TMI Tax Updates - e-Newsletter
October 13, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of education services rendered by appellant - The Educational courses for which qualification standards / framework i.e. QP/ NOS has not been defined by NSDC will not be treated as in relation to National Skill Development Programme implemented by NSDC. - Benefit of exemption not available.
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GST:
Classification of goods - rate of GST - The Reactor is neither an Ion exchanger plant or apparatus, Household type filter and therefore would fall under the others category i.e. 8421 21 90, thus attracting 9% CGST and SGST each.
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GST:
Classification of supply - composite supply of goods and services - services provided by the Applicant under the ICT @ School Project - Benefit of exemption not available to the appellant.
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GST:
Classification of Services - Rate of GST - contract for supply of water after removal of excess iron and to supply all goods and services for achieving the objective of supplying water after removing excess iron - Rate of GST is 12%
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Income Tax:
Deduction u/s. 35(1)(ii) - weighted deduction - bogus donation - It is not in dispute that M/s. HHBHRF was enjoying the approval within the meaning of Sec. 35(1)(ii) of the Act as on the date of receipt of donation and retrospective cancellation of approval of the concerned institution, the deduction claimed in respect of donation cannot be denied.
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Income Tax:
Setoff of short term loss from shares with short term capital gain - Genuineness of loss - the AO could not have on one hand accepted the genuineness of the transaction which resulted in gain, but on other hand doubted the genuineness only where the transaction resulted in loss.
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Income Tax:
Long term capital gains - The assessee inherited the said flat by Will after the death of her father. - the amount for discharge of mortgage interest has to be considered as cost of acquisition and accordingly the net consideration on sale of the flat in question will be Nil.
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Income Tax:
Premium expense on hedging contract - speculative transaction or not - the provisions of section 43(5) of the Act are clearly not attracted.
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Customs:
Amends Notification No. 57/2017 dated 30th June, 2017 - Prescribing effective rate of duties for certain items as 10% as against fixation of basic rate of duty of 20% for the items falling under the heading 8517 62 90 and 8517 69 90
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Customs:
Exemption under the Sr. no. 13S, heading no. 8517 70 10 limited to certain specified items only - Notification No. 24/2005 dated 1st March, 2005
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Customs:
Basic Rate of Customs Duty on import of certain items "Base stations" falling under the heading 8517 61 00 and "Other items" falling under the heading 8517 69 90 set to 20%
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Customs:
100% EOU - packing material used is in the prohibited category - even if the packaging material contains non Bio-degradable plastic but the goods is exported, the Plastic Waste (Management and Handing) Rules, 2011 shall not apply - there is no case of violation of Plastic Waste (Management and Handling) Rules, 2011 against the appellant.
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Direct Taxes:
Right to representation - who can be a authorised representative - Section 48 of the PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 - Amended vide Removal of Difficulties order.
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Indian Laws:
Dishonor of Cheque - recovery of loan - The criminal proceedings filed under Section 138 of the Negotiable Instrument Act cannot be used as arm-twisting tactics to recover the amount allegedly due from the petitioner
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IBC:
Conditions for grant of Certificate of registration. - Regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 as amended
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IBC:
Inspection or Inquiry before grant a certificate of recognition as an insolvency professional entity - Regulation 13 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 as amended
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IBC:
Eligibility for registration. - Regulation 3 of the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016, as amended
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Service Tax:
Valuation - includibility - amount collected as Interest free Maintenance Security as a deposit - The amount collected as deposit was merely a security and not an advance towards any service charge and hence not includible in value for service tax.
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Service Tax:
Mandap keeper services - sale of food/beverages by the appellant-assessee also took place - In the absence of any sale contract between the appellant-assessee and its customers the appellant-assessee is not eligible for exemption under N/N. 12/2003-ST
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Service Tax:
Stock Broker - The demand of service tax on account of income from distribution of mutual funds and selling bonds issued by banks/companies is not sustainable and the same is set aside.
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Service Tax:
Valuation - Maintenance and Repair Services - the incentives received from Maruti Udyog for achieving targeted sale were held as not to be part of the value of the services
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Service Tax:
Maintenance or repair service - inasmuch as the appellant was reflecting everything in their returns filed with the Revenue, no malafide can be attributed to them - The activity of re-conditioning of old and worn out sugar mills rollers would not be taxable prior to 16.06.2005
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Service Tax:
Commercial training or coaching services - Place of supply of services - The services covered under the said sub-Rule is taxable only when the same are performed in India. In the instance case, it is not in dispute that the said service was performed outside of India. Therefore, there cannot be any liability of tax.
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Service Tax:
Renting of Immovable Property Services or not - assignment of entire business of the hotel to IHCL - there is no “fixed rent” that is payable as would be expected in a normal renting of immovable property transaction - Demand set aside.
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Service Tax:
Whether the appellant is liable to pay service tax under the category ‘commercial training or coaching services’ wherein they provide training to prospective insurance agent - he training imparted by the appellant is having the recognition of law - Not liable to service tax.
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Service Tax:
Demand of Interest - delayed payment of service tax - renting of immovable property services - the period of limitation would apply to the demand of interest.
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Service Tax:
The demand of interest on delayed payment of service tax is liable to be set aside on the ground of limitation of time because not only is there no evidence of elements required to invoke extended period in the show cause notice, there is not even any allegation that the interest has not been paid by reasons of fraud, collusion, willful misstatements etc.
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Central Excise:
CENVAT credit - even in case where the service itself is not taxable but if the service provider discharge the Service Tax, the same can be availed as Cenvat Credit by Service recipient
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Central Excise:
CENVAT Credit - input - HR Plates - whether the appellant is entitled for the Cenvat Credit in respect of HR Plates which were used for Fabrication of Storage Tank used for factory of the appellant - Held Yes
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Central Excise:
Clandestine removal - If the appellant is an issuing goodless invoice which means no goods have been manufactured by the appellant. Therefore, on that account, no duty can be demanded against the appellants.
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Central Excise:
Valuation - related person or not - a proprietorship concern and a Private Limited company are not related person - even if two are held to be related, the price to any independent buyer of similar quantity only can be adopted under Rule 11 - Demand fails on both count.
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Central Excise:
CENVATCredit - fake invoices - no actual supply of goods - Merely because consignment note was not produced, it cannot be said that the goods were not transported.
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Central Excise:
Manufacture - Construction activity at site - ready mix concrete (RMC) - in the entire findings of the Hon’ble Apex Court from para 18 onwards there is no mention of any IS Specification anywhere. In fact Hon’ble Apex Court has not relied at all on the IS Specifications. In these circumstances any changes in the IS Specifications cannot be used to distinguish the decision of Hon’ble Apex Court.
Notifications
Companies Law-
F. No. 12/03/2018-CSR - dated
11-10-2018
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Co. Law
Re-Constitution of High Level Committee on Corporate Social Responsibility - 2018 (HLC-2018)
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F. No. 12/03/2018-CSR - dated
28-9-2018
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Co. Law
Constitution of High Level Committee on Corporate Social Responsibility —2018 (HLC-2018)
Customs-
76/2018 - dated
11-10-2018
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Cus
Amends Notification No. 24/2005 dated 1st March, 2005
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75/2018 - dated
11-10-2018
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Cus
Amends Notification No. 57/2017 dated 30th June, 2017
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74/2018 - dated
11-10-2018
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Cus
Amends First Schedule of Customs Tariff Act, 1975
GST - States-
S.O. 261 - dated
9-10-2018
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Bihar SGST
Bihar Goods and Services Tax (Twelfth Amendment) Rules, 2018
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S.O. 260 - dated
9-10-2018
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Bihar SGST
Bihar Goods and Services Tax (Eleventh Amendment) Rules, 2018
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54/2018 – State Tax - dated
9-10-2018
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Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Thirteenth Amendment) Rules, 2018
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53/2018—State Tax - dated
9-10-2018
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Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Twelfth Amendment) Rules, 2018
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8/2018-State Tax - dated
31-8-2018
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Kerala SGST
Amendment in Notification No. 7/2018-State Tax dated 13th August, 2018
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21/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Exemption to Intra-State Supplies of Handicraft Goods
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31509–FIN-CT1-TAX-0043/2017/FIN-S.R.O. No. 404/2018 - dated
29-9-2018
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Orissa SGST
Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies
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F.1-11(91)-TAX/GST/2018(Part-II) - dated
10-10-2018
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Tripura SGST
Tripura State Goods and Services Tax (Eleventh Amendment) Rules, 2018
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F.1-11(91)-TAX/GST/2018(Part-II) - dated
10-10-2018
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Tripura SGST
Tripura State Goods and Services Tax (Twelfth Amendment) Rules, 2018
Income Tax-
F. No.370149/170/2018-TPL - S.O. 5194 (E) - dated
9-10-2018
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IT
Prohibition of Benami Property Transactions (Removal of Difficulties) Order, 2018
Insolvency and Bankruptcy-
IBBI/2018-19/GN/REG36 - dated
11-10-2018
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IBC
Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2018
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IBBI/2018-19/GN/REG35 - dated
11-10-2018
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IBC
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (MODEL BYE-LAWS AND GOVERNING BOARD OF INSOLVENCY PROFESSIONAL AGENCIES) (AMENDMENT) REGULATIONS, 2018
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IBBI/2018-19/GN/REG34 - dated
11-10-2018
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IBC
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INFORMATION UTILITIES) (SECOND AMENDMENT) REGULATIONS, 2018
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IBBI/2018-19/GN/REG33 - dated
11-10-2018
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IBC
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY PROFESSIONAL AGENCIES) (AMENDMENT) REGULATIONS, 2018
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (10) TMI 684
Classification of Services - Rate of GST - contract for supply of water after removal of excess iron and to supply all goods and services for achieving the objective of supplying water after removing excess iron - contract entered into by the applicant with the Public health Engineering Department, Government of Bihar. What is the rate & HSN code of GST applicable (after it's introduction from 1st July 2017) when Extracting water from tube well, passing it through treatment plant of removing unwanted contaminants like Iron from ground water and eventually lifting it to overhead tank (in short the scheme) runs on solar power? Held that:- The issue pertains to a contract entered into by the applicant with the Public health Engineering Department, Government of Bihar. Vide letter dated 31.10.2014, the Executive Engineer of the Public health Engineering Department, Purnea, Bihar had informed the applicant that their bid in respect of their tender for the work of “Design, Construction, Supply and Commissioning of 200 Mini Piped Water Supply Schemes with solar powered pumps and suitable treatment plants (aeration and activated carbon based) for removal of excessive iron from the Iron affected habitations of 9 districts on TURNKEY basis with 3 months trial runs after commissioning and comprehensive of 60 months after successful completion of trial run period” had been approved. The applicant has been awarded a contract for supply of water after removal of excess iron and to supply all goods and services for achieving the objective of supplying water after removing excess iron - From the work details submitted by the applicant it is very clear that the entire contact is in the form of a composite contract consisting of supply of goods and services and Where the main intention is to drinking water to the villages after removing excess Iron impurities and which therefore would be the main part of the contract. Here it would not be out of place to mention that the applicant is claiming that the work performed by them are 'water treatment schemes' and not 'water purification schemes'. The work done by them is a composite supply which attracts the provisions of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The said Notifications has specified the rate of central tax to be levied on Intra State supply of services of description specified in Column 3 of the Table in the said Notfn, falling under scheme of classification of services mentioned therein. 'Composite supply of WCS supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal attracts a tax rate of 6% each of CGST and SGST. However, the benefit of 12% tax rate would be available to the applicant only if the Works Contract services provided by them are Composite supply of works contract as defined in clause (119) of section 2 Of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, pipeline, conduit or plant for (i) water supply (ii) water treatment. Ruling:- TSH 9954 is applicable to the subject contract of Extracting water from tube well, passing it through treatment plant of removing unwanted contaminants like Iron from ground water and eventually lifting it to overhead tank and the same would attract a tax rate of 12% (6% each of CGST and SGST).
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2018 (10) TMI 683
Classification of supply - composite supply of goods and services - services provided by the Applicant under the ICT @ School Project - Applicability of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 read with Entry No. 72 of Notification No. 12/2017-State Tax (Rate) dated 29.06.2017 - interpretation of afore-mentioned Entry No. 72 of the said Notification to the subject activity of the applicant. Whether the services provided by the Applicant to the Government secondary and higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? Held that:- The Director of Education (Secondary and Higher Secondary), Maharashtra State (hereinafter referred to as DE(S&HS) to implement ICF project in 5000 government secondary and higher secondary schools in ten identified regions in the State of Maharashtra. As per Entry No 72 pertaining to Heading 9992, Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration attract nil rate of taxes under the GST law - there are three elements involved as under which have to be satisfied by the applicant to be eligible to avail the benefit of Entry No. 72 of Notification No. 12/2017:-1. Services should be provided to the Central Government, State Government, Union territory administration; 2. under any training programme and 3. for which total expenditure is borne by the Central Government, State Government, Union territory administration. Services should be provided to the Central Government, State Government, Union territory administration - Held that:- The applicant has entered into a contract with Maharashtra State, for a period of 5 years, for implementation of the ICT @ school project in Government and Government aided higher secondary schools across the State of Maharashtra. In the preamble of the contract it is mentioned that “In its pursuit to improve the quality of education in Secondary and Higher Secondary schools of Maharashtra, the supply of computer hardware, software and connected accessories, Faculty and provision of IT Education Services in Government Secondary and Higher Secondary schools in the State of Maharashtra on Build, Own, Operate and Transfer (BOOT) Model is envisaged under the ICT @school scheme under Public Private partnership’ - Applicant, has to procure, supply and install requisite number of IT equipment i.e. computer hardware, software, etc and to maintain and keep the same in proper working conditions for the entire contract period of five years along with deployment of manpower (in the form of Faculty member/ Instructors, etc) in the said 1590 Schools to impart computer knowledge to the students and teachers for a total contract value of ₹ 284.61 Crores. Thus it is seen that the applicant, under the contract, is obliged to make taxable supply of goods and services to the during the contract period - There is not only provisions of rendering service under any a training programme, but there is also a provision to create necessary infrastructure in schools for implementation of ICF project. Hence from the terms of the Contract, we find that the applicant is not just providing a supply of Service but is also providing a composite supply of Goods i.e. hardware and network equipments, printers, scanners, power equipments, and also imparting training on use of such equipments as per the syllabus prescribed. Services should be provided to the Central Government, State Government, Union territory administration under any training programme - Held that:- The applicant is not just providing a supply of Service but is also providing a composite supply of Goods i.e. hardware and network equipments, power equipments, etc. In view of the fact that the applicant has to set up the site provided by the DE(S&HS) as a computer lab by way of procuring and installing the computers, and other equipments as mentioned above, it would appear that the entire project cannot be termed as a training programme. It would rather be a composite supply of goods and services, not naturally bundled and having distinctly separate components with distinct value attributable to each of the components - It is a composite supply having distinctly identifiable components with distinct value attributable to each of the components. There is no doubt that the applicant has provided computer training service as part of the contract, but the said service is not the pre-dominant/ principal supply. In fact as seen above the contracted supply has many distinct supply components out of which training is a small component - as per para 1(c) of Schedule II of the SGST/CGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service - the second condition/pre-requisite is also not satisfied. Services supplied for which the total expenditure is borne by the Central Government, State Government, Union Territory administration - Held that:- From a plain reading of the terms of the contract that payment for the work done is to be made by DE(S&HS) which is a department of the State Government. Thus the source of funding the expenditure is the State Government. Thus there is no dispute in respect of fulfillment of this condition but as per discussions above, the other two conditions of Notification are not satisfied. When the language of a taxing statute is clear, if the conditions of supply falls within the four corners of statute allowing exemption, it is to be exempted. If not, tax is to be levied. In the present case all the conditions of Entry No 72 of the Notification No. 12/2017 have not been fulfilled and therefore there is no question the applicant being eligible for exemption on the basis of the said Entry. Ruling:- Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 read With Entry No. 72 of Notification No. 17/2017-State Tax (Rate) dated 29.06.2017 is not applicable to the services provided by the Applicant under the ICT @ School Project - The supply of goods and services as made by the applicant under ICT @ School project is not in compliance of all conditions of exemption as notified under the above referred Notification.
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2018 (10) TMI 682
Classification of goods - rate of GST - Reactor used in Hand Pump for water disinfection - Whether the Reactors are more appropriately classifiable under Chapter sub heading No. 8421 21 90 attracting CGST of 9%, SGST of 9% and IGST of 18% or otherwise? Held that:- The Reactor manufactured by the applicant is used to purify the water supplied by hand pumps. It may be mentioned here that the main function of a hand pump is to lift water from under the ground and make them available to the public. The hand pump does its work even without the presence of Reactors inside it. Hence it clearly appears that the Reactor is not an essential part of the hand pump - the basic function of the Reactor is purifying the water which is different from the function Of the hand pump which is withdrawal and delivery of water from the underground . The said Reactors are not exclusively used in hand pumps. They are also used with other machinery, and their main function is to purify water - The Reactors as supplied by the applicant, even though claimed as meant to be solely used With and in Hand pumps, their existence would not be as a part of the hand pump, but still this Reactor would have an independent existence as that of a water purifier which can be used in other applications for purification of water - the Reactor does not merit classification under Chapter 8413.91 under the category of Hand Pumps and parts thereof . Reactors are apparatus/ machinery which are used to purify water and as per the submissions made by the applicant, it can be used with various machinery including hand pumps. Hence the arguments of the applicant for considering Reactors as part of Hand Pumps is not tenable and sustainable as Reactors have a use of their own as compared to that of a Hand Pump and thus have an identity of their own - Reactors can also be used in various other places like motorized pipelines, in buildings along with overhead tank, in swimming pools/ fountains, in sewage water treatment in townships, hotels, hospitals, etc. - Reactors have use as water purifier at several places in various pipelines for purification of water and not only in hand pumps. Therefore their claim that their Reactors be treated as parts of hand pumps is not correct. Reactor, in the case of the applicant is nothing but a filtering or purifying machinery/ apparatus for liquids. Apparatus used for filtering or purifying water falls under Heading 8421 21 attracting 9% CGST and SGST each. The Reactor is neither an Ion exchanger plant or apparatus, Household type filter and therefore would fall under the others category i.e. 8421 21 90, thus attracting 9% CGST and SGST each. Ruling:- The Reactors are classifiable under Tariff Heading 8421 21 90 of the GST Tariff - GST @ 9% each. Tax @ of 9% CGST and 9% SGST is applicable on the present goods.
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2018 (10) TMI 681
Classification of education services rendered by appellant - Appellant is approved by National Skill Development Corporation - National Skill Development Programme - whether merit classification under HSN 9992 or otherwise? - exemption under N/N. 12/2017 Central tax (Rate) dated 28th June 2017. Whether educational courses offered by the Applicant which have been approved by National Skill Development Corporation (NSDC) would be construed as in relation to National Skill Development Programme implemented by NSDC? - whether they are eligible for exemption from GST as per Serial No. 69 of Notification No. 12/2017 Central tax (Rate) dated 28th June 2017 and if so, in respect of which services being provided by them would they be eligible for exemption under Sr.No. 69 of the above said Notification? The Applicant offers certain educational courses for which qualification standards / framework i.e. QP/ NOS has not been defined by NSDC and will be approved by NSDC as and when the relevant QP/ NOS would be defined by NSDC. In the interim period, NSDC has given exceptional approval on such courses. Till the time QP/ NOS are defined for such educational courses and are eventually approved by NSDC, whether such courses will be treated as in relation to National Skill Development Programme implemented by NSDC? In certain situations, NSDC approved educational courses are subsequently, upgraded by the Applicant within pre-defined QP/ NOS framework, by way of adding more topics/ content /modules. However, such modified version of NSDC approved educational courses have not been approved by NSDC yet. Whether such modified version will be treated as in relation to National Skill Development Programme implemented by NSDC? If the answer to Q.1, Q.2 and Q.3 are Yes, then whether the benefit of GST exemption as per Notification No. 14/2017- Central Tax (Rate), dated the 28th June 2017 would be available to the Applicant? If answer to Q.4 is Yes, whether benefit of GST exemption as per Notification No. 17/2017-Central Tax (Rate), dated the 28th June 2017 would be still available if such educational courses are offered to corporates and business institutions? Whether the NSDC approved educational courses which are actually imparted by the business partners of the Applicant, on behalf of the Applicant as sub-contractor of Applicant, at various centres located across the country, will be considered as offered by the Applicant? If answer to Q.6 is Yes, whether benefit of GST exemption as per Notification No. 17/2017- Central Tax (Rate), dated the 28th June 2017 would be available to the Applicant? Held that:- NSDC was set up as a part of National Skill Development Mission to fulfil the growing need in India for skilled manpower across sectors and narrow the existing gap between the demand and supply of skills. Its main objective was and is to contribute significantly to the overall target of skilling up people in India mainly by fostering private sector initiatives in skill development, programmes and to provide funding - further, National Skill Development Mission was launched on 15th July, 2015 with the objective to provide overall institutional framework to rapidly implement and scale up the skill development efforts across India. The Ministry of Skill Development & Entrepreneurship, through the National Skill Development Corporation (NSDC), has taken up multiple initiatives to connect with industries for partnership under the larger Skill India Mission. NSDC has a single-window facilitation system that offers a unique platform for the industries to partner on various such initiatives. NSDC works with diverse set of stakeholders such as Corporates, Foundations, Government and Community based Organisations in structuring high impact collaborative skill development projects. The benefit of exemption as given at Sr. NO. 69 of Notification 12/2017-CT (Rate) as claimed to be applicable by the applicant in the present case is in respect of any services provided by a training partner approved by the NSDC or the Sector Skill Council in relation to the National Skill Development Program implemented by the NSDC or any other scheme implemented by the NSDC. The objective of the National Policy on Skill Development and Entrepreneurship, 2015 will be to meet the challenge of skilling at scale with speed and standard (quality). It will aim to provide an umbrella framework to all skilling activities being carried out within the country, to align them to common standards and link the skilling with demand centres. In addition to laying down the objectives and expected outcomes, the effort will also be to identify the various institutional frameworks which can act as the vehicle to reach the expected outcomes. The national policy will also provide clarity and coherence on how skill development efforts across the country can be aligned within the existing institutional arrangements. This policy will link skills development to improved employability and productivity. Some of the courses of vocational training that have been designed by the applicant are approved and certified by NSDC and thus we find that the services in this respect being in the nature of approval and certification of course being provided by NSDC to the applicant and not by the applicant to NSDC and thus there is no question of the applicant being eligible for any exemption in this respect as they are a services recipient and not service provider in relation to NSDC. In National Skill Development Programme there are two parts. One is Skill Development Programme which is very vast in scope and all public, private or individual efforts at skill development undertaken throughout the country by everybody would be covered under it. However once prefix ‘National’ is put before the phrase ‘Skill Development Programme’ it becomes National Skill development Programme and it limits its scope and restricts it only to the activities/ efforts that are undertaken through Government funding, Government Schemes and specifically designed Government Programmes - National Skill Development Programme would consist of the schemes, actions and deeds that are actually done or are mandated to be done by various ministries, Government departments or their attached offices, Directorates or other institutions as per their instructions and for which expenses in that regard are to be incurred by the Central or State Governments through budgetary provisions. The intent of the Notification No. 12/2017-CT provides that exemption would be available only in respect of “Any services provided by a Training partner approved by National Skill Development Corporation in relation to the National Skill Development Programme implemented by the NSDC. If the intent of the Legislature had been to extend the benefit of exemption of present Notification in respect of all activities in relation to skill development done by NSDC, in that case the wordings Of the Notification would not have been restrictive, which is very clear when we see that in the Notification, exemption benefit is restricted and would be applicable only in respect of services provided in relation to national Skill Development Programme implemented by NSDC. Thus, the National Skill Development Programme would cover only the actual schemes and programmes of skill development that are undertaken by the Government through its various ministries, departments, directorates, attached offices and organizations and cannot in any way be construed to be including each and every activity under the sun which enhances skills in one way or other. Ruling:- The educational courses offered by the Applicant which have been approved by National Skill Development Corporation would not be construed as in relation to National Skill Development Programme implemented by NSDC. The Educational courses for which qualification standards / framework i.e. QP/ NOS has not been defined by NSDC will not be treated as in relation to National Skill Development Programme implemented by NSDC. The modified version of NSDC approved educational courses will not be treated as in relation to National Skill Development Programme implemented by NSDC. The benefit of GST exemption as per Notification No. 14/2017- Central Tax (Rate), dated the 28th June 2017 would not be available to the Applicant. The Benefit of GST exemption as per Notification No. 17/2017-Central Tax (Rate), dated the 28th June 2017 would not be available if such educational courses are offered to corporates and business institutions. Other questions not answered.
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2018 (10) TMI 680
Failure to pay GST - Mandi Samiti stopped issuing gate passes to the petitioners as per the order of the GST department - it was alleged that the petitioners have not paid GST, as per the provisions of the Central Goods and Services Tax Act, 2017 - Held that:- The petitioners would be satisfied if they are allowed to approach the fourth respondent by way of reply to the letter dated 1.8.2018 and directions are issued to consider their reply and decide the mater afresh within time frame. Counsel for respondents has no objection for passing such an order. The petitioners shall furnish their reply to the letter dated 1.8.2018 (Annexure-8) within a period of 10 days from today - petition disposed off.
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2018 (10) TMI 679
U.P. Entertainment and Betting Tax Act, 1979, which has been repealed by the GST Act on 01.07.2017 - Held that:- It is left open to the petitioner to approach the appropriate authority under the GST to pass appropriate orders in accordance with law - petition allowed.
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Income Tax
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2018 (10) TMI 678
Premium expense on hedging contract - speculative transaction or not - TDS liability - interest component on ECB - assessee claimed that premium or discount arising at the inception of forward exchange contract was amortised as expense over the life of the contract - TDS liability - The Assessing Officer opined that the transactions under consideration with these banks were in the nature of speculative transactions u/s 43(5) of the Act and, hence, the loss was not deductible. Alternatively, he opined that the assessee was required to deduct tax at source before making payment of interest and Premium to the two banks u/s 195 of the Act. In the absence of the assessee having deducted tax at source, the AO held the amount to be not deductible in terms of the provisions of section 40(a)(ia) read with section 195 of the Act. Held that:- The assessee, did not enter to agreements with the two banks for sale or purchase of any commodity, which was to be settled otherwise than by the actual delivery. On the other hand, it is a case of a hedging transaction and the consideration is for securing the assessee against any fluctuation loss in foreign currency and service of loan by means of interest. Thus, it is clear that the provisions of section 43(5) of the Act are clearly not attracted. Interest component on ECB - Held that:- As the loan was taken, admittedly, for the business purpose, interest thereon, which is a part of the overall compensation to the banks, thus has to be allowed as deduction. As tax was properly deducted on such interest component and paid to the exchequer, we hold that the ld. CIT(A) rightly appreciated the facts in deleting addition of ₹ 2.67 crore. Premium on hedging contract - Held that:- the deductions have already been allowed by the Assessing Officer in the preceding three years, which assessments have attained finality. To that extent, there will be double deduction in the fifth year, which cannot be permitted. We, therefore, hold that the assessee was justified in claiming deduction of the proportionate part of the Premium on year to year basis. TDS liability - Held that:- Having issued certificates u/s 195(3) of the Act to the two banks, the Revenue was not within its power to require deduction of tax at source from the amount of Premium payable to these two banks, which was claimed as deduction. We, therefore, hold that the assessee rightly claimed deduction for the proportionate part of the Premium payable to Citi Bank N.A. and Barclays Bank. Deduction u/s 80IB - Held that:- the income relatable to the goods manufactured in Unit-1 cannot be allowed deduction u/s 80IB, even though the ultimate sale is made by Unit Nos.2 and 3 using, inter alia, the output of Unit-1 as their respective input. The contention of the assessee for allowing deduction on the total income from Unit Nos. 2 and 3, thus, cannot be accepted. Decided against the revenue and partly in favor of assessee.
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2018 (10) TMI 677
Transfer pricing - selection of comparable - none of the companies selected by the TPO are engaged in the activity of lease and sub-lease of the vessels - Held that:- the issue needs verification by the Ld.TPO/AO to select the correct comparables functionally, asset wise to arrive at the PLI to bench mark and arrive at the ALP. Therefore, in the interest of justice, we restore the matter back to the file of the Ld.TPO/AO to determine ALP after making proper transfer pricing study. - Matter remanded back.
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2018 (10) TMI 676
Long term capital gains - The assessee inherited the said flat by Will after the death of her father. - legal representative of the deceased, bequeathed the capital asset in favour of the assessee appellant - Residential flat in a Cooperative Housing Society - deduction of payment made for the purpose of clearing of the mortgage - Indexed cost of acquisition. Held that:- As a result of such payment made for the purpose of clearing of the mortgage the interest of the mortgagee in the property has been acquired by the heir. The said payment has, therefore, to be regarded as cost of acquisition under section 48 read with section 55(2) of the IT Act. For the purpose of indexation, the cost of acquisition in the hands of the deceased father of the assessee has to be taken into consideration and not at the time of acquisition of the property by the assessee. Thus when the assessee has received nothing from the sale consideration of the property in question, then the question of any capital gain in the hands of the assessee does not arise. Accordingly, following the decision of Hon’ble Supreme Court in the case of R.M. Arunachalam vs. CIT [1997 (7) TMI 5 - SUPREME COURT], the amount for discharge of mortgage interest has to be considered as cost of acquisition and accordingly the net consideration on sale of the flat in question will be Nil. Accordingly, we set aside orders of the authorities below, qua this issue and allow the claim of the assessee.
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2018 (10) TMI 675
Setoff of short term loss from shares with short term capital gain - Genuineness of loss - share belonging to the RPG group to which the assessee belonged. - revenue claimed that, even though the purchase and sale of investments were carried out within a very short span of time, proper explanation was not furnished by the assessee company as to why there was such difference between the purchase price and sale price. Held that:- It was not a case where profits were earned by the assessee in respect of transaction with third parties and thereafter, the loss was artificially created to be set off against such income which is a distinguishing factor. The present case both profit and loss have arisen only from the intra group transactions and, therefore, the AO could not have on one hand accepted the genuineness of the transaction which resulted in gain, but on other hand doubted the genuineness only where the transaction resulted in loss, which action of AO cannot be countenanced because AO being a quasi-judicial authority has to be fair and reasonable. - Set off allowed - Decided against the revenue.
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2018 (10) TMI 674
Deduction u/s. 35(1)(ii) - weighted deduction - bogus donation - it was found that the concern M/s. Herbicure Healthcare Bio-Herbal Research Foundation (HHBHRF) was engaged in providing bogus donation u/s. 35(1)(ii) of the Act to beneficiaries like assessee to enable them to claim deduction of 175% of the amounts purported to have been paid as donation to it. Held that:- It is not in dispute that M/s. HHBHRF was enjoying the approval within the meaning of Sec. 35(1)(ii) of the Act as on the date of receipt of donation and retrospective cancellation of approval of the concerned institution, the deduction claimed in respect of donation cannot be denied. - Decided against the revenue.
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2018 (10) TMI 673
Business expenditure - amount paid for acquiring rights in the plot - nature of interest paid on borrowings - The assessee is engaged in business of real estate developments and construction. The assessee has carried the cost of the said I T Park being developed/constructed by the assessee as inventories/project work-in-progress. Held that:- The borrowings made by the assessee on which interest expenditure were incurred were all mainly directed towards working capital for development/construction of the aforesaid I T Park including acquisition cost of the plot of land and also acquiring rights from the erstwhile JV partners. The assessee is continuously debiting interest cost to the carrying cost of inventories/project work-in-progress. The assessee debited ₹ 95,17,500/- towards interest for borrowing wrt acquisition costs for acquiring interest of erstwhile JV partners namely M/s Om Metals Limited and M/s Well Wisher Constructions and Finance P. Ltd. in the carrying cost of inventories/project work-in-progress during the year under consideration. The Revenue treated the entire transaction as sham and hence this interest also got disallowed. The Mumbai- tribunal has consistently since AY 2006-07 to 2011-12 has held the aforesaid transactions for acquisition of rights from erstwhile JV partners by the assessee in 50 acres of plot of land allotted by MIDC in Navi Mumbai for settin up I T Park and consequently payment of interest as genuine transaction allowable as business deduction while computing income. Decided in favor of assessee.
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2018 (10) TMI 672
Business Expenditure u/s 37(1) - punitive charges paid by the assesse to railways for overloading of wagon - Interest on late deposit of TDS - Deduction u/s 14A - Held that:- CIT(A) has rightly deleted the additions - Decided against the revenue.
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2018 (10) TMI 671
Exemption u/s 10(23C)(vi) / u/s 11 - Reopening of assessment u/s 147/148 - charitable activity - for the impugned Assessment Year, no return of income had been filed by the assessee and the assessees application for approval u/s 10(23C)(vi) of the Act had been rejected. - assessee contended that having been granted registration u/s 12AA effective from Assessment Year 2013-14, the benefit of the same was available to it in the impugned year also by the virtue of the first proviso to Section 12A(2) of the Act. Held that:- Undoubtedly the requirement of filing of return of income and the report of audit have been specified for being eligible for claiming exemption u/s 11 & 12 of the Act, alongwith the grant of registration u/s 12AA of the Act. In the case of the assessee, we find, that the return of income has been filed in response to notice u/s 148 of the Act. Therefore the condition of filing of return of income stands fulfilled. The section, we find, nowhere prescribes the filing of return by any due date, therefore the findings of the CIT(A) that the assessee having not filed its return within the prescribed time it had failed to comply with the requirement prescribed, is not tenable. As for the requirement of filing report of audit in the prescribed form, the said condition has been held by courts to be merely procedural and therefore directory in nature and not mandatory for the purpose of claiming exemption u/s 11 & 12 of the Act. The reassessment framed is therefore set aside. As a consequence the addition made is deleted. - Decided in favor of assessee.
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Customs
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2018 (10) TMI 670
Smuggling - red sanders - absolute confiscation - penalty u/s 114(i) of CA for omissions and commissions which have rendering the subject goods liable for confiscation - Held that:- In the entire findings on the role played by M/s ICS Cargo, I find that the Adjudicating Authority has recorded, M/s ICS Cargo being CHA/Customs Broker as employer of Shri Praveen Kumar and said Shri Praveen Kumar master minded illegal export of red sander wood logs, are liable for penalty. In my view, the findings recorded by the Adjudicating Authority are unacceptable as there was no omission on the part of the appellant M/s ICS Cargo, as per statements recorded of Shri Praveen Kumar, wherein he stated that M/s ICS Cargo is not aware of the situation of his embarking into illegal export of red sander wood logs - penalty set aside. Penalty imposed on Shri Praveen Kumar M/s Dattar Shipping Logistics - Held that:- Shri Praveen Kumar was advising many people how to do the illegal export of red sander wood logs. Shri K. Somasekhar and Shri Pydi Raju have clearly stated that they were engaged in the export of red sanders under the advice of Shri Praveen Kumar - The findings recorded by the Adjudicating Authority in paragraph No. 30.2 of his Order-in-Original and also paragraph No. 30.3 clearly indicate the complicity of Shri Praveen Kumar in master minding the illegal export of red sander wood logs - penalty upheld. Penalty on Shri Pydi Raju - Held that:- It is on record that Shri K. Pydi Raju had received monetary consideration from Shri Praveen Kumar for illegal exports of red sanders and it is also not disputed during the search operations in his residence, unaccounted cash of ₹ 24 lakhs were found which can be considered as sale proceeds of illegal export of red sandal woods - penalty upheld. Penalty on Shri K. Soma Sekhar - Held that:- Adjudicating Authority has clearly brought out on record that various rubber stamps of the customs officers were recovered from his residence and he had agreed and admitted to the said fact - penalty upheld. Appeal allowed in part.
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2018 (10) TMI 669
100% EOU - packing material used is in the prohibited category - bio-degradable in nature or not? - Rule 5(d) and 5(g) of the Plastic Waste (Management And Handing) Rules, 2011 - whether the appellant manufacturer has violated Rule 5(d) and 5(g) of the Plastic Waste (Management and Handling) Rules, 2011, in the course of exporting the goods namely RMD Gutkha (4 gms)? Held that:- The Customs authorities drawn a sample sent for test to Customs laboratory, Vadodara, wherein, the report reveals that the packaging material is composed of paper, Aluminium and Plastic, however, the said report does not clarify whether the nature of plastic is bio-degradable and non Poly Lactic Acid and otherwise. Therefore, the said report was not clear. It was further, clarified that the packaging material is made of plastic which is of Poly Lactic Acid. Despite of the report, which shows that the plastic used in packaging material is bio-degradable, the adjudicating authority held that the appellant have violated the Rule 5(D) And 5(G) Plastic Waste (Management And Handing) Rules, 2011. From report of Customs laboratory, Kandla, it is seen that the plastic layer in the packaging material is made of Poly Lactic Acid / Co-polymer Lactic Acid. From all the above report of the Chemical Examiner it is clear that the plastic based on Ploy Lactic Acid is made of starch which is clearly bio-degradable. Therefore, as per the direction of the Commissioner (Appeals) in the first appellate order the adjudicating authority had no option except to allow the appeal, however, he in complete defiance of the Commissioner Appeal’s direction, once again visited on the original issue and given the finding that irrespective of any nature of plastic there is a violation of Rules, 5(d) and 5(g) of Plastic Waste (Management And Handing) Rules, 2011, which is absolutely incorrect and illegal. Hon’ble Supreme Court in the case of R.M. DHARIWAL 100% EOU VERSUS UNION OF INDIA [2016 (11) TMI 502 - SUPREME COURT] has taken up clear view that if the goods are manufactured in 100% EOU and the said goods is exported and not cleared in the domestic market, the operation of Plastic Waste (Management and Handing) Rules, 2011 is exempted. The Hon’ble Supreme Court in this judgment laid down a principle that in case of export of goods the Plastic Waste (Management and Handing) Rules, 2011, is not applicable. As per the judgments of Supreme Court even if the packaging material contains non Bio-degradable plastic but the goods is exported, the Plastic Waste (Management and Handing) Rules, 2011 shall not apply - there is no case of violation of Plastic Waste (Management and Handling) Rules, 2011 against the appellant. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 668
Refund of additional duty of custom/SAD - N/N. 102/2007-Cus dt. 14.09.2007 - denial on the ground of time limitation - Held that:- As per the Notification No. 102/2007-Cus dt. 14.09.2007 as amended vide Notification No. 93/2008-Cus dt. 01.08.2008, additional duty of customs is exempted if the goods are imported for the subsequent sale - the appellants have filed the refund claim within one year from the date of subsequent sale. This issue is squarely covered by the decision of Hon’ble High Court of Delhi in the case of Sony India Pvt Ltd. vs. CC, New Delhi [2014 (4) TMI 870 - DELHI HIGH COURT], wherein it has been held that the time limitation of one year specified under the above Notification shall not apply until and unless the basic provisions of Section 27 of the Act dealing with refunds are made applicable. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 667
Misdeclaration of imported goods - Solid S.S. Melting Scrap - Advance Authorization Scheme - It appeared to revenue that the imported goods were not as per declaration - On examination, it was noticed that imported goods were scrap and alongwith the scrap some part of the goods were packed in drums labeled as “Nickel Oxide” - benefit of N/N. 93/2004-Cus - Held that:- There is no ground put forth by the counsel for appellant which is able to establish that the impugned order is not in accordance with law - there is no reason to interfere with the impugned order passed by the learned Commissioner - appeal dismissed - decided against appellant.
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2018 (10) TMI 666
Mis-declaration of imported goods - Heavy Melting Scrap - It appeared to revenue that the goods were of prime quality - Confiscation of goods alongwith redemption fine - Held that:- The goods imported were referred to as Heavy Melting Scrap in the country of export. Further, the Pre-shipment Inspection Certificate also was to the same effect - The learned Original authority has accepted that the imported goods were for the purpose of melting and therefore, we do not find his decision to alter the classification claimed by the appellant to be sustainable. Once it is held that classification was not to be altered then the question of redetermination of value did not arise - Appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (10) TMI 661
Demand of interest on delayed payment of service tax - whether the demand of interest on the service tax by the Department is sustainable? Held that:- The service tax law does not provide any limitation for demand of interest on service tax - However, the Hon’ble Supreme Court has, in the case of T.V.S. Whirlpool Ltd., [1999 (10) TMI 701 - SUPREME COURT OF INDIA] laid down the law that the period of limitation which applies to the principal amount also apply to the interest thereon. This judgment was passed under the Customs Act which also did not have the period of limitation for demand of interest during the relevant period. The demand of interest is liable to be set aside on the ground of limitation of time because not only is there no evidence of elements required to invoke extended period in the show cause notice, there is not even any allegation that the interest has not been paid by reasons of fraud, collusion, willful misstatements etc. - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 660
Demand of Interest - delayed payment of service tax - renting of immovable property services - assessee claimed bonafide belief and stated that the delayed payment of tax was due to legal uncertainty about the taxability of the service - absence of any letter requiring assessee to pay interest by Revenue - Section 73(3) of FA - Held that:- After receiving the intimation on 18.6.2012, the department should have determined the interest payable and communicated to the assessee and if the assessee did not pay the same, they had one year period for issuance of show cause notice. In this case, without intimating to the assessee that he is liable to pay interest and they should pay the same, the Officers proceeded to issue show cause notice straightaway. Section 73(3) contemplates non issue of show cause notice in the event of an assessee paying full amount of service tax with interest. When the section and provisos are read together, in this case also, a letter should have been written to the assessee to pay interest and if they fail to pay the interest, show cause notice should have been issued. There is no evidence on record to show that any such letter was written by the Revenue. Time limitation - SCN was issued on 24.08.2016 demanding interest for the period from 1.6.2008 to 30.09.2011 - Held that:- There is no ingredient of mis-statement or suppression of facts with an intent to evade payment of service tax - the issue is squarely covered in favor of the appellant laying down that the period of limitation would apply to the demand of interest. There are no justification for confirmation of interest amount - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 659
Commercial training or coaching services - prospective insurance agent - import of ‘intellectual property service’ - CENVAT Credit of non-registered branches. Whether the appellant is liable to pay service tax under the category ‘commercial training or coaching services’ wherein they provide training to prospective insurance agent – Held that:- The issue is covered by the decision in the case of NIS SPARTA LTD. VERSUS CST, NEW DELHI [2015 (1) TMI 504 - CESTAT NEW DELHI], where it was held that Training imparted by the appellants does not fall under the ambit of Section 65(27) of the Finance Act, 1994 as the training imparted by the appellant is having the recognition of law and covered under exclusion clause of Section 65(27) of the Finance Act, 1994 - demand set aside. Whether appellant is liable to pay service tax on import of ‘intellectual property service’ – ₹ 48.73 lakhs? - Held that:- The burden to prove that the activity is liable to service tax, is on the Revenue. In the present case, as per the agreement, admittedly, there is no consideration qua for IPR and the Revenue is not able to show any other evidence. Hence, when there is no consideration for IPR then the demand of service tax under IPR is liable to be set aside - demand set aside. Whether the appellant have wrongly availed and utilised Cenvat credit on the invoices which was addressed to separate unit, working, for about the same premises and whether appellant have wrongly availed and utilised Cenvat credit in respect of non-registered branches– ₹ 88.09 lakhs? - Held that:- Name of the appellant i.e. from ‘NIS Sparta’ to “NIS Sparta (Division of Mudra Communications Pvt. Ltd.)’ had been changed in accordance with High Court (permission) order. Moreover, the department is not disputing that the services mentioned in the invoices has been used by the appellant. It is settled law that substantive benefit cannot be denied merely on the procedural lapse - credit allowed. Demand and Penalties set aside - Appeal allowed.
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2018 (10) TMI 658
Renting of immovable property Service - Abatement of Property tax - rent due for the period prior to 01.06.2007 was received by them later in 2011 and this has been included for raising the demand - penalties - Held that:- Both these pleas require to be verified by the adjudicating authority - both these issues have to be remanded to the adjudicating authority for fresh consideration. Penalties - Held that:- During the impugned period, the issue whether Renting of Immovable Property is subject to levy of service tax, was under litigation - Being an interpretational issue, the levy of penalty under Section 78 of the Act ibid., cannot sustain and requires to be set aside. Appeal allowed in part and part matter on remand.
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2018 (10) TMI 657
Refund claim - service tax paid on CHA Services - expenses incurred by the appellant beyond the place of removal - Case of Revenue that CHA expenses incurred were not in accordance with notification No. 41/2012-ST, dated 29.06.2012 as the CHA expenses were incurred before the place of removal and not after the place of removal and hence the appellant is not eligible for refund. Held that:- The amendment to the statutory provisions, vide Finance Act, 2016, has finally put the dispute to rest - Amendment of notification issued under section 93A of Finance Act, 1994 has clarified that refund on such services allowed - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 656
Renting of Immovable Property Services or not - assignment of entire business of the hotel to IHCL - scope of definition - immovable property buildings used for the purpose of accommodation including hotels, whether comes within the scope of Renting of immovable property or not? - Nature of receipt of License fee. Held that:- The renting of immovable property as defined in Section 65 (90a) of the Finance Act includes renting, letting leasing, licensing or similar arrangements of immovable property. In the present case, however, the agreement between the appellant and IHCL is not merely for renting of the hotel or land appurtenant thereto etc., but is license to run, conduct and operate Connemara hotel together with all the related facilities and business appertaining thereto . It appears to reason that not just the immovable property portion of the hotel, but also, the employees and other staff, goodwill and other paraphernalia are also taken into consideration by the two parties involved while framing the license agreement. It is also relevant to note that there is no fixed rent that is payable as would be expected in a normal renting of immovable property transaction - the license fee that would accrue to the appellant is only a percentage of the turnover. Since the turnover is never static but is dynamic and will go up or down in every succeeding year, the lease license fees would also wax or wane in resonance. In the recent decision in the case of Ex Maharani Mahendra Kumari Vs CCE ST Jaipur [2017 (4) TMI 1136 - CESTAT NEW DELHI] presided over by the then president of CESTAT, the Tribunal further ruled that presence of other incidental facilities related to entertainment, personal care etc. does not exclude the building from the category of hotel . Time limitation - Held that:- Verifications had been initiated with SIHL as far back as on 09.11.2005. However in spite of SIHL having given all the necessary clarification through their letters dt. 15.12.2005 and 26.06.2006, including copies of the agreement concerned, the department did not issue the SCN till 17.03.2014. Hence the proceedings are clearly hit by limitation. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 655
Commercial training or coaching services - External training/ personnel cost capitalised - the training on which the tax has been demanded was under taken abroad - Liability of Service tax - Held that:- It is not in dispute that the training on which the tax has been demanded was under taken abroad. The services under Section 65 (105) (zzc) fall under Rule 3(2) of the Taxation of Service (provided from outside India and received in India) Rules, 2006. The services covered under the said sub-Rule is taxable only when the same are performed in India. In the instance case, it is not in dispute that the said service was performed outside of India. Therefore, there cannot be any liability of tax. Penalty - liability of tax on IS rebilling services and Professional fees for foods safety and goods manufacturing practise audit - Held that:- The appellant have paid the said tax and also availed the Cenvat credit of the same. The said Cenvat Credit has not been challenged by Revenue - penalty not warranted and is set aside. Appeal allowed in part.
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2018 (10) TMI 654
Pre-deposit - Section 35F(i) of the Central Excise Act - Held that:- As per the requirement of Section 35F the appellant is required to pay only 10% of the disputed demand for filing the appeal before the Tribunal and in the present case the appellant paid 7.5% before filing the appeal before the Commissioner (Appeal) and 10% of the impugned demand before filing the appeal before the CESTAT, thereby making total of pre-deposit of 17.5% instead of 10%, as is required under Section 35F. The original authority after considering the submissions of the appellant has rightly allowed the refund of excess 7.5% of the predeposit - this position was also clarified by the board vide circular dated 10.03.2017 wherein the board has observed that refund of pre-deposit need not be subjected to the process of refund of duty under Section 11B of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 653
Penalty - Demand of service tax on Legal Services and Securing Agency Services - reverse charge mechanism - Bonafide belief - Held that:- There is no dispute about the fact that the appellant was required to discharge its Service Tax liability in respect of Security Agency Services and Legal Consultancy Services so received by them, on Reverse Charge basis. However, inasmuch as the said services were not being provided by the appellant himself, there could be a bona fide belief on his part as regards his liability to pay the Service Tax. Payment of interest is also penal in nature and in the light of the overall facts and circumstances, it cannot be said that there was any mala fide on the part of the appellant so as to attract the penal provisions. Penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 652
Maintenance or repair service - Extended period of limitation - appellant undertook job work with regard to de-shelling and re-shelling of old and worn out sugar mills rollers supplied by various sugar mills - Department issued SCN invoking extended period of limitation alleging that the activities of the appellant are covered under the category for service of ‘maintenance or repair’ - Held that:- An identical issue was the subject matter of the decision in the case of M/s.Jagat Machinery Pvt.Ltd. v. Commissioner [2012 (12) TMI 478 - CESTAT NEW DELHI], wherein it stands held that the activity of re-conditioning of old and worn out shells of Sugar Mills Rollers, shall be liable to service tax only with effect from 16.06.2005. The Tribunal also dealt with the issue of limitation and held that inasmuch as the appellant was reflecting everything in their returns filed with the Revenue, no malafide can be attributed to them - The activity of re-conditioning of old and worn out sugar mills rollers would not be taxable prior to 16.06.2005 Time Limitation - Held that:- The entire facts were being placed by the appellant before their Jurisdictional Central Excise Authorities, in which case no malafide can be attributed to them so as to invoke the longer period of limitation. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 651
Management maintenance or repair service - appellants contended that they basically provided job work to Indian Oil Corporation within their factory premises and therefore they were not covered under the scope of management, maintenance or repair service - Held that:- The appellants were given the task of operating one of the plants of Indian Oil Corporation for producing crumb rubber modified bitumen. Non availment of Notification No.214/86-CE - Held that:- It is to state that notification permits removal of goods without payment of duty from the premises of the job worker when the premises of the job worker is away from the premises of the main manufacturer. In the present case because the job work was done within the factory of IOC, the question of availment of the Notification No.214/86-CE simply does not arise. It is incorrect to hold that a job worker necessarily has to avail of the exemption Notification No.214/86-CE. Further, as the process done by the appellants amounted to manufacture, the job work done by them did not fall in the category of service. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 650
Valuation - Maintenance and Repair Services - inclusion of cost of spare parts, lubricants etc. in the cost of the services provided by them - Held that:- Inthe case of Tanya Automobiles Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Meerut-I [2016 (1) TMI 704 - CESTAT ALLAHABAD], it was held by relying upon precedent decisions that the value of the parts used during the course of repair of the services would not represent the value of the services, so as to require their addition in the value of the services - Similarly the incentives received from Maruti Udyog for achieving targeted sale were held as not to be part of the value of the services - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 649
Construction of residential units - constructions not meant for sale but for making them available to the weaker of the society - Held that:- The issue is already decided by this Tribunal through final order in the case of Commissioner of Customs, C. EX. & S.T., Allahabad vs. Ganesh Yadav [2017 (5) TMI 1251 - CESTAT ALLAHABAD], where it was held that The activity for constructing houses by the appellant for economically weaker section under works allotted by the Varanasi Development Authority under the scheme of Government of U.P., the activities is neither taxable under works contract services nor under Construction of Complex/Commercial or Industrial Construction Services - demand set aside. Construction of residential complex where the residential complex was constructed on the land owned by the builder and the sale was effected before 31.03.2010 i.e., before the explanation was inserted to the definition of residential complex services - Construction of Road, drainage and sever line, which are exempted - Held that:- The matter should be remanded to the Original Authority with direction to examine the leviability of service tax. Appeal allowed by way of remand.
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2018 (10) TMI 648
Maintenance & Repair Services - case of appellant is that the work executed by them was in respect of Boiler and Turbines which are immovable property and as such the service tax liability would arise only from 16.06.2005 - Held that:- All the legal issues raised above have not been considered by the appellate Authority in detail and the matter is required to be remanded with directions to give findings on each and every legal issue raised by the appellant - Appeal allowed by way of remand.
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2018 (10) TMI 647
Valuation - inclusion of Notional Interest earned on the interest free deposits in the assessable value - Renting of Immovable Property Services - Held that:- Tribunal in the case of Murli Realtors Pvt. Ltd. [2014 (9) TMI 461 - CESTAT MUMBAI] has held that in the absence of evidence showing that security deposits did not influence the rent and in the absence of any provision of law allowing addition of such notional interest in the assessable value it was held that the notional interest cannot be treated as assessable value. There is a clear finding by this Tribunal that there is no proviso of law to decide the rate of interest that should be taken into consideration and also there is no provision of law to add notional interest on the interest free security deposit to the rent received by the service provider for the purpose of levy of service tax. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 646
Penalty u/s 77 and 78 of FA - Returns not filed by appellant - non-payment of service tax - benefit of reduced penalty - Held that:- The appellant got themselves registered under the service tax, vide registration dated 07/11/2008. In spite of getting themselves registered, appellant did not file ST-3 returns nor deposited the service tax in question. The appellant s plea that the service tax was not being deposited on account of financial difficulties being faced by them cannot be appreciated inasmuch it was the legal obligation on the part of the assessee to deposit the service tax in time - penalty upheld. Benefit of reduced penalty - Held that:- The option having been granted by the Appellate Authority to deposit the 25% penalties within a period of 30 days from the date of passing of impugned Order-in-Appeal, having not been exercised by the assessee, no further extension can be granted for exercise of said option. Appeal dismissed - decided against appellant.
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2018 (10) TMI 645
Refund of service tax paid - refund claimed on the ground that VAT on logistic charges have been paid - refund rejected on the ground of time limitation and unjust enrichment - Held that:- There is no dispute that the refund claims stand filed after the normal period of limitation provided under Section 11 B of the Central Excise Act. It is well settled law that the Tribunal has no constitutional jurisdiction so as to allow the refund claim in deserving cases, by by-passing the limitation provided under the Act - refunds having been filed beyond the period of limitation are fully time barred and as such are required to be rejected on the said ground itself, without further going into the unjust enrichment angle - appeal dismissed - decided against appellant.
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2018 (10) TMI 644
Extended period of limitation - suppression of facts - demands based on Balance Sheet - case of appellant is that they have already paid the service tax and no further demand is maintainable - Held that:- The contentions of learned counsel for the appellant as recorded hereinabove are tenable in law - the subject show cause notice dated 11.7.2014 which was issued in extended period of limitation is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 643
Mandap keeper services - sale of food/beverages by the appellant-assessee also took place - Exemption under N/N. 12/2003-ST - Extended period of limitation - penalty - suppression of facts or not? - Held that:- The booking of banquet hall on buffet menu basis consists of elements of renting and catering activity and it does not appear to be disputed that the amount of renting of the banquet hall and catering stands amotised in buffet menu, therefore, supply of food/beverages in the banquet hall are not sale of food/beverages where other services are involved and predominant, therefore, the predominant of these other activities in buffet menu fall under the category of Mandap Keeper Services - In the absence of any sale contract between the appellant-assessee and its customers the appellant-assessee is not eligible for exemption under N/N. 12/2003-ST and are liable to pay service tax under Mandap Keeper Services within the normal period of limitation. Penalty u/s 76 of FA - Held that:- The act itself statutorily provides for waiver of penalty, since in the present case, there was a bona fide believe on the part of the appellant that their activities are not subject to service tax, based on the detail reasoning given above, therefore, there was a reasonable cause for failure if any on the part of the respondent assessee to pay service tax although they filed ST-3 returns - The issue involved in the present appeal involves interpretation of complex legal provisions, as such in terms of Section 80 penalty under Section 76 are hereby set aside. Extended period of limitation - Held that:- The audit team recorded that nothing is found incriminating as such the allegation of suppression in the show cause notice does not survive - appeal of Revenue dismissed on this ground alone. Appeal allowed in part.
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2018 (10) TMI 642
Valuation - includibility - amount collected as Interest free Maintenance Security as a deposit - Section 67 of FA - Whether service tax is leviable on the amount collected as Interest free Maintenance Security (IFMS) collected as a deposit from the flat owners of a housing society? Held that:- The reference to section 67 for making IFMS as part of the gross amount chargeable to tax for provision of the said service in the impugned order is not tenable as only advances for the services and actual receipts for provision of the said service can be legible to tax which in this case being the advance deposit of first 18 months and the monthly charges are already covered by service tax and the same was duly paid. The deposit (IFMS) could not be correlated to payment or advance for service. The amount collected as deposit was merely a security and not an advance towards any service charge and hence not includible in value for service tax. Further, the appellants had retained this amount till the stage of transfer of maintenance responsibility to RWA. The repair and maintenance was the responsibility of developer till that stage - The issue of taxability of maintenance charges in such cases was decided by Honourable Tribunal in the case of Kumar Behary Rathi vs. CCE Pune [2013 (12) TMI 269 - CESTAT MUMBAI], where it was held that Such maintenance of the structure is not rendering a taxable service as per s. 65 (64) of the Finance Act, 1994. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 641
Liability of service tax - Stock Broker - various charges/commissions/income - CTCL charges - depository service - commission from mutual funds - income from RBI bonds, Govt. securities, public issues under B.S.A. - commission from banks for promotion of their bonds - penalties. Service Tax on CTCL charges and Depository Charges - Held that:- These charges relate to payments made by the appellant for the CTCL computer program. Such a program provides a single point trading access to equity, commodity and currency derivatives markets - The Depository/Demat Charges are levied by the Depository under Depositories Act, 1996. The appellants collect these charges from customers and pay the same to depository participants like CDSL or NSDL - Tribunal in the case of Span Caplease Pvt Ltd [2018 (2) TMI 569 - CESTAT AHMEDABAD] held that such charges, which are collected separately and in accordance with various statutory bodies regulations and not retained by the stock brokers but deposited with the authorities concerned (e.g. National Stock Exchange), such charges cannot form part of the taxable value - aforesaid charges realized by the appellant are not in the nature of commission or brokerage and that being so; the same shall not form part of the value of taxable services - demand set aside. Service Tax on income from distribution of Mutual funds and Commission from Banks/Companies for investment in their Bonds - validity of SCN - Held that:- The demand in the show cause notice has been raised in the category of banking and financial services whereas in the adjudication order, the same has been confirmed under Business Auxiliary Service (BAS), which is beyond the show cause notice. This fact has not been rebutted by the Ld. A.R. - otherwise also, the issue is settled in the case of CST, Delhi vs. ABN Amro Bank [2011 (1) TMI 69 - CESTAT, NEW DELHI], where iCommissioner has dropped the proceedings on the ground that the Circular dated 5.11.2003 of the Board which was the basis for issue of Show Cause Notice stands set aside by the Hon ble High Court of Andhra Pradesh - the demand of service tax on account of income from distribution of mutual funds and selling bonds issued by banks/companies is not sustainable and the same is set aside. Service Tax demand on income from RBI bonds - Held that:- The issue of liability to pay the service tax on commission received from sale of RBI bonds is no longer res integra and has been settled by this Tribunal in favour of assessee in the case of Enam Securities Pvt Ltd [2014 (11) TMI 585 - CESTAT MUMBAI], where it was held that the lending or borrowing of money by the Government is a sovereign function and on such functions there cannot be any tax liability whether by way of direct tax or by way of indirect tax - the demand of service tax on commission received from sale of RBI bonds is not liable to service tax. Penalties on above also set aside. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 640
Refund claim - relevant time - Rule 5 of Export of Services Rules 2005 read with Notification No. 11/2005 ST dated 19.04.2005 - Revenue has raised the objection that service tax has been paid after receipt of FIRC which is in violation of the Notification - Held that:- There is no such restriction under the Notification that the service tax has to be paid at the time of provision of service. Rather as per Export of Service Rules service is completed only on receipt of the FIRC and therefore the payment of service tax by way of cenvat credit paid on receipt of the FIRC is not wrong and therefore the rejection of rebate on this ground is not sustainable. The appellant has included the said service along with the value of service provided to the domestic customers and the learned counsel has submitted that he has already provided the value of service exported on which service tax was paid and the same comes to ₹ 1,95,50,854/- - For verification of this amount, the matter needs to be remanded back to the original authority for verification of the rebate amount. Appeal allowed by way of remand.
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Central Excise
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2018 (10) TMI 639
Demand of duty of Credit, interest and penalty - issue pending reconsideration before the Larger Bench - input credit on Fuel - job-work - penalty - Held that:- The issue involved in the present Tax Appeal is squarely covered by the judgment of Supreme Court in case of Commissioner of C. Ex. v. Gujarat Narmada Fertilizers Co. Ltd. [2009 (8) TMI 15 - SUPREME COURT], where it was held that exclusion of fuel- input vis-a-vis non-fuel-input would still fall in sub-rule (1) - appeal dismissed.
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2018 (10) TMI 638
Penalty u/r 26 of CER, 2002 - Whether the product manufactured by the appellant, described by the revenue as ‘ready-mix concrete’, eligible for exemption under Central Excise Notification 12/2012 dated 17.03.2012 as ‘concrete mix’ manufactured at the site of construction for use and construction work at such site under Chapter 38 of the Central Excise Tariff? - time limitation. Held that:- There is no change in the Central Excise Tariff Heading in so far as the ‘ready mix concrete’ is concerned. The description ready mix concrete has been replaced by the description “concrete ready to use known as “ready mix concrete (RMC)” - there is no change in tariff description or in the Notification as far as ready mix concrete is concerned. Similar issue was examined by Hon’ble Apex Court in appellant’s own case [2015 (10) TMI 612 - SUPREME COURT], where there is no change in the Central Excise Tariff Heading in so far as the ‘ready mix concrete’ is concerned - it is apparent that the sole distinction recognized by Hon’ble Apex Court between the RMC and CM is the manner of manufacture, whether conventional (manual) or automated. It is seen that in the entire findings of the Hon’ble Apex Court from para 18 onwards there is no mention of any IS Specification anywhere. In fact Hon’ble Apex Court has not relied at all on the IS Specifications. In these circumstances any changes in the IS Specifications cannot be used to distinguish the decision of Hon’ble Apex Court. Time Limitation - Held that:- The concrete mix prepared at site would be entitled to exemption under Notification 4/97. In these circumstances, the benefit of limitation has to be extended to the appellant. Penalty - Held that:- Since the issue was of interpretation no penalty can be imposed on Sh. Mukund K. Bangde. The demand against M/s Larson & Toubro for the period beyond the normal period of limitation is set aside - penalty also set aside - appeal allowed in part.
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2018 (10) TMI 637
CENVATCredit - fake invoices - no actual supply of goods - case of Revenue is that appellant could not prove the transportation of the goods to the appellant - Held that:- The entire case is based on one statement of transporter, that too in respect of one consignment between the manufacturer M/s Tribhuvan Industries Pvt. Ltd. and M/s Good Luck Empire - As regard statement of the director of the appellant’s company, there is no admission regarding wrong availment of credit without receipt of the goods - There is no investigation carried out by the investigating agency, on the further transportation of goods from the first stage dealer to the appellant. Regarding consignment note since the service tax on transportation was paid by the appellant that itself establish the transportation of the goods. Merely because consignment note was not produced, it cannot be said that the goods were not transported. Since the entire case is on the basis of one transaction between the manufacturer and the first stage dealer which is not relevant with the appellant, any evidence of that transaction cannot be used against the appellant, particularly, when no tangible evidence was unearthed in the transaction between the dealer M/s Good Luck Empire and the appellant - The payment for the supplies was made through cheques which were recorded in the ledger of both M/s Good Luck Empire and the appellant. The receipts of inputs were entered in the Cenvat registers such as RG23A Part I and Part II. Despite the visit of the officers to the appellant’s factory, no discrepancy was noticed. There is no reason to deny the Cenvat Credit. The only the evidence which is not related to the appellant is the statement of the transporter which is not respect of the transportation of the goods to the appellant cannot be used against the appellant. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 636
Valuation - related person or not - Revenue s allegation is based on the assertion that the whole capital of M/s. Tubes was contributed by the family members of Shri Kapil Dabharia and that he is also the proprietor of M/s. K.R. Metals - Rule 11 of Central Excise (Valuation Determination of Price of Excisable Goods) Rules, 2000. Held that:- Only the specified persons are the qualified to be relative - In the instant case, while the appellant-assessee is a proprietorship concern and M/s. Tubas is a Private Limited company. The Section 6 of the Companies Act, 1956 would not cover such a situation. In these circumstances, the basic charge in the show cause notice fails and thus, the demand made on the basis of this charge cannot be sustained. Moreover, it is seen that even if two are held to be related, in terms of the decision of Hon'ble Apex Court in the case of SACI Allied Products Limited vs. CCE [2005 (4) TMI 65 - SUPREME COURT OF INDIA], the value to be adopted should be of the goods cleared to same class of buyers - In the instant case, M/s. Tubas is buying substantial quantity of the total sale of the appellant. Since M/s. Tubas is buying 20/30% of the appellant s production, the price to any independent buyer of similar quantity only can be adopted under Rule 11 of the Central Excise (Valuation Determination of Price of Excisable Goods) Rules, 2000. On this count also, the demand dose not survive as the price adopted does not related to similar class of buyer. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 635
SSI exemption - scaffoldings / propping equipments supplied to some of the construction companies on job work basis - case of appellant is that they have not undertaken any manufacture of goods and in fact the goods are manufactured by the job workers - Held that:- There is no mahazar drawn up to show that there were any machinery at the premises at the time of inspection. It is also not noted anywhere whether there were raw materials or finished products in the said premises of M/s. Lakshmi Scaff and Vel Scaff on the date of inspection i.e. 8.12.2006. If the department had conducted inspection in the premises, they should have drawn up a mahazar showing the stock of raw materials and finished products lying in the premises. So also the activities carried out in the premises should reflect in the documents prepared at the time of inspection. There is nothing to show that there were machines in the premises or raw materials and finished products. There is no evidence put forth by the department to show whether the appellant had engaged any labourers in the premises for carrying out the manufacturing activity. From the statement, not supported by any document, the adjudicating authority has vaguely presumed that Shri A. Ganesan has manufactured the impugned goods. The statement given by Shri A. Ganesan does not put forth any evidence that he has manufactured such goods. It is for the department to establish the clandestine manufacture of goods by the appellant. In the present case, the department has failed to draw up panchanama during the date of visit so as to establish that the appellant was manufacturing goods in the premises. Further, there is no evidence to show that he had engaged labourers for manufacture and supply of such huge quantity of goods - the strong probability is that the appellant had procured the goods from job workers for supply to the construction companies. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 634
Clandestine removal - removal of goods without cover of invoices - issuance of goodless invoices - fake invoices to avail excess credit - undervaluation - entire case has been built up against the appellants on the basis of data retrieved from pen drives, which were recovered from private persons - Section 36 B of Central Excise Act, 1944 and Section 65 B of Indian Evidence Act, 1872 - cross-examinations denied - demand based on production capacity also. Held that:- In this case during the course of investigation neither stock variations were found and nor any incriminating documents were recovered during the search of factory premises of appellants. Only two pen drives were recovered from the possession of Ms. Priyanka Jain in the joint office of the appellant and data has been retrieved and on that basis, the case has been made out against the appellant. Section 36B of the Central Excise Act, 1944 deals with the situation of admissibility of documents and computer print outs as evidence. The procedure has been prescribed under Section 36B of the Act - In this case, the procedure laid down under Sub-sections 2, 3 & 4 of section 36B, has not been followed, in that circumstances, the data gathered from pen drives relied in toto and some of the invoices, are not admissible evidence. Therefore, on this sole ground, the show cause notice is not sustainable. Production capacity - Held that:- As per ER-7 returns, the appellant has shown their production capacity during the impugned period and as per the ER-7 returns it is clear that the maximum production capacity of the appellant is 3500 MT without any break. Admittedly, no factory work on 100% production capacity due to wear and tear. The production capacity on which the impugned order is demanding duty works out to 6430.1705 MT during the impugned period. By no stretch of imagination, such quantity of clandestinely cleared goods by the appellants could be manufactured during the impugned period. Invoices - Held that:- On the one hand it has been alleged that the appellant is clearing goods without cover of invoices and on the other hand it is alleged that the appellant is issuing with goodless invoices. In fact, the duty has to be demanded on the goods manufactured by the appellants. If the appellant is an issuing goodless invoice which means no goods have been manufactured by the appellant. Therefore, on that account, no duty can be demanded against the appellants - the appellant has explained the issue of goodless invoices but the adjudicating authority has not considered the defense reply of the appellant, therefore, also the impugned order lacks merits. Cross-examination of persons, whose statements were relied upon, not provided - Held that:- No cross examination of the persons whose statements have been relied upon by the adjudicating authority during the course of adjudication has been granted, therefore, the said statements cannot be relied upon as admissible evidence - the statements recorded during the course of adjudication are not admissible evidence in terms of Section 9 (D) of the Act. Therefore, on that account also, the demand is not sustainable. Undervaluation - Held that:- As the appellant has shown invoices, the price of the goods and corresponding invoices has been recovered which is having higher price to the same party of the same quantity, in that circumstances, the issue of undervaluation has been proved, therefore, on account of undervaluation, the appellants are liable to pay duty alongwith interest - demand upheld. Appeal allowed in part.
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2018 (10) TMI 633
Intermediate product - sugar syrup - Captive consumption - Excisability/marketibility - Exemption under N/N. 67/1995-CE dated 16.03.1995 - Held that:- Tribunal in the case of M/s Bhagwati Food Pvt. Ltd. and others [2016 (9) TMI 678 - CESTAT ALLAHABAD], held that there was no evidence to prove that sugar syrup captively consumed is classifiable under Tariff Item No. 17029090 nor there is any evidence to prove that the goods in question in the form in which they come into existence in the appellants’ factory are marketable. Sugar syrup coming into existence during the manufacture of biscuits and captively consumed does not attract Central Excise duty for the reason that there is no evidence that the same is marketable - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 632
CENVAT Credit - duty paying invoices - supplementary invoices - Held that:- There was no necessity of issuing supplementary invoice for availing the Cenvat credit of differential amount of duty paid by the manufacturers - there is no revenue loss to the Department in the present case. Once the manufacturer has paid the differential duty for the disputed period and there is no revenue loss to the Department, therefore, rejection of the claim of the appellant for Cenvat credit is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 631
Appropriation of refund sanctioned against the outstanding interest amounts - finalization of provisional assessment - whether the sanctioned refunds have to be made in cash or in RG 23A Part-II as credit? - Held that:- On being questioned learned Advocate fairly agrees that such duties were originally paid out of the credit account only and not in cash. He has further fairly agreed that the appellant is in a position to use the said credited amount for payment of duties in future. If that be so, I really fail to understand the appellant’s contention to receive refunded amounts in cash. The duties having been paid out of the credit amount has to be refunded to the credit account only and cannot be allowed to be refunded in cash - appeal disposed off.
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2018 (10) TMI 630
Clandestine removal - stock found short - HR Coils, GP coils and Zinc - it was alleged that such short found stock stands cleared by the appellant without payment of duty - Held that:- Even though we find that the appellants have tendered a plausible explanation for such shortages, inasmuch as the visiting officers did not take into account the slitted coils and the Zinc available in the tanks, we are of the view that even if the shortages are accepted to be correct reflection of facts, the demand of duty cannot be sustained - demand set aside. CENVAT Credit - apart from making a bald allegation that various iron and steel items are not Cenvatable, in terms of Cenvat Credit Rules, the Revenue has not examined the use of the same in the assessee’s factory - Held that:- Even if the Revenue’s stand that such goods were used as structurals is accepted, the credit would still be available to the appellant - Credit allowed. CENVAT Credit of duty paid on the pipes purchased by them from other manufacturers - denial on the sole ground that no manufacturing activity has taken place in the appellant’s factory - Held that:- Even the said issue is no more res integra and majority decision of the Tribunal in the case of Asian Colour Coated Ispat Ltd. v. CCE [2014 (9) TMI 974 - CESTAT NEW DELHI] has held that even if no manufacturing as taken place, but the goods have been cleared finally on payment of duty, the assessee would be entitled to the Cenvat Credit of duty paid on the raw materials - credit allowed. Appeal allowed in toto.
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2018 (10) TMI 629
Exemption/refund of education/higher education cess - Area Based Exemption - N/N. 56/2002-CE dated 14/11/2002 - Held that:- The issue decided in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - refund allowed. Valuation of excisable goods - Inclusion of of outward freight up to the place of delivery of their finished goods - place of removal - Held that:- In the present case the appellants are claiming that the goods were sold on FOR basis and as such the place of removal is the delivery point to the buyer. The freight element incurred by the appellants should form part of the assessable value in such FOR sale - there is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory. Appeal disposed off.
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2018 (10) TMI 628
Rectification of Mistake - Held that:- In paragraph 3 of the impugned order, it has been recorded that “it has been submitted by the Ld. Counsel that to say that correct classification of the said product is 3808.10 of Central Excise Tariff which is mistake apparent on record and same is rectified - ROM application allowed.
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2018 (10) TMI 627
CENVAT Credit of Krishi Kalyan Cess - utilization of such credit for payment of Krishi Kalyan Cess paid on renting of immovable property service - Held that:- The appellant is not only the manufacturer of excisable goods but also provider of services namely, renting of removable property, therefore, the appellant is working in the capacity of manufacturer as well as service provider - As per Rule 3 (1) (a) of CCR, provider of output services is allowed to take the Cenvat Credit the service Tax of the Krishi Kalyan Cess. As per facts the appellant are providing output services that is Renting of immovable as property as the service provider and according to Rule 3(1)(a), the Cenvat Credit of Krishi Kalyan Cess is admissible to the appellant as per Clause(d) of Rule 3(7). The said credit of Krishi Kalyan Cess is allowed to be utilized only for payment of Krishi Kalyan Cess on taxable service. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 626
CENVAT Credit - Product Liability & product Recall Insurance Policy in respect of goods manufacture and sold by appellant - whether the appellant eligible is for Cenvat credit in respect of Service Tax paid on Insurance services of “Product Liability & product Recall Insurance Policy”? Held that:- As per the facts of the case the Product Recall Insurance Policy is taken by the appellant, as per condition of sale of the goods, without the said condition the goods cannot be sold to customer, the Product Recall Policy is pre-decided before supply of the goods. Therefore, it cannot be said that the Product Recall Policy Expenses is a post removal expenses, once it is pre-determined the goods can be supplied only after the Product Recall Policy is taken then it becomes part of cost of the final product, during the manufacturing of the same. In the present case the Product Recall Policy expenses is born for the purpose of security of the goods. Therefore, for his reason also the service falls under the definition of input services. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 625
Rectification of Mistake - applicant submits that there is mistake in the order in as much as the Hon'ble Tribunal has not considered the decision cited in the case of the Prayagraj Dying and Printing Mills Pvt.Ltd [2013 (5) TMI 705 - GUJARAT HIGH COURT] - also issue on limitation not considered - Held that:- The Tribunal Vide order dated 24.11.2017 remanded the matter to the adjudicating authority, no conclusive finding was given by this Tribunal. Therefore, in my view, the issue on merit/facts/limitation was kept open for de-novo adjudication by the adjudicating authority. There is no error, as the matter was not conclusively decided - ROM application dismissed.
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2018 (10) TMI 624
Rectification of Mistake - applicant submits that the Tribunal passed the order dated 12.03.2018 without appreciating the facts and settled law on the issue - Held that: - In para 3 of the order, the Bench has recorded the submission made by the Ld. Counsel on behalf of the appellant including the judgment cited by the Ld. Counsel, thereafter, in para 5 the detailed finding was given after interpreting Section 11A, therefore, the order passed by this Tribunal is very reasoned. The applicant in the application also could not point out any specific error in the order - there is no merit in ROM application - ROM Application dismissed.
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2018 (10) TMI 623
CENVAT Credit - inputs - MS Plates - denial on the ground that the same is not used in the manufacture of Well Platform - Principles of natural justice - Held that:- he detailed submission made by the appellant before the Commissioner (Appeal) which has been recorded but no finding was given, therefore, the Ld. Commissioner (Appeals) has not followed the principles of natural justice. In this position there is no option except the re-consideration of the overall case by the Commissioner (Appeals) - appeal allowed by way of remand.
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2018 (10) TMI 622
CENVAT Credit - input - HR Plates - Laboratory Furniture - whether the appellant is entitled for the Cenvat Credit in respect of HR Plates which were used for Fabrication of Storage Tank used for factory of the appellant and Laboratory Furniture? - Held that:- Goods used in the factory by the manufacturer of the final product are inputs. As per this sub-clause A of definition of Inputs, it is not required that the goods should be used in the final goods if it is used by the assessee in his factory whether the final product is not contained in the goods, it will quantify as input. There is no dispute that the HR Plates were used in the factory of the appellant who is the manufactured, plates were used for Fabrication of Storage Tank which is subsequently used for production of final product, therefore, it is not only used in the factory also used in the relation to manufacture of final product. Therefore, HR Plates clearly qualified as inputs in terms of Rule 2 (k) of cenvat Credit Rules, 2004 - credit allowed. Laboratory Furniture - Held that:- Appellant are not contesting the demand of Cenvat Credit on the Laboratory Furniture and the same has been reversed by them - demand upheld. Demand of Interest - Held that:- Since the appellant maintained the credit balance throughout the period the interest is not chargeable, in terms of Rule 14, wherein, it is provided that interest is chargeable only when assessee availed and utilized the Cenvat credit, therefore, only by availing the Cenvat Credit and not utilized the same, interest cannot be charged. Appeal allowed in part.
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2018 (10) TMI 621
CENVAT credit - Man Power Supply Service - Reverse Charge Mechanism - N/N. 13/2012-ST dated 20.06.2012 - Case of the department is that the appellant being a proprietorship concern was not liable to pay service Tax under Reverse Charge Mechanism; therefore, the Service Tax also paid by them is not available as Cenvat Credit to the appellant - Held that:- There is no dispute that the Service Tax on Supply of Man Power was payable by the service provider, therefore, levy of Service Tax on supply of Man Power is not under dispute the said liability of the Service Tax even though discharged by the appellant it will not effect to the characteristics of the levy of service Tax which is legally payable on service of supply of Man Power. Moreover, even in case where the service itself is not taxable but if the service provider discharge the Service Tax, the same can be availed as Cenvat Credit by Service recipient. The only condition is that service recipient should receive the services which duly Service Tax paid, if that is so Cenvat Credit cannot be denied to the service recipient - the present case is on better footing as the Service Tax on Man Power Supply per say was taxable, therefore, Service Tax paid on such services irrespective by Service recipient, Cenvat Credit is admissible - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 620
CENVAT credit - service tax paid by the job worker - N/N. 12/2003-ST. - Held that:- If the service provider has opted not to avail the exemption Notification No. 12/2003-ST and paid the service tax on the entire value including material cost, no objection can be raised either on the payment of service Tax and consequently, on the part of the service recipient for availing the CENVAT credit - The service tax paid by the service provider on the gross value which includes the material cost cannot be disputed consequently eligibility to CENVAT credit on the said service tax can also not be objected on the part of the appellant - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 619
CENVAT Credit - credit in respect of Dasna Unit - the entire case of the Revenue primarily rests upon the allegation that the invoices on the basis of which the appellant have availed the credit were in the name of their Delhi office and not in the name of their unit situated at Dasna - Held that:- Admittedly the services have been received and utilized by the appellant at their Dasna unit inasmuch Delhi office was not in position to utilize the credit. It is also not the Revenue’s case that such credit was also transferred by Delhi office to their Najibabad unit and as such there is double utilization of the same - In the absence of any allegation of non-receipt and non-utilization of the services by the assessee, the denial of credit on the sole ground that the invoices were in the address of Delhi office cannot be appreciated and upheld. As regards non registration of Delhi office as ISD, we note that the issue is no more res-integra and stands settled by various decisions of the Tribunal laying down that non-registration as ISD will not result in denial of credit. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 618
Penalty - Valuation - manufacturing of Pan Masala containing Tobacco (Gutkha) - sealing of machinery - Held that:- All the machines were sealed and as such could not have been operated during the period of closure and as observed by Commissioner (Appeals) that even if the Department feels that sealing has not been done as per requirement of law then it was the fault of the Department for which the assessee cannot be penalized as he had filed timely intimation - penalty not warranted - appeal dismissed - decided against Revenue.
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2018 (10) TMI 617
Extended period of limitation - no suppression of facts - Clearance of LED lights and fittings - Benefit of Sl.No.71B of Notification No.6/2006-CE dated 01.03.2006 - scope of SCN - Held that:- The basis for issue of show cause notice was scrutiny of ER-1 returns - there was no evidence for revenue to alleged suppression. Therefore, revenue did not have extended period for raising the demand - the demand is hit by bar of limitation - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 616
Clandestine removal - shortage of finished goods and raw material - demand based on weightment slips - reliability on statements - it was alleged that appellant could not produce any record/documents relating to stock of raw material and finished goods - It further appeared that the stock of raw materials was unaccounted in the factory of M/s Prakash Ispat with an intent to remove the same after manufacturing of finished goods clandestinely. Held that:- The Department is heavily relying upon the statement of Shri Rajendra Prasad Jaiswal, Weighment Clerk of M/s. Jain Dharamakanta, Sikandrabad, to prove the entries mentioned in weighment slips allegedly belonging to the appellant. However, we find that the said statement of Shri Rajendra Prasad Jaiswal, Weighment Clerk is hit by Section 9 D of Central Excise Act, 1944 inasmuch as the learned Commissioner has not verified the fact that Shri Rajendra Prasad Jaiswal is dead or alive, therefore, the said statement cannot be relied upon as evidence - Also, there are inconsistency in his statement as explained by the learned Counsel for the appellant and these facts have not also been corroborated from the owner of M/s. Jain Dharmakanta. Hon’ble High Court of Allahabad in the case of Continental Cement Company Vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] held that charge of clandestine manufacture & removal is a serious charge & it has to be proved by bringing on record clinching evidence in the form of purchase of excess raw materials, use of extra electricity, sale of final products, clandestine removal, transportation, payment & realization of sale proceeds - in the present case, there is no evidence to prove that appellant was involved in clandestine manufacture & removal of goods. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (10) TMI 665
Restraining defendant from infringing the trademark “GOLD WINNER” - It is the claim of the plaintiff that the trademark “GOLD WINNER” was originally coined and adopted by the plaintiff in the year 1999 in respect of different varieties of Dhall and Flour preparations - It is also the claim of the respondent/plaintiff that in order to safeguard the rights acquired over the said trademark, they applied and obtained registration for the mark “GOLD WINNER (Label)” under Application No.1232740 in Class-30. The prayer of the respondent/plaintiff in O.A.No.224 of 2017 is for an order of ad-interim injunction restraining the appellant/defendant from in any manner infringing the registered trademark and passing off its products as that of the respondent/plaintiff's trademark “GOLD WINNER” Held that:- The documents made available before this Court would prima facie indicate that the respondent/plaintiff is having Certificate of Registration in Class-30 in respect of dhall varieties in Reg.No.1232740 dated 05.09.2003 and whereas the appellant/defendant is having trademark registration Nos.1399085, 1399087 and 1399088 dated 16.11.2005 in Class-30 for the mark “GOLD WINNER SREE GOLD”. This Court is of the considered view that the respondent/plaintiff is not entitled for an order of ad-interim injunction in respect of infringement for the reason that the registration of the appellant/defendant for the mark “GOLD WINNER SREE GOLD” dated 16.11.2005 is also in respect of Class-30. Both the appellant/defendant and the respondent/plaintiff is having registration in respect of dhall varieties etc., in Class-30 and that the registration of the respondent/plaintiffis dated 05.09.2003. A contention was also put forward that the mark of the appellant/defendant is not a “well-known trademark” as per the definition under Section 2(zg) of the Trade Marks Act, 1999 and the learned Judge in paragraph 33 of the impugned order observed that it was open to the appellant/defendant to establish his claim in that regard during in trial. This Court is also of the considered that it also requires appreciation of evidence, which can be let in during the course of trial and hence, not inclined to give any finding as to whether the trademark of the appellant/defendant has attained such reputation and status - the appellant/defendant has stopped using the said wrapper for the reasons best known to him and started packing dhall varieties in the package/wrapper titled as “GOLD WINNER- Range of dals”. The explanation offered is that they are having registration of the artistic work “GOLD WINNER SREE Gold” and those Registration Certificates are in respect of Orid Dhall, Moong Dhall and Toor Dhall bearing Nos.A-78000/2006, 78004/2006 and 78063/2007 dated 29.12.2006 and 09.01.2007 respectively and whereas the respondent/plaintiff's trademark registration certificates are dated 05.09.2003. It is a settled position of law that when the word is only descriptive of the character of the goods, no protection can be claimed for use of such word, but if the word is known for its distinctiveness secondary meaning, such word is entitled to get protection. Appeal allowed in part.
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2018 (10) TMI 664
Dishonor of Cheque - settlement of liability - offence under Section 138 of the Negotiable Instruments Act - validity of criminal proceedings - Held that:- In the present case, it is only a money transaction and the complainant has also received the amount from the petitioner/ fifth accused and in this regard a memo of compromise has also been jointly filed by the petitioner and complainant. Therefore, the complainant's interest lies primarily in recovering the money rather than seeking the drawer of the cheque in jail - Further Section 147 of the Negotiable Instruments Act also empowers this Court to compound the offence under section 138 of the Negotiable Instruments Act. The conviction and sentence imposed on the revision petitioner/fifth accused Salem are set aside and this criminal revision is disposed of - revision disposed off.
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2018 (10) TMI 663
Dishonor of Cheque - recovery of loan - Section 138 of Negotiable Instrument Act - case of petitioner is that they never issued any cheque and never be the signatory to the alleged cheque issued by the petitioner - Held that:- Admittedly, the cheque has been issued from the current account of CANNAN CITY signed by one P.David Rajan as its Proprietor/authorised signatory. The petitioner/accused is not the signatory to the said cheque issued to the tune of ₹ 3 lakhs dated 11.11.2013 drawn on Axis Bank, Ashok Nagar Branch, Chennai. It is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the petitioner is not a drawer of the cheque and she has not signed the same. A copy of cheque is annexed with the typed set of papers and it is brought to the notice of this Court that one Mr.P.David Rajan signed as Proprietor by authorised signatory of CANNAN CITY from its current account - As per the case of the respondent/complainant, the petitioner borrowed a sum of ₹ 3 lakhs to develop her business on 11.08.2013 on her personal capacity. On the date of the borrowal of the said amount itself, the petitioner issued the cheque in favour of the respondent/complainant. The criminal proceedings filed under Section 138 of the Negotiable Instrument Act cannot be used as arm-twisting tactics to recover the amount allegedly due from the petitioner. It cannot be said that the complainant has no remedy against the petitioner, but, certainly not under the provisions of Section 138 of the Negotiable Instrument Act. The criminal proceedings under Section 138 of the Negotiable Instrument Act is not maintainable as against the petitioner herein - petition allowed.
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2018 (10) TMI 662
Does the Commercial Court have power to take on record, the written statement which is presented beyond the period of 120 days from the date of service of summons on sufficient grounds, preventing the defendant from filing the same being made out? Held that:- The Act envisages that the commercial disputes of specified value shall be dealt with by the Commercial Courts. Appeals against the judgment of the Commercial Court would lie before the High Court Appellate Commercial Division. Section 8 of the Act of 2015 provides for a bar against revision application or petition against an interlocutory order. It provides that notwithstanding anything contained in any law for the time being in force, no civil revision application or petition shall be entertained against any interlocutory order of a Commercial Court, including an order on the issue of jurisdiction and any such challenge; subject to the provisions of Section 13, shall be raised only in an appeal against a decree of the Commercial Court. In the present case, the legislative intent which emerges is that the prescription of time limit for filing the written statement applicable to a Commercial Court is mandatory. Such an interpretation would also be in consonance with the scheme of the Act of 2015 and the objects for enactment of the said act. Petition dismissed.
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