TMI Tax Updates - e-Newsletter
February 2, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Supply of services of Solid waste management, Garbage Collection, Disposal, Water Supply, Cleaning to state Housing Board is exempt from GST

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• No change in tax slabs of income tax for individuals - Benefit of exemption is available only if his total income is not exceeding Rs. 5 lac

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Highlights / Catch Notes

• GST:

  Classification - Power Bank - the principal function of the said Power Bank remains the same i.e storing and supplying of electric energy and ‘hence the said product merits classification of the heading 85 07. as an accumulator and not as Static Converter.
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• GST:

  Composite supply or principal supply? - supply of books by CHHATTISGARH TEXT BOOK CORPORATION as per instruction of School Education Department CG after printing the Syllabus - merits consideration as supply of printed books - Rate of tax is Zero
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• GST:

  Exempted supply or not - supply of services to Solid waste management, Garbage Collection, Disposal, Water Supply, Cleaning of Colony - Pure Services - Chhattisgarh Housing Board - Benefit of exemption allowed.
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• GST:

  Whether recovery of Parents Health Insurance expenses from employee in respect of the insurance provided by the Applicant amounts to “supply of service” - Held No - Applicant cannot claim input tax credit of GST charged by the insurance company.
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• GST:

  Input tax credit - GST paid for hotel stay in case of rent free hotel accommodation provided to employees of the Applicant - ITC is not available in view of section 17(5)(g)
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• Income Tax:

  Settlement commission order - Chairman and the Vice Chairman of a Settlement Commission are appointed from amongst serving Chief Commissioners or Principal Chief Commissioners or Principal Commissioner of Income Tax of equivalent rank and which again is a relevant factor for the Department to ponder, whether at all any order of a Settlement Commission unless staring on statutory violation or on perversity, should be assailed in a routine manner as having been done in the present case.
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• Income Tax:

  Revision u/s 263 - Deduction u/s 80IC - Since, AO had not expressed any view in that behalf as is discernible from the assessment order, revision order sustained.
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• Income Tax:

  Budget 2019 - There is no change in tax slabs of income tax for individuals - The benefit of exemption is available to individuals only if his "total income" is not exceeding 5 lakhs rupees - So this benefit is not for all.
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• Income Tax:

  Revision u/s 263 - agricultural activity - Seeds cannot be produced without basic agricultural activities. The assessee has sold the seeds and must have carried out the agricultural activities in order to produce the seeds - revision order set aside.
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• Income Tax:

  Once assessee has filed all the details and the audit report and has given explanation with regard to each and every entry of the trading account including expenses incurred with evidences, then no adhoc estimation of income or disallowance of expenses can be made.
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• Income Tax:

  Penalty u/s 271FA - assessee responded to the notice by furnishing the ‘Nil’ transactions - in the absence of reportable transaction, the assessee is not obliged to file the AIR and levy of penalty u/s 271FA is unjustified.
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• Income Tax:

  Addition u/s 69A - sale of residential property - receipt in cash against sale of property and refund by way of cheque when transaction failed - we agree with the assessee’s explanation, since source of cash explained - no addition.
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• Income Tax:

  Rate of depreciation on software - @25% or @60% - computer included computer software. Note 7 of the Appendix, defines computer software as any computer programme recorded in any information storage device. - assessee was eligible to claim depreciation at the rate of 60%
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• Customs:

  Evasion of ADD - imports of Ceftriaxone Sodium Sterile - the chemical formula was declared instead of the chemical name only to trick the assessment system and to evade ADD which would have been otherwise imposable on its import.
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• FEMA:

  Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2019
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• Indian Laws:

  Budget 2019-2020 - Interim
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• Indian Laws:

  Highlights of Interim Budget 2019-20
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• Indian Laws:

  BUDGET SUMMARY WITH MAJOR HIGHLIGHTS OF THE INTERIM BUDGET 2019-20
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• Indian Laws:

  Rationalization of customs duty and procedures to give boost to “Make in India” initiative RFID technology to be used to improve export logistics
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• Indian Laws:

  Tax collections increased from ₹ 6.38 Lakh Crore in year 2013-14 to almost ₹ 12 Lakh Crore this year 80% growth in tax base; number of returns filed increased from 3.79 crore to 6.85 Crore Within the next 2 years, almost all verification and assessment of returns selected for scrutiny to be done electronically
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• Indian Laws:

  GST, the biggest taxation reform, led to increase in tax base, higher collections and ease of trade Rates continuously reduced providing relief of about ₹ 80,000 crore annually to consumers Most items of daily use of poor and middle class now in the 0% or 5% tax slab Average GST collection in the current financial year stands at ₹ 97,10
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• Indian Laws:

  FM: India now 6th largest economy in the world with high growth Fiscal deficit down to 3.4%; average inflation 4.6% FDI of USD 239 BN in five years Banks recover ₹ 3 Lakh Crores in outstanding loans
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• Indian Laws:

  Government Unveils vision for the Next Decade
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• Indian Laws:

  Government takes several measures to strength then msmes Gem platform extended to all CPSES Government undertakings to procure a fixed proportion of materials from women owned SMEs
  Visit to Get Source

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• Indian Laws:

  Highest Ever Growth Of 42% Recorded in Minimum Wages of Labours during last 5 years
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• Indian Laws:

  Government proposes to launch mega pension yojana 'Pradhan Mantri Shram-Yogi Maandhan' for unorganised sector workers with monthly income upto rs. 15,000; 10 Crore Labourers and workers in the sector to be benefitted
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• Indian Laws:

  KEY TO BUDGET DOCUMENTS - BUDGET 2019-2020
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• Indian Laws:

  Interim Budget 2019-2020 - Speech of Piyush Goyal
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• Indian Laws:

  Dishonor of Cheque - A presumption arises from the act of issuance of cheque that it was “for the discharge in whole or in part, of” a debt or other liability and in terms of Section 139 NI Act, onus to prove facts to the contrary so as to rebut the said presumption would be of the petitioners.
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• Service Tax:

  Reverse charge mechanism - Recipient of service - It was not available to the appellant to make suo moto adjustments about the claims of the reinsurer, the scheme of availing credit itself is simultaneously in existence. Such suo moto adjustments shall forfeit the entire objective of credit availment scheme.
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• Service Tax:

  Classification of service - dealer commission - the assessee is neither acting on behalf of dealer nor providing any service to dealer. Therefore, the assessee definitely does not fit into the category of Commission Agent or under the definition of BAS.
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• Service Tax:

  Penalty u/s 76 and 77 of FA - non-discharge of service tax liability in spite of having collected the same from the service recipient - since there was reasonable cause for failure of the appellant to discharge tax liability, no penalty.
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• Service Tax:

  Pre-deposit is a mandatory requirement for admission of appeal and not for its dismissal after the appeal has been admitted, heard and taken up for orders - the Commissioner (Appeals) though dismissed the appeal on the ground of noncompliance of pre-deposit provision, he also discussed the merit of the appeal - This finding itself indicative of the fact that compliance of provision for pre-deposit was subconsciously accepted by the Commissioner (Appeals).
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• Service Tax:

  Penalty u/s 78 of FA - the intention of the appellant to evade tax is understood form its very conduct of non-filing of periodic returns and even not answering to the notices sent at least on three occasions - demand confirmed.
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• Service Tax:

  Suo-moto adjustment of excess service tax paid - If the assessee has made excess payment, the same can be adjusted towards the liability for subsequent months. The essence of this provision is to help the assessee who has made excess payment to utilize such excess amount to pay up the tax liability for other period.
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• Service Tax:

  Refund of service tax paid - export of services - place of supply - The destination of provision of service is to be considered on the basis of the place of consumption and not on the basis of place of performance of service
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• Service Tax:

  Classification of services - credit card services or not - the amount received by the appellant does not qualify as credit card services that when acquiring bank has discharged service tax liability on the entire amount, no service tax is payable by the appellant.
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• Central Excise:

  CENVAT Credit - exempt goods or not - waste and scrap of batteries - There was absolutely no proposal to demand the Credit attributable to the inputs involved in the waste of dry cell batteries. - Demand set aside as beyond the scope of SCN.
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• Central Excise:

  Refund of CENVAT Credit - High Sea Sale - trading activity - credit was reversed to buy peace - There is no evidence to show that common input services have been used for such High Sea Sales. - Refund allowed - Issuance of SCN is of no consequence.
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• Central Excise:

  CENVAT Credit - service tax under RCM on warehousing and logistics support services taken in Spain - clarifactory circular cannot have overwriting effect against statutory provision made by the legislature which by itself defines a warehouse as a place of removal - credit allowed.
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• Central Excise:

  CENVAT Credit - when finished products are exported, AVCL would not be making any gain by indulging in such fraudulent availment of credit, as they cannot use such credit - The department has failed to establish fraudulent availement of credit on the part of AVCL - demand do not sustain.
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Articles

• HIGHLIGHTS OF BUDGET 2019
• Sectionwise Commentary on The Central Goods And Services Tax (Amendment) Act,2018
• ANALYSIS OF GST NOTIFICATIONS ISSUED ON 29th JANUARY 2019
• Charity and Mutuality
• BLACK TEA – AN AGICULTURAL PRODUCE?

Notifications

• Customs

• F. No. 354/ 47 /2018- TRU - dated 31-1-2019 - Cus
  Corrigendum – Notification No. 03/2019-Customs, dated the 29th January, 2019

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• FEMA

• F. No. 1/22/EM/2016 - G.S.R. 78(E) - dated 31-1-2019 - FEMA
  Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2019

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• GST

• 07/2019 - dated 31-1-2019 - CGST
  Seeks to amend Notification No. 66/2018-Central Tax, dated the 29th November, 2018

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• F. No. 354/432/2018-TRU (pt.) - G.S.R. 81(E) - dated 31-1-2019 - CGST Rate
  Corrigendum – Notification No. 26/2018-Central Tax (Rate), dated the 31st December, 2018

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• F. No. 354/432/2018-TRU (pt.) - G.S.R. 82(E) - dated 31-1-2019 - IGST Rate
  Corrigendum – Notification No. 27/2018-Integrated Tax (Rate), dated the 31st December, 2018

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• F. No. 354/432/2018-TRU (pt.) - G.S.R. 83(E) - dated 31-1-2019 - UTGST Rate
  Corrigendum – Notification No. 26/2018-Union Territory Tax (Rate), dated the 31st December, 2018

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• Income Tax

• 09/2019 - dated 31-1-2019 - IT
  Amendment in Notification No. S.O. 2088(E) dated the 24th May, 2018

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Circulars / Instructions / Orders

• Income Tax - F. No. 275/192/2018-IT (B) - dated 1-2-2019
  Corrigendum - Circular No-1/2019 dated 1st January, 2019
• GST - 88/07/2019 - dated 1-2-2019
  Changes in Circulars issued earlier under the CGST Act, 2017
• GST - 04/01/2019 - dated 1-2-2019
  Rescinding of Circulars issued earlier under the IGST Act, 2017 to be effective from 01.02.2019
• GST - Order No. 01/2019 - dated 31-1-2019
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Central Goods and Service Tax Rules, 2017 in certain cases
• DGFT - Policy Circular No. 18 /2015-20 - dated 31-1-2019
  Relief in average export obligation in terms of Para 5.19 of Hand Book of Procedures of FTP 2015-20
• Customs - 04/2019 - dated 1-2-2019
  Rescinding Board Circular No. 46/2017-Customs dated 24th November, 2017
• Customs - 03/2019 - dated 31-1-2019
  Procedure to be followed in cases of manufacturing or other operations undertaken in bonded warehouses under section 65 of the Customs Act
• Customs - PUBLIC NOTICE NO. 26/2018 - dated 28-12-2018
  Revision of All Industry Rates AIRs of Duty Drawback
• Customs - PUBLIC NOTICE NO. 27/2018 - dated 28-12-2018
  Forwarding of received applications under Regulation 4 of Customs Brokers Licensing regulations, 2018 to National Academy of Customs, Indirect Taxes and Narcotics, NACIN
• Customs - PUBLIC NOTICE NO. 24/2018 - dated 17-12-2018
  Launching of AEO Web Application (aeoindia.gov.in)
• Customs - PUBLIC NOTICE NO. 25/2018 - dated 17-12-2018
  Launching of AEO Web Application (aeoindia.gov.in)
• Customs - PUBLIC NOTICE NO. 23/2018 - dated 6-12-2018
  Procedure for disposal of un-claimed/un-cleared cargo under section 48 of the Customs Act, 1962, lying with the custodians
• Customs - PUBLIC NOTICE NO. 22/2018 - dated 26-11-2018
  Implementation of PGA eSANCHIT - Paperless Processing under SWIFT - Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs
• Customs - PUBLIC NOTICE NO. 20/2018 - dated 12-11-2018
  Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents (eSANCHIT) in Exports

News

• Power Minister calls the Budget as historic, people friendly and forward looking Finance Minister thanks tax payers saying “Your tax pays for the electricity connections to the poor”

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• MSME Ministry allocated ₹ 7011 Crore in Budget 2019-20

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• To provide an assured income support to small and marginal farmers Govt. is launching Pradhan Mantri Kisan Samman Nidhi (P.M. Kissan) Budgetary allocation of Agriculture & Farmers Welfare Ministry has been raised by around 2.5 times.

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• PM's remarks on the Budget 2019-20

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• The Budget for New India will energise the nation, says PM

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• Budget empowers all sections of society: PM

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• Fiscal deficit to be at 3.4% of GDP this year: Goyal

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• Rs 3 lakh cr recovered from big corporate loan defaulters: FM

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• Farmers to get ₹ 6,000/yr in 3 installments under Centre funded scheme: FM

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• Budget 2019: Sensex, Nifty hold on to gains

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• Other banks to be out of PCA framework soon, says FM

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• Inflation hidden, unfair tax on poor, middle class; govt broke the back of high prices: Goyal

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• Interim Budget: Income tax exemption raised, farmers to get cash dole

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• Union Home Minister, Shri Rajnath Singh hails the Interim Budget as historic

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• Union Minister of Consumer Affairs, Food and Public Distribution, Shri Ram Vilas Paswan lauds the Budget as a landmark – Sabka Saath Sabka Vikaas Budget which has provision for betterment of all sectors of the economy with a special focus on the social sector.

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• Total Budget allocation for the WCD Ministry enhanced by ₹ 4856 crores for the year 2019-20 showing an increase of 20% Three-fold increase in Budget for Working Women’s Hostel ₹ 4500 crores increase in Umbrella ICDS Scheme

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• Rs 1,03,927 allocated to MHA in 2019-20 budget

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• Fiscal Programme for 2019-20 and beyond

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• Income upto ₹ 5 Lakh to get full tax rebate; higher standard deduction proposed

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• Pradhan Mantri Kisan Samman Nidhi announced to provide assured income support to small and marginal farmers

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• Budget 2019-2020 - Interim

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• Highlights of Interim Budget 2019-20

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• Allocation for the North Eastern Areas is being proposed to be increased by 21% to ₹ 58,166 crore in 2019-20 BE over 2018-19 BE: Finance Minister

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• Higher budget allocation for Space technology

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• Government to implement recommendations of the Inter-Ministerial Committee that made several recommendations regarding Exploration in Petroleum and Gas sector

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• BUDGET SUMMARY WITH MAJOR HIGHLIGHTS OF THE INTERIM BUDGET 2019-20

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• 15.56 Crore Loans amounting to ₹ 7,23,000 crore disbursed under Mudra Yojana Government envisages National Programme on 'Artificial Intelligence'

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• A Committee under Niti Aayog to be set -up to complete task of identifying De-Notified, Nomadic and Semi-Nomadic Communities not yet formally classified

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• Rs. 1330 Crore provided in the Interim Budget 2019-20 for the Mission for Protection and Empowerment for Women

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• Government allocates ₹ 64,587 Crore for Railways in 2019-20 Infra allocation for north eastern areas increased by 21% to ₹ 58,166 Crore in 2019-20

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• Defence budget hiked to ₹ 3,05,296 crore

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• One Lakh villages to go digital over next five years JAM-DBT – game changers since bank Nationalisation half century ago 34 Crore new bank accounts in last five years under Jan Dhan; Aadhaar reach near Universal Single window clearance for film shoot, available to foreigners, to be extended to Indian filmmakers Cinematograph act to be amended to check piracy

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• Anti-black money measures brought undisclosed income of about ₹ 1.3 Lakh Crore to tax ₹ 6,900 Crore worth Benami assets and ₹ 1600 Crore worth foreign assets attached 18% growth in direct tax collection in Fy 2017-18 Tax base increased by 1.06 Crore people filing ITR for 1st time mainly on account of demonetization

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• Rationalization of customs duty and procedures to give boost to “Make in India” initiative RFID technology to be used to improve export logistics

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• Tax collections increased from ₹ 6.38 Lakh Crore in year 2013-14 to almost ₹ 12 Lakh Crore this year 80% growth in tax base; number of returns filed increased from 3.79 crore to 6.85 Crore Within the next 2 years, almost all verification and assessment of returns selected for scrutiny to be done electronically

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• GST, the biggest taxation reform, led to increase in tax base, higher collections and ease of trade Rates continuously reduced providing relief of about ₹ 80,000 crore annually to consumers Most items of daily use of poor and middle class now in the 0% or 5% tax slab Average GST collection in the current financial year stands at ₹ 97,100 crore per month as compared to ₹ 89,700 crore per month in the first year GST council to appoint a group of ministers to examine and make recommendations to reduce GST burden on home buyers

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• FM: India now 6th largest economy in the world with high growth Fiscal deficit down to 3.4%; average inflation 4.6% FDI of USD 239 BN in five years Banks recover ₹ 3 Lakh Crores in outstanding loans

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• Government Unveils vision for the Next Decade

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• Government takes several measures to strength then msmes Gem platform extended to all CPSES Government undertakings to procure a fixed proportion of materials from women owned SMEs

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• Highest Ever Growth Of 42% Recorded in Minimum Wages of Labours during last 5 years

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• Government proposes to launch mega pension yojana 'Pradhan Mantri Shram-Yogi Maandhan' for unorganised sector workers with monthly income upto rs. 15,000; 10 Crore Labourers and workers in the sector to be benefitted

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• KEY TO BUDGET DOCUMENTS - BUDGET 2019-2020

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• Interim Budget 2019-2020 - Speech of Piyush Goyal

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Case Laws:

• GST

• 2019 (2) TMI 66
  Classification of traded item - Power Bank - Whether the “Power Bank”, traded by the Applicant, is classifiable under Heading 8504 40 90 as ‘Static Converter -Others’? - Held that:- The principal function of the instant product is to store the electricity in the battery of the said product and to supply the same when required. Hence it is pertinent to mention here that the battery in the Power Bank is the main / core part of the device and without the battery the Power Bank would not function in the required manner. The charge management system is an ancillary circuitry for Charging the battery and the voltage boost converter is also an ancillary circuitry to draw the current from the battery at the relevant rating, depends on the load of the device connected. The Power Bank can also be used in the absence of the said voltage booster system, in which Case only the prescribed / pre-determined rate of current only can be drawn - the principal function of Power Bank is only to charge, even though the additional circuitry is embedded in it for drawing required rated current depends on the load. The accumulators are covered under heading 8507 whether or not they include any ancillary components which contribute to their function of storing and supplying electric energy. Further the. accumulators are classified under the heading 85.07 even if they are designed for use with a specific device. Therefore, even though the battery in the said “Power Bank” is attached to the ancillary circuitry of “Voltage Booster System”, for effective function of the said battery, the principal function of the said Power Bank remains the same i.e storing and supplying of electric energy and ‘hence the said product merits classification of the heading 85 07. as an accumulator.

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• 2019 (2) TMI 65
  Classification of supply - Supply of goods or supply of services - composite supply or principal supply? - supply of books by CHHATTISGARH TEXT BOOK CORPORATION as per instruction of School Education Department CG [Loksikshan Sanchnalay) after printing the Syllabus decided by the SCERT - supply of books by CHHATTISCARH TEXT BOOK CORPORATION as per instruction of various agencies of school Education Department CC such as Rajiv Gandhi Siksha Mission/ SCERT/office of District education officer etc.- zero rate sales or not - Held that:- It is clear from the information provided by CHHATTISGARH TEXT BOOK CORPORATION that as per standing order issued by the State Government it performs activities related to various academic classes - the State Government has constituted the CHHATTISGARH TEXT 300K CORPORATION for various 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. 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 - from the details put forth by the applicant before us, it is observed that had it been the case where the printer of books engaged by Chhattisgarh Text Book Corporation for getting the books printed where only the content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belongs to the printer, supply of printing [of the content supplied by the recipient of supply] would definitely qualify being treated as the principal supply and such supplies would constitute supply of service, which is not the case here. This, in this case supply of goods is involved i.e. ‘supply of specified printed educational books'/ which is the principal supply and accordingly, the said supply merits being treated as “printed books” attracting zero rate 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 28-06-2017.

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• 2019 (2) TMI 64
  Rate of GST - Exempted supply or not - supply of services to Solid waste management, Garbage Collection, Disposal, Water Supply, Cleaning of Colony - Pure Services - N/N. 12/2017 dated 28th June, 2017 - Governmental Board - Authority issuing work order to the applicant i.e. Chhattisgarh Housing Board - public utility services - Held that:- Chhattisgarh Housing Board is a “Government Authority” as per No. 12/2017-State Tax (Rate) No. F-10- 43/2017/CT/V(80), Naya Raipur, Dated 28.06.2017 and as amended by Notification No. 31/2017-State Tax (Rate) No. F-10-82/2017/CT/V(146), Naya Raipur, Dated 13.10.2017 - Chhattisgarh Housing Board is a Government Authority fully owned by the State Government. Whether the nature of service supplies being provided by the applicant falls under 12th schedule, Article 243W of the Indian Constitution? - Held that:- The service supply to be provided by the applicant by their very nature appear to fall in the list of services enumerated under serial no. 5, 6, 8, 10, 12 and 17 of 12th schedule of Article 243W of the Indian Constitution, thus qualifying the admissibility criterion. It has also been categorically stated by the applicant that the said services to be provided to Chhattisgarh Housing Board does not involve any transfer/sale of any goods - the said services provided by the applicant to Chhattisgarh Housing Board qualifies being placed under the category of services as stipulated under Notification No. 12/2017-State Tax (Rate) No. F-10-43/2017/CT/V(80), Naya Raipur, Dated 28.06.2017 and hence is exempt.

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• 2019 (2) TMI 63
  Input tax credit - GST paid for hotel stay in case of rent free hotel accommodation provided to General Manager and Managing Director of the Applicant - invoice for quality claim raised by the Applicant on POSCO Daewoo Corporation located in Korea - export of service - recovery of Parents Health Insurance expenses from employee - supply of service or not. Whether Input Tax Credit is admissible in respect of GST paid for hotel stay in case of rent free hotel accommodation provided to General Manager and Managing Director of the company? - Held that:- As per Section 16 (1) of the CHST Act, ITC is available on the tax charged on any supply of goods or services or, both to the applicant which are used or intended to be used in the course of furtherance of their business - the Hotel Accommodation is being used by the applicant as a residential premises of their MD/ GM which is for the personal comfort of both and therefore in view of the provisions of Section 17(5)(g) we hold that they are not eligible to claim the ITC for the same. Whether invoice for quality claim raised by the Applicant on POSCO Daewoo Corporation located in Korea will be treated as '“export of service”? - Held that:- In the present case, in respect of the so called defective goods they have not stated whether the goods were sold as such to their clients or whether the goods were sold to their customers after they have carried out “low value-added processing function in respect of some of the traded goods based on customer's requirements - the complete details regarding the transaction have not been submitted by them and therefore this issue is not answered. Whether recovery of Parents Health Insurance expenses from employee in respect of the insurance provided by the Applicant amounts to “supply of service” under Section 7 of the Central Goods and Service Tax Act, 2017(CGST Act, 2017)? - Time of supply - value of supply - input tax credit of GST charged by the insurance company - Held that:- Appellant are not rendering any services of health insurance to their employees and hence there is no supply of services in the instant case. Since there is no supply, we do not find the need to answer the second part of this question - the Applicant cannot claim input tax credit of GST charged by the insurance company.

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• 2019 (2) TMI 62
  Application for withdrawal of appeal - Levy of GST - Export of consultancy service to Foreign Company and Amount received 100% in foreign currency through Bank - Held that:- The Application in GST ARA form No. 01 of M/s. PLATINA BUSINESS MANAGEMENT PRIVATE LIMITED is disposed off as being withdrawn unconditionally.

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• Income Tax

• 2019 (2) TMI 61
  Reopening of assessment - notice beyond four years - interest on fixed deposit undisclosed - Held that:- Undisputedly, the impugned notice dated 26.3.2018 has been issued beyond the period of four years from the end of relevant assessment year i.e 2011-12. The regular assessment was completed under Section 143(3) of the Act. Thus, in view of the clear mandate of the first proviso to Section 147 of the Act, reopening notice on the above facts can only be sustained if there has been a failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment. Bare reading of the reasons in support of the impugned notice would make it evident that there has been a complete disclosure of all material facts on the part of the petitioner in the regular assessment proceedings under Section 143(3) of the Act. This is so as the basis of the notice as indicted in the reasons is information collected from the examination of the records. There is no new tangible material received by the AO that has triggered the impugned notice. Moreover, these reasons, further, record that the amounting to ₹ 1.84 crore have been credited to profit and loss account and have been offered to tax by the petitioner as part of its business income, however, the same was not accepted by the Assessing Officer on the ground that the petitioner did not carry out any business. Be that as it may, the impugned notice is clearly hit by the first proviso to Section 147 as there has been no failure on the part of the petitioner to disclose truly and fully all material facts necessary for assessment in the proceedings leading to an order under Section 143(3) of the Act. - decided in favour of assessee.

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• 2019 (2) TMI 60
  Reopening of assessment - MAT computation - determination of book profit u/s 115JB - Held that:- As regular assessment proceedings for the subject assessment year were completed on 17th March, 2015 under Section 143(3) of the Act. The reasons in support the impugned notice do not indicate that there was any failure on the part of the petitioner to truly and fully disclose all material and primary facts necessary for assessment truly and fully, during the regular proceedings under Section 143(3) of the Act. Thus, on this short ground itself the impugned notice is hit by the proviso to Section 147 of the Act and is without jurisdiction. Also during the assessment proceeding queries were raised by the Assessing Officer with regard to the petitioner’s claim for provision for doubtful debts and petitioner had responded to same in detail by its letter dated 12th January, 2015. It was after AO satisfying himself with the petitioner’s reply that the petitioner's book profit were determined under section 115JB of the Act. This would indicate that the impugned notice is an attempt to review the order dated 17th March, 2015 under Section 143(3) of the Act, which is clearly not permissible. - Decided in favour of assessee.

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• 2019 (2) TMI 59
  Deduction u/s 10B - computation without setting off of any carried forward losses and unabsorbed depreciation - Held that:- It is only logical and natural that the stage of deduction of profits and gains of the business of an eligible undertaking has to be made independently and therefore immediately after the stage of determination of its profits and gains. As pointed out that at that stage the aggregate of income under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. Thus, it held that the deductions under Section 10A would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. For the above reasons, it was held that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI of the Act. As pointed out by us earlier, the arguments advanced by the learned counsels for the parties was not the arguments which were put forth before the Tribunal. That apart, the decision of the Tribunal was rendered in the year 2007 and the law on the issue has been interpreted by the Appellate Courts and some of the decisions have been referred supra. All the decisions which were referred by us, the latest being the decision of the Apex Court in the case of Yokogawa India Ltd (2016 (12) TMI 881 - SUPREME COURT). The issue requires to be decided afresh, more particularly, in the light of the law laid down by the Hon'ble Supreme Court as to its applicability to the case on hand. Thus, we are of the view that the matter requires to be remanded to the Assessing Officer for fresh consideration. Tax case appeals filed by the assessee are allowed and the orders passed by the Tribunal and CIT(A) are set aside and the matter is remanded to the Assessing Officer to take a fresh decision

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• 2019 (2) TMI 58
  Settlement commission order - whether the Settlement Commission has defaulted in its exercise to warrant any interference? - Held that:- Department can raise no objections on this count because every objection raised by the Commissioner, Income Tax as regarding non-disclosure by the assessee is well discussed and disposed with reasons. In the nature of exercise so undertaken by the Commission, we completely fail to appreciate as to the cause of action for the Department to maintain this writ petition. As we have noted above, Chapter XIXA of the Act incorporates a special procedure for settlement on the basis of full and true disclosure of income by an assessee and considering that the Commission has taken note of each of the objections raised by the Commissioner in his report and after testing the same against the disclosure made by the assessee in his application, proceeded to dispose of the matter by the order impugned, in our opinion, it is on a misconception of a legal position that the writ petition has been filed which does not raise any issue having lawful support warranting any indulgence. As we have already noted above, the power exercised by this Bench to examine an order passed by the Settlement Commission is limited on its statutory compliance or perversity and we do not find any instance present in the order impugned which draws itself in either of the two class requiring interference by this Court. We also do note that the Chairman and the Vice Chairman of a Settlement Commission are appointed from amongst serving Chief Commissioners or Principal Chief Commissioners or Principal Commissioner of Income Tax of equivalent rank and which again is a relevant factor for the Department to ponder, whether at all any order of a Settlement Commission unless staring on statutory violation or on perversity, should be assailed in a routine manner as having been done in the present case.

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• 2019 (2) TMI 57
  Revision u/s 263 - violation of conditions stipulated u/s 10A(2)(ii) and (iii) as assessee's undertaking claiming exemption for the first time under Section 10A for the assessment year 2000-01 - Held that:- As decided in the case of Super Auto Forge Ltd., Vs. Additional Commissioner of Income Tax [2014 (4) TMI 897 - MADRAS HIGH COURT] the assessee was engaged in the business of manufacturing of Auto parts and it has four units. One of the units was registered as Domestic Tariff Area Unit with the Central Excise Authorities during November, 1999. Subsequently, an application was submitted by the assessee therein before the Madras Export Processing Zone (MEPZ) to treat the Domestic Tariff Area unit as 100% Export Oriented Unit. Permission was granted and the Unit came into existence from 31.03.2000 as an Export Oriented Unit. For the assessment year 2001-02, the assessee showed net profit and claimed exemption under Section 10B of the Act, in respect of the 100% Export Oriented Unit. The claim was rejected by the Assessing Officer and the Tribunal. On appeal to this Court, the appeal filed by the assessee was allowed and it was held that the assessee was entitled to the exemption in respect of 100% Export Oriented Unit. - Decided in favour of the assessee and against the Revenue. Revision u/s 263 - Held that:- As decided Principal Commissioner of Income Tax Vs. H.Nagarajain [2018 (6) TMI 105 - KARNATAKA HIGH COURT] the conclusion reached by the Commissioner, while exercising revisional jurisdiction, tantamount to directly interfering with the conclusions reached by the appellate Commissioner and such power of the Revisional authority cannot be conceded to enable him to interfere with the orders passed by the appellate Commissioner, in view of the doctrine of merger and therefore, it was held that the Revisional Authority acted without jurisdiction in passing the said order. We concur with the view taken by the Tribunal in holding that the Revisional Authority has exceeded in jurisdiction in invoking the provisions of Section 263 of the Act when the assessment order with regard to claim of deduction under Section 10A of the Act has merged with the order passed by the CIT(A) dated 25.10.2005. - Decided in favour of assessee.

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• 2019 (2) TMI 56
  Revision u/s 263 - Deduction u/s 80IC - Held that:- In the present case, the claim of the assessee for 100% deduction under Section 80IC of the Act after the expiry of initial five years from assessment year 2006-07 when the commercial activities in the firm M/s M A Industries were started, whereas substantial expansion was carried out during the period relating to assessment year 2011-12 was not admissible. AO had not expressed any view in that behalf as is discernible from the assessment order. Tribunal in the case of M/s Hycron Electronics s case [2015 (6) TMI 725 - ITAT CHANDIGARH] had also held similar issue against the assessee. No doubt, the Himachal Pradesh High Court did express contrary view in appeal against the said decision of the Tribunal which was reversed by the Apex court in Commissioner of Income Tax Vs. M/s Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA]. Thus, contention of the assessee that where two views are possible, recourse to proceedings under Section 263 of the Act is unwarranted, does not come to his rescue in the present factual matrix as noticed hereinbefore. Claim of 100% deduction under Section 80IC for the assessment year 2011-12 when the industrial unit had been set up in the financial year 2005-06 relating to assessment year 2006-07, it could not be disputed that the matter is no longer res integra and is concluded by the decision of the Apex court in Classic Binding Industries case [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] against the assessee and in favour of the revenue.

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• 2019 (2) TMI 55
  Penalty u/s 271AA - scope of amendment - assessee discussed the provision u/s 271AA of the Act as it stood relevant to the year under consideration and its substitution thereafter w.e.f. 01.04.2014 - Held that:- We find that it was rightly pointed out by the Ld.AR that the entire provision was substituted vide Finance Act, 2012 w.e.f. 01.07.2012 thereby prima facie the said provision is not applicable to the present case. AO primarily imposed penalty u/s 271AA of the Act only on the condition that the assessee reported “no international transaction in its return of income”. But, however, the CIT(A) discussed the same in its order at page No.11 and observed during the year under consideration the requirement is to keep and maintain any such information/document in respect of international transaction and no such condition to impose penalty on failure of reporting international transaction in the return of income. Therefore, we find no infirmity in the order of CIT(A) and it is justified for the reasons stated in his order which is reproduced herein above. - Decided against revenue

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• 2019 (2) TMI 54
  Penalty u/s 271(1)(c) - long-term capital loss addition - Held that:- There is no dispute on the fact that this item has not been added back to the profit in case of the business under the computation of income, which resulted in understatement of income in the return of income filed. In view of Explanation-1 below the section 271(1)(c) the penalty is leviable where the assessee offers an Explanation which is not able to substantiate or fails to prove that such Explanation is bonafide and all the facts relating to the same and material to the computation of his total income have been disclosed by him. In the instant case, assessee has furnished explanation thus we have to examine, whether the explanation furnished is bonafide and the assessee has disclosed all material facts to the computation of his total income. We note that all the facts in respect of long-term capital loss of ₹ 66,94,673/-was available before the Assessing Officer in the profit and loss account and schedule of selling and administrative expenses. Only mistake was made on the part of the accountant who prepared the computation of the income. Material facts about the long-term capital loss was fully disclosed in the profit and loss account. On being pointed out this mistake, the assessee has admitted and even did not file any further appeal on the addition. This shows bonafide on the part of the assessee and we do not find any deliberate attempt on the part of the assessee for not offering the income in the return of income, particularly when said item has already been disclosed in the profit and loss account. In view of above facts and circumstances and the Explanation-1 to section 271(1)(c) we do not find any merit in sustaining the penalty by the CIT(A) and accordingly, we delete the same. Disallowance of entertainment expenses the assessee explained that expenses were incurred on arranging parties and get together in relation to design consultancy business of the assessee. The contention of the AO is that the assessee failed to substantiate her claim and according to him that expenses were of personal nature. The claim has not been found acceptable by the Assessing Officer. We note that in the case of Reliance Petro products Private Limited (2010 (3) TMI 80 - SUPREME COURT) has held that merely because assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under section 27(1)(c). Thus, respectfully, following the above decision of the Hon’ble Supreme Court, the penalty in respect of the rejection of the claim of entertainment expenses cannot be levied. - Decided in favour of assessee.

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• 2019 (2) TMI 53
  Revision u/s 263 - CIT(A) jurisdiction to adjudicate the issues raised in the consequential order afresh - Held that:- Order u/s 263 the CIT has set aside the assessment made under section143(3) r.w.s.147 for redoing the assessment afresh by using the words to pass consequential order after giving opportunity to the assessee. Therefore the assessment order passed u/s 143(3) r.w.s. 263 dated 17.09.2014 required to be considered as a fresh order of assessment and the CIT(A) vests with the jurisdiction to adjudicate the issues raised in the consequential order afresh on merits. In the instant case, the CIT(A) did not pass the order on merits, instead presumed that the assessee having not filed the appeal before the ITAT accepted the order u/s 263. The said presumption is incorrect in view of the confusion created by the Ld.CIT in his order u/s 263. Therefore, it is incumbent upon the CIT(A) to decide the issue on merits. Accordingly, we set aside the order of the CIT(A) and remit the matter back to the file of the Ld.CIT(A) to decide the appeal of the assessee afresh on merits. The assessee is free to take up all the grounds relating to merits before the CIT(A). - Appeals of the assessee are allowed for statistical purpose.

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• 2019 (2) TMI 52
  Deduction u/s 10A before setting off of brought forward losses of eligible unit - Held that:- It is not in dispute that the brought forward losses set off by the assessee are of eligible unit. It is no more res integra that the assessee can claim deduction u/s 10A of the Act before claiming setting off of brought forward losses. As in the case of Black & Veath Consulting Pvt. Ltd., (2012 (4) TMI 450 - BOMBAY HIGH COURT) and in the case of CIT Vs. Yokogawa India Ltd. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] has held that the deduction u/s 10A of the Act can be claimed before setting off of brought forward losses of non-eligible units. The Hon’ble Apex Court in the case of CIT & another Vs. Yokogawa India Ltd. (2016 (12) TMI 881 - SUPREME COURT) has upheld the decision of Hon’ble Karnataka High Court. We find no infirmity in the order of CIT(A) in allowing the benefit of deduction u/s 10A of the Act to the assessee. The impugned order is upheld and the appeal of Revenue is dismissed being devoid of any merit. - Decided against revenue

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• 2019 (2) TMI 51
  Penalty u/s.271(1)(c) - Defective notice - non specification of charge - mandation of specification of correct limb - Held that:- It is evident that at the time of initiation of penalty proceedings in the assessment, AO has not mentioned any limb. However, at the time of levy of penalty, the AO mentioned that “this is a fit case for levy of penalty in terms of Explanation 1 to Section 271(1)(d) for filing of inaccurate particulars. This manner of recording of satisfaction suggests the existence of ambiguity with reference to applicability of specific limb. It is a settled legal proposition that the AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. This view of ours is fortified by the judgment in the case CIT Vs. Shri Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT) as well as of CIT Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT]. In view of the above deliberation on this issue, without going into the merits of the penalty, we are of the opinion that the penalty order is liable to be quashed on this legal issue. - Decided in favour of assessee.

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• 2019 (2) TMI 50
  Addition of capital gain - land sold by the assessee along with other society members - Held that:- As the AO matched the facts of the instant case with those of Mr. P.S. Bhinder and Mr. R.V. Singh, the ld. AR was required to give status of the appeals in respect of them. In response, he submitted that the Tribunal has deleted similar additions in the case of those two persons. He, however, expressed his inability to produce copies of such orders passed by the Tribunal. It was fairly admitted by the ld. AR that the facts and circumstances of the instant appeal are similar to those of two persons named in the assessment order. Since copies of the Tribunal orders in the case of Mr. P.S. Bhinder and Mr. R.V. Singh have not been placed on record, though the AR admitted that the appeals have been decided by the Tribunal, we deem it fit to set-aside the impugned order and remit the matter to the file of AO. We order accordingly and direct him to decide this issue afresh in the light of the decision claimed to have been rendered by the Tribunal in similar facts in the case of Mr. P.S. Bhinder and Mr. R.V. Singh. Needless to say, the assessee will be allowed an opportunity of hearing in such fresh proceedings.

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• 2019 (2) TMI 49
  Revision u/s 263 - claim of the assessee, on the agricultural activity - Held that:- The assessment order need not discuss all the points, but, AO or assessee should bring on record that AO has made enquiry and relevant information was submitted before him. In our view, the claim of the assessee, on the agricultural activity particularly peculiar, as in the case of assessee, AO should have called for the leased agreement with the farmers and evaluated how the activities of the assessee are exactly similar to M/s Prabhat Agri Biotech. No doubt AO asked for the information, but, there is no record that assessee has actually submitted that before the AO. It clearly shows that AO has not made enquiry in this case, but, merely accepted the contention of the assessee. Further, in our view, no doubt, AO has not applied his mind, but, the CIT has not established how the order of AO is prejudicial to the interests of revenue. Looking at the facts submitted before us seeds cannot be produced without basic agricultural activities, in our view, CIT should not stop merely on finding that the order is erroneous but also has to establish that the order of AO is prejudicial to the interests of revenue. Only missing link is the verification of lease agreement with the farmers and activities whether it is similar to the Prabhat Agri Biotech or not. This could also be verified by CIT and established that it is prejudicial to the interests of revenue. CIT has failed in this aspect. This is in line with the decision in the case of Malabar Industrial co. Ltd.(2000 (2) TMI 10 - SUPREME COURT) and CIT Vs. Green World Corporation (2009 (5) TMI 14 - SUPREME COURT OF INDIA). Therefore, no doubt, the assessment order is erroneous but not prejudicial to the revenue considering the case law submitted before us. Seeds cannot be produced without basic agricultural activities. The assessee has sold the seeds and must have carried out the agricultural activities in order to produce the seeds. Hence, we set aside the order of CIT passed u/s 263 of the Act and the order of the AO is restored. Accordingly, ground raised by the assessee are allowed.

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• 2019 (2) TMI 48
  Entitlement to deduction claimed u/s. 54/54F - claim of assessee to calculate the long-term capital gains after taking into account the sale consideration as admitted by the assessee OR considering the sale consideration of the property transferred, as valued by the AVO - Held that:- It is born out on record that in the said computation, the assessee itself has computed the long-term capital gains at ₹ 29,50,677/- and after deducting ₹ 29,04,841/- u/s. 54, has admitted the taxable long-term capital gains at ₹ 45,836/- as noted above. There remains nothing to say on behalf of the assessee to considering the sale consideration of property at ₹ 16,00,000/- for further computing the capital gain of the said property, particularly when the request of assessee for referring the valuation to Valuation cell has been accepted by the CIT(A) and the valuation of AVO at ₹ 34 lakhs has been accepted by him and the AO has been directed accordingly. No justification in the claim of assessee to consider the sale value of impugned property at ₹ 16 lakhs in the peculiar facts and circumstances of the present case. As far as the claim of deduction u/s. 54 it is not in dispute that the assessee has invested in purchase of residential property at B-40, Malcha Marg, for ₹ 29,04,841/-. AO while rejecting the claim of assessee u/s. 54 of the Act has opined that the said deduction is not available to the assessee u/s. 54 as he had sold a plot of land and not any residential house. The assessee has submitted that the claim made by assessee is legitimate and is available to it u/s. 54/54F. Once the assessee has admitted the capital gains on the sale of capital asset and has admittedly invested substantial amount of capital gains in purchase of residential property within the stipulated time, the assessee would be entitled to claim deduction u/s. 54 or 54F, as the case may be, and the Assessing Officer was bound to give credit of such claim legitimately, meaning thereby, if the assessee was found not satisfying the conditions of section 54 AO was required to consider its claim in the light of section 54F. Remit this issue back to the file of Assessing Officer for considering the claim of assessee on the anvil of section 54F and to decide the issue afresh after being satisfied with the conditions of section 54F, if satisfied by assessee. Needless to say, the assessee shall be given reasonable opportunity of being heard. - Appeal deserves to be partly allowed for statistical purposes.

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• 2019 (2) TMI 47
  Deduction u/s 80IC - demerger of assessee company - Assessing Officer was of the opinion that by virtue of Explanation-7 to Section 43(1), the cost of asset should be reduced by the deferred government grants - disallowance of depreciation - Held that:- Admittedly, demerger took place in the year 2006 and thereafter whether the depreciation is to be allowed on the actual cost of demerged assets or the cost is to be reduced by any government grant received by the demerged company should have been examined in the assessment year 2007-08 and thereafter, year after year, depreciation is to be allowed on WDV. These facts are not available on record. We, therefore, direct AO to examine what happened in the preceding years. If in the preceding years the depreciation was not claimed or this issue was not considered and the facts of the case warrant the consideration of this issue in the year under consideration, then Assessing Officer will consider the same in the light of the decision of Hon’ble Apex Court in the case of Meghalaya Steels Ltd. (2016 (3) TMI 375 - SUPREME COURT). If the claim of depreciation of the assessee is allowed, then the assessed income will turn into negative income and there will be no question of claim u/s 80IC - Appeal allowed for statistical purposes.

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• 2019 (2) TMI 46
  Exemption u/s 10(23C)(vi) - excess of income over expenditure from running the school - AO treated the building fund and building maintenance fund as revenue receipts and added the same to the income of the assessee - Held that:- We find that the issue is covered in favour of the assessee by the order of the Tribunal in assessee’s own case for assessment years 2010-11 Perusal of the order passed by CIT Exemption lying at Page 8 of the paper book filed by the assessee, apparently shows that the application in Form 56D for claiming exemption u/s 10(23C) (vi) was filed on 15/03/2008 by the assessee and consequently CIT Exemption accorded the approval with effect from the Assessment Year 2008-09. Thus respectfully following the order of the Coordinate Bench in assessee’s own case for assessment year 2010-11, we restore the issue to the file of the Assessing Officer to decide the matter afresh in light of the order of approval u/s 10(23C)(vi) of the Act, vide order dated 15.6.2015, and having retrospective effect after providing adequate opportunity to the assessee. - deciced in favour of assessee for statistical purposes.

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• 2019 (2) TMI 45
  Penalty proceedings u/s 271B - Rejection of books of accounts - G.P. rate - disallowance u/s 43B - Held that:- The entire case of the AO and the CIT(A) is that no audited account or audit report has been furnished. From the perusal of the letter filed before the AO, find that assessee has filed the audit report in response to a notice issued by the AO and said audit report is also appearing, wherein auditors have duly certified the books of account and the trading result in Form 3CB. Not only that, a notice was also sent by the AO to CA and despite all these material facts placed on record, the entire additions have been made on the ground that entries in the profit and loss account and balance sheet have not been audited. The entire basis and premise for making an adhoc addition gets vitiated in the light of the fact that audited accounts and the entire audit report was filed before the AO as well as before the CIT(A), which fact stands established by the Tribunal in the penalty proceedings u/s 271B. Apart from that, find that assessee has given the entire details relating to trading account and profit and loss account and balance sheet including details of opening stock, purchases and the sales made by the assessee before the CIT(A) which was also sent to the AO to submit his remand report. However, the AO in the remand report has not even commented upon these details. Once assessee has filed all the details and the audit report and has given explanation with regard to each and every entry of the trading account including expenses incurred with evidences, then no adhoc estimation of income or disallowance of expenses can be made. - Decided in favour of assessee.

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• 2019 (2) TMI 44
  Charitable activity - registration u/s 12AA - activities in accordance to its objects specified in the trust deed and for charitable purposes - complete inactivity till the sale of land and the associated gains from the sale are clear pointers that the activities (rather zero activities) are not in sync with the stated objects - amendment of trust deed on 27.03.2014 incorporating dissolution clause and at the same time introduction of new trustees - registration of Supplementary Trust Deed dated 27-03-2014 Held that:- It is trite to say that at the time of registration u/s 12AA, the Ld. CIT(E) has to consider the twin requirement (i) objects of the assessee society (ii) genuineness of its activity. Nowhere in the order, the Ld. CIT(E) has neither pointed out any defect in the objects of the society and/or activities of the applicant society nor doubted the genuineness of the activities specifically, therefore we are of the considered view that the Appellant is carrying its activities in accordance to its objects specified in the trust deed and for charitable purposes. As clearly demonstrated by the Appellant that before to establishing the 'Bhawan' the Appellant has not carried out any activity due to paucity of funds, which in our considered view seems to be logical reason for not carrying out any activity previously, hence this ground of rejection can not sustain. in the instant case new trustees have been appointed in place of erstwhile trustees who have died, by the board of trustees and therefore situation clearly seems to be covered by sub clause (a) of section 73 of the Indian Trusts Act and in our opinion there is no embargo and impediment in appointment of new trustees, except as specified in section 73 of the Act, which otherwise is not applicable to the instant case, hence we are of the considered view that new trustees have been appointed in accordance of law. It is seen that a supplementary trust deed has been submitted to the sub-registrar, Ludhiana. Whether the same has been registered and whether the Sub-Registrar is competent to do the same in the case of Public Charitable Trust has not been evidenced. The components of the trust deed (till the amendments are accepted by the competent Court) are held to be restrictive and to that extent not enduring to the benefit of the general public, seems to be general remarks without considering the intricacies of the law and therefore the reasons are illogical, hence, we are not inclined to accept this ground of rejection also. We are inclined to grant the registration to the Appellant trust and hence direct the Ld. CIT(E) to grant the registration u/s 12AA of the Act, however, it is clarified that the Ld. CIT(E) while granting the registration, shall be at liberty to endorse the condition, if any, he find to be reasonable in accordance with law. - Decided in favour of assessee

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• 2019 (2) TMI 43
  Penalty u/s 271FA - person responsible to file return / AIR information - return has to be filed by a person who has recorded the transaction and person who fails to furnish such return within time period prescribed u/s 285BA(2) - Held that:- The assessee or person not having entered into the reportable transaction/specified transaction mentioned u/s 285BA of the Act need not furnish a statement or the return. In the instant case, as per the acknowledgement placed by the Ld.AR there were no reportable transactions/specified transactions which required to be reported u/s 285BA of the Act r.w.Rule 114E of Income Tax Rules. Therefore, there is no obligation cast upon the assessee to fie the return u/s 285BA for the F.Y. 2010-11 and 2011-12. DIT issued notice u/s 285BA on 24.08.2017 which was served on the assessee on 27.03.2017 and the assessee responded to the notice by furnishing the ‘Nil’ transactions and the department did not make out a case that the assessee had the recorded reportable/specified transactions in the relevant financial year. We are unable accept the contention of the Ld.DR not to accept fresh argument of the assessee with regard to non requirement of filing the AIR in the absence of reportable transaction and the same is rejected. We hold that in the absence of any specified transaction required to be reported u/s 285BA of the Act, the assessee is not obliged to file the AIR and levy of penalty u/s 271FA is unjustified. Accordingly, we set aside the orders of the lower authorities and cancel the penalties imposed u/s 271FA - Decided in favour of assessee. Penalty required to be imposed for the period of delay - delay in filing the original return as well as the delay in furnishing the supplementary return correcting the defects, but not for the intervening period - Held that:- In the instant case, DIT have given only 4 days time to rectify the mistakes and the assessee has filed the AIR within 30 days from the date of receiving the notice for the A.Y. 2013- 14 to 2015-16 and the reason explained by the assessee was delay in service of notice and insufficient time given by the DIT and pressure of work due to annual closing of the accounts. Therefore, we consider it is reasonable cause for not furnishing the supplementary returns rectifying the defects within one month from the date of receipt of notice u/s 285BA(4). Accordingly, no penalty is leviable for the A.Y. 2013-14 to 2015- 16 for delay in filing the supplementary return rectifying the defects. For the A.Y. 2016-17, the assessee filed the supplementary return on 25.10.2017 with 210 days delay. Since the notice was received by the assessee on 27.03.2017, we consider it is reasonable to allow the time limit of at least 29 days from the date of receipt of the notice as provided u/s 285BA(4) of the Act, as the Act provides time limit of less than 30 days for rectifying the defects. Thus, the assessee should have filed the rectified return on or before 25.04.2017. The assessee did not furnish any reason for not furnishing the supplementary return on or before 25.04.2017. Though the assessee explained that the reason for not furnishing the return was closing work of year end, the same would be completed by 31st March of the relevant financial year and there is no reason for not furnishing the supplementary return subsequent to completion of the year end closing work. Therefore, we confirm the penalty for the period of default in furnishing the original return and the supplementary return rectifying the defects. Accordingly, we set aside the orders of the Ld.CIT(A) and confirm the penalty u/s 271FA for the period of delay in furnishing the original return from the due date of furnishing the return for the F.Y. 2011-12 to 2014-15 and also the delay in furnishing the supplementary return rectifying the defects after expiry of 29 days limit for the F.Y.2015-16.

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• 2019 (2) TMI 42
  Reopening of assessment - addition on account of Long Term Capital Gain - scope of Section 55A of the Act regarding reference to DVO in case of cost of acquisition as on 01.04.1981 - land was purchased by assessee in the name of his son as co-owner - Held that:- For the assessment year 2009-10 in assessee’s group concern this issue was observed in detailed and it was held by the Co-ordinate Bench of the Tribunal that the applicability of amendment so far as Section 55A is concerned, it cannot be applicable retrospectively. Exemption/s.54B - assessee was not allowed by the Revenue Authorities. Since the land was purchased in the name of the assessee’s son - whether exemption/s.54B of the Act can be allowed even if the new agricultural land is purchased in the name of family members? - Held that:- Out of sale proceeds of the said sale, the assessee has purchased other piece of land in his name and in the name of his only son who was bachelor and was dependent upon him, for being used for agricultural purposes within the stipulated time. Further it was not the case of the Revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultural purpose. The purchased land was being used by the assessee for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the Hon'ble ITAT has rightly come to the conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purposes. On the other hand, Ld. DR did not bring out any evidence on record to demonstrate that the said land of the assessee was used for any other purpose other than agricultural purpose. The Assessing Officer referred to the judgment of Hon'ble Bombay High Court in the case of Prakash Vs. ITO [2008 (9) TMI 234 - BOMBAY HIGH COURT] but the facts are substantially different from the case of the assessee in hand. Further, we have also considered the decision in the case of CIT Vs. Vegetables Products Ltd. [1973 (1) TMI 1 - SUPREME COURT], therein the view also favorable to the assessee that has to be taken, in case of conflicting opinions. - Decided in favour of assessee

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• 2019 (2) TMI 41
  Disallowance u/s.14A r.w. Rule 8D - Held that:- Assessee during the Assessment Year under consideration received exempt income of ₹.57,539/- and the CIT(A) following the decision of the Punjab & Haryana High Court in the case of Pr. CIT v. Empire Package (P.) Ltd. (2016 (2) TMI 505 - PUNJAB AND HARYANA HIGH COURT) and Nimbus Communication ltd v. ACIT (2016 (5) TMI 166 - ITAT MUMBAI) restricted the disallowance u/s. 14A to the exempt income received by the assessee during the Assessment Year under consideration. This bench is consistently holding that the disallowance u/s. 14A should not exceed exempt income. Thus, we do not find any infirmity in the order passed by the Ld.CIT(A) in restricting the disallowance u/s. 14A to the exempt income received by the assessee. Claim for depreciation on the Bizerba Weighing Scales as part of computer - Held that:- We find that this issue has been decided against the assessee and in favour of the Revenue by the Tribunal upholding the disallowance made by the AO. The Tribunal held that Bizerba Weighing Scale is not part of the computer and therefore not entitled for depreciation @60% as claimed by the assessee. respectfully following the said decision, we uphold the disallowance made by the Assessing Officer in respect of Bizerba Weighing Scales. This ground of Revenue is allowed. Disallowance made u/s. 14A - Held that:- We do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the disallowance made u/s. 14A of the Act by the assessee since the assessee has not earned any exempt income during the Assessment Year 2012-13. Disallowance u/s 14A - whether suomoto disallowance made in the return of income should not be considered for disallowance in the absence of any exempt income - Held that:- CIT(A) restricted the disallowance to the suomoto disallowance which was already made by the assessee in the return of income and deleted the disallowance made by the Assessing Officer. Since the CIT(A) failed to consider the submissions of the assessee apparently by oversight, we are of the considered view that this issue in assessee’s appeal should be restored to the file of the CIT(A) for adjudicating the claim in accordance with law. Issue raised by the assessee in its appeal is restored to the file of the CIT(A) who shall decide in accordance with law, after providing adequate opportunity of being heard to the assessee.

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• 2019 (2) TMI 40
  Revision u/s 263 - allowability of Corporate Social Responsibility (CSR) expenditure - Held that:- Section 37 has been amended to clarify that for the purposes of sub-section (1) of section 37 any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under said section 37. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed as deduction under those sections subject to fulfillment of conditions, if any, specified therein. But this amendment takes effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years. The relevant assessment year before us is 2013-14 and hence this amendment will not apply to this case of assessee’s case. Respectfully following the principle laid down by the Hon’ble Supreme Court in the case of Vatika Township (P.) Ltd. [2014 (9) TMI 576 - SUPREME COURT] we hold that the ammendment brought out in section 37(1) by inserting explanation 2 by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 is prospective and assessee’s assessment year being 2013-14 will not apply and hence, revision proceedings of CIT is without any basis and quashed. - Appeal of assessee is allowed.

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• 2019 (2) TMI 39
  Addition u/s 69A - sale of residential property - receipt in cash against sale of property and refund by way of cheque when transaction failed - Held that:- There is a sale deed duly registered which states clearly that the sale consideration has been received by the assessee on or before the date of execution of the sale deed i.e, 8.7.2010, there is deposit of cash in bank account of the assessee on 8.7.2010, and there is also evidence of issuance of cheque dated 10.8.2010 by the buyer of the property in favour of the assessee and which has been credited in the assessee’s bank account on 13.8.2010. In such a scenario, only probable scenario which exists is that the assessee has initially received cash of ₹ 20 lacs from the buyer of the property which was deposited in the assessee’s bank account on 8.7.2010 which has resulted in closure of the sale transaction as evidenced by the sale deed executed on 8.7.2010. Subsequently, for reasons best known to the two parties, the buyer of the property issued a cheque of equivalent amount on 10.8.2010 which was deposited in assessee’s bank account on 13.8.2010 and simultaneously, cash of equivalent amount was withdrawn by the assessee and returned to the buyer of the property. In light of peculiar facts and circumstances of the case, we agree with the assessee’s explanation that the source of cash deposit of ₹ 20.5 lacs on 8.7.2010 is the balance sale consideration received from the buyer of the property and which has been duly offered to tax by the assessee in his return of income. In the result, ground of appeal is allowed.

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• 2019 (2) TMI 38
  Addition made u/s 14A read with Rule 8D - Held that:- Following the law laid down in GODREJ BOYCE MANUFACTURING COMPANY LIMITED VERSUS [ 2017 (5) TMI 403 - SUPREME COURT] , MAXOPP INVESTMENT LTD [ 2011 (11) TMI 267 - DELHI HIGH COURT] and CHEMINVEST LIMITED [ 2015 (9) TMI 238 - DELHI HIGH COURT] we are of the considered view that the findings returned by AO that, making disallowance u/s 14A by the AO by relying upon CBDT Circular dated 05/2014 dated 11.02.14 that disallowance u/s 14A is to be made even if no exempt income has earned during the year under consideration, is no longer a good law because where the assessee has not earned any dividend income forming part of the total income during the year under assessment, section 14A read with Rule 8D is not attracted. So making disallowance u/s 14A read with Rule 8D in a mechanical manner without recording any dissatisfaction as to the working out made by the assessee that he has not incurred any expenses nor earned any dividend income during the year under assessment is not permissible under law. So consequently AO as well as CIT(A) have eared in disallowing/confirming the addition made u/s 14A read with Rule 8D - Decided in favour of assessee.

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• 2019 (2) TMI 37
  Disallowance u/s 14A read with Rule 8D - Held that:- Except for investment made in a trading field, there is no question of any exclusion while calculating the disallowance u/s.14A of the Act. It is not disputed that none of the investments of the assessee were held as stock in trade. Accordingly, we are of the opinion that lower authorities were justified in making a disallowance u/s.14A of the Act read with rule 8D(2) (iii) of the Rules. Especially so, since ld. Assessing Officer had clearly stated the reasons why he was not satisfied with the suo-motu disallowance made by the assessee. Claim of depreciation on temporary sheds which was restricted to 10% - Held that:- It is not disputed that the sheds were made by using steel pipes and iron meshes. Such structures which are built in open space are susceptible to very fast corrosion. Especially so, in a sea side area like Chennai. We cannot say that such structure is having an enduring nature. We are of the opinion that assessee was eligible to claim 100% depreciation on such structures. We set aside the orders of the lower authorities and allow the claim of the assessee for 100% depreciation on such temporary sheds built by using steel pipes and iron meshes. Ground No.2 of the assessee for all the years stands allowed. Restriction of depreciation claimed on electrical fittings - eligible for 15% depreciation or 10% - Held that:- It is not disputed that electrical fittings if considered as part of building is eligible for only 10% depreciation. Claim of the assessee is that these fittings were to be considered as part of plant and machinery. However nothing has been brought on record to show that electrical wiring, switches, sockets, other fittings were part of any plant and machinery. Accordingly, we are of the opinion that lower authorities were justified in restricting the depreciation to 10%. Restriction of the claim of depreciation on software - @25% or 60% - Held that:- What we find from the above description is that all these were nothing but items in the nature software or software applications. Entry No.5 coming in III of Part A in New Appendix I clearly says that computer included computer software. Note 7 of the Appendix, defines computer software as any computer programme recorded in any information storage device. We are therefore of the opinion that assessee was eligible to claim depreciation at the rate of 60% on the above items. Orders of the lower authorities on this issue are set aside and the claim is allowed. Ground No.4 of the assessee stands allowed. Disallowance of payment of non-compete fees - Held that:- We cannot say that assessee derived any enduring benefit due to the above payment effected by it for obtaining certain commitments from Shri V. Shankar and restricting himself from indulging in any competition with the business of the assessee or from weaning way the employees. We are of the opinion that non compete fee was a revenue expenditure, and had to be allowed in one go, irrespective of the method of accounting adopted by the assessee. Accordingly, we set aside the orders of the lower authorities and allow the claim of the assessee.

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• 2019 (2) TMI 36
  Assessment u/s.144 - Lack of proper representation by the assessee - Held that:- After making additions and the additions were confirmed by the CIT(A) again without the proper representation from the assessee. It is an admitted fact that the additions were confirmed in view of lack of proper representation by the assessee before the lower authorities. Considering the set principles of natural justice, as mentioned in the open court, it appropriate to remand the entire issues to the file of AO for fresh adjudication after giving reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2019 (2) TMI 35
  LTCG on sale of ancestral property - appellant sold his ancestral property share for ₹ 99,00,000/- and out of which he paid ₹ 7,00,000/- to his divorced wife and ₹ 7,00,000/- to his minor son and ₹ 7,00,000/- to his minor daughter who are staying with the divorced wife - appellant’s contention is that he actually received ₹ 78,00,000/- and he has already paid tax on ₹ 78,00,000/- hence no tax laibility Held that:- In the Hindu Succession Act, 1956 amended in 2005 state that Hindu family governed by the Mitakshara law, the daughter of a coparcener shall be a coparcener by birth in her own right in the same manner as the son and will have rights in the coparcenary property as she would have had if she had been a son. Since ancestral property was sold by the appellant and his minor son and daughter are equal beneficiary of the sold property but out of 99,00,000/- appellant has paid ₹ 14,00,000/- to the minor children and ₹ 7,00,000/- to his divorced wife. We hold that for ₹ 14,00,000/- which were paid to minor children will not be taxed in the hand of appellant and remaining 7,00,000/- which was paid to divorced wife will be taxed in the hands of the appellant. In other words, appellant shall be taxed for ₹ 85,00,000/- not for ₹ 99,00,000/-. In terms of above, we partly allow the appeal of the assessee.

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• 2019 (2) TMI 34
  Attribution of profit to Indian entity - remuneration paid by the assessee to the Indian entity - whether at arm’s length price or not? - PE in India - India Mauritius DTAA - business connection - agent of independent status in terms of the provisions of Article 5(5) of the DTAA - assessee is engaged in the business of acquiring and allotting advertisement time and programme sponsorships in connection with ESPN and Star Sports channel in Television, which it acquires the advertisement time from ESPN Star Sports Singapore - Indian entity is also carrying out many other activities relating to transmission of all the assessee’s channel and also providing access to the cable operators to the downlink the channel through access code - Held that:- Indian entity has been appointed as independent representative for soliciting TV ad on the channels and to collect and remit advertisement charges to ESS Mauritius. It is only authorized to solicit television advertisement for the Indian Territory. The compensation part clearly shows that the commission would be paid @10% of net billed advertisement actually collected by it or received by ESS Mauritius for the advertisement solicited by the Indian entity. From the perusal of the transfer pricing order, in the case of ESPN India, it is seen that it carried various functions of other entities for the ESPN group like, distribution of ESPN Star Sports Channel in India for which it collects ‘subscription fees’ from the cable distributors. This activity of function is not carried out for the assessee but for different group entity. Only function carried out by the Indian entity is that it is doing solicitation and collection of advertisement revenue and remitting the same to the assessee. Qua this function, the remuneration paid by the assessee to the Indian entity which is subjected to tax in India is @10% which has been accepted to be at arm’s length. No other functions are carried out or there are any other transaction by the Indian entity vis-à-vis the assessee and all other functions of the ESPN India relate to distribution of the channel of other entities for which it is paid ‘subscription fee’. If one goes by the overall revenue earned by the Indian Entity, then transaction with the assessee is much less than 5%, as noted by the TPO in his order. The receipt of advertisement commission only has been received from the assessee. Thus, if the Indian entity has been remunerated at arm’s length price, then no further attribution of profit can be made. Thus as relying on DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VERSUS MORGAN STANLEY AND COMPANY INC. [2007 (7) TMI 201 - SUPREME COURT] once the payment made by the assessee to the Indian entity have been accepted to be at arm’s length price then no further attribution is required to be done. Accordingly, the addition made on account of attribution of profit is directed to be deleted. - Decided in favour of assessee

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• 2019 (2) TMI 1
  Applicability of Amended provision of Section 234B(2A) to proceedings which were pending as on 01.06.2015 when the amendment came into force - Held that:- The petitioner has fairly conceded that the opinion expressed by the Division Bench of the Gujarat High Court is in favour of the Department to apply the provision retrospectively to pending proceedings as well, but he also informs that the matter is pending consideration before the Hon’ble Supreme Court in filed on behalf of the assessee Devdip Malls Developers Pvt. Ltd. Vs. Secretary Income Tax Settlement Commission [2018 (5) TMI 1826 - SUPREME COURT OF INDIA] feeling aggrieved by the judgment of the Gujarat High Court. In the aforesaid view of the matter, we would adjourn the hearing of the writ petition for its listing on disposal of the matter pending before the Hon’ble Supreme Court arising from SLP.

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• Customs

• 2019 (2) TMI 33
  Provisional release of goods - ‘No Objection’ was issued by the Department on 12th January, 2018 - Held that:- The respondents are directed to pass appropriate orders for provisional release of the goods, within a week and indicate it directly to the petitioner. All rights and remedies of the parties are kept open. For W.P.(C) 14109/2018, ‘No Objection’ has been provided currently in respect of eight consignments; likewise seizure of the goods was resorted to in these cases. However, the petition pertains to nine Bills of Entry. The orders to be passed will cover all the nine Bills of Entry. Petition disposed off.

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• 2019 (2) TMI 32
  Detention of seized goods - consignment of L.P.G. cylinders - personal bond of ₹ 12 lacs in lieu of seized cylinders is already furnished - Held that:- The writ petition is disposed off with a direction to the respondent no.3 Additional/Deputy Commissioner of Customs (Preventive) Division 5th and 11 Floor, Kendriya Bhawan, Sector-H Aliganj, Lucknow, to consider and decide the petitioner's application dated 15.12.2018 sent through registered post, in accordance with law, preferably within a period of 15 days from the date of production of a certified copy of this order in his office.

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• 2019 (2) TMI 31
  Evasion of ADD - imports of Ceftriaxone Sodium Sterile - mis-declaration of description as well as country of origin of goods in order to avoid ADD - chemical formula was declared instead of the chemical name - N/N. 98/2008-Cus. - Held that:- The Ld. Advocate has been at pains to contend that as far as MSK International is concerned, the full chemical name was declared in the Bill of Entry and only generic name was not mentioned, hence there cannot be any charge of misdeclaration. We are not enthused by this argument. When the import of Ceftriaxone Sodium was saddled with ADD when imported from China, it was obvious that no additional reference in such ADD notification or any alternative chemical name or formula of the said item. In any case, in the normal course of business and trade and especially imports, the goods are only known by the chemical name and certainly not by the chemical formula run into almost four lines. Then, there is no doubt in our mind that the chemical formula was declared instead of the chemical name only to trick the assessment system and to evade ADD which would have been otherwise imposable on its import. Penalty on Sujath Ali, Partner of K.S.R. Pharmacy - the entire exercise was planned and furthered by Sujath Ali - Held that:- The duty / interest has not been demanded from Sujath Ali, Partner of K.S.R. Pharmacy and hence there cannot be any penalty on the said person under Section 114A ibid also. In the circumstances, the penalty of ₹ 1,47,28,161/- imposed on Sujath Ali cannot be sustained and will require to be set aside - penalty set aside. Penalty of ₹ 1 lac imposed on Shri K. Saravanan, Proprietor of MSK International - Held that:- No doubt, Shri K. Saravanan had lent his IEC number and signed the import documents for the import and clearance of the impugned goods. But there is no evidence that he was aware of the fraud at any stage before or during the import - When the modus operandi of using the chemical formula name instead of the regular chemical name has fooled even the assessment system module of the customs authorities, it would be unjust to saddle K. Saravanan with a large penalty only for having lent IEC number - in the interests of justice the penalty of ₹ 1 lac imposed under Section 112 (b) ibid is reduced to ₹ 50,000/-. Appeal allowed in part.

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• Corporate Laws

• 2019 (2) TMI 30
  Official Liquidator action for auctioning/selling the property/plot - Held that:- A company can only act through the authorisation received from the Board of Directors while effecting sale of an immovable property. In the present case the applicant has not been able to show that the signatories to the sale deed are officers of the respondent company or have any authorisation from the Board of Directors of the respondent company to effect a sale in favour of the applicant and to execute registered conveyance deed. There is no proof that the respondent company received the consideration for sale of the land. Other factors noted above also throw suspicion on the bona fide and genuineness of the sale transaction. The sale deed relied upon by the applicant cannot be relied upon. It is manifest that the above sale deed relied upon by the applicants have been allegedly executed to hoodwink the respondent company and to fraudulently part with the assets of the company. In my opinion, the applicant lacks bonafide. The alleged sale deed is an illegal and a sham document created for the purpose of grabbing the property of the company. Accordingly, in my opinion, the sale transaction relied upon by the applicant cannot be relied upon. The present application is accordingly dismissed.

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• Service Tax

• 2019 (2) TMI 29
  Taxability for the period prior to 09.07.2004 - Maintenance and Repair Services - period under dispute is 09.07.2004 to 31.03.2006 - N/N. 20/2003-ST dated 21.08.2003 rescinded vide N/N. 07/2004-ST dated 09.07.2004 - Circular No. 81/2/2005-ST dated 07.10.2005 - Held that:- N/N. 20/2003-ST dated 21.08.2003 exempted services provided to a customer in relation to maintenance or repair of computers, computer systems or computer peripherals from payment of service tax. Later, it was clarified vide Circular dated 17.12.2003 that the maintenance of software is also a part of computer systems and therefore, would be covered by the exemption Notification. The above Notification was later rescinded by Notification No. 07/2004 dated 09.07.2004. Although the Notification rescinded the above exemption Notification, the said services were not brought into the levy of service tax by the specific Notification - Later, Circular No. 81/2/2005-ST dated 07.10.2005 clarified that maintenance or repair or servicing of software is leviable to service tax. There was much confusion as to whether Maintenance and Repair of computer software is subject to levy of service tax during the disputed period. However, taking note of the fact that the Circular dated 07.10.2005 has been quashed by the Hon’ble jurisdictional High Court, we are of the considered opinion that the Commissioner (Appeals) has rightly applied the law and precedents so as to set aside the demand, interest and penalties. Demand do not sustain - appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 28
  Reverse charge mechanism - Recipient of service - appellant has been receiving services under Business Auxiliary Services, Re-insurance Premium from foreign based service provider - short payment of service tax - Denial of CENVAT credit in respect of import of taxable services from outside India - Held that:- The Insurance Auxiliary Services & Business Auxiliary Services are taxable under sub-clause (zx) and (zzb) respectively of clause 105 of Section 65 of the Act are received by the appellant and that these services fall under the category 3rd to Section 66A, the appellant being the service recipient of those services and being based in India and is liable to pay the service tax. Once appellant is discharging the said liability he is entitled for the credit disallowing the same is therefore an error on the part o the adjudicating authority. Valuation - whether the value in balance sheet or the one in service tax return for the impugned period is to be taken for assessing liability? - Held that:- Section 67 of the Act acquires relevance which described valuation of the taxable service. In accordance thereof, such value has to be the gross amount charged, though this liability is fixed on the service provider but in the light of the provisions and in the given facts of the present case, it is apparent that service provider being outside India, it is recipient who is liable to discharge the service tax. From the record, it is observed that there has been difference in foreign exchange expenses reported in the balance sheet and the said expanses reported in the service tax returns. Since Section 67 of the Act, the taxable value shall be the gross amount charged by the service provider for providing such taxable services. It was not available to the appellant to make suo moto adjustments about the claims of the reinsurer, the scheme of availing credit itself is simultaneously in existence. Such suo moto adjustments shall forfeit the entire objective of credit availment scheme. Resultantly, the value assessed under this head need to be rechecked at the end of the authorities below - the difference in balance sheet and the ST-3 return figures, as far as the salary of employees is concerned has to be ignored with respect to the differences for rest of the values - It is for the adjudicating authorities to first verify and then to accordingly adjudicate. Appeal allowed by way of remand.

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• 2019 (2) TMI 27
  Classification of services - Commercial Training and Coaching Services or not - educational pogrammes conducted by the appellant - Held that:- Such post-graduate short term courses are in the nature of professional development programmes and /or continuous education programmes for development of manpower/skill, is not taxable under the category of Commercial Training or Coaching Service as defined under Section 65 (27) of the Finance Act - the appellant is not a Commercial Coaching or Training Centre - demand set aside. Levy of service tax - amount received for publishing advertisement from other educational institutes in the Business School Directory - Held that:- The same is not taxable, being advertisement made in print media, as per the exception given under Section 65(105)(zzm) - demand set aside. Business Auxiliary Service - stall fees collected for educational exhibition organized by appellant - Held that:- As the exhibition held by the appellant is for educational purposes, the same does not qualify as business exhibition under Section 65(105)(zzo) read with Section 65(105)(19(a), wherein it is provided that business exhibition so as to promote/to market/to advertise/to show any product or service intended for the growth in business of the producer or provider of such product or service - service tax levied under these categories is not tenable. Business Support services - rating of Business School done by the appellant - Held that:- The said issue is already decided in favor of the appellant, as the same issue was raised in the earlier show cause notice - demand set aside. Management Consultant Service - reverse charge mechanism - remuneration paid for conducting lectures /seminars to faulty from abroad - Held that:- The lectures /advice given by the foreign experts/professors at workshops on various management programmes, are in the nature of delivery of lectures and speaking at the workshops are for intellectual development of the professors, the same is thus not a taxable service under the category of Management of any business as defined under Section 65(105) of the Finance Act, 1994 read with Section 65(105)(r) - demand set aside. Extended period of limitation - Held that:- As the appeal is decided on merits, there is no given finding on the issue of limitation raised by the appellant. Appeal allowed in toto.

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• 2019 (2) TMI 26
  Business Auxiliary Services - assessee had received amount towards dealer commission - whether the amount received attains the character of consideration and also whether the activity falls under BAS? - Held that:- Though in the Show Cause Notice it is alleged that the activity would fall under Sub-Clause (i) of Section 65(19), the Original Authority has held that the appellant is acting as a Commission Agent. The definition of Commission Agent will show that Commission Agent is a person who acts on behalf of another and causes sale or purchase of goods - The appellant, in the present case, undisputedly, is not acting on behalf of the vehicle dealer for the purchase or sale of vehicles. Merely because vehicle is intended to be purchased from the dealer, the Bank would not disburse the loan. The Bank has to be satisfied with other conditions like executing hypothecation agreement, etc. The ultimate decision to give loan rests with the Bank. This being so, it is not a service provided to the dealer, and the Bank is never a Commission Agent of the dealer - It is clear that the assessee is neither acting on behalf of dealer nor providing any service to dealer. Therefore, the assessee definitely does not fit into the category of Commission Agent or under the definition of BAS. The discount received by the assessee cannot be considered as a consideration for service. The activity, if any, does not fall under the definition of BAS. Time limitation - Held that:- Since the issue on merits is found to be in favour of the assessee, it is not necessary to consider the issue on limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 25
  Transfer of CENVAT Credit in an unauthorized manner - Input Service Distributor - Rule 3(4) of the CENVAT Credit Rules 2004 - Credit availed on the strength of improper documents - imposition of penalties. Held that:- The manner in which the Credit can be distributed among different units is prescribed under Rule 7 of CCR, 2004. During the relevant period, Rule 7 ibid stated that the Input Service Distributor may distribute the Credit to its manufacturing units or units providing output service subject to two conditions stated therein. The two conditions are: (i) The Credit distributed against a document referred to in Rule 9 does not exceed the amount of service tax paid thereon; and (ii) Credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing exempted services shall not be distributed - The Department has no case that these conditions have not been satisfied. The whole case is based on the allegation that the Credit which was distributed by M/s. Pricol Ltd., ISD, was re-transferred to it and later distributed to the other units. Rule 7 ibid was later amended vide Notification No. 18/2012 CE (NT) dated 17.03.3012 wherein a restriction for proportionate distribution was introduced - True, there may not be any specific provision to facilitate such return of non-required credit which has been transferred in the first place by the Input Service Distributor, but it has to be kept in mind that there would be situations when an Input Service Distributor may transfer Credit amounts inadvertently or in excess of what was intended, to a constituent unit. In such situations, the only recourse would be by way of return/reversal of such Credit back to the Input Service Distributor, which in turn can be facilitated only by the recipient unit reversing the unintended Credit and issuing a document confirming the facts of the same - There is no prohibition in law for such reversal of Credit to the Input Service Distributor. Thus, it is evident that M/s. Pricol Ltd., Plant-I has only returned/reversed the exact quantum of Credit that was transferred to it in the first place by the M/s. Pricol Ltd., ISD. Such return/reversal has not enlarged the quantum of Credit that has been availed nor has there been any financial injury caused to the exchequer. This is then only a revenue neutral situation - the demand or penalties cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 24
  Penalty u/r 15 (3) of CCR, 2004 - Ineligible CENVAT Credit of SAD (Special Additional Duty) availed - entire demand along with interest was paid prior to the issuance of SCN - Section 73(3) of the Finance Act - Held that:- Section 73(3) is very clear as it states that if tax is paid along with interest before issuance of SCN, the SCN shall not be issued - In this case, also, as soon as the audit pointed out the wrong availment of credit, the appellant reversed the same along with interest before the issuance of SCN - Further, except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression or concealment of facts to evade payment of tax. The imposition of penalty under Rule 15 (3) of CCR, 2004 is not justified and bad in law in view - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 23
  Penalty u/s 76 and 77 of FA - non-discharge of service tax liability in spite of having collected the same from the service recipient - huge cash flow problem - immediate payment of tax with interest paid on being pointed out by audit team - ST-returns for half year ending 30.09.2009 on 27.08.2010. However, ST-3 returns for half year ending 31.03.2010 had not been filed - no intent to evade present - Held that:- The identical dispute involving non-discharge of service tax liability in spite of having collected the same from the service recipient had been addressed by CESTAT Chennai in the case of Jeyam Automotive Vs CCE Coimbatore [2018 (11) TMI 1150 - CESTAT CHENNAI] wherein it was held when reasonable cause for the failure to discharge service tax liability was available, and especially there is no evidence to show that that the delay / default was due to any wilful act to evade payment of duty, it is a fit case for invocation of Section 80 of the Act. There is no hesitation in holding that while the demand of tax liability is very much justified, imposition of penalty under Section 76 of the Finance Act, 1994 is not justified since there was reasonable cause for failure of the appellant to discharge tax liability - the penalty imposed under Section 77 ibid is fully justified and no interference is made with the same - appeal allowed in part.

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• 2019 (2) TMI 22
  CENVAT Credit - input service - rent-a-cab service - period between April 2012 to September, 2015 - appellant has also not made pre-deposit - Section 35F of the Central Excise Act - Held that:- Referring to clarification on mandatory pre-deposit, while filing appeals, vide F. No. 15/CESTAT/General/2013- 14 dated 28.08.2014 containing instructions that mandatory deposit of duty confirmed can be made from CENVAT credit account, he has given his finding that appellant had failed to produce any evidence of reversal of the same amount of ₹ 5,78,923/- and failed to produce protest letter to substantiate the same. These findings appear contradictory to each other as reversal of CENVAT credit was affirmatively stated to have been made and evidencing the same, a chart showing CENVAT credit including closing balance filed vide Annexure-6 was produced. No reason was forthcoming as to why the same was not accepted by the Commissioner (Appeals) as sufficient proof that such mount by way of reversal of CENVAT credit was available that was to be treated as sufficient compliance to mandatory pre-deposit. Therefore, the finding of Commissioner (Appeals) in respect of non-compliance of provision contents in Section 35F is erroneous. Pre-deposit is a mandatory requirement for admission of appeal and not for its dismissal after the appeal has been admitted, heard and taken up for orders - In the instant case, the Commissioner (Appeals) though dismissed the appeal on the ground of noncompliance of pre-deposit provision, he also discussed the merit of the appeal in holding that the appellant is not entitled to avail such benefit w.e.f. 01.04.2012. This finding itself indicative of the fact that compliance of provision for pre-deposit was subconsciously accepted by the Commissioner (Appeals). Extended period of limitation - penalty - Held that:- It cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. It cannot also be established that appellant had any malafide intention to suppress its duty liability from the department. Therefore, CAG Audit cannot form the basis for invocation of extended period since audit normally goes from old period to new period and not in the reverse gear as supposed to be done to invoke extended period when abnormality is noticed in respect of non-payment or short payment during scrutiny of returns/records of the normal period. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 21
  Penalty u/s 77 and 78 of the Finance Act read with 15(3) of Cenvat Credit Rules - short payment of service tax - appellant already paid the said tax along with interest - requirement to issue SCN - appellant was not issued with show-cause under section 73(1) of the Finance Act - Held that:- Though admissibility or inadmissibility of the credit in respect of renting of immovable property and business support service is a mixed question of fact and law, the same requires no discussion here in view of admission by the respondent except to the extent that there is a difference between compliance of audit report and discharge of duty liability in respect of imposition of tax as per Section 265 of the Constitution of India. Moreover, appellant was given a written promise before commencement of Audit that if any discrepancy in the audit is pointed out and the same is complied with, no further litigation would ensue. When show-cause does not contain the rule violated by the respondent while proposing penalty which Commissioner (Appeals) found from the factual aspect of the case to have been covered under Section 73(2) and held that in such an event proceeding is to be concluded under section 73(3), there is nothing left before this court to interfere with the finding of the Commissioner (Appeals). Penalty u/s 77 of FA - Held that:- A reading of Section 70 of the Finance Act would take any prudent man to conclude that such a finding made by the Commissioner (Appeals) is not erroneous and therefore his order setting aside penalty under section 77 of the Finance Act needs no interference in view of the fact that audit was conducted on the basis of production of books of account and other documents. Appeal dismissed - decided against Revenue.

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• 2019 (2) TMI 20
  Penalty u/s 78 of FA - Manpower Recruitment and Supply Agency Services - delayed payment of service tax - intent to evade or not - only ground cited by the appellant for such non-payment between 2006-2011 was its financial crisis - Held that:- The only ground cited by the appellant for such non-payment between 2006-2011 was its financial crisis but as held by the Adjudicating Authority and confirmed by the Commissioner (Appeals), financial crisis cannot form sole basis for non-payment of tax, when the same was collected by the appellant from the service receiver - Furthermore, the intention of the appellant to evade tax is understood form its very conduct of non-filing of periodic returns and even not answering to the notices sent at least on three occasions. Therefore, it is a clear case where department has proved the fact of intentional suppression of fact for the purpose of evading the tax liability - demand upheld. Appeal dismissed - decided against appellant.

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• 2019 (2) TMI 19
  Refund of CENVAT Credit - input services - Air Travel Agent Services - Banking Financial Services - Business Auxiliary Services - General Insurance Services - denial on account of nexus - Denial of excess refund claim to the Appellant for the quarters October, 2014 to December, 2014 and January, 2015 to March, 2015. General Insurance Services - Held that:- The insurance policy is taken by the Appellant in relation to the financial risks during the course of business that may arise upon the appointment of the employees as Nominee Director/Alternate Director in the investee company and not for the personal consumption of the employees. The said input service is used in the course of provision of output service and has not only a nexus with the output services but is essential for the business of the Appellant, therefore the Appellant is eligible for CENVAT credit on General Insurance Services - refund allowed. Air Travel Agent Services - Held that:- The Appellant has availed those services for booking air tickets for the travelling of its employees for official meetings with the client at various locations. Those meetings are conducted to enable to the Appellant to understand the needs of the overseas client and to deliver qualitative services to them. These meetings are essential for the business of the Appellant and in its absence, the business of the Appellant is going to be affected - this input service as availed by the Appellant in connection with its business are essential for the provision of output services and therefore the Appellant is entitled for refund of Service Tax on the said services - refund allowed. Storage and Warehousing Services - Banking Financial Services - Business Auxiliary Services - Held that:- These services are essential and there is nexus between the input services and output services and therefore for these services also the Appellant is entitled for refund - refund allowed. Denial of excess refund claim to the Appellant for the quarters October, 2014 to December, 2014 and January, 2015 to March, 2015 - denial on account of non-reversal of erroneous credit availed by the Appellant in their ST-3 return - mis-match between the opening and closing balance for the month of September, 2014 October, 2014 - Held that:- Both the Authorities below have erred in considering the amount of unutilised credit for the quarter, which was calculated by deducting the amount of domestic services tax liability for the period discharged through utilisation of CENVAT credit, from the amount of CENVAT credit availed by the Appellant during the period. The submission of the Appellant seems to be reasonable that nowhere in Notification No. 27/2012 or in Rule 5 ibid there is a requirement to consider the amount of unutilised credit for the period. The calculations/tables have been produced by the Appellant for comparing the amount of CENVAT credit balance available on the last day of the quarters, on the day of filling the refund claim and also the quantum of refund claim worked out as per Notification No. 27/2012- CE (NT) dated 18.06.2012 - it is clear that the Appellant has followed calculation as prescribed by Notification No. 27/2012 and Rule 5 ibid, and has rightly claimed refund of the lowest amount for the relevant quarters viz. October, 2014 to December, 2014 and January, 2015 to March, 2015 and there is no question of excess credit availed by the Appellant - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 18
  Valuation - inclusion of value of cement and steel supplied free of cost in assessable value - Held that:- The issue stands settled in the case of M/s. Bhayana Builders Pvt. Ltd. [2018 (2) TMI 1325 - SUPREME COURT OF INDIA] wherein the Hon’ble Apex Court has held that the value of free supplies need not be included - demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 17
  Suo-moto adjustment of excess service tax paid - no intimation made to Department about such adjustment - Sub-section 4A of Rule 6 of Service Tax Rules, 1994 - scope of SCN - Held that:- On perusal of SCN it is seen that the allegation is limited to the adjustment made by the appellant. There is no allegation that such adjustment is with regard to the commission received after 01.04.2005 for the services provided prior to 31.03.2005, etc. - Since the SCN does not make any such allegation, such observation made by the adjudicating authority is definitely beyond the scope of SCN. Whether the adjustment made by the appellant is sustainable? - Held that:- In Central Excise Law there is no such provision for adjustment. In case of excess payment of duty the only option available to the assessee is to apply for refund under Section 11B of the said Act. However, the legislature has made provisions for adjustment of excess tax paid in the Service Tax Rules. This is to facilitate the assessee so as to eliminate the hassles to obtaining the refund. If the assessee has made excess payment, the same can be adjusted towards the liability for subsequent months. The essence of this provision is to help the assessee who has made excess payment to utilize such excess amount to pay up the tax liability for other period. The demand cannot sustain - Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 16
  Renting of immovable property service - appellant is an association formed for the purpose of facilitating merchants to store and trade food grains from the demarcated premises - the appellant has received rent from members as well as non-members such as Petrol Bunk, BSNL, Bank, etc. - principles of mutuality - Held that:- Tribunal in the appellant s own case in M/S. THE LEIGH BAZAAR MERCHANT S ASSOCIATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [2018 (8) TMI 254 - CESTAT CHENNAI] has decided that the rent collected from members cannot be subject to levy of service tax due to the principle of mutuality - the demand of service tax on the rent received from members cannot sustain. Rent received from non-members - Threshold limit - Held that:- The details of rent collected covered by the Show Cause Notice for the year 2011-12 is given - It would go to show that the amount of rent collected from non-members is within the threshold limit of exemption of service tax - the demand of service tax on the rent collected from non-members also cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 15
  Refund of service tax paid - input services - export of service - POPOS Rules - Providing “Business Support Service” and “Management or Business Consultants Service” - Held that:- The destination of provision of service is to be considered on the basis of the place of consumption and not on the basis of place of performance of service - the services provided by the respondent is to be categorized as service falling under Rule 3(1)(iii) of the Export of Service Rules, 2005. The issue arising out of the present dispute is no more res integra in view of the decision of this Tribunal in the case of Paul Merchants Ltd. v CCE, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)], wherein it has been held that the service receiver located abroad, since has paid for the services, the beneficiary of service in India cannot be termed as service receiver for the purpose of consideration of export, in terms of Rule 3 of the Export of Service Rules, 2005. Refund allowed - appeal filed by Revenue is dismissed.

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• 2019 (2) TMI 14
  Classification of services - credit card services or not - distinct contractual (service) relationships - Interchange Fees which accrues to the appellant as a fallout of each credit card transactions by a holder of a credit card issued by the former - taxability or otherwise - Held that:- In a very recent decision of the Tribunal in the case of ABN Amro [2018 (7) TMI 1750 - CESTAT ALLAHABAD], it has been categorically held that the amount received by the appellant does not qualify as credit card services that when acquiring bank has discharged service tax liability on the entire amount, no service tax is payable by the appellant and that the amount offered by the appellant does not qualify a credit - the very issue that is in dispute in the present appeal has been conclusive decided by the Tribunal in the final order (ABN Amro) against Revenue. The impugned order is not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 13
  Commercial or Industrial Construction Service - agreements for construction of buildings - period involved is from 2005 to 2008 - Held that:- Undisputedly, the works executed or the contracts entered are of composite in nature as it involves supply of materials as well as element of services - The Hon'ble apex court in the case of M/s. Larsen & Touboro Ltd., [2015 (8) TMI 749 - SUPREME COURT] has held that such contracts which are composite in nature are not leviable to service tax prior to 01.06.2007 - the demand prior to 01.06.2007 cannot sustain and requires to be set aside. Part of the demand falls after 01.06.2007 - Construction of Complex Service - Held that:- The Tribunal in the case of M/s. Real Value Promoters Pvt Ltd., [2018 (9) TMI 1149 - CESTAT CHENNAI] had discussed in detail the leviability of service tax on composite contracts under the category of CCS/CICS/ECIS for the period after 01.06.2007. The Tribunal therein had observed that after 01.06.2007, the demand for such composite contracts can attract the levy of service tax under the category of Works Contract Services only - demand do not sustain. The demand prior to 01.06.2007 or after cannot sustain - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (2) TMI 12
  CENVAT Credit - Incorrect reversal of cenvat credit attributable to exempted goods by considering the weight of the final product and not considering the quantum of inputs used in the manufacturing activity - Held that:- When there is an embargo to avail credit on inputs used for manufacture of exempted products, the appellant cannot contend that the credit would be eligible since the waste and scrap is cleared on payment of duty - the demand of ₹ 1,29,52,945/- on this issue is legal and proper and does not require interference. CENVAT Credit - Incorrect reversal of credit for LPG / Furnace oil used in the manufacture of exempted goods, by incorrect adoption for value of exempted goods - Non reversal of input services credit for exempted goods manufactured - Sep 2005 to March 2008 - Held that:- Even prior to 1.4.2008, when the CENVAT Credit Rules bars availing of credit on inputs used for exempted products and also lays down procedure for reversal of proportionate credit, the appellant had to arrive at the value of clearances by taking into consideration the value of free supplies as well as amortized cost - also the appellant has used the funded machinery for dutiable goods and has paid royalty to VSSC for such use. All these aspects have to be considered while arriving at the value of exempted clearances - All the aspects have to be considered while arriving at the value of exempted clearances - matter require to be remanded to the adjudicating authority for reworking the exempted clearance and that has to be reversed by the appellant. Non reversal of input services credit for exempted goods manufactured - period after 1.4.2008 - Held that:- The appellant fairly concedes the demand in this regard. They only contest the inclusion of the entire amortized value of plant and machinery funded by VSSC, on the grounds, inter alia that the impugned plant and machinery was also used to manufacture dutiable goods for customers other than VSSC - for the purpose of reworking the credit that has to be reversed under this issue, the matter remanded along with the above two issues to the adjudicating authority. Penalty - Held that:- All these issues are in the nature of interpretation of law or have resulted from mistakes and inadvertent errors on calculating the amounts to be reversed - the penalties imposed on all the issues cannot sustain and require to be set aside. Appeal allowed in part - part matter on remand.

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• 2019 (2) TMI 11
  Valuation - includibility - It is the case of the Revenue that the cost of the cylinders which the appellant charged from their customers should part of the assessable value being the additional consideration for sale of the BOPP films (since the cylinders are made for each customer) - extended period of limitation - Held that:- These amounts were recovered from their customers as liquidated damages only when the customers did not place the orders as agreed to. Therefore, the cost which they incurred in getting the cylinders engraved as per the requirement of the customers was recovered from them. Therefore, these amounts cannot be included as additional consideration for sale in the assessable value of the final products. The nature of these receipts by the appellant from their customers could not be readily ascertained because there were no written agreements between the appellant and customers. As far as the remaining amount is concerned, as there is only evidence that these amounts have been collected by the appellant from their customers and there is no evidence that these amounts pertain to any other transaction between the appellant and customer we find that this is a consideration for sale of their final product. Accordingly, the demand on this account needs to be upheld Extended period of limitation - Held that:- The books of accounts were not required to be submitted to the officers of Central Excise. The returns which were filed with the central excise Department must reflect the correct and total value of the amounts recovered by the appellant from the customers. They have not done so. Only investigation by the Department and the statements recorded by them revealed these facts - the extended period of limitation under Section 11A(2) of the Central Excise Act, has been correctly invoked - The amount of interest and penalties imposed upon the appellant also get correspondingly reduced. Appeal allowed in part.

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• 2019 (2) TMI 10
  100% EOU - excisability - spent solvents - Post manufacturing process, spent solvents arise as mother liquor - clearances of sludge, residue of oil that remains in the tank in the form of sludge - Held that:- The Hon’ble Apex Court in the case of M/s. Grasim Industries Ltd. [2011 (10) TMI 2 - SUPREME COURT OF INDIA], where it was held that the metal scrap and waste arising out of the repair and maintenance work of the machinery used in manufacturing of cement, by no stretch of imagination, can be treated as a subsidiary product to the cement which is the main product - impugned order cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 9
  CENVAT Credit - exempt goods or not - waste and scrap of batteries - demand of an amount equal to 5% of the value of the defective cells - Rule 6(3)(i) of the CENVAT Credit Rules 2004 - scope of SCN - Held that:- The SCN as seen from page 55 of the Appeal Book, had proposed only to demand ₹ 14,874/- payable in terms of Rule 6(3)(i) ibid being an amount equal to 5% of the value of the exempted goods along with interest. There was absolutely no proposal to demand the Credit attributable to the inputs involved in the waste of dry cell batteries. This only would be the case when the Show Cause Notice has considered the waste and scrap of batteries as excisable goods - Once that proposition has been shot down by the Commissioner (Appeals) in paragraph 16(i) of the impugned Order, the further Order at paragraph 16(ii) directing the appellant to pay up the CENVAT Credit attributable to inputs involved in such non- excisable goods is definitely beyond the scope of the Show Cause Notice. On this very point, the impugned Order cannot sustain. The very issue of requirement of reversal of Credit in such cases has been addressed by the Tribunal in respect of the very same appellant in the case of Eveready Industries India Ltd. [2018 (6) TMI 625 - CESTAT ALLAHABAD], where it was held that C.B.E. & C. Instruction stand that Cenvat credit is admissible in respect of input contained in any of the waste, refuse or by product. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 8
  Valuation - manufacturers of rubber compound - removal of goods to M/s. HSI Automotives Ltd, who holds 100% of equity shares of appellant - short payment of duty - intent to evade or not - revenue neutrality present or not - Held that:- In the present appeal, revenue neutrality is very much present since the goods manufactured by the appellant were removed only to their holding company M/s. HSI. It is true that the appellants have calculated the assessable value only at around 103% of the cost of production instead of 110%, as required by CAS-4 valuation method. In any case, even if the discharge of duty liability was at 110%, the Department would have been able to avail the same to that extent. It is seen that the appellants have discharged the entire duty liability in respect of the Show Cause Notice dated 01.05.2015 before the issuance of the same and even the remaining amounts proposed in the three Statements of Demand were paid up proximate to their issue - the short payment on the part of the appellant was not with any intention to evade payment of duty and further, since they were clearing the goods only to their holding company, there is definitely revenue neutrality in the entire transaction. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 7
  Refund of CENVAT Credit - High Sea Sale - trading activity - credit was reversed to buy peace - common input/input services used in manufacturing as well as trading activity - non-maintenance of separate records - Held that:- It is the sale of goods which happens by way of transfer of document of title after the goods cross the Customs Barriers of the foreign nation but before they cross (enter) the Customs frontiers of India. Hence, when High Sea Sales take place outside the territorial waters, it cannot be understood how such sales can be considered as an exempted service (trading) so as to fall within the ambit of Rule 2(e) of the CENVAT Credit Rules, 2004 - There is no evidence to show that common input services have been used for such High Sea Sales. Further, possibly to buy peace with the Department, the appellant had reversed the CENVAT Credit voluntarily and is now contesting only the rejection of refund claim. Refund was rejected mainly on the grounds that the appellant did not exercise the option of reversing the proportionate Credit and that another SCN has already been issued to the appellant demanding the recovery of Credit as quantified under Rule 6(3)(i) of the CCR, 2004 for the very same disputed periods - Held that:- The appellant, as per the provision, reversed an excess amount of ₹ 8,38,752/-. This being so, the Department cannot reject the refund claim stating that they have not exercised any option. The conduct of reversing proportionate Credit is sufficient to show the intention of the appellant to exercise the option provided under Rule 6(3) ibid. Another ground for rejection is that a further Show Cause Notice dated 24.02.2016 has been issued to the appellant - Held that:- Merely because a Show Cause Notice has been issued or is pending adjudication, it cannot be said that any other appeal proceedings has to be kept in abeyance by the Commissioner (Appeals) or this Tribunal. This contention of the Department for rejecting the refund claim is without any legal basis. The impugned Order rejecting the refund claim cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 6
  CENVAT Credit - inputs - H.R. Plates/M.S. Plates/S.S. Plates/Cheq. Plates - Held that:- Larger Bench of CESTAT, New Delhi reported in M/S. MANGLAM CEMENT LTD. VERSUS C.C.E., JAIPUR-I [2018 (3) TMI 1547 - CESTAT NEW DELHI] held that input on steel items used as support structure for smooth erection of machines can be considered as “accessories” of capital goods and those are eligible to get benefit of CENVAT credit as they fall within the scope and ambit of both Rule 2(a)(A) as well as 2(k) of the CENVAT Credit Rules, 2004 - thus, availment of CENVAT credit by the appellant on MS Plates, Steel Plates etc. which were used either as capital goods or as support structure or even for repair and maintenance activities of the manufacturing unit are admissible CENVAT credits which were rightly availed by the appellant - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 5
  CENVAT Credit - Business Support Services by the appellant towards warehousing and logistics support services taken in Spain for timely delivery of goods - reverse charge mechanism - place of removal - Held that:- In the instant case, appellant contents that it had taken up the risk of shipment of goods to its warehouse located outside India against any lass or damage and the sale is made from the said warehouse to M/s Ford in Spain for which place of removal is to be considered as warehouse located in Spain and since appellant company registered in India, the Central Excise Act is applicable to it irrespective to the fact that its goods are sold from within the territory of India or outside it. Further obligation to discharge the duty is on the appellant company as a legal entity and not on the goods manufactured by it as the goods cannot be treated as legal entity for which the observation of the Commissioner (Appeals) is erroneous furthermore, clarifactory circular cannot have overwriting effect against statutory provision made by the legislature which by itself defines a warehouse as a place of removal. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 4
  CENVAT Credit - fraudulent availment of CENVAT Credit - the appellants AVCL received non-duty paid MS Scrap without any valid cenvated documents from registered dealers - also it is alleged that the description of goods shown in the invoices differs from the description of goods supplied by the manufacturers to the registered dealer - demand mainly based on statements of the Driver - Held that:- It must be stated that other than mere statements, there is no evidence adduced by the department to establish that there has been fraudulent availment of credit. In cross-examination Shri T.K. Sundaram has stated that he has given the statements under force and coercion. It is explained by Shri T.K. Sundaram that they had used gas cutting machines to cut and size the materials received from the manufacturers as required by the clients. All these would go to show that AVCL has received scrap only. The department has not put forward any invoices, which has not included Central Excise duty. The basic allegation is that there is difference in the description of the goods. This has been plausibly explained by AVCL as well as Shri T.K. Sundaram. It is also to be noted that the AVCL uses all the input only after through lab testing. In such a case, the allegation that they have not received inputs or that they have differently described the inputs etc., do not seem to be probable at all. Needless to say that when finished products are exported, AVCL would not be making any gain by indulging in such fraudulent availment of credit, as they cannot use such credit. The department has failed to establish fraudulent availement of credit on the part of AVCL - demand do not sustain - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (2) TMI 3
  Valuation - dealer in Cement - inclusion of freight and coolie charges incurred by the assessee - sale of car and two wheeler was not reported for the assessment year 2007-08 - discount offered tax was not paid - TNVAT Act - Tribunal reversed the orders passed by the first appellate authority on going through the assessment file, which contained sample sale bills and some more sale bills produced at the time of arguments before the Tribunal. The Tribunal found that the sample bills do not contain freight and handling charges. Held that:- On a reading of the revised assessment orders wherein, the Assessing Officer says that the inspecting officials have verified and found that the assessee has not shown the freight and coolie charges and discount allowed in the sale bills issued by them. Further, the Assessing Officer states that the assessee has not produced sale bills issued by them for verification before him. The next sentence in the revision orders speaks of verification from the bill wise details furnished in respect of discount, freight and coolie charges and it is stated that no uniform method has been followed. This is probably a part of the report submitted by the inspecting officials. The revision of assessments itself are based upon a report of the Enforcement Wing. It has been held in several decisions that if incriminating material is unearthed during the course of inspection, it cannot form a basis of a revision of assessment. In other words, the Assessing Officer would be entitled to issue show cause notice to the assessee calling upon the assessee to explain as to why the turnover should not be revised; and why higher rate of tax should not be levied and demanded. Upon issuance of such notice and receipt of the reply from the dealer, it is incumbent upon the Assessing Officer to take an independent decision in the matter based on the materials placed before the Assessing Officer. There is no finding by the Tribunal that the stand taken by the assessee that it is an indirect expense and in commercial terms, it is a postsale expense was never disbelieved. Consequently, the appellate Tribunal could not have included the said amounts in the taxable turnover. More importantly, cement, being a controlled commodity, price fixation is done by the manufacturer or wholesale distributor, and the assessee, being a small retailer, has no role in fixation of the price, any other charges cannot form part of taxable turnover. Tax cases allowed - the substantial questions of law are answered in favour of the assessee.

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• Indian Laws

• 2019 (2) TMI 2
  Dishonor of Cheque - it was contended that cheque in question did not represent an amount that could be termed as “legally enforceable or other liability” which was due - section 138 of Negotiable Instruments Act - Jurisdiction under Section 482 Cr.P.C. - Held that:- This Court finds that the petitioners at best raise questions of fact mixed with questions of law which cannot be examined or effectively addressed in the limited jurisdiction under Section 482 Cr.P.C., it being desirable that the same be left to be adjudicated upon on the basis of formal evidence led by both sides at the trial. The contention of the petitioners is that the amount of cheque represented a liability which was not due on the date of issuance of the cheque - This contention cannot be accepted as correct at this stage of the process without proper inquiry. A presumption arises from the act of issuance of cheque that it was “for the discharge in whole or in part, of” a debt or other liability and in terms of Section 139 NI Act, onus to prove facts to the contrary so as to rebut the said presumption would be of the petitioners. This Court declines to interfere at this stage in the ongoing criminal prosecution of the petitioners on the complaint of the respondent - petition dismissed.

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