TMI Tax Updates - e-Newsletter
February 19, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Failure to mention details of inter-State supplies made to unregistered persons in FORM GSTR-3B and GSTR-1 may attract penalty u/s 125

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• The input tax credit (ITC) is not admissible on the inward supplies for construction of the warehouse, ITC is blocked u/s 17(5)(d)

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• Classification of supply - construction and guaranteed lease - cannot be understood to be naturally bundled - it is a Mixed Supply

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Highlights / Catch Notes

• GST:

  Relief for tax payment made, as CGST and SGST instead of IGST, for supply of warehoused goods while being deposited in a customs bonded warehouse for the period July, 2017 to March, 2018
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• GST:

  Failure to mention Place of Supply in the tax Invoice, in compliance of rule 46(n) of the CGST Rules, 2017, in case of inter- State supply, may attract penalty u/s 122 and 125
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• GST:

  Failure to mention details of inter-State supplies made to unregistered persons in FORM GSTR-3B and FORM GSTR-1 may attract penalty u/s 125
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• GST:

  Input tax credit (ITC) - The warehouse being constructed is immovable property. The input tax credit is, therefore, not admissible on the inward supplies for construction of the said warehouse, as the credit of such tax is blocked under section 17(5)(d) of the GST Act.
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• GST:

  Supply of goods after printing the Syllabus decided by the SCERT - supply of goods is involved i.e. 'supply of specified printed educational books', which is the principal supply and accordingly we come to the considered conclusion that the said supply merits being treated as "printed books"
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• GST:

  Classification of goods - Sprayers made of Plastics - Sprayers are correctly classifiable under the HSN Code 84244100 - rate of tax is 18%
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• GST:

  Classification of goods - Broom Stick made of plastics - the correct classification of the Plastic Broom-Stick is under heading 96032900 and classifiable as “Others” - taxable @5%
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• GST:

  Place of supply - sourcing (on a worldwide basis)) of goods from India - export or not - Appellate authority dismissed the appeal Challenging the decision of the Advance ruling decision -
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• GST:

  Levy of GST - actionable claims or not - Even if it is admitted that there is a provisioning of service by the appellant to the end-customers, there cannot be any such service or actionable claim against the payback points not redeemed by them against anyone.
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• GST:

  Classification - the item cannot be called as part of “waste to energy plants/devices” in generalized manner, as it would depend upon in its actual use - this item supplied by the applicant is pollution control device classifiable under chapter heading 8421
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• GST:

  Classification of supply - construction and guaranteed lease - since both these services are capable of being provided independent of each other, these cannot be understood to be naturally bundled and supplied conjointly in the ordinary course of business. Therefore, the applicant has/is providing ‘Mixed Supply’
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• Income Tax:

  Prospective application of Black Money - the Act of 1961 does not impose a punishment of imprisonment while the Act of 2015 does. In such circumstances, it cannot be said that, the petitioner has been sought to be punished twice for the same offence.
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• Income Tax:

  Penalty u/s 271D and 271E - If loan in cash is taken once or twice, in exceptional exigencies, may be a ground for interference, but when the fact remains that a lender not even licensed was illegally giving loans only in cash and accepting repayment in cash cannot be a ground for condonation of regular transaction with such unauthorised lender.
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• Income Tax:

  Depreciation on POS terminals - assessee was entitled to the depreciation at 60% on the ground that the equipment was akin to a computer
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• Income Tax:

  Levy of penalty levied u/s 271(1)(c) - disallowance under section 40(a)(ia), does not amount to concealment of income - No penalty.
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• Income Tax:

  Deduction u/s 80IC and deduction u/s 80IB denied - Mere initiation of proceedings u/s 148 of the Act to reopen the assessment of the past year cannot be understood to mean that the ‘claim is withdrawn’.
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• Income Tax:

  Order u/s 254 (1) passed beyond the period of 90 days from the date of conclusions of its hearing - Since, in the present case, the order has been pronounced one day beyond 90 days prescribed under the Rules, we recall the order
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• Customs:

  The failure of the CESTAT to adjudicate the petitioners’ appeal, in the opinion of this Court, is inexplicable. - The CESTAT’s approach of ‘washing its hands’ of the duty cast upon is, therefore, deprecated in the strongest terms.
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• Customs:

  Valuation of imported goods - automobile motor parts - The reliance cannot be placed on the same contemporary price after such a long period.
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• PMLA:

  Attachment orders under PMLA - Two different enactments, i.e., the PMLA, 2002 and the I and B Code provide two different hierarchies of functionaries to decide the controversies that arise under the respective enactments. - one authority cannot interfere with the functions of the other authority under a different enactment.
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• Service Tax:

  CENVAT credit - input services - Banking company - The amount of 50% of the available credit in a month, required to be paid under Rule 6(3B) of CCR,2004 by the Appellants, cannot include the inadmissible credit of service tax paid on insurance premium paid to DICGC.
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• Service Tax:

  Works contract services provided to various departments of Govt. of Uttar Pradesh - When the legislation itself has legislated for the refund of Service Tax in terms of the provisions of section 102, the objections raised by Revenue cannot be appreciated.
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• Service Tax:

  Refund of service tax - export of services - Though whatever balance is being shown in the accounts of the assessee has to find mention in the ST-3 but due to the said documents being the basis of ST-3 as far as the amounts shown therein as balance is concerned, ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter.
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• Central Excise:

  Once the appeal filed by the Department is rejected, the action proposed by the Revenue on the refund application is negated. Hence, the payment of duties, in cash, subsequently, after the objection taken by the department, becomes refundable to the Respondent.
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• Central Excise:

  Clandestine removal - the alleged printouts were not from any computer but from standalone pendrive(s) fed into computer(s) in the office of the DGCEI which is palpably incorrect and susceptible to innumerable doubts - Demand set aside.
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• Central Excise:

  CENVAT credit - neutralization of credit - in case of exempted goods and clearance on payment of duty which is much more than the amount required in terms of Rule 6(3)(b), there is no question of further payment
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• Central Excise:

  CENVAT Credit - removal of inputs as such - input or not - once cenvat credit availed is reversed, it is to be considered as ab initio not availed - the assessee cannot be held to have availed cenvat credit irregularly in respect of inputs cleared as such.
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• VAT:

  C-Forms - in the absence of any statutory bar operating against issuance of Form-C to a dealer in respect of the purchases made during the period when he was registered on the ground that his registration is subsequently cancelled, it is not legally permissible for the respondents to deny issuance of C-Forms to him.
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• VAT:

  Interstate sale or not - deemed sales - there pre-existed works contracts between the assessee and the contractees and further the assessee had purchased the goods from outside the State of U.P., only to execute those pre-existing works contracts - Benefit of CST allowed.
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Articles

• RECENT CIRCULARS/PUBLIC NOTICE ISSUED BY ‘CESTAT’
• GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XX)

Notifications

• Customs

• 05/2019 - dated 16-2-2019 - Cus
  Seeks to insert tariff item 9806 00 00 in chapter 98 of the First schedule to Customs tariff act, 1975 to impose basic customs duty of 200% on all goods originating in or exported from Pakistan.

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• GST - States

• 38/1/2017-Fin(R&C)(94) - dated 31-1-2019 - Goa SGST
  Government of Goa appoints the 1st day of February, 2019, as the date on which the provisions of the Goa Goods and Services Tax (Amendment) Ordinance, 2018, except clause (ii) of section 8, section 17, section 18 and clause (i) of section 20, shall come into force.

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• 38/1/2017-Fin(R&C)(93) - dated 31-1-2019 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(33), dated the 23rd November, 2017

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• 38/1/2017-Fin(R&C)(92) - dated 31-1-2019 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(5)/2550, dated the 28th June, 2017

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• 38/1/2017-Fin(R&C)(91) - dated 31-1-2019 - Goa SGST
  Goa Goods and Services Tax (Amendment) Rules, 2019

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• 38/1/2017-Fin(R&C)(31/2018-Rate) - dated 31-1-2019 - Goa SGST
  Rescinds the Notification No. 38/1/2017-Fin(R&C)(8/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(89) - dated 24-1-2019 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(26)/3640 dated 02nd November 2017

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• Order No. 04/2018-State Tax - dated 31-12-2018 - Goa SGST
  Goa Goods and Services Tax (Fourth Removal of Difficulties) Order, 2018

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• Order No. 03/2018-State Tax - dated 31-12-2018 - Goa SGST
  Goa Goods and Services Tax (Third Removal of Difficulties) Order, 2018

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• Order No. 02/2018-State Tax - dated 31-12-2018 - Goa SGST
  Goa Goods and Services Tax (Second Removal of Difficulties) Order, 2018

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• CCT/26-2/2018-19/43/3283 - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. CCT/26-2/2018-19/37, dated 13th August, 2018

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• CCT/26-2/2018-19/42/3285 - dated 31-12-2018 - Goa SGST
  Amendment in Notification Nos. CCT/26-2/2017-18/12 dated 15th September, 2017 and CCT/26-2/2017-18/30 dated 26th March, 2018,

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• CCT/26-2/2018-19/41/3284 - dated 31-12-2018 - Goa SGST
  Amendment in Notification Nos. CCT/26-2/2017-18/3 dated 08th August, 2017 and CCT/26-2/2017-18/21 dated the 15th November, 2017

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• 38/1/2017-Fin(R&C)(88) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017- Fin(R&C)(38)/323, dated the 12th January, 2018

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• 38/1/2017-Fin(R&C)(87) - dated 31-12-2018 - Goa SGST
  waived for furnish the return in FORM GSTR-3B for the months of July, 2017 to September, 2018

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• 38/1/2017-Fin(R&C)(86) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017- Fin(R&C)(43)/433, dated 31st January, 2018

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• 38/1/2017-Fin(R&C)(85) - dated 31-12-2018 - Goa SGST
  Goa Goods and Services Tax (Fourteenth Amendment) Rules, 2018

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• 38/1/2017-Fin(R&C)(84) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017- Fin(R&C)(72), dated 21st September, 2018

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• 38/1/2017-Fin(R&C)(83) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(69), dated the 11th September, 2018

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• 38/1/2017-Fin(R&C)(82) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017- Fin(R&C)(65), dated the 6th August, 2018

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• 38/1/2017-Fin(R&C)(30/2018-Rate) - dated 31-12-2018 - Goa SGST
  Insert Explanation in the Notification No. 38/1/2017-Fin(R&C)(11/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(29/2018-Rate) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(28/2018-Rate) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C) (12/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(27/2018-Rate) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C) (11/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(26/2018-Rate) - dated 31-12-2018 - Goa SGST
  Exemption on supply of gold by nominated agency for export of jewellery

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• 38/1/2017-Fin(R&C)(24/2018-Rate) - dated 31-12-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(1/2017-Rate), dated the 30th June, 2017

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• Order No. 01/2018-State Tax - dated 17-12-2018 - Goa SGST
  Goa Goods and Services Tax (Removal of Difficulties) Order, 2018

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• ORDER No. 1/2019-State Tax - dated 13-2-2019 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax (Removal of Difficulties) Order, 2019

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• No. EXN-B(1)-3/2018. - dated 24-12-2018 - Himachal Pradesh SGST
  Appoint Sh. Sanjay Bhardwaj, Additional Commissioner of State Taxes and Excise (Grade-I) as Additional Commissioner (Appeals) for carrying out the purposes of section 107 of Himachal Pradesh Goods and Services Tax Act, 2017 (10 of 2017)

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• No. EXN-B(1)-3/2018 - dated 24-12-2018 - Himachal Pradesh SGST
  Governor of Himachal Pradesh, appoint Divisional Commissioner, Shimla as Commissioner (Appeals) for carrying out the purposes of section 107 of HPGST Act 2017

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• No. EXN-B(1)-3/2018 - dated 18-12-2018 - Himachal Pradesh SGST
  Governor of Himachal Pradesh, appoint Additional Commissioner of State Taxes and Excise (Grade-I)/ Additional Commissioner of State Taxes and Excise (Grade-II) as Additional Commissioner (Appeals) for carrying out the purposes of section 107 of HPGST Act 2017

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Circulars / Instructions / Orders

• GST - 89/08/2019 - dated 18-2-2019
  Mentioning details of inter-State supplies made to unregistered persons in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1
• GST - 90/09/2019 - dated 18-2-2019
  Compliance of rule 46(n) of the CGST Rules, 2017 while issuing invoices in case of inter- State supply
• GST - 91/10/2019 - dated 18-2-2019
  Clarification regarding tax payment made for supply of warehoused goods while being deposited in a customs bonded warehouse for the period July, 2017 to March, 2018

News

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

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• Finance Commission meets Representatives of ULBs of Telangana

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• Finance Commission meets Representative of PRIs of Telangana

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• India to use AI for good governance – Suresh Prabhu

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• High level NITI delegation visits Riyadh

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• Insolvency and Bankruptcy Board of India (IBBI) organizes the First of its kind two day Workshop on “Committee of Creditors: An Institution of Public Faith” for the benefit of Financial Creditors in Mumbai

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Case Laws:

• GST

• 2019 (2) TMI 1009
  Input tax credit - inward supplies for construction of the warehouse - section 17(5) (c) (d) of the GST Act - immovable property or not? - property of the warehouse being built - Held that:- The Vendor is not supplying the floor as a pre-fabricated removable structure. The civil work undertaken is meant not only for fixing the prefabricated structure built upon the floor but also for developing the floor space itself - Beneficial enjoyment of the floor so inalienably attached to the land is integral to the enjoyment of the warehouse. The Applicant is constructing a warehouse that is intended to be used as a permanent structure, and associated with beneficial enjoyment of the land on which it is being built. The technology used for the construction of the warehouse involves the application of pre-fabricated structures and also civil work for supporting the pre-fabricated structure and developing the floor of the warehouse. The warehouse cannot be conceived without beneficial enjoyment of the civil structure embedded on earth. The warehouse being constructed is, therefore, an immovable property, and the input tax credit is not admissible on the inward supplies for its construction, as the credit of such tax is blocked under section 17(5) (d) of the GST Act. The warehouse being constructed is immovable property. The input tax credit is, therefore, not admissible on the inward supplies for construction of the said warehouse, as the credit of such tax is blocked under section 17(5)(d) of the GST Act.

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• 2019 (2) TMI 1008
  Rate of tax - Classification of supply - supply of goods or services - books which the Chhattisgarh Text Book Corporation is supplying as per instruction of School Education Department CG [Loksikshan Sanchnalay] after printing the Syllabus decided by the SCERT - zero rated goods or not - books which the Chhattisgarh Text Book Corporation, is supplying as per instruction of School Education Department [Loksikshan Sanchnalay] after printing the Syllabus decided by the SCERT - books which the Chhattisgarh Text Book Corporation is supplying as per instruction of various agencies of School Education Department CG such as Rajiv Gandhi Siksha Mission/SCERT/office of District education officer etc. - books which the Chhattisgarh Text Book Corporation is supplying as per instruction of various agencies of School Education Department CG such as Rajiv Gandhi Siksha Mission/SCERT/office of District education officer etc. Held that:- The State Government has constituted the Chhattisgarh Text Book Corporation for the above mentioned task in a continuous manner according to which Chhattisgarh Text Book Corporation supplies the books owned and printed by it to School Education Department and Rajiv Gandhi Shiksha Mission every year whose syllabus is being approved by the experts. Chhattisgarh Text Book Corporation performs the works of publishing and distribution of books, consequent to getting it printed, as per Order No. F-10-12/2014/20, dated 13-4-2005 of School Education Department. The Chhattisgarh Text Book Corporation has been registered on 11-8-2004 as per Chhattisgarh Society Registration Act, 1973. It is the permanent job of Chhattisgarh Text Book Corporation to prepare specified educational books every year as per the syllabus as approved by the experts, get the books printed class-wise and to transport the same to specified schools. Separate amount is being determined for every work according to which the sale price of specified educational books is fixed. In the instant case in hand, ownership of printed books is never transferred to the School Education Department and Rajiv Gandhi Shiksha Mission etc. i.e. here the ownership of printed books at all times, lies with the Chhattisgarh Text Book Corporation and more-over the sale price is being computed with reference to 'sale of books' in applicant's books of accounts. Supply of books, printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply. It is to be noted that in case of composite supplies, taxability is determined by the principal supply - In the instant case the applicant, Chhattisgarh Text Book Corporation has submitted that it provides such paper to job workers (printers) for getting the content printed as provided by SCERT along with the patterns/ layout of the books which it specifically decides. In this case supply of goods is involved i.e. 'supply of specified printed educational books', which is the principal supply and accordingly we come to the considered conclusion that the said supply merits being treated as "printed books" as specified under Serial No. 119 ("Printed books, including Braille books") of Notification No. 2/2017-State Tax (Rate) No. F-10-43/2017CT/V /70, dated 28-6-2017.

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• 2019 (2) TMI 1007
  Admissibility of Advance Ruling application - Section 97(2)(a) of the CGST/WBGST Acts, 2017 - Applicant submits that the question raised in the Application has neither been decided by nor is pending before any authority under any provisions of the GST Act - Held that:- 1st proviso to Section 98(2) prohibits this Authority from admitting any application where the question raised is already pending or decided in any proceedings in the case of the applicant under any provisions of the GST Act. It does not distinguish between stages or nature of the proceedings. Any action lawfully taken under any provisions of the GST Act is, therefore, to be construed as proceedings under the Act. It appears from records that the Application was filed online on 22-11-2018, whereas, as the above central authority submits, the proceedings under Section 71 had been initiated on 31-7-2018. The Applicant did not dispute that officials from the concerned authority had visited his places in connection with the investigation, and its subject matter was the same question on which he was seeking a ruling from this Authority. It is amply clear from the above discussion that proceedings under the GST Act were pending against the Applicant on the date of hearing under Section 98(2), concerning the same question on which he was seeking advance ruling - application cannot be admitted.

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• 2019 (2) TMI 1006
  Classification of goods - Broom Stick made of plastics - Sprayers made of Plastics - applicable rate of tax - Held that:- Broom stick is a cleaning tool consisting of usually stiff fibres (made of materials such as plastic) attached to, and roughly parallel to, a cylindrical handle, The broomstick is thus a variety of brush with a long handle. It is commonly used in combination with a dustpan for cleaning floors etc. - it is very much clear from the reading of the main heading that the major heading for the classification of the plastics broom-stick is 9603. Since the product in question i.e. Broom-Sticks is made from plastics, hence, it is very much clear that it should be classified as Brooms other than brooms consisting of twigs or other vegetable materials bound together , with or without handle. Thus brooms made from plastics are other than brooms classifiable under heading 96031000 - the correct classification of the Plastic Broom-Stick is under heading 96032900 and classifiable as Others - the product Plastics Broom-Stick is eligible for concessional rate of tax vide Notification No. 1/2017-CT(rate) dtd 28.06.2017 i.e. 5% IGST or 2.5% CGST + 2.5 UTGST. Classification of the product - Sprayers - Held that:- Sprayer is a device used to spray a liquid. The sprayers are commonly used for projection of water, weed killers, crop performance materials, pest maintenance chemicals, as well as manufacturing and production line ingredients. In agriculture, a sprayer is a piece of equipment that is used to apply herbicides, pesticides, and fertilizers on agricultural crops. Hence, we are of the view that Sprayers are different from irrigation systems - the product of the applicant is a Portable Sprayers . We find that the product Portable Sprayers under the HSN Code 84244100 is available. Hence, Sprayers are correctly classifiable under the HSN Code 84244100. The correct rate of GST for the product in question is (9% CGST+9% UTGST) 18%.

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• 2019 (2) TMI 1005
  Place of supply - sourcing (on a worldwide basis)) of goods from India - export or not - Challenge to Advance ruling decision - Non-speaking order - It is pleaded that the Ld. AAR has not applied mind while passing the impugned order and the order is non-speaking. Held that:- It is observed that the appellant is side tracking the facts by submitting that the appellant is not an agent or broker, as no such question was asked before the AAR - The Id. AAR has answered all the Questions raised, in term of relevant provisions of the GST Act and by giving detailed reasons. The plea of the appellant, that the AAR has given SAC description alongwith tax rate which was not asked for, does not hold water because AAR has clarified each and every aspect raised in the application for Advance Ruling by giving self-explanatory findings. Thus the arguments raised by the appellant are untenable. The appellant has himself admitted that he has been providing services to the Esprit Germany in terms of the contract between Esprit Germany and Esprit Hong Kong and for that purpose an agreement was made between Esprit Hong Kong and Esprit India (appellant). The appellant is providing the services of market research and assisting in trade mark protection, identification of supplies and inspection and quality control of the goods/services. Therefore, we find that the AAR has rightly identified the SAC description with rate of tax - After perusing the provisions of Section 97(2) and going through the findings of AAR, we are of the view that Question 2 and 3, raised by the applicant, have rightly been declined by the AAR. There is no hesitation in dismissing the appeal - the Advance ruling decision does not suffer from any infirmity or illegality and the same is upheld.

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• 2019 (2) TMI 1004
  Levy of GST - actionable claims or not - amount of issuance fee retained/forfeited by LSRPL - reward point based loyalty programme - challenge to Advance ruling decision - Held that:- It is very clear that the loyalty programme is a programme devised with the aim of generating and maintaining customer loyalty towards the partners entering into agreement with the appellants for the running and managing the overall scheme - It is not the appellant s case that consideration for maintaining and facilitating encashment of payback points is flowing from the end customers. In fact it is admitted position that the amount received upfront from the Partners in respect of the generated payback points is booked as revenue in their account. The consideration for total payback points including those becoming unredeemed ones after validity period, has flowed from the Partners - this consideration has two components - fixed and variable. The fixed component is what has been received by the appellants by the name of Management Fee and the variable component is the amount booked as revenue in respect of the unredeemed leftover payback points. Appellant s contention that AAR has admitted that payback points are in the nature of actionable claim and therefore any consideration is out of the provision of GST is grossly misplaced. In fact Appellant is in possession of points and revenue at their end. Whenever customers claim/ redeem the points it is their liability to honour the claim of Customers. However when there can be no claims by the end-customers after the expiry of validity period, these are no more actionable claims. These stand lapsed at the end of the Customers and Appellant treat the redeemed money as revenue which can never be described as any claim against anyone. The consideration for the unredeemed payback points has already flowed from the Partners. After validity period the same has become appellant s revenue by virtue of the contract for servicing of the loyalty scheme including the points ibid, executed between the Partners and the appellants. Even if it is admitted that there is a provisioning of service by the appellant to the end-customers, there cannot be any such service or actionable claim against the payback points not redeemed by them against anyone.

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• 2019 (2) TMI 1003
  Classification of supply - applicant is supplying WTE PLANT BOILER'S FLUE GAS CLEANING SYSTEM (to the customer's address at Andhra Pradesh) - whether classified under HSN Code 84051090? - rate of GST - Held that:- The impugned product is classifiable under heading 8421 of the first schedule to the Customs Tariff Act, 1975, being filtering or purifying machinery and apparatus for gases. Rate of GST - Held that:- From the working of impugned device, it can be inferred that this device can also be used as pollution control equipment in other power plants as well, which may be based on other fuel, such as fossil fuel, etc. Thus, this impugned item cannot be called as part of waste to energy plants/devices in generalized manner, as it would depend upon in its actual use - it emerges that the impugned item supplied by the applicant is pollution control device classifiable under chapter heading 8421 of the first schedule to the Customs Tariff Act, 1975 and when the same is supplied for being used in waste to energy plants/devices the same would be covered by Sr. No. 234 of schedule I of Notification No.01/2017-Central Tax (Rate) dt.28.06.2017 Notification No.35/ST-2 dt.30.06.2017, chargeable to CGST @ 2.5% and SGST @ 2.5%.

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• 2019 (2) TMI 1002
  Levy of GST - Classification of supply - construction and guaranteed lease - Private Entrepreneurs Godowns built under the PEG-2008 scheme of the FCI and leased out to the Nodal Agency (UPSWC) on Lease and services basis for the storage of FCl s food grain stocks (Wheat) - Mixed Supply - Held that:- Under the scheme for construction of godowns for FCl-storage requirement through private entrepreneurs2008 (known as PEG-2008 scheme), the Haryana State Co-operative Supply and Marketing Federation Ltd. (Hafed) was notified as Nodal Agency for construction of godowns in the State of Haryana - The Haryana State Cooperative Supply and Marketing Federation Ltd. (HAFED) was notified as nodal agency for construction of godowns in the State of Haryana under the said PEG-2008 Scheme of the Central Government/ FCI. In case of Lease only basis, godowns have been built by the Private Investor and have been leased out to the Nodal Agency which manages storage, preservation and warehousing of the stocks of the FCI stored therein - In case of Lease and Services basis, godowns have been built by the Private Investor and have been leased out to the Nodal Agency and the storage, preservation and warehousing of the stocks of the FCI stored therein is managed by the Private Investor under the supervision of the Nodal Agency. The applicant s case, as per its agreement with the Nodal Agency, falls under the PEG scheme of Lease and services basis type. As per the scheme of classification of services appended to notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 and its corresponding State tax notification no. 46/ST-2, dated 30.06.2017 the service code 997212 is for renting or leasing services involving own or leased non-residential property. Such services attract 18% GST as per Sr. no. 16 of notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 and its corresponding State tax notification no. 46/ST-2, dated 30.06.2017 - Since, as per the copy of contract/agreement with Hafed, the applicant is providing both the services, i.e., the support services in relation to agricultural produce as well as Real Estate Services in terms of SAC 997212, and since both these services are capable of being provided independent of each other, these cannot be understood to be naturally bundled and supplied conjointly in the ordinary course of business. Therefore, the applicant has/is providing Mixed Supply as per section 2 (74) of the CGST/HGST Act, 2017 and attract tax rate of that particular supply which attracts the highest rate of tax in terms of section 8 (b) of the Act ibid.

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• Income Tax

• 2019 (2) TMI 1001
  Prospective application of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with effect from April 1, 2016 - voluntary disclosure under the Act of 2015. - penalty under Section 271(1)(b) and 271(1)(c) - foreign bank accounts and the amount lying thereat were taken into consideration by the Assessing Officer - Held that:- The petitioner had an opportunity to make the disclosure with regard thereto while submitting his return in the proceedings under search and seizure. The petitioner also had an opportunity to disclose such assets before the Settlement Commission. The petitioner did not avail of any of the two opportunities. Those opportunities were subsequent to the Act of 2015 coming into effect. Therefore, the petitioner failed to furnish in his return of income, an information about an asset located outside India. It attracts the provisions of Section 50 of the Act of 2015. He can be proceeded against under the Act of 2015. There are sufficient materials on record for proceeding against the petitioner under the Act of 2015. Section 55 of the Act of 2015 provides the persons at whose instance, the prosecution will be made for an offence under Section 49 to Section 53 both inclusive. The petitioner was required to file a return after the search and seizure proceedings. It did not do so. It also did not make true and proper disclosure in the settlement proceedings. It cannot be said that, a retrospective effect has been sought to be given to the Act of 2015 so far as the petitioner is concerned. The failure of the petitioner to file the requisite return was subsequent to the Act of 2015 coming into effect. Anwar Ali (1970 (4) TMI 1 - SUPREME COURT) has considered the issue as to whether the Income Tax Authorities were justified in imposing a penalty on the assessee under Section 28(1)(c) of the Act of 1961 in the facts of that case. It has held in such context that, contraventions of Section 28 of the Act of 1961 may give rise both a criminal offence as well as a statutory offence. However, if a penalty has been imposed under Section 28, no prosecution before the Criminal Court shall again lie in respect of the same offence. In the present case, the petitioner is charged with violating the provisions of Section 51 of the Act of 2015 which is different to that of any provisions of the Act of 1961. Where an act or an omission constitutes an offence under two enactments, the offender may be prosecuted and punished under either or both enactments but shall not be liable to be punished twice for the same offence. In the facts of the present case, the Act of 1961 does not impose a punishment of imprisonment while the Act of 2015 does. In such circumstances, it cannot be said that, the petitioner has been sought to be punished twice for the same offence. W.P. dismissed.

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• 2019 (2) TMI 1000
  Penalty u/s 271D and 271E - Deposit of the cash by the Director into the bank account of the assessee - running account maintained between the promoter/director and the Appellant company in the context of the transactions covered in section 269SS - Held that:- Deposit of the cash by the Director received from Mr.J.D. into the bank account of the assessee on the same day and those amounts, being utilized for making several payments including salaries, apart from that the Director withdrawing money from the assessee's bank account and remitting to the Financier by cash can never be taken to be a bona fide transaction. It is not a solitary instance, as the same type of transactions have been carried on by the assessee and the Director from the assessment year 2012-13. Most of the cases, which were relied on by the assessee are of either individual or rare transactions of the assessee. Therefore, we are of the clear view that there is absolutely no genuinity or bonafideness in the transaction done by the assessee and it will not amount to reasonable cause for the purpose of exercise or discretion by the Assessing Officer under Section 273B of the Act. Alternate plea raised by Mr.A.S.Sriraman stating that the penalty should be restricted to the peak of the cash deposits, we find that such a plea did not find favour with the Tribunal and in the light of the reasons assigned by us in the preceding paragraphs, we reject such a plea raised by the assessee. The Tribunal while considering the correctness of levy of penalty under Section 271E of the Act found that it has been admitted that cash has been deposited into the bank account of the assessee, the funds having been routed through the bank accounts, why the same was withdrawn in cash for repayment to the Director and subsequently, to Mr.J.D. This transaction remained unexplained. Further, the Tribunal pointed out that perusal of the assessment order of the Financier, Mr.J.D., gives a picture that moneys were the unaccounted cash of Mr.J.D., and this cash was laundered through the accounts of the two assessee's herein. Thus, the Tribunal concluded that the assessees have been used as custodian of the unaccounted cash of Mr.J.D. by depositing it in the bank accounts of the assessee by their Director, Dr.A.M. The assessee was not able to give any explanation to substantiate with evidence for repayment of the deposits to Dr.A.M., Director in cash. Examining the transaction, the Tribunal noted that as and when Mr.J.D. required cash, which appears to have been withdrawn by Dr.A.M., Director from the bank accounts of the assessee and paid to Mr.J.D. Thus, after considering all the factual aspects, the Tribunal confirmed the levy of penalty under Section 271E. The assessee's have not been able to convince us to take a different view. If loan in cash is taken once or twice, in exceptional exigencies, may be a ground for interference, but when the fact remains that a lender not even licensed was illegally giving loans only in cash and accepting repayment in cash cannot be a ground for condonation of regular transaction with such unauthorised lender. Therefore, we find the findings and observations in M.Sougoumarin [2018 (5) TMI 1731 - MADRAS HIGH COURT] to aid the case of the Revenue. - Decided against assessee.

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• 2019 (2) TMI 999
  Reopening of assessment - assessment beyond a period of four years from the end of the relevant assessment year - claim of deduction under section 80IB - change of opinion - Held that:- Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 4th February, 2019 By way of ad-interim relief, the respondent is permitted to proceed further pursuant to the impugned notice; he, however, shall not pass the final order without the permission of this court. Direct Service is permitted today.

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• 2019 (2) TMI 998
  Stay petition - pre-condition of the petitioner's depositing 20% of the disputed tax to have the coercive proceedings stayed until the appellate authority could consider the Ext.P5 - Held that:- Ext.P6 order refers to the Ext.P7 office memorandum as the 1st respondent's source of power to order a stay on a pre-condition. On going through the Ext.P7, I reckon that that is an office memorandum that applies to the appeals pending before the CAT (Appeals). So the 1st respondent cannot take recourse to the Ext.P7. Then essentially, he should have been conferred the power under the provisions of the statute, to stay proceeds with or without any pre-condition. The Department could not bring to my notice any such power being enjoyed by the 1st respondent. There shall be a stay of all further proceedings until the Tribunal decides the petitioner's appeal, subject to the condition that the petitioner remits 20% of 430,05,99,970, that is 86,01,19,994, in two months from today.

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• 2019 (2) TMI 997
  Granting interim stay subject to satisfaction of 20% of the liability fixed as per the order under challenge - Held that:- This Court does not find anything wrong or objectionable with regard to the course pursued by the learned single Judge. No tenable ground is brought out to call for interference of the Division Bench with regard to the discretion exercised by the learned single Judge as above. In the said circumstance, interference is declined. The appeal is dismissed. As the appellant however seeks for a short time to comply with the condition imposed as per Ext.P4. Since the time has already run out, we find it appropriate to grant one more week's time to comply with the direction in Ext.P4. If the condition is satisfied within one week from the date of receipt of a certified copy of this judgment, the appellant will continue to enjoy the benefit of Ext.P4 order throughout the pendency of the appeal.

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• 2019 (2) TMI 996
  Reopening of assessment - reasons to believe - material evidence could not be discovered by the Assessing Officer and could be discovered with due diligence attracting the explanation to the provisions of section 141 - Held that:- From the reasons recorded, it is evident that no fresh material has been found by the Assessing Officer on the basis of which the assessment is sought to be reopened, and that upon verification of the very record that the petitioner has produced during the course of scrutiny assessment, the assessment is sought to be reopened. Nothing specific has been pointed out to show as to what was the failure on the part of the petitioner to disclose fully and truly all materials facts. In the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration the first proviso to section 147 would be attracted and consequently, the assumption of jurisdiction on the part of the Assessing Officer under section 147 by issuing the impugned notice under section 148 of the Act is without authority of law. The impugned notice under section 148 of the Act, therefore, cannot be sustained. - Decided in favour of assessee.

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• 2019 (2) TMI 995
  Grant of deduction u/s 80IB - conditions for qualifying as a small scale industry to be fulfilled in the initial year alone and not on year to year basis for grant of deduction under Section 80IB - Held that:- At the request of the parties, the appeal itself is being disposed of finally at this stage. It is agreed position between the parties that the aforesaid question stands concluded against the Respondent-Assessee and in favour of the Appellant-Revenue by the decision of the Supreme Court in Deputy Commissioner of Income Tax Vs. ACE Multi Axes Systems [2017 (12) TMI 372 - SUPREME COURT OF INDIA] - Decided in favour of the Revenue.

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• 2019 (2) TMI 994
  Penalty u/s 271(1)(c) - Held that:- It is an admitted fact that the Tribunal has restored the quantum appeal to the file of the Assessing Officer for fresh adjudication. Therefore, the very basis on which penalty was levied does not survive. Therefore, penalty levied by the Assessing Officer and sustained by the CIT(A) is liable to be cancelled. We accordingly direct the Assessing Officer to cancel the penalty so levied u/s 271 (1) (c) of the IT Act. However, the Assessing Officer is at liberty to initiate fresh penalty proceedings after the order is passed by him in the light of the direction of the Tribunal.

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• 2019 (2) TMI 993
  Nature of expenditure - expenditure incurred by the assessee on acquiring licenses to use the software - whether it did not confer any enduring benefit on the assessee and has to be allowed as deduction under section 37 (1)? - Held that:- Hon’ble jurisdictional High Court in the cases of Oriental Bank Of Commerce [2018 (4) TMI 1534 - DELHI HIGH COURT] and ACL Wireless Ltd [2013 (12) TMI 1160 - DELHI HIGH COURT] a coordinate Bench of this Tribunal reached a conclusion that the expenditure incurred by the assessee on acquiring licenses to use the software which did not confer any enduring benefit on the assessee and has to be allowed as deduction under section 37 (1) of the Act. It is not the case of the revenue that there is any change of facts and circumstances involved in these two assessment years. There is no reason as to why we should not follow this line of decisions which are applicable to the facts of the case on hand. - Decided in favour of assessee. Disallowance on account of advertisement and marketing expenses - nature of expenditure - Held that:- Since the genuineness of the expenditure is not in dispute and the dispute is only regarding capital or revenue expenditure in nature decided the issue in favour of the assessee holding that the expenditure incurred by the assessee on glow sign boards and a neon sign boards is revenue in nature and allowable as deduction under section 37 (1) of the Act. Depreciation on POS terminals - Assessee claimed depreciation on POS terminals at 60% by treating the same as part of block of assets “computers” whereas the learned assessing officer treated the same as part of Plant and Machinery block and allowed depreciation at 15% - Held that:- As in assessee's own case Tribunal followed the decision in the case of Connaught Plaza restaurants [2014 (9) TMI 1105 - ITAT DELHI] wherein the issue of higher rate of depreciation on POS terminals was considered and the decision of the Tribunal granting 60% depreciation thereon was upheld. In the said decision Hon’ble jurisdictional High Court noticing that the CIT(A) in assessee’s own case for the assessment year 2008-09 held that the assessee was entitled to the depreciation at 60% on the ground that the equipment was akin to a computer and such a finding was concurred by the ITAT. Disallowance of depreciation on UPS - whether depreciation could be allowed at 60% as claimed by the assessee treating it as the computer periphery or at 15% as restricted by the learned assessing officer by treating it as falling within Plant and Machinery block - Held that:- DR placed reliance on the decision in the case of Nestlé India Limited vs. DCIT [2007 (4) TMI 299 - ITAT DELHI-F] wherein the Tribunal held that the depreciation on UPS is not to be allowed at 60%. However subsequently there are many decisions on this aspect and more particularly the Hon’ble Delhi High Court in the case of CIT vs. BSES Yamuna Power Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] held that UPS forms part of the computer periphery and depreciation at a 60% is allowable. In view of this settled position by the said judgement, we do not find any merits in the contention of the revenue. Disallowance u/s 14A - Held that:- In view of the decisions of the jurisdictional High Court in the cases of Ld. PCIT vs. McDonalds India Ltd [2018 (11) TMI 1057 - DELHI HIGH COURT], Cheminvest Ltd vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT) and Ld. PCIT vs.IL & FS energy development company Ltd ( [2017 (8) TMI 732 - DELHI HIGH COURT] in the absence of any exempt income earned by the assessee in the financial year relevant to the concerned assessment year, no disallowance could be made under section 14 A of the Act. Issue is no longer res Integra and well settled by the aforesaid judgements

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• 2019 (2) TMI 992
  Stay of recovery of demand - comprising of tax and interest - Held that:- As perused the orders of lower authorities and the stay petitions filed by the assessee. Contention of the assessee is that if downward adjustment was done on the international transactions alone considered, the effect thereof would be ₹ 15,61,77,887/- only against the sum of ₹ 25,42,23,046/- considered by the AO. Though assessee may have a prima facie case, it has not been able to demonstrate any grave financial difficulties except for pleading that it is running in a loss. Considering the facts and circumstances of the case, we are of the opinion that if the assessee effects a payment of ₹ 90,00,000/- on or before first March, 2019, balance of the demand can be kept in abeyance for a period of six months from the date of this order or date of pronouncement of the order in the appeal whichever falls earlier.- Stay petition filed by the assessee is partly allowed.

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• 2019 (2) TMI 991
  Addition u/s. 68 - unexplained credits in the form of share capital/share premium during the year - assessee had discharged the onus of proving the identity and creditworthiness of the share subscribers and the genuineness of the subscription - Held that:- Assessee-company received share application money with huge share premium from corporate entities, merely because said amount was received through banking channel, AO was not justified in accepting said transactions as genuine without making proper enquiries and, therefore, impugned revisional order passed by Commissioner setting aside assessment was to be upheld. Regarding the investment made by Hi-Fi Infotech, AR has contented that it is a group company having three companies as share holders, namely Geemad Promoters Pvt. Ltd., Hightech Valuation Consultant and M/s. Wizard Developers Pvt. Ltd. and the fund received as share capital from these three companies by Hi Fi Infotech was invested into assessee company. The investment made in M/s. Hi-Fi Infotech has been accepted by the Assessing Officer of that company and therefore, there is no valid reason to doubt the investment made by M/s. Hi-Fi Infotech into the assessee company. Assessee has produced copy of order passed u/s. 143(3) in the case of this investor company, which was also stated to have been submitted before the AO. In presence of these facts, once the investment in the said company stands accepted by the Revenue authorities, it is not justified to doubt the investment made by the same company into the assessee company on the basis of suspicion and presumption of bogus share capital. The contentions of the assessee could not be controverted on behalf of the Revenue. We, therefore, are of the opinion, that the CIT(A) has rightly deleted the addition made u/s. 68 with respect to this company. - Decided against revenue

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• 2019 (2) TMI 990
  Deemed dividend addition u/s 2(22)(e) - addition made towards loan u/s 2(22)(e) as the shareholders of the assessee company holding more than 20% shareholding are the major shareholder of M/s Shivsmruti Investment & Services Pvt. Ltd. - Held that:- In this case, there is no dispute with regard to the fact that as on date of loan, the company i.e. M/s Shivsmruti Investment & Services Pvt. Ltd. is having reserves and surplus in excess of loans and advances given to the assessee company. Admittedly, the assessee is not the beneficial ownership in the lending company, but two common shareholders are owned more than 40% equity shares in the above company. When the assessee is neither beneficial nor registered in lending company, then loans and advances received from the said company cannot be brought to tax within the ambit of provisions of section 2(22)(e) of the Act. This legal proposition has been laid down in the case of CIT vs Impact Containers Pvt. Ltd. [2014 (9) TMI 88 - BOMBAY HIGH COURT] held that when the recipient of the loan was not a shareholder in any of the entities which have advanced loans and advance, then the addition is required to be deleted . As assessee was neither the beneficial nor the registered shareholder of the company, the amount so received is not liable to be taxed as deemed dividend. No error in the reasons recorded by the Ld. CIT(A), while deleting the addition towards the deemed dividend u/s 2(22)(e) of the Act. Hence, we are inclined to uphold the order of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. - Decided in favour of assessee.

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• 2019 (2) TMI 989
  Exemption u/s 11 - Claim of the assessee for carry forward of the said deficit - Held that:- The question no.(ii) as proposed does not give rise to any substantial question of law as it stands concluded by the decision of this Court in M/s. Gem & Jewellery Exports Promotion Council [2011 (2) TMI 1511 - BOMBAY HIGH COURT] as well as CIT v/s. Institute of Banking Personnel Services [2003 (7) TMI 52 - BOMBAY HIGH COURT]. Also see COMMISSIONER OF INCOME TAX (EXEMPTION) NEW DELHI VERSUS SUBROS EDUCATIONAL SOCIETY [2018 (4) TMI 1622 - SUPREME COURT OF INDIA] - decided against revenue

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• 2019 (2) TMI 988
  Levy of penalty levied u/s 271(1)(c) - disallowance under section 40(a)(ia) - unpaid VAT and service tax liability - unexplained cash credit under section 68 - Held that:- AO has made addition on the basis of facts as disclosed by the assessee in the return of income and during the course of assessment proceedings. Assessee has furnished all relevant facts; therefore, the penalty cannot be levied merely because that it was not acceptable to the AO. Where the explanation is bonafide and all the facts relating to the same have been disclosed, penalty is not leviable. In this case, the assessee has offered explanation during the course of assessment proceedings itself that there was no requirement for tax deduction and the assessee has not claimed the liability of service tax and MVAT as expenditure in the Profit & Loss Account therefore, disallowance under section 43B are not called for. The assessee has given the details that cash deposits were out of cash withdrawals made before two to fifteen days prior to cash deposits in bank account. However, even after making addition there was still income computed was Nil on account of set-off of brought forward business loss of earlier years. We find that payment of ₹ 51,738 made to M/s. Atharva Landscape included ₹ 3,738 for material and ₹ 48,000 for labour charges, hence, TDS was not required to be made. Similarly, payment of ₹ 32,700 made to M/s. Nirman Projects as consultancy charges, this amount included reimbursement expenses for travelling. Total payment of consultancy charges is at ₹ 29,700 and travelling charges at ₹ 2,700, hence, there was no requirement of deduction of TDS However; the AO has disallowed the same under section 40(a)(ia) of the Act. Even disallowance under section 40(a)(ia), does not amount to concealment of income as held by the Co-ordinate Bench of tribunal in the case of ACIT v. M/s. Medercity Online Pvt. Ltd. [2011 (5) TMI 977 - ITAT HYDERABAD] wherein it was held that where accounts of the assessee are audited and explanation has been offered relating to disallowance under section 40(a)(ia) of the Act, no penalty can be levied under section 271(1)(c) of the Act. Similarly, the assessee has not claimed the service tax and MVAT as expenses and delay in deposit with government account was not deliberate therefore, there is no question of any disallowance under section 43B of the Act. However, the AO has not accepted this explanation. Though provisions of section 43B is not applicable to service tax as held in Pharma Search v. ACIT [2012 (5) TMI 90 - ITAT MUMBAI]. Therefore, there was no question of any concealment of income or furnishing of inaccurate particulars of income. With regard cash deposits, we find that the AO has disbelieved this contention of the assessee by observing that there is gap between cash withdrawals and cash deposits and made addition of the same. However, this cannot be ground for addition as held in the case of Gordhan V. ITO [2015 (10) TMI 2479 - ITAT DELHI] wherein it was held that no addition can be made merely because there was time gap between cash withdrawals and cash re-deposits. Similarly, in the case of Jasbir Singh Saini v. ITO [2015 (7) TMI 1151 - ITAT CHANDIGARH] it was held that where in quantum appeal tribunal has accepted assessee`s explanation in respect of part of deposit and partly confirmed addition stating that explanation given by the assessee which was not convincing, it could not be said that the assessee has concealed the his income or furnished inaccurate particulars of income warranting of levy of penalty under section 271(1)(c). Non-filing of appeal against quantum addition does not mean that the assessee has concealed income of furnished inaccurate particulars of income. Just because Appellant’s explanation was not found acceptable by the AO, it does not follow that that the Appellant was unable to substantiate his explanation by providing various evidences and judicial opinions. Explanation 1 to section 271(1)(c) of the Act does not therefore cover the case of the Assessee. Based on the above facts of the case; it can be held that the Assessee had made all the necessary disclosures on a bonafide belief, which is not agreeable to the AO, it will not automatically lead to a case for penalty under section 271(1)(c) of the IT Act, 1961. - Decided in favour of assessee.

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• 2019 (2) TMI 987
  Revision u/s 263 - addition u/s 68 - lack of enquiry - Held that:- The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the Revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. An order of assessment passed by the ITO without making necessary enquiries on certain important points connected with the assessment would be erroneous and prejudicial to the interests of the Revenue When the ITO is expected to make an enquiry of a particular item of income and he does not make an enquiry as expected, that would be a ground for the CIT to interfere with the order passed by the ITO since such an order passed by the ITO is erroneous and prejudicial to the interests of Revenue. Where the ITO had made enquiries in regard to the nature of the credit received by the assessee who had given detailed explanation in that regard by a letter in writing and all these are part of the record of the case and the claim was allowed by the ITO on being satisfied with the explanation of the assessee such decision of the ITO cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. We are of the considered view that the assessment passed by the AO is neither erroneous nor prejudicial to the interest of the revenue. Hence, we set aside the order passed by the PCIT and restore the assessment order passed by the AO u/s 143(3) - Decided in favour of assessee.

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• 2019 (2) TMI 986
  Discontinuation of Business activity - temporary suspension and/or lull in the business of the assessee - disallowance of Expenditure claimed as deduction u/s 37(1) and the depreciation claimed u/s 32 - Held that:- As evident from the documents placed on record including submissions made by the assessee that there was temporary lull in the business of the assessee and it was not a complete cessation of business activity fact of which was not considered by the authorities below in its proper prospective. AO disallowed the expenses incurred by the assessee for discontinuation of its business which deserves to be allowed; in fact the profit and loss of the subsequent years shows that there were considerable materials consumed by the assessee company in the said trading of cotton business. The gross receipt of the assessee became high during the subsequent years which establishes the fact of there being temporary lull in the business activity of the assessee during the year under consideration.The reason which was shown by the assessee while replying the show-cause issued by the AO for such lull in the business seems to be justified which was again not attended by the Learned CIT(A). There was a temporary suspension and/or lull in the business of the assessee and thus the assessee is entitled to the claim of deduction u/s 37(1) of the Act, which was incurred by the assessee as narrated herein before as also the depreciation u/s 32 of the Act. - Decided in favour of assessee.

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• 2019 (2) TMI 985
  Disallowance u/s 14A read with Rule 8D of the Rules - AR argued that the investments made by the assessee in subsidiary company are to be considered as strategic investment and hence the same should be kept outside the ambit of computation mechanism provided in Rule 8D of the Rules - Held that:- We find this aspect has been settled recently in the case of Maxopp Investments against the assessee [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. However, at the outset, we find that the assessee had earned exempt income in the form of dividend only to the extent of ₹ 674.40/-. Hence the disallowance u/s 14A of the Act could be restricted only to the extent of dividend income. AO to restrict the disallowance u/s 14A to ₹ 674/- in the facts and circumstances of the instant case. Accordingly, ground no. 1(b) raised by the assessee is allowed for statistical purposes. TDS u/s 194H - Disallowance u/s 40a(ia) in respect of credit card swiping charges paid to the bank treating the same as commission - Held that:- The monies paid by the assessee to the bank are nothing in the form of bank charges and similar to bank rendering services to the assessee for opening letters of credit, bill discounting, issuing DDs etc.. Merely because the bank collects the money from customer for providing credit card services and retains its charges and passes on net amount to the assessee, it cannot automatically fall within the ambit of the term ‘commission’ within the meaning of section 194H of the Act. AR has informed that the similar disallowance made in assessment year 2010-11 in assessee’s own case was deleted by the ld. CIT(A) against which the revenue did not prefer any appeal before this Tribunal. He also argued that no such disallowance was made by the AO in subsequent years. These facts are not controverted by the revenue before us. Hence we direct the ld. AO to delete the disallowance made u/s 40a(ia). Addition on account of interest income as per ITS details - Held that:- AR having reiterated the submissions made before the lower authorities prayed before us that let this matter be examined by the ld. AO as to whether any refund at all was granted to the assessee for assessment year 2009-10 on 24.02.2011 or adjusted against any other demands thereon. The ld. DR fairly agreed to these proposals. Accordingly, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the AO for de novo adjudication as per law. Needless to mention that the assessee be given reasonable opportunity of being heard in this regard. The ld. AO is also directed to dispose off with cogent evidences , the objections, if any, filed by the assessee in this regard. Ground raised by the assessee is allowed for statistical purposes.

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• 2019 (2) TMI 984
  Addition u/s 68 - unexplained cash deposits in Bank Account - Held that:- From the assessment order it is discerned that assessee is having source of her income from (i) cows, (ii) buffaloes, (iii) milk and milk products and (iv) sweet shop. The sweet shop income assessee has already offered in her regular return of income. So the source of deposit in the bank accounts must be inferred to have been from the aforesaid sources of income other than from sweet shop. Taking into consideration the overall facts and circumstances of the case, we are of the opinion that in order to find out the undisclosed income of the assessee the AO has to take into consideration the total deposits in the bank account and thereafter, reduce the turnover disclosed by the assessee from sweet shop, which will give the undisclosed turnover of the assessee. The entire undisclosed turnover cannot be the income of the assessee. Necessarily the undisclosed income that shall form part of the total income would be so taken after defraying all expenses that are incurred for earning such income by the assessee, therefore, taking into consideration the overall facts and circumstances of this peculiar case, Gross profit rate of 10% of the undisclosed turnover should be taken as the undisclosed income of the assessee and that amount has only to be taxed. The impugned order of CIT(A) is set aside on tis issue and the AO is directed to compute the gross profit as directed above. Appeal of assessee is partly allowed

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• 2019 (2) TMI 983
  Reopening of assessment - the assessee had not filed the return of income for the year or, for that matter, filed his return without disclosing the said income - Held that:- No mention of the return in the reasons recorded, the same is not on the assessment record, with in fact the AO enquiring the assessee about it. Rather, the very fact that the Revenue justifies its’ action u/s. 148 on the basis of the assessee’s return filed on 02.05.2016 brings out its’ relevance to the formation of belief as well as failure to disclose fully and truly all material facts necessary for assessment. The Revenue cannot, as explained in Vipin Khanna v. CIT [2000 (7) TMI 2 - PUNJAB AND HARYANA HIGH COURT], invoke section 148 to enable verification, for which the proper course is the recourse to notice u/s. 142(1); sec. 143(2) or, as the case may be, sec. 144. The reason/s recorded u/s. 148(2) on 18.03.2013 cannot be regarded as valid reason/s justifying the issue of notice u/s. 148(1) on 18.03.2013 which, therefore, cannot be regarded as valid notice in law. The impugned assessment is, accordingly, without jurisdiction. In this view of the matter, it is not necessary to travel to the other grounds, which are on the merits of the quantum additions.- Decided in favour of assessee.

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• 2019 (2) TMI 982
  Deduction u/s 80IB(10) - revenue has argued that the CIT(A) has failed to comply the circular of CBDT205/3/2001/ITA-II Ft. 4.5.2001 and allowed the claim of the assessee u/s 80IB(10) of the Act wrongly - Held that:- Claim of the assessee has been allowed by CIT(A) on the basis of the decision of earlier year for the A.Y. 2010-11 to 2012-13 decided by CIT(A), therefore, the claim of the assessee has rightly been allowed. The development rights acquired by the appellant firm was not a collusive transaction for the reasons - a. Just because M/s Kashish Park Realtors Pvt Ltd. a. partner of the appellant firm had initially intended to purchase the TDR from the landlord and had also made a payment of ₹ 1.10 cr to the landlord before the appellant jinn was constituted, does not in any way lead to the conclusion that the transaction entered into by the appellant with the landlord was a collusive transaction. b. The observation of the AO that had M/s Kashish Park Realtors Pvt Ltd developed the additional TDR-FSL then it would not have been eligible for deduction u/s 8OIB(IO) is without any legal basis because as held by the jurisdictional High Court in the case of Vandana Properties, even the additional building tied on the same plot of land where other buildings had already existed was eligible for the deduction provided other conditions were fulfilled. The project had been constructed on a plot of land of more than one acre as is apparent from the fact that the appellant firm had acquired the development rights of FSI to the tune of 9851 sq. mts. Therefore, deduction u/ 80IB(10) was available to the appellant as no violation of any other conditions has been pointed out by the AO. - Decided in favour of assessee.

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• 2019 (2) TMI 981
  Deduction u/s 80IC and deduction u/s 80IB denied - reopening of assessment - whether when the deductions under section 80IC as well as under section 80IB of the Act have been granted in the initial assessment years, the same could not be rejected for the subsequent assessment years unless the relief allowed for the initial year was withdrawn? - Held that:- Once deduction is granted in the initial assessment year, the same would continue for the period of ten consecutive years unless the relief for initial assessment year is also withdrawn. We are conscious of the fact that in coming to such decision, the SIMPLE FOOD PRODUCTS PVT. LTD. VERSUS COMMISSIONER OF INCOME TAX-II, NAGPUR [2017 (8) TMI 646 - BOMBAY HIGH COURT] did notice the absence of the Revenue to establish that for the subsequent assessment years in dispute, the facts were different from the facts on which the claim for deduction in the initial year was allowed. Clearly, in the instant year when the claim of deduction is rejected by the Assessing Officer, the relief allowed in the initial assessment year has not been withdrawn. Mere initiation of proceedings under Section 148 of the Act to reopen the assessment of the past year cannot be understood to mean that the ‘claim is withdrawn’. Therefore, in our view, the Assessing Officer could not have rejected the claim for deduction under Sections 80IB as well as 80IC of the Act in the subject assessment order because the relief allowed in the initial assessment year was not withdrawn at the time of such rejection in the instant year. Disallowance u/s 14A - Held that:- Disallowance under Section 14A of the Act cannot exceed the exempt income is being generally accepted by the Benches of the Tribunal. The learned representative for the respondent-assessee submitted that the respondent does not wish to press its Cross-objection once the view taken by the CIT(A) is accepted. We find no reasons to distract from the stand taken by the CIT(A) on this aspect, which is in conformity with the judgment of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. MAT - direction by the CIT(A) not to include the disallowance u/s. 14A for the purpose of computing tax liability u/s. 115JB - Held that:- This decision of the CIT(A) is consistent with the decision of the Special Bench of the Tribunal in the case of Vireet Investment (P.) Ltd., [2017 (6) TMI 1124 - ITAT DELHI]

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• 2019 (2) TMI 980
  Penalty imposed u/s 271(1)(c) - excessive deduction claimed u/s 35(2AB) - quantum of deduction claimed on account of part disallowance of expenditure by the DIS - Held that:- In any case of the matter, it is not the case of the department that the assessee is not eligible for claiming deduction under section 35(2AB) of the Act. In fact, the DSIR has not only recognised the R&D facility of the assessee but also approved the expenditure incurred by the assessee in respect of the R&D facility. The dispute arises only with regard to the quantum of deduction claimed on account of part disallowance of expenditure by the DISR. As observed earlier, the certificate of the DSIR in Form No. 3CL disallowing part of the expenditure was received by the assessee in November, 2013, i.e. at a much later stage, even after the AO has started enquiry with regard to assessee’s claim of deduction under section 35(2 AB) of the Act. Thus, upon considering the overall facts and circumstances of the case we are of the considered opinion that the assessee cannot be alleged of either furnishing inaccurate particulars of income or concealment of income. None of the conditions of Section 271(1)(c) of the Act in the instant case are satisfied. Accordingly we have no hesitation in deleting the penalty imposed - Decided in favour of assessee.

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• 2019 (2) TMI 979
  Reopening of assessment - A.O. assumed wrong jurisdiction under section 148 - cash found and seized during search - addition u/s 69A - Held that:- There is live link of cash found and seized during course of search, with reasons recorded by Ld. AO. It cannot be considered as a borrowed satisfaction the Report of CBI. Ld. AO made his detailed enquiry by verifying return of income, where he did not find disclosure with respect to above cash found. CBI Report already exonerated assessee with respect to cash found and seized, therefore, it cannot be said that assessing officer have relied upon any conclusion in investigation report of CBI. Further in present case; Ld. AO had tangible material in form of huge of cash found by CBI and upon verification return of income found to be undisclosed in the hands of assessee who is deriving only salary income and, therefore, there is a live link between tangible material and formation of reason to believe by Ld. AO as above cash was not disclosed in return of income filed by assessee. In view of this, none of decisions cited by Ld. Counsel does not apply to facts of present case. There was no reference of verification of information received from investigation wing with return of income of assessee. In the present case before us, Ld. AO verified original return of income filed by the assessee where he did not find the amount of cash seized by CBI. Assessee is a salaried person who was searched by CBI from whom cash was found and seized which, was not disclosed in return of income filed by assessee, we do not find any infirmity in action of Ld. AO in initiating reassessment proceedings under section 147 of the Act. The CIT(A) rightly upheld reassessment proceedings. Addition u/s 69A - Held that:- Assessee has supported its contention by submitting annual report of companies showing, above payment, reply by companies to assessing officer in response to various notices, confirmation by Sri Vipin Gupta, production of audited financial statement of Shri Vipin Gupta, copies of respective vouchers of above payment, coupled with the copy of agreement to sale. Assessee provided explanation that why property could not be transacted later on, for reason that after CBI search on assessee, buyer was not willing to buy the above property from the assessee. Further, market value determined by Ld. AO was also not based on any credible evidence. Assessee has shown that property was to be transacted for ₹ 2.90 crores and out of which only ₹ 1.40 crores were paid by the buyer as advance. This was shown in the agreement to sell found during course of such. Therefore, explanation given by assessee cannot be rejected in absence of any contrary evidence found by AO. Thus, in our opinion, addition made by Ld. AO cannot be sustained. A.O failed to establish non genuineness of agreement to sell. There is no evidence on record to establish transaction to be bogus. Unexplained money under section 69A - Held that:- There is no dispute regarding money having received under a Will, by assessee. Further, Ld. AO himself stated that that ‘Will’ seems to be genuine. Part of the Will has been accepted by Ld. AO and held ₹ 55 lakhs as explained source of the cash found in the lockers. Ld. AO rejected balance sum of ₹ 13.42 lakhs only for reason that that though money has been found from locker, it has not been mentioned that such sum was kept in lockers. We do not agree with contention of Ld. AO that merely because in the Will, it has not been stated that money is to be kept in locker, it cannot become unexplained money of assessee. In the Will it has been stated that ₹ 12 to 15 lakhs was given to assessee from time to time by his father (grandfather of assessee). The above sum of ₹ 13.42 lakhs is falling within range of ₹ 12 to 15 lakhs stated by Late Father of assessee. Ld. AO believed the ‘Will’ to be genuine and granted substantial credit of ₹ 55 lakhs out of sum found amounting to ₹ 68.42 lakhs from lockers. We are not inclined to uphold balance addition of ₹ 13.42 lakhs as it was made on flimsy ground. Accordingly, orders of lower authorities are reversed and AO is directed to delete addition of ₹ 13.42 lakh. - decided in favour of assessee.

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• 2019 (2) TMI 978
  Order u/s 254 (1) passed beyond the period of 90 days from the date of conclusions of its hearing - Held that:- The Hon’ble Bombay High Court in the case of Otter Club Vs. Director of Income Tax (Exemptions) [2017 (1) TMI 1242 - BOMBAY HIGH COURT] has held that the impugned order rejecting rectification application has not been considered the rule 34(8) of the Tribunal Rules and the binding decision, therefore, the order is not sustainable. In the said case, the Tribunal had passed order u/s 254 (1) beyond the period of 90 days from the date of conclusions of its hearing. The assessee filed application for rectification of the order on the ground that the order was in breach of Rule 34(5)(c) of the Income Tax Appellate Tribunal Rules and the delay had resulted in prejudice to the assessee. The Hon’ble jurisdictional High Court set aside the order being not sustainable and restored the miscellaneous petition to the Tribunal for fresh consideration and dispose of in accordance with law. Since, in the present case, the order has been pronounced one day beyond 90 days prescribed under the Rules, we respectfully following the order of the Hon’ble High Court discussed above, recall the order dated 09.11.2017 without going into the merits of the other grounds raised in the application, for fresh hearing. Accordingly, we direct the registry to fix the case for fresh hearing by the regular Bench in the ordinary course.

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• 2019 (2) TMI 977
  Revision u/s 263 - as per CIT-A assessee adopted a faulty method of revenue recognition - requirement of tax withholding u/s 194-I - assessee was spreading over lease premium at 1/99th on the basis of the lease period of 99 years, and in case of transfer, it was recognizing the same at 1/78th, apart from showing profit at 10% of the amount of Premium on the lease of plots of land - CIT held that entire amount of the lease premium was chargeable to tax in the year of receipt itself and hence the AO committed a serious mistake by accepting the shifting of income from the year of receipt of Premium to several years by means of spreading it over to 99/78 years - Held that:- There is no whisper of the issue of treatment of revenue in the assessment order. Secondly, on a specific query, the Ld. AR could not draw our attention towards any judicial pronouncement accepting the spread over of lease premium over the life of lease in the hue of the terms of the lease agreement as are prevalent in the case of the assessee. Under such circumstances, the assessment order passed by the AO accepting such spread over has necessarily to be held as erroneous, even if the assessee had put forth its explanation about the spreading over of Premium and the AO accepted the same without recording anything in the assessment order. The amount of lease premium accrues to the assessee at the time of its receipt. Such a lease premium does not bear any traits of rent, which in the extant case resembles with annual payment by the lessee at the rate of Re.1/-. Since the amount of lease premium has no characteristics of rent, in our view, such amount cannot be subjected to TDS u/s 194-I of the Act, which, therefore, rules out the application of Circular No.05/2001. It is further noted that the CBDT has recently clarified vide Circular No.35/2016 dated 13.10.2016 that on the amount of lump sum lease premium, which is not adjustable against the periodic rent, as is the case under consideration as well, there is no requirement of tax withholding u/s 194-I of the Act. We therefore jettison the contention raised on behalf of the assessee on this aspect of the matter. To sum up, since the assessee did not offer full amount of lease premium in the year of receipt and the AO accepted such a position, we are satisfied that the Ld.CIT was justified in invoking the provisions of section 263 of the Act and thus holding that the assessment order to be erroneous and also prejudicial to the interest of the Revenue Exemption u/s 11 - entitled to exemption u/s. 10(20) - assessee functions as an extended arm of the State Government of Maharashtra and hence does not come within the ambit of taxation - Held that:- The assessee is a statutory authority and is not a State Government in itself so as to claim any immunity from taxation. In our considered opinion, this issue is no more res integra in view of the latest judgment dated 12-10-2018 rendered by the Hon’ble Supreme Court in ITO Vs. M/s. Urban Improvement Trust [2018 (10) TMI 874 - SUPREME COURT OF INDIA] as held that Urban Improvement Trust constituted under the Rajasthan Urban Improvement Act, performing various municipal functions, is chargeable to tax in respect of its income and further no exemption u/s.10(20) is available to it. Since the Hon’ble Supreme Court has held that Urban Improvement Trust, doing admittedly activities similar to those of the instant assessee, is chargeable to tax and further not entitled to exemption u/s. 10(20) of the Act, the argument of the Ld. AR that assessee should be treated as not at all chargeable to tax as an arm of the State Government, deserves to be and is hereby repelled.

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• 2019 (2) TMI 925
  Reopening of assessment - “reasons to believe" - change of opinion - What is the “tangible material” which compelled the AO, in all these four cases, to issue the impugned reassessment notices? - Held that:- No reason to interfere in the matter. The special leave petitions are, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.

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• 2019 (2) TMI 923
  Depreciation on UPS @60% - Held that:- Tribunal was correct holding that UPS is the part of computer and entitled for depreciation at 60% - Decided against the revenue MAT/115JB applicability On Insurance Companies - Held that:- As rightly pointed out by the Tribunal, the Insurance Companies prepare profit and loss account as per the guidelines issued by the Insurance Regulatory and Development Authority of India and not as per Part II and III of Schedule VI of Companies Act. Furthermore, the applicability of Schedule VI of the Companies Act was specifically excluded in respect of Insurance Companies. The revenue has not been able to dislodge this finding before us in these appeals. We find that the conclusion arrived at by the Tribunal in this regard is proper and valid. - Decided in favour of assessee MAT computation on Solatium Fund - revenue contending that the solatium fund has been estimated in a routine manner and this amount is an unascertained liability and therefore, liable to be disallowed while computing book profit under Section 115JB - Held that:- We find that the contribution of 0.1% of gross premium from motor vehicle insurance is done as per the directions given by the Government of India and this amount has been paid by the assessee as per the decision taken by the General Insurance Council in the meeting held on 04.02.2005. Therefore, we find that the Tribunal was fully right in rejecting the case of the revenue stating that the estimation was done in a routine manner and it is an unascertained liability. See THE COMMISSIONER OF INCOME TAX VERSUS BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD. [2016 (11) TMI 1256 - BOMBAY HIGH COURT]. Commission for receipt of reinsurance - Held that:- CIT(A) took note of the decision taken in the assessee's own case for the assessment year 2009-2010 in which the assessment for the year 2008-2009 was followed and the assessee succeeded before the CIT(A) for the assessment year 2008-2009, wherein the CIT(A) noted that as a matter of industrial practice it was termed as commission on reinsurance premium received , however, in substance it is discount on re-insurance premium received by an Insurance Company from an other Insurance Company. We find that the Tribunal rightly decided the issue in favour of the assessee. TDS on Survey Fees u/s 195 - fee has been paid for utilizing the expertise of the surveyor and therefore, tax has to be deducted at source - Held that:- CIT(A) on going through the contentions raised by the assessee pointed out that disallowance under Section 40(a)(i) can be made only if taxes are not withheld on income chargeable to tax in India. On facts, it held that the payment was made to Royal and Sun Alliance, U.K. to settle the amounts of various surveyors on cost to cost basis and the surveyor does not make available any technical knowledge which can independently be applied by the assessee and consequently, held that the payment by the assessee would not be taxable as fees for technical services in the hands of the recipient. Furthermore, it is noted that in the absence of permanent establishment, the income in the hands of the recipient is also not taxable in India. The above view taken by the CIT(A) was rightly affirmed by the Tribunal and we find that the revenue has not made out any grounds to interfere - decided against revenue

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• Customs

• 2019 (2) TMI 976
  Release of the confiscated goods - furnishing of Bank Guarantee - applicability of decision in the case of C.C.E.C. S. TAX, SURAT-II VERSUS DHARMESH PANSURIYA [2017 (9) TMI 1454 - CESTAT AHMEDABAD] - Held that:- In the present case, the total value of the confiscated goods is less than the value of confiscated goods in the case of Dharmesh Pansuriya [2017 (9) TMI 1454 - CESTAT AHMEDABAD]. However, since in this case it is the applicants who are in appeal, at this stage they cannot claim complete parity with the case of Dharmesh Pansuriya. Besides, the case of Dharmesh Pansuriya has not attained finality as the appeal of the revenue has been admitted by this court. However, considering the fact that this court has found that a prima facie case has been made out and has admitted the appeal on substantial questions of law, this court is of the view that the confiscated goods are required to be released on appropriate terms and conditions. The interest of justice would be met if at this stage the applicants are directed to pay redemption fine of 10% of the value of the confiscated goods and 1% of the amount of penalty and further furnish bank guarantees of ₹ 50 lakhs each, which shall be kept alive till the final disposal of the appeal - application allowed.

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• 2019 (2) TMI 975
  Anti-Dumping Duty - Cold Rolled Coils by Chinese and other manufacturers in India - marginal injury - Section 9C of the Customs Tariff Act, 1975 - Held that:- The CESTAT s approach, we regret to note, is wholly inconsistent with this Court s order and directions in Manali Petrochemicals Limited vs. Union of India Ors. [2017 (1) TMI 1018 - DELHI HIGH COURT]. The Court had on that occasion, in similar circumstances, noted the nature of Section 9C of the Customs Tariff Act, 1975 and inter alia held The CESTAT has in essence, treated an appellate remedy (otherwise a compulsive jurisdiction) to be alternative and discretionary, robbing it of substantial content. The failure of the CESTAT to adjudicate the petitioners appeal, in the opinion of this Court, is inexplicable. Its impugned order, is completely at variance with the directions in Manali Petrochemicals. The Court is also cognizant of the fact that the proceedings before the Supreme Court have not in any manner restrained CESTAT from performing its statutory duty of adjudicating on the appeals pending before it. The CESTAT s approach of washing its hands of the duty cast upon is, therefore, deprecated in the strongest terms. The impugned order is set aside and the appeals preferred by the petitioners before it are restored to the file of CESTAT - petition disposed off.

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• 2019 (2) TMI 974
  Implementation of the order passed by the Commissioner (Appeals) - drawback is permitted also on the National Calamity Contingent Duty of Customs and not treating it to be different than the duty amenable for Section 75 of the Customs Act, 1962 for drawback purpose - Held that:- Respondent nos.3 and 4 shall decide the applications and appeals respectively pending before them on the issue filed by the petitioners without any further undue delay or on account of pendency of Tax Appeal No.123 of 2012 and in accordance with law and the same be disposed of preferably within a period of 90 days from the date of receipt of this order - petition disposed off.

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• 2019 (2) TMI 973
  Valuation of imported goods - automobile motor parts such as Heat Exchanger, Condenser and magnetic clutch assemble - identical/similar goods - reliance placed on contemporary price after a long period - Held that:- The Revenue is attempting and comparing the quality product imported by M/s Sanden which is reputed supplier and the imported goods are branded one. We also find that the import in this case has already been assessed finally and cleared after examination thereof. The demand cannot be raised after the gap of 4/5 years on the basis of alleged contemporaneous import price. It is on record that the alleged contemporaneous price of M/s Sanden Vikas was available with the assessing officer at the time of import but the same was not considered at that time considering these to be of different quality. The reliance cannot be placed on the same contemporary price after such a long period. The impugned order is bad in law and not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 972
  Valuation of imported goods - enhancement of value - Polyester Knitted Fabrics, PVC Quoted Fabrics, Flock Fabrics and 100% Non-Textured Lining Fabrics from China - the entire case of the Revenue is based upon the statement of the partner of the importers, which according to the learned Advocate stands retracted by them subsequently - Held that:- The allegations of under-valuation are required to be substantiated by the Revenue by production of positive evidences - In the present case, apart from recording the statement of the importer, there is not even an iota of evidence to reflect upon the factum of under-valuation. According to the learned Advocate, even such statement was retracted. The evidentiary value of such statement without there being any corroboration by other independent evidences has been the subject matter of various decisions of the judicial or quasi-judicial authorities and it stands held that the Revenue cannot entirely and solely rely upon the retracted statement, for upholding its view. In the absence of any evidence indicating that the value of the goods was actually on the higher side and there was excess payments to the foreign supplier, there are no justifiable reasons to uphold the impugned order - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2019 (2) TMI 971
  Transfer of shares - Exercise of power under Section 111-A of the Companies Act, 1956 (as amended in 1988) and the Depositories Related Laws (Amendment) Act, 1997 - whether issued raised rightly or wrongly, has to be adjudicated by some forum whether it be a civil suit or the exercise of jurisdiction by the then Company Law Board? Held that:- The effect of section 430 of Companies Act is that in matters in respect of which power has been conferred on the NCLT, the jurisdiction of the civil court is completely barred - It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. Thus, Relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded - in view of the subsequent developments, the appropriate course of action would be to relegate the appellants to remedy before the NCLT under the Companies Act, 2013 - appeal allowed.

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• 2019 (2) TMI 970
  Rectification of name of company - Registration of Trademark - application rejected on the ground that it was highly belated, and more than five years had passed from the date of incorporation of respondent no. 4 company - petitioner claims that its application was filed within a period of five years of becoming aware of the respondent no. 4 company - Section 22(1)(ii) of the Companies Act. Held that:- It is relevant to note that proviso to Section 22(1)(ii) Companies Act was included by virtue of Section 158 of the Trademarks Act, 1999 (Act 47 of 1999) with effect from 15th September, 2003 - there is a repugnancy between the provisions of Section 22(1)(ii)(b) of the Companies Act and the proviso so included. A plain reading of Clause (ii) of Sub-Section 1 of Section 22 of the Companies Act indicates that if the Central Government is of the opinion that the corporate name too nearly resembles the registered trademark of a proprietor, then such company shall, if directed by the Central Government within the 12 months of its registration, change its corporate name. Thus, undeniably, prior to 15th September, 2003, there was no obligation on the part of any company to change its corporate name if such direction was not issued by the Central Government within a period of twelve months of its first registration, or registration of its changed name. The proviso to Section 22(1)(ii) of the Companies Act clearly indicates that a proprietor of a registered trademark is not precluded from making an application within a period of five years “of coming to notice of registration of company”. Thus, this Court is of the view that the power of RD to examine such a complaint, which is not beyond the period as prescribed under the proviso, has to be inferred - The provisions of the statute must be interpreted to ascertain the intention of the legislature. In cases where there is no ambiguity in the language of the statute, the same must be literally construed. However, in another cases, it would be necessary for the Court to press into service other principles of statutory interpretation to ascertain the legislative intent. The proviso to Section 22(1)(ii) of the Companies Act is to preclude the registered proprietor of the Trademark from making an application under Section 22(1)(ii) of the Companies Act beyond the period of five years of such proprietor coming to notice of the company. It is clearly implicit from the language of the said proviso that a proprietor of a registered trademark can make an application under Section 22(1)(ii)(b) of the Companies Act within a period of five years. This is the clear intention of the legislature in including the proviso. The proviso to Section 22(1)(ii) of the Companies Act was inserted by virtue of Section 158 of the Trademarks Act, 1999 (Act 47 of 1999) with effect from 15th September, 2003. This Court is of the view that the power of the Central Government to issue a direction for change in the name of the company, even beyond the period of twelve months from the date of first registration or from the date of registration of the change of name, must be read in the provisions of Section 22(1)(ii)(b) of the Companies Act. Whether the petitioner’s application was within the time specified? - Held that:- In view of the inclusion of the proviso, the period as prescribed under the main provision ‒ Clause (b) of Section 22(1)(ii) is required to be correspondingly enhanced. If the period of five years is now read in Clause (b), the same would oblige a company to follow the directions of the Central Government for change in its name within a period of five years from the date of first registration. The basic scheme of the provisions of Section 22(1)(ii)(b) of the Companies Act cannot be altered by the proviso - The basic scheme of Clause 22(1)(ii)(b) of the Companies Act is to provide for an period of limitation for the Central Government to issue binding directions, and that period is stipulated to be twelve months from the date of registration of the name. This period has to be read as implicitly enhanced by inclusion of the proviso. However, the same cannot be enhanced indefinitely. Petition dismissed.

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• 2019 (2) TMI 969
  Oppression and mismanagement - Sections 397 and 398 read with Section 402 of the Companies Act, 1956 - principle of lis pendis - was it proper on the part of the Board to throw out the petition on the ground that the appellants could not invoke Sections 397, 398 and 402 to redress their grievances? Held that:- It is very sad to note that the learned member of the Company Law Board could not view the law in its proper perspective. Suppose a company has two options of entering into a contract with either A or B. B is the nominee of some of the Directors of the Company and those Directors are likely to gain by virtue of the contract in favour of B. The contract with A is more beneficial for the company while B would be highly detrimental. In my opinion, a Section 397/398 application can be made before the Company Law Board to compel the company to enter into a contract with A and an order of injunction restraining the company from entering into any contract with B. This kind of a situation is opposed to a plain and simple contract by the company. Where specific performance of an ordinary contract is necessary, the company has to take an action and such action is not invited from a shareholder or a group of shareholders but is taken by the company through the board, usually. The appellants say that the control of the company had been changed over their head. Its only asset was being tossed around several purchasers without consultation with the appellants. Now, the allegation is that in the name of entering into a compromise with the intending purchasers, money is now diverted to corporate entities controlled by the Govind Sarda and his group - if it is alleged that one group of shareholders was divesting the only asset of the Company for their personal gain, could an action under Section 397 or Section 398 of the Companies Act, 1956, not be maintainable? - Surely it is. Yet, the Company Law Board has come to the opinion that no case under Sections 397 or 398 of the Companies Act had been made out. Where change of circumstances become material, a particular litigant is entitled to bring on record subsequent events post filing of the litigation by amendment of the pleadings so that there is full and complete adjudication of the disputes between the parties. It is quite possible as it has happened in our case that even after filing of the litigation between the parties the cause of action is continually made larger, wider and more complex by events. In this case, there was entry of SEARS, thereafter, the order of status quo, then negotiation between SEARS, Upasana and Kajaria for return of the investments of the last two parties by SEARS, the entry of Adarsh, the false representation before the Court on 18th December, 2013 and so on. It was within the rights of the parties to include the subsequent events in the cause of action and to ask for reliefs compatible with the changed cause of action by moulding, if necessary, the original reliefs, without causing prejudice to any party. The appellants make a strong case that there is a very close connection between the Govind Sarda group, SEARS and Adarsh. The stamp papers for the transaction between the first respondent company and SEARS were purchased in West Bengal. The agreement was executed in New Delhi. The 5th April, 2010 Memorandum of Understanding between the first respondent company and SEARS Bilt was signed by Mritunjay Kumar Singh, the respondent no. 24 on behalf of SEARS Bilt describing himself as its authorized signatory. The cancellation agreement dated 27th December, 2010 between the first respondent and Upasana was signed by Mritunjay Kumar Singh, the respondent no. 24 who is also one of the Directors of SEARS Bilt. One Manish Chaudhary, a Director of Adarsh Bilt Estate signed the application on behalf of the first respondent to Jaipur Development Authority seeking the conversion of the property. As there was a lot of apprehension in the appellants that the property would again change hands during the Christmas vacation, the Court after hearing the submission of learned Counsel for the parties passed an order recording an assurance that the subject matter of the controversy in the appeals would not be disturbed by any party till the Court was in a position to hear out the appeals - It was clear as daylight to anybody that the only asset the first respondent company had was the Jaipur property and that through this company petition the Ghanshyam Das group was fighting to regain control of the company and the property. The undertaking which the Court understood, learned Counsel to be making related to that property only. No other interpretation of the undertaking is possible. But it soon transpired that Adarsh Bilt Estate was working on this property. Then both SEARS and Adarsh declared that in November, 2013 by a registered agreement Adarsh had been inducted into the property by SEARS to develop and sell the same. I emphasize there is enough evidence to suggest that SEARS was another face of the Govind Sarda group and entirely controlled by it. Therefore, I have no hesitation to declare the transfer in favour of SEARS as detrimental to the company. There is also sufficient evidence to prove the collusion of the Govind Sarda group with Adarsh. I also have no hesitation to declare the transaction between SEARS and Adarsh as detrimental to the company - This Court has enough powers under Section 397, 398 read with Section 402, 403 of the Companies Act, 1956 to undo any act or declare it as void and not binding on the company or its shareholders. Applying the principle of lis pendis the property could not be divested from the first respondent company pending this appeal. So on both grounds, it remains with the first respondent company. The Company Law Board ought to have heard the petition on merits instead of throwing it out - there is no point in remanding the matter to the tribunal for fresh adjudication because that would delay the matters further and result in complication. Since the appeal is a continuation of the trial Court proceeding this Court has now to ascertain how on the above available facts and evidence which are prima facie, Court can do justice to the case. - Applications disposed off with directions.

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• 2019 (2) TMI 968
  Recovery of outstanding dues - company under liquidation - performance guarantees - encashment of Bank Guarantees - Held that:- There is an outstanding amount of about ₹ 16.88 Crores payable to the various vendors of the Company in liquidation, towards the ONGC project. The Court found that if the vendors were paid 75% of their outstanding payment upfront, they can take up the balance work and complete the same in accordance with the project specifications. It was found that the ONGC was to pay an amount in the region of ₹ 30 Crores, to the Company in liquidation towards the project. The Court further observed that as indicated by Mathews, the project can be completed within a period of six months at an estimated cost of about ₹ 3,35,94,440/- plus the project management cost of ₹ 91,50,000/-. Though the learned counsel appearing on behalf of the Respondent No.2 – ONGC was in broad agreement with the proposal, but had expressed apprehension that since amounts have to be paid to the various vendors with a view to enable them to take up and complete the balance work, this will be in the nature of advance payment and therefore requested that ONGC may be permitted to charge interest in accordance with its prevailing policy and adjust the same towards the final amount payable to the vendors or the company in liquidation. While considering the aforesaid objection, the learned Company Judge observed that, the payment is directed to be made by ONGC as part of its past dues and not as an advance payment. The learned company Judge, therefore, specifically observed that there is no question of ONGC charging any interest towards amount paid under the orders of this Court. There is no merit in the Appeal challenging order dated 26th April, 2018. The Appeal is, therefore, dismissed.

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• Insolvency & Bankruptcy

• 2019 (2) TMI 967
  Initiating corporate insolvency resolution process - existence of dispute - claim of the corporate debtor for non-delivery of goods entrusted to the operational creditor - Held that:- A claim of the corporate debtor for non-delivery of goods entrusted to the operational creditor was not resolved till the date of issuance of the demand notice to the corporate debtor. The operational creditor has denied its liability towards the claim raised by the corporate debtor. According to the operational creditor it has no obligation for the loss of goods or misplaced of the goods by the ship- per/corporate debtor and the operational creditor has no liability for mis- placed and lost material as claimed by the corporate debtor and the said purchase orders were never renewed by the operational creditor. In a case of this nature not bound to determine the merits of the dispute. The above said factors leads to a conclusion that corporate debtors claim for sett off on account of loss/non-delivery of goods entrusted is still not resolved. It has come out in evidence that operational creditor issued notice for reference of the dispute to the arbitration. The liability if any on account of admitted non-delivery of goods is denied by the operational creditor. The above said circumstances are sufficient to hold that there is a pre-exist- ing dispute in respect of the amount liable to be paid by the corporate debtor to the operational creditor. What is meant by existence of dispute to be established on the side of the corporate debtor in a case of this nature is dealt with in Mobilox Inno- vations P. Ltd. v. Kirusa Software P. Ltd. [2017 (9) TMI 1270 - SUPREME COURT OF INDIA]. The corporate debtor issued reply notice to the demand notice issued under section 8(2) of the Code so as to bring to the notice of the opera- tional creditor the existence of a dispute, which is evidently found pre- existing before the issuance of the notice received by the corporate debtor. Thus the application is liable to be rejected under section 9(5)(ii)(d) of the Code. Accordingly rejected.

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• 2019 (2) TMI 966
  Initiation of Corporate Insolvency Resolution Process - whether the petitioner would be covered by the definition of expression ‘financial creditor’ as per the provisions of Sections 5(7) & (8) of the Code? - Held that:- The definition of expression ‘financial creditor’ as provided by Section 5(7) of the Code which means any person to whom a financial debt is owed and includes a person to whom such financial debt has been legally assigned or transferred. A perusal of the definition given in Section 5(8) of the Code would show that a ‘financial debt’ would mean a debt along with interest which is disbursed against the consideration for the time value of money. The definition must be read in its contemporaneous meaning to cover all such, financial transactions as providers of finance commonly enter into. It appears that the petitioner fulfils the first ingredient of Section 5 (8) of the Code. In the present case it is evident from the perusal of reply to the notice sent by the Corporate Debtor to the Financial Creditor that as per agreements and addendums executed between them, a sum of ₹ 1,85,00,000/- (Rupees One Crore Eighty Five Lakh Only) belonging to the petitioners has been deposited with Trustworthy Gems & Jewellers Private Limited and Logical Jewellers Private Limited towards security of liabilities of K.K. Kohli & Brothers Private Limited (now known as SRS Automotive Components Pvt. Ltd.) for period upto 31.03.2008. It is also asserted by the Corporate Debtor that they have been fulfilling their part of obligation by payment of interest on the aforesaid amount through Trustworthy Gems & Jewellers Private Limited and Logical Jewellers Private Limited. However, the petitioners have remained unable to clear its own liabilities within maximum period of 5 years and alleged to have avoided the clearance of the aforesaid liabilities deliberately knowing fully well that interest and penalty is accruing day-by-day. The amount is to become due and payable on the performance of obligation undertaken by the Financial Creditor but not before that. In the petition a copy of the reply dated 06.12.2017 filed by the Corporate Debtor has been attached but no detailed explanation has been given has to how the Financial Creditor is not liable to perform its obligations. Accordingly, we are of the view that in the absence of performance of its own obligation the amount would not be due and payable to the Financial Creditor. As a sequel to the above discussion we find that the petitioners do not satisfy the requirements of Section 7 (5) of the Code in so far as no default appears to have occurred which is to arise only after fulfilling the obligations on the part of the Financial Creditor. The default would occur only when the amount is due and payable as stated in the above paras. Accordingly, the petition fails and the same is dismissed.

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• 2019 (2) TMI 965
  Corporate Insolvency Resolution Process - outstanding loan - claim of applicant that the original loan agreement is with the borrower, has been vehemently denied as illogical and unbelievable - Held that:- Onus lies on the applicant to establish that the loan was given against the consideration for time value of money. When the respondent debtor disputes that there is no question of payment of interest at any point of time on the debt in question and also disputed the existence of the loan agreement, it becomes more onerous on the part of the applicant to prove that the amount was disbursed against the consideration for time value of money. Admittedly, original loan agreement has not been produced. Expert opinions have been placed in support of the pleading that the loan agreement is a forged one. In the facts discussed above and in the absence of the original loan agreement and in the light of serious dispute and allegation of fraud; it appears that the matter requires proper trial and investigation. Admission of the application under the Code has serious civil consequences. Heavy onus lies on the applicant to prove the claim of interest component, date of default and as to when the repayment is due. Simply, relying upon the copy of a seriously disputed document would not suffice in the present summary proceedings. For the reasons stated above this petition fails and the same stands dismissed as not maintainable.

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• 2019 (2) TMI 964
  Resolution Plan submission - necessary time period to enable the investor to submit the Resolution Plan - Held that:- Main objective of the Code is for Resolution of the Corporate Debtor rather than liquidation. If the liquidation is ordered that too when the liquidation value is very meagre, nobody will gain. Considering the primary objective of the Code which prefers Resolution of any Corporate Debtor even at the remotest of possible opportunity, yes, this Bench is certainly inclined to afford an opportunity to the investor identified by the Applicant Association to submit the Resolution Plan even at the cost of excluding the time periods that got wasted in waiting for prospective investors, if at all he is eligible and financially sound in accordance with the real spirit of the Code. Accordingly the investor may file an appropriate application on or before 07.01.2019 with details of its net worth so that further directions will be given in this matter in this regard. It is made very clear that the Resolution Plan has to be submitted only by the Investor and not by the Applicant Association. In order to enable the investor to submit the Resolution Plan (if he otherwise eligible), it is necessary that time period has to be either extended or time period from the date of filing of this application till the date of disposal of this application is to be excluded from the CIRP process. However, under the Code it is not possible to extend the 270 days period and hence this Bench is inclined to exclude the period from the date of filing this Application (19.12.2018) till the disposal of this Application from the CIRP period, so that above said investor or any other investor can submit their resolution plan which would revive the hopes of keeping the aspirations of workers, creditors and above all in the public interest. List this matter on 08.01.2019 for filing appropriate application by the above said investor and the said investor is directed to provide the details of net worth etc. to the Resolution Professional on or before 07.01.2019 so that the Resolution Professional can verify the eligibility of the proposed investor. Further the Resolution Professional is directed to maintain a regular contact with the other UK investor who interacted with him and exchange the necessary details as per the Code if they satisfy the eligibility criteria.

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• FEMA

• 2019 (2) TMI 963
  Grant of stay - pre-deposit - interim order granted by the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS, PEPT, New Delhi-3 - Tribunal failed to consider the income tax returns of the appellant for the year 2018-19, but only noted the income tax returns filed for the years from 1999-2000 to 2002-2003 - Held that:- Without going into the controversy as to whether the appellant had produced the current income tax returns or not, we deem it appropriate that the appellant shall be given one more opportunity to place all the records before the Tribunal, so that the Tribunal can take a decision as to whether the interests of the Revenue stand sufficiently safeguarded on account of the attachment over the immovable property of the appellant, which is stated to be worth of ₹ 3 Crores and as to whether the appellant's financial condition precludes from making a predeposit. For such a reason alone, we allow this appeal, set aside the order of the Tribunal and remand the matter to the Tribunal for a fresh consideration.

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• PMLA

• 2019 (2) TMI 962
  Offence under PMLA - provisional attachment - definition of the expression “proceeds of crime” - allegations of the ED in the present case is that wrongful gain to the Appellant M/s. VGN Proprty Developers Pvt. Ltd. and wrongful loss to the Government of India of ₹ 115 Crores has been caused by sale of the property admeasuring about 10.46 Acres in Guindy Village, Chennai (hereinafter referred to as the “said property”) at a sale price of ₹ 272 Crores whereas the guidelines value for the same was ₹ 387 Crores (and hence the loss) Held that:- No reasons to believe are produced before us in order to satisfy us that the property was attached under second proviso if the same is not attached immediately, the purpose would be frustrated any proceedings. It is also not stated either in PAO or in impugned order that the respondent no. 1 has made any efforts to trace out the other property of VGN and respondent no. 1 is unable to find out any other property of the Managing Director/ Director of the Company in view of impugned mortgaged property. The respondent no. 1 has failed to discuss the interest of the buyers who have stake in the attached property. The pre-requisite for ordering attachment is that the property to be attached should constitute the proceeds of crime. In the present case, the said project in question prima facie may not be termed as proceeds of crime since the same was acquired by utilizing the money advanced from the appellant and respondent no. 4. Unless the property comes within the definition of the expression „proceeds of crime’ under Section 2(1)(u) of PMLA, it could not have been attached under Section 5(1)(a) of PMLA. A careful look at the definition of the expression “proceeds of crime” would show that to come within the definition of the said expression, the following pre-requisites are to be satisfied: a. that the same should be any property or the value of any such property; b. that it should have been derived or obtained directly or indirectly; c. that it should have been obtained or delivered by any person as a result of criminal activity relating to a Scheduled Offence. The Respondent no. 1 did not follow the mandate of Section 8(2) and the finding was given. No cogent and cohesive reason was given for rejection of the submissions in writing. The impugned order is mechanical, without application of judicious mind and as such is liable to be set at naught. In fact, the replies and material produced by the appellants have not been considered by the Adjudicating Authority. There were no discussions about the stand taken by them in their replies. The respondent no. 1 despite being aware that thelendersthat they prior in time interest in the subject Property, Respondent No. 1 - ED proceeded to pass a PAO No. 02/2018 dated 13.02.2018, wherebyattachedthe subject Property to the value of ₹ 115 crore as proceeds of crime. In the PAO, in the column „Present Status of theproperties‟, the ED identified that the Subject Property wasmortgaged in favour of the lenders and IL&FS i.e.Piramal. In the light of above and in the interest of justice, the order passed by the Adjudicating Authority is set-aside by allowing the present appealsfiled by the lenders. The findings are not sustainable in law and the facts of the appeals of lenders. With regard to the appeal of VGN is concerned, we wish to impose certain terms and we pass the order to secure a sum of ₹ 115 crores as per the version of the ED and direct the VGN to give a surety of the equal amount. As a matter of fact, at the interim stage, VGN has already offered security of the land having value more than ₹ 119 crores situated at Sekkadu Village, Avadi Taluk, Tiruvallur District ad-measuring 10.21 acres, the other property is attached which is owned by the Managing Director/Chairman of VGN. The relevant papers alongwith the affidavit have been filed at the interim stage. If the criminal complaints are finally decided by the Special Court in favour of VGN, the said property shall be released. Till that time, VGN shall not dispose the said property directly or indirectly. Subject to above, the impugned property is released forthwith which was attached under the provisional attachment order i.e.admeasuring about 10.46 acres in Guindy Village, Chennai at VGN Fairmont, Thiru Vi Ka Industrial Estate, Guindy, Chennai-32and the impugned order of confirmation was passed.

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• 2019 (2) TMI 961
  Attachment orders challenged - PMLA, 2002 and the IB Code - attach the properties of the corporate debtor under the Prevention of Money-laundering Act, 2002 (PMLA) and restore the said properties to the liquidator for the purpose of liquidation under the IBC, 2016 to declare the right of the lenders/creditors on the attached properties of the corporate debtor to recover their dues prevails over the right of the respondent to attach the properties under the PMLA - whether an offence of money laundering has been prima facie made out or not and the properties that are mortgaged to the bank and other lenders, thereby creating security interest are "proceeds of crime", or not ? - whether properties attached are not proceeds of crime? Held that:- Issue here has to be decided only by the Adjudicating Authority or the Appellate Authority or the Special Court under the provision of the PMLA but not by this Adjudicating Authority exercising jurisdiction under the I and B Code. Two different enactments, i.e., the PMLA, 2002 and the I and B Code provide two different hierarchies of functionaries to decide the controversies that arise under the respective enactments. When such is the case one authority cannot interfere with the functions of the other authority under a different enactment. It is already said there is no repugnancy in procedure that is being followed for liquidation of the asset of the corporate debtor and the procedure to be followed in case of proceeds of crime, where an offence of money laundering has been committed. It is already said even if an offence of money laundering is committed, the claimant who are having security interest over the properties of the corporate debtor, can still ask for release of the properties, if they are able to establish they acted in good faith and they parted with valuable consideration in the form of sale consideration or debt and/or that the properties attached are not proceeds of crime. Therefore, the liquidator is at liberty to approach the Authorities under the PMLA and seek order to release the properties from the attachment on the ground that the properties attached are not proceeds of crime and the lenders are bona fide lenders and it is for the authorities under the PMLA Act to decide such issues based on the record of investigation and other material placed on record before then, uninfluenced by any of the findings or observations or opinion expressed in this order. In view of the above discussion the reliefs prayed in the petition cannot be granted without the liquidator taking recourse to remedies provided under the PMLA.

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• Service Tax

• 2019 (2) TMI 960
  Validity of Notification dated 13.4.2017 - liability of importer to make payment of service tax in respect of ocean freight - whether notification is ultra vires the provisions of section 66B and section 68(2) of the Finance Act, 1994 - Held that:- Identical issue decided in the case of MESSRS SAL STEEL LTD. VERSUS UNION OF INDIA [2019 (1) TMI 327 - GUJARAT HIGH COURT], where in an identical situation, this court has issued notice and has granted ad-interim relief. Issue NOTICE returnable on 20.2.2019.

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• 2019 (2) TMI 959
  Release of attached Bank accounts - garnishee notices - Recovery of outstanding amount of service tax from fixed deposits - petitioner agreed to provide the detailed workings of interest liability for delayed payment of service tax as well as for GST. - Held that:- Section 87 provides for recovery of any amount due to Central Government. Where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made thereunder is not paid, then, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned in sub-clauses of this section - Section 73 deals with a situation of collecting tax not paid to the Government and section 73A enables this collected amount to be recovered and remitted to the Central Government. In the present case, what we find is that two or three letters were addressed, one of which was of 19th September, 2018. The petitioner pointed out the nature of business and then urged that the petitioner's major clients went out of business leaving it with huge outstanding overheads. It has pointed out that it has taken all the contingency measures. It has also pointed out the hardship on account of the notices under section 87 of the Finance Act, 1994. What we have on record, therefore, is a request to withdraw these notices. These are on several grounds. The petitioner, in one of its communications has stated that it does not carry out any activities in India and therefore, the provisions of the Finance Act, 1994 do not apply. The petitioner, therefore, disputes its liability to pay service tax and interest. Instead of this court going into these disputed issues, in facts peculiar to this case and without this order being treated as a precedent for the future cases, the respondents should provide an opportunity to the petitioner so as to make good its case and particularly the stand in the writ petition. The petitioner has raised several grounds. It has also said that it does not carry out activities in India. It has also raised the issue with regard to the activity of catering undertaken by it and urged that this is a deemed sale and not leviable to service tax - the petitioner has specifically stated that section 87 cannot be resorted to unless the determination of the disputed issues takes place. Merely because there is a self assessment done does not mean that the petitioner can be saddled with such recovery notices. The petitioner has also alternatively and without prejudice pointed out its financial difficulties and claimed that the appropriation or adjustments could not have been made towards the alleged interest liability. The petitioner should be given an additional opportunity to make good its case - the petitioner is given an opportunity to appear before the Commissioner, CGST, Mumbai West Commissionerate, Mumbai, who shall, after the personal hearing is concluded, pass a reasoned order. Bank accounts released from attachment - garnishee notices kept in abeyance - petition disposed off.

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• 2019 (2) TMI 958
  Penalty u/s 78 of FA - submission of the counsel for the Appellant that there was no fraud or intention not to pay the service tax infact deposits have been made, but beyond the period of 30 days prescribed under Section 78 of the Finance Act, 1994 - Held that:- The provision is unambiguous. A time frame has been fixed for deposit of the tax, the interest on delayed payment and penalty. The same is quite rigid. Tribunal has not committed any error by dismissing the appeal of the Appellant / the assessee - appeal dismissed.

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• 2019 (2) TMI 957
  CENVAT credit - input services - banking company - limit of credit of 50% - deposit insurance service provided by Deposit Insurance and Credit Guarantee Corporation (DICGC) - premium paid on deposit insurance to DICGC, whether input services or not? - period after 01.4.2012. Held that:- All services/activities which are required for promoting or running the business cannot be considered as input service ; the CENVAT Credit facility of the tax paid on such services, could be allowed only when it falls within the scope of the present definition of input service . Even though deposit is an activity relating to banking business but not a taxable service under the Finance Act, 1994, as the consideration for such service is exempted. The deletion of the expression activities relating to business post 01.4.2012 is with some significance and in that sense, the new amended provision has to be read and understood. Hence, the argument that to commence and continue the banking business, insuring the deposits of customers is mandatory, accordingly, the service tax paid on such insurance premium, become an input service, in our opinion could not be sustained under the amended definition of input service brought into effect from 01.4.2012. Besides, it is not the business of the bankers which has been insured, but the deposit of the customers, with the social objective of the Government/RBI to protect the interest of small depositors, in the event the banks undergoing liquidation, the customers will be directly paid the insured amount. Interpretation relating to Rule 6(3B) of CENVAT Credit Rules, 2004 - Held that:- It is clear that irrespective of the situation whether common inputs or input services are used for providing output services and exempted services, a banking company and a financial institution is required to be 50% of the credit availed on the input and input services in that month. The argument of the appellant that they become eligible to avail credit of the service tax paid on insurance premium for deposits to DICGC, in view of the sub-rule (3B), in our opinion, is fallacious. The said sub-rule directs payment of 50% credit on the input or input services availed. In the aforesaid analysis, we came to the conclusion that the insurance premium paid on deposits to DICGC is not an input service, consequently, the service tax paid on such insurance premiums, cannot be available as credit to the appellant during a particular month. The payment of 50% credit means that it is from the admissible amount of credit on inputs or input services as defined under the cenvat credit rules, 2004. Penalty - Held that:- It cannot be denied that there has been a lot of changes in the cenvat credit provisions after 01.4.2011 and also on introduction of negative list service tax regime from July 2012. Therefore, since the present issue relates to interpretation of law, and the demand notices have been issued for normal period, we do not find justification in imposing penalty on the appellants. Thus, the amount of service tax paid on the insurance premium relating to the deposits of customer to DICGC by the Appellant Banks cannot be considered as an input service accordingly, credit of the said amount is not admissible to the Appellants - The amount of 50% of the available credit in a month, required to be paid under Rule 6(3B) of CCR,2004 by the Appellants, cannot include the inadmissible credit of service tax paid on insurance premium paid to DICGC. Appeal allowed in part.

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• 2019 (2) TMI 956
  Time limitation - wrong availment of CENVAT credit - intent to evade or not - proviso to Section 73(1) of Finance Act read with Rule 14 of CENVAT Credit Rules, 200 - Held that:- The basis for issuing show-cause notice was a mismatch between the ST-3 returns and the worksheets annexed therewith. Further, the department has not examined as to whether the appellant took CENVAT credit on the basis of valid duty paying documents at the time of issuing show-cause notice. Also, the appellants have been regularly filing ST-3 returns along with the detailed worksheets enclosed with the said returns, which clearly shows the availment of credit by the appellant on different input services. Even if there was some mismatch in the ST-3 returns and the worksheets, it was incumbent on the Department to call for the reports while examining the ST-3 returns but the same was not done and it was only at the time of audit this was noticed and thereafter, show-cause notice was issued on 17.10.2012 for the period 2007-08 which is completely barred by limitation as the Department has not brought in any material on record to show that there was suppression of facts with intent to evade payment of duty by the appellant. The Department cannot allege suppression of facts with intent to evade payment of tax. Further, in the impugned order, the limitation aspect has not been discussed properly and they have simply invoked the extended period without discharging the burden of proof cast on the Revenue. The entire demand in the present case is barred by limitation and is set aside - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 955
  Valuation - Supply of Manpower services - inclusion of extra advantages/ benefits availed by the Personnel - clause (b) of Service Tax (Determination of Value) Rules, 2006 - Jurisdiction - extended period - penalty - Held that:- The argument about appellant, undisputedly, being a foreign company is apparently false. The fact rather is that a company irrespective incorporated under laws of a foreign country, is supplying manpower to Indian companies through its India office which is duly registered in the territory of India. However, the another apparently admitted fact is the appellant is the service provider and three of the companies in India (as mentioned above) are the service recipients. The SCN has been issued invoking Section 66A of the Act read with Rule 2(1)(d)(iv) of the Service Tax Value Determination Rules is therefore apparently wrong. Both these provisions are not applicable to the given set of circumstances Section 66A is applicable for charge of service on services received from outside India. In the present case, as discussed above, services of manpower though have been provided by Telenor AS, a Company incorporated under laws of Norway but through its India office registered with India Service Tax Commissionerate. Appellant admittedly being the provider of service, Rule 2(1)(d)(iv) is not applicable to the given circumstances as under this rule, the person liable to pay service tax is recipient of service - SCN has been issued invoking the wrong provisions of the Act and thus is nonest. Even the order under challenge has confirmed demand under these wrongly invoked provisions. Thus, irrespective that the service provider generally is liable to discharge the service tax liability the demand against him cannot be invoked/ confirmed under the provisions making the recipient thereof as liable to pay service tax. Invocation of Rule 5 of Service Tax (Determination Value) Rules, 2006 - Held that:- Rule 5 of Service Tax (Determination Value) Rules, 2006 which talks about the expenses to be included in the cost is therefore absolutely contrary to the intention of legislature as under the charging provisions of Section 66 and 67 of the Finance Act. Hon ble Apex Court in the case of Union of India Vs. Inter Continental Consultants (supra) while confirming the view of High Court of Delhi has declared the said Rule 5 as ultra vires as being beyond the mandate of Section 67 of the act of 1994. The Apex Court has also clarified therein that Rules cannot override or overrule the provisions of the main enactment. Admittedly, the appellant have been discharging their tax liability qua the said amount regularly and have also been regularly filing their ST-3 Returns. The amount as paid by the Indian companies directly as benefits been given to the personnels provided by the appellant as mentioned in Clause 6.3 of these agreements are nothing but the expenditure or cost incurred by the service recipient irrespective it being reimbursed or not. The same cannot be considered as the part of the gross value subject to taxability. Jurisdiction - Held that:- It becomes clear that once the SCN was issued by audit and was confirmed by MCM it should have been adjudicated only and only by Executive Commissioner. The Audit Commissioner has no competent jurisdiction to adjudicate rather as per above circular, he is held to have become functus officio after issuing the SCN and the audit objections if any are confirmed. Thus, the order as passed by the Commissioner(Audit) is otherwise not sustainable as being beyond jurisdiction. Extended period of limitation - penalties - Held that:- It is an admitted case of the Department that appellant was regularly filing the ST-3 Returns qua the consideration it has received in furtherance of Clause 6.2 of The Agreement. The discussion above has clarified that appellant is not liable to discharge any tax liability qua the benefits being received directly by the personnels (provided by the appellant) from the service recipients in terms of Clause 6.3 of the Agreement. As such no question of tax evasion is apparent on part of the appellant. Once it is not the case of tax evasion question of any malafide intent/mensrea has no sustainability. In absence thereof, the Department was not liable to invoke proviso to Section 73(3) of the Finance Act. In the given circumstances no question even of imposition of penalty at all arises - extended period also not invocable. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 954
  Failure to discharge service tax in full for the services provided by them - Manpower Supply - Cleaning Service - demand in the show-cause notice was arrived at on the basis of the Bank statement of the assessee for the relevant period - Held that:- The Adjudicating Authority has carefully considered the submissions made by the assessee before him and have excluded various amounts received in the Bank towards interbank transfers, refund of EMD/FDR encashment, cheque returned and other charges. Show-cause notice has been originally issued by taking into account the entire receipt in the Bank account. However, it is evident that the receipts indicated in the impugned order are clearly not by way of consideration for any service rendered. Accordingly, there is no infirmity in the stand taken by the Commissioner to exclude such amounts from the gross value of taxable services. The amount towards manpower supply as well as cleaning service can be considered for exclusion if such amounts have been received as consideration for providing these services, during the period prior to 16.06.2005. The Table as well as accompanying documents, even though duly certified by the Chartered Accountant, does not substantiate the above consideration. As such, we are unable to extend the deduction of such value for determination of service tax liability. The matter is remanded to the original Adjudicating Authority for re-quantifying of the demand and passing denovo order, after duly considering the claim of the appellant for deduction of manpower supply and cleaning agency service to the extent of receipt of consideration prior to 16.06.2005 - appeal allowed by way of remand.

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• 2019 (2) TMI 953
  Refund claim - service tax was paid, which the appellant was not required to pay - time limitation - Held that:- The Hon’ble Supreme Court in the case of Porcelain Electrical Manufacturing Co. [1994 (11) TMI 145 - SUPREME COURT OF INDIA] have held that the authorities working under the provisions of the Act are bound by the same and cannot relax the time limit provided under Section 11 B for the refund of erroneously paid duty - the refund claimed by the assessee having no connection with the earlier demand of tax by revenue and the same having being filed beyond the period of one year from the relevant date, stands rightly rejected by the lower authorities as bared by limitation - appeal dismissed - decided against appellant.

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• 2019 (2) TMI 952
  Non-payment of service tax - consideration received by them for providing taxable service of ‘Business Support Service’ during the period 2008-09 to 2011-12 - demand of service tax with interest and penalty - Held that:- The Appellate Authority has examined all the evidences placed before him and have come to a finding that the appellants were awarded the work order for supply of (or printing of) printed mark-sheet, tabulation chart, admit cards, verification cards, etc. by various Universities or Institutions directly or some contracted, such works through private firms. The assessee had also submitted confirmation letter of Universities stating that they had done printing work in the period of dispute and some work orders containing details of nature of work order done and document for making payments also stand scrutinized by him. From perusal of Profit & Loss Account, ITR, etc. it cannot be concluded rather the Bills, Work Orders, etc. produced by them clearly show that such work was awarded by Universities, Professional Exam Council, etc. who are Public Educational Institutions and not doing any commercial activities for Business or Commerce. Consequently, the appellant can also not be alleged for supporting any business activity of their clients. As regards work done for private firm M/s MCM, I find that such printing work of Universities, Exam Council, etc. was sub-contracted to them through M/s MCM. Thus, the conclusion of the Adjudicating Authority that the appellant were providing Business Support Service to these clients is unfounded and lacks support from documentary evidence. Revenue has not been able to adduce any evidence to the contrary - appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 951
  Works contract services provided to various departments of Govt. of Uttar Pradesh - exemption in terms of the Entry No.12 of Notification No.25/2012-ST dated 20.06.2012 - Held that:- The contracts with the Government were executed when the services were exempted in terms of various Sl.Nos. of Entry 12 of the Mega Notification - Admittedly in such a scenario the question of inclusion of any tax in the contract value would not arise. Further observed that the assessee was not raising any Bills for the work executed by them and only the contract amounts were being paid to them. When the legislation itself has legislated for the refund of Service Tax in terms of the provisions of section 102, the objections raised by Revenue cannot be appreciated. Appeal dismissed - decided against revenue.

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• 2019 (2) TMI 950
  Restoration of appeal - Non-compliance of the stay order - dismissal of appeal by ex-parte order for default of the stay order - Held that:- There is no deliberate default on the part of the appellant as was suffering from serious ailment and his work was also practically at stand still, during the relevant period - Further, Hon’ble Allahabad High Court in the case of Vijay Kumar [2018 (2) TMI 1259 - CESTAT NEW DELHI] have held that this Tribunal should not dismiss appeal for failure to comply with the order of pre-deposit. The appeal was filed prior to 1st Aug. 2014, and under the pre-amended Section 35F, there was no pre condition that Tribunal cannot entertain appeal without making of pre-deposit. Further Tribunal was directed by higher courts the disposal for appeal on merit even in absence of pre deposit - restoration of the appeal allowed.

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• 2019 (2) TMI 949
  Business Auxiliary Services - appellants are engaged in providing services to the State Government Department such as Department of Mines & Geology (DMG) and Commercial Tax Department - exempt services or not - Held that:- The similar issue is already decided in case of Mateshwari Indrani Contractors Pvt. Ltd. [2018 (6) TMI 665 - CESTAT NEW DELHI]. All the issues, which are being contested in these appeals have been decided in favour of the appellants by this Tribunal. The show cause notice does not whispers the category under which the services are to be qualified, post 1.6.2012. On the other hand, these are also statutory duties levied by the Government and accordingly, amended by the notification no.25/2012-ST dated 30.06.2012 - such collection of taxes and statutory levies by the Appellant on behalf of government/ statutory authorities is exempt from payment of Service Tax. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 948
  Refund of service tax - export of services - denial on the ground that the details of the Cenvat Credit were not appearing in the ST-3 Return for the period January, 2016 to March, 2016 and no concrete evidence was submitted with the claim that cenvat credit is available to them - N/N. 27/2012 dated 18.06.2012 - Held that:- The bare perusal of this condition makes it clear that what is to be determined to ascertain the eligibility of refund, is the balance of credit lying with the assessee, as on the last date of quarter as well as on the date of filing of the refund. To check the balance lying with the assessee the relevant documents are the accounts of the assessee in the form of balance sheets, bills & invoices. Though whatever balance is being shown in the accounts of the assessee has to find mention in the ST-3 but due to the said documents being the basis of ST-3 as far as the amounts shown therein as balance is concerned, ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter. Range Superintendent had also committed an error while rejecting the request of the appellant to revise the ST-3 return despite the availability of documents to justify the said revision mainly on the ground of it being proposed beyond the stipulated period. So has been done by Commissioner (Appeals) while endorsing this finding. Issue of the ST-3 return as the sole document to verify the balance - Held that:- From Rule 7B, it becomes clear that mistake in ST-3 return was a rectifiable mistake. The findings of Commissioner (Appeals) are held to lack the appreciation of all the documents as were relied upon by the appellant and based whereupon revision of ST-3 return inadvertently showing balance as nil, was proposed - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 947
  Security Services - non-payment/short-payment of service tax - it was alleged that value of the services were suppressed along with suppressing of rendering of certain services - benefit of cum-duty - Held that:- The benefit of cum duty is required to be extended to the appellant - The demand has been raised for the full consideration received by the appellant from their customers. This fact itself establishes that there was no service tax recovered by them from the service recipient. If the appellant was recovering service tax separately from the service recipient, the demand would have been raised in terms of the provisions of Section 73 A of the Finance Act. The fact that it has not been raised under the said section itself leads to inevitable conclusion that no service tax was being recovered by the appellant from their clients - matter remanded to Commissioner for re-quantification of the demand of service tax, after extending the benefit of cum duty. Penalty u/s 78 - Benefit of reduced penalty - Held that:- The Commissioner, in his impugned order, has extended the option to the assessee to pay all the dues within a period of 30 days of communication of the order in which case penalty payable would get reduced to 25% of the total tax confirmed against them. The appellant has not exercised the option given by the Commissioner and as such, at this point of time, they cannot claim the benefit of the said provision of law - the matter is being remanded for the re-quantification of the tax amount the penalty amount would also get reduced to the tax confirmed against them. Appeal allowed by way of remand.

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• 2019 (2) TMI 946
  Import of services - foreign remittances outside India for availing certain services for use in their manufacturing business - reverse charge mechanism - GTA Services - period 01.01.2004 to 31.12.2004 and period 01.01.2005 to 31.12.2006. Import of services received from outside India - Held that:- Though the Ld. Commissioner has in-principle agreed that service tax liability will arise on payment basis and not on accrual basis, he has considered the tax liability for the period from 2003 to 2006. It is now well settled legal position as held by the Hon’ble Supreme Court in Indian National Ship Owners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA], that the service tax liability will arise for foreign remittances made for import of services for the period 18.4.2006 onwards. In the instant case, since the period in dispute is 01.01.2003 to 31.12.2006, the demand would be restricted to import of taxable service for the period from 18.04.2006 to 31.12.2006 only - the adjudicating authority would accordingly re-compute the final service tax liability for the aforesaid period. Explanation 3 to Section 67 of the Finance Act, 1994 - Held that:- The service tax is payable only when the payment of consideration /foreign remittance is made (cash basis) as per Rule 6 of the Service Tax Rules, 1994. If the contention of the Revenue is accepted, the same would lead to premature demand which is legally not sustainable in view of the aforesaid provisions of Rule 6 - the demand which has been dropped by Ld. Commissioner is on account of point of taxation and not the value of taxable services - decided against Revenue. Service tax demand on Goods Transport agency service for the period January 2005 to December 2006 - abatement benefits - Held that:- The Revenue has filed appeal against the abatement benefits extended by Ld. Commissioner only on the ground that he has not verified the genuineness of the certificates submitted by concerned transporters based on which abatement benefit has been extended. However, no evidence has been provided by the Revenue to doubt the correctness of the said certificates provided by the transporters. Time limitation - penalty - Held that:- The service tax payable under reverse charge on import of services from outside India as well on Goods Transport services would be available as credit and hence, revenue neutral - Further, the very levy on import of service was under dispute which was finally settled by Hon’ble Supreme Court in Indian National Ship Owner’s Association - extended period not invocable - Since there is no suppression, penalty also not sustainable. Appeal allowed in part.

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• Central Excise

• 2019 (2) TMI 944
  A compilation of judgments has been filed in Court today by the learned counsel for the appellant, on which reliance has been placed by him. The same is taken on record, subject to all just exceptions - Issue Notice of motion to the respondents.

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• 2019 (2) TMI 943
  CENVAT Credit - input services - Banking, Auditing, Security services etc. - denial of credit on the ground that the specified services were exclusively under for traded goods - interpretation of statute - no intent to evade - extended period of limitation - period pertaining to November, 2006 to August, 2008 - Held that:- The trading was neither a service, nor exempted service during the material time and therefore the appellant was not covered by CENVAT credit scheme with reference to such activity. It cannot therefore be said that Rule 6 of CENVAT Credit Rules, 2004 would not apply for account maintenance. Extended period of limitation - Held that:- The Tribunal in our view has rightly relied on its earlier judgement in HCL Infosystem Limited [2014 (7) TMI 76 - CESTAT NEW DELHI] and held that there is no scope for any interpretational misconception on this aspect. Invocation of extended period was, therefore, held to be without any error. Appeal dismissed - decided against appellant.

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• 2019 (2) TMI 942
  Maintainability of appeal - applicability of Section 35-G of the Central Excise Act - imposition of penalty of ₹ 10,000/- - dismissal of appeal on the ground that the amount of penalty involved was less than ₹ 2,00,000/- - Held that:- Para (ii) of second proviso to Section 35-B does not apply, which is essentially meant to cover the cases referred in clause (b), clause (c) or clause (d) of subsection (1) of Section 35-B of the Act. Clause (ii) of second proviso to Section 35-B is not applicable in the present case and hence regardless of the fact that the quantum of penalty being subject matter of the appeal before the Tribunal was less than ₹ 2,00,000/-; the Tribunal did not have discretion to refuse to admit the appeal and non-suit the appellant, by holding its appeal as not maintainable. The impugned order dated 31.10.2017 passed by the Tribunal being contrary to the unequivocal statutory provision, deserves to be quashed and set aside - appeal allowed.

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• 2019 (2) TMI 941
  Condonation of delay of 121 days in filing the appeals - power of the CCE(A) to condone the delay - whether the assessee was entitled to file writ petitions challenging the said common Order-in-Original dated 29.2.2016 after having lost before this Court in CMA.Nos.1691 to 1700 of 2018 dated 07.8.2018, by which, the appeals filed by the assessee were dismissed confirming the orders passed by the Tribunal, which upheld the decision of the CCE(Appeals) rejecting the appeals filed by the assessee as barred by limitation? - Held that:- An identical issue was considered by the Hon'ble Full Bench of the Andhra Pradesh High Court in the case of Electronic Corporation of India Limited [2018 (3) TMI 767 - TELANGANA ANDHRA PRADESH HIGH COURT] wherein a reference was made by a Division Bench to the Full Bench raising a question as to whether the decisions of the Division Bench in the case of M/s.Resolute Electronics Private Limited Vs. Union of India [2015 (4) TMI 422 - ANDHRA PRADESH HIGH COURT] and in the case of Star Enterprises Vs. Joint Commissioner, Guntur [2015 (4) TMI 40 - ANDHRA PRADESH HIGH COURT] require reconsideration. In the decision in the case of Electronic Corporation of India Limited, the first question was answered against the assessee thereby holding that the period of limitation provided under Section 35 of the Act can be extended only upto 30 days as provided by the Proviso and it cannot be extended beyond 90 days. Statutory remedy or appeal under Section 35 of the Act - Held that:- Admittedly, the assessee, while responding to the show cause notices, which we find as periodical notices, did not specifically canvass the issue, which they raised in the writ petitions namely challenging the jurisdiction of the Authority to impose equal penalty for the period from March 2008 to March 2010. Secondly, the assessee did not raise the contention, which was raised in the writ petitions stating that equal penalty could not have been imposed for the period from 01.4.2010 to 31.1.2015 since there is no allegation in the show cause notices that there is any willful misstatement, fraud, collusion, etc with an intention to evade payment of duty. We find that while replying to the show cause notices, the assessee canvassed the merits of the matter stating that the demand itself is not maintainable - the issue, which has been raised by the assessee before us and in the writ petitions, touches upon the jurisdiction of the Adjudicating Authority to impose equal penalty for the period upto 31.3.2010 and whether circumstances warrant imposition of equal penalty post 31.3.2010. Thus, for the period from 01.4.2010, mens rea requires to be established to impose equal penalty. In our considered view, the issues as to whether equal penalty was imposable or in other words, whether the Adjudicating Authority had jurisdiction to impose equal penalty for the period prior to 31.3.2010 and as to whether facts warranted imposition of equal penalty for the period from 01.4.2010 are definitely issues touching upon the jurisdiction of the Authority to take a decision in the matter - thus, the assessee has made out a case for interference of the said common Order-in-Original in exercise of the powers under Article 226 of The Constitution of India, as we are prima facie satisfied that the Adjudicating Authority assumed jurisdiction, which has been shown to be not in existence for the period upto 31.3.2010. Petition allowed.

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• 2019 (2) TMI 940
  CENVAT Credit - inputs utilized in the manufacture of Plain Lateral Pipes and Tubes - classification of pipes and tubes - Held that:- Revenue is silent about the duty paid by the appellant on the said Plain Lateral Pipes and Tubes. Admittedly the said duty stands paid by them by utilizing the credit, which gets reversed at the time of payment of duty. In such circumstances the further reversal of the credit cannot be sought by the Revenue. If the Revenue was of the view that the said Pipes and Tubes were also exempted, and the appellant is not entitled to avail the credit, then the duty paid by the appellant on their final product was required to be refunded to them or to be adjusted or neutralized against the demand of credit being made. As such, the entire situation is revenue neutral - demand set aside. Demand of interest and penalty - Held that:- here is no dispute about the fact that the wrongly availed credit was not being used by the assessee inasmuch as there was sufficient balance in their credit account at the time of reversal of the excess availed credit. The Hon’ble Karnataka High Court in the above-referred judgement of Bill Forge (P) Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that in case the excess and wrongly availed Cenvat credit does not stand utilized, and is subsequently reversed, the same would not call for any interest liability. Interest set aside - Revenue has also not advanced any evidence to the contrary to show that such credit was being availed with a mala fide intention. The demand also stands raised by invoking the longer period of limitation. However, as the appellant is not disputing the said payment by them by reversing the credit, we, while upholding the said demand, set aside the penalty imposed upon the appellant. Demand upheld - interest and penalty set aside - appeal allowed in part.

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• 2019 (2) TMI 939
  CENVAT Credit - capital goods - immovable property - HR plates, MS sheets, MS plates, MS channels, joists, flats, squares, beams, etc., used for fabrication and erection of support structure for kiln plants for manufacture of sponge iron and demineralization plant to meet the requirement of water for the power plant and manufacture of sponge iron - Held that:- From the perusal of the show-cause notices itself, it is found that, the usage of the goods have been mentioned in the show-cause notices itself and after noting the usage, the CENVAT credit is sought to be denied on the ground that the impugned goods have been used for fabrication and erection of support structures, which are embedded to earth and is not an input or a capital goods. Further, once usage is admitted in the show-cause notice itself, appellant is not required to prove the same by any documentary evidence. Further, this issue has consistently been considered by various Benches of the Tribunal and the High Court and it has been held that the MS plates, MS angles, channels, HR sheets used as inputs for fabrication/manufacture of supporting structures to various machines like kiln, conveyor system, demineralization plants are eligible for CENVAT credit. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 938
  Clandestine manufacture - seal of machinery found to be broken - closure of factory - demand on the ground that the seal having been broken accidently during the period of closure, it is assumed that the said machine was used for production activities - N/N. 42/2008-CE dated 01.07.2008 - Held that:- Revenue in their memo of appeal, apart from reiterating the same allegation as were made in the show cause notice, has not further adduced any evidence to show that the broken seal of the machine has led to the use of the machine and the machine has produced Gutkha pouches on the same. The Commissioner has given a detailed finding and has also taken into account the report of the Deputy Commissioner indicating absence of any mala fide on the part of the assessee. Such report of the Deputy Commissioner is also based upon the scrutiny of various relevant documents and has not been controverted and rebutted by the Revenue. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 937
  Debonding of unit - scope of SCN - Held that:- The grounds of appeal do not dispute the factual position. The grounds of appeal are beyond the scope of the show cause notice. The grounds of appeal are without any merit. Hence, the appeals filed by the Revenue are liable to be rejected and consequential refund should be allowed to the Respondent. Time limitation - it has been held by the Commissioner (Appeals) that the appeal is time barred - Held that:- The said finding is a finding of fact. The said finding has not been challenged by the department. In other words, the demand has been set aside by the Commissioner on merits as well as limitation. However, in the instant appeals, the challenge is only on the merits of the case. The department seems to have accepted the order on limitation. Once the entire demand is time barred and it has been accepted by the Department, the question on merits would become purely academic. On this count alone, the present appeals filed by the department are liable to be dismissed. Nature of duty payable at the time of de-bonding - Held that:- even on merits, there is no case made out by the department in the instant appeal. The only case made out by the department in the show cause notice dated 01.11.2013 was that the nature of duty payable on the goods, which were procured indigenously, cleared by EOU to DTA is customs duty and not central excise duty. The show cause notice alleged that the goods cleared by EOU to DTA are to be treated as imported goods as EOU cannot be considered as located in India - the case id thus devoid of any merit. Discharge of excise duty liability by utilization of cenvat credit - Held that:- Revenue is of the view that the payment of central excise duty by the respondent at the time of de-bonding by debiting cenvat credit is incorrect. There is no legal basis for this view - as per Rule 17 of the Central Excise Rules, 2002 provides that in case where goods are removed from EOU to DTA, such removal shall be made under invoice and the duty leviable on such goods may be paid by utilizing the available cenvat credit or in cash. Thus, an EOU is permitted to utilize cenvat credit for discharging excise duty on removal of goods from EOU to DTA. Availment of cenvat credit of the excise duty paid on indigenous procured goods, SAD paid on capital goods imported and CVD and SAD paid on imported raw material - Held that:- The Revenue contends that the respondent is not eligible to avail cenvat credit on the inputs and consumables as the cenvat credit of the same is available at the time when the inputs and consumables are procured in the factory of manufacture of final product. This contention is without any legal basis. In the instant case, inputs and capital goods fall within the definition of ‘input’ and ‘capital goods’ as defined under Cenvat Credit Rules, 2004. This fact is not under dispute. The said inputs and capital goods were received in the factory of manufacturer and the same have been used in the manufacture of final products (excisable goods). This fact is also not under dispute. Furthermore, the Respondent has issued invoice under Rule 11 of the Central Excise Rules, 2002 while making payment of duty on such indigenous procurements. Hence, it is evident that the Respondent has fulfilled all the conditions of Rule 3 of the Cenvat Credit Rules, 2004 for availing credit of duty paid on such inputs and capital goods - credit of SAD should also be extended to the respondent on all imported procurement and not only on capital goods. Customs duty paid by debiting EPCG license and advance license - Held that:- The case of the department is that the customs duty paid, at the time of de-bonding, by the respondent through debiting EPCG license and advance authorization is not correct in terms of FTP 2009-14, as the advance license and EPCG license were obtained long after the cut-off date and hence, the same cannot be allowed to discharge Customs duties. This contention is without any legal basis - In identical set of facts, this Tribunal in Welspun Zucchi Textiles V/s CCE [2006 (8) TMI 55 - CESTAT, MUMBAI], wherein the issue was utilization of EPCG license for payment of duties on second hand machinery, at the time of de-bonding of EOU, which was duly allowed by the Development Commissioner. In the said judgment, ‘In principle’ approval for de-bonding was obtained on June 29, 1999, and the EPCG license was obtained on August 5, 1999, and benefit under the EPCG scheme was granted even though the EPCG license was obtained after acquiring the in-principle approval for de-bonding by Development Commissioner. Duty foregone on finished goods and raw materials exported pursuant to cut-off date - Held that:- The Revenue contends that the Respondent is liable to pay customs duty on the finished goods exported and raw material re-exported after the cut-off date as the respondent shall not be eligible for the benefits available to an EOU. There is no basis for this argument - the respondent cannot be placed in an indeterminate state in the intervening period till the NDC or final de-bonding order is obtained. Therefore, the respondent unit continues to remain an EOU till the date of final de-bonding order and is eligible to export finished goods without payment of duty under Bond B-17 - Even otherwise, assuming whilst denying, that the respondent is liable to discharge excise duty and customs duty in respect of the finished goods and raw materials, lying in exit stock, it would be a case of revenue neutrality as the respondent would be entitled to refund of the duty so paid. Hence, the entire exercise is purely academic and having no revenue implications. Liability of duty on WIP/semi-finished goods - Held that:- It is well settled that central excise duty is payable on ‘excisable goods’ as defined under section 2(e) of the Central Excise Act. No central excise duty is payable at intermediate stage. No goods are manufactured or produced at that stage. Appendix 14-I-L of the FTP Handbook of Procedures Vol. 1 outlines the exit from the EOU Scheme. The said appendix lays down the applicable customs and excise duties payable by the unit on imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods. It does not provide for payment of duties on WIP. Obviously and logically so. Therefore, no duties of customs are payable on WIP at the time of debonding. Once the appeal filed by the Department is rejected, the action proposed by the Revenue on the refund application is negated. Hence, the payment of duties, in cash, subsequently, after the objection taken by the department, becomes refundable to the Respondent. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 936
  SSI Exemption - Reversal of CENVAT Credit - amount equivalent to the Cenvat Credit contained in respect of inputs received for use in the manufacture of final product, which are lying in stock as on 1.4.20007 - proviso of Rule 11(2) & 11(3) of the Cenvat Credit Rules, 2004 - option exercised for exemption of Excise duty, under N/N. 8/2003-CE dated 1.3.2003. Held that:- Reliance placed in the appellant own case for the earlier period COMMISSIONER OF CENTRAL EXCISE, NASHIK VERSUS M/S TIRUPATI PIPES & ALLIED INDS. PVT. LTD. [2009 (12) TMI 1020 - CESTAT MUMBAI], where it was held that while opting for SSI exemption the assessee is not required to reverse the CENVAT Credit. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 935
  Clandestine manufacture and removal - excisable goods cleared without payment of duty by showing such goods as traded goods which have been manufactured/procured from other firms - Section 9D of Central Excise Act, 1944 - the entire case of department is primarily based on the statements of 13 odd witnesses whose statements have been relied upon in the show cause notice for demanding central excise duty. Held that:- As ordered by this Tribunal in its previous order dated 04/03/2015 that the department need to comply with the requirement of Section 9D (1) of Central Excise Act, 1944. It has been provided under Section 9D (1) of Central Excise Act, 1944 that statement made and signed by a person before any central excise officer of a gazette rank during the course of enquiry of proceeding under the Central Excise Act shall be relevant for the purpose of proving, non-prosecution for an offence made under this Act. The Adjudicating Authority was required to make available the witnesses for cross-examination to the appellant to establish the evidence as legally sustainable since no other corroborative record have been produced by the department to prove the case of evasion of central excise duty by the appellant by resorting to clandestine manufacture and trading of the same in the garb of trading undertaken by their sister concern. Since, the witnesses have not been cross-examined at the time of adjudication. We feel that the evidentionary value of such statements have been lost and same alone cannot be accepted for proving the case of duty evasion only on the basis of such statements. For proving a case of clandestine manufacture and clearance of dutiable goods, some evidences more concrete and convincing nature need to be adduced. It is a settled law that in cases of alleged clandestine removals and duty evasion the burden lies on the department to prove that activities of manufacturing, its clearance and thus duty evasion have taken place with concrete evidences. We find that the department have not been able to adduce any evidence to show as to from where such a huge quantity of raw materials have been procured by the appellant to manufacture the excisable goods and to whom the same were sold without payment of duty, as to how such a huge quantities has been transported clandestinely after its clearances. We find that no enquiries have been made at the end of the buyers. Since the department has failed to establish the crucial evidences of clandestine manufacture and its clearance, we find that a case of clandestine removal and thereby evasion of central excise duty has not been established by the department - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 934
  Clandestine removal - MS Ingots - failure on the part of Revenue to prove the clandestine activity - admissibility of evidences - Section 36B of the Central Excise Act. Held that:- The grave misconduct alleged in this case is clandestine removal and hence, the burden is always on the Revenue to establish the same, if not with mathematical precision, but, at least beyond reasonable doubts. Persons whose statements are recorded have retracted and such retractions find place in the record. On a perusal of the statements, even they are not leading us anywhere since no one has spoken as to him witnessing any event : even the Mahazar is not beyond suspicion. In this context, Ld. Advocate’s argument deserves merit when he says that the seizure of pendrive was from the personnel and that the same was not attached to any computer; that nowhere in the panchanama/Mahazar do we find the make of pendrives. Hence, the allegation of clandestine removal is not made out beyond doubts. Admissibility of evidences - Section 36B of the Central Excise Act - Held that:- Section 36B of the Central Excise Act which plays a crucial role requires the Revenue to comply with its requirements when it comes to the admissibility of evidences in the form of micro-films, facsimile copies of documents and computer printouts - On a careful analysis of the basic requirement of Section 36B, what it requires as evidence is a document, may be a micro-film or facsimile or a statement contained in a document and included in a printed material produced by a computer. Therefore, it clearly has the effect of excluding any other thing other than a document, that is to say, it excludes any material or thing other than documents. We are therefore constrained to hold that the pendrive(s) not being a document should also get excluded from the provisions of Section 36B(1). In this case, we do not find either in the statements of any persons or by means of any independent investigation by the Revenue as to who was actually having lawful control over the use of the computer. This assumes importance especially when the case of the assessee is that the pendrive seized was a standalone pendrive, not attached or inserted in the computer. As a natural corollary, the printout obtained from the pendrive is not the one covered by Sub- Section (2) as the Revenue has nowhere established that the alleged printout was a result of regular supply in the ordinary course of the appellant’s business. Strangely, the Revenue relies on such printouts, running over one thousand pages, but even then the same is not foolproof since undisputedly, the requirements of Section 36B (4) are not at all complied with. Sub-Section (4) (supra) requires a certificate if a statement is sought to be relied or used as evidence and no such exercise is done by the Revenue. We have come across umpteen number of cases wherein the courts have discorded the computer printouts, but the much worse situation here is that the alleged printouts were not from any computer but from standalone pendrive(s) fed into computer(s) in the office of the DGCEI which is palpably incorrect and susceptible to innumerable doubts. The Revenue has miserably failed to prove clandestine removal and therefore, the impugned demands cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 933
  CENVAT credit - whether the provision of Rule 6(3)(b) would apply in such a scenario when the goods stand cleared on payment of duty? - Held that:- The said payment in terms of Rule 6(3)(b) is meant to neutralize the cenvat credit so availed by assessee in respect of inputs which have gone into the manufacture of the exempted goods. Such neutralization would be effective only when no duty stands paid on the final product. In case the final product has already paid the duty, there is no need for any neutralization. The Adjudicating Authority has examined the said issue only from one angle i.e. applicability of Rule 6(3)(b) in case of exempted clearance and has not taken into account the entire facts and circumstances of the case. The earlier proceedings iniated against the same assessee were dealt with by Commissioner (Appeals) who vide his order dated 20.11.2009 observed that in case of exempted goods and clearance on payment of duty which is much more than the amount required in terms of Rule 6(3)(b), there is no question of further payment - also, when the appellant had paid duty on their final product they must have paid the same by utilizing the credit so availed by them in respect of common input used for dutiable as also exempted final product in which case there would be no question of further neutralization of cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 932
  Clandestine removal - Cold Rolled products in various forms like Coils/Shets/Strips and Plain/Corrugated Galvanized Sheets - Revenue’s entire case is based upon the factum of purchase of raw material at Chandigarh Depot and the allegation that the same was subsequently transfered to the respondent’s Sahibabad factory who utilized the same for manufacture of their final product removed clandestinely back to their Chandigarh Depot from where the same was sold to various parties. Held that:- Admittedly the raw material purchased at Chandigarh depot was reflected in their account book and as rightly held the same could not be sold in an unaccounted manner. Even though the Revenue has contested that the transactions at Chandigarh were with the related parties of assessee but none of those related parties have been made a party to the proceedings. Apart from the bare allegations, there is not even an iota of evidence to show as to how such huge quantity of raw material was transported from Chandigarh to Sahibabad and as to how the final product allegedly manufactured at Sahibabad were transported to Chandigarh in a clandestine manner. Apart from the fact that the Revenue has not produced any evidence to show engagement of such a huge number of trucks by the assessee, we also note that at no point of time even a single truck was ever intercepted by the Revenue. Further, during the relevant period the entry of goods in the State of Uttar Pradesh was to be accompanied with Form 31 issued by the Sales Tax Department and the goods were physically checked at the entry points of State - There being no evidences to that effect the allegations of clandestine manufacture and removal cannot be upheld and have been rightly dropped by the Adjudicating Authority. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 931
  CENVAT Credit - removal of inputs as such - input or not - Revenue has taken the view that the inputs procured for manufacture of Synthetic Detergent Powder, cannot be considered as inputs covered by the definition in Rule 2(k)(1) of the Cenvat Credit Rules - Held that:- The definition of “input” covers all goods, which are utilized in the manufacture of final product in the assessee’s factory. The assessee has procured various inputs, some of which were required for manufacture of Synthetic Detergent Powder. It so happened that the assessee did not actually commence the manufacture of this product while continuing with the manufacture of all other products in the factory. The inputs procured for the same, were cleared as such, since they could not be used in the manufacture. The Cenvat Credit Rules, 2004, provides for the circumstances, in which the inputs procured for manufacture, can be cleared as such. Rule 3 (4) subsequently provides for this scenario. It is specifically provided that when inputs are cleared as such, the manufacturer is required to reverse the amount equal to the cenvat credit taken on inputs. It is seen that the requirement of this Rule has been satisfied by the assessee - It is well settled position of law that once cenvat credit availed is reversed, it is to be considered as ab initio not availed - the assessee cannot be held to have availed cenvat credit irregularly in respect of inputs cleared as such. Demand of Interest - whether the assessee will be liable to pay interest on the cenvat credit availed on the inputs, which were never utilized in the manufacture? - Held that:- The assessee did not utilize the credit availed on the un-used inputs before reversal of the same. Under such circumstances, no interest liability will arise on the assessee. Penalty - Held that:- Since it is held that the credit availed cannot be held as irregular and no interest liability can be fastened on the assessee, there is no justification for imposition of penalty - penalty set aside. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (2) TMI 930
  Vires of Rule 24(i-eeee) of the Haryana Liquor License Rules 1970 (as amended by the Haryana Liquor License (Amendment) Rules 2017) - Punjab Excise Act, 1914 - single L-1BF license for the entire State to deal in imported foreign liquor, bottled outside India and imported into the country in a bottled form - creation of a monopoly by the State in favour of a private entity, to trade in liquor - Article 19(6) of the Constitution of India - Difference of Opinion. Held that:- While Section 71 confers power on the State Government to make rules there is no provision akin to Section 59 of the Punjab Excise Act which confers power on any other authority in which case it could not possibly be contended that sub-section (2) of Section 71 would in any manner cut down the width of the general power of Section 71(1) for the State Government to make rules for the purpose of the Act. The Financial Commissioner has power to decide upon the number of licenses. Appeal dismissed.

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• 2019 (2) TMI 929
  Jurisdiction - power of Commissioner of VAT to entertain Second Appeal - Imposition of penalty under Section 10(d) read with Section 10­A of the Central Sales Tax Act, 1956 - misuse of Form C - Transport business - registration under the “The Daman and Diu Value Added Tax Regulation, 2005” obtained - whether respondent No.2, the Commissioner of VAT had jurisdiction to entertain the Appeal filed by the petitioner against the order passed by the First Appellate Authority – respondent No.4 under the provisions of Section 74(1) of the Daman and Diu Value Added Tax Regulation, 2005? Held that:- Chapter XII of the Regulation provides for hearing of Appeals, Disputes and Questions. Section 74(1) provides for a remedy to challenge an assessment or order or decision made under this Regulation. Section 74(1)(a) provides for an Appeal to the Joint Commissioner or Deputy Commissioner or Assistant Commissioner having jurisdiction, when such decision has been made or order has been made and assessment has been made by any Value Added Tax Officer or Assistant Value Added Tax Officer. Section 74(b) provides for an appeal against an assessment made under the Regulation or any other order made under the Regulation to the Commissioner, when such decision has been made or order has been made or assessment has been made by the Assistant Commissioner, Deputy Commissioner or Joint Commissioner - The language of the proviso to Section 74(1) is clear and unambiguous. The proviso in clear terms mentions that only one appeal shall be made by the person against an assessment, decision or order. In view of the clear mandate in the proviso to Section 74(1), only one appeal is contemplated against any assessment, decision or order and therefore, the question of entertaining the second appeal by the Commissioner under clause (b) does not arise. In clearest terms and by employing the words “Such decision has been made or order has been passed or assessment has been made by the VAT Officer” the Legislature did not provide for a Second Appeal to the Commissioner nor designate him as the Second Appellate Authority. The proviso makes this position clear if at all there was any ambiguity. In our opinion, if proviso to Section 74 restricts the number of appeals, no further appeal against an order passed in appeal can lie to the Commissioner under clause (b) of Section 74(1) as a second appeal is not expressly provided in the Regulation. On the contrary, Section 74 has restricted the right of appeal to only one. In this view of the matter, the respondent No.2 – Commissioner, though in­charge of the administration exercising control over the officers mentioned in clause (a) of Section 74(1), cannot confer authority on himself to hear an appeal against orders passed by his sub­ordinate authorities in exercise of their appellate powers - when the language of Section 74(1), especially the proviso is so clear and unambiguous, we have no hesitation in holding that the Commissioner has no jurisdiction to hear and decide the second appeal. The impugned order passed by the respondent No.2 dated 9/11/2018, therefore, will have to be set aside for lack of jurisdiction. Whether the Administrative Tribunal constituted under the Administrative Tribunal Act, 1965 empowered to exercise powers of the Tribunal under the Sales Tax Act, 1964 can entertain and hear Appeals under the Regulation of 2005 till such time a Tribunal is constituted or notified in accordance with Section 73(1) of the Regulation of 2005? - Held that:- The Administrative Tribunal empowered by the Notification dated 17/7/1970 and 13/4/1972 would continue to exercise the powers and discharge the functions conferred on the Appellate Tribunal by or under the Regulation of 2005 till the time Government constitutes a Tribunal under Section 73(1) or notifies any other Tribunal to act accordingly. We note that even the Appeal filed by the petitioner is styled as an Appeal before 'the Tribunal'. It is well settled that a law does not create a vacuum nor does it leave anything to guesswork but always ensures that until a new regime is established, the earlier would continue to operate unless otherwise is provided by the new or reenacted law - there is no hesitation in observing that the Appeal filed by the petitioner on 15/5/2018 against the order dated 26/3/2018 passed by the respondent No.4 will have to be heard and disposed of by the Administrative Tribunal constituted by the Notification dated 8th July, 2003. Petition allowed.

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• 2019 (2) TMI 928
  Time limitation for making assessment - assessment to be initiated within five years - argument is that this would create an anomaly insofar as permitting assessments to be initiated within five years while re-assessment can only be within four years - Held that:- The limitation so provided for re-assessment again is a measure to ensure finality to proceedings already concluded. In the case of a regular assessment as has been found, the proceedings commence with the filing of return and this return is the basis on which the assessment is completed. There is hence no limitation provided for commencement of proceedings and the mandate could only be of a completion within a reasonable period. However the general sales tax law as also the Rules under the CST Act does not contemplate a period of limitation for conclusion of proceedings. All the same both contemplate a period of limitation for initiation of proceedings for re-assessment. It is only proper that in determining the reasonable time for initiation of proceedings for assessment, for which there is no specific time provided, the longer period prescribed for re-assessment is adopted. Notice for assessment for the year 2005-06 has been initiated respectively on 29.12.2012 and 26.12.2011, both beyond the five year period. Hence, necessarily the same has to be set aside - petition allowed in part.

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• 2019 (2) TMI 927
  Issuance of outstanding C-Form declarations - CST Act, 1956 - inter-State purchases - benefit of concessional rate of tax on inter-State sales - Held that:- In the details required to be stated by the dealer, it is required to state the registration certificate number which covers the purchase of such goods. Therefore, for the purpose of filling a declaration in Form-C, the person concerned is required to have a registration certificate at the time of purchase of goods. Sub-section (4) of section 8 of the Act provides that the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. In the present case, the petitioner being a registered dealer is required to supply C-Form to the selling dealer. Therefore, the petitioner seeks issuance of Form-C in respect of the purchases made during the period when the first petitioner had a registration certificate, that is, prior to 1.9.2016. In the opinion of this court, if the first petitioner meets with the requirements of section 8 read with rule 12 of the rules, it is entitled to be issued Form-C in respect of the inter- State purchases made by it. Besides, Form-C is issued under the Central Sales Tax Act and in the absence of any dues under that Act being outstanding, it is not permissible for the respondents to refuse to issue Form-Cs on the ground that tax under other enactments is outstanding. In fact even if there were outstanding dues under the Central Sales Tax Act, it would not be permissible for the respondents to refuse to issue Form-Cs, if the requirements of section 8 of the Act are satisfied. Thus, in the absence of any statutory bar operating against issuance of Form-C to a dealer in respect of the purchases made during the period when he was registered on the ground that his registration is subsequently cancelled, it is not legally permissible for the respondents to deny issuance of C-Forms to him. The respondents are directed to forthwith and not later than two weeks from the date of receipt of this judgment, issue the outstanding C-Form declarations under the Central Sales Tax Act to the petitioner in respect of the purchases made by it during the period when it was registered - petition allowed - decided in favor of petitioner.

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• 2019 (2) TMI 926
  Condonation of delay of 15 years i.e. 5,484 days in filing appeal - inordinate delay was explained by the applicant-assessee stating that a letter had been written to the General Manager of the assessee seeking guidelines with reference to the aforesaid assessment order dated 7.8.2003 - Held that:- It remains undisputed that the assessee had been served with the assessment order dated 7.8.2003 itself. Also, admittedly the appeal came to be filed for the first time on 15.9.2018 and not before that. The fact that the assessee may have made an application for refund of the money was of no consequence, inasmuch once the assessment order had been served on the assessee, there remained no occasion for claiming refund without the assessment order being first set aside, in appeal - The fact that the assessee had been writing letters internally is also of no consequence, inasmuch in the context of delay of 15 years procedural delays that sometimes occur in such matters and which are often accepted as due explanation of the delay do not are of few days or few months, not 15 years. The delay is wholly inordinate and excessive. Revision dismissed.

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• 2019 (2) TMI 924
  Benefit of Rule 9(1)(e) of the U.P.V.A.T. Rules denied - the goods in question were not specified in the original works contract, though according to the Tribunal, the goods were brought inside the State of U.P. by way of inter-state purchase for execution of the works contract by the assessee. Held that:- There is no dispute as to the fact that the assessee had been awarded and it had executed indivisible works contract. Also, the Tribunal recorded a specific finding that the assessee had made import of the goods only for the purpose of execution of and applied the goods to the works contract, in paragraph nos. 9 and 10 of the impugned order. In face of such finding it had to be accepted, the assessee had imported the goods only for the purpose of execution of the works contract and not for the purpose of any other business, trading or other contract. Merely because there was no privity of contract between the contractee and the actual seller of the goods (from whom the assessee made the purchases), and though such seller was not known/specified at the time of the execution of the works contract document, it would make no difference to the eligibilty to deduction claimed by the assessee under Rule 9(1)(e) of the Rules, on deemed interstate sale arising upon transfer of property in goods involved in the execution of the works contract. On the findings recorded by the Tribunal, the goods in question had been moved from outside the State solely by reason of the pre-existing works contract and those goods had been applied only solely the execution of that works contract. Therefore, the deemed sale of goods arose, only by way of inter-state sale as the movement of goods was occasioned by the prior contract of sale, namely the works contract - Rule 9(1)(e), though worded differently from section 3-F(2)(i) of U.P.Trade Tax Act, 1948, it does not and it cannot be permitted to convey a different meaning. Since in the present case, the Tribunal recorded a specific finding that there pre-existed works contracts between the assessee and the contractees and further the assessee had purchased the goods from outside the State of U.P., only to execute those pre-existing works contracts, in absence of any further finding that such goods had been sourced from before or that they were not applied to the works contract or that there arose two sales, the assessee was clearly entitled to the benefit of deduction contemplated under Rule 9(1)(e) of the Rules. Revision allowed - decided in favor of assessee.

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• Indian Laws

• 2019 (2) TMI 945
  Reconstitution of the firm - re-opening of the Bar - compliance for the permission for Bar to be opened - Held that:- The appellant is entitled to some lee-way insofar as the time prayed for making deposit - also, the Bar is remaining closed from September onwards. We are also persuaded by the fact that on our oral direction, the appellant has paid up ₹ 55 lakhs, exhibiting their bonafides. Considering the fact the licence expires on 31.03.2019, we cannot grant the time sought for by the appellant. We direct that 50% of the balance amounts be paid on or before 07.03.2019 failing which the license would stand cancelled on 08.03.2019. If such amounts are paid within the time stipulated, then, the appellant can be allowed to continue operating the Bar till 21.03.2019, by which time, the appellant will pay 50% of what is remaining to be paid after the remittance on 07.03.2019. Again the very same conditions would apply, if the payment is not made. On the second remittance also being made, the appellant shall be allowed to continue further and the entire amounts shall be paid within 31.03.2019. Appeal disposed off.

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