TMI Tax Updates - e-Newsletter
December 5, 2019

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Filing of appeal before GST Tribunal - Period of limitation will commence from the date of constitution of Appellate tribunal where the order has been passed before such date. - A big relief for the aggrieved person.
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• GST:

  Classification of services - security and scavenging services to the Government hospitals - Applicant is liable to pay GST on the portion of the payment received on account of the bonus paid or payable to the persons it deploys as security personnel.
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• GST:

  Grant of registration - migration of registration under Notification dated 6.8.2018 - the stand of the Revenue is only that the application for migration was belated - In matters where the assessee risks the loss of a substantive right that accrued to him, the revenue ought to relax the procedural requirements so as to ensure that substantive benefits accrued to assessees are not denied on account of mere technical lapses.
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• GST:

  Detention of goods alongwith vehicle - consignee is an unregistered dealer - detention on the ground that there was a possibility of evasion of payment of IGST in Kerala - the reasons stated in the detention order are wholly irrelevant for the purposes of Section 129 of the Act
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• GST:

  Refund of input services - Grant of any interim relief, as prayed for, would virtually amount to directing the Respondents to act contrary to the provisions of Rule 89(5) of the CGST Rules.
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• GST:

  Detention of truck - Power of police officer - without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act.
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• GST:

  Profiteering - purchase of Flat - Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent.
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• Income Tax:

  Transfer Pricing (TP) adjustments - Transfer Pricing (TP) adjustments - debar of deduction u/s 10A on addition income assessed u/s 92CD as per the Proviso to 92C(4) - deduction u/s 10A cannot be disallowed in respect of additional income offered in the modified return as it is not a transfer pricing addition made by the AO but the additional transfer pricing income offered by the assessee in consonance with the APA with the CBDT.
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• Income Tax:

  Exemption u/s 11 - the trust is operating buses to transport the students at free of cost. In case of breakdown, the Managing Trustee offers the vehicles of his own transport business to ferry the students - denial of exemption should only be to the extent of the income which is violative of section 13(1)(d) - The amount t be brought to tax at the maximum marginal rate.
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• Income Tax:

  Exemption u/s 11 - entitled for registration u/sec 12A - imparting training in performing arts like various dance forms including traditional “Kuchipudi” - an assessee need not necessarily be a school or a college where education is imparted - assessee is entitled for registration u/sec, 12A
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• Income Tax:

  Accrual of income - Permanent Establishment (PE)/Service PE/ Supervisory PE - There is no evidence of doing work by the Director in India in market research and related jobs. Merely because of the fact that expatriate Director was present in India, no nexus can be held to be established between HO and BO.
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• Income Tax:

  After its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee.
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• Income Tax:

  Penalty u/s 271(1)(c) - Defective notice - a proper satisfaction has been arrived at before initiation of penalty proceedings, and then a defect in notice including mere non-striking of irrelevant portion in the notice does not invalidate the penalty proceedings.
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• Income Tax:

  MAT - Disallowance of depreciation on fixed assets to the book profits computed u/s 115JB - resadjudicata - Once the claim of the assessee has been accepted in earlier financial years, then there is no reason for the AO to disturb the settled position unless otherwise there is a complete change in facts for the year under consideration.
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• Customs:

  Release of detained goods - over-valuation of goods - seizure memo issued - there is no reason to interfere with this seizure memo at this stage - Show Cause Notices are required to be issued under the provisions of Customs Act, 1962.
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• Customs:

  Reopening of appeal - power to review its own order - such taking up of the Appeal was a result of miscommunication. It is obvious that the factum of disposal of the Appeal by order dated 10th July, 1998 was not brought to the notice of the Tribunal, either by the SDR or the staff of the Tribunal. - Order set aside - Earlier order shall prevail.
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• Customs:

  Refund of SAD - As regards unjust enrichment Board itself has clarified the issue that Chartered Accountant certificate indicating non passing of duty to the customers is sufficient. - It is well settled that Revenue cannot argue against the Board’s Circular which are in favour of the assessee.
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• Indian Laws:

  Dishonor of Cheque - acquittal of accused of charges u/s 138 - It is settled law that where two views are possible, the benefit should tilt in favour of accused. The onus is on the prosecution to prove the accused to be guilty of offence beyond reasonable doubt.
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• Indian Laws:

  Appropriate forum for appeal - The complainant of the offence u/s 138 of the Act of 1881, to whom the remedy of appeal against an order of acquittal to the High Court u/s 378(4) of the Code is already provided, cannot take recourse to proviso inserted to section 372 of the Code under the guise of the term 'victim' as used in the newly inserted proviso to section 372 of the Code.
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• IBC:

  Permission to withdraw the CIRP Application - if 90% voting share of Committee of Creditors approves application for withdrawal then Adjudicating Authority to allow for withdrawing the application filed under section 7 or section 9 or section 10 of the Code - The application filed by RP is to be allowed and moratorium order passed under section 14 shall cease to exist.
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• Service Tax:

  Principles of natural justice - Issuance of SCN after making inquiry - Deliberate concealment of material facts - he position is not as the one projected by the Petitioner, namely, rampant issuance of notices, one after another, without considering the fact that the earlier notices issued to Petitioner had been replied. Revenue have followed the statutory scheme. - Petition dismissed.
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• Service Tax:

  Classification of services - service of construction of residential complex or not - personal use - this being a case of demand, the onus was on revenue to establish that the residential units constructed by the appellant were covered by the definition of residential complex to raise the demand.
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• Service Tax:

  CENVAT credit - input services - Food coupons/sodexo coupons - These services are in the nature of welfare service and purely for personal consumption of employees as these are perquisites allowed to the employees. - credit not allowed.
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• Service Tax:

  Association of persons - clubbing of rent - the benefit of the exemption notification would be available to individual owners of the property and clubbing of rent of all the four individual co- owners of the property was not legally sustainable.
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• Central Excise:

  Service of order - Relevant date for communication of order - Period of limitation for filing an appeal - the appellant could able to demonstrate and rebut the presumption that the order dated 29.08.2017 could not have been delivered to them through the speed post dated 01.09.2017 and in fact they have not been communicated about the said Order on 12.9.2017 as held by the Ld. Commissioner(Appeals). - there is no delay in filing the appeal.
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• Central Excise:

  Valuation - Merely because the corrugated box was supplied by the customer that does not make difference as far as inclusion of cost of packing material required to arrive at the Assessable value - Since the Transaction Value is not the sole consideration as the packing cost was not included the value has to be determined resorting to the Valuation Rules made by authority of Section 4.
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• Central Excise:

  Goods supplied to Mega Power Projects under International Competitive Bidding (ICB) - The observation made by the learned Commissioner to deny the exemption that “the goods manufactured by appellant i.e. cable tray and accessories falling under chapter subheading 73089090 which is used as support for laying the cable that is structures cannot be treated as machines, spare parts or raw materials to be used in making such goods of chapter 84” is completely irrelevant for the reason that goods falling under any of the chapter headings of Central Excise Tariff is exempted.
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• Central Excise:

  Mobile phone battery is a part or component of the mobile handset because without a battery, the mobile handset cannot function. Such being the position, the Commissioner fell an error in concluding that the mobile phone battery would not be entitled to the benefit of the General Exemption Notification dated 01 March, 2011
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Articles

• Menace of Rule 138E of CGST and E-way Bill Website – Blocking of E-way Bill
• GST COLLECTIONS DEFY ECONOMIC SLOW DOWN
• High prices of onion- too much hype is not justified- timely actions by government can avoid spiralling prices and save governments. Some suggestions.

Notifications

• GST

• Order No. 09/2019 - dated 3-12-2019 - CGST
  Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 - Period of limitation for filing of an appeal before the GST Tribunal

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• GST - States

• 20/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 11/2017- State Tax (Rate), dated the 28th June, 2017

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• 19/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment under section 11 to exempt supply of goods for specified project under FAO under the Arunachal Pradesh Goods and Services Tax Act, 2017

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• 18/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 02/2019-State Tax (Rate), dated the 7th March, 2019

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• 17/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 26/2018-State Tax (Rate), dated the 1st January, 2019

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• 16/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 3/2017-State Tax (Rate), dated the 28th June, 2017

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• 15/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 2/2017-State Tax (Rate), dated the 28th June, 2017,

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• 14/2019- State Tax (Rate) - dated 30-9-2019 - Arunachal Pradesh SGST
  Amendment in Notification No. 1/2017-State Tax (Rate), dated the 28th June, 2017

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• S.R.O. No.409/2019 - dated 22-11-2019 - Orissa SGST
  Amendment in Notification No. 19869-FIN-CT1-TAX-0022/2017/FIN., dated the 29th June, 2017

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• S.R.O. No.403 - dated 6-11-2019 - Orissa SGST
  State Government appoint Deputy Commissioner CT & GST

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• G.S.R.42/P.A.5/2017/S.164/Amd.(31)/2019 - dated 29-10-2019 - Punjab SGST
  Punjab Goods and Services Tax (Amendment) Rules, 2019

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• S.O.105/P.A.5/2017/Ss. 9,11,15,16 and 148/Amd./2019. - dated 30-9-2019 - Punjab SGST
  Amendment in Notification No. S.O.17/P.A.5/2017/Ss.9, 11, 15 and 16/2017, dated the 30th June, 2017

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• S.O.104/P.A.5/2017/S.164/Amd./2019 - dated 25-9-2019 - Punjab SGST
  Amendment in Notification No. S.O.90/P.A.5/2017/S.164/2019, dated the 20th August, 2019

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Circulars / Instructions / Orders

• DGFT - 46/2015-2020 - dated 4-12-2019
  Inclusion of Agencies in Appendix 2G as Pre-Shipment Inspection Agencies
• Customs - PUBLIC NOTICE NO. 106/2019 - dated 26-11-2019
  Amendment in Import policy of Iron & Steel and incorporation of policy condition in Chapter 72, 73 and 86 of ITC(HS), 2017 Schedule-1
• Customs - PUBLIC NOTICE No. 49/2019 - dated 25-11-2019
  Amendment in Import policy of Iron & Steel and incorporation of policy condition in Chapter 72, 73 and 86 of ITC (HS), 2017 Schedule-1
• Customs - PUBLIC NOTICE NO.- 90/2019 - dated 19-11-2019
  Clarification regarding Duty Drawback allowed in cases of short realisation of export proceeds due to bank charges deducted by Foreign Banks
• Customs - Public Notice No. 42/2019 - dated 13-11-2019
  First time exporters, verification of documents
• Customs - PUBLIC NOTICE NO. -34/2019 - dated 6-11-2019
  Clarification regarding inclusion of cesses, surcharge, duties, etc. levied and collected under legislations other than Customs Act, 1962, Customs Tariff Act, 1975 or Central Excise Act, 1944 in Brand Rate of duty drawback
• Customs - PUBLIC NOTICE No. 100/2019 - dated 5-11-2019
  ICES Advisory 25/2019 - New Changes in the Bill of Entry Filing - SIMS and Expansion of e-Sanchit
• Customs - PUBLIC NOTICE No. 01/2019 - dated 21-10-2019
  Implementation of faceless assessment in ICES-Goods filed for Group-2G(Plastics) under Turant Customs

News

• Trade with BRICS Nations

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• e-Marketplace

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• Anti-Dumping Duty

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• Development of SEZ

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• Regulation of E-Commerce Companies

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• Industrially Backward Districts

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• Goa to host 2nd edition of startup India Global Venture Capital Summit 2019

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• MOS Finance: DRI must employ new-age technology to fight smuggling networks

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• Approval for land monetisation at Pragati Maidan to build a five-star hotel

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• Cabinet approves launch of Bharat Bond Exchange Traded Fund

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• S & Preaffirmed Sovereign Credit Rating of India at BBB- with Stable outlook ; expects Indian economy to continue to out-perform its peers and that growth will remain strong over the next 2 years

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Case Laws:

• GST

• 2019 (12) TMI 166
  Scope of Advance Ruling application - section 98(2) of the GST Act - levy of GST on electricity charges - whether the Licensor can collect GST from the Applicant on electricity charges - HELD THAT:- In terms of section 95(a) of the Central Goods and Services Act, 2017 or West Bengal Goods and Services Act, 2017 an advance ruling means a decision provided by this Authority or the Appellate Authority, as the case may be, on matters or on questions specified in section 97(2) or section 100(1) of the GST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the Applicant. The Applicant's question is related to the components of the amount that the Licensor, as supplier of the service of leasing of immovable property, is charging on it. They are not related to the supplies the Applicant makes or intends to make. This Authority cannot, therefore, provide a decision to the Applicant in the form of an advance ruling - Application is rejected in terms of section 98(2) of the GST Act.

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• 2019 (12) TMI 165
  Classification of services - security and scavenging services to the Government hospitals - whether classified under SAC 998525 or not - applicant makes separate bill for claiming the Bonus amount - levy of GST on such bonus amount - HELD THAT:- The security personnel engaged are at no point employees of the State Government. The Applicant can recruit, deploy, withdraw or replace any security personnel, provided the recipient is kept informed. It is not a manpower recruitment agency. The State Government is not recruiting any security personnel through the Applicant. The latter is the employer of the security personnel deployed and is responsible for paying all statutory dues, including employer's contribution to EPF, ESI etc. Employer's contribution to EPF, ESI etc. and payment of Bonus at the Government approved rate are, therefore, components of the Applicant's expenditure. It is entitled to pass this liability to the recipient, who, in terms of the Agreement, is apparently ready to bear that liability. Such an agreement, however, does not create a master and servant relationship between the recipient of the service and the security personnel . Payment received from the recipient on account of the bonus paid or payable to the persons deployed as security personnel is not, therefore, guided by Para 1 of Schedule III - Applicant is, therefore, liable to pay GST on the portion of the payment received on account of the bonus paid or payable to the persons it deploys as security personnel.

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• 2019 (12) TMI 164
  Grant of registration - migration of registration under Notification dated 6.8.2018 - transitional credit - While the application for migration had to indicate the provisional GSTIN that was earlier granted to the petitioner, the petitioner inadvertently showed the new GSTIN that had been allotted to him in July 2018. This led to the respondents (revenue) taking a stand that the migration to the GST to cover the period from July 2017 onwards could not be accepted. - the stand of the respondents is only that the application for migration was belated. HELD THAT:- It is not in dispute in the instant case that the petitioner had availed of the extended time limit granted through the Notification dated 06.08.2018 to prefer an application for migration on 09.08.2018, well before the last date of 31.08.2018 prescribed by the respondents. No doubt, there was an inadvertent error occasioned by the petitioner while furnishing the GSTIN number. While he ought to have indicated the provisional GSTIN that he once held, he provided the GSTIN number that was subsequently obtained by him in July 2018. In matters where the assessee risks the loss of a substantive right that accrued to him, the revenue ought to relax the procedural requirements so as to ensure that substantive benefits accrued to assessees are not denied on account of mere technical lapses - In the instant case, since it is found that there is no dispute with regard to the identity of the assessee, who held a provisional GSTIN and later a regular GSTIN, and he was under the regulatory supervision of the GST department throughout the period, there cannot be any prejudice caused to the revenue by allowing the petitioner to migrate the accumulated credit in his account. Ext.P7 are quashed and the respondents are directed to treat the GSTIN granted to the petitioner in July 2018, as covering the period from July 2017 onwards, by making appropriate adjustments in the system - petition allowed.

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• 2019 (12) TMI 163
  Constitution of Public Grievance Committees (PGC) at the local and commissionerate level - Revenue submits that in place of IT Grievances Redressal Mechanism , which was required to deal with all kind of grievances, including individual grievances relating to the working of the GSTN, the respondents are in the process of constituting Public Grievance Committees (PGC) at the local and commissionerate level, which would also redress IT Grievances - HELD THAT:- It is not stated as to how and when the said committees would be constituted; what would be the structure and qualification of the persons who would be part of the said grievance committees, and; the mechanism that these committees would adopt to ensure that the grievances are adequately addressed, and do not remain unaddressed. It goes without saying that unless such committees have participation of the decision makers, their word may not matter and the grievance may remain unaddressed. We direct the respondents to file an affidavit within two weeks in this regard, listing all the particulars. In any event, till the constitution of the said committees at the local and commissionerate level, the grievances raised by the registered assessees cannot go un-redressed. Mr. Agarwal, further pointed out that various persons are raising tickets from time to time on issues with which they are confronted, but to no avail - till the constitution of PGCs, we direct that the Chairman and the CEO, GSTN shall be responsible to monitor, and they shall ensure the rederessal of all grievances relating to the GSTN, including IT related grievances in the working of the GSTN network, and to comply with our orders, as well as the aspects on which agreements have been reached and assurances have been given by the respondents - A status report shall be filed by the Chairman and the CEO, GSTN on the next date with regard to the grievances tickets raised; grievances/tickets addressed and resolved, and; outstanding grievances/tickets. List on 18.12.2019.

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• 2019 (12) TMI 161
  Maintainability of petition - alternative remedy of appeal - Principles of natural justice - non-speaking order - only contention is that the impugned order is an unreasoned order and is in breach of the principles of natural justice - HELD THAT:- Having regard to the fact that the petitioners have an efficacious alternative remedy by way of appeal before the Commissioner (Appeals), this court is not inclined to exercise its extraordinary jurisdiction under article 226 of the Constitution of India in the absence of existence of any factor set out in the above decision for entertaining a writ petition against an order of the adjudicating authority. The petitions are accordingly dismissed as not maintainable.

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• 2019 (12) TMI 160
  Detention of goods alongwith vehicle - detention on the ground that there was a possibility of evasion of payment of IGST in Kerala and further, that the consignee of the goods in Kerala was indicated as an unregistered dealer at the time of detention of the goods - Scope of section 129 of CGST Act - HELD THAT:- There was no justification for detention of the goods in terms of Section 129 of the CGST/SGST Act. This is more so because the reasons stated in the detention order are wholly irrelevant for the purposes of Section 129 of the Act - the 3rd respondent directed to release the goods and vehicle to the petitioner, on the petitioner producing a copy of this judgment, before the said respondent - petition disposed off.

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• 2019 (12) TMI 159
  Maintainability of application - refund of input services - Rule 89(5) of the CGST Rules - substantive challenge to the Order-in-Original or not - HELD THAT:- The challenge in the main Petition is to Rule 89(5) of the CGST Rules, which restricts refund of input services. Grant of any interim relief, as prayed for, would virtually amount to directing the Respondents to act contrary to the provisions of Rule 89(5) of the CGST Rules. Normally, unless a case, much stronger than a mere prima facie case is made out, there is no question of grant of stay to any legislation or the Rules, having statutory force. The Applicants are seeking a mandatory relief, though the relief is styled as seeking stay on the impugned orders. There is really no case made out for grant of such a relief in mandatory terms, at the interim stage. Application rejected.

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• 2019 (12) TMI 158
  Detention of truck - Power of police officer for inspection, search and seizure - Section 67 of the Assam Goods and Services Tax Act, 2017 - requirement of presence of the authorities under the Customs Department to respond the present appeal - direction to hand over the investigation to the customs authorities, along with the seized goods and trucks for further investigation - commission of the principal offences under the Customs Act. HELD THAT:- Provisions of Section 67 of the AGST Act contains a clear provision that prior to any inspection, or as a matter prior to any search and seizure, a recording of reasons by the proper officer for such belief is a requirement of the law and only thereupon the process for search, seizure or confiscation can be undertaken - A reading of Sections 100 and 101 of the Customs Act shows that if the proper officer or the empowered officer has reasons to believe that a person to whom the provision applies has secreted about his person any goods or documents liable for confiscation, a search may be conducted and pursuant thereto the subsequent actions be taken which may result in arrest, seizure or confiscation. From the provisions of Section 67 of the AGST Act and 100 and 101 of the Customs Act, a process for search, seizure, confiscation etc for violating any of the provisions of the AGST Act or the Customs Act can only be initiated upon having reasons to believe by the proper or appropriate officer that a person concerned was involved in violation of any of the provisions of the GST Acts or the Customs Act. In the instant case, the documents made available on record so far as it relates to violation of the provisions of the AGST Act are not being relied upon by the respondents to indicate any such violation of the provisions of the AGST Act. What is contended is that some such documents are either fraudulent or it contains forged signatures resulting in offences under Sections 120(B)/420/467/471 of the IPC - we are of the view that if the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the AGST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly. But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act. By taking note of the report of the Ministry of Agriculture and Farmers Welfare, Government of India as regards the bio-security aspects of the areca nuts and also the stand of the Customs department that the areca nuts may have been smuggled in from across the Myanmar border in violation of the provisions of the Customs Act, we are of the view that if the proper officer or the empowered officer has reasons to so believe, it would be appropriate to initiate proceedings under Section 100/101 of the Customs Act and thereafter follow the procedures prescribed in the Act as regards search, arrest, seizure or confiscation. The detained/seized goods be retained by the police authorities of Assam for a period of seven days from today. In the meantime, the GST authorities of the Government of Assam, the police authorities of the Government of Assam and the Customs authority of the Customs Department, Government of India shall take their respective decisions on how to proceed with the matter of the detained/seized trucks of areca nuts within the period of seven days. If any such decision is taken to proceeded against the appellants, the same be done by the respective authorities strictly as per the provisions of the GST Acts, the CrPC/IPC or the Customs Act, as the case may be - petition disposed off.

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• 2019 (12) TMI 157
  Revision of TRAN-1 form - typographical mistake in the amount claimed as credit - HELD THAT:- The interest of justice will be served if the Petitioner is granted liberty to make representation to the CBIC and the CBIC is directed to consider such representation for verification and bonafide of the claim made by the Petitioner, no doubt in accordance with law and on its own merits. In case the Petitioner is not satisfied with the response of the CBIC, liberty is reserved to the Petitioner to take out appropriate proceedings in the matter, inter alia on the grounds which have now been urged in this petition as well. This is because we have not examined the rival contentions on merits and we leave this exercise to the CBIC whilst disposing of the Petitioner's representation. Petition disposed off.

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• 2019 (12) TMI 156
  Profiteering - purchase of Flat - it is alleged that Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flat - contravention of section 171 of CGST Act - Penalty - HELD THAT:- It is established from the perusal of the facts that the Respondent has benefited from the additional ITC to the extent of 10.66% of the turnover during the period from July, 2017 to August, 2918 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers and has profiteered an amount of ₹ 3,79,10,058/- inclusive of GST @ 12% on the base profiteered amount of ₹ 3,38,48,266/-. Further, the Respondent has realized an additional amount of ₹ 1,69,878/- which includes both the profiteered amount @ 10.66% of the taxable amount (base price) and 12% GST on the said profiteered amount from the Applicant No. 1. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. The concerned Commissioner CGST/SGST shall ensure that the above benefit is passed on to the eligible flat buyers - In case the above benefit is not passed on by the Respondent the Applicant No. 1 or any other buyer shall be at liberty to approach the Tamil Nadu State Screening Committee to initiate fresh proceedings against the Respondent as per the provisions of Section 171 of the CGST Act, 2017. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.

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• Income Tax

• 2019 (12) TMI 155
  Non-taxability of income on account of waiver of loan payable by the appellant to Canara Bank, without going into the merits of such claim - HELD THAT:- It is clear to us that the remand made by the Tribunal to the AO vide order dated 10.03.2011 was a complete and wholesale remand for framing a fresh assessment. The remand was not limited in its scope and was occasioned upon the Tribunal finding the approach of the AO and the CIT (A) to be excessive, harsh and arbitrary. The earlier assessment had been framed on the basis of Best Judgment without examining the books of accounts of the assessee, which the assessee has claimed were available. That being the position, the AO ought to have evaluated the claim made by the assessee for write-off of liability by Canara Bank in its favour amounting to ₹ 1,36,45,525/-, and should not have rejected the same merely on the ground of it being raised for the first time. The reliance placed by the Tribunal SAHELI SYNTHETSICS P. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2008 (2) TMI 182 - GUJARAT HIGH COURT] is misplaced in the light of the scope and nature of remand in the present case. The finding returned by the Tribunal in paragraphs 8, 9 and 12 of the impugned order are erroneous since the Tribunal has not appreciated the scope and nature of the remand ordered by it by its earlier order dated 10.03.2011. Answer the questions framed aforesaid in favour of the assessee and set aside the impugned order. Since the Assessing Officer has not evaluated the appellant s claim regarding non-taxability of income arising from write-off of liability by Canara Bank in its favour on merits, we remand the matter back to the Assessing Officer for evaluation of the said claim on its own merits.

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• 2019 (12) TMI 154
  Reopening of assessment u/s 147 - Reopening at insistence of the audit department - HELD THAT:- In the present case, from the audit para it emerges that upon the audit department bringing the above two issues to the notice of the AO, the AO did not agree with the objections raised by the audit department and expressed the opinion that the original assessment was not erroneous. It appears that on the insistence of the audit department, which found that the reply of the Assessing Officer was not tenable, AO has reopened the assessment. In the aforesaid premises, it is evident that the AO did not form the requisite belief that income chargeable to tax has escaped assessment, but the reasons have been recorded on the basis of borrowed satisfaction of the audit department and not that of the Assessing Officer. Basic requirement for assumption of jurisdiction u/s 147 namely the formation of belief on the part of the Assessing Officer that income chargeable to tax has escaped assessment, is not satisfied in the present case. The assumption of jurisdiction by the AO u/s 147 of the Act is, therefore, invalid. The impugned notice under section 148 of the Act, therefore, cannot be sustained. Petition succeeds and is, accordingly, allowed.

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• 2019 (12) TMI 153
  Transfer Pricing (TP) adjustments - debar of deduction u/s 10A on addition income assessed u/s 92CD as per the Proviso to 92C(4) - HELD THAT:- As the incremental income is offered by the assessee itself in the modified return in accordance with the APA, it cannot be equated with the computation of income u/ss. 92C/92CA of the Act, as the later provisions talks of making some transfer pricing addition by the AO. The suo motu offering of additional income by the assessee pursuant to the APA is of the same nature as the assessee itself offering some transfer pricing adjustment in the original return of income. In that case also, deduction u/s 10A, if otherwise permissible, would be allowed and not curtailed as it will not be a case of transfer pricing addition made by the AO. In the same manner, deduction u/s 10A cannot be disallowed in respect of additional income offered in the modified return as it is not a transfer pricing addition made by the AO but the additional transfer pricing income offered by the assessee in consonance with the APA with the CBDT. The second component for magnetizing the proviso is that the `total income of the assessee is enhanced . An enhancement of income in this context pre-supposes some action of the authorities after the filing of the return of income by the assessee, which has the consequence of increasing the total income from the one declared by the assessee. Filing of the modified return u/s 92CD of the Act with the income as agreed between the assessee and the CBDT under the APA is an act of the assessee in offering the additional income and not an act of the AO in making the enhancement of the total income. Instantly, we are dealing with a situation in which the assessee itself has filed a modified return of income at the mutually agreed rate of 17% under the APA. As such, there cannot be any question of the AO making any enhancement in the income as a result of transfer pricing adjustment so as to attract the proviso to section 92C(4) of the Act. Assessment u/s 92CD provides for granting deduction u/s 10A - HELD THAT:- A careful circumspection of sub-section (2) deciphers and delineates that in the computation of total income by the AO pursuant to the filing of the modified return by the assessee in terms of the APA, all other provisions of this Act shall apply accordingly. In other words, if an assessee is otherwise eligible for deduction under any other appropriate provision in respect of the income offered in the modified return, there cannot be any embargo on granting deduction under such relevant provision. The saving clause contained in sub-section (2), making all other provisions of the Act applicable in the assessment of the modified return, ostensibly includes the applicability of section 10A as well, of course, subject to the fulfillment of others conditions as set out in the section. It, therefore, follows that if an assessee is otherwise entitled to deduction u/s.10A, or for that matter under any other provision of the Act, in respect of the income offered in the modified return, the same cannot be denied. As such, the view of the authorities below that in the absence of any specific provision in section 92CD for granting of deduction u/s.10A, no deduction can be allowed, is sans merit. Such stipulation is contained in subsection (2) of 92CD itself. It is, ergo, held that the assessment u/s 92CD provides for granting deduction u/s 10A. First sub-question is answered by holding that proviso to section 92C(4) does not per se debar deduction u/s 10A on additional income in assessment u/s 92CD. Assessee has satisfied the conditions of deduction u/s 10A - HELD THAT:- The sequitur is that the APA has made it mandatory for the assessee to bring in convertible foreign exchange in India within one month. But for granting the relevant deductions connected with the realization of convertible foreign exchange in India, there was no purpose to stipulate it in the APA. This stipulation is, thus, a direction to grant deduction u/s 10A only if the assessee succeeds in bringing in convertible foreign exchange in India within one month, bringing the case within the saving clause of sub-section (2) of section 92CD. As the assessee brought into India the convertible foreign exchange within the stipulated one month s period, it became entitled to deduction u/s 10A. What is further pertinent to note from para 2 of the Clause 6 of the APA is that: The determination of ALP for Rollback years is subject to the condition that the ALP would get modified to the extent that it does not result in reducing the total income or increasing the total loss, as the case may be, of the applicant as already declared in the return of income of the said year . Assessee declared total income in the original return. After the increase in the income due to the APA and with the simultaneous claim of deduction u/s.10A, the total income of the assessee as declared in the modified return remained at the same level. Thus, it is neither a case of reducing the total income nor increasing the total loss. Ex consequenti, it is held that the assessee has satisfied the condition of deduction u/s 10A(3) read with section 92CD(2) of the Act. Proviso to section 92C(4) does not debar deduction u/s 10A on additional income in assessment u/s 92CD; assessment u/s 92CD provides for granting deduction u/s 10A; and the assessee has satisfied the requirement of section 10A(3) read with section 92CD(2), thereby entitling it to deduction u/s.10A on the additional. The impugned order is overturned and deduction is granted.

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• 2019 (12) TMI 152
  Denial of credit of tax deducted at source - Rectification u/s 154 - HELD THAT:- AO has passed specific directions u/s 154 allowing the assessee s claim towards grant of TDS credit and only when the assessee received the cheque towards the income tax refund, there was apparent inconsistency between the order passed u/s 154 and the processing of the income tax refund wherein the assessee was not granted credit for the TDS which was directed to be allowed by the AO while passing the order u/s 154. Where the Department has accepted the claim of the assessee towards short credit of TDS, it should have suo-moto carried out the rectification and no cause of action lies with the assessee firm. Having said that, where the assessee feeling aggrieved has moved an appeal before the CIT(A), no doubt the order under appeal is order passed by the AO u/s 154 and the appeal should normally be filed within thirty days of receipt of the order. No fault lies with the assessee as it was under the impression that its claim has been accepted as apparent from reading of the rectification order passed u/s 154 and only on receipt of refund cheque, the assessee realized that the credit of TDS has still not been granted to it. The assessee has moved an appeal before the CIT(A) (on 25.07.2018) within a period of few days of receipt of refund cheque (on 3.07.2018). We therefore find that there is a reasonable cause beyond the control of the assessee in preferring the appeal before the ld CIT(A) and the delay so happened is hereby condoned. On merits, we find that it is undisputed fact that the assessee has offered an amount of ₹ 11 lacs received from M/s K. C. India Ltd. during the year. Therefore where the income has been offered to tax and brought to tax by the Assessing officer, the assessee is legal eligible and well within its right to claim corresponding TDS thereon amounting to ₹ 1,23,596/- as reflected in Form No. 26AS. The AO is accordingly directed to give the TDS credit of ₹ 1,23,596/- to the assessee.

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• 2019 (12) TMI 151
  Exemption u/s 11 - violation of provisions of section 13(1)(c) - specified person - the trust is operating buses to transport the students at free of cost. In case of breakdown, the Managing Trustee offers the vehicles of his own transport business to ferry the students - HELD THAT:- AO was of the view that Bharat Shah was a person belonging to the prohibited category within the meaning of section 13(3)(a) and section 13(3)(cc) and since the income or property of the institution had been lent to such a person for any time during the previous year relevant to AY 1989-90 and 1990-91, without adequate security and adequate interest, the legal fiction in Sub-section (2) of section 13 of the Act would come into play and the income or property of the institution shall, for the purpose of Clause (d) of sub-section (1) of section 13 of the Act, be deemed to have been applied for the benefit of the prohibited category of persons under Sub-section (3) and thereby, the Hon ble Supreme Court affirmed the view of the Assessing Officer. The decision of the Hon ble Jurisdictional High Court in the case of CIT v. Working Women s Forum [ 2014 (8) TMI 681 - MADRAS HIGH COURT] is not in favour of the Revenue, wherein, it was held that denial of exemption should only be to the extent of the income which is violative of section 13(1)(d) of the Act and not the total denial of exemption under section 11 of the Act. Against the above decision, the SLP filed by the Department in this regard has been dismissed by the Hon ble Supreme Court and thus, the law laid down by the Hon ble Jurisdictional High Court in the above case has become final. Under the above facts and circumstances, we are of the considered opinion that the ld. CIT(A) has rightly followed the above decision of the Hon ble Jurisdictional High Court and directed the Assessing Officer to compute the value of the benefits extended to the trustee to the extent of violation and brought to tax at the maximum marginal rate. Thus, the ground raised by the Revenue stands dismissed.

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• 2019 (12) TMI 150
  TP Adjustment - Comparable selection - HELD THAT:- DRP in the third round of proceedings before us applied a new turnover filter i.e. since the assessee was a 100% exporter, it deemed it fit that only concerns having export activity atleast to the extent of 75% should be selected. Thus out of 09 concerns which were selected by assessee as a part of additional evidence, 05 concerns were held to be as not comparable. The assessee was engaged in export of 100% of its software / data to its AE for year under consideration. The assessee had selected TNMM method as the most appropriate method and applied PLI of OP over OC. In the TP study report, the assessee had used weighted margins of the comparables; however the TPO applied only the margins of the contemporaneous period. As against 14 concerns selected by the assessee, the TPO applied updated margins and also additional filters and finally selected 04 concerns as comparables. The assessee applying the additional filters of the TPO i.e. not considering persistent loss making concerns and concerns having high turnover and applying RPT filter of 25%, selected 09 comparables as additional evidence. The mean margins of the comparables was 12.8% as against the margin of the assessee at 9.90%. In the said list, the concern at serial no. 7, Allsec Technologies India Limited is selected by AO / DRP and there is no dispute. As far as the concern at Sr. 6, and 9, are concerned the learned AR for the assessee fairly admitted there is no dispute viz a viz its exclusion from the final list of comparables hence we uphold the same. Concern i.e. at Sr. 8 i.e. Eureka Outsourcing Solutions Pvt. Ltd., where the OP / TC of the concern was 0.25%, was rejected in the final assessment order and such a concern though having marginal profit cannot be said to be persistent loss making concern. Hence, we find no merit in the orders of authorities below and direct that the said concern be included in the final list of comparables. Balance list of 05 comparables which were rejected on the ground that the income from export activity of the said concern did not fulfill the filter of turnover to the extent of 75%. It may be pointed out that the TPO in the first order under section 92CA (3) of the Act had accepted the filter applied by the assessee of the persons engaged in export and no filter of the extent of export was applied. These proceedings started from the order of the TPO and travel to the Tribunal in two rounds and have been set aside by the Tribunal, with specific directions to consider the additional evidence filed by the assessee and if the same is based on the filters applied by the TPO, then the concerns selected by the assessee may be considered in the final list of comparables. The order of the AO / DRP suffers from infirmities in applying a revised filter in the set aside proceedings. We find no merit in the same. According we set aside the said directions of the AO / DRP. The concerns at Sr. Nos. 1 to 5 are to be included in the final list of comparables if they are found to be functionally comparable. This aspect has not been verified by the authorities below and the learned AR for the assessee has fairly admitted that the same may be verified. Accordingly, we direct the TPO to verify functionality of the said 5 concerns and if they are functionally comparable to the assessee, then the same may be included in the final list of comparable. Hence the ground of appeal raised by the assessee in this regard is allowed. Working capital adjustment - No such objection was raised by the assessee before the DRP against the original order and since this is a set aside matter, then no working capital adjustment can be allowed at this juncture. Hence, plea of the assessee is rejected. Thus, grounds raised by the assessee in this appeal are partly allowed.

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• 2019 (12) TMI 149
  Revision u/s 263 - AO accepted the assessee s claim for exclusion of such foreign assignment allowance from the ambit of total income. - Residential status of assessee - non-resident in terms of Section 6 or not - assessee rendered services outside India as employees of IBM India Pvt. Ltd. who have been sent to Switzerland on company s foreign assignment - TDS was deducted at source u/s 192 - ambit of total income u/s. 5(2) Held that:- while passing the assessment order the AO had followed the permissible view in law which cannot be said to be 'unsustainable in law'. In the circumstances therefore, the jurisdictional facts for usurping the jurisdiction u/s 263 of the Act, being absent, we hold that the action of Ld. CIT was without jurisdiction and all subsequent actions are 'null' in the eyes of law. - Decision in the case of Bodhisattva Chattopadhyay [ 2019 (11) TMI 1031 - ITAT KOLKATA] followed. - Decided in favor of assessee.

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• 2019 (12) TMI 148
  Exemption u/s 11 - entitled for registration u/sec 12A - imparting training in performing arts like various dance forms including traditional Kuchipudi - HELD THAT:- Training and education in performing arts like dance and music are traditionally given by teachers to small groups of students in an informal atmosphere. Training in the above field is usually not given in schools, colleges and institutions having a formal frame. Therefore the attire and choreography of the place of instruction is not the prime thing to be looked into by the assessing authority. Despite the form or the absence of form, what is to be looked into is whether the assessee-trust is in fact imparting training in performing arts like various dance forms including traditional Kuchipudi and granted benefit u/sec. 10(23C)(iiiad). During the course of hearing assessee has submitted that Vempati Chinna Satyam Kuchipudi Art Foundation has already enjoying 12A registration. Thus we find that the assessee is entitled for registration u/sec, 12A of the Act. The Hon'ble Calcutta High Court in the case of CIT Vs. Doon Foundation [ 1985 (1) TMI 36 - CALCUTTA HIGH COURT] wherein it was held that educational institutions need not be affiliated to Universities or Boards and what is to be seen is that the object clause of the trust is for educational purposes and it has carried out a full-fledged teaching of the relevant course . In the case of CIT Vs. Academy of General Education [ 1983 (8) TMI 18 - KARNATAKA HIGH COURT] wherein it was held that an assessee need not necessarily be a school or a college where education is imparted so as to claim exemption under section 10(22). The court held that it would be sufficient if the assessee is an educational institution primarily engaged in educational activities . Hon'ble Madras High Court in the case of CIT Vs. Kshatriya Girls Schools Managing Board [ 1998 (6) TMI 9 - MADRAS HIGH COURT] has held that the term 'institution' is not used in a narrow sense and it is of wide import . Keeping in view we are of the opinion that the assessee is entitled for registration u/sec, 12A of the Act. Accordingly, registration u/sec, 12A is granted. Thus, this appeal filed by the assessee is allowed.

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• 2019 (12) TMI 147
  Assessment ex parte u/s 144 - grievance of the assessee is that due to reasons beyond the control the assessee could not furnish the necessary documentary evidences before the AO - HELD THAT:- We have given a thoughtful consideration to the rival contentions and have carefully perused the application made under Rule 29 of the ITAT Rules. The undisputed fact is that the discretion lies with the Tribunal to admit additional evidence in the interest of justice. It is also not in dispute that Rule 29 of the ITAT Rules is aking to order 41 Rule 27(1) of the CPC. Our view is fortified by the decision of the Hon ble High Court of Delhi in the case of CIT vs. Text Hundred India Pvt. Limited [ 2013 (6) TMI 72 - DELHI HIGH COURT]. As mentioned elsewhere with the demise of the Counsel of the assessee the assessee could not be represented properly either before the AO or before the CIT(A). In the interest of justice, the additional evidences are admitted. The additional evidences contained documents establishing that the appellant is only an agent of Allana Group. In our considered opinion, these documents need thorough investigation/verification at the assessment stage. We, accordingly, restore the entire issues to the files of the AO. The assessee directed to furnish all these evidences before the AO and the AO is directed to examine the same and decide the issues afresh, after affording reasonable and fair opportunity of being heard to the assessee.

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• 2019 (12) TMI 146
  Transfer Pricing ( TP ) Adjustment - economic analysis - determination of the arm's length price (ALP) - selection of the comparable companies - differences in idle capacity, working capital and risk profile between the Appellant and the comparable companies - foreign exchange gain - benefit of 5 percent range - Held that:- idle capacity from the total expenditure incurred by the taxpayer while determining ALP is required to be excluded - TPO directed to decide afresh after due verifications of the details given by the taxpayer qua idle capacity adjustments in the light of the decisions rendered by the coordinate Bench of the Tribunal in taxpayer s own case Accrual of income - functions performed by the fixed place Permanent Establishment (PE)/Service PE/ Supervisory PE - transactions between HO and BO - Held that:- No activities have been performed by the BO on behalf of the HO as presumed by the AO. Moreover, the taxpayer has specifically explained the functions performed and risk undertaken by the HO and BO in its TP study, relevant pages 558 to 590 of the paper book, showing activities of the BO being restricted to basic design and engineering services. Furthermore, HO was otherwise responsible for its own market development research and negotiation for contract. Nature of activities carried out by the expatriate Director stationed at Gurgaon - Held that:- AO observed that, he has played a major role in supervising market research to find out customers, procuring orders, contract negotiations, etc. It has come on record that there is no evidence on record brought forward by the AO to support his contention regarding doing aforesaid work by the Director in India in market research and related jobs. Merely because of the fact that expatriate Director was present in India, no nexus can be held to be established between HO and BO. Aforesaid addition made by the AO/DRP qua attribution of profits to HO from direct supplies and services to customers in India to PE in India i.e. BO is not sustainable, hence ordered to be deleted. Attribution of profit to PE - Held that:- when transaction between the HO and BO has otherwise been held at arm s length by taking into account the risk bearing functions, no further profit to the BO can be attributed. Rate of Tax - AO applied surcharge and cess over the tax rate of 10% - Held that:- Under Article 2(3) of the DTAA, tax includes Income-tax and surcharge thereon and as such, surcharge is included in the income-tax and the tax rate of 10% for fee for technical services as prescribed in Article 12 is deemed to be included surcharge as cess is nothing but an additional surcharge, so only tax rate of 10% under DTAA is applicable.

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• 2019 (12) TMI 145
  Disallowance of expenditure incurred on account of furniture and fixtures - premise was sealed and could not be used for business activity - AO disallowed the entire expenses by taking view that the assessee incurred expenditure which is capital in nature and hit by the provision of section 37(1) - HELD THAT:- CIT(A) upheld the action of AO of impugned order and granted part relief to the assessee on the expenses incurred on certain items. We have noted that the lower authorities has not disputed that assessee has obtained a tenanted premises for running its business for setting up a Studio. Further, there is no dispute that the premises could not be utilized as its user from Warehouse to office premises was not sanctioned by BMC. The premise was sealed in the month of October 2008. The leave and licence agreement was executed on 01.05.2008. The assessee has claimed expenses which consist of furniture and fixture fixing of interior, installation of water and electricity connection, fencing of the tenanted premises. Assessee fairly submitted that ld CIT(A) has granted substantial relief to the assessee. We have noted that order giving effect to the order of ld CIT(A) is not placed on record The assessee has furnished the break-up of all these expenses, details of which are available at page no. 213 of Paper Book. We find merit in the submissions assessee, that the assessee despite incurring huge expenditure could not use the tenanted premises for its business purpose and the expenses incurred by the assessee are allowable expenses. Therefore, the issue is restored back to the file of assessing officer to verify the remaining expenses which were incurred on repair / maintenance for use of tenanted preemies and allow appropriate relief to the assessee in accordance with law. Needless to say that before passing the order, the Assessing Officer shall grant opportunity to the assessee to substantiate the claim / expenses. In the result, this ground of appeal is allowed for statistical purpose. Claim of bad-debt in the nature of revenue expenses - AO disallowed the claim by taking view that suit filed by landlord has not attained the finality - CIT(A) upheld the action of Assessing Officer holding that the assessee has not fulfill the requirement of section 36(2) - HELD THAT:- Considering the fact that the assessee has made the payment by the order of Civil Court and the fact that this plea is raised before the Tribunal for the first time, therefore, this ground of appeal is restored to the file of Assessing Officer to verify the payment made by the assessee in compliance of order of small cause court dated 23.10.2015 and grant appropriate relief to the assessee before giving effect to the direction of this order, the Assessing Officer is directed to grant opportunity to the assessee. In the result this ground of appeal is allowed for statistical purpose.

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• 2019 (12) TMI 144
  Revision u/s 263 - revenue authorities namely Pr. CIT / CIT is vested with the supervisory powers of suo-moto revision of any order passed by the AO - HELD THAT:- Nothing on record would establish the fact that these submissions were not available in the case records and it is also not the allegations of Ld. Pr.CIT. Therefore, the aforesaid action u/s 263 could not be triggered only on the basis of mere apprehension / doubts. Another apprehension raised by Pr.CIT was the fact that order sheet entries were not properly maintained. However, we are not convinced with the reasoning / logic since the no fault could be found on the part of assessee with respect to maintenance of order sheet entries. The same was the responsibility of AO and the assessee could not be made to suffer and go through the entire exercise of assessment proceedings merely because there was certain lapse of this kind on the part of AO. Therefore, the exercise of jurisdiction on this basis could not be held to be justified. We find that the assessee was directed to file various details vide notice dated 15/06/2016, against which two replies were filed by the assessee and the same were subject matter of consideration by Ld. AO. After satisfying himself with the details furnished by the assessee, the assessment was framed. The Ld. Pr.CIT finding shortcomings in the verification made by AO, set-aside the order and directed AO to framed assessment de-novo. As already noted by us, AO had appreciated the details submitted by the assessee and chose not to make any additions on the basis of details furnished by the assessee. Therefore, the order could not be branded as erroneous or prejudicial to the interest of the revenue simply because the revisional authority felt that further verifications should have been done in the matter and more aspects were to be considered while framing the assessment. If that be so, there would be no end to assessment proceedings and the matter would never attain finality. CIT, in our opinion, could not be clothed with unbridled power to undo each and every assessment merely because, in his opinion, further verifications were required to be made unless it was shown that the order under consideration was not passed in accordance with law. Therefore, we are of the considered opinion that revisional jurisdiction u/s 263 as exercised by Ld. Pr.CIT vide order dated 19/03/2019 could not be held to be sustainable under law. By quashing the same, we restore the original order framed by AO u/s 143(3).

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• 2019 (12) TMI 143
  LTCG - Benefit of exemption u/s. 54 - assessee has not satisfied the condition that the construction of new asset has to be complied within a period of 3 years from the date of transfer - HELD THAT:- As far as exemption claimed by the assessee u/s. 54 is concerned, the assessee has not satisfied the condition that the construction of new asset has to be complied within a period of 3 years from the date of transfer. This condition having not been satisfied in the case of assessee, the deduction u/s. 54 was rightly denied by the revenue authorities. Even today, there has been no construction on the site purchased by the assessee and therefore the action of the revenue authorities in denying the benefit of exemption u/s. 54 is upheld. Long term capital gain on sale of the flat has to be computed in accordance with the provisions of section 48. The facts which we notice in this regard from the statements filed by the assessee before the CIT(Appeals) is that the flat which was sold by the assessee during the previous year was acquired by the assessee under a joint development agreement dated 7.3.2003. The assessee had 1/3rd share in 2 acres 35 guntas which was given to M/s. Gopalan Enterprises under a joint development agreement and supplementary agreement dated 7.3.2004 and 27.4.2004 respectively. The assessee got 13 flats and 4 car parks from the developer. The assessee retained 7708 sft. and undivided interest in land. The assessee worked out the cost of land and the cost of super built-up area of Flat B 105 that was got under the joint development agreement and which was sold during the previous year Computation of long term capital gain is concerned, the same is a second computation of the long term capital gain filed by the assessee before the CIT(A) and this is not supported by a report of any registered valuer. The flat that was sold by the assessee comprises of undivided share of interest in the land of 472 sft. and the built- up area of the flat is 1315 sft. The land was purchased prior to 1.4.1981 and therefore the assessee has an option to adopt fair market value as on 1.4.1981 insofar as it relates to the land component that was sold along with the built-up area of Flat B 105. The assessee will be entitled to benefit of indexation on such value. As far as cost of acquisition of super built-up area of 1315 sft. of Flat B 105 is concerned, the valuation would be proportionate value for 1315 Sq.ft. based on the cost which the builder had incurred in constructing flats allotted to the assessee or the value of the land conveyed to the developer as per the Sub-Registrar s valuation, whichever is higher. The assessee will be entitled to benefit of indexation on such cost. The AO is directed to compute the capital gain as per directions given above. Appeal by the assessee is treated as partly allowed.

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• 2019 (12) TMI 142
  Unexplained investment u/s 69 - HELD THAT:- It is an established fact that nothing incriminatory was found in respect of the property purchased by the assesses during the search. Further, there is no evidence on record to show that the property at A-25/9, Kachnar Marg is similar in all respect of the property purchased by assessee. There in nothing wrong in the CIT(A) believing the confirmation issued by the Axis Bank that the property was provided as a collateral security and for such purpose, the valuation was done by M/s M.L.Aggarwal/Arun Aggarwal at higher price. Revenue failed to bring on record any material assailing the correctness of the findings of the ld. CIT(A) on this aspect. In so far as the valuation report of M/s M.L.Aggarwal/Arun Aggarwal cannot be a yardstick for the purpose of determination of the proper value is concerned, findings of the learned CIT(A) are legal and do not invite any interference. On this premise, we dismiss the grounds of appeal of the revenue. Now coming to the grievance of assesses that the purpose of submitting copy of sale deed of the adjoining plot at 3, Round No. G-4, DLF-1 at the rate of ₹ 20,460/- per sq. was only to demolish the contention of the AO as to the higher valuation but not to establish the valuation of the property purchased by the assesseee at ₹ 20,000/- per sq. Mt. We find some force in this submission made by the assesses because the property purchased by them is altogether different from the property covered by such sale deed which shows the value of the property at plot No.3 at ₹ 20,460/- per sq. Mt. Further, the valuation report of the property dated 1.12.2011 shows the same at ₹ 18,200/- per sq. Mt. Out of these two documents learned CIT(A) had taken the one which shows higher price. There is no reason for the CIT(A) to choose that particular document when the other one is also available. Difference in the value of the property purchased by assesses and the adjoining one, we are inclined to accept the contention of the assessees. We, therefore, direct the AO to delete the addition of ₹ 8 lacs each also. As such appeals of ground of assesses appeals are allowed.

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• 2019 (12) TMI 141
  Eligible for deduction u/s 80IA - income is attributable to the manufacturing activities - HELD THAT:- Case made out by the assessee, the documents in support of such claim on record before us and respectfully relying on the ratio laid down on this issue of allowability of supervision charges by the Jurisdiction High Court, we find no alternative but to allow the claim of the assessee for deduction u/s. 80IA since we find the income is attributable to the manufacturing activities. Consequently the addition is deleted. Hence, the assessee appeal is allowed. Applicability of the provision of Sec. 194C or Sec. 194J - payment to the contractors - non-deduction of tax at source or non payment of tax though was deducted on payments made to residents - HELD THAT:- It is a fact that the assessee has made such payment to the contractors but TDS has not been deducted u/s 194C and hence the disallowance was made under section 40(a)(ia) by the authorities below. It is also a fact that the assessee was with the bona fide wrong impression regarding the applicability of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee. If that be so, the disallowance of entire expenditure of ₹ 7,65,700/- for drawing charges and ₹ 2,84,050/- towards PLC Programming Charges ought not to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee s appeal are partly allowed.

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• 2019 (12) TMI 140
  Penalty u/s 271(1)(c) - Defective notice - recording of satisfaction before initiation of penalty proceedings or any time during proceedings - HELD THAT:- Show cause notice issued by the AO u/s 274 r.w.s. 271(1)(C) we find that although, the assessee has challenged the validity of penalty proceedings, in light of non striking of irrelevant portion in the notice u/s 274, but, fact remains that the AO had issued further show-cause notice, dated 19/02/2016, for which the assessee neither filed any explanation nor justified its case in light of Explanation-1 to section 271(1)(c). AO has arrived at proper satisfaction, in respect of additions made towards interest income on fixed deposits at the time of assessment proceedings, where he had initiated penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income leading to concealment of income. We, further noted that the AO had levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income leading to concealment of income. Once a proper satisfaction has been arrived at before initiation of penalty proceedings or any time during proceedings, then subsequent issue of show-cause notice is a formality to communicate the assessee about initiation of penalty proceeding. In this case, AO had issued one more show-cause notice and also, called upon the assessee to explain why penalty proceedings shall not be initiated for furnishing inaccurate particulars of income, for which no compliance from the assessee. Therefore a proper satisfaction has been arrived at before initiation of penalty proceedings, and then a defect in notice including mere non-striking of irrelevant portion in the notice does not invalidate the penalty proceedings. Although, the assessee has cited certain judicial precedents, including the decision in the case of Mehrjee Cassinath Holdings Pvt.Ltd. vs ACIT [ 2017 (5) TMI 904 - ITAT MUMBAI] we find that facts of the present case are entirely different from the case laws relied upon by the assessee and hence, are not considered as applicable to the case of the assessee. In the case of M/s. Earthmoving Equipment Services Corporation vs DCIT [ 2017 (5) TMI 474 - ITAT MUMBAI] had considered an identical issue and held that when, proper satisfaction has been recorded in the assessment order, as well as in the penalty order then mere non striking of notice or vague notice does not invalidate penalty proceedings. Therefore, we are of the considered view that there is no merit in legal arguments taken by the assessee and hence, ground no. 1 and 2 are rejected. Penalty levied in respect of additions made towards interest income earned from fixed deposits - HELD THAT:- The fact that a person/entity carried on business does not lead to inference that all the income received from such persons/entity is assessable under the head income from business. It is the manner in which income is derived is relevant to decide the head of income, but not merely the fact that persons/entity are engaged in the business. If you examine the case of the assessee, it is abundantly clear that the assessee has parked its surplus funds in the banks in form of fixed deposits and earned interest income. Although interest income from fixed deposits is assessable under the head income from other sources, the assessee has treated said interest income as capital receipts and set up against pre-operative expenses without offering interest income for tax. Therefore, we are of the considered view that the assessee has furnished inaccurate particulars of income, in respect of interest income earned from fixed deposits, which warrants levy of penalty u/s 271(1)(c) - assessee has also failed to offer any explanation in response to a show cause notice thereby committed default within the meaning of Explanation-1 to section 271(1)(C) of the I.T.Act, 1961. Therefore, we are of the considered view that there is no error in penalty levied u/s 271(1)(c) and accordingly, the CIT(A) was right in affirmed penalty levied by the Ld. AO. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the assessee.

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• 2019 (12) TMI 139
  Disallowance of depreciation on fixed assets to the book profits computed under section 115JB - HELD THAT:- Since, the books of accounts of the assessee have been audited and also have been approved in AGM, the AO cannot alter book profit for any items other than as provided as in explanation (1) to section 115JB - AO has accepted the claim of the assessee in preceding financial years when the assessee has claimed depreciation on alleged bogus fixed assets without any adjustment to book profit. Once the claim of the assessee has been accepted in earlier financial years, then there is no reason for the AO to disturb the settled position unless otherwise there is a complete change in facts for the year under consideration. Although, resadjudicata is not strictly applicable to income tax proceedings, but rule of consistency is to be followed as held in the case of CIT vs. Radhasoami Sathsung vs CIT [ 1991 (11) TMI 2 - SUPREME COURT] wherein it was held that rule of consistency has to be followed in income tax proceedings even though resadjudicata is not strictly applicable. AO as well as CIT(A) were erred in making additions towards depreciation on alleged fixed assets to book profit computed u/s 115JB. We direct the AO to delete additions made to book profit under section 115JB towards depreciation claim on fixed assets. Disallowance of expenditure incurred in relation to exempt income u/s 14A read with rule 8D of Income Tax Rules, 1962 and consequent additions made to book profit computed under section 115JB - HELD THAT:- CIT(A) has directed the AO to exclude investments in mutual funds, because dividend from mutual funds and long term capital gains on redemption of units in respect of debt oriented funds is chargeable to tax. CIT(A) has set aside the issue to the file of the AO and directed him to consider working furnished by the assessee determining the disallowances under section 14A. Therefore, we are of the considered view that the issue needs to go back to the file of the AO to decide afresh in light of our discussions given hereinabove. We set aside the issue to the file of the AO and direct him to recompute disallowances contemplated under section 14A in accordance with law in terms of our observations given hereinabove. Coming to the recomputation of book profit under section 115JB in respect of disallowance of expenditure under section 14A - We find that this issue has been covered in favour of the assessee in the case of ACIT vs. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it was held that computation under clause (f) of explanation (1) to section 115JB(2) is to be made without resorting to computation as contemplated under section 14A read with rule 8D. AO was erred in making additions towards book profit u/s 115JB in respect of disallowances of expenditure under section 14A by invoking rule 8D. Hence, we direct the AO to delete the additions made towards book profit computed under section 115JB in respect of disallowance of expenditure under section 14A.

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• 2019 (12) TMI 138
  Disallowance of deduction u/s 80IA - HELD THAT:- The enterprises carrying on development of the infrastructure facilities should be owned by a company or consortium of companies. The infrastructure facilities need not be owned by a company. It was held that the word ownership is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80IA(4) and not any other person like new HUF Firm etc. Hence, we hold that the assessee fails to satisfy the applicability clause of the provision as envisaged under section 80IA(4)(i) of the Act . So far as catena of the judgments submitted assessee, we notice that they only pertain to section 80IA(4)(i)(b) i.e. regarding the issue of contractor viz-a-vis developer. Hence, we do not deem it appropriate to decide on the said issue since the assessee does not fulfill the condition enumerated in the first part of the statutory provision. Disallowance u/s 40A(3) - HELD THAT:- The provisions of section 40A(3) of the Act restrict payment or aggregate of payment made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeding ₹.20,000/-. Moreover, in the case of N. Mohammed Ali v. ITO [ 2016 (1) TMI 941 - MADRAS HIGH COURT] the Hon ble Jurisdictional High Court has held that where the assessee made cash payments in excess of ₹.20,000/- for purchase of crackers, in absence of even names of agencies or agents or retailers living in villages to whom the said payments were made on a day-to-day basis, the impugned disallowance made by the authorities below u/s 40A(3) should be confirmed. We confirm the disallowance of expenses made to New Bharat Electricals Enterprises, PSK Blue Metal and New Bharat Foundation. We direct the AO to allow the payment made to Raghvendra Blue Metal of ₹.10,000/-, which is less than the monetary limit stipulated under section 40A(3). Accordingly, the ground raised by the assessee is partly allowed.

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• 2019 (12) TMI 137
  Reopening of assessment u/s 147 - non recording of proper satisfaction - assumption of jurisdiction u/s. 147/148 on the basis of invalid and mechanical approval granted by the Pr. CIT, Delhi-2, New Delhi wherein it was mentioned as Yes , which shows that Pr. CIT, Delhi-2, New Delhi has not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner - HELD THAT:- Since in the present case the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind by only mentioning in Column No. 12 YES , in the Reasons for Initiating Proceedings u/s. 147 and For obtaining the Approval of the Addl. Commissioner of Income Tax, Delhi-2, New Delhi, a copy of which is placed at page no. 103 of the Paper Book No. 2, and therefore, the legal issue in dispute is squarely covered by the aforesaid finding of the Tribunal, hence, respectfully following in the case of Dharmender Kumar vs. ITO [ 2019 (10) TMI 736 - ITAT DELHI] as relied by the Ld. Counsel for the assessee, the reassessment is hereby quashed and accordingly the ground no. 2 is allowed.

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• 2019 (12) TMI 136
  Reopening of assessment - notice u/s 148 issued by an incompetent officer - notice by AO with no jurisdiction - HELD THAT:- In Principal CIT-II, Lucknow v. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, Lucknow [ 2017 (3) TMI 1792 - ALLAHABAD HIGH COURT] , thus, in effect, holds, answering the question in favour of the assessee, that where a notice u/s 148 was issued by an incompetent officer, i.e., one who has no jurisdiction, and subsequently, on the objection of the assessee with regard to the jurisdiction, the matter is transferred to the Assessing Officer having jurisdiction, a valid assessment cannot be made by him without issuing a fresh notice under section 148. Since the AO, having jurisdiction over the assessee, completed the reassessment without issuance of notice under section 148, the reassessment order passed is invalid and cannot be sustained. It is, accordingly, set aside and cancelled. - Decided in favour of assessee.

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• Customs

• 2019 (12) TMI 135
  Release of detained goods - over-valuation of goods - seizure memo issued - HELD THAT:- It appears that the seizure memo dated 31st August, 2019 has been formally issued for the goods mentioned in Shipping Bill No.4651654 dated 4th June, 2019. Looking to the Seizure Memorandum dated 31.08.2019 (Annexure P-9 to the memo of this writ petition), there is an over valuation of the goods and hence the goods have been seized and the seizure memo has been issued. Hence, there is no reason to interfere with this seizure memo at this stage - Show Cause Notices are required to be issued under the provisions of Customs Act, 1962. Petition disposed off.

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• 2019 (12) TMI 134
  Reopening of appeal - power to review its own order - absence of any petition for review - challenge in this Appeal is to the order dated 19th April, 2007 made by the Customs, Excise and Service Tax Appellate Tribunal (Tribunal), rejecting the appeal instituted by the Appellant herein against the order made by the Commissioner of Customs (Appeals), Mumbai - HELD THAT:- It is obvious that very taking up the Appeal by the Tribunal on 19th April, 2007 was an exercise in excess of jurisdiction. Since the Appeal had already been disposed of by the order dated 10th July, 1998, there was really no occasion for taking up such appeal for reconsideration. It is obvious that such taking up of the Appeal was a result of miscommunication. It is obvious that the factum of disposal of the Appeal by order dated 10th July, 1998 was not brought to the notice of the Tribunal, either by the SDR or the staff of the Tribunal - Impugned order set aside. It is not necessary to go into the larger issue as to whether the Tribunal has any power to review its own Judgments and orders. However, we must note that Ms. Desai did place reliance upon the decision of the CP. AQUACULTURE (INDIA) PVT. LTD. VERSUS PRESIDENT, CESTAT [ 2010 (11) TMI 166 - MADRAS HIGH COURT] to submit that the Tribunal is not vested with any such power of review. The substantial questions of law, as framed, are liable to be answered in favour of the Appellant and against the Respondent.

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• 2019 (12) TMI 133
  Return of gold that was seized from late Padmanabha Bhattar in 1973 - quantity of 2186.900 grams of gold ornaments was seized from the shop of late Padmanabha Bhattar at Alappuzha during 1973 - HELD THAT:- On going through the statutory provisions under the Customs Act, I find myself unable to accept the contention of the learned counsel for the petitioner that it would be open to an assessee under the Customs Act/Gold Control Act to approach the statutory authorities more than 20 years after the date of the adjudication order of the CEGAT seeking a release of the gold ornaments seized from him by paying the redemption fine amount that was fixed in 1996. As the prayer sought for in the writ petition cannot be granted, the writ petition is dismissed but without any order as to costs - petition dismissed.

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• 2019 (12) TMI 132
  Refund of SAD - Exemption N/N. 102/2007 dated 14.9.2007 - It is submitted that apparently the refund claim in the present case is beyond one year from the date of payment of SAD - HELD THAT:- The SAD is leviable under section 3 (5) of Customs Tariff Act 1975. However, the Department in the year 2007 vide N/N. 102/2007 extended an exemption to said SAD. Vide this notification the goods falling within first schedule to Customs Tariff Act 1975 stands exempted from whole of the additional duty of the customs leviable thereon when imported in India for subsequent sale. Two conditions are prescribed in the notification itself for availing the said exemption. Though this N/N. 102/2007 is silent about any time limit for seeking the refund but in the subsequent amendment thereto vide notification no. 93/2008 dated 1.8.2008 the time period for filling the application for refund of said SAD is specified as one year from the date of payment of SAD. This amendment makes it abundantly clear that the imports, post this amendment, have to comply with the condition as that of limitation, as well, while seeking the refund of the duty (SAD) as was paid at the time of import. In view of the entire above discussions it stands clear that the decision of Sony India Pvt. Ltd. [2014 (4) TMI 870 - DELHI HIGH COURT] is not applicable to the cases of import made after the impugned notification and that to such imports the period of limitation of one year from the date of payment of duty is applicable. Appeal allowed.

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• 2019 (12) TMI 131
  Refund of SAD - benefit of N/N. 102/2007-CUS dated 14/09/2007 - refund rejected on the ground that the unjust enrichment angle had not been verified by the Assistant Commissioner, who had only relied upon the Chartered Accountant certificate - Board Circular No.06/2008-CUS dated 28/04/2008 - HELD THAT:- The refund of SAD in terms of the N/N.102/2007-CUS is special case of refund available to the assessee in terms of the Notification itself. The same provides for refund of SAD in case of subsequent sale of imported goods on payment of VAT. As regards unjust enrichment Board itself has clarified the issue that Chartered Accountant certificate indicating non passing of duty to the customers is sufficient. Revenue is silent on the applicability of various Tribunal decisions to the facts of the present case, which stands referred to and relied upon by Commissioner (Appeals). Neither have they said anything above Board Circular. It is well settled that Revenue cannot argue against the Board s Circular which are in favour of the assessee. There are no reasons to take a different view than the other taken by the Original Adjudicating Authority and as also Appellate Authority - appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2019 (12) TMI 130
  Liquidation of the company - Liquidation basing on the resolution passed by the CoC - HELD THAT:- It is evident that this case was admitted on 27.03.2019. Thereafter, on the claims received from the Financial Creditors, CoC was constituted on 25.04.2019. In addition to constitution of CoC, in the second CoC meeting held on 03.06.2019, since no asset is lying with the company, the CoC has arrived to a conclusion that this is a fit case for placing a proposal for liquidation as this company is neither a going concern nor holding any assets, thereby on 19.06.2019, they have unanimously proposed for liquidation of this company. Since it has been categorically mentioned by the CoC that this company is neither a going concern nor having any asset, this Bench is of the view that this is a fit case for liquidation, whereby, this Bench hereby orders for liquidation.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 129
  Permission to withdraw the Application which is admitted u/s 7 of the IBC Code, 2016 - Sec 12A of I B Code - HELD THAT:- It is clear from section 12A of the Code that the Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10 on an application filed by the applicant with the approval of 90% voting share of the Committee of Creditors. Thus it is clear if 90% voting share of Committee of Creditors approves application for withdrawal then Adjudicating Authority to allow for withdrawing the application filed under section 7 or section 9 or section 10 of the Code. Present application is filed by RP before this Tribunal for approval of the withdrawal of application. It is clear that Regulation 30A of IBC (Corporate Insolvency Resolution Process) regulation 2016, are complied - By virtue of provisions of sec 12A, Tribunal is empowered to approve the application for withdrawal. The application filed by RP is to be allowed and moratorium order passed under section 14 shall cease to exist.

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• 2019 (12) TMI 128
  Maintainability of application - initiation of CIRP - default committed by the Corporate Debtor in repaying amount alongwith interest - existence of debt and default or not - HELD THAT:- The Corporate Debtor counsel has admitted the debt and default, whereby looking at the request of the Corporate Debtor for grant of loan, entries of the payments to the Corporate Debtor made by the Applicant through Bank Account on various dates as reflected in the above said table and the Corporate Debtor failing to repay the same, it can be said that this Applicant has proved existence of debt and default with regard to the loan of ₹ 32,00,000 given by the Applicant. Application admitted - moratorium declared.

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• 2019 (12) TMI 127
  Maintainability of application - initiation of CIRP - issuance of El Form - debt due and payable - whether submission of El Form as per the terms stipulated in the purchase order, is a pre condition for enabling the Corporate Debtor to pay the amount in demand? HELD THAT:- On a reference to all documents, there is a pre existent dispute as alleged by the Corporate Debtor in respect of the payment of the debt due to the Operational Creditor and therefore, this Application is liable to be rejected. Application rejected.

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• 2019 (12) TMI 126
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of outstanding amount - existence of dispute or not - HELD THAT:- In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt by way of affidavit - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'. There is existence of default and that the application under Section 7(2) of the Code is also complete in all respect - the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2019 (12) TMI 162
  Principles of natural justice - Issuance of SCN after making inquiry - Deliberate concealment of material facts - Respondent impleaded in his personal capacity - grievance of the Petitioner is that in respect of the earlier notices issued by the Respondents, no final determination has been made or communicated to the Petitioner. On each occasion, the Petitioner has submitted its replies which have been ignored while issuing impugned show cause notice - HELD THAT:- The position is not as the one projected by the Petitioner, namely, rampant issuance of notices, one after another, without considering the fact that the earlier notices issued to Petitioner had been replied. The Respondents have followed the statutory scheme. The earlier notices were only to make inquiries, and it is only the impugned show cause notice which is a Substantive Show Cause Notice to show cause as to why the amount ₹ 4,39,44,304/-, allegedly wrongly carried forward in the GST electronic credit ledger in GST TRAN-1 statement, should not be recovered under Section 73 of the Act along with interest, and why penalty should not be imposed upon the Petitioner. There is no jurisdictional error in issuance of the impugned show cause notice. The matter is at the stage of the examination of the Petitioner s response to the show cause notice - no interference is called for at this stage by this Court - Petition dismissed.

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• 2019 (12) TMI 125
  Maintainability of appeal - monetary amount involved involved in the appeal - HELD THAT:- The instant appeals are disposed of since the total tax effect involved in these appeals is less than Rupees two crore.

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• 2019 (12) TMI 124
  Refund of the unutilized CENVAT credit - input services - Business Support Services - Clearing and Forwarding Services - Management Consultant Service - Manpower Recruitment Services - Renting of Immovable Property services - Rent-a-Cab services - Insurance services - Business Auxiliary and Cleaning / Housekeeping services - Commercial Training and Coaching services - Club or Association Services - HELD THAT:- It is seen from the definition of input services that when the services have been used for providing output service, the same are eligible for credit. In the present case, the department does not allege that these services were not used by the appellant. Event management service - HELD THAT:- On perusal of invoices, it can be seen that the amount has been incurred only for the training for fire and safety measures and not for any outdoor catering service. Further, the club or association service have been availed for obtaining membership in NASSCOM, American Chamber of Commerce and International Market Assessment - refund allowed. Rent-a-cab service - HELD THAT:- The credit is denied for this service as the appellant is not disputing the claim in respect of rejection of refund in regard to rent-a-cab service. The impugned order is modified to the extent of allowing the credit /refund in respect of these services given except rent-a-cab service - Appeal allowed in part.

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• 2019 (12) TMI 123
  Classification of services - service of construction of residential complex or not - construction of residential quarters - case of appellant is that all quarters constructed by the appellant were for personal use of the employees of the organizations on payment of rent and therefore the said quarters were for personal use and therefore the construction activity undertaken by the appellant was not for construction of residential complex - burden to prove - HELD THAT:- As per provision of law the ultimate use of the constructed residential unit is having bearing of levy of service tax. The law has very clearly provided that if the residential unit is intended for personal use or it is being used by other persons on rent then such unit is not covered by the definition of residential complex and therefore not eligible to be subjected to levy of service tax under construction of residential complex service. Further, this being a case of demand, the onus was on revenue to establish that the residential units constructed by the appellant were covered by the definition of residential complex to raise the demand. Revenue has not produced any evidence in the proceedings to establish that the residential units constructed by appellant were not for personal use. The said onus was not discharged by Revenue to establish that the residential units constructed were liable to levy of service tax. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 122
  Refund of unutilized CENVAT credit - input services - Group Medical Insurance - Insurance on assets and business activities - Rent-a-Cab and bus pass - Food coupons/sodexo coupons - extended period of limitation - penalties. Group Medical Insurance - HELD THAT:- This Tribunal in the case of BHARAT FRITZ WERNER LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH WEST COMMISSIONERATE [ 2019 (6) TMI 67 - CESTAT BANGALORE ] has held that cenvat credit is not permissible under the Group Medical Insurance Service. This Tribunal has come to the conclusion that the impugned service falls under the exclusion clause as provided in Clause (c) of Rule 2(l) - appellants are not entitled to cenvat credit of service tax paid on Group Medical Insurance Service. Insurance on assets and business activities - HELD THAT:- The Commissioner (Appeals) has rightly rejected the CENVAT credit to the tune of ₹ 2,27,123/- after examining the various invoices relating to CENVAT credit and there are no infirmity in his findings and therefore appellant is not entitled to cenvat credit on insurance on assets and business activities to the tune of ₹ 2,27,123/- - Credit not allowed. Rent-a-Cab and bus pass - HELD THAT:- This falls in the definition of input service as it is directly related to the productivity of the employees working with the appellant and this facility is only from the factory to the residence of the employees and back which in my opinion falls in the definition of input service and the exclusion clause is not applicable as far as this service is concerned - Credit not allowed. Food coupons/sodexo coupons - HELD THAT:- These services are in the nature of welfare service and purely for personal consumption of employees as these are perquisites allowed to the employees. Further the Commissioner (Appeals) has given reasons for denying the cenvat credit on sodexo coupon and there are no fault in that and upheld the same - credit not allowed. Extended period of limitation - HELD THAT:- The issue involved in the present case relates to interpretation of the definition of input service and therefore extended period cannot be invoked and penalties cannot be imposed - the demand for the normal period of one year is upheld and invocation of extended period is not tenable. Penalties - HELD THAT:- The penalties under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC (1)(c) of Central Excise Act, 1944 set aside. The matter is remanded back to the original authority to re-quantify the demand for the normal period with regard to all the impugned services which the appellant is liable to pay - Appeal allowed in part by way of remand.

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• 2019 (12) TMI 121
  Demand of service tax - amount recovered by the appellants from their Insurance Agents as Service Tax for the period 2006-07 upto June, 2012 has not been deposited in the Government Exchequer - applicability of Section 73A (2) of Finance Act, 1994 - whether assessee can enter into a contract to shift the incidence of his service tax liability? - HELD THAT:- A careful reading of the said self contained provisions of Sec. 73A, and in particular Sub. Sec.(6), it can be safely inferred that the Government cannot retain the amount in excess of applicable service tax collected and deposited with the Govt., but after adjustment of the tax levied and payable in relation to the service either by the service provider or the service recipient, required to transfer the excess amount to the Consumer Welfare Fund or refund it to the person who borne the incidence of duty - What is the objective and purport of the said provision is that any amount in excess of the tax leviable is collected, the said amount should be deposited with the Govt. and the excess amount would be dealt with by the Govt. either being refunded to the person who bears the burden or being transferred to the consumer welfare Fund - The contractual obligation to reimburse the tax paid by the person designated to do so by law is, thus, not tax collected in any manner warranting recourse to Section 73A of Finance Act, 1994 - The demand under Section 73 A (2) confirmed qua the amount recovered from the agent as service tax is held not sustainable and as such is liable to be set aside. Demand of service tax - reimbursements paid to the insurance agents of expenses for trainings and overseas trainings - period of 2007-08 to 2012-13 - HELD THAT:- A combined reading of Section 67 of Finance Act and Clause (ix) of Rule 6(1) of the Valuation Rules makes it evident that only such value or commission or fee would form part of the gross amount, subject to Service Tax, which is in relation to the insurance auxiliary service provided by the insurance agent - it becomes clear that even the overseas expenditure in the nature of training and cost /expenses incurred by the appellant in relation to the same cannot be said to be for solicitation or procurement of insurance business, but exclusively for the mandatory training. Hence the such cost and expenses incurred by the appellant cannot be said to be treated as a consideration for service. The proposed demand for ₹ 12,17,50,892/- for the period from October 2007 to March, 2013 is therefore, not sustainable - demand set aside. Service Tax payable on 4% debit adjustment made by the appellant - HELD THAT:- Department could not produce any evidence to show that there was any amount which the insurance agents were suppose to pay back to the appellant and it is said amount which has been set out by the appellant against the commission paid to the insurance agent. In absence of any such evidence, the 4% debit adjustments from the commission as was paid to the insurance agent is nothing different than the discount as apparent from the agreed terms with such agents - The emphasis of adjudicating authority below upon rule 3 of Valuation Rules while confirming this demand is also opined erroneous, because Rule 3 (a) of Service Tax Rules is applicable only in the cases where the taxable value is not ascertainable. However, in the present case, the value is ascertainable - demand set aside. Extended period of limitation - HELD THAT:- The show cause notice in the present case has been issued on 22.04.2013, which is much beyond the permissible period of one year for the purpose, there is no suppression of facts. Department cannot invoke the extended period of limitation - The show cause notice is otherwise held to be barred by time. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 120
  Association of persons - clubbing of rent - benefit of the exemption extended to small service providers by Notification dated 1 March, 2005 and 20 June, 2012 - HELD THAT:- The Division Bench in the decided four Appeals relied upon a decision rendered by the Chandigarh Bench of the Tribunal in Anil Saini Vs. CCE, Chandigarh I [2017 (1) TMI 101 - CESTAT CHANDIGARH] holding that the benefit of the exemption notification would be available to individual owners of the property and clubbing of rent of all the four individual co- owners of the property was not legally sustainable. The impugned order passed by the Commissioner (Appeals) clubbing the rent of all the four Appellants was not justified. If that be so, each of the individual owners would be entitled to the benefit of exemption notification - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 119
  Condonation of delay of one year in filing appeal - power of Commissioner (Appeals) to condone delay - Short payment of service tax - restaurant service - Department observed that despite providing the taxable service the appellant is not registered with the department nor is paying the service tax - period from May 2011 to September, 2015 - HELD THAT:- As mentioned under Section 85(3A) of Finance Act, 1994, Commissioner (Appeals) has clearly recorded that he had the power to condone delay only coupled to the extent of 30 days beyond 60 days from the date of the order to be challenged and since the impugned appeal was much beyond 30 days/one month, it being filed after a delay of one year, the Commissioner (Appeals) had dismissed the appeal being barred by the period of limitation. The statute itself provide a specific period during for which the Commissioner (Appeals) can exercise the discretion to condone the delay that to on being satisfied that a sufficient cause has been show for not presenting the appeal in the appropriate time. From the order under challenge, it is apparent that there was no reason for delay was mentioned in the appeal. From the record of present appeal, there is apparent a letter written by the appellant to Commissioner (Appeals) on 30 May, 2018 praying for treating the said letter as a mercy petition - The only reason mentioned in the said application is that he demanded the copy of order dated 13.2.2017 from Assistant Commissioner, Ajmer vide his application dated 1.2.2018. From the Order-in-Original it is clear that the appellant was heard and the order is not ex-party. Accordingly, there is no reason apparent as to why the appellant took one year time to seek the copy of the order. Above all, Section 85(3A) of Finance Act makes it clear that Commissioner is not empowered to condone any delay in filing appeal in excess of limitation period prescribed under the said Section. There is no infirmity in the order under challenge. Commissioner (Appeals), rather in the given circumstances had no option to dismiss the appeal on the ground of limitation - the present appeal stands dismissed not only for want of the prosecution on part of the appellant but also for the reason that the appeal has no merits to sustain - Appeal dismissed.

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• 2019 (12) TMI 118
  Maintainability of appeal - appropriate forum - Section 83 of the Finance Act, 1994 r/w Section 35G of the Central Excise Act, 1944 - classification of services - sound recording services or advertising agency services - HELD THAT:- It is a case of classification of services between two entries. In fact, the questions as framed by the Revenue, itself brings out the issue of classification. Therefore, in view of Section 35G this Court has no jurisdiction to entertain this appeal. This appeal is dismissed as not maintainable before this Court.

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• Central Excise

• 2019 (12) TMI 117
  Stay on issuance of SCN - SCN has been issued by the respondent authority after a period of more than 18 years - HELD THAT:- In the present case, admittedly, the entry in question was mutated in the revenue record on 22.03.2001, which was subsequently certified on 03.08.2001. Now, the impugned show cause notice is issued by the respondent on 09.10.2019 i.e. after a period of more than 18 years alleging that there is breach of provisions contained under Section 54 of the Saurashtra Gharkhed, Tenancy Settlement and Agricultural Lands Ordinance, 1949. Issue involved in the present petition requires consideration - notice returnable on 27.02.2020. In the meantime, proceedings pursuant to the impugned show cause notice are stayed.

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• 2019 (12) TMI 116
  Recovery of Duty on the Readymade Garments exported - demand on the ground that the appellant did not follow the procedure of Notification No. 42 of 2001-CE (NT) dated 26.06.2001 by preparing ARE-1 as provided in Annexure-14 Part-7 of CBEC manual - levy of penalty - principles of natural justice - HELD THAT:- The government has prescribed a simplified procedure particularly for those units who are not clearing their goods in home consumption but entire production is exported. In this regard various circulars were issued from time to time. It is observed that as regard the readymade garment, there is a specific circular No. 705/21/2003-CX dated 8.04.2003 was issued. According to which the appellant was suppose to follow the simplified procedure as prescribed in the said circular that means the appellant was not required to follow the procedure as prescribed under Notification 42/2001-CE (NT). Therefore, the demand only on the basis that the appellant have not followed the procedure prescribed under Notification 42/2001-CE(NT) will not sustain. However, in any case the exports of goods have to be established. In the present case there is no much dispute raised as regard export of goods. Also, the appellant by Miscellaneous Application submitted some vital documents which were obtained under RTI, after the Adjudication Order was passed. Those documents were not considered while passing the Adjudication Order. Since the veracity of these documents needs to be verified on factual background, which can be done by the Adjudicating Authority - Therefore, the matter needs to be remanded to the Adjudicating Authority - appeal allowed by way of remand to the Adjudicating Authority for passing a fresh order.

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• 2019 (12) TMI 115
  Filing of appeal is belated or not - Relevant date for service of order - Time Limitation - Section 11 (B) of Central Excise Act 1944 - Refund of Oil Cess paid in excess - price fluctuation clause - refund arising due to difference in the foreign exchange rate - refund claim was filed before the Assistant Commissioner on 30 May, 2017 pertaining to the period from June 2016 to August 2016 and January 2017 to March 2017 under Section 11 (B) of the Act - according to the Appellant, the appeal that was filed before the Commissioner (Appeals) on 4 September, 2018 was within sixty days from the date of communication of the order and could not have been rejected as being barred by time - refund rejected also on the ground of unjust enrichment. Whether the order dated 29 August, 2017 had actually been served upon the Appellant on 12 September, 2017 as contended by the Department or on 6 August, 2018 as contended by the Appellant? - Difference of opinion - present matter has been referred to third member by Hon ble President on account of difference of opinion in the Bench comprising of Hon ble President and Hon ble Member (Technical). HELD THAT:- The relevant dispatch register and speed post register maintained at the Division office have been placed before the Bench earlier and also today for examination. Besides the envelope bearing the speed post no. ER924187517IN issued on 01.9.2017 and the envelope bearing speed post no. ER956130766IN with its contents received by the Appellant on 11.8.2018 are also presented. The size of the former envelope is of 23cm 10cm and is a window envelope, whereas the second one is of 27cm 12cm size. On examination of these envelopes, it has been fairly accepted by all concerned that the first envelope is not fit enough to contain the order dated 29.08.2017, which of eleven pages and legal size paper. Also the postal charges levied for speed post of both letters are different, the second one with higher charge the weight being 90gms, therefore, the order dated 29.08.2017 could not have been dispatched in the envelope containing speed post no. ER9241875719IN, for which minimum speed post charge is levied. The learned Commissioner (Appeals) on the basis of the report of the Adjudicating Authority dated 20.11.2018 arrived at the conclusion that the Order-in-Original dated 29.08.2017 has been sent by speed post no. ER9241875719IN dated 01.09.2017 and thus the procedure prescribed under Section 37C of the Central Excise Act, 1944 has been complied with since the speed post has not been returned by the postal authorities to the Department - Also, from the correspondences independently undertaken by the learned Commissioner (Appeal) with the postal Department it was revealed that the said speed post letter was delivered. The appellant even though not disputed the receipt of the said speed post letter no. ER9241875719IN dated 01.09.2017 but contended that it was a letter written by the Range Superintendent to the Appellant in the context of applicability of service tax on the License/royalty fees, and the said envelope did not contain the adjudication order dated 29.08.2017 issued by the Assistant Commissioner. The department could not place any evidence to rebut the said claim of the Appellant - the appellant could able to demonstrate and rebut the presumption that the order dated 29.08.2017 could not have been delivered to them through the speed post ER9241875719IN dated 01.09.2017 and in fact they have not been communicated about the said Order on 12.9.2017 as held by the Ld. Commissioner(Appeals). Therefore, the finding of the learned Commissioner (Appeals) is unsustainable. In their separate orders, Hon ble President and Hon ble Technical Member have arrived at the same conclusion that the Order-in-Original is claimed to have been dispatched through Range office. Examination of the speed post register maintained at the division office indicates the speed post no. ER9241875719IN. In the affidavit of the Asst. Commissioner at para 2 it is stated that the order has been sent to Range office for delivery - further verification of the speed post register, if at all maintained in the Range Office, would not yield any positive result in as much as the register in the Range office would also show the same speed post number. Receipt of the said speed post letter not disputed by the appellant. It is only the content of the speed post letter ER9241875719IN which is in dispute. As far as the role of the officers of the department is concerned in furnishing the report, it is not clear as to what short of verfication conducted and whether it is ascertained the order dated 29.8.2017 remained to be dispatched at the Range office or at the Division office itself; the affidavit also does not disclose about the lapse relating to delivery of the Order - it remains with the authority to examine internally about the lapse on the part of the officers. But, as far as the appellant is concerned, they should not made to suffer as the order has been communicated only on 06th August, 2018, hence there is no delay in filing the appeal. The findings and conclusion of the Hon ble President that order dated 29.08.2017 has been communicated to the Appellant only on 06.08.2018, and the Appeal has been filed before Commissioner(Appeals) within the time limit prescribed under Section 35(1) of CEA,1944, is agreed upon - the impugned Order deserves to be set aside and the matter be remanded to the learned Commissioner (Appeal) to decide the issue on merits.

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• 2019 (12) TMI 114
  Valuation - inclusion of cost of packing material in assessable value - case of the department is that since the packing material i.e. corrugated boxes were supplied free of cost by the buyers, the cost of the same needs to be included in the assessable value as in the form of supply of corrugated box, there is also an additional consideration flowing directly or indirectly from the buyers resulting in under valuation of Excisable goods and short levy of duty - extended period of limitation. HELD THAT:- From section 4 it can be seen that only in cases where the transaction value is sole consideration such transaction value shall be the Assessable Value for charging of Excise Duty. However, in the present case apart from the transaction value the packing material supplied Free of Cost by the customer was also used by the appellant. The value of such packing material was not included. When any Excisable product is manufactured and cleared the value of such goods shall be the total value of the goods in the form it is cleared from the factory of the Assessee. It is immaterial that whether a part of the material contained in the final product to borne the cost. In the present case undisputedly the case of the appellant i.e. Metal Container cleared were packed in the corrugated boxes. Therefore, the value of the Metal Containers duly packed in the corrugated box has to be valued. Since the appellant have charged the value excluding the Cost of packing material the revenue is right in including the Cost of the packing material for a very simple reason that the goods were cleared duly packed in such corrugated boxes. Merely because the corrugated box was supplied by the customer that does not make difference as far as inclusion of cost of packing material required to arrive at the Assessable value - Since the Transaction Value is not the sole consideration as the packing cost was not included the value has to be determined resorting to the Valuation Rules made by authority of Section 4. It is absolutely clear that the said rule was made amongst other circumstances for the purpose of inclusion of Cost of packing material, if it is supplied Free of Charge by the buyer. Therefore, by virtue of the above Rule 6 read with Explanation 1 Clause-iii the value of packing material supplied Free of Cost by the buyer mandatorily needs to be included in the price of final product. Therefore, in view of Section 4 read with Rule 6 there is absolutely no ambiguity on the issue involved in the present case in as much as the cost of corrugated boxes supplied by the buyer to the appellant is includable in the Assessable Value. Every goods manufactured is otherwise complete in its manufacturing before packing. However, even though the packing is part of the manufacturing activity or otherwise, the Excise Duty is chargeable on the value of the goods in the form it is cleared from the factory of the manufacturer. In the present case, there is no dispute that the Metal Containers manufactured by the appellant are packed in the corrugated box and the same duly packed are cleared for sale to their customers. Therefore, since the goods are cleared in the packed form, the cost of packing material needs to be included in the Assessable value - Hence the argument of the appellant that the packing of the Metal container is beyond the stage of manufacturing will not help as long as the Valuation of goods for the purpose of charging Excise Duty in the form it is cleared. Extended period of limitation - HELD THAT:- When the supply of corrugated box Free of Cost by the customer to the appellant was declared by the appellant to the department, it was open for the department to make out a case if they desire and issue the Show Cause Notice well within the stipulated time period of one year but despite all the details available with the department the Show Cause Notice was not issued in the normal period. In this fact the demand for the period before one year of the date of Show Cause Notice is time barred and the demand for extended period is set aside. On merit the demand is sustainable and on Limitation demand for the extended period is set aside - appeal allowed in part.

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• 2019 (12) TMI 113
  Doctrine of merger - Proceeding against new proprietor of the company, old proprietor, being deceased - CENVAT credit in respect of input lying in stock or in process or contained in final product lying in stock on the date of surrendering of registration - HELD THAT:- Tribunal has discussed the applicability of Section 11 to the successor and while observing that the provisions of Section 11 of Central Excise Act, 1944 cannot be invoked to demand duty on the successor, CESTAT has set aside the impugned order. We find that the present appeal is also against the same impugned order. When the impugned order is already set aside by the Tribunal; no application for rectification of the mistake apparent on record has been filed by the Department and as the order of the Tribunal is not negated by any higher judicial forum, we find that the impugned order is non est. Moreover, the principal on which the appeal was made, i.e., the applicability of proviso to Section 11 to the successor, before 10/09/2004 was also decided in favour of the appellants and the same was upheld by the High Court - As the impugned order has already been set aside, the present appeal gets consequentially merged with the earlier order passed by the Tribunal. The present appeal is to be held to have been allowed earlier. We find that no intervention is required by this Bench - Appeal disposed off.

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• 2019 (12) TMI 112
  Benefit of N/N. 67/95 - Captive consumption - molasses, denatured spirit, ethanol, etc. - denial of benefit on the ground that molasses has been consumed in the manufacture of non-excisable ethyl alcohol - HELD THAT:- Tribunal has already passed series of order in respect of the same issue. Therefore, the issue is no longer res integra - This Bench in appellant s own case BANNARI SMMSN SUGAR LTD VERSUS C.C.,C.E. S. T-MYSORE [ 2018 (2) TMI 813 - CESTAT BANGALORE] has observed that rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 111
  Goods supplied to Mega Power Projects under International Competitive Bidding - benefit of N/N. 6/2006-CE dated 01.03.2006 (serial no. 91) and subsequent N/N. 12/2012-CE dated 17.03.2012 (serial no. 336) - exemption denied on the ground that the subject goods are not unconditionally exempted from customs duty when imported into India as per the corresponding Customs N/N. 21/2002-Cus dated 01.03.2002 as amended and subsequent N/N. 12/2012-Cus dated 17.03.2012 as amended - HELD THAT:- The goods have been cleared by the appellants to the specified Mega Power Projects against International Competitive Biddings and the said facts have duly been recorded in the impugned order and there is no dispute on the said facts. The notifications under which exemptions have been claimed by appellants are subject to condition that the said goods, when imported into India, are exempted from payment of customs duty. In the instant case, since the goods have been supplied for setting up of Mega Power Projects, we find that the learned Commissioner in his adjudication order has not negated the submissions made by the appellant regarding the availability of the exemptions from customs duty. Had the said goods been imported from outside India, the same would have been eligible for exemption as projects import as available under the aforesaid Notification 21/2002. The entries in the Excise Exemption Notifications as availed by the assessee appellant in column No. (2) for reference of Chapter or heading specifically states Any Chapter , which clearly implies that goods sought to be cleared by assessee under the said exemption entries may fall under any of the chapter headings of central excise tariff with the only condition that they are supplied under International Competitive Bidding which are exempted from customs duty - The observation made by the learned Commissioner to deny the exemption that the goods manufactured by appellant i.e. cable tray and accessories falling under chapter subheading 73089090 which is used as support for laying the cable that is structures cannot be treated as machines, spare parts or raw materials to be used in making such goods of chapter 84 is completely irrelevant for the reason that goods falling under any of the chapter headings of Central Excise Tariff is exempted. The supply of subject goods in the instant case for Mega Power Project under International Competitive Bidding is on record and not in dispute - the appellant is legally entitled to exemption from payment of central excise duty and thus the duty demand is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 110
  CENVAT credit - Goods Transport Agency (GTA) in relation to transportation of goods from the factory and depots to the buyer s premises - credit denied on the ground that the documents furnished by the appellant pertain to clearances of final products from the factory to the buyer s premises - HELD THAT:- Undisputedly, cement has been sold in this case on FOR destination basis for delivery at the buyer s premises by the supplier. Cenvat Credit Rules permit availment of Cenvat credit on GTA services up to the place of removal. The question is whether in such a case, whether Cenvat credit on outward transportation to the buyer s premises is admissible. Identical issue was dealt with by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent. The learned adjudicating authority must be given an opportunity to examine the present case in the light of this judgment and also all the documents relied upon by the appellant to assert that they are entitled to Cenvat credit which has been denied to them as the purchase orders clearly indicate that sale was on FOR buyer s premises basis and decide the entitlement of Cenvat credit - thus, without passing any remarks on the merits of the case, the impugned order is set aside and the matter is remanded to the adjudicating authority to pass a fresh order after considering this judgment and following principles of natural justice. Appeal allowed by way of remand.

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• 2019 (12) TMI 109
  Valuation - inclusion of Sales Tax subsidy in assessable value - Whether the Sales Tax subsidy received in the form of VAT-38B challans which has been used to pay VAT/CST liability of the subsequent period, amounts to retention of VAT/CST amount collected by the Appellants from the customers and thus liable to be included in the transaction value of the final products of the Appellants? HELD THAT:- There is no justification for inclusion of VAT amount paid by the assessee using VAT-38B Challan in the assessable value. The order impugned in the appeals, so far as it relates to the present four Appellants, cannot, therefore, be sustained - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 108
  Levy of excise duty - mobile phone battery and LED Bulb - taxable at 12.5% excise duty on mobile phone battery and LED Bulb or not - General Exemption Notification No. 46 dated 01 March, 2011 or benefit of General Exemption Notification No. 50 dated 17 March, 2012 for LED Bulb - whether battery chargers, PC connectivity cables, memory cards and hands-free headphones of mobile handsets are restricted to accessories or cover parts and components of mobile handsets also? HELD THAT:- A bare perusal of the description of excisable goods leaves no manner of doubt that the aforesaid qualify accessories only and have no relation to parts or components because it cannot be doubted that battery chargers, PC connectivity cables, memory cards and hands-free headphones of mobile handsets are not parts or components of mobile handsets and are accessories. If that be so, mobile phone battery is a part or component of the mobile handset because without a battery, the mobile handset cannot function. Such being the position, the Commissioner fell an error in concluding that the mobile phone battery would not be entitled to the benefit of the General Exemption Notification dated 01 March, 2011. The imposition of penalty or interest, therefore, also cannot be sustained. LED Bulbs - HELD THAT:- The Appellant is not contesting the finding recorded by the Commissioner in relation to imposition of excise duty on LED bulbs, it is not necessary for us to deal with this issue. Time limitation - HELD THAT:- The issue of limitation also is not required to be addressed since it has been held that the Department was not justified in denying the benefit of the General Exemption Notification dated 01 March, 2011 for imposition of duty on mobile phone battery. The impugned order, insofar as it directs the Appellant to pay Central Excise Duty on mobile phone charger and with interest and penalty is, accordingly, set aside - appeal allowed.

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• 2019 (12) TMI 107
  Recovery of the alleged short paid excise duty - delay of 10 days in filing appeal - HELD THAT:- The lacuna noticed against the appellant is that he was clearing his manufactured finished goods without paying the excise duty. Finished goods and the stock taking thereof was conducted at the time of search of four premises of the appellant which was done in the presence of the appellant s authorized person and even in the presence of independent witnesses. There has been specific details of the stock of finished goods as was found available in the premises of the appellant and was seized by the Department. It is apparent that there was no denial on part of the appellant at the time of said such search, for stock found and seized finished goods. It is only six months after that the appellant came up with a plea that the stock as was found at the time of search was not of finished goods. Except the said submission there is apparently no such documentary evidence produced by the appellant which may falsify the details of six various kinds of final goods and the respective quantity as was got recorded in the panchnama on 21.7.2014. The mere submission of the appellant that since the testing and inspection by their buyers was not yet conducted that the goods could not be called as finished goods is also not tenable for want of specification of testing and inspection. In the given circumstances, that appellant has violated rule 10 of Central Excise Rules 2002. There is no infirmity in the order under challenge while confirming the proposal not only of the demand of not paid excise duty but also of the confiscation. The redemption fine of ₹ 4,08,570/- as was imposed and as has already been deposited by the appellant is also hereby denied to be refunded - the appeals stands dismissed not only for want of prosecution on part of the appellant but also for want of any merits supporting his case.

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• 2019 (12) TMI 106
  Clandestine removal - sponge iron - shortage of stock - demand based on documents and even the statement of the proprietor of said Kailash Traders - case of appellant is that the major part of demand has been dropped by the adjudicating authority below for want of any concrete/corroborative evidence and holding that the entries found in the 3rd parties document are not reliable - HELD THAT:- No doubt, the statement of Mr. Kejriwal has recorded inability on his part to give the details about the noticed shortage. However, the fact still remains is that based upon the noticed shortage department has alleged the clandestine removal and that it has already been observed by the adjudicating authority below that Department is not able to prove the allegations. Law has been settled by catena of judgments that clandestine removal is a serious charge. The burden to prove the same is required to be discharged by the Department by production of sufficient and tangible corroborative evidence - As already held by the adjudicating authority that there is no such evidence. Department is not in appeal against the said observations as well. Once this is the fact of the present case, mere shortage in the stock as noticed, that too, on the basis of eye estimation only, the same cannot be held to be convincing corroborative evidence even qua the alleged shortage. Observing that except the statement of the appellant s Director, there is no other evidence produced by the Department to corroborate the noticed shortage - demand do not sustain - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 105
  Reopening of assessment - Validity of pre-assessment Notice issued in terms of the Central Sales Tax Act, 1956 - exemption in respect of pre-export sales and branch transfers - HELD THAT:- The issue being raised by the officer is contrary to the Judgment of the Supreme Court in the case of ASHOK LEYLAND LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER (AND OTHER APPEALS AND A WRIT PETITION) [ 2004 (1) TMI 365 - SUPREME COURT] where it was held that an order passed under Sub-Section (2) of Section 6A cannot be subject matter of reopening of a proceeding under Section 16 of the State Act. Petition allowed.

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• 2019 (12) TMI 104
  Grant of stay during for a limited period only during the pendency of the appeals - petitioner seeks for a direction to the first respondent to grant stay till the disposal of the appeals - HELD THAT:- There is no dispute to the fact that the first respondent/Appellate Authority has granted interim stay subject to the conditions as stated - It is an admitted fact that the petitioner has complied with the conditions imposed. Now, the period of stay granted by the Appellate Authority got expired and however, the appeals are still pending before the first respondent. In view of the fact that the petitioner has extended the bank guarantees upto 06.05.2021, this Court is of the view that the interest of the parties will be protected, if the second respondent is directed to accept the extended bank guarantees and consequently, the first respondent is directed to extend the stay till the disposal of the appeals, also with a direction for disposal of the appeals within a time stipulated by this Court. The petitioner shall furnish the extended bank guarantees before the second respondent within a period of seven days from the date of receipt of a copy of this order - Petition allowed.

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• Indian Laws

• 2019 (12) TMI 103
  Smuggling - Ketamine - contraband item - section 50 of NDPS Act - main ground urged on behalf of petitioner is that the seized material is not Ketamine - other allegation that Shivaraj was trained by petitioner is based on statement of co-accused. No other allegation is made by the prosecution against petitioner. HELD THAT:- Admittedly, as per the charge sheet, 17 samples were sent to Central Revenue Controlled Laboratory. The chemical analysis report has shown negative result for presence of Ketamine . Thus, as on date, the seized material cannot be described as Ketamine . Section 37 of NDPS Act places an embargo from releasing a person accused of offences punishable for Section 19 or 24 or 27A of the NDPS Act, unless the Public Prosecutor has been given an opportunity to oppose the application and Court is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail. In the case on hand, as per report of Central Revenue Laboratory, seized material is not Ketamine . The other allegation of training accused No.2 is based on the voluntary statement of co-accused. Though a statement made before any Officer referred under Section 42 of the NDPS Act can be used by the prosecution against an accused, it is relevant to note that the allegation is with regard to training a co-accused in manufacturing drug. No other material is placed by the Prosecution to corroborate the statement of Shivaraj. Admittedly prosecution has already filed charge sheet and petitioner is in custody since 10th May 2019. Petitioner shall be released on bail, upon his executing a personal bond for ₹ 5,00,000/- and two sureties for the like-sum to the satisfaction of the XXXIII Additional City Civil and Sessions Judge and Special Judge for NDPS Act, Bengaluru - petition allowed.

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• 2019 (12) TMI 102
  Dishonor of Cheque - acquittal of accused of charges under Section 138 of the Negotiable Instruments Act 1881 - HELD THAT:- The accused having admitted issuance of cheque and stop payment instructions etc., there is no need to delve into the evidence of this witness. The defence led evidence of four witnesses. DW-1 was an employee of the accused, DW-2 is an employee of the bank from where the son of complainant is supposed to have withdrawn the cash of ₹ 10,000/-. DW-3 is one Arvind Chagan Joshi to whom the computer papers worth ₹ 20,140/- was delivered by Shree Balaji Enterprises and DW-4 is the accused himself. DW-1 confirms having delivered 32 boxes of computer from Shree Balaji Enterprises to Arvind Chagan Joshi, i.e., DW-3. DW-3 is an independent witness who states that on instructions of complainant he received 32 boxes of paper rolls alongwith challan in his factory because complainant requested him to keep it with him as they did not have enough storage space. The Trial Court has given the benefit of doubt to the accused and acquitted the accused. It is settled law that where two views are possible, the benefit should tilt in favour of accused. The onus is on the prosecution to prove the accused to be guilty of offence beyond reasonable doubt. There is an acquittal and therefore, there is double presumption in favour of the accused. Firstly, the presumption of innocence available to the accused under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court. For acquitting the accused, the Trial Court observed that the prosecution had failed to prove its case. The opinion of the Trial Court cannot be held to be illegal or improper or contrary to law - the order of acquittal need not be interfered with - Appeal dismissed.

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• 2019 (12) TMI 101
  Suspension of sentence pending the appeal - grouse of the petitioner-accused is that bare perusal of Section 389 Cr.P.C, nowhere suggests that Appellate Court while considering the application for suspension of sentence, is necessarily required to issue direction to the person in appeal for depositing amount of compensation - HELD THAT:- True, it is that bare perusal of Section 389 of Cr.P.C, which is reproduced hereinabove, nowhere suggests that Appellate Court while considering the application for suspension of sentence cannot order for suspension of sentence awarded by the learned trial Court without calling upon the person seeking suspension of sentence to deposit amount of compensation, if any, awarded by the learned court below. Solely with a view to mitigate the hardship of complainant, especially in proceedings under Section 138 of the Negotiable Instruments Act, Section 143 of the Act has been incorporated, whereby Courts can order accused to pay 20% of the cheque amount during the pendency of proceedings under Section 138 of the Act - Aforesaid provision of law has been incorporated with a view to provide interim relief to the complainant, who is unnecessarily compelled to approach the Court of law for realization of his/her own money. Similarly, the appeal is statutory right of a person and such right cannot be allowed to be defeated merely on account of nondeposit of compensation amount, if any, awarded by the learned trial Court. Hon ble Apex Court in case titled DILIP S DAHANUKAR VERSUS KOTAK MAHINDRA CO LTD ANR [ 2007 (4) TMI 667 - SUPREME COURT] has categorically held that power of Court to suspend the sentence with regard to realization of compensation is totally different from its power to issue direction for realization of fine. Though, in the aforesaid judgment Hon ble Apex Court has categorically held that Appellate Court while suspending the sentence, is entitled to put appellant on terms, but an order may not be passed which the appellant cannot comply with, resulting him being sent to the prison. Careful perusal of aforesaid exposition of law laid down by the Hon ble Apex Court, suggests that Appellate Court while suspending the sentence, if any, imposed by the trial Court though is not totally barred or estopped from directing the appellant to deposit the amount, but such amount should be reasonable - In the case at hand, while suspending the sentence imposed by the trial Court has ordered for deposit of 40% (₹ 1,16,000) of the compensation amount awarded by the learned trial Court, which is definitely on higher side. Petition allowed.

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• 2019 (12) TMI 100
  Levy of property tax - It is the case of the petitioners that inasmuch as their educational institutions are not housed in buildings owned by the Government or aided or functioning under the financial assistance from the Government, they are denied the benefit of the exemption granted under the Acts - whether the exemption provision under the Acts is discriminatory in its grant of exemption to only such buildings that are used for educational purposes and under the ownership of educational institutions owned by the Government or aided or functioning with the financial assistance from the Government? HELD THAT:- Applying the principles discernible therefrom to the facts in the instant cases, it can be seen that the tax concessions envisaged under the Acts are intended to provide a level playing field for Government/aided educational institutions on the one hand and the self-financing educational institutions on the other. Tax concessions have been granted to the former category, keeping in mind the role played by them in discharging the sovereign obligation of the State to provide education, despite the economic limitations faced by them. It is trite that Government and Government Aided Educational institutions are subjected to a different system of control when compared to Unaided Educational institutions that do not function under the restrictions imposed on the former category in respect of collection of fees and payment of salaries/wages to teaching and non-teaching staff. The classification brought about is between unequals, and when viewed against the objective of the provision granting exemption, which is to provide relief from the financial burden imposed through taxation, it cannot be said that the classification effected has no nexus with the object sought to be achieved by the legislature through the exemption provision. The challenge to the assessment orders, demand notices and revenue recovery notices would also have to be dismissed, there could be cases where assessees want to prefer statutory appeals against the quantification of their tax liability - the assessment orders, demand notices and revenue recovery notices impugned in these writ petitions are quashed only for the limited purpose of enabling the respondent Panchayats/Municipalities to issue fresh assessment orders and demand notices to the petitioners showing the basis of computation of tax and interest therein.

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• 2019 (12) TMI 99
  Appropriate forum for appeal - Whether the appeal against acquittal in prosecution for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, would lie under Section 378(4) of the Code of Criminal Procedure or would be as per proviso below Section 372 of the Code of Criminal Procedure? HELD THAT:- The right of appeal, being a statutory right, cannot be assumed unless expressly provided by the statute. The right of appeal is created by way of substantive provision in the statute. The Code of Criminal Procedure, though considered as a procedural law, it is a substantive law as far as right of appeal is concerned. For the purpose of trial of the offence under section 138 of the Act of 1881, as per Section 4(2) of the Code, the provisions in the Code are applicable. For the purpose of appeal against the order of conviction or the order of acquittal in a case instituted on private complaint, the remedy of appeal is already provided in the Code - Only on the basis of definition of 'victim' which came to be inserted by way of amendment in the year 2009 with avowed object in mind alongside the creation of right of appeal to the victims of crime, the same cannot be usurped for the purpose of offence under section 138 of the Act of 1881, unless expressly provided. The complainant of the offence under Section 138 of the Act of 1881, to whom the remedy of appeal against an order of acquittal to the High Court under Section 378(4) of the Code is already provided, cannot take recourse to proviso inserted to section 372 of the Code under the guise of the term 'victim' as used in the newly inserted proviso to section 372 of the Code. Here, the purpose for insertion of the said proviso was certainly not to provide additional remedy to the complainant in complaint cases under section 138 of the Act of 1881. In the case of SUBHASH CHAND VERSUS STATE (DELHI ADMINISTRATION). [ 2013 (1) TMI 943 - SUPREME COURT] , it has been held that once a case is instituted on a complaint and an order of acquittal is passed, whether the offence be bailable or non-bailable, cognizable or non-cognizable, the complainant can file an application under Section 378(4) of the Code of Criminal Procedure for Special Leave to Appeal against an order of acquittal of any kind only in the High Court. The appeal against acquittal in prosecution for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, would lie under Section 378(4) of the Code of Criminal Procedure.

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