wrong rule number - The first appellate authority was not correct in holding that mentioning Rule 25 was a typographical error and the intention was to impose penalty under Rule 26, because in the Order-in-Original, the lower authority has discussed as to why penalty is liable to be imposed under rule 25
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VAT

• Law of estoppel - levy of penalty twice the rate - excess stock found during investigation - KVAT - Once the appellant issued cheque for entire amount, the appeal before the appellate authority was not maintainable in view of the law of estoppel, it was unethical for the appellant to file appeal.
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Articles

• ANTI-PROFITEERING CHARGES ON TAX RATE DEDUCTION
• Maggi – the 10th case for National Anti-Profiteering Authority

Notifications

• Central Excise

• 22/2018 - dated 10-10-2018 - CE
  Seeks to amend notification No. 11/2017-Central Excise dated 30th June, 2017 in order to reduce Central Excise duty rates on Aviation Turbine Fuel

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• GST - States

• F-10-51/2018/CT/V(91) - 52/2018-State Tax - dated 20-9-2018 - Chhattisgarh SGST
  Collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies

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• F-10-50/2018/CT/V(90) - 23/2018-State Tax (Rate) - dated 20-9-2018 - Chhattisgarh SGST
  inserts the Explanation in Notification No. 12/2017-State Tax (Rate), No. F-10-43/2017/CT/V(80), dated the 28th June, 2017

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• F-10-48/2018/CT/V(84) - 47/2018-State Tax - dated 10-9-2018 - Chhattisgarh SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated taxpayers

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• F-10-48/2018/CT/V(83) - 46/2018-State Tax - dated 10-9-2018 - Chhattisgarh SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated taxpayers

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• F-10-48/2018/CT/V(82) - 45/2018-State Tax - dated 10-9-2018 - Chhattisgarh SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated taxpayers

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• F-10-48/2018/CT/V(81) - 43/2018-State Tax - dated 10-9-2018 - Chhattisgarh SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores

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• F-10-47/2018/CT/V(80) - 41/2018-State Tax - dated 4-9-2018 - Chhattisgarh SGST
  Seeks to waive the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6

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• 38/1/2017-Fin(R&C)(76) - dated 10-10-2018 - Goa SGST
  Goa Goods and Services Tax (Twelfth Amendment) Rules, 2018

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• 38/1/2017-Fin(R&C)(75) - dated 10-10-2018 - Goa SGST
  Goa Goods and Services Tax (Eleventh Amendment) Rules, 2018

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• Income Tax

• 66/2018 - dated 8-10-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Uttaranchal Board of Technical Education, a board constituted by the State Act Uttaranchal Board of Technical Education Act, 2003, in respect of the specified income arising to the said Board

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• 65/2018 - dated 8-10-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Real Estate Regulatory Authority, Punjab’, an authority constituted by the Government of Punjab, in respect of the specified income arising to that authority

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• 64/2018 - dated 8-10-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Madhya Pradesh Electricity Regulatory Commission’, Bhopal, a Commission constituted by the State Government of Madhya Pradesh, in respect of the specified income arising to the said Commission

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• 63/2018 - dated 8-10-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Kerala State Electricity Regulatory Commission’, Thiruvananthapuram, a commission established by the Government of Kerala, in respect of the specified income arising to that commission

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• Indian Laws

• F. No. 4(22)-B(W&M)/2018 - G.S.R. 1006(E) - dated 8-10-2018 - Indian Law
  Sovereign Gold Bond Scheme 2018-19

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News

• World Bank’s Human Capital Index released

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• Vision of a USD 5 Trillion Indian Economy

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• NITI Aayog's AIM & IBM India design First-of-its Kind Industry-tailored Student Internship Programme

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• Improved connectivity to boost bilateral trade between India and Bangladesh

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• Special Central Government Package for Footwear and Leather Sector

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Case Laws:

• GST

• 2018 (10) TMI 600
  Works Contract Services - Composite supply - Sub-Contract - supply of works awarded by Public Works Department/SC-ST District Officer/Special Officer, Government Medical College being line departments of State Government, the civil structural, internal and external finishing, plumbing and sanitary arrangements, electrical, HVAC, lifts and fire fighting installations, including testing, commissioning attracts @12% GST. Held that:- Government Authority means any authority or a board or any other body set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity control. The Central University of Kerala established under the Central University Act. Hence the supply work relating to the construction of non-science building for various departments at Central University of Kerala, is also taxable @12% GST. Even if the work is executed through RITES Ltd, the applicable tax rate is 12% GST. Life Sciences Park, Trivandrum is an initiative of Kerala State Industrial Development Corporation Ltd. for providing basic infrastructural facilities to research institutions, science and technology academia and companies working in the field of Bio-Technoloo, Nano-Technology and Life Sciences - Therefore, it is evident that the Life Sciences Park, Trivandrum is a commercial venture of the KSIDC Ltd., a State Public Sector Undertaking and accordingly the works contract services in respect of construction of Biotech lab and administrative block at Life Science Park, Trivandrum is covered under SI No. 3 (xii) - Heading 9954 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 18%. Ruling:- Supply of works contracts awarded by Government attracts 12% GST. Supply of works contracts awarded by the Central University of Kerala attracts 12% GST. Supply of work awarded by M/S. HLL Infra Tech Services Ltd. For the construction of Biotech lab and administrative block at Life Science Park, Trivandrum attracts 18% GST.

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• 2018 (10) TMI 599
  Classification of Supply - sale of building - development charge - whether classified as supply of goods or supply of services? - Input tax credit - Is it correct to structure agreement by fixing the land cost by absorbing the development charges? - Whether the ITC availed has to be paid back on pro rata basis, on plots sold after completion? Held that:- As per Paragraph 5 (b) of Schedule II, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required by the competent authority or after its first occupation, whichever is earlier shall be treated as a supply of services. In the instant case, the Completion Certificate in respect of the project has been issued on 31.052018 and the proposed transaction is in respect of sale of developed plots/ land with civil structures after the issuance of Completion Certificate. Therefore the transaction is covered by Paragraph 5 of Schedule III of the GST Act. Hence the sale deed executed for plot as well as undivided share in common area attracts only stamp duty and registration charge - The Input Tax Credit availed in respect of the GST paid on goods and/ or services used / consumed for the development of the land is liable to be reversed on pro rata basis in respect of the plots sold after the issuance of completion certificate. Ruling:- It is lawful to structure agreement by fixing the land cost after absorbing the development charges. The Input Tax Credit availed in respect of the GST paid on goods and/or services used/consumed for the development of the land, in respect of the plots sold after the issuance of Completion Certificate is liable to be reversed on pro rata basis.

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• 2018 (10) TMI 598
  Levy of GST - Supply or not? - naturally bundled services - placement of specified medical instruments to unrelated customers - Whether the placement of specified medical instruments to unrelated customers like hospitals. labs etc, for their use without any consideration, for a specific period constitute supply? - Whether such movement of goods constitutes otherwise than by way of supply under GST? Held that:- The name of agreement executed between the parties is styled as the reagent supply and instrument use agreement. The applicant provides instrument for the use of the customer subject to a condition that customer shall procure agreed quantity of products as per the scheduled time limit. The customer is also responsible for the Cost of any repairs required in connection with any damage caused to the instrument due to negligence or misuse. The agreement between the parties, established that the supply of two components are indispensable for the fulfillment of contract and getting required output - the supply of two components based on the strength of agreement qualifies the concept of combination or two or more naturally bundled' supply and becomes composite supply. The supply of instrument and the products to a hospital/ laboratory is for monetary consideration. Being a composite supply, it is the discretion of the parties to fix the point of exchange of consideration. While supplying the instrument, the applicant deferred the consideration and merged it with the price of products like reagents, calibrators, disposals etc - There is clear provision in the agreement to the effect that, if the customer fails to meet its exclusive purchase obligation or its minimum purchase obligation, the applicant shall have the right to recover the deficit amount from the customer. From this, it is clear that the price realized from the Customer includes subsumed rent of the equipment also. That is why if required quantity of consumable is not used, the customer hospital has the liability to pay the deficit amount. The different elements of the transaction as evidenced by the agreement; namely the provision of the right to use the machine / instrument without consideration and the supply of reagents etc for consideration with a Clause that a minimum amount / quantity of such reagents etc shall be procured are integral to an overall supply namely; the right to use the machine instrument; which is the principal supply. Hence as per provisions of Section 8 of the GST Acts;, the entire transaction is liable to GST under Sl No. 17 (iii) - Heading 9973 - Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other consideration. Ruling:- The placement of specified medical instruments to unrelated customers like hospitals, labs etc. for their use without any consideration, against an agreement containing minimum purchase obligation of products like reagents, calibrators, disposals etc for a specific period constitute composite supply. The principal supply is the transfer of right to use of any goods for any purpose and is liable to GST under Sl No. 17 (iii) - Heading 9973 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.

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• 2018 (10) TMI 597
  Classification of supply - Intermediary Services or not - pure and mere promotion and marketing services - determination of place of supply of services - Composite supply - zero rated supply - export of services or not - POPOS Rules. Whether pure and mere promotion and marketing services will be intermediary services for the purposes of section 12 of the Integrated Goods and Services Tax Act, 2017 for determining the place of supply of such services? If after sale support services are also provided under a composite contract, would it then be composite supply? What will be the principal supply for such contracts? Whether the above contracts would qualify as exports if the client is overseas entity, in terms of clause (6) of section 2 of the Integrated Goods and Services Tax Act, 2017 and will be a zero-rated supply as provided in section 16 of IGST Act, 2017? Held that:- In Clause VI of the contract, it is seen that the commission is calculated on the basis of the amount invoiced for the business transaction, free of VAT and rebates are deductible. Additional costs such as freight, cartage, packing insurance, custom duties, and all other charges and dues, costs for installation, expenses resulting from putting into operation and similar services which are essentially work and labour shall be deducted, even if they are not invoiced separately, shall also be deducted. It is also stated in the contract, where the agent orders goods from the principal at his own expense, the commission due can be deducted directly from the value of goods. Further, it is also stated that any expenses and spendings of the Agent resulting from his activities (regardless of whether they arise generally or in connection with a particular business transaction) shall be regarded as covered by commission that the Agent is entitled to, and such expenses excludes travelling expenses. It is also stated that for spare parts, the commission would be paid for values equal or superior to 250 and repairs are not subject to commission. In sub-clause 6 of Clause IV, it is seen that the consideration is payable for the services which include pre-sales, marketing, sales, installation and warranty period services and the commission payable is for the complete bundle of services. Intermediary services - Held that:- The agreement copy provided by the applicant shows clearly that the price is negotiated by the applicant for the machinery or equipments and intimated to the overseas supplier. It is also seen that the Principal who is the overseas supplier reserves the right to conclude or reject or change the contract, but he shall inform the decisive reasons to the applicant - Even the agreement entered by the applicant with the Principal, call the applicant an agent and since he is facilitating the supply of goods between the overseas supplier who is the principal, and the customer, by soliciting the customers and also by negotiating the prices, terms etc., the predominant nature of the transaction is of intermediary nature. Composite supply or not - Held that:- The incidence of after-sale and warranty services is contingent upon the successful supply of materials and is not contingent upon the marketing intermediary services provided by the applicant to the principal and hence cannot be called as a naturally bundled services. Hence this does not amount to a composite supply and the same are treated as two supplies independent of each other and the valuation of each has to be computed as per Section 15 of the Central Goods and Services Tax Act. Both these independent supplies are only linked to the supply of goods from the ultimate supplier to the consumer and till that happens the transaction of after-sales supplies do not come into existence at all. But the supply of services in the form of intermediary services is related to the supply of goods, as no consideration flows to the applicant without a supply being effected by the Principal and hence it is tightly bound to supply of goods to the Principal. Export of services or not? - Held that:- The issue has to be decided on the basis of the place of supply applicable to each of the transaction. This Authority is not competent to decide on this issue of determination of place of supply and hence does not answer this question. Ruling:- The contract of services supplied are not pure and mere promotion and marketing services and the services provided is of the nature of facilitating the supply of goods, and hence would amount to intermediary services for the reasons enumerated in the aforesaid paragraphs for the purposes of determination of place of supply of such services. The after-sale services provided are not in the nature of a composite contract and they are independent from the services provided in paragraph 1 above and hence there is no question of determination of what will the principal supply. The third question cannot be answered as it is not in the purview of jurisdiction of this Authority as it amounts to determination of the place of supply.

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• 2018 (10) TMI 596
  Application for withdrawal of Advance Ruling application - Classification of supply - Supply of cooked food and beverages to the employees of the customers within designated area (generally the cafeteria / canteen) of the client’s premises - Over the counter supply of food and beverages to the employees of clients / customers. Held that:- The application filed by the Applicant for advance ruling is dismissed as withdrawn.

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• 2018 (10) TMI 595
  Renting of immovable property service - Small Business Exemption - Co-owners - Whether small business exemption under Section 22 of the GST Act is available to all owners separately in case of jointly owned property? Whether engaging a co-owner to collect and distribute rent among all the owners for administrative convenience will have any implication on the business exemption under Section 22 of the GST Act for individual co-owners? Held that:- The rent collected from joint property is equally distributed among the co-owners. Each co-owner received a rent income of below ₹ 20 Lakhs, which is below the threshold limit under GST. By mere joining of hands of two or more persons, a different and distinct legal entity or legal personality does not come into existence, unless there is an intention to do so. A co-owner holding immovable property jointly with other co-owners, but receiving lease rent separately, in proportion to his share in the property, is eligible for the benefit of threshold exemption. There is also Judicial pronouncement under Service Tax that clubbing of rent amount received by each co-owner, as per their share in jointly owned rented property, is not permissible - refer case ANIL SAINI, KABAL SINGH, NEELAM SAINI, SURINDER KAUR, JASWINDER SINGH, PARMOD KUMAR CHAUDHARY, SUKHJEET JODHA VERSUS CCE, CHANDIGARH-I [2017 (1) TMI 101 - CESTAT CHANDIGARH]. Ruling:- Small business exemption, provided under Section 22 of the GST Act, is eligible to the co-owners separately in the case of jointly owned property, where the rent is collected together, but divided equally and transfered to the respective co-owner. Engaging a co-owner to collect and distribute rent among all the owners for administrative convenience has no implication on the business exemption under Section 22 of the GST Act for individual co-owners.

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• 2018 (10) TMI 594
  Petitioner called upon to furnish certain information with reference to levy of service tax on the fee paid for award of license for sale of liquor - Held that:- Respondent fairly submitted that he has received instructions to the State that in 26th meeting of GST Council held on 10.03.2018 it has been decided that no GST/Service Tax is leviable on the fee paid for grant of license sale of liquor for human consumption. Keeping in view the statement made by learned counsel for the respondent, prayer made in the present petition has been rendered infructuous and the same is disposed of accordingly.

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• 2018 (10) TMI 593
  Adjustment of CENVAT credit granted to the petitioner - migration to GST regime - Held that:- Interest of justice would be sub-served by permitting the petitioner to apply before the Nodal Officer as identified in this order - petition disposed off.

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• Income Tax

• 2018 (10) TMI 615
  Addition u/s 40(a)(ia) for non deduction of TDS - Commission paid to no-resident - income deemed to accrue or arise in India - Held that:- The prime requirement therefore for applicability of the section is that the payment to the nonresident should be a sum chargeable under the provisions of the Act. In other words, the payment is not an income which is chargeable to tax in India. Requirement of deducting tax at source under section 195 of the Act would not arise. The nonresident agents appointed by the assessee for procuring export orders do not have permanent establishment in India. Their agents are situated outside India. Their activities as commission agents are being carried out outside India. The Tribunal therefore correctly held that there was no liability on the assessee to deduct tax at source. Merely because a portion of the sale to the overseas purchasers took place in India, would not change situation vis a vis the commission agents. Decided against the revenue.

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• 2018 (10) TMI 614
  Re-opening of the assessment u/s 147 - failure to provide reason to belief despite written request - failure to issue notice u/s 143(2) - Held that:- t by taking note of the insertion of the new proviso with retrospective effect and noticing the law laid down in the case of C.Pananappan [2011 (3) TMI 589 - MADRAS HIGH COURT], the Substantial Question of Law has to be answered in favour of the Revenue and against the assessee. However, as inspite of request made by the deceased assessee, the reasons were not furnished. Therefore, at this distant point of time, we feel it will be inappropriate and inequitable to remand the matter to the Assessing Officer with a direction to furnish the reasons and to proceed in accordance with law. Assessment proceedings quashed on the ground of non-furnishing of reasons for re-opening of assessment and also taking note of the monetary limit involved in this appeal, which is less than ₹ 2 lakhs. - Decided against the revenue.

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• 2018 (10) TMI 613
  Business expenditure - commercial expediency - dealer's termination compensation - reimbursement of advertisement expenses - Tribunal confirmed the additions - Held that:- The Tribunal pointed out that there is no doubt the assessee as well as DEL were closely associated and there is nexus between the two and that the assessee was about to approach the BIFR for revival in the year 1997 and there was no eminent cause or reason for the assessee to terminate the dealership of DEL and when there was no return agreement between the assessee and DEL, it cannot be said that the assessee has taken up a prudent business decision, which is otherwise commercial expediency to terminate the dealership of DEL. The decision has been taken against the assessee purely on facts and we find that no Substantial Questions of Law arise for consideration in this Appeal. - Decided against the assessee.

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• 2018 (10) TMI 612
  Deduction u/s 80I - Rectification of mistake u/s 154 - material available on record - Held that:- First of all, the facts of the case clearly show that the assessee did not make any claim for deduction under Section 80-I of the Act, for the relevant assessment year. Secondly, as pointed out by us in the preceding paragraph, while discussing about the applicability of the decision in Chokshi Metal Refinery [1976 (3) TMI 35 - GUJARAT HIGH COURT], if the interpretation sought to be given by the assessee is to be accepted, then it would mean that the Assessing Officer should virtually sit in the office of the assessee and help the assessee file the return. The assessee has not been able to satisfy this Court that what has been pointed out in the petition dated 22.04.1996 under Section 154 of the Act, is a mistake, which is apparent from the record. It is not a mistake which could be identified by a mere look, since there was no claim made by the assessee for deduction under Section 80-I of the Act. Thus, the decision in the case of Lakshmi Vilas Bank [2009 (12) TMI 99 - MADRAS HIGH COURT] also does not render support to the assessee. Appeal dismissed - Decided against the assessee.

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• 2018 (10) TMI 611
  Certificate of exemption from TDS u/s 197 - AO allowed TDS @1% at concessional rate as against 10% - Assessee incurs huge loss and sought full exemption - Department has allowed for lower deduction of tax for last two years - Held that:- Under subsection (1) of Section 197 it is an Assessing Officer who can entertain and decide an application of an assessee for either total exemption or permission for reduced tax deduction at source. The statute has used the language that if the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of incometax at any low rates or no deduction of incometax, as the case may be, the Assessing Officer shall on application made by the assessee in this behalf give to him such certificate as may be appropriate. Necessarily, therefore, the satisfaction of the Assessing Officer at that stage about the total income of the recipient justifying reduced collection of tax at source would be prima facie in nature. Two things emerge from the said provisions; firstly, that such consideration cannot be devoid of exercise of sound discretionary powers and based on mere ipse dixit of the Assessing Officer. Secondly, that the power vests with the Assessing Officer. No provision or rule is brought to our notice which would enable the higher authority to govern such discretion of the Assessing Officer statutorily vested in him under subsection (1) of Section 197 of the Act. We do not accept the contention of the petitioner that the notes put up by the Assessing Officer suggesting collection of tax at reduced rate of 1% was expression of his final decision. The Assessing Officer, therefore, not having expressed his final decision his opinion would not be binding to the Department. Petition dismissed - Decided against the assessee.

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• 2018 (10) TMI 610
  Transfer pricing - determination of Arm's Length Price (ALP) - OFCD - Corporate Guarantee fee - Claim of expenditure u/s 37(1) incurred on behalf of others - disallowance of R&D expenditure after excluding export turnover for the purpose of computing allocation of R& D expenses. Appeal admitted.

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• 2018 (10) TMI 609
  Levy of penalty 271(1)(c) - under valuation of closing stock - ITAT deleted the penalty - Held that:- Tribunal deleted the penalty imposed by the Assessing Officer and confirmed by the CIT (Appeals) on the ground that the issue was highly debatable and that there was no filing of inaccurate particulars or concealment of income by the assessee. - We see no reason to interfere. - Decided against the revenue.

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• 2018 (10) TMI 608
  Whether on facts and circumstances of the case Appellate tribunal is justified in law on facts in holding that such assessment or reassessment u/s. 153A is to be restricted only to the incriminating materials found during the search and no cognizance can be given to subsequent inquiries u/s 131(1A)? Appeal admitted.

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• 2018 (10) TMI 607
  Transaction in shares - Business income or capital gains - AO was of the opinion that the amount claimed as short-term capital gains really ought to be treated as business income - CIT(A) and ITAT confirmed the additions - Held that:- AO was cognizant of the CBDT’s circular which outlined no less than ten elements which the Revenue authorities are to consider in appreciating, whether or not, capital gains reported by the assessee are in fact so or do they really amount to a business income. Having regard to the concurrent findings rendered on proper application of the law and the relevant circulars, the Court is of the opinion that no question of law arises. - Decided against the assessee.

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• 2018 (10) TMI 606
  Registration u/s 12AA - CIT(E) refused the registration to the trust on the ground that it not a legal trust in the State of Rajasthan in view of section 17(1) of the Rajasthan Public Trust Act, 1959?” - ITAT allowed the registration - Held that:- the issue is squarely covered by the decision of this court in case of Commissioner of Income Tax (Exemptions) vs. M/s Arihanth Charitable Trust [2018 (7) TMI 1815 - RAJASTHAN HIGH COURT] As per the provisions of the Indian Trust Act, the trust can be created even orally and if the assessee is able to give some evidence of creation of such Trust by a word of mouth, the same shall be eligible for registration u/s 12AA/12A of the Act, provided such evidence is filed and the other conditions under the statute are satisfied. Decided against the revenue.

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• 2018 (10) TMI 605
  Assessment u/s 153A - absence of incriminating material found during search - special audit u/s 142(2A) - extension of time limit for submission of Audit Report U/s 142(2A) - Period of limitation - Held that:- nowhere it is the case of Revenue that the aforesaid addition is based on any incriminating material found in the case of the Assessee either for this year or for any other Assessment Year covered by Section 153A of I.T. Act. - CIT(A) was not justified in confirming the aforesaid addition of ₹ 10,10,476/- made by the Assessing Officer. Since the addition is already deleted by us, the other issues raised by the Assessee in the grounds of appeal are academic in nature and need not be adjudicated - Decided in favor of assessee.

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• 2018 (10) TMI 604
  Levy of interest u/s 201(1)/201(1A) and penalty u/s 271C - failure to deduct TDS - production of certificate that relevant taxes have been paid by the deductee of the hospital - TDS liability u/s 194J - TPAs making the payments on behalf of the insurance company to the hospitals over settlement of medical insurance claim etc. under various schemes - Circular No. 8/2009 issued by CBDT clarifying the issue. The assessee, after the CBDT Circular came into force made very herculean effort for obtaining 1614 certificates, out of which the assessee before the AO as well as before the Ld. CIT (A) had produced almost 1584 certificates for which Ld. CIT (A) has given the benefit. Now the dispute is with regard to 90 certificates which assessee could not procure, the tax liability u/s 201 and 201(1A) has been determined. Apart from that, assessee has also challenged the levy of interest by the AO u/s 201(1A) on the payments, on which assessee has produced the certificates. Held that:- professional services relating to medical services alone should be liable for deduction of TDS u/s 194J. The medical services here would include operation fees, Doctor’s consultancy fee or any kind of medical investigation fee. The payments towards bed charges, medicines used on the patients, transportation charges, implants, consumables, etc. will not fall into professional medical services. AO directed to examine these payments and only payment relating to ‘professional medical services’ like, professional charges and medical investigation fees should alone be held to be liable for TDS u/s 194J and not other reimbursements. Only with regard to these payments which are held to be professional charges, the liability u/s 201(1) should be charged and consequently the interest u/s 201(1A) will also be levied. In so far as interest charged under first proviso to section 201(1A), we have already given a finding that in the case of payments where auditor’s certificates have been produced then assessee can not held to be ‘assessee in default’ and consequently, no interest u/s 201(1A) can be charged. Levy of penalty u/s 271C - Held that:- there cannot be a case of automatic levy of penalty u/s 271C. Since the circular has come much after the expiry of the financial year ending on 31st March 2009, therefore, assessee was clearly under a bonafide belief that no TDS is liable to be deducted. Accordingly, we hold that it is not a fit case for levy of penalty u/s 271C and hence same is directed to be deleted. Decided partly in favor of assessee.

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• 2018 (10) TMI 603
  Non-deduction of TDS - Additions u/s 40(a)(i) - Disallowance of re-insurance premium paid by the assessee to the non-resident re-insurance companies - The question now arises for consideration is when the provisions of Section 2(9) of the Insurance Act, 1938 is applicable with effect from 26.12.2014, why it is not applicable for earlier assessment years? - Held that:- the provisions of Section 2(9)(c) of Insurance Act, 1938 is very much applicable to the re-insurance business, therefore, the profit of non-resident re-insurance company or the person in India who has standing contract with underwriters, who are members of the Lloyds, is taxable in India. Hence, the assessee has to necessarily deduct tax on the premium paid to non-resident re-insurance company for re-insurance. Even otherwise, if the assessee claims that there was no person in India, who has standing contract with underwriters who are members of the Lloyds and premium was paid directly to non-resident re-insurance company, then the transaction of the assessee is clearly in violation of provisions of Section 2(9)(c) of Insurance Act, 1938. In other words, the entire re-insurance arrangement of the assessee- company is in violation and contrary to the provisions of Section 2(9) of Insurance Act, 1938. - Order of AO restored - Decided against the assessee. Applicability of MAT u/s 115JB - Held that:- It is not in dispute that the applicability of provisions of Schedule VI of the Companies Act was excluded in respect of insurance companies. Therefore, the provisions of 115JB of the Act, which enables the companies to compute the book profit, may not be applicable to the insurance companies. Appeals filed by both the Revenue and the assessee are partly allowed.

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• 2018 (10) TMI 602
  Default in collecting tax at source (TCS) - scrap sales - levy of interest u/s 201(1A)/206C(7) - Period of limitation - validity of SCN - scope of the term "Scrap" and "buyer" - the assessee is a dealer and not a manufacturer. It purchases scrap from various manufacturers and then carries out sorting of the scrap in different forms like copper, iron, plastics and PVC etc. and then sell the same in retail to various persons. Held that:- so long as the show-cause as well as the final order states clearly the applicable provisions i.e, 206C(6)/206C(7) of the Act, merely the fact that in addition to relevant provisions, it makes a mention of additional provisions 201(1)/201(IA), the same will not make the proceedings invalid Even though there are no specific limitation provisions prescribed in Section 206C of the Act, however, the present proceedings under section 206C can be reasonably guided by the limitation provisions as contained in Section 201(3) of the Act. Admittedly, the Revenue has also not disputed the applicability of Section 201(3) of the Act as apparent from the assessment order. Given that there is no specific finding of the AO or the ld CIT(A) on the aspect of limitation, the matter is set-aside to the file of the ld CIT(A) for the limited purposes of determination whether the present proceedings are barred by limitation as prescribed under section 201(3) of the Act in light of above discussions and the legal propositions so laid down in the decisions referred supra.

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• 2018 (10) TMI 591
  Claim of depreciation on public roads - Claim of depreciation on EDP Equipments - @ 60% OR @ 15% - Disallowance under 43B(F) - disallowance u/s 14A - Held that:- SLP dismissed.

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• 2018 (10) TMI 590
  Capital gain - Asset transferred as "Gift" - Period of Holding - Held that:- In these appeals the tax effect is less than ₹ 1 crore and it also appears that they do not come under any exception provided in Para 10 of the Circular dated 11.07.2018 as amended by Circular dated 20.08.2018. These appeals are, accordingly, dismissed. However, it will be open to the Income-Tax Department to seek revival if the Department finds that these cases are covered under any exception of the said Circular.

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• 2018 (10) TMI 589
  Disallowance of interest - investment made in the 100% subsidiary companies - proof of commercial expediency warranting no interest disallowance - Held that:- In view of concurrent finding of both the authorities and in view of the fact that 86,08,460/- deduction which was allowed by the CIT (A) after following the detail reasoning and the matter was remitted to verify the accounts, in that view of the matter, the first question is answered in favour of assessee against the Department. The funds borrowed to the extent which was from their own fund, interest is required to be deducted in view of the judgment of Supreme Court in Godrej Boyce Manufacturing Company Ltd. [2017 (5) TMI 403 - SUPREME COURT OF INDIA] relied on by Mr. Sanjay Jhanwar. - Decided in favour of assessee. Education cess as a disallowable expenditure u/s 40(a)(ii) - Held that:- In view of the circular of CBDT No. 91/58/66 ITJ (19), dated May 18, 1967 where word Cess is deleted, in our considered opinion, the tribunal has committed an error in not accepting the contention of the assessee. Apart from the Supreme Court decision M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [2017 (11) TMI 655 - SUPREME COURT OF INDIA] referred that assessment year is independent and word Cess has been rightly interpreted by the Supreme Court that the Cess is not tax in that view of the matter, we are of the considered opinion that the view taken by the tribunal on issue is required to be reversed and the said issue is answered in favour of the assessee. Disallowing deduction on account of Capital expenses claimed against the sale of mining rights and not reducing the short-term capital gains - Held that:- For the assessment year 2004-05, it was stated that the same is not revenue expenses then for the relevant year, in our considered opinion, the CIT(A) has rightly accepted the details that payment has been made through cheque and the same has been reflected by the assessee in the balance sheet, merely on that ground the expenses cannot be disallowed since for earlier year it was accepted as capital expenses and capital gains, the issue ought to have been decided in favour of the assessee.

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• 2018 (10) TMI 588
  Validity of scrutiny assessment - Non-service of the notice on the assessee - notice served through affixture - non adherence to mandatory condition for assessment - Held that:- It is really surprising that the notice sent through speed post remained undelivered upto 29th Sep., 2010 and thereafter the same must have been received by the Assessing Officer after 2 and 3 days, may be on 1st October, however, the A.O. passed the affixture order on 28.09.2010. We have failed to understand as to how the A.O. has perceived on 28.09.2010 about the non-service of the notice on the assessee that apparently seems to be mere formality without any basis ,which creates many doubts and shrouds in the genuineness of the assessment proceeding, hence, we do not any hesitation to hold that the notice dated 20.09.2010 as well as 28.09.2010 by way of affixture never been served upon the assessee and in the absence of statutory notices, the Assessment order can not be held valid and therefore on the aforesaid reasons is liable to be set aside and pursuant thereto the appellant order which is impugned herein also liable to be set aside. Assessing Officer failed to serve the notice to the assessee at his last known address and therefore not in confirmatory with the provisions of the Order-5, Rule -17 & Rule-20 of the C.P.C .- Decided in favour of assessee

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• 2018 (10) TMI 587
  Estimation of income - N.P. determination - adopting net profit rate at 3.5% of the turnover after upholding rejection of book result under section 145(3) - AO has estimated at the rate of 5% whereas ld.CIT(A) has substantially reduced the rate to 3.5% - Held that:- Estimation of income would always involve guess work. To our mind 2nd appellate authority ought not to disturb the discretion exercised by the ld.CIT(A) simply for the reason that some minor variation on account of results shown by the assessee in earlier and subsequent year is possible to be made. The basic reason for this is that, the AO has an occasion to visualize about status of the assessee on the basis of his personal knowledge. The kind of inquiry made for rejecting the book results must have lead to harbouring a belief that some higher element of income is involved in the case of the assessee. This has been re-appreciated by the ld.CIT(A). Formation of such estimated opinion ought not to be disturbed by the second appellate authority unless something very serious flaws are being pointed out or it has been established that such belief was formed by the ld.CIT(A) on some extraneous decision. No such situation has been brought to our notice, and hence, we do not wish to interfere in the discretion of the ld.CIT(A) on the estimated rate of profit required to be applied while computing the income of the assessee - Decided against assessee

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• 2018 (10) TMI 586
  Accrual of income - Addition on account of transfer of development rights - receipt of advances - Held that:- The assessee-company rightly contended that income from transfer of development rights would accrue as per I.T. Act when assessee-company would receive approval for construction for specified FAR area from GDA. Unless and until it does not receive the approval from GDA, income would not accrue to the assessee-company. - Decided in favor of assessee. Addition on account of transfer of development rights - allowable expenditure - Chargeability and accruability of value of development rights together with land - following the rule of consistency - Held that:- The assessee-company maintained books of account on the same accounting pattern as have been maintained in earlier years and the offering of the income as per sanctioned FSI have been accepted by the Tribunal in A.Y. 2008-2009. When the assessee-company followed the same accounting system in subsequent year and accepted by the A.O, there is no reason for the A.O. to deviate from the same. CIT(A) has not given any independent finding with regard to claim of the expenditure made by assessee-company as against proportionate income offered for taxation. No fault have been found in the accounting system followed by assessee-company. No material have been produced by the Revenue to rebut the contention of the assessee-company. No justification to disallow the expenses claimed by the assessee-company being cost of the land and development expenses incurred by the assessee-company. - Decided in favour of assessee. Deemed dividend addition u/s 2(22)(e) - Held that:- As perusing the relevant records, it reveals that they are in the form of current and inter banking accounts and contain both types of entries i.e. giving and taking the amount and appear to be a current account and cannot be considered as loans and advances as contemplated u/s 2(22)(e) of the IT Act. The identical issue have been decided by the Tribunal in the case of assessee and other group concerns. Following the same, we are of the view that the amount in question could not be treated as deemed dividend under section 2(22)(e). - Decided in favour of assessee.

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• 2018 (10) TMI 585
  Reopening of assessment u/s 148 - disallowance of deduction u/s 80IA(4) - reasons to believe - Held that:- Referring to the decision of Hon’ble Gujarat High Court in the cases of Classic Network Ltd. Vs. DCIT [2014 (6) TMI 263 - GUJARAT HIGH COURT], Parixit Industries P.ltd. Vs. ACIT [2012 (4) TMI 464 - GUJARAT HIGH COURT] AO has earlier granted deduction under section 80IA, thereafter reopened the assessment by re-appreciating the same material. Hon’ble Court has held that re-opening is being made on account of change of opinion and it is not justifiable. In the present case, AO has re-appreciated the material. Earlier, the AO considered the assessee as engaged in the business of development of infrastructure project, but later on the basis of same material he construed the assessee as a contractor. To our mind, it is a just his change of opinion, and there is no tangible material in possession of the AO to reopen the assessment. Therefore, we allow first ground of appeal in both the years, and quash re-assessment orders in both the years. We taken all the submissions of the assessee while taking cognizance of the statement of facts extracted (supra) vis-àvis finding recorded by the AO. AO construed the assessee as a contractor or sub-contractor for two companies viz. s.MSK Infrastructure & Toll Bridge Pvt.Ltd. and MSK Highway Ltd. It is also pertinent to observe that the AO failed to take of the facts that these two companies are wholly owned subsidiaries of the assessee. The assessee has applied in response to the tenders invited by M.P. Rajya Setu Nirman Nigam Ltd.. It was fully qualified and well equipped to undertake development and completion of contract work. According to the assessee on account of certain technicalities, it has to float two subsidiaries as special purpose vehicle. Later on these subsidiaries amalgamated with the assessee company during the accounting period relevant to AY 2005-06. The scheme of amalgamation was approved by the Hon’ble Gujarat High Court and given effect from the appointed date i.e. 1.1.2005. These facts have totally been ignored while framing the assessment order. Thus, considering the order of the ITAT in the AY 2010-11 and order of the Commissioner passed under section 264 in the AY 2008-09, and details submitted in these years, we are of the view that the assessee is entitled for deduction under section 80IA(4) - decided in favour of assessee.

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• 2018 (10) TMI 584
  Addition under the head “undisclosed transactions” - assessee has been repeatedly stating that he has not undertaken any transportation work for M/s Impex Ferrotech Ltd. and has not issued the alleged bills - Held that:- When the assessee has been repeatedly stating that he had never issued the alleged bills and that he had never undertaken any such transportation work nor received any payment for the same, the revenue authorities are bound to investigate the matter by summoning the persons in charge of M/s. Impex Ferrotech ltd. The genuineness of the bills have to be examined. No transporters payment can be blocked for more than two years without any rhyme or reason. If the alleged bills have nothing to do with the assessee, then suitable action should be taken under law against M/s. Impex Ferrotech Ltd. Thus this issue should be set aside to the file of the Assessing Officer, with a direction to investigate the matter and for discovering the truth. - Decided in favour of assessee for statistical purposes.

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• 2018 (10) TMI 583
  TPA - ALP adjustment - methods prescribed under the Act for determination of the ALP of these inter-group services - determination of ALP of the international transaction of payments made under CCA, at NIL by the TPO - Held that:- The factual findings of the Ld. DRP that I.T. services were utilized by the assessee for its own business purpose and any independent enterprise would have to ask and pay for such services is not disputed. We agree with the view of the Ld.CIT(A) that there services are not stewardship services. The arguments and facts have been analysed in details. We do not find any infirmity on the same. Services were rendered and the assessee received benefits. Hence, we hold that the order of Ld.CIT(A) for AY 2009-10 & 2010-11 and Ld. DRP of AY 2011-12 are upheld. Coming to the submissions of the Ld.DR that the issue should be remanded back to the file of the TPO for fresh adjudication, we find that the payment in question was admittedly reimbursement of cost. When the issue of deduction of tax at source on the very same payments had come up before the Tribunal in the assessee’s own case for AY 2002-03 and the subsequent years, it was held that these were reimbursement of actual cost and hence no tax may be deducted at source on these payments. Moreover, the conditions specified in section 92CA r.w.s 92C(3) are not complied with the TPO. Hence, no purpose could be served in restoring the issue back to the file of TPO for fresh adjudication for determination of ALP. As decided in case of NALCO INDIA [2016 (3) TMI 639 - ITAT KOLKATA]The paragraph no. 7. 12 of the OECD Guidelines provides that there are some cases where an intra-group service perforated by a group member such as a shareholder or coordinating centre relates only to some group members but incidentally provides benefits to other group members.he incidental benefits ordinarily would not cause these other group members to be treated as receiving intra-group services because the activities producing the benefits would not be ones for which an independent enterprise ordinarily would: be willing to pay. But in the instant case no such benefits such as those mentioned in paragraph no. 7. 12 of the OEC]) Guidelines accrued to assessed under the agreement and hence, no incidental benefits accrued under the agreement. Accordingly, we are of the view that the first ground for confirming disallowance by CIT(A) that no independent documentary evidence had been furnished by assessed to show that the fact of actual services having been rendered to assessed and Nalco Pacific too could not substantiate the claim 6or provision of actual services with documentary evidence, has no leg to stand. Also in SCHNEIDER ELECTRIC INDIA PRIVATE LIMITED VERSUS DY. COMMISSIONER OF INCOME TAX, CIRCLE 1 (2) , VADODARA [2017 (6) TMI 392 - ITAT AHMEDABAD] held it cannot be open to the TPO to reject a method of ascertaining the arm's length price without fining a legally permissible method to substitute for the method of ascertaining ALP as adopted by the assessee. To hold that the arm's length price of these services was NIL under the CUP method. the TPO had to necessarily to demonstrate that the same services. whatever be its intrinsic worth. were available for NIL consideration in an uncontrolled situation: that is not. and that cannot be. the case. It is also not the case of the authorities below that the arm's length price of these services, under any other legally permissible method is, NIL There is thus no legally sustainable foundation for the impugned ALP adjustment. - decided against revenue

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• 2018 (10) TMI 582
  TDS u/s 195 - non deduction of tds on commission paid to the various commission agents outside India - According to AO this expenditure is disallowable as income of foreign agents is chargeable to tax the agents have the ‘business connection’ in India and tax should have been deducted under section 195 - Held that:- The commission is paid to the two parties for export sales. The foreign agents are non-resident and the services have been rendered undisputedly by them outside India. The commission payment was also supported by the copy of the agreement and confirmation of commission paid. The copy of the passport of the commission agents were also submitted along with the party wise and invoice wise details resulting into payment of commission. Therefore it is not the case that the payment has been made to on identified parties. Further, The revenue has not brought any material on record to show that either of these commission agents has rendered any of their services in India and the payments have been made to them in India. In view of the finding of the learned Commissioner appeals, we are of the opinion that the income of the foreign agents is not chargeable to tax in India, as they do not have any ‘business connection’ as per provisions of section 9 of the income tax act. In absence of any business connection, the income is not chargeable to tax under section 5 of the income tax act of the non-resident foreign agents. Thhe natural consequences is that on such payment assessee is not obliged to deduct tax at source under section 195 of the income tax act. The learned Commissioner of income tax appeals has relied upon the decision of the jurisdictional High Court EON TECHNOLOGY P. LIMITED [2011 (11) TMI 20 - DELHI HIGH COURT] wherein it has been held that when a non-resident agent operates outside the country no part of his income arises in India and since payment is remitted directly abroad and merely because an entry in the books of accounts of the assessee is made, it did not mean that non-resident has received any payment in India. Therefore, no business connection is established and income tax was not deductible at source and hence no disallowance is called for. We direct learned assessing officer to delete the disallowance on account of commission paid to foreign agent who did not render any services in India. - Decided against revenue.

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• 2018 (10) TMI 581
  Deduction u/s 80-IA - set-off of loss of the eligible industrial unit against the profit of other eligible industrial unit - CIT(A) rejected the finding of AO by holding no justification in netting off of the profit and losses of the two eligible units and allowing deduction thereon - Held that:- It has been held in various decisions that while computing the deduction u/s 80-IA, loss of one eligible unit is not to be set off or adjusted against the profit of another eligible unit. Since the order of the ld. CIT(A) is in consonance with the law laid down by various High Courts and various Benches of the Tribunal, therefore, we find no infirmity in the order of the ld. CIT(A). Accordingly, the same is upheld and the ground raised by the Revenue on this issue is dismissed. Deduction claimed u/s 80-IA disallowed by holding that value of power supplied to its own unit for captive consumption at ₹ 4.28 per unit has been overstated - Held that:- Raipur Bench of the Tribunal in the case of DCIT vs. Hira Ferro Alloys Ltd. [2009 (8) TMI 732 - CHHATTISGARH HIGH COURT] for assessment years 2009-10, 2010-11 and 2012-12 has also decided identical issue by upholding the decision of the CIT(A) wherein CIT(A) has deleted the disallowance made by the Assessing Officer u/s 80-IA by holding that the assessee has not overstated the price of power supplied to its divisions. Further, we find the Assessing Officer in subsequent assessment years i.e. for assessment years 2009-10, 2010-11 and 2012-13 has not made any such disallowance u/s 80-IA on account of power tariff charged to other units of the assessee. Under these circumstances, we do not find any infirmity in the order of the ld. CIT(A) on this issue. Taxability of the carbon credits - Assessee filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 and submitted that the issue relating to the taxability of receipts on account of carbon credit was a highly contentious issue and the law relating to the same has been settled in favour of assessee by the decision of the Hon’ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] - Held that:- Ground is admitted for adjudication. Since this ground was neither raised before the Assessing Officer nor before the ld. CIT(A) for which there is no adjudication, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh. While doing so, he shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. Disallowance on account of CSR expenses - Held that:- We find identical issue had come up before the Tribunal in assessee’s own case for assessment year 2009-10 and 2010-11 submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made by the Assessing Officer. Addition on account of charity/pooja and festival expenses - allowable busniss expenditure u/s 37 - Held that:- dentical issue had come up before the Tribunal in assessee’s own case wherein the Tribunal, considering the CBDT Circular No.17(F.No.27(2)-IT/43) dated 06.05.1983 and another CBDT Circular No.13A/20/68-IT(A-II) dated 03.10.1968 wherein it has been held that the expenses incurred on the occasion of Deepawali and Mahurat are in the nature of business expenditure had allowed and granted relief to ₹ 6,54,900/-. Since in the instant case such relief granted by ld. CIT(A) is only ₹ 3,50,000/- towards purchase and distribution of sweets, therefore, following the order of the Tribunal in assessee’s own case for the preceding assessment years 2009-10 and 2010-11 respectively, we do not find any infirmity in the order of the ld. CIT(A). Disallowance u/s 14A - Held that:- Since admittedly the assessee in the instant case has sufficient own capital and free reserves of ₹ 559.12 crores which is much more than the investments of ₹ 212.09 crores, therefore, respectfully following the decisions cited above, we hold that no disallowance of interest is called for. However, since the assessee is holding huge investments, the income of which is exempt from tax, therefore, some disallowance towards administrative expenses is required to be made. Considering the totality of the facts of the case, we are of the considered opinion that 2% of the dividend income received during the year may reasonably be estimated towards administrative expenses for earning such exempt income. The Assessing Officer is directed to compute the same and the order of the ld. CIT(A) is accordingly modified to this extent. Disallowance u/s 43B - delayed payment of employees’ contribution to PF and ESI - employees’ contribution to PF and ESI although deposited after the due date prescribed under the relevant date, however, were deposited before the due date of filing of the return u/s 139(1) - Held that:- The various Benches of the Tribunal are also taking the consistent view that employees’ contribution to PF and ESI cannot be disallowed u/s 2(24)(x) r.w.s. 36(1)(va) if such deposits are made before the due date of filing of the return. Since in the instant case the assessee has deposited the employees’ contribution to PF and ESI before the due date of filing of the return u/s 139(1) of the I.T. Act, 1961, therefore, following the consistent view of the various Benches of the Tribunal on this issue, we hold that the ld. CIT(A) is justified in deleting such disallowance - decided against revenue

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• 2018 (10) TMI 580
  Disallowance of R & D Expenditure - Claim of deduction on the expenditure on Research and Development u/s.35(1) - mandation of necessary approval taken from the prescribed authority - Held that:- As held by Hon'ble Karnataka High Court TEJAS NETWORKS LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 12 (4), BENGALURU [2015 (4) TMI 1064 - KARNATAKA HIGH COURT] that on a plain reading of section 35(2AB) (1), deduction is allowable u/s. 35(2AB) if it is approved by the prescribed authority. AO has no jurisdiction to examine the correctness of the certificate issued by the prescribed authority. In the present case, a categorical finding is given by AO which remains uncontroverted that the assessee has not produced necessary approval taken from the prescribed authority namely, Secretary, Department of Scientific and Industrial Research, Govt. of India. Since in the present case, no approval of prescribed authority is available, the assessee’s claim for deduction is not allowable - Decided against the assessee.

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• 2018 (10) TMI 579
  Entitled to claim long term capital gain on transfer of rights in the Flats - Deduction u/s 54 against capital gains arising out of sale of flats - Legal right over property - AO in his assessment order mentioned that the flats were not in habitable condition in any manner and the assessee had not even got the possession letter from the builder before transfer/ relinquishment and therefore, the properties in question were not residential units on the date of transfer - Held that:- Read in the context of the definitions of "capital asset" and "transfer" the section carries no words of limitation to the effect that a transfer effected by a person backed up with a title passed on under a registered deed alone could be considered as resulting in a profit or gain assessable under section 45. All that the section looks at is the transfer of a capital asset held as understood under section 2(14) of the Act and under section 2(47) of the Act. AO failed to appreciate that the assessee has acquired a legal right in the capital asset in terms of Section. 2(47) of the Act r.w.s. 53A of the Transfer of Property Act 1882. The assessee was having legal right over the property and for this we have to note the definition of capital asset where the word used is "held" in the Section 2(14) read with explanation to Section 48 of the Act clearly depicts rights of the assessee over a capital asset and also specifies the benefit of indexation to be granted to the assessee on the basis of payments made by her for acquiring the said capital asset. In the instant case of the assessee, the right over the property was held by the assessee for the period of 36 months, therefore, on transfer of these properties the ‘long term capital gain’ has been offered by the assessee. The property is acquired is long term capital assets, therefore, the right over the property in question enjoyed by the assessee, the sale of the said property, the consideration was necessarily in the nature of Long Term Capital Gain. At the best, the date of provisional allotment letter dated 30.05.2007 for Upohar Apartment, Kolkata and in respect of two flats jointly held by her with four other persons at Diamond City South, Kolkata, the letter of provisional allotment issued by the builder on 11.04.2007,is to be considered as date of acquisition of right in the property. Thus assessee is entitled to claim long term capital gain on transfer of these Flats. - Decided in favour of assessee.

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• 2018 (10) TMI 578
  Assessment made u/s 153C - documents seized from the search operation on another person do not give rise to any undisclosed income - Held that:- In the instant case, the satisfaction under section 153C of the Act has been recorded by the Assessing Officer of the searched person on March 25, 2014. A copy of the relevant satisfaction note has been placed by the assessee. AO of the assessee has received the documents subsequent to recording of dissatisfaction and thus, even we can take this date of recording satisfaction under section 153C as the date when the Assessing Officer of the assessee received the documents from the Assessing Officer of the search person. Since this date i.e. March 25, 2014 falls in the assessment year 2014-15, the six assessment years preceding the assessment year 2014-15, are the assessment year 2008-09 to the assessment year 2013-14. Since the assessment year involved before us is 2007-08, it is beyond the six assessment years which could be assessed/reassessed under section 153C of the Act. Thus, in our opinion the assessment proceeding under section 153C of the Act in assessment year in question, is without jurisdiction and beyond the purview of the said provision. Accordingly, we quash the assessment proceeding under section 153C of the Act in the instant assessment year Effective receipt of any amount from FIIT-JEE group - Held that:- Learned counsel has failed to explain as how the funds have been utilised for charitable purpose. In the instant case by way of collusion between the FIIT-JEE group and the assessee, the funds have been given the group entities in the name of disbursement of scholarship etc. This collusion is evident from the statement of Sh. Aseem Gupta as how the cheque books of the assessee-society were controlled by the authorities of the FIIT-JEE group. By way of providing scholarship to the meritorious students, the FIITJEE group has served its business purposes of attracting the students to various courses run by them. Thus in our opinion, the funds of the assessee-society have not been utilised for the charitable purposes. We, accordingly, uphold the finding of the lower authorities in denying the exemption under sections 11 and 12 of the Act. - Decided in favour of assessee.

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• Customs

• 2018 (10) TMI 601
  Initiation of Sunset Review - ADD on Ductile Iron Pipes - import from Peoples Republic of China - Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Articles for Determination of Injury) Rules, 1995 - extension of ADD for a further period. Whether the impugned order dated 17.5.2018 refusing to initiate a Sunset Review, on an application made by the petitioner, stands the test of it being so passed within the prescribed legal parameters? Held that:- As is evident from the Notification dated 10/10/2013, that for the first time, anti-dumping duty on ductile pipes was imposed by a notification dated 14/09/2007. The Central Government had extended the anti-dumping duty on the subject goods i.e. ductile pipes originating in or exported from China for a further period of five years vide a notification dated 10/10/2013. This was done on an assessment of facts in exercise of powers under sub-sections (91) and (5) of Section 9 of the Customs Tariff Act, 1975 read with Rules 18 and 23 of the Customs and Tariff (Identification, Assessment and Collection of Anti-dumping Duty of Dumped Articles for Determination of Injury) Rules, 1995. Section 9A provides for imposition of anti-dumping duty and also stipulates that it shall remain in fore for a period of five years, unless revoked earlier. Sub-section (5) provides that the anti-dumping duty shall cease to have effect on the expiry of five years. The first proviso provides that if, the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may from time to time, extend the period of such imposition for a further period of five years. Therefore, there is power to review the necessity of continuing the enforcement or period of anti-dumping duty on a review so initiated - Rule 23 of the Rules provides that the review, either can be on the Central Government’s own initiative or upon a request by any interested party who submits positive information substantiating the need for such review. Moreover, such an application has to be duly substantiated. What is evident from the facts on hand is that the antidumping duty was initially imposed in 2007 and was initially extended by a period of five years. It was to cease to have effect in 2012, however the designated authority on a review, by a notification dated 10/10/2013 extended the anti-dumping duty for a period of five years and the same is set to expire on and from 9/10/2018. From 10/10/2018, unless the period of anti-dumping duty is further extended, the same shall cease to have effect. The review is carried out under Rule 23 of the Rules. Importantly, sub-rule(3) of Rule 23 states the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 19 and 20 shall mutates mutandis apply in the case of review. Therefore, while deciding an application for a review, the designated authority’s order should reflect in such decision making process, the parameters of determination, as laid out under Rules 10, 11, 16 and 17. Petition allowed.

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• 2018 (10) TMI 577
  Duty Drawback u/s 74 of the Customs Act, 1962 - the imported goods were sought to be exported - High Carbon Ferro Manganese Fines - claim of drawback was rejected by the Jurisdictional Assistant Commissioner on the ground that, the identity of the re-exported High Carbon Ferro Manganese Fines could not be established with the imported High Carbon Ferro Manganese Fines on the basis of the documents submitted at the time of the import and export. Held that:- According to the petitioner, the export document shows that, the Manganese content is 68% minimum. With respect, the same itself will indicate that, the quality was not that, as imported. Moreover, the test reports which were sought to be relied upon at the behest of the petitioner before the adjudicating authority were disbelieved. The reasons for disbelieving the same have been stated by the authorities. It cannot be said that the impugned order suffers from the vice of perversity - petition dismissed.

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• 2018 (10) TMI 576
  Principles of Natural Justice - cross-examination not granted - Whether the Tribunal right to hold that since the order of not granting cross-examination goes to route of the matter, this Tribunal sets aside the letter No. S/1030/ 201617/ CAC/NS-III/ Comm/JNCH dated 06.10.2016 with a direction to adjudicating authority to grant cross-examination as sought by the assessee and decide the matter after following principles of natural justice without appreciating various authorities decisions? Held that:- We would expect the Respondent to file Appeal after considering all aspects and not file Appeals as a matter of ritual and withdraw it when it comes up for hearing before the Court. This indicates the most casual manner in which the Revenue is filing Appeals from the orders of the Tribunal to this Court. This non filtering of orders which need to be challenged, leads to numerous appeals being filed which are without merit. In the present facts, we would have expected the Commissioner to have been more careful before having filed this Appeal. However, we give him the benefit of doubt, that filing of this Appeal was a bonafide mistake and accept his unconditional apology. We hope that he and the other Commissioners of Customs would apply their minds, to the orders of the Tribunal before filing Appeals to higher forums. The Appeal is allowed to be withdrawn.

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• 2018 (10) TMI 575
  Admission and disposal of appeal - substantial question of law - Whether in the facts and circumstances of the case, the appellate tribunal is right in passing the order after five months twenty days from the date of hearing contrary to the judgment of this court in the case of Shivsagar Veg. Restaurant vs. Assistant Commissioner of Income Tax, Mumbai [2008 (11) TMI 64 - HIGH COURT BOMBAY]? Held that:- The decision in the case of GANDHAR OIL REFINERY (I) LTD., KUSHAL N. DESAI, VIVEK SAH, RAJIV PAREKH, SAH PETROLEUMS LTD. (NOW KNOWN AS GP PETROLEUMS LTD.) , APAR INDUSTRIES LTD. VERSUS THE COMMISSIONER OF CUSTOMS (IMPORT) [2016 (10) TMI 157 - BOMBAY HIGH COURT] equally applies to the present case, where it was held that Once the manner in which the tribunal has dealt with the appeals is not agreed, then, no alternative exists, but to quash and set aside the impugned order. Impugned order set aside - Both the Appellant's appeals are restored to the Tribunal for fresh disposal, in accordance with law.

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• 2018 (10) TMI 574
  Penalty u/s 114AA of the Customs Act, 1962 - provision was inserted in the statute book w.e.f. 13.07.2006 - levy of penalty for the period prior to insertion of statute - Manipulation of bills of entry to later the date - It was emphasized in this regard that the Bills of Entry (BoE) were initially filed in 2005; for its own convenience, the Customs authorities asked them to split the same into 14 bills which Atlas did in 2006. Held that:- Although, the BoE which signifies the importation of goods and the official record thereof undoubtedly occurred in 2005, the occasion for the DRI to investigate the genuineness of the transaction arose when the appellant sought to re-export the goods to a company which did not exist. In that sense, it was not the original importation but rather re-attempted importation upon its failure to clear the goods on account of apparently factors beyond its control. The reexport application made sometime in 2007 and the order, which was issued upon it, in the opinion of this court, constituted attempts that were successful on the appellant’s part to claim a fraudulent or otherwise fictitious transaction, to be genuine - the imposition of penalty, which was in respect of the facts that took place after 13.07.2006, was justified. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 573
  Interpretation of Statute - Circular No.35/2017–CUS. dated 16.08.2017 - provisional release of goods - CESTAT has relegated the matter entirely to the Commissioner, with a direction that the application should be decided in accordance with Circular No.35/2017–CUS. dated 16.08.2017 - Held that:- The circular expressly states in para 4.1 that the observations of this court and of the Madras High Court are to be taken into account - This obviously meant that the conditions in paras 2.1 and 2.2 are merely guidance and cannot be treated as mandatory, in all circumstances. The CESTAT is directed to consider the matter afresh and pass an appropriate order having regard to the circumstances of the case - appeal allowed in part.

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• 2018 (10) TMI 572
  Import of restricted item - various categories of skin shave gel in semi liquid form - absolute confiscation - penalty - Held that:- Apparently, the petitioner had in the past been resorting to imports at ICD Tughlakabad from where its goods were cleared. Although, there seems to be some merit in the argument that it was compelled to import the goods at ICD Dadri on account of CONCOR’s decision (for which some kind of generic approval appeared to be forthcoming from the Assistant Drug Controller), nevertheless, it cannot claim ignorance of Rules 43A/113 which continue as it were unamended. The decision of the Customs Authorities with respect to the lawfulness of imports at ICD Dadri per se cannot be faulted - absolute confiscation not justified - the penalty imposed (to the tune of 100%) appears to be excessive. The petitioner is at liberty to move the concerned Commissioner of Customs, Noida for appropriate orders to redeem the goods for the purposes of re-export - petition disposed off.

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• 2018 (10) TMI 571
  Penalty u/s 112(a) of CA on CHA - non-speaking order - Whether the impugned order of the Appellate Tribunal sustaining the penalty imposed on the Appellant under Section 112(a) of the Customs Act, 1961, is nonspeaking and passed in breach of principles of natural justice? - Held that:- The submission of the Appellant which is the fundamental to their challenge of the order in appeal before the Tribunal, is not considered - The Respondent is not able to show any reason, why the impugned order should be sustained in the above facts. The substantial question of law, is answered in affirmative - impugned order is set aside - Appeal of the Appellants are restored to the Tribunal for fresh disposal after following the principles of natural justice.

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• 2018 (10) TMI 570
  Permission to re-export the goods - need to re-export the goods has arisen, as the importer has abandoned the same inasmuch as he has not filed a Bill of Entry for Clearance of the goods - Held that:- Held that:- Without commenting on the merits of both these petitions or on the stand of the Revenue, we feel it would be appropriate if the Commissioner of Customs (Import) i.e. Respondent No.1 would expeditiously dispose of the applications dated 23.06.2018 and 04.07.2018 - petition disposed off.

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• 2018 (10) TMI 569
  Refund of anti-dumping duty paid - test of unjust-enrichment - Held that:- There is an adumbration of the test of unjust enrichment; to counter this, the balance sheets for the relevant years were also submitted - in the relevant years, appropriate provisions have been made indicating that the incidence of duty had been borne by the importers. With the invalidation of imposition of anti-dumping duty, the duty collected in consequence should not, in these circumstances, have been credited to the Consumer Welfare Fund but released in accordance with the provisions of section 27 of the Customs Act, 1962 - appeal allowed - decided in favor of assessee.

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• 2018 (10) TMI 568
  Misdeclaration of export goods - export of man-made fabrics under rebate/DEPB scheme - Confiscation - rejection of declared value - penalty u/s 114 of CA, 1962 - Held that:- For entertaining mis-declaration of value, rejection of the declared value deducible from various circumstantial evidence, is making one pillar - A single pillar is unable to support a superstructure much beyond the top of its surface area; the stability of a structure is possible only with the support of additional pillars. In all matters pertaining to valuation, it is, therefore, required that rejection of declared value should necessarily be followed by determination of an assessable value that has the approval of rules framed for the purpose. Neither does the show cause notice propose nor does the impugned order consummate the valuation exercise. In the absence of re-determination of value, goods cannot be said to have been mis-declared warranting imposition of penalties under section 114 on various individuals, whatever their linkage with the goods may be. Impugned order do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 567
  Refund of excess Export duty paid - Exporter did not challenge the assessment order - whether the respondents are eligible for the refund of the amount of excess export duty paid by them on export of iron ore or otherwise? - Held that:- The assessment in the instant case cannot be considered final by any stretch of imagination for the simple reason that the same was done subject to the outcome of the analysis of the samples by the Chemical Examiner - refund cannot be denied on this ground - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 566
  Penalty u/s 114 of CA - duty drawback - It is the case of the Revenue that on investigation, it was found that the consignment entered for export i.e., Cotton Denim Garments was mis-declared on quality and valuation and it was sought to be exported to avail ineligible higher drawback - Held that:- The Adjudicating Authority has not recorded the exact role played by the M/s Exim Services, except that failure to cancel the first drawback shipping bill and thereafter filing the second shipping bill with proper reasons and intimation to the proper officer, have aided the exporter to conceal the crime. The appellant M/s Exim Services would not be covered under Section 114 for simple reason they had filed shipping bill as per the documents received by them in the first instance or in the second instance of filing drawback shipping bills were on instructions. There is nothing on record to indicate the appellant M/s Exim Services had instructed/aided M/s Suryakiran International Limited for claiming ineligible drawback on the export of mis-declared and overvalued Denim Garments - In the absence of any such evidence, the appellant herein is not liable to be penalized under Section 114 of the Customs Act, 1962 - penalty set aside. Penalty imposed on M/s Expo Freight Pvt. Ltd. - only allegations against them is they had provided container to M/s Suryakiran International Ltd., for the export of mis-declared undervalued Denim Garment for export - Held that:- The findings of the Adjudicating Authority do not indicate any specific role by M/s Exim Services and penalty is imposed only on the finding of the Adjudicating Authority expo freight aided the exporter by providing the container, cannot be held has an activity for visiting penalty under Section 114 of the Customs Act, 1962 - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 565
  Valuation of imported goods - rejection of declared value - Case of respondent is that Department could not provide any data on contemporaneous import of the said consignments of betel nuts at the time of filing bills of entry - Held that:- As assessment in these cases have been done by rejecting the declared invoice prices on a notional value for which no evidence, whatsoever, had been provided to the importer either at the time of import and or at the time of finalisation of provisional assessment, the same is contrary to the Provisions of Section 14 of Customs Act, 1962 read with the Customs Valuation Rules, 1988. The Commissioner (Appeals) had therefore, rightly set aside the assessment orders and ordered that assessment of the imported goods under the various bills of entry, to be made at the declared price - Appeal dismissed - decided against Revenue.

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• Insolvency & Bankruptcy

• 2018 (10) TMI 592
  Application u/s 43 of the Insolvency and Bankruptcy Code, 2016 - Preferential transactions and relevant time - Held that:- Admittedly, the 2nd Respondent is not a related party to the Corporate Debtor and therefore, for preferring an application under Section 43 in respect to transaction made with 2nd Respondent one has to refer to clause (b) of Sub- section (4) of Section 43. In the said provision the period of one year preceding the insolvency commencement date is prescribed to find out whether any preferential transaction was made in favour of any person other than the related party. Admittedly, the insolvency commencement date (date of admission) in the present case is 16.06.2017, the execution of Sale Deed reached finality on 30.05.2016 that is much prior to one year preceding the insolvency commencement dated. In that view of the aforesaid finding we hold that the application under Section 43 of I&B Code in respect of 2nd Respondent was not maintainable and the Adjudicating Authority has rightly rejected the petition.

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• Service Tax

• 2018 (10) TMI 564
  Monetary limit involved in appeal - on account of the monetary limits in these appeals, which are lesser than the threshold limit fixed by the Board's circular dated 11.7.2018, she seeks permission to withdraw the appeals - appeal dismissed as withdrawn.

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• 2018 (10) TMI 563
  CENVAT Credit - input services - insurance services (errors and omission policy taken by the appellant for indemnifying the errors / omissions or defects in the software products supplied by them) - It appeared to the department that general insurance / insurance auxiliary services are not covered within the definition of input service and therefore the appellants are not eligible for the credit - Held that:- In the case of M/s. Rane brake Lining Ltd. Vs. Commissioner of Central Excise [2018 (7) TMI 611 - CESTAT CHENNAI], the Tribunal has allowed credit on product liability insurance - The very same analogy can be applied for the software products which are supplied by the appellant. Further on analyzing the definition of input services, it can be seen that only those type of insurance services which fall under the category of life insurance, health insurance etc. which are availed for personal consumption are excluded from the ambit of the definition - These policies which are for covering the product liability in case of defect to the products supplied would definitely come within the inclusive part of the definition - credit allowed. CENVAT Credit - transit insurance policy - Held that:- The storage services are eligible only upto place of removal. So also outward transportation service is eligible only upto the place of removal. The inclusive part of the definition does not qualify the list of services mentioned therein except storage and outward transportation with the words “upto the place of removal” - the transit insurance policy which is availed by the appellant for moving the goods to the site where the output services are to be provided are also eligible for credit - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 562
  Taxability - extended warranty services on vehicles provided to customers - part of amount retained by appellant - case of Revenue is that the amount retained by the appellant is taxable under authorised service station services and appellant is liable to pay service tax on the amounts retained with applicable interest. Held that:- The genesis of the issue as to what is the amount retained by the appellant in the entire case records has not been considered by the lower authorities in these proceedings. The affidavit filed by the appellant herein indicates some figure which needs to be considered by the first appellate authority to arrive at a conclusion as to whether the refund application filed by the appellant is acceptable or otherwise. The issue of correct tax liability on the amounts retained by the appellant needs to be considered, then the adjudicating authority needs to reconsider the issue in respect of correct amount retained - the matter is remitted back to the adjudicating for coming to a conclusion after considering all the records that may be produced by the appellant - Appeal allowed by way of remand.

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• 2018 (10) TMI 561
  Cum-tax benefit - case of appellant is that they had not collected the service tax and therefore they have to be given cum-tax benefit - abatement for property tax under N/N. 24/2007-ST dated 22.5.2007 - Held that:- It is brought out that the appellant had put forward cum-tax benefit and the same has not been considered by the authorities below stating that the appellant has not furnished evidence. The ld. counsel has submitted that though necessary documents / bills were produced before the adjudicating authority, the same was not considered. That the appellant is ready to furnish the necessary documents again if a chance is given to them - the issue whether the appellant is eligible for cum-tax benefit requires to be remanded to the adjudicating authority for fresh consideration. Benefit of SSI exemption under N/N. 6/2005-ST dated 1.3.2005 - Held that:- This aspect also requires reconsideration by the adjudicating authority. It is also seen from the records that the appellant has not been given the abatement for the property tax under Notification No.24/2007-ST dated 22.5.2007. The adjudicating authority shall also consider this plea of the appellant if sufficient proof is adduced by the appellant. Penalties - Held that:- The issue whether renting of immovable property is subject to levy of service tax was under litigation during the disputed period and there were litigations filed by the tenants pending before the various High Courts - The issue is still pending before the Hon’ble Supreme Court - penalties do not sustain. Appeal allowed in part.

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• 2018 (10) TMI 560
  Renting of immovable property service - co-owners of inherited property - threshold exemption to each co-owners separately - Held that:- The Tribunal in the case of Sarojben Khulsanchand & Ors. Vs. Commissioner of Service Tax, Ahmedabad [2017 (5) TMI 240 - CESTAT AHMEDABAD], had considered the similar issue and held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 559
  Renting of immovable property service - co-owners of inherited property - threshold exemption to each co-owners separately - N/N. 6/2005-ST dt.1.3.2005 - Held that:- The Tribunal in the case of Sarojben Khulsanchand & Ors. Vs. Commissioner of Service Tax, Ahmedabad [2017 (5) TMI 240 - CESTAT AHMEDABAD], had considered the similar issue and held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. Demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 558
  Penalties on Local Authorities - Delay in payment of service tax - Renting of immovable Property Services - Case of appellant is that there was no levy of service tax at that time and when the levy of service tax was introduced, it was difficult for the municipality to immediately intimate the tenants to make necessary alterations to collect service tax - it was also argued that the issue is interpretational. Held that:- Appellant, being a municipality, has to take up a lot of formalities before giving the premises for lease as well as for collecting rents. The premises were already leased out for three to five years without incorporating the levy of service tax. It is understandable that such a local self-body would find it very much difficult to collect the service tax from the tenants without proper orders from higher authorities. They have written letters to the Principal Commissioner, etc., to obtain sanction for collection of service tax as well as for remitting the service tax. Thus, the delay in payment of service tax occurred due to such reasons. It is convincing that the appellants have put forward reasonable cause for failure to discharge service tax - this is a fit case to invoke section 80 - Penalty set aside - The impugned Order is therefore modified to the limited extent of setting aside the penalties imposed without disturbing the demand or interest thereon. Appeal allowed in part.

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• 2018 (10) TMI 557
  Renting of immovable property service - default in payment of rent- Department has adjusted the advance received as security deposit by the appellant towards the demand raised for the period 2007-08 - case of appellant is that this is not warranted as this amounts to higher burden of interest - penalty - Held that:- The intention of the security deposit is to adjust the same when there is default in payment of rent. Such default has happened only from October, 2009 to March, 2010. In that case, the Department cannot demand service tax on the advance received by the appellant for the period 2007-08. This would make the appellant pay a higher amount of interest - appellant argues that they have discharged the service tax liability along with interest by calculating the adjustment of advance received by them to the rent dues for the period October, 2009 to March, 2010 - matter is remanded for requantification. Penalties - Held that:- The issue whether renting of immovable property is liable to service tax was under litigation - The matter is still pending before the Hon’ble Supreme Court - penalty imposed under Section 78(1) of the Act cannot sustain and requires to be set aside. Appeal allowed in part and part matter on remand.

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• 2018 (10) TMI 556
  Nature of activity - Manufacture or service? - Business Auxiliary Service or not? - machining and grinding of castings purchased. Whether the activity of doing job work of the castings namely, Elbow, Cocks and Valves, after subjected to grinding and machining, amount to manufacture or not? Held that:- We have gone through the Chapter notes pertaining to Tariff Sub-heading No. 74199100 of the Central Tariff Act, 1985 which pertains to cast, moulded, stamped or not forged, further worked and the conversion of the same into finished goods find it place at Tariff Sub-heading No. 8481 80 20 which is evident from the table as extracted above. It is therefore, evident that when the goods are falling into the two different categories within the Central Excise Tariff Act, the same will mean that amount to manufacture. It is also clear from the Section 5 (a) of the Section 15 of the Central Excise, Tariff Act. The activities undertaken by the Appellant fall within the ambit of manufacturing and thus beyond the purview of the Business Auxiliary Service - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 555
  C&F agent services - amount received from the service recipient as reimbursement for the maintenance of generators, electricity, AMC and insurance apart from the commission for the services of C&F agent - extended period of limitation - penalty - Held that:- From the grounds of appeal of M/s Uniware Distributors Pvt. Ltd. it can be seen that they have not challenged the demand on merit and, thus, it is not open to them to raise the said issue now. Extended period of limitation - penalty - Held that:- Under Rule 6(8) of the Service Tax Rule 1994, the tax can be levied only on the amout of commission received for the services. The said sub-rule has clearly been interpreted by Hon’ble High Court also in the case of Sangamitra Service Agency [2013 (7) TMI 862 - MADRAS HIGH COURT] - the appellant had a bonafide reason to believe that the tax is payable only on the Commission received by them - Invocation of extended period and penalty not justified. Appeal allowed in part.

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• 2018 (10) TMI 554
  Manpower Recruitment & Supply Agency Service - amounts received as consideration from District TB Control Society, sponsored by Government of Andhra Pradesh for implementation of Revised National Tuberculosis Control Programme - Held that:- It is seen from the said contract/MOU that the District TB Control Society being empowered to implement the programmes which is mandated to the appellant herein - though the services rendered by the appellant being the services of a non-governmental organisation with no profit motive, the services would definitely be classified under the category of “Manpower Recruitment and Supply Agency Services”. The claim of the appellant that these are reimbursable expenses is also not established from the contract which have been produced in the appeal memorandum. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 553
  GTA Service - freight charges for transportation of imported Styrene Monomer from Visakhapatnam port to their factory premises - liability of Service Tax - Held that:- The said VPRS Transport is engaged in the activity of Goods Transport Agency Services - The claim of the appellant is that the tankers supplied by individuals and hence not taxable under GTA is incorrect inasmuch the said VPRS Transport issues an invoice cum challans for movement of Styrene Monomer from port to factory premises of the appellant. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 552
  Site formation and clearance services - appellant is a mines contractor and is into drilling and blasting work in mines; was awarded winning of iron ore by drilling and blasting in mines; the said activity was conducted for a consideration during the period 16.06.2005 to 31.12.2008 - demand of service tax with Interest and penalty - tax prior to 01.06.2007, when the service tax were levied - Held that:- On perusal of the said work order it transpires that activity undertaken by the appellant is regarding drilling and blasting of sufficient quantity as and when required of iron ore in the mines; the said work order also specifies about the drilling pattern and explosive for such drilling will be given by the mine owners; the bills which have been raised by the appellant for payment also indicates that consideration is towards the gross quantity which has been blasted in the mines or winning of the iron ore - From the mere reading of the said activity and the activity undertaken by the appellant, it can be seen that the appellant is engaged only in drilling and blasting in the mines and the definition of site formation and clearance services will not get attracted to the activity undertaken by the appellant. A similar issue came up before the Bench in the case of Shipping Corporation of India Ltd [2016 (8) TMI 852 - CESTAT MUMBAI], the Bench held that the service tax liability on the entries which have been inserted from a specific date cannot be taxed under any other entry prior to such date. The activity undertaken by the appellant i.e., drilling and blasting in the mines cannot be taxed under site formation and clearance services prior to 01.06.2007. Liability of tax post 01.06.2007 - Held that:- Appellant is not contesting the tax liability of such services - Since law is settled on this point there being no findings recorded by the adjudicating authority on this point, while upholding the taxability of the services of drilling and blasting post 01.06.2007, under mining services, matter remanded back to the adjudicating authority to recompute the tax amount by considering the amounts received by appellant as cum tax value and the interest liability thereof. Appeal disposed off.

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• 2018 (10) TMI 551
  Classification of services - appellant were executing various contracts for the Andhra Pradesh State Irrigation Development Corporation Ltd., Panchayat Raj RWS, Public Health etc., on composite/Turnkey basis - works contract - demand for the period prior to 01.06.2007 - whether during the period in question, the activities under taken by the appellant would get covered under erection commissioning and installation services or otherwise? Held that:- Since, it is undisputed that the activity under taken by the appellant is laying of pipeline for irrigation projects for the period involved under a composite contract and the show cause notice also demands service tax under erection, commissioning and installation charges, we find that the entire demand needs to be set aside as unsustainable. Similar issue came up before the Larger Bench of the Tribunal in the case of Lanco Infratech Limited [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], where it was held that Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/ contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act. Also, prior to 01.06.2007 the demand on the appellant cannot be sustained in view of the judgment of the Apex Court in the case of Larsen & Tourbo Ltd., [2015 (8) TMI 749 - SUPREME COURT] as it is the fact that contracts which are awarded to the appellant are for erection & commissioning of various irrigation projects. That would mean that the entire contract is a works contract. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 550
  Reverse Charge Mechanism - GTA Service - freight incurred in connection with transport of goods - benefit of abatement of 75% of the value of the freight charges as provided under N/N. 32/2004 also denied - Revenue unable to justify the demand in SCN and also unable to produce relevant records - Held that:- On a specific query raised from the Bench, both sides are unable to show from the show-cause notice as to how the figures have been worked out by the Revenue in the show-cause notice in paragraph No. 7 as reproduced hereinabove - The random extract which is produced before us of the ledger accounts do not indicate that the amounts which were shown as selling expenses are not only freight charges, leave alone the figures as reported by the appellant in the audited balance-sheet are totally different from the figures on which demands have been raised. Revenue has not been able to justify the demand in the show-cause notice itself and despite the request of the appellant to give them the documents to defend their case, Revenue was unable to produce other relied upon documents even before us. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 549
  GTA Service - reverse charge mechanism - goods transport agency services for transportation of effluent generated in their factory during the period January, 2005 to September, 2008 - time limitation - Held that:- Similar issue of transportation of effluent waste through pipeline or conduit, was being considered by the Tribunal as to whether taxable or otherwise, in the case of Gujarat State Fertilizers and Chemicals Ltd Vs CCE [2014 (7) TMI 893 - CESTAT AHMEDABAD], where it was held that the said services cannot be taxed under the head “GTA Services” - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 548
  CENVAT Credit of CVD paid - capital goods/inputs used for providing output services - import of chassis on payment of applicable customs duty, procured kit buckets, cylinders etc. and other body building material and assembled the same at their site as tippers and dumpers and used the same for the purpose of transportation of overburden - denial of credit on the ground that these vehicles are motor vehicles and cannot be considered as capital goods or inputs - Held that:- Identical issue decided in the case of GANTA RAMANAIAH NAIDU VERSUS COMMISSIONER OF CENTRAL EXCISE, GUNTUR [2009 (9) TMI 261 - CESTAT, BANGALORE], where it was held that duty paid on motor vehicles cannot be considered as eligible CENVAT credit under capital goods or under inputs - credit rightly denied. CENVAT Credit - duty paying documents - invalid documents - Held that:- The issue needs reconsideration by the adjudicating authority as random sample documents produced before us indicate that appellant may be able to justify their contention that they are eligible for the CENVAT credit - matter on remand. As regards CENVAT credit availed in excess of 50% of the capital goods of an amount of ₹ 29,08,122/- there are no merits in the contentions raised by the learned counsel that this amount is included in the amount of CENVAT credit denied and is upheld. CENVAT credit of cess availed by the appellant - Held that:- On perusal of CENVAT Credit rules, it is found that it does not contemplate for availment of CENVAT credit of motor vehicle cess - demand upheld. Confiscation of tippers and spare parts - Redemption fine - Held that:- Such confiscation is unwarranted as the appellant during the relevant period may have entertained a bonafide belief that since the said tippers after assembly were used for rendering taxable output service, they are eligible for CENVAT credit - confiscation and redemption fine set aside. Penalty u/r 15 - Held that:- There could be a bonafide impression that any inputs or input services or capital goods used for providing output services were eligible for CENVAT credit, which was an industry norm and had to be decided by the Tribunal in the case of Ganta Ramanaiah Naidu - issue being contentional, penalty not warranted. Appeal allowed in part.

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• 2018 (10) TMI 547
  Refund claim - relevant date - the relevant date of refund claim for the purpose of limitation is the “date of payment received in foreign exchange by the service provider” or the “date of export of service.”? - Held that:- Larger Bench decision of CESTAT South Branch, Bengaluru in Bengaluru Service tax vs. Span Infotech Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] has held that export of service is completed only on receipt of consideration in “Foreign exchange and therefore the date in Forward Inward Remittance Certificate (FIRC) is relevant” in view of N/N. 27/2012 with effect from 01.03.2016 [14/2016 (NT) refers] - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 546
  Non-deposit of the service tax collected by appellant from their customers - Advertising services - demand of tax with Interest and penalties - Held that:- The appellant had not disputed the factual matrix that they had in fact charged and collected the service tax liability for the period in question form their customers. Despite collecting such an amount from their customers, appellant did not deposit the same in to the Govt Treasury. Subsequently they deposited the said amount. We find from the records that it is not very clear as to whether the appellant has deposited the entire amount to day also - the appellant had not even filed the monthly returns indicating the service tax liability to the departmental authorities and the amounts collected by them during the course of business - demand upheld. Simultaneous penalties under Section 76 & 78 of FA - Held that:- These arguments will not carry the case of the appellant any further as it is seen from the records that show-cause notices were issued on 20.04.2007 and before the insertion of provisions of Section 78 of the Finance Act 1992 which indicated non-imposition of simultaneous penalties. Invocation of Section 73 A of the Finance Act 1994 - Held that:- Provisions of Section 73 A would be attracted only when the amounts collected by the assessee is in excess of the tax which is deposited or to be deposited in the Govt Treasury indicating them as tax in the invoices - In the case in hand, appellant had charged the applicable rate of tax, collected the same, hence, provisions of Section 73 for the demand of non-payment of tax was correctly invoked. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 545
  Short payment of Service Tax - whether the appellant herein is required to discharge the differential service tax liability on the services rendered of erection of telecom towers, construction of petrol pumps and industrial buildings, erection and painting of telecom towers, erection and installation of telecom equipments as a sub-contractor, erection of railway signalling system (railways) or otherwise? Held that:- The services rendered by the appellant as engaged herein above are indeed rendered by the appellant; that the billing is done on erection per tower basis rate; entered into agreements with various telecom service providers and considered the amounts as composite contracts involving supply of material and services and as per their understanding, paid tax after availing abatement of 67% as provided. In respect of the telecom tower installation services, construction of petrol pumps and industrial buildings, erection and painting of telecom towers and erection of signalling system for railways, these works have been awarded to the appellant on turnkey basis for laying the foundation as per the design, erect tower materials on the foundation, civil works for base station and consumption of materials like cement, steel for laying the foundation and construction of petrol pumps, industrial buildings are undisputedly composite contract for supply in materials and in the case of works contract in respect of railways, it is a works contract awarded to the appellant - the tax demand confirmed on tower implementation service, erection and painting services, erection services as sub-contractor and erection of signalling system for railways and construction services rendered to IOCL for the period prior to 01.06.2007 needs to be set aside. Demands raised on appellant post 01.06.2007 under the category of tower implementation services and erection and installation services as a sub-contractor - Held that:- The demands raised under these two heads needs reconsideration by the adjudicating authority as the random perusal of the documents and impugned order indicate that the claim of the appellant has not been considered in proper perspective by the adjudicating authority - matter on remand. Demand on signalling system erected for railways, post 01.06.2007 - Held that:- The said work has been executed by the appellant under a contract awarded by the railways which has to be considered as works contract and the definition of works contract under Sec.65 (105) (zzzza), excludes from the tax liability, the work executed for railways - Demand set aside. Penalties - Held that:- The entire issue involved in this case is of interpretation and covered by the decision of the Apex Court for substantial period and set aside by us, interest and penalties are set aside - penalties set aside. As regards the interest liability for the amounts which needs to be reconsidered by the adjudicating authority, it is not open to the adjudicating authority to come to an appropriate conclusion, as also in respect of the penalties on those amounts. Appeal disposed off.

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• 2018 (10) TMI 544
  Condonation of delay in filing refund application - refund of service tax - SEZ Unit - N/N. 40/2012-ST dated 20.06.2012 - Held that:- The said order of the adjudicating authority not condoning delay in few applications, needs reconsideration as the procedure mentioned in the Notification No.40/2012- ST dated 20.06.2012 for sanctioning of the refund claims based on this exemption notification, specifically at clause 3(a) indicates that refund claims should be filed within one year from the end of the month in which actual payment of service tax was made by such developer or unit (SEZ) to the registered service provider but considering the situation prevalent at ground level, such clause 3(a) specifically grants powers to the Asst. Commissioner or the Dy. Commissioner of the Central Excise as the case may be condoning the delay of such extended period. There is no limit laid down in the said clause during the relevant period. In the case in hand, the adjudicating authority should have exercised this power granted to him for condoning the delay by appreciating the factual matrix in a broader perspective, wherein the delay has been sought to be explained. The adjudication order for rejection of refund claims of ₹ 13,75,625/- needs reconsideration by the adjudicating authority looking at the circumstances at which appellant had to file the refund claims belatedly - Appeal allowed by way of remand.

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• 2018 (10) TMI 543
  Penalty u/s 78 of FA - non discharge of service tax by the appellant for the period 2004- 05 to 2008-09 on the TDS value - Held that:- In the case in hand the issue is regarding non payment of service tax on the TDS deducted as per agreement, which was contested before various forums and appellant could have had a bonafide belief that tax liability need not be discharged on such TDS amounts - since the entire tax liability in these proceedings stands paid before issuance of show cause notices and the interest thereof stands paid before adjudication. Penalty not called for - appeal allowed.

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• 2018 (10) TMI 542
  Demand of Interest and penalty u/s 76 - short payment of service tax - intent to evade present or not - Held that:- It was informed that assessee has not paid said tax liability and interest thereof. In the absence of any evidence to show that assessee had intention to pay the tax with interest which is short paid, the impugned order is correct in imposing penalty along with interest on the appellant - demand upheld. Penalty - Reversal of ineligible CENVAT credit availed - Held that:- Appellant has availed ineligible CENVAT credit and should have reversed the same as soon as the adjudicating authority has passed the order but the same still remains to be paid despite the adjudication order passed by the authority in 2016 - the prayer for leniency on penalty imposed under this also does not hold any good. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 541
  Rectification of Mistake - factual error that is sought to be corrected, is rectification of the figure of redemption fine imposed and recorded by the Bench in Para 5 of the Order - Held that:- The error is rectified and the last sentence of Para 5 will be read as under “Keeping in view the entire issue, I reduce the redemption fine from ₹ 3.50 lakhs to ₹ 1.00 lakhs (Rupees one lakh only).” - application for ROM allowed.

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• 2018 (10) TMI 540
  Doctrine of Merger - Classification of services - Storage and warehousing services or otherwise? - Held that:- It is a fact that when the matter was taken up for disposal by the Revisioning authority, the Order-in-Original got merged with the order of first appellate authority - the doctrine of merger applies and provision of Section 84(4) would come into play and the Revisioning authority had no power to pass any order under the said section - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 539
  Rectification of Mistake - The error that is sought to be rectified is on the ground that the Bench has not recorded any findings on the issue of taxability on Goods Transport Agency Services - Held that:- The lower authority needs to be given an opportunity to reconsider the issue in respect of the goods transport agency services in its entirety keeping in mind the Order-in-Original already passed - the Adjudicating Authority should take up the matter for disposal on the supply of tangible goods service as remanded by our Final Order dated 20.05.2016 and as also GTA services is remand proceedings. Application for rectification of mistake stands disposed of.

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• Central Excise

• 2018 (10) TMI 538
  Condonation of delay in filing appeal - Limitation act - Section 35C of the Central Excise Act, 1944 - Power of Commissioner of Central Excise (Appeals) to condone the delay - Held that:- The Petitioner was aggrieved with the order dated 30th November 2015 (received on 11th December 2015) passed by the Additional Commissioner of Central Excise confirming a demand. This grievance was sought to be addressed by filing on 14th December 2015 an rectification/review application before the Additional Commissioner of Central Excise - the above Application dated 14th December 2015 has not yet been disposed of. It was in early June 2016 that the Officers of the Respondents enquired of the Petitioner whether or not an Appeal had been filed from the Order dated 30th November 2015. This resulted in the Petitioner filing an Appeal on 11th June 2016 to the Commissioner of Central Excise (Appeals). Both the Commissioner of Central Excise (Appeals) as well as the Tribunal rejected the Petitioner's Appeal on the ground that there is no power in the Commissioner of Central Excise (Appeals) to condone the delay beyond the aggregate period of 90 days provided under Section 35 of the Act - This is not correct in view of the decision the Supreme Court in M.P. Steel Corporation Vs. Commissioner of Central Excise [2015 (4) TMI 849 - SUPREME COURT]. Thus, the Tribunal ought to have considered whether or not the Petitioner has made out a case which would entitle it to the benefit of the principle available under Section 14 of the Limitation Act, 1963. That is to examine the facts and determine whether the delay in filing the Appeal to the Commissioner of Central Excise (Appeals) could be condoned on application of the above principle. The impugned order dated 6th October 2017 of the Tribunal is quashed and set aside. The Petitioner's Appeal is restored to the file of the Tribunal for fresh disposal on merits on consideration of the reason for the delay in filing the Appeal.

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• 2018 (10) TMI 537
  Maintainability of petition - Held that:- The petition revolves on the issue of determination of whether hearing was granted before the passing of the impugned order dated 12th February, 2016. Therefore, the same will be appropriately dealt by the Authorities under the Act. Therefore, there is no warrant to exercise extraordinary jurisdiction in the facts of this case. Petition dismissed.

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• 2018 (10) TMI 536
  Monetary amount involved in the appeal - CENVAT Credit - Held that:- The monetary limit, involved in the instant case, being well below the amount fixed in the instruction dated 11.7.2018, the Department cannot pursue this appeal - Appeal dismissed.

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• 2018 (10) TMI 535
  Penalty u/r 25 or 26 of CER - Mentioning wrong rule number - SSI Exemption - use of brand name of others - Demand based on statement of Shri Murali Krishna, Director of M/s Sada Healthcare Products Pvt. Ltd. - opportunity of being heard - principles of natural justice - scope of SCN - SCN proposed imposition of penalty under Rule 26 whereas the Order-in-Original has imposed the penalty under Rule 25 of Central Excise Rules, 2002 - Held that:- The appellant was never given an opportunity to defend themselves against imposition of penalty under Rule 25 and therefore the penalty needs to be set aside on this ground alone. The first appellate authority was not correct in holding that mentioning Rule 25 was a typographical error and the intention was to impose penalty under Rule 26, because in para 15 of the Order-in-Original, the lower authority has discussed as to why penalty is liable to be imposed under rule 25, both on M/s Sada Healthcare Products Pvt. Ltd. and the appellant herein. Penalty u/r 25 - Held that:- Penalty under rule 25 can be imposed on any producer, manufacturer, registered person of a Warehouse or a registered dealer for various contraventions. It is not the allegation in the show cause notice that the appellant is the manufacturer - penalty u/r 25 set aside. Penalty u/r 26 - Held that:- Penalty u/r 26 is imposable on any person who acquires possession of or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or dealing in any other manner with any excisable goods which he knows or has reason to believe are liable to confiscation - Show cause notice does not bring out any facts which can support the allegation of both involvement of the appellant in any of the aforesaid activities nor the intention to do so except for the uncorroborated statement by the Director of M/s Sada Healthcare Products Pvt. Ltd. - penalty u/r 26 set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 534
  Levy of Tractor Cess - whether the tractor cess is leviable on the part and component of the tractor cleared by the appellant? - Held that:- It is clear that part and accessories etc. of the tractor cannot be compared with that of the tractor itself. Therefore, the tractor cess is not leviable thereon in terms of Notification dated 06.09.1985. CBEC Circular No. 41/88, dated 31.08.1988 in the case of parts and accessories of the automobile which clearly goes in favour of the appellant - aforesaid circular is with reference to automobile cess but the principle enunciated there is squarely applicable in the instant case. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 533
  CENVAT credit - ineligible documents - rule 9(1) of CCR - debonding of EOU - service tax on the commission paid to their overseas agencies, covering the period from April 2006 to December 2012 - VCES Scheme - Held that:- The appellants have paid the service tax and have also filed declaration under VCES. Final discharge certificate was issued only on 03.09.2014 and there was no occasion to avail the CENVAT credit prior to receiving of the discharge certificate. They have availed the CENVAT credit only on 30.09.2014. There were correspondence exchanging views between the appellants and their Range authority and they had taken the credit on a later occasion as advised by the Range authorities and in such a factual scenario, there is no occasion to deny the benefit of the credit to which the appellants are lawfully entitled to. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 532
  Valuation - related person or not - Rule 9 of Valuation Rules, 2000 - M/s Hindustan is a partnership firm and M/s Malkoh is a Private Limited Company - under-valuation - case of the Revenue is that both the appellants are related to each other, therefore, valuation of the goods cleared to M/s Malkoh is to be determined in terms of Rule 9 of the Central Excise Valuation Rules, 2000 Held that:- In terms of section 4(3)(b)(ii), if the person is relative then he should be relative in terms of Section 2(41) of Companies Act, 1956, which defines that relative means with reference to any person who is related to such person in anyway specified section 6 of and no others - as the Private Limited Company is not a living person and partnership firm is consist on various partners but the private limited company/partnership firm find no mention in schedule of 1(A) of section 6 of the Companies Act, 1956, therefore, the Revenue’s case fails on this ground only. The appellants are not related person in terms of Section 4(3)(b)(ii) of the Central Excise Act, 1944. Applicability of Rule 9 of Central Excise Valuation Rules, 2000 - Held that:- Admittedly, whole of the goods are not sold by the M/s Hindustan through M/s Malkoh. In fact, M/s Hindustan is selling goods to Government Department as well as for exports. In that circumstances, the provisions of Rule 9 of Central Excise Valuation Rules, 2000, are not applicable to the facts of this case. Therefore, on that ground also, the charge of Revenue of under valuation is not sustainable. Thus, the appellant are not related persons in terms of section 4(3)(b)(ii) of Central Excise Act,1944 and provisions of Rule 9 of the Central Excise Valuation Rules, 2000, are not applicable to the facts of this case, therefore, the impugned orders are not sustainable in the eyes of law - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 531
  Relief from Interest and penalties - method of Valuation - it was contended that the central excise authorities were inconsistent in adopting different practices for determination of the differential amounts to be paid despite which they had been complying - appellant has not been laggard in discharging the duty liability and, despite the demonstrated inconsistency in the approach of central excise authorities on the computation method, further duty liability had also been deposited along with a substantial portion of the interest. Held that:- The appellant was discharging duty liability in accordance with the adhoc procedure notified for computation of assessable value on goods cleared for captive consumption. The scheme itself envisages reliance upon the data of the previous year for discharge of provisional duty and which, upon availability of data of the current year, is adjusted for payment of the differential duty. Thereby, the legal provisions acknowledge the existence of a differential duty within the framework of law. Furthermore, the contention of the appellant that this scheme of payment of duty should be deemed to be provisional does not appears to be unattractive. The Tribunal, in a similar dispute relating to the same appellant, had upheld the decision of the lower authorities to demand interest and we find no reason to take a contrary view. Interest liability upheld - penalty set aside - appeal allowed in part.

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• 2018 (10) TMI 530
  CENVAT Credit - input services - place of removal - Outward GTA service - Extended period of Limitation - Held that:- Supreme Court in the case of Ultra tech Cement Ltd [2018 (2) TMI 117 - SUPREME COURT OF INDI] on the issue of ‘Place of Removal’ as well as on the eligibility of the Cenvat credit on outward GTA prescribed some guide lines for field formation for deciding the case of cenvat credit on outward GTA. Since the issue involved is mixed question of law and facts, the facts first to be verified that whether the GTA service in each case is up to the place of removal or beyond place of removal. Therefore, without verifying these facts any judgment of Supreme Court cannot be applied in straight away - matter needs to be remitted back to the adjudicating authority who shall decide the matter fresh - appeal allowed by way of remand.

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• 2018 (10) TMI 529
  CENVAT Credit - applicability of rule 6(3) of CCR 2004 - iron ore fines gets generated during the course of manufacture which is a waste product but it has marketable value - Held that:- There is no dispute on the facts of the case that the demand is on reversal of CENVAT credit under rule 6(3) for the value of iron ore fines generated by the appellant during the process of manufacture of final products viz; Sponge iron - On the very same issue in the case of Maa Mangla Ispat Pvt. Ltd. [2013 (5) TMI 268 - CESTAT NEW DELHI], the Principal Bench of CESTAT has decided that Rule 6(3) of CCR 2004 does not apply because iron ore fines are not manufactured let alone being exempted - the first appellate authority has not considered this aspect at all. It is a fit case to be remanded back to the first appellate authority to examine the issue on merits and also on limitation - Appeal allowed by way of remand.

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• 2018 (10) TMI 528
  CENVAT Credit - whether the appellant is entitled for cenvat credit in respect of Work Contract Service received by them during the period September 2015 to March 2017? Held that:- Ld. Commissioner (Appeals) has not considered the nature of the service that whether it is of new construction or repair or maintenance on the basis of the document such as invoice, purchase order, work order, etc. he found that the document like contract paper is not submitted - I have gone through the invoice shown by the Ld. Counsel which were not considered by the Ld. Commissioner (Appeals), therefore, I am of the view that the matter should be re-considered by the Commissioner (Appeals) on the basis of the invoice and work order available on record that whether the service received by the appellant are of maintenance and repair of the existing plant or of new construction. Appeal allowed by way of remand.

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• 2018 (10) TMI 527
  CENVAT Credit - input services received from Foreign service provider - reverse charge mechanism - place of removal - Held that:- In both the orders of the lower authorities, it was not disputed that all the services are related to Sales Promotion Marketing of the goods exported by the appellant, therefore, even though services even not used in the manufacture of final product or upto place of removal, credit is admissible by virtue of inclusion clause of definition under Rule 2(l) of Cenvat Credit Rules, 2004. From the definition of input service, it can be seen that in the inclusion clause, Sales Promotion Marketing etc. are specifically included in the definition. This inclusion removes any doubt that even though these services were not used in relation to manufacture but by specific inclusion, credit was allowed. There is no doubt that the services in question are input service in terms of definition of input service - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 526
  Liability of Central Excise Duty - Di-Calcium Phosphate (animal feed grade) - N/N. 04/2016-CX (N.T), dated 12.02.2016 issued u/s 11C - Held that:- Since the manufactured item of the appellant is arising out of rock phosphate, the 11C Notification dated February 12, 2016 would apply in its full force and demands confirmed by the Adjudicating Authority are not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 525
  CENVAT Credit - items used for fabrication of structures which are supporting their plants - whether the appellant is eligible to avail CENVAT credit of Central Excise duty paid on MS plates, sheets, beams, channels etc., or otherwise received during the period January, 2009 to June, 2009? - Held that:- In various orders, it was categorically held items if used for fabrication of machinery in a cement plant, CENVAT credit needs to be allowed. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 524
  CENVAT credit - Invocation of Rule 6 of CENVAT Credit Rules, 2004 - case of appellant is that reversal of credit and payment of interest was made before issuance of SCN dated 13.09.2004 i.e. on 26.09.2013. Thereafter, there is no question of invoking Rule 6 of CENVAT Credit Rules, 2004 - Held that:- Though the appellant had availed the credit in respect of common service which are attributing to dutiable goods as well as trading activity, however, on pointed out by the audit party, they have reversed not on pro rata credit but entire credit along with interest before issuance of SCN, accordingly the provision of rule 6 shall not apply. Even under Rule 6(3A) there is provision for reversal of the proportionate credit attributing to the exempted service therefore after reversal of the credit along with interest, the demand under Rule 6 does not sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 523
  CENVAT credit - input services used for export of services - CFS Dock Expenses - C&F Agent Service - THC charges (Export) - freight outward(Export) - banking service - denial on the ground that these services were rendered beyond the place of removal i.e. factory gate - Held that:- In case of the export of the goods, the ownership of goods remained with exporter till it reaches to the foreign port of delivery, therefore, any service which is used before the delivery of goods or foreign port is admissible for Cenvat Credit, therefore, all these services rendered for export of goods is upto the place of removal. This Tribunal in various judgment held that in case of export of goods, place of removal stand extended from factory gate to port of export, therefore, all the services in question which was admittedly used for export of goods are indeed input services and credit is admissible. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 522
  Liability of duty - clearances of scrap arising out of MS Plates, Moulds, Liners, etc. - Held that:- This fact is not in dispute by the Revenue as assessee issued letters dated 10.12.2005 informing the audit party is on record, and not disputed or controverted in any manner. Reliance placed in the judgment was carried SLP in Apex Court in M/S. GRASIM INDUSTRIES LTD. VERSUS UNION OF INDIA [2011 (10) TMI 2 - SUPREME COURT OF INDIA], where it was held that such scrap is not dutiable. CENVAT Credit - non-maintenance of separate records - Held that:- Appellant should have produced records to show that they had maintained separate accounts of the Grog received by the market and non-duty paid nature of the said Grog. In the absence of any such records, the appellant is not able to justify his claim that they are not required to pay duty on “Grog” - demand upheld. Appeal allowed in part.

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• 2018 (10) TMI 521
  Rectification of mistake - SSI Exemption wrongly denied - Held that:- There is mistake apparent on record in paragraph 6 of the order of this Tribunal in M/S. TECHNICS VERSUS COMMISSIONER OF CENTRAL EXCISE DELHI I [2018 (1) TMI 1377 - CESTAT NEW DELHI] and the paragraph 6 of the order be read as under “However, the appellant is registered with the department, so appellant is entitled to avail Cenvat credit on inputs/input services and cum duty benefit subject to satisfaction of the lower authorities” - ROM application allowed.

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• 2018 (10) TMI 520
  Benefit of N/N. 63/95 dated 16.03.95 - finished goods manufactured by them supplied to Bharat Electronics Limited - whether to be considered as supply to Ministry of Defence or not? - Penalty - Held that:- The Notification exempts the goods supply to the Ministry of Defence for official purposes if they are manufactured by the entities/ PSU for supply to MOD. The said notification does not give any leverage to the suppliers by vendors to such entities as mentioned in notification - the benefit of the notification restricts the exemption only to units indicated in the above reproduced relevant portion of the notification. The claim of the appellant in the case in hand is incorrect as to that they are eligible for the benefit of notification. Penalty - Held that:- The issue involved in this case being in respect of interpretation of the Notification No. 63/95, appellant may have entertained a bonafide belief and also may be guided by various decisions of the Tribunal - In view of this confused situation prevailing during the period in question, appellant should not be visited with any penalties - penalty set aside. Appeal allowed in part.

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• 2018 (10) TMI 515
  Finalisation of differential duty - disallowance of abatements - finalisation of duty ordered on the ground that the assessments were provisional - contention of the appellant is that, in the absence of explicit noting of provisional assessment and the various securities attached to such assessment, there can be no provisional assessment and, consequently, any demand beyond the normal period of limitation in section 11A of Central Excise Act, 1944 would not lie against them. Held that:- It is clear from the various decisions of the Hon ble Supreme Court and of the Tribunal that the various prerequisites, enumerated by the appellant while adverting to the nature of assessment, would not be essential to the extent that the circumstances did not admit to an absence of doubt about the finality of the assessment. It is the normal practice for assessment to be provisional when the duty liability is discharged at the time of clearance from the factory gate without simultaneous delivery of the goods to the customer. The liability to duty, arising after abatement of the various cost claimed to be post-manufacture, is an obligation under law. The limitation on demand of duty will have to be established on substantial grounds and not by recourse to a claim for disallowance of provisional assessment. In the absence of an order of final assessment, and in the context of a demand for recovery based on the various submissions made by the assessee, it would not be appropriate to set aside the detailed findings in which the original authority has, having taken note of the limited terms of remand of the Tribunal, held the assessment to have been provisional - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 519
  Levy of Sales Tax - Chicory Roots - whether the chicory roots sold by the partnership firm were falling under entry No.23 of the First Schedule of the Gujarat Sales Act, 1969 or whether the same were exempted from levy of sales tax? - Held that:- Entry No.23 refers to that which may germinate. The entry refers to flower, fruit, vegetable seed, lucerne grass and hemp and bulbs which all fall in the same category. This would also mention 'tubers and plants other than orchids' and therefore, since the chicory roots are tubers they would fall within the ambit of Entry No.23 and must be subjected to tax accordingly. The essential character of chicory roots does not change by reason of slicing, cutting and drying and hence they are not liable to tax either under the GST Act or under the CST Act and therefore, no outstanding amount remain. The prosecution which has been initiated for the recovery of the amount in absence of any adjudication in form of the department and in wake of the said outcome even otherwise is no longer sustainable. Application allowed.

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• 2018 (10) TMI 518
  Maintainability of petition - alternative remedy by way of an appeal - Taxability - Works Contract - Held that:- The case involves mixed questions of facts and law and detailed scrutiny of the record is required for ascertaining the exact tax liability of the petitioner Assessee, which exercise cannot be undertaken in the Writ jurisdiction under Article 226 of the Constitution of India - Though while entertaining these writ petitions, a Co-ordinate Bench of this Court had stayed the operation of the impugned Assessment Orders and these petitions are pending for the last about two years, this Court is not inclined to continue the proceedings in the present writ petitions and finally decide the controversy in hand on merits. It is considered appropriate and opportune for the Assessee Company which itself is a Government of India Undertaking to avail the regular remedy before the Appellate forum under Section 62 of the KVAT Act, 2003 provides for the first appeal before the Joint Commissioner of Commercial Taxes (Appeals) and second appeal also lies against it before the Karnataka Appellate Authority under Section 63 of the KVAT Act, 2003 - This Court should be circumspect in entertaining the direct writ petitions against the Assessment Orders and Show Cause Notices issued under the Tax Statutes which involve a complex matrix of facts, figures and legal contentions. The legal contentions, of course can be examined by this Court at an appropriate stage upon the Revision Petitions brought before this Court, but the question of law involved in the matter after the facts are appropriately scrutinized, appreciated, analyzed and discussed in detail by the Appellate Forums. Petitions are dismissed as not maintainable with a liberty to the petitioner Assessee Company to avail the regular remedy of filing the appeals before the concerned Appellate Authority under Section 62 of the Act.

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• 2018 (10) TMI 517
  Law of estoppel - levy of penalty twice the rate - excess stock found during investigation - Whether the Inspecting Authority was justified in invoking the provision of Section 77 (2) of KVAT Act, 2003 and Sub Section 1(J) of Section 52 of KVAT Act, 2003, under the facts and circumstances of the case? Held that:- The material on record clearly depicts that though the Inspecting Authority issued notice under the provision of Section 77(2) of the KVAT Act, 2003, the appellant who was present at the time of spot inspection did not rise any objections with regard to unaccountable stock found in the premises of the factory and also did not provide any circumstantial reasons for the same and rightly paid the levied penalty - Once the appellant issued cheque for entire amount, the appeal before the appellate authority was not maintainable in view of the law of estoppel, it was unethical for the appellant to file appeal. The Appellate Authority without verifying the original records, proceeded to pass erroneous order. Therefore, penalty imposed under Section 77(2) of KVAT Act, 2003 is in accordance with law - the order passed by the Revisional Authority, the same is in accordance with law. Accordingly, the substantial question of law raised in the present appeal has to be answered in affirmative holding that the Inspecting Authority was justified in invoking the provisions of Section 77(2) of KVAT Act, 2003 and Sub Section 1(J) of Section 52 of KVAT Act, 2003. As soon as notice issued under Section 77(2) of KVAT Act, 2003, immediately seven days time has to be given, but in the present case, notice issued under Section 77(2) of KVAT Act, 2003 to the appellant and he did not filed any objection, nor disputed the contents of the notice and the appellant was ready and willing to pay the penalty and accordingly, paid the penalty levied. Therefore, the contention raised by the learned counsel for the appellant that, there is no proper verification and absolutely, there was no unaccountable stock in the factory premises cannot be accepted. The appellant has not made out any ground to interfere with the impugned order passed by the Revisional Authority by this Court in exercise of power under the provisions of Section 66(1) of the Karnataka Value Added Tax Act, 2003 - appeal dismissed.

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• 2018 (10) TMI 516
  Adjustments insofar as the payments made by the assessee pending litigation as also the tax paid by PGHHCL for the sale to the assessee - sale of products under the brand name ‘Procter and Gamble’ - KGST Act - amnesty scheme granted for all the years starting from 1998-99 to 2003-04 - whether the respondent-Procter and Gamble Home Products Limited (PGHPL) is liable to tax under Section 5(2) of the Kerala General Sales Tax Act, 1963 for the sale of products under the brand name ‘Procter and Gamble’? Held that:- The revisional authority is said to have set aside the penalty order from which no appeal was filed by the State. Hence, on verification, if the stated facts of the penalty and deposit made are true, the amounts remaining with the State has to be necessarily given adjustment of, when satisfying the amounts under the amnesty scheme. The further claim is with respect to 20% of the demand paid as per stay orders in the years 2002-03 and 2003-04 which comes to a total of ₹ 1,56,08,625/-. If such deposit is made, necessarily the same would also have to be given credit and deducted from the total amounts due in the amnesty scheme. It is made clear that in none of these amounts, there can be a claim now raised of appropriation to interest. The penalty having been set aside and the order of assessment in the years 2002-03 & 2003-04, also having been set aside by the Tribunal, there could have been no appropriation effected. The assessee's dues under the amnesty scheme arose only for reason of their voluntary shouldering of the responsibility under Section 5(2). Exts.P4 and P7 shall be modified accordingly - by making the modification, there shall not be any denial of the amnesty scheme only on the amnesty scheme having now expired on 30.6.2018. The modification made shall be applying the amnesty scheme as it existed prior to its expiry. The said directions are issued only in the context of the facts arising in this case, where the assessee had voluntarily accepted the amnesty scheme within the time and orders were also issued by the AO. The writ petition is ordered accordingly. Petition disposed off.

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