TMI Tax Updates - e-Newsletter
February 23, 2018

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• Income Tax:

  Penalty u/s 271(1)(c) - voluntary surrender of income by assessee - The mere offer therefore, of the amount during the search in the absence of any explanation for the source of income, renders the assessee’s argument insubstantial in the totality of circumstances. - HC
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• Income Tax:

  Reopening of assessment - allowability of interest income u/s 80IA - Once the Assessing Officer rejected the claim of deduction under Section 80IA [4] in its entirety, there was thereafter no occasion and any need for him to dissect such claim for rejection on some additional ground. - HC
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• Income Tax:

  Receipt of amount without consideration - income from other sources u/s 56(2)(vi) - Amount received from employer’s various employee’s welfare trusts - when the income of all the aforesaid 12 discretionary trusts have been charged to tax, the same income cannot be taxed twice when fell into the hands of the assessee - AT
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• Income Tax:

  Registration u/s 12AA - proof of charitable activities - scope of primary objects - In case the assets are being parted with either individual entity or institution, who are not having charitable objects or registration u/s 12A, then under the scheme of the Act it will first suffer tax, only thereafter, it will vest in such individual or entity. This is not a valid reason for rejecting registration - AT
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• Income Tax:

  TDS u/s 194H - advertisement agencies - what is liable for TDS is commission of brokerage and not the incentives given on the basis of principal to principal relations - HC
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• Income Tax:

  Validity of reopening assessment - unexplained investment - survey u/s 133A - the vague statements giving estimated details without supporting evidence would not help the case of the assessee - AT
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• Income Tax:

  The amount received by the assessee as full and final settlement on dissolution of firm could not give rise to any capital gain chargeable to tax as there was no transfer of any capital asset - AT
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• Income Tax:

  AO made the addition of commission expense paid to AEMS without confronting from assessee that no reply was received by him in response to the notice issued u/s 133(6) of the Act to AEMS - no addition can be made - AT
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• Customs:

  Seeks to impose anti-dumping duty on Ceramic Tableware and Kitchenware, excluding knives and toilet items, originating in or exported from China PR - Notification
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• Corporate Law:

  An independent director re-appointed for second term shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard
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• Service Tax:

  Supply of DG sets on hire basis - this is the case of supply of tangible goods for use, with legal right of possession and effective control vesting with the hirer, required to be treated as "deemed sale of goods", hence cannot be considered as "supply of tangible goods for use of service" - AT
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• Service Tax:

  Cleaning Services - Indian Railways - the original authority held cleaning of such railway coaches will be considered as cleaning of commercial premises - the interpretation of the original authority is far fetched and not sustainable in view of the plain meaning of the statutory definition for tax entry. - AT
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• Service Tax:

  Non-payment of service tax - difference between the statutory returns and the annual balance sheet - The burden of explaining the difference amount being not taxable income has been shifted to the appellant. This will be against the very basis of tax levy - AT
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• Service Tax:

  Liability of service tax - expenditure incurred in setting up of certain branch offices in foreign countries - the legal fiction of considering a branch of an assessee as a separate establishment is not to tax a service rendered to its head office. Further, here there is no such service also has been identified with supporting evidence - the tax liability under BAS cannot be sustained. - AT
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• Central Excise:

  Classification of goods - Aswini Homeo Arnica Hair Oil (AHAHO) - The goods are classifiable under chapter 30 of the Central Excise Tariff as Homeopathic medicine and liable to duty accordingly. - AT
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• Central Excise:

  Waste - N/N. 89/95-CE - manufacture of refined vegetable oil - the gums, waxes and fatty acid distillate are emerging due to removal/refining process of crude rice bran oil - benefit of exemption allowed - AT
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• Central Excise:

  Transfer of CENVAT credit - transfer of credit from Service Tax credit Register to CENVAT Credit Register, was properly done under intimation to Revenue and as such the demand for this is hit by limitation. - AT
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• Central Excise:

  Area based exemption - if the unit is one and the same as contended by the Revenue, the products which are otherwise eligible for exemption under the said notification are to be cleared without payment of duty. It is not tenable to hold that some products can avail area based exemption and others need not avail area based exemption. - AT
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• VAT:

  The scheme of the Act would not permit the Tribunal to jettison the first appeal before the Commissioner and allow itself to act as first Appellate Authority. If the second appeal lies before the Tribunal and the Tribunal were to disregard the first appellate forum and convert itself into first Appellate Authority, the same would be froth with two difficulties. - HC
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Articles

• GST RATES FOR CONSTRUCTION SECTOR ( As amended upto 20-02-2018)
• No LLP can be Registered till the 31st March 2018 due to DPIN

Notifications

• Companies Law

• F. No. 7/8/2016-CL.I - dated 21-2-2018 - Co. Law
  Companies (Removal of Difficulties) Order, 2018

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• Customs

• 04/2018 - dated 21-2-2018 - ADD
  Seeks to impose anti-dumping duty on Ceramic Tableware and Kitchenware, excluding knives and toilet items, originating in or exported from China PR

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• GST - States

• 2222-FIN-CT1-TAX-0043/2017-S.R.O. No. 39/2018 - dated 25-1-2018 - Orissa SGST
  Amendment to Finance Department Notification No.19869-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017, bearing S.R.O. No.305/2017 notifying State Tax on intra-state Supply of few Services.

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• 2218-FIN-CT1-TAX-0034/2017-S.R.O. No. 38/2018 - dated 25-1-2018 - Orissa SGST
  The Odisha Goods and Services Tax (Amendment) Rules, 2018.

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• 27-FIN-CT1-TAX-0043/2017- S.R.O. No. 04/2018 - dated 1-1-2018 - Orissa SGST
  Amendment to Clause (i) and Clause (iii) of the Notification No.19821-FIN-CT1-TAX-0034/2017 dated 29.06.2017

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• 38451-FIN-CT1-TAX-0034/2017- S.R.O. No. 779/2017 - dated 30-12-2017 - Orissa SGST
  The Odisha Goods and Services Tax (Twelfth Amendment) Rules, 2017.

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• 38447-FIN-CT1-TAX-0043/2017-S.R.O. No. 778/2017 - dated 30-12-2017 - Orissa SGST
  Seeks to prescribe quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore.

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• 38443-FIN-CT1-TAX-0043/2017-S.R.O. No. 777/2017 - dated 30-12-2017 - Orissa SGST
  Notification specifying 1st day of February, 2018, as the date from which provisions at serial numbers 9,10 and 11 of the Finance Department Notification No.25382-FIN-CT1-TAX-0034/2017 Dated 30.08.2017 shall come in to force.

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• Income Tax

• 08/2018 - dated 16-2-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Maharashtra Electricity Regulatory Commission’, a Commission constituted by the State Government of Maharashtra, in respect of the specified income arising to the Commission

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News

• Fifteenth Finance Commission invites suggestions/views from general public, institutions for higher inclusive growth

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• Revised Double Taxation Avoidance Agreement (DTAA) between India and Kenya notified

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• RBI Reference Rate for US $

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Case Laws:

• Income Tax

• 2018 (2) TMI 1428
  Capital gains arising to the Applicant- Transferor, a tax resident of Mauritius, from sale of shares - Benefit of DTAA - whether the Transferee shall not have any liability to deduct tax at source under section 195? - department contended that the working of capital gain involves correctly working out the total sales consideration which in turn depends upon the value assigned to each share of SIPL and Scorpio and this involves the determination of fair market value of the said property Held that:- We do not feel that questions raised involve any valuation and determination of fair market value of property. The computation of capital gains is embedded in the concept of valuation and merely for this reason the question of capital gains arising in Application cannot be held to be barred by clause (ii) of the proviso to section 245 R(2). Especially so when it is stressed that the questions pertain to the legal admissibility of the transaction and not of any valuation the aspect of profit shifting raised by the Revenue is also unclear in regard to the law from which the inference is drawn - it is merely an assumption on the part of the Department and cannot be considered as a bar. The Departmental Officer sought some more time to make submission in regard to clause (iii) of the proviso to section 245 R(2) and that being declined by this Authority, he requested that the issue may be kept open for consideration during the proceedings under section 245 R(4). Thus the Application is admitted under section 245 R(2) for giving rulings on the two questions mentioned earlier, keeping open the issue of avoidance of tax which the Department may raise, if so desired, during section 245 R(4) proceedings.

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• 2018 (2) TMI 1381
  Assessment u/s 153C - existence of satisfaction note - Held that:- Special Leave Petitions are dismissed. HC order confirmed. [2017 (7) TMI 539 - DELHI HIGH COURT] HC has held that while the documents may ‘pertain to’ the Assessee, but in the context explained above, they cannot be presumed to be documents that ‘belonged to’ the searched person. Consequently, even with regard to these documents, the jurisdictional requirement under Section 153 C (1) of the Act, of the AO of the searched person having to be satisfied that the said documents do not belong to searched person but to the Assessee, has not been fulfilled. The satisfaction note prepared by the AO of the searched person does not fulfill the legal requirement spelled out in Section 153C (1) of the Act. The satisfaction note of the AO of the Assessee, being a carbon copy of the satisfaction note of the AO of the searched person also fails to fulfill the jurisdictional requirement. - Decided in favour of assessee

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• 2018 (2) TMI 1380
  Penalty u/s 271(1)(c) - voluntary surrender of income by assessee - Held that:- The assessee merely made a voluntary surrender; she did not offer any explanation as to the nature of income or its source. The observations in MAK Data (2013 (11) TMI 14 - SUPREME COURT) are that the authorities are not really concerned with the statement - whether voluntarily or otherwise and have to see whether there was any non disclosure of material facts, or income. The complete failure to furnish any details with respect to the income, which if given could have been the only reasonable basis for deletion of penalty, in the opinion of the court, reinforced the views of the AO and CIT (A) that the revised return was an afterthought, based on the subsequent event of disclosure of ₹ 2,00,00,000/-. The mere offer therefore, of the amount during the search in the absence of any explanation for the source of income, renders the assessee’s argument insubstantial in the totality of circumstances. - Decided against assessee.

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• 2018 (2) TMI 1379
  Reopening of assessment - notice issued beyond the period of four years - reasons to believe - Held that:- The question of the assessee failing to disclose truly and fully all material facts necessary for assessment therefore becomes important. Nothing stated in the reasons recorded or from the materials on record suggest that the assessee failed to disclose truly and fully all material facts. AO has examined the materials on record during the original assessment proceedings, now to form a belief that assessee's treatment of capital gain tax was erroneous. Being a notice which was issued beyond a period of four years, this aspect therefore becomes important. As correctly pointed out by the counsel for the petitioner, there was no additional or extraneous material at the command of AO now to believe that income chargeable to tax has escaped assessment. Only on this ground, the notice of reopening needs to be quashed. This Court in case of Adani Exports vs Deputy Commissioner Of Income Tax (1998 (12) TMI 51 - GUJARAT High Court) and several times repeated by the Supreme Court later, reopening cannot be resorted to under the insistence of the audit party, particularly when the Assessing Officer holds a contrary belief. From this angle, we have perused the original files and do not find that the Assessing Officer independently believed that the audit note or the audit objection was otherwise valid. - Decided in favour of assessee.

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• 2018 (2) TMI 1378
  Application of provision of section 48 Explanation (iii) - whether inflation index would apply for the first year when the asset was first held by the assessee - computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift - shares which are the subject matter of capital gains tax were purchased by the father of the assessee on 01.08.1989. They were gifted by him to his son on 15.03.2009. The son i.e. the assessee sold the shares on 19.03.2009 - what would be the relevant date for ascertaining the cost of acquisition of shares for the purpose of indexation. Held that:- The issue is no longer res-integra. Division Bench of this Court in case of Commissioner of Income Tax v. Rajesh Vitthalbhai Patel reported in (2013 (7) TMI 413 - GUJARAT HIGH COURT) held that if the interpretation of the counsel for the Revenue was correct, this later reference to the cost of improvement borne by the assessee would not have been necessary since section 48 itself would take care of any improvement on the capital asset to be included for the cost of acquisition. The interpretation sought to be given by the Revenue would be unacceptable because there is no provision under which the cost of acquisition in the hands of the assessee in cases such as gift on the date of acquisition of the property can be made and found in the Act. A Serious roadblock would be created if such property is acquired through Will and would therefore have no reference to its actual cost on the date of operation of the Will. - Decided against revenue.

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• 2018 (2) TMI 1377
  Reopening of assessment - Held that:- According to the department, there are documents suggesting that there are TDS transactions concerning the firm for the period relevant to the assessment year in question. More importantly, during the course of a search against two individuals, name of the firm was found. There were documents indicating that the assessee had entered into huge cash loan transactions. The ledger account itself showed cash credit to the tune of ₹ 3.38 crores (rounded off) and debit of ₹ 2.28 crores (rounded off). There are as many as 20 entries of cash loan transactions in the name of the assessee in the ledger account for the period relevant to the assessment year 2010-11. It was also noted that despite such transactions, they have still not filed a return of income. All these are primarily factual aspects and cannot be gone into in the writ petition. It would be always open for the petitioner to establish that these transactions do not concern the petitioner or that the transactions are well explained. Whatever be the petitioners defence must be raised before the Assessing Officer during such assessment proceedings and not before this Court in a writ petition.

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• 2018 (2) TMI 1376
  Reopening of assessment - allowability of interest income u/s 80IA - Held that:- The record would show that the crucial requirement arising out of the proviso to Section 147 is not satisfied. AO has, in fact, in the reasons recorded itself proceeded on the basis of “on verification of record.” Thus, clearly the Assessing Officer proceeded on the basis of disclosures forming part of the original assessment. During the original assessment, AO had called upon the assessee to clarify on the interest income of ₹ 2 Crores which include the assessee's claim of ₹ 57.01 lacs as business income and therefore, eligible for deduction under Section 80IA [4]. There was no failure on the part of the assessee to disclose fully and truly all relevant facts. AO had rejected entire claim of deduction under Section 80IA [4]. He, therefore, had no occasion to thereafter comment on a part of such claim relatable to the assessee's interest income. Had the Assessing Officer accepted in principle the assessee's claim of deduction under Section 80IA [4] and thereafter, after scrutiny not made any disallowance for interest income forming part of such larger claim, the principle of change of opinion would apply. Once the Assessing Officer rejected the claim of deduction under Section 80IA [4] in its entirety, there was thereafter no occasion and any need for him to dissect such claim for rejection on some additional ground. AO thereafter cannot re-visit such a claim and seek to disallow part thereof. This would be contrary to the principle of merger statutorily provided and judicially recognized. Even after the Commissioner [Appeals] allow such a claim and the Revenue was of the opinion that he has not processed it and committed an error, it was always open for the Revenue to carry the matter in appeal. At any rate, reopening of the assessment would simply not be permissible. Reassessment carries an entirely different connotation. Once an assessment is reopened, the same gives wider jurisdiction to the AO to examine the claims which had been formed part of the reasons recorded, but which were not originally concluded. - Decided in favour of assessee.

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• 2018 (2) TMI 1375
  Benefit of Section 80-G (5) (vi) - activities carried out would qualify as charitable activities - Held that:- The record/paper book reflects that the amounts, which were expended by the assessee towards all the activities were less than ₹ 10,00,000/- and, therefore, the activities would clearly be included to be covered under the provisions of Section 2 (15) of the Act and in view of that the benefit of Section 80-G (5) (vi) would also enure to the assessee. In a recent division Bench judgement of this Court in the case of CIT vs. Shri Balaji Samaj Vikas Samiti (2018 (2) TMI 769 - ALLAHABAD HIGH COURT) a similar question arose with regard to charitable activities and this Court took a view that where the amount of less than ₹ 10,00,000/- it would get the benefit of Section 2 (15) of the Act. - Decided in favour of assessee.

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• 2018 (2) TMI 1374
  Disallowance u/s 40(a)(ia) - non deduction of tax at source on interest paid to financial institutions even when the appellant has paid the entire amount and no amount remains payable at the end of the year - Held that:- Taking into consideration, the decision rendered by the Delhi High Court in CIT vs. Ansal Land Mark Township Pvt. Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April 2005, merits acceptance which has been discussed by the tribunal in detailed, we are of the opinion that tribunal has not committed any error in allowing the appeal only for statistical purposes. No substantial question of law arises.

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• 2018 (2) TMI 1373
  TDS u/s 194H - non-deduction of tax by invoking provisions of section 40(a)(ia) - Held that:- The advertisement are to be procured by such agencies at the rates and terms decided between them and advertiser, assessee has no involvement therein. In the case of Kerala State Stamp Vendors Association vs. Office of the Accountant General [2005 (6) TMI 21 - KERALA High Court] the Hon’ble Kerala High Court held that what is liable for TDS is commission of brokerage and not the incentives given on the basis of principal to principal relations Delayed payment of PF & ESI contribution - ITAT deleted the addition - Held that:- As decided in State Bank of Bikaner and Jaipur [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income u/s 139(1), cannot be disallowed u/s 43B or u/s 36(1)(va) of the IT Act – this controversy is pending before the Supreme Court hence, the issues are decided subject to SLP.

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• 2018 (2) TMI 1372
  Assessment u/s 158BD r.w.s. 158 BC(c) - availment of appeal remedy before ITAT - Held that:- Complicated factual issues are to be first thrashed out before one goes into the aspect as to which of the legal principles as put forth would apply. Record of proceedings shows that there has been an order of interim stay granted by this Court in this writ petition, when the writ petition was entertained on 26.11.2002 and till date, interim order is in force and infact, it has been made absolute on 31.12.2002, much prior to the filing of the counter affidavit by the 1st respondent, dated 22.08.2003. Therefore, while relegating the assessee to avail the appellate remedy before the ITAT, this Court is inclined to direct that the impugned assessment proceedings shall continue to remain stayed till the disposal of the appeal by the Tribunal. Writ petition is held to be not maintainable and accordingly dismissed and the petitioner is granted liberty to file an appeal before the ITAT as against the impugned assessment order.

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• 2018 (2) TMI 1371
  Non granting registration under section 12AA - proof of charitable activities - scope of primary objects - unsecured loans taken - way in which education is imparted - complete intermingling of funds - Board of Governance as well as Board of Management is entirely controlled by Sponsoring Body namely Bhandari Charitable Trust - Held that:- President shall be appointed by the sponsoring body in consultation with State Government for a period of three years by following such procedures and on such terms and conditions as may be prescribed by the statute. The president shall preside at the meeting of the governing body. Thus, in the Act a mechanism has been provided that there will be search committee and it will be searching eminent personalities and professionals to be appointed by the Board of management. At every stage there would be a consultation with the State Government. Apart from the above, it is pertinent to observe that how this aspect is relevant to test genuineness of objects of the university. Objects of the university are to impart education. Whether such education is being imparted in a controlled manner, financially or administratively, then those objects would not change. If some actions at the end of the assessee are being taken against the provisions of Income Tax Act and then section 13 etc. are already there to keep a check of misuse of powers. Next reasons assigned by the ld.DIT that university has shown unsecured loan of ₹ 3.15 crores from Bhandari Charitable Trust is not a relevant factor to determine genuineness of objects. All financial affairs if misused can be considered at the time of assessment proceedings with the help of section 13 In the present case, even if the assessee has taken funds from “BCT” it will not be affect its objects, if it has extended some undue benefits to “BCT” then safeguards are already there under section 13 of the Income tax Act. Registration cannot be rejected at the threshold only under an anticipation that something could be controlled either by the “BCT” or some undue benefit would be given to “BCT”. These are concerns which can always be looked into at the time of assessment proceedings. If a charitable institution enjoying benefit under section 12A is being dissolved then either those assets would be given to other institutions being charitable trust and enjoying benefit under section 12A, In case the assets are being parted with either individual entity or institution, who are not having charitable objects or registration under section 12A, then under the scheme of the Act it will first suffer tax, only thereafter, it will vest in such individual or entity. This is not a valid reason for rejecting registration under section 12A. The ITAT in the case of Rai University (2015 (6) TMI 633 - ITAT AHMEDABAD) has observed that at the time of registration, ld.DIT(E) has to satisfy with regard to genuineness of the activities of the trust, and not anything else. - Decided in favour of assessee

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• 2018 (2) TMI 1370
  Receipt of amount without consideration - income from other sources u/s 56(2)(vi) - Amount received from employer’s various employee’s welfare trusts - Held that:- We are of the considered view that ld. CIT (A) has thrashed the controversy at hand at length by considering the aforesaid CBDT circular no.157 (F.No.228/8/73-IT (A-II) dated 26.12.1974 and judgment rendered by Hon’ble Supreme Court in ITO vs. Atchaiah (1995 (12) TMI 1 - SUPREME Court) and when the income of all the aforesaid 12 discretionary trusts have been charged to tax, the same income cannot be taxed twice when fell into the hands of the assessee. So, when the AO has exercised his option once by taxing all the 12 trusts duly described in preceding para no.6, it is not open to the assessing authority to assess the same income for that assessment year in the hands of the other person i.e. the beneficiary of the trusts. - Decided against revenue.

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• 2018 (2) TMI 1369
  Penalty levied u/s.271(1)(c) - unexplained investment from undisclosed sources - Held that:- We find ourselves in agreement plea raised on behalf of the assessee that sufficient ambiguity exist in the interpretation of cancellation agreement from Kuoni Travels India Pvt. Ltd. Therefore, benefit of doubt should be given to the assessee and discretion for non imposing the penalty should be exercised in favour of the assessee. Similarly as regard penalty arising an addition of ₹ 58,500/- attributable to M/s. Prabhat Automation, verified some merit in the plea of the assessee for non imposition of penalty having regards to the fact narrated by the coordinate bench of the Tribunal in quantum proceeding. - Decided in favour of assessee

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• 2018 (2) TMI 1368
  Addition on share of goodwill received by the assessee on his retirement from the partnership firm - Held that:- There was no transfer of any asset or goodwill by the assessee on his retirement to the partnership firm. The amount received by the assessee as full and final settlement on dissolution of firm could not give rise to any capital gain chargeable to tax as there was no transfer of any capital asset. See case of Ajay Kumar Doshi [2015 (12) TMI 1750 - ITAT KOLKATA]- Decided in favour of assessee.

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• 2018 (2) TMI 1367
  Addition u/s 41(1)- AO found that it was a trading liability and subsequently, the assessee changed his stand claiming it was a gift - Held that:- Assessing Officer has not examined all the documentary evidences filed by the assessee. In view of this factual aspect, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Disallowance u/s 14A - Held that:- The assessee claims that the investment was made in the partnership firm in which he was also a partner. Copy of partnership deed is not available before this Tribunal. Therefore, this Tribunal is unable to find out whether the investment is for business purpose or for earning exempted income. Moreover, the assessee also claims that no exempted income was earned by him. This was also not considered by both the authorities below, thus the matter needs to be reconsidered by the Assessing Officer Appeal of assessee allowed for statistical purposes.

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• 2018 (2) TMI 1366
  Denying registration to the assessee trust u/s. 12AA - order passed without observing the due process of law - Held that:- As the law itself clearly provides that any order refusing registration, as the impugned order, could only follow a reasonable opportunity of hearing (to the applicant trust or institution). This hearing, firstly, is to be before the competent authority, and cannot be delegated, even as clarified by the Hon'ble jurisdictional High Court in Ameliorating India (2017 (2) TMI 1283 - PUNJAB AND HARYANA HIGH COURT). This is as it is he who is to be in law satisfied, or not so, about the merits qua the grant of registration. That is, it is his personal satisfaction and judgment alone that is relevant, and it is he who is therefore to form an informed opinion after hearing the applicant. Two, the hearing has to be specifically qua the grounds with reference to which the competent authority considers the application for registration as failing or as infirm, so that the same ought to be refused/not allowed. Not so doing would render nugatory the very purpose of hearing. In the facts of the present case, the only aspect, among the several that inform the denial of registration, as a perusal of the impugned order shows, on which the assessee was show caused, is the absence of dissolution clause in the trust deed. And qua which in fact the assessee, vide para (xi) of its letter dated 20.12.2016, states to have been since added. Under the circumstances, therefore, the impugned order, passed without observing the due process of law, is procedurally deficient, constituting an irregularity.We, accordingly, setting aside the impugned order, direct the disposal of the assessee’s application by the competent authority in accordance with law - Decided in favour of assessee for statistical purposes.

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• 2018 (2) TMI 1365
  Validity of reopening assessment - unexplained investment - survey u/s 133A - no books of accounts were found at the business premises of the assesses - Held that:- It is not a matter of case of dispute about the quantum of investment or the source of investment but the assessee has neither maintain the books of accounts or accounts of the construction of the shopping complex nor has filed the return of income for the assessment year under consideration. Therefore, all these facts are sufficient to form the belief that the income assessable to tax has escaped assessment. At the stage of initiation of proceedings u/s 147/148 what is required is prima facie reasons to belief that the income assessable to tax has escaped assessment and the AO is not required to establish the correctness of the reasons at this stage. Therefore, when the assessee firm has failed to produce a single document during the course of survey proceedings and post survey inquiry to show the source of investment which cannot be treated as income of the assessee firm then, the vague statements giving estimated details without supporting evidence would not help the case of the assessee - Decided against assessee Cost of construction adopted by the AO on the basis of DVOs valuation report as against the cost declared by the assessee - estimation of cost of construction by adopting State PWD rate by the ld. CIT(A) instead of CPWD rates adopted by DVO - Held that:- We find that it is settled proposition of law that when the assessee has claimed the deduction on accounts of self supervision then appropriate deduction ought to have been given on this account while determining the cost of construction. Further, when certain expenditure were incurred by the tenants of the shops as claimed in the affidavit as well as in their statements then, the said claim should not have been denied without bringing contrary material on record. Similarly the assessee has claimed that the ld. CIT(A) has adopted incorrect State PWD prescribed rates therefore, all these aspects require a proper verification and examination at the time of determination of cost of construction of the shopping complex in question. The other issues raised by the assessee are also required to be considered in light of the relevant evidence produce by the assessee. There is no points in adopting two separate rates when the CIT(A) has impermissible accepted the State PWD rates of determining the cost of construction then the cost of extra items are also be determined by applying the State PWD rates. The assessee has claimed to have paid architecture fee of ₹ 2 lacs whereas the DVO has adopted the estimated fee @ 1% of total cost. We are of the considered view that estimation of fee is required only when the assessee has failed to produce the evidence in support of the actual fee paid. Thus, if the assessee has claimed to have made the payment of ₹ 2 lacs only on account of architecture fee then, without examination of the correctness of the payment and relevant evidence, the estimated value cannot be adopted. Therefore, the issue of determination of cost of construction is remitted to the record of the Assessing officer to examine and decide afresh.

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• 2018 (2) TMI 1364
  Disallowance of interest paid to the close relatives - reason to distinguish the rate of interest between close relative and third party - on loan borrowed from third parties the assessee paid interest at the rate of 12% but only to the close relatives, the assessee has paid interest at the rate of 18% - Held that:- There was no reason for paying higher rate of interest to the close relatives. The contention of the assessee is that the interest charged by the bank at the relevant point of time was 17.25% and after considering the expenses and other charges levied by the bank, the rate of interest comes to 21%. This may be relevant in case the assessee has not borrowed loan from third parties. When the loan was availed from third parties at the rate of 12%, there is no reason why the assessee preferred to borrow loan from close relatives and paid interest at the rate of 18%. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the excess payment has to be disallowed.- Decided against assessee Penalty u/s 271(1)(c) - profit on sales of shares was not disclosed in original return but by way of another revised return, the assessee claiming that the same was exempted under Section 10(38) - Held that:- There was a confusion in the mind of the assessee whether the profit earned on the transaction on sale has to be offered or not. This confusion is because of interpretation of provisions of Income-tax Act. The assessee bonafidely believed that the profit on sale of shares is exempted from taxation. Even if there was omission, this Tribunal is of the considered opinion that such an omission cannot be construed as concealment of income or inaccurate particulars of such income. In view of the judgment of Apex Court in Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012 (9) TMI 775 - SUPREME COURT), it is an inadvertent omission to disclose the income. This Tribunal is of the considered opinion that there cannot be any levy of penalty under Section 271(1)(c) of the Act. - Decided against revenue

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• 2018 (2) TMI 1363
  Scope of assessment u/s 153A - addition on material gathered during the search - Held that:- We reiterate that if the Income Tax Department had any material information in its possession received from any external source and in wake of such an information search u/s 132 has been carried out and nothing incriminating has been found having live-link nexus with the said information already in hand, then the Revenue has other courses open to implicate the assessee or carry out further inquiry under the other provisions of the Act, but definitely not u/s.153A. Thus, we hold that despite there being incriminating material in the possession of the Revenue which may implicate assessee, but same cannot be used within the scope of Section 153A when nothing has been found from the search, especially when assessee too has denied any such involvement and there is no material gathered during the search to rebut such a denial by the assessee. Accordingly, the addition made by the Assessing Officer for sum is deleted. - Decided in favour of assessee.

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• 2018 (2) TMI 1362
  Estimation of income - profit @ 8% as done by CIT-A OR made by the Ld. AO at 40% - Held that:- Assessee has stated that the contract activity was carried out for the first time during the year under appeal and hence, no past history of the same was available with the Income Tax Department. In these circumstances, the only recourse available to the revenue is to take shelter from the provision of Section 44AD of the Act which enables the revenue to bring to tax at 8% of gross receipts on presumptive basis as the net profit of the assessee. This is provided in section 44AD of the Act which has been rightly relied upon by the Ld. CIT(A) even though no specific reference was made to this section by the Ld. CIT(A) in his order. We hold that the addition made by the ld. AO at 40% of gross receipts is unachievable and cannot be sustained - Decided against revenue Estimating the net profit at 1.25% of disputed purchases - Held that:- the assessee had made total sales of ₹ 24.87 crores which has been credited in the profit and loss account. The entire sales of ₹ 24.87 crores has been accepted by the Revenue . We are inclined to accept the stand taken by the Ld. CIT(A) that only profit percentage should be brought to tax in the subject mentioned transaction. Thus the estimation of net profit at 1.25% of the disputed purchases by the Ld. CIT(A) does not call for any inference. Accordingly, grounds raised by the revenue are dismissed.

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• 2018 (2) TMI 1361
  Penalty u/s 271(1)(c) - undisclosed income not declared in the original return - specification of charge against assessee - defective notice - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. See Jeetmal Choraria Versus A.C.I.T., Circle-43,[2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.

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• 2018 (2) TMI 1360
  Maintainability of appeal - payment of admitted tax - whether ‘admitted tax’ includes interest? - Held that:- The explanation of ‘assessed tax’ as per the provisions of Section 140(1B) does not include the component of interest at all. The Provisions of Sub-section 1B also specifically says that interest payable u/s. 234B shall be computed on an amount equal to the ‘assessed tax’ or as the case may be on the amount by which the advance tax paid falls short of the ‘assessed tax’. The words ‘admitted tax’ and ‘assessed tax’ in the context of Income Tax Act always refers to the tax component and does not include any interest or penalty which are levied separately and also specifically stated wherever they occur. In view of that, respectfully following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Manoj Kumar Beriwal (2008 (6) TMI 204 - BOMBAY HIGH COURT), we hold that the order of CIT(A) cannot be sustained. As assessee has paid the admitted tax, the appeal is maintainable before the CIT(A).

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• 2018 (2) TMI 1359
  Allowance of unsubstantiated amount of commission - addition on account of non-confirmation from the parties - Held that:- All the necessary details were filed by assessee in the course of assessment proceedings as well as remand proceedings but no defect of whatsoever has been pointed out by AO. It was also pertinent to note that PAN of AEMS was available before AO but no verification was done with the AO having jurisdiction over AEMS - at the time of assessment proceedings a notice was issued u/s. 133(6) of the Act to AEMS for verification of commission expense but no response whatsoever received by the AO till the date of completion of assessment. Accordingly, the AO made the addition of commission expense paid to AEMS without confronting from assessee that no reply was received by him in response to the notice issued u/s 133(6) of the Act to AEMS. - Decided against revenue Addition on account of late delivery charges - necessary details were not furnished by assessee during assessment proceedings - Held that:- AO in remand proceedings has taken the stand that party-wise detail of late delivery charges was not filed by assessee, without point out any defect on the submissions filed by assessee before him. As the AO has not pointed out any defect in the submission made by the assessee at the time of assessment proceedings as well as remand proceedings, we feel that addition has been made by AO on his surmise and conjecture. Also assessee has furnished details of invoice against which late delivery charges was deducted and which are placed on pages 92 to 102 of the paper book. In this regard, Ld. DR before us has not pointed out any defect in the finding of Ld. CIT(A)- Decided against revenue Addition on account of capital loss - whether asset pertaining to the block of asset can be written off in the profit and loss account in the event it is lost? - Held that:- A block of asset can be reduced only in the event of sale, discarded demolished or destroy in the previous year. In the instant case, the deduction was claimed on account of loss of asset which is not appearing under the provision of Section 32(1)(iii). Therefore, no deduction on account of such loss of asset can be claimed by the assessee. Once an asset becomes part of block of asset then such block of asset can be reduced only in the event as provided under Act. There is no provision under the Act to reduce the block of asset in the event of loss of asset. Therefore, the deduction claim by assessee on account of loss of asset is not allowable under the scheme of Act. The assessee at the most can claim deduction in the form of depreciation on the asset lost by it @ specified under the Act. We direct the AO to disallow the claim of assessee on account of loss of asset but allow depreciation on the value of such asset @ Rate specified under the Act

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• 2018 (2) TMI 1358
  Withdrawing/cancelling a registration u/s. 12AA(3) - proof of charitable activities - activities of assessee are not genuine - bogus donation receipts - Held that:- Identical facts & circumstances this Tribunal has decided the identical issue in favour of the assessee in the case of Vishwaroopa Charity Trust Vs. CIT (Exemption) [2017 (10) TMI 418 - ITAT KOLKATA] as held that there is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by the assessee from HHBHRF was a bogus donation. Cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained We hold that the impugned order passed by Ld. CIT(Ex) cancelling the registration certificate granted u/s. 12AA of the Act is not sustainable. We order accordingly. Hence, the ground of assessee’s appeal is allowed.

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• 2018 (2) TMI 1357
  Unexplained cash credits u/s 68 - genuineness of gift receipt - Held that:- The documentary evidence placed on record by the assessee in his attempt to substantiate the genuineness of the gift transaction under consideration does not inspire any confidence - the assessee had not only failed to discharge the onus as stood cast upon him, but rather, a perusal of the facts clearly reveals that the explanation tendered by him was clearly a result of an afterthought to wriggle out of the unexplained cash deposits in his bank accounts with DCB Bank - the assessee had absolutely failed to discharge the onus as regards proving the genuineness and veracity of the gift transaction under consideration, therefore, uphold the view of the CIT(A) that the assessee had raised a bogus claim of having received a gift of ₹ 5,00,000/- from his aunt Mrs. Anis Jariwala. - Decided against assessee Addition of entire cash deposits made during the year under consideration in his SB A/C instead of restricting the same to the peak credit - Held that:- Merely raising of a claim that an addition in respect of the cash deposits in the bank account was liable to be restricted after telescoping the cash deposits/withdrawals in the said bank account cannot be summarily accepted, unless the assessee is able to substantiate on the basis of irrefutable evidence that the amounts withdrawn were thereafter parked by way of re-deposit in the bank account - unable to find ourselves to be in agreement with the claim raised by the assessee that the addition in respect of the cash deposits of ₹ 14,33,500/- in his SB A/c No. 0261010003562 was liable to be restricted to the extent of the peak credit of ₹ 6,55,350/-. We thus uphold the order of the CIT(A) and sustain the addition of ₹ 14,33,500/- made by him in the hands of the assessee. - Decided against assessee

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• 2018 (2) TMI 1356
  Revision u/s 263 - taxabilty of sum received by the assessee for services rendered outside India - AO accepted without any verification, the claim of the assessee that payment received was not taxable in India - P.E. in India - Held that:- along with the computation of total income, as annexure to the computation/statement of income the assessee has given the details of nature of payment, invoice no., invoice date, gross fees and tax both in US$ and Indian rupee. In all there were 93 payments. These details are available at pages 96 to 108 of the assessee’s paper book. These documents had been filed by the assessee along with the computation of total income. It is not in dispute that these documents was available before the AO when he completed the assessment. The AO in the notice u/s 142(1) dated 16.10.2012 has also called for Audited accounts and balance sheet as on 31.10.2010, report of audit u/s 44AB of the Act. As we have already observed in a letter dated 21.06.2012 the assessee has clearly taken a stand regarding non taxability of fees received for services rendered outside India. AO has made due enquiries with regard to non taxability of receipts by the assessee for services rendered outside India and applicability of Article 15 of DTAA. The CIT in the impugned order was of the view that the AO ought to have called for the copy of the contract between the assessee and the person to whom the assessee rendered services from USA and also to verify where payments were made to the related parties and also examine the nature of services. In our view this is nothing but a fishing and roving enquiry which is not permitted in exercise of jurisdiction u/s 263 of the Act. The exercise of jurisdiction u/s 263 of the Act in this regard is therefore held to be not sustainable. Services rendered in India, it is not disputed that this was offered to tax by the assessee and brought to tax by the AO. Therefore there cannot be any loss of revenue in this regard. We therefore hold that the exercise of jurisdiction in respect of receipts for services rendered in India and the direction of CIT as given in Paragraph 3.6(ii) of his order to examine the contract of the parties is not sustainable and is hereby quashed. International transaction between the assessee and the associated enterprises - non filing of Form No.3CEB - CIT surmised that there could be some more international transactions with AE and the report disclosing only one international transaction may not be correct. In our view the CIT on perusal of Form 3CEB has not drawn any adverse inference. He however directed the AO to examine certain other payments to parties having similar name as that of the assessee. We fail to see as to how such vague reasons jurisdiction u/s 263 of the Act could be exercised. The jurisdiction u/s 263 can be exercised only on a definite finding that the order of the AO was erroneous and prejudicial to the interest of the revenue. Such a finding with regard to Form 3CEB in respect international transaction with associated enterprises has not been spelt out - Decided in favour of assessee

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• Customs

• 2018 (2) TMI 1427
  Stay of the reimbursement of the amount that would be due pursuant to the impugned order - the decision in the case of M/s. Wipro GE Healthcare Private Limited Versus Union of India, Development Commissioner Cochin Special Economic Zone (CSEZ) , The Director, Software Technology Parks of India, Department of Electronics and Information Technology, Director General of Foreign Trade, Deputy Director General of Foreign Trade [2017 (8) TMI 432 - KARNATAKA HIGH COURT] referred - Held that: - The amount is not yet quantified. Having regard to the facts and circumstances of the case, we are not inclined to stay the operation of the impugned order.

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• 2018 (2) TMI 1426
  Scope of SCN - it is alleged that there is no whisper in the SCN either for invoking Section 14 of the Customs Act, 1962 or the Customs Valuation Rules, 2007. There was no proposal for rejection of the value declared - Held that: - It is correct that the SCN does not propose for redetermination of the value of the goods or reject the value declared by the exporter/appellant. So also there is no proposal for invoking section 14 of Customs Act or the Valuation Rules, 2007 - there is no proposal for invoking the provisions for redetermination of value or proposing rejection of the value declared by the appellant. The Commissioner has applied Section 14 and the Valuation rules to redetermine the value of goods. The contentions of the department that there is sufficient ground for confiscation under section 113(h)(ii) of the Customs Act, is not tenable as the alleged mis-declaration is not conclusively established. The Commissioner has traveled beyond the scope of SCN - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1425
  Penalty u/s 114 AA of the Customs Act, 1962 - The Revenue contended that the whole modus operandi adopted by the importer was to avail the benefit of Section 74 even after a lapse of two years from the date of import - Held that: - it is clear that the appellant is in a responsible position and coordinated the imports and other operations as deposed by the customs house agent. In fact, the appellant appeared before the authorities and gave various explanation with reference to the impugned consignment. He also undertook to provide additional supporting documents, clarifications as sought by the officers. Some of these documents, originally promised to be supplied, were not provided. This was also recorded by the original authority. All these will reveal that the appellant cannot be considered as a lower level employee executing the directions of responsible senior person of the company - If the appellant is not a responsible person directly connected to the present dispute, it is not clear as to why he is coordinating the action with the CHA and deposed before the customs authorities in the follow up investigations also. In other words, an un-connected employee of a company, as claimed by the appellant, has no business in these activities. The goods were lying un-cleared, as claimed by the appellant, with customs department, duty of ₹ 5.61 crores, have been duly discharged and appropriated to the Government; a penalty of ₹ 5 crores has been imposed on the importer/re-exporter under Section 114 of the Customs Act, 1962 - the interest of justice will be met if the penalty imposed on the present appellant is reduced to ₹ 50 lakhs from ₹ 1 crore - appeal allowed in part.

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• 2018 (2) TMI 1424
  Violation of import condition - The department entertained the view that respondent having not fulfilled the export obligation and having diverted the duty free imports into the domestic market are not eligible for exemption under Customs N/N. 204/92 and 80/95 and was liable to pay duty - Held that: - the Tribunal had given specific direction to the adjudicating authority to take cognisance of the EODC issued by JDGFT and to consider the matter on the basis of such documents. When the authority who granted the license has rendered a finding and issued certificate that the respondent-company has fulfilled the export obligation, the contention of the Revenue that the respondents are liable to pay duty as well as penalty cannot sustain - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1423
  Rectification of mistake - case of appellant is that the ground was taken up in appeal but the Tribunal has not given any findings on the subject - Held that: - At the time of passing the Final Order, the Tribunal had occasion to hear all connected parties and considered the entire record of the case. After such careful consideration the Tribunal has upheld the penalties imposed on M/s MAX Shipping & Forwarding Pvt. Ltd. as well as the Operational and Managing Directors. every sentence or words or argument order. Under the garb of rectification, a fresh order cannot be passed by the Tribunal. Rectification of Mistake application is misuse of judicial process, and the same has no merit - ROM Application dismissed.

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• 2018 (2) TMI 1422
  N/N. 53/2016-Customs (ADD) dated 25/11/2016 - ADD on “low ash metallurgical coke” originating in or exported from PR China and Australia - Held that: - It appears that the said notification has already been assailed by the other parties in the case, M/s Kalyani Steels Limited and M/s Association of India Mini Blast Furnaces, [2017 (4) TMI 545 - CESTAT NEW DELHI] on identical grounds, before the Tribunal, where it was held that The import from subject countries has increased significantly and the market share of domestic sales has actually come down, in spite of increase in total demand. The magnitude of dumping has been examined by the DA. On the causal link, the point raised by the appellant, like high inland freight cost and poor performance of DI due to other factors, due consideration was given by the DA in his investigation. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 1421
  Valuation - The grievance of the appellant is that the Department proceeded to take NIDB data that too on a higher basis - Held that: - the value as declared by the importer was based on an invoice, which was admittedly not genuine. In such situation, proposals were made based on the contemporenous assessment, correctness of which has been admitted. No protest has been recorded. As such, we cannot be now called upon to examine the correctness of value in absence of any ground towards that. In the facts of the present case, it is clear that the appellant themselves were in fault in presenting a fake invoice. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2018 (2) TMI 1420
  Valuation of properties - company in liquidation - symbolic possession of the properties - Held that:- (i) The Official Liquidator, with the guidance of the Court Receiver and after obtaining appropriate directions from the learned Company Judge in consultation with Justice A.S. Oka, can go ahead to sell the movable properties and, thereafter, proceed to sell the immovable properties which find mention in paragraph (a) of the prayer clause. (ii) The amount spent by the Official Liquidator and the Court Receiver shall be reimbursed by the SEBI after getting approval from the learned Company Judge in consultation with Justice A.S. Oka and due intimation thereof shall be given to the contemnor. (iii) The symbolic possession of the properties of the Aamby Valley Limited taken by the Court Receiver, Bombay High Court from 11th to 14th December, 2017, stands confirmed. (iv) The Court Receiver is conferred with all the powers under the Code of Civil Procedure to deal with all the situations and events prevailing and occurring in Aamby Valley City on an almost daily basis and/or in relation to its properties so that the actions already taken and/or proposed to be taken are not impeded or obstructed in any manner by any person. (v) The Court Receiver is permitted to take such actions as may be necessary for compliance of the orders and directions passed by this Court in respect of movable and immovable properties situate in the Aamby Valley City and also appoint the Aamby Valley Group of Companies or any of them or any other agency as agents of the Court Receiver on terms and conditions to be determined by the Court Receiver. (vi) The Court Receiver is also authorized to engage and retain the services of existing professionals, including Advocates, Agencies, Architect, Chartered Accountants and Engineers to maintain Aamby Valley City and to ensure that no encroachments take place. (vii) It shall be the duty of the Court Receiver to see that the valuation of the properties does not reduce and the auction, as directed today, shall take place in a peaceful manner. The steps taken by the Court Receiver shall be put forth before the learned Company Judge, who shall take a decision in consultation with Justice A.S. Oka. (viii) As this Court is in seisin of the matter, no other court in the country shall entertain any litigation pertaining to Aamby Valley City. On a query being made, Mr. Khambatta, learned senior counsel, submitted that after due survey is made, the sale proceeding shall start and it may take approximately two months. Let the matter be listed at 3.00 p.m. on 19th April, 2018

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• 2018 (2) TMI 1419
  Winding up of the Company - Held that:- In the case on hand, the respondent has raised a bonafide disputes as regards to the debt and in facts of the case, the proceedings under Sections 433 and 434 of the Companies Act, 1956 is not an alternative method of recovering debt which is disputed only because the plant of the respondent-Company is closed and therefore, it cannot be said that the respondent-Company has neglected to pay on a statutory demand as decided by this Court in the case of Tata Iron & Steel Company Ltd. (2000 (3) TMI 920 - HIGH COURT OF GUJARAT). Considering the aforesaid facts of the case and considering the ratio relied upon by the Apex Court as well as this Court, the affidavits and counter affidavits, it appears that the debt is not an admitted debt and bonafide disputes are raised by the respondent-Company and on the basis of the aforesaid, it cannot be said that nonpayment of bonafide disputed debt would amount to neglect to pay so as to make liable under Sections 433 and 434 of the Act and thus, the present case would not fall under the same.

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• Service Tax

• 2018 (2) TMI 1416
  Refund of unutilized CENVAT credit - denial on the ground of Non-Registration of premises - Whether the decision of CESTAT in allowing refund of Cenvat credit even without registration is correct? Held that: - Reliance placed in the case of mPortal India Wireless Solutions (P) Ltd. Vs. Commissioner of Service Tax, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that Registration not compulsory for refund - there was no error, in the order of the tribunal, and accordingly answered the substantial questions of law, against the revenue. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1415
  Levy of sales tax/VAT or service tax? - Hire Agreement - appellants had entered into Hire Agreement with parties for supply of Diesel Generators - Department took the view that the said services rendered by appellants to their customers i.e. supply of diesel generators are classifiable under the category of "supply of tangible goods" and that appellants are liable for payment of service tax on the consideration received for such services from 16-05-2008 onwards - whether the transaction entered into by the appellants with the hirers of DG sets would be in the nature of a transaction involving transfer of possession and control of goods to the users or is only one that allows the other users to use the goods without giving legal right of possession and effective control? Held that: - both before and after 01-07-2012, it can be reasonably concluded that supply of tangible goods inter-alia with the right to use then for any purpose and which transaction is deemed as a sale will attract only sales tax levy. However, where such supply does not extend to transfer of possession and effective control of overall goods, such a transaction would not become a deemed sale but a service. This is exactly what CBEC had clarified in their circular No.334/1/2012-TRU, dated 16.03.2012. The agreements only set out the terms of the hire and in no way put any shackles on the hirer for full enjoyment of the DG set hired by the hirers or for that matter, bring about less than complete transfer of possession and control. It is also noteworthy that the hirer pays "hire charges" and not "service charges". We also find merit in the appellant's contention that the deposit amount is also paid by the hirers, which is the practice only in cases of leasing contracts which are deemed sale transactions and not the cases where only service is provided or received - It is also not the case of the department that the appellants are not discharging sales tax/VAT on the transactions. In fact the impugned order concedes that appellants have already paid VAT under APVAT Act on the entire hiring charges. Further, the adjudicating authority has refrained from imposing penalty under the Finance Act, 1994 on the grounds that appellants were paying VAT under the APVAT Act on the very same transaction. The impugned transaction involving supply of DG sets on hire basis to various hirers is nothing but supply of tangible goods with transfer of both possession and control of the goods to the users of the goods. These transactions have been ruled as "deemed sale of goods" for the purpose of APVAT Act by the concerned Advance Ruling Authority. Appellants have also been discharging VAT on the hire charges under APVAT Act. Hence, this is the case of supply of tangible goods for use, with legal right of possession and effective control vesting with the hirer, required to be treated as "deemed sale of goods", hence cannot be considered as "supply of tangible goods for use of service" for the purposes of Section 65(105) (zzzz) of the Finance Act, 1994 for the period upto 01-07-2012 or as taxable service for the purpose of Section 65B (44) of the Finance Act, 1994 after 01-07-2012. Reliance placed in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) Versus UNION OF INDIA [2006 (3) TMI 1 - Supreme court]. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1414
  Packaging Service - the appellant received charges for carrying out the activity of blending and packing of tea on behalf of M/s TATA Tea Ltd. - Department were of the opinion that the lease agreement by which the appellant made premises available on lease to M/s TATA Tea Ltd. was nothing but a camouflage for receiving additional consideration for the activity of packing - cum duty benefit. Cum duty benefit - Held that: - the appellant has carried out the activity of blending and packing tea on behalf of M/s TATA Tea Ltd. It stands admitted by the appellant that the activity carried out was covered within the definition of the service of packaging and hence they have admitted their liability to pay service tax on such activity - reliance placed in the case of COMMR OF C. EX & CUS., PATNA Versus ADVANTAGE MEDIA CONSULTANT [2008 (3) TMI 59 - CESTAT KOLKATA], where it was held that when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable - the cum tax benefit allowed. Penalty - Lease agreement - receipt of consideration towards lease rent - Held that: - the appellant w.e.f. that date has already started discharging the service tax liability under the above service and under the lease agreement. In the result, we are of the view that the service tax liability arises on the consideration received under the lease agreement only w.e.f. 01/06/2007 and the demand prior to this date is set aside - the service tax under rent of immovable property has already been paid alongwith interest prior to issue of SCN - penalty waived. Appeal allowed in part.

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• 2018 (2) TMI 1413
  Real estate agent service - consideration received by them to change the name of the allottee/owner of a unit in the building and managed by them - Held that: - an identical issue has come up before the Tribunal in the case of M/s MGF Developments Ltd. Vs CCE, Delhi [2018 (2) TMI 1048 - CESTAT NEW DELHI], where it was held that the promoter and manager of such property cannot be taxed as real estate agent for the consideration received to substitute the name of the owner / allottee in their records - appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1412
  Contractual arrangements with Indian Railways and Catering Tourism Corporation Limited (IRCTC) - Revenue entertained a view that they are not discharging Service Tax on certain activities undertaken/considerations received - Cleaning Services - Held that: - It is clear that cleaning is with reference to objects or premises of commercial or industrial building, factory and premises thereof. The original authority gave a reason that railway coaches are either standing on platform or running on the track and the same are to be considered as object on the premises for Indian railway holding railway coaches and contracts constituents of capital assets and machinery of Indian railway, the original authority held cleaning of such railway coaches will be considered as cleaning of commercial premises - the interpretation of the original authority is far fetched and not sustainable in view of the plain meaning of the statutory definition for tax entry. Supply of Bed Rolls to Passengers of Railways - Held that: - In M/s Foodworld Railways and Institutional Caterers [2014 (12) TMI 662 - CESTAT NEW DELHI], the Tribunal held that such services cannot be considered as BSS. It is more appropriately classifiable under Business Auxiliary Service as it is essentially a customer care service provided on behalf of the client - demand not sustainable. Outdoor Catering Service - Held that: - the tax is paid on received amount not on billed amount which included element of VAT - The jurisdictional authority can verify the documents to satisfy the correctness of quantification of tax liability as claimed by the appellant - matter on remand. Supply of newspaper to passengers in Rajdhani train - Held that: - the original authority upheld the tax liability on the consideration received for supply of newspaper only on the ground that it is part of a composite contract of catering and on board service. We note that the reasoning adopted by the original authority to consider the supply of newspaper as part of their catering service is not sustainable - tax liability do not sustain. Extended period - penalty - Held that: - The demand for extended period also cannot be sustained in respect of cases where service tax liability was affirmed in connection with service to Railways/IRCTC - the penalties imposed on the appellant are also set-aside. Appeal allowed in part.

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• 2018 (2) TMI 1411
  Levy of service tax - rent–a-cab services - Held that: - it appears that w.e.f. 16/10/1998, the definition of rent a cab scheme operator means any person engaged in the business operating cab on rent basis - In the instant case, the learned Counsel was unable to show any contract with the user. Time limitation - Held that: - the appellant had not disclosed the value of remunerated amount that they are not discharging/paying service tax on the remunerated amount to the department despite clear provisions of law on the issue, it is proved beyond any doubt that they had suppressed this fact from the department, with intent to evade payment of service, as providing of taxable service was remain unearthed if searches premises of the appellant was not conducted by the department - extended period rightly invoked. Penalty u/s 80 - Held that: - full service tax liability with interest has been paid before issue of demand notice - penalty waived by invoking section 80. Appeal allowed in part.

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• 2018 (2) TMI 1410
  Non-payment of service tax - only point on which the present demand is made is that there is difference between the statutory returns and the annual balance sheet - Held that: - Admittedly, the appellants have more than one business premises through which the taxable service were provided. These were registered with the Department and discharging the service tax. The balance sheet of the appellant as a whole did not distinguish the different service centres. Further, the SCN did not give any reason to allege short levy except the difference between balance sheet and the ST-3 returns. The burden of explaining the difference amount being not taxable income has been shifted to the appellant. This will be against the very basis of tax levy. It is the Department which alleged short payment and at least basic preliminary supporting evidence of such short payment has to be made so that the appellant can defend their case. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1409
  Liability of service tax - consideration received for transferring the said trade mark rights - Held that: - Admittedly, the appellant transferred the right to use the registered brand name to HWL in 1975. This is not disputed. The continuous usage of such right by HWL cannot be construed as continuous rendering of taxable service on the part of the appellant. Intellectual Property Service means transfer temporarily or permitting the use or enjoyment of any IPR. Admittedly, such transfer happened before the introduction of the tax entry in the present case. The tax entry is not for continuous usage of Intellectual Property but on the event of transfer or permission. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1408
  Liability of service tax - Business Auxiliary Service - reverse charge mechanism - expenditure incurred by the appellant in setting up of certain branch offices in foreign countries like Bangladesh, Ukraine etc. - Held that: - similar dispute came before the Tribunal for tax liability under the very same tax entry in Torrent Pharmaceutical Ltd. [2014 (12) TMI 41 - CESTAT AHMEDABAD]. The issue of the expenditure incurred by the appellant with reference to the branch office located abroad, which was involved in activities, which may fall under business auxiliary service was considered by the Tribunal - the legal fiction of considering a branch of an assessee as a separate establishment is not to tax a service rendered to its head office. Further, here there is no such service also has been identified with supporting evidence - the tax liability under BAS cannot be sustained. Liability of service tax - advertising services availed by the appellant in pursuance of contract with various foreign service providers who advertised and promoted the product of the appellant in foreign countries - reverse charge mechanism - Held that: - It is clear that statutorily such services are considered for taxation based on the location of the service recipient. Such being the clear position as per law in the present case the services being utilized by the appellant as a manufacturer of the said goods, which are exported and marketed in the places where the advertisement are held, the tax liability on such services are correctly made against the appellant on reverse charge basis - extended period and penalty cannot be imposed. Appeal allowed in part.

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• 2018 (2) TMI 1407
  Consultancy engineering service - Certain expenditure shown in the books of the appellant with reference to income and expenditure of projects in India is sought to be taxed as a consideration for consulting engineer service - Revenue entertained a view that expenditure incurred/shown in the accounts of appellant against consultancy fees and technical fees, which was further taken into account by LIL, Canada in the overall income and expenditure is liable to be taxed under the category of engineering consultancy service on reverse charge business - Held that: - the whole of the income shown in the books of accounts of the appellant, though the same is accrued to LIL, Canada has suffered tax under the category of consultancy engineering service. An expenditure, which is part of the same accounting for income, cannot be taxed for the same service, even under reverse charge tax. Secondly, the appellant has no agreement or arrangement with LIL, Canada to receive any consultancy service. No such allegation has been made. LIL, Canada apparently, procured such consultancy service from various consultants, which in turn were used for rendering service to Indian clients. In fact, such services were effectively managed and utilized by LIL, Canada. This is expenditure for LIL, Canada, which is also reflected in the appellant’s accounts as per the requirement. The full income on consultancy service, as already noted, has suffered Service Tax. This is an admitted fact. The expenditure to provide such service cannot be put to Service Tax even under reverse charge basis. There is no basis either on fact or law to sustain such confirmation. Manpower Supply Service - tax liability under manpower supply in respect of staff deputed by LIL to India to render the services in terms of the agreement with the Indian clients - Held that: - The Hon’ble Allahabad High Court in the case of Computer Science Corporation India Pvt. Ltd. [2014 (11) TMI 125 - ALLAHABAD HIGH COURT] held that in such arrangement, the deputation of employee for executing work cannot be considered as a manpower supply. It was held that the employer cannot be considered as a manpower supply agency - neither the appellant nor LIL, Canada can be considered as a manpower supply agency - tax liability cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1406
  Valuation - abatement of value - N/N. 15/2004-ST dated 10.09.2004 and No.1/2006-ST dated 01.03.2006 - Commercial or Industrial services - Held that: - the matter has come up before the Tribunal in the case of Bhayana Builders Pvt. Ltd [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] and it has been held that taxable consideration in the form of gross value in terms of Section 67 cannot include the value of materials supplied free of cost by the recipient of service - demand set aside. Eligibility of the appellant to pay tax on cum-tax value for the period 10.09.2004 to 30.09.2005 - Held that: - the matter is before the original authority for re-computation of taxable value - it is fit and proper that the original authority can examine the other points, if any raised by the appellant before re-determining the tax liability in terms of the remand directions in the impugned order. Appeal allowed in part and part matter on remand.

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• 2018 (2) TMI 1405
  Rectification of mistake - power to review - Held that: - The error attempted to be pointed out by the Revenue has been taken note of by the Tribunal while passing the impugned Final Order. In such circumstances, to consider the application of such exemption, would amount to review of the Final Order. The Tribunal has no power to review its order. The power of rectification is restricted to mistakes apparent from the record, calling for amendment of the order. The mistake must be obvious and patent one. In the application submitted by the Revenue there is no error apparent on the face of record, which requires rectification. ROM application being devoid of merits is set aside.

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• 2018 (2) TMI 1399
  CENVAT credit - credit of full service tax paid on partial reverse charge on input services - Alleging that as per N/N. 30/2012-ST dated 20.06.2012, the appellant was required to pay 75% of the Service tax amount as service recipient whereas, the service provider was required to pay 25% of the service tax liability, instead, since the service provider had paid the entire service tax amount(100%), therefore, the appellant are not eligible to avail credit of the service tax paid by the service provider. Held that: - the appellant though required to pay 75% of the service tax liability, on receiving the man-power supply service from the service provider, however, initially the entire amount of service tax was paid by the service provider and later recovered from the appellant by indicating the same in the invoice - appellant eligible for credit. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (2) TMI 1404
  Order under Section 14AA of the Central Excise Act, 1944 - case of the petitioner/assessee company is that the order does not provide reasons enough to support the formation of belief by the respondent No.1 that the utilisation/availing of the credit duty by the petitioner/assessee company falls under any of the conditions stipulated by Section 14AA(1)(a) and (b) thereof - Held that: - identical issue decided in the case of [1976 (3) TMI 1 - SUPREME Court], where it was held that majority of the learned judges in the High Court, in out opinion, were not in error in holding that the said material could not have led to the formation of the belief that the income of the assessee-respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. This Court finds that the respondent No.1 has applied his mind to the record, heard and considered the facts presented in defence of the petitioner/assessee - petition dismissed.

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• 2018 (2) TMI 1403
  Validity of SCN - the reply given by the petitioner to the Audit objections dated 16.12.2016 have not even been referred to, much less considered - principles of natural justice - Held that: - Circular dated 21.12.2015 stipulates that Pre show cause notice consultation with the Principal Commissioner and Commissioner is being made mandatory prior to issue of show cause notice in the case of demands duty above ₹ 50 lakhs (except for preventive / offence related SCN's). Admittedly, the above referred procedure, which has been held to be a mandatory by CBEC, has not been adhered to in the instant case. That apart, when the petitioner had been given an opportunity to submit the reply to the Audit Slip, which they had submitted by reply dated 16.12.2016, the same ought to have been considered by the fourth respondent prior to issuance of the SCN. Matter is remanded to the fourth respondent, for fresh consideration - petition allowed by way of remand.

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• 2018 (2) TMI 1402
  Clandestine manufacture and removal - “Saraswati writing Pad” diary (notebook) was recovered where the details of the finished goods i.e. copper rods manufactured and cleared by them without any bill, were mentioned - Simultaneous search was conducted at the residential premises of Shri Brijesh Kumar from where a cash of ₹ 12,83,000/- was recovered - Held that: - this is a case of clandestine removal of the goods without payment of Central Excise duty. During the search, “Saraswati writing pad” was recovered from the factory premises of M/s. Tirupati Industries, appellant No. 1. Shri Tipesh Kumar, Supervisor, in his statement dated 4.3.2011 accepted that they had been clearing copper rods without raising any bills. He has recorded these details in the Saraswati writing pad. The goods were removed without payment of duty and on the basis of kachaa parchies, as is evident that the same was recovered from the tempo driver DL-IL-5371 from the premises of Shri Mukesh Kumar Gupta’s factory. Shri Mukesh Kumar Gupta’s factory is totally unregistered factory and entire transaction was made by merely kaccha parchies by making entries in Neelgagan note book. No payment was made or receipt of payment was through banking channel. The transaction was made in cash through unknown buyers of the finished goods. Impugned order sustained - appeal dismissed.

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• 2018 (2) TMI 1401
  Principles of natural justice - The main grievance voiced by the appellant before us as well as before the Tribunal in the earlier round of litigation is that copies of all the RUDs have not been shared by the Revenue with them - Held that: - We have perused of the long list of RUDs vis-a-vis, the documents which have already been made available to the appellant and we are convinced that all the main documents leading to the demand and its computation has already been shared with the appellant - we are of the view that they have been given a fair opportunity to advance the case against them, even in the absence of copies of some of annexures of the RUDs. Clandestine removal - shortage of raw material and finished goods - The stock was ascertained making use of the dip reading method. The appellants grievance is that this is not an accurate method of ascertaining stock - Held that: - the method has been adopted by the departmental officers only after obtaining the concurrence of the appellant’s representative who was present during the panchnama proceedings - the appellant is liable to pay the duty on the finished products found short as well as reverse the modvat credit on the inputs which were found in short - demand upheld. Clandestine removal - finished products - it has been alleged that the appellant has removed 3996.286 MT of formaldehyde during the period under consideration and duty demand on the same has been confirmed - Held that: - the appellant, by failing to account the full quantity of raw material received by them has indulged in suppression of facts. Analysis of some of the documents relating to finished product clearly evidences that appellant has manufactured and cleared significantly more quantity of formaldehyde then what has been accounted - the preponderance of probability clearly indicates clandestine clearance in the present case. However, the duty demand cannot be sustained on 3996.86 MT of formaldehyde as has been done by the adjudicating authority. It will be reasonable to restrict the demand to the quantity of 1378.595 MT of formaldehyde manufactured out of the unaccounted methanol which has been consumed to the extent of 453.302 MT - In addition, the appellant will also be liable for payment of duty on the shortage of raw material as well as finished products. Matter is remanded to the Adjudicating Authority to requantify the demand and redecide the penalties on the basis of the revised computation.

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• 2018 (2) TMI 1400
  Benefit of N/N. 1/2011-CE dated 01.03.2011 as amended by N/N. 43/2011 dated 30.12.2011 (Sl. No. 131 - sanitary napkins falling under tariff item 9619 00 10 of the Central Excise Tariff Act, 1985 - Department took the view that since the appellant has availed Cenvat Credit of the tax paid on services, the appellant will not be entitled to the benefit of the N/N. 1/2011 ibid - case od appellant is that they had reversed the credit subsequently, and thus they are entitled for benefit. Held that: - The legal position that once the cenvat credit availed has been reversed, it is to be considered as not availed, ab initio has been settled by the Hon’ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA]. It is seen from the record that in the revised return filed on 25.04.2015, the cenvat credit of ₹ 16,16,790/- paid on input services has been deleted. Further, the appellant vide their written submission dated 19.01.2018 has confirmed that they have further reversed the amount of ₹ 97,957/- alongwith the interest of ₹ 88,258/-. The net result of the revised return as well as the further payment is that the entire cenvat credit availed on input services have been reversed by the appellant. The appellant can be considered as not availed the cenvat credit of input services, ab initio. Accordingly, they will be entitled to the benefit of N/N. 1/2011 during the disputed period - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1398
  CENVAT credit - bags and barrels arising in the course of manufacture, not usable - applicability of Rule 6(1) of Cenvat Credit Rules 2004 - Revenue is of the view that on the said bags and barrels, the appellant is required to pay an amount equal to 6% of the value of said goods in terms of explanation to Rule 6(1) of Cenvat Credit Rules 2004 - Held that: - The provision of Rule 6 are applicable where the assessee is manufacturing dutiable as well as exempted goods - The appellant is not manufacturing these bags or barrels, therefore, Rule 6(1) or explanation thereto is not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1397
  Classification of goods - Aswini Homeo Arnica Hair Oil (AHAHO) - Appellant has classified the said produce as Medicament falling under chapter sub heading No.30039014 and were claiming concessional rate of duty under N/N. 18/2012-CE dt. 17.03.2012 - Held that: - In case of CCE Nagpur Vs. Vicco Laboratories [2004 (12) TMI 92 - SUPREME COURT OF INDIA], the Hon ble Apex Court has held that classification cannot be changed without a change in the nature of a product or a fresh interpretation of a tariff heading by such decision - In the present case the goods in question has remained same and there is no change of tariff heading. The goods are classifiable under chapter 30 of the Central Excise Tariff as Homeopathic medicine and liable to duty accordingly. There is no reason to demand the duties and penalties adjudged against the Appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1396
  Demand of differential duty - Cement - benefit of N/N. 4/2006/4/07-CE (as amended) - case of Revenue is that appellant herein had cleared cement to construction companies, and not affixed any MRP on the cement bags, and claimed the benefit of N/N. 4/2006/4/07 (as amended) on the ground that construction companies cannot be categorised as industrial consumers or institutional buyers - Held that: - Hon'ble High Court of Karnataka in an identical set of facts in the case of Mysore Cements Ltd [2009 (5) TMI 445 - CESTAT, BANGALORE] has held that Tribunal committed no illegality in holding that the construction industry is a service industry and the assessee had satisfied the other requirement of the Notification, they are entitled to the benefit under the Notification. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1395
  Waste - N/N. 89/95-CE - Whether fatty acids, wax and gum arising in course of manufacture of refined vegetable oil are to be treated as “waste” for the purpose of exemption N/N. 89/95-CE and would be exempt from duty under this notification? Held that: - The appellants are engaged in converting crude rice bran oil into refined rice bran oil. In effect the processes undertaken by them are towards this intended final product. For producing refined rice bran oil, the gums and waxes available in the crude rice bran oil are to be removed by deguming and de-waxing. Thereafter by a process of deacidification/ de-odourisation, by distillation the refined oil is obtained. In this final process fatty acid distillate (fatty acid with odour) is obtained as a waste. As can be seen the gums, waxes and fatty acid distillate are emerging due to removal/refining process of crude rice bran oil - the process is to obtain refined rice bran oil by removing these unwanted products alongwith spent earth, which when present makes the oil as crude refined oil. The process of manufacturing refined vegetable oil is essentially by removing the unwanted materials that were present in the crude vegetable oil so that a refined vegetable oil can be obtained. In this process of refining, the unwanted materials are removed. Hence, we are of the considered view that the removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture of these gums, waxes and fatty acid with odour. The process of manufacture is for refined rice bran oil. Noting that the reference is to decide whether these are to be treated as waste for the purpose of exemption N/N. 89/95-CE we note though the excisability of the product itself is seriously in dispute as per the opinion expressed by us, as above, these cannot be considered as anything other than waste and as such will be covered by the exemption N/N. 89/95-CE. The appellant/assessee are eligible for exemption under the said notification - appeal returned to the regular Division Bench for decision on the points raised in the respective appeals.

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• 2018 (2) TMI 1394
  CENVAT credit - input services - GTA Service - reverse charge mechanism - Held that: - The definition of “input service” was amended vide N/N. 10/2008-CE(N.T.), dated 01.03.2008, w.e.f. 1.4.2008. The effect of amendment was that the Phrase “from the place of removal” was substituted by “upto the place of removal”. As per the amended provisions of definition of “input service”, service tax paid on freight for transportation of goods “upto the place of removal” should only merit consideration as input service - the freight paid by the appellant from 1.4.2008 to 10.07.2014 should merit consideration as “input service” and service tax paid thereon should be eligible for cenvat credit - credit allowed. With regard to the period after 11.07.2014, though the “place of removal” was specifically defined in Rule 2(qa) of the CCR 2004, but on analysis of such definition Clause, the CBEC vide Circular dated 20.10.014 has clarified that the place, where sales have taken place or when the property in goods passes from the seller to the buyer, is relevant consideration to determine the “place of removal”. On perusal of the said clarification of the Board, it reveals that there is no difference between the amendment in the definition of “input service” effective upto 10.07.2014 and the amendment brought out on 11.07.2014 - However, since the appellant, at this juncture, has not produced all the copies of the purchase orders/invoices in respect of all the buyers and only submitted sample copies issued by few numbers of buyers, the matter should go back to the Original Authority for verification of the purchase orders/invoices in respect of the buyers, to whom the goods were sold by the appellant on FOR destination basis - matter on remand. Appeal allowed in part and part matter on remand.

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• 2018 (2) TMI 1393
  Benefit of N/N. 10/97-CE, dated 1.3.1997 - clearance of testing equipments to public funded Universities etc. - denial on the ground that Essentiality Certificate from head of the institution not produced (as was signed by the other authority) - Held that: - It must be kept in mind that the intention of the Legislature in extending this exemption was only to engage research in public funded research institutions, universities, Institute of Technology etc. Discernibly, there is no allegation that the goods have not been received or used by the intended beneficiaries - the person who has signed the essentiality certificates in these cases would have done so only after being authorized to do so by the concerned institution - Essentiality certificates not having been signed by the officer designated in the notification but by some Other Officer of the same Institution is only a curable defect, of a technical nature, and can very well be overlooked - demand set aside. Demand on the ground that essentiality certificate was not available or produced - Held that: - The averment of the appellants that in no case, goods were cleared by them without receipt of the certificate issued by respective buyer institutions/Colleges/ Universities should indeed be given credibility. After all, these buyers are institutions of stature and cannot be expected to obtain these goods without following requirements laid by notification and issuing the necessary Essentiality Certificates - demand set aside. Penalties also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1392
  Clandestine removal of finished goods - mis-use of the cenvat credit - seizure of currency - Held that: - Revenue should pay interest for the period the amount remained in its custody - the amount of ₹ 8 lakh seized in cash and held by the Department in bank account should be eligible for interest from 21.09.2005 (from the date of seizure) till its actual refund. The interest in this case should be computed on the basis of the interest accrued to the Revenue for keeping such money in the bank account. Interest as per the provisions of Section 35 F ibid - Held that: - the only active provision contained in the Central Excise Statute for grant of interest is Section 11 BB, which mandates that if the refund is not sanctioned within three months from the date of its filing, the said refund should be paid along with interest at the prescribed rate. Further, Section 35 FF of the Act provides that in case of favourable order by the Appellate Authorities, the refund should be sanctioned within three months from the date of communication of such order to the adjudicating authority - In this case, since the order was not communicated to the appellant or the Adjudicating Authority on 26.12.2016, the claim of the appellant for interest from such date, should not merit consideration. The appellant should be entitled for refund of interest from the date of seizure of currency, till its actual refund by the Department and that the Department should pay the interest amount at the applicable bank rate - appeal disposed off.

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• 2018 (2) TMI 1391
  Transfer of CENVAT credit - whether appellant have rightly transferred the CENVAT Credit from their Service Tax Credit Register to CENVAT Credit Register under Rule 11 of Cenvat Credit Rules, 2004, of the balance as on 31.12.2004 under intimation to Revenue by letter dated 19.01.2005? - time limitation - Held that: - transfer of credit from Service Tax credit Register to CENVAT Credit Register, was properly done under intimation to Revenue and as such the demand for this is hit by limitation. CENVAT credit - GTA service - whether the appellant have rightly utilized CENVAT Credit for payment of GTA on reverse charge basis? - Held that: - utilization of CENVAT Credit for the purpose of payment of service tax on the GTA services is concerned, the appellant is covered by the ruling of Hon’ble Delhi High Court in the case of CST vs. Hero Honda Motors Ltd. [2012 (12) TMI 734 - DELHI HIGH COURT], where it was held that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services. Penalties imposed under Rule 15 of Cenvat Credit Rules, 2004 (Rule 13 of the Cenvat Credit Rules, 2002) read with Rule 25 of Central Excise Rules, 2002, read with Section 11AC of Central Excise Act, 1944 are set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1390
  Clandestine manufacture and removal - M S Steel Bars and Rods - the entire allegation of the clandestine removal is based on the statement of the transporter as well as detailed culled out from the register of the transporter - Held that: - the Department has not verified to whom the unaccounted goods were sold. No attempt was made to verify the excess consumption of the raw material and use of the extra energy - It is settled law that the documents recovered from third party cannot be used against the manufacturer to prove the clandestine removal unless they are supported by corroborative evidence. From the record of the factory, no evidence has been brought on record regarding manufacture of the finished goods for the clearance of the same without payment of duty - also, the Department has failed to prove the case of clandestine removal. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1389
  CENVAT credit - capital goods - MS Plates etc. - Held that: - MS Plate were used for fabrication in tanks - In absence of any allegation in the SCN or another expert’s opinion, Chartered Engineer Certificate produced by the appellant needs to be accepted - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1388
  Restoration of appeal - Mandatory deposit under 35F of Central Excise, 1944 - Held that: - no pre-deposit has been made by the appellants as required under section 35F of the Central Excise, 1944. When mandatory pre-deposit has not been made by the appellants, then appeals are not maintainable - applications for Restoration of Appeals are dismissed as not maintainable.

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• 2018 (2) TMI 1387
  CENVAT credit - capital goods - input services - area based exemption - Original Authority held that the appellant being the same Central Excise assessee under a single registration, cannot take credit on such capital goods and input services as they are not covered by Cenvat Credit Rules. Held that: - if the unit is one and the same as contended by the Revenue, the products which are otherwise eligible for exemption under the said notification are to be cleared without payment of duty. It is not tenable to hold that some products can avail area based exemption and others need not avail area based exemption. Admittedly, the lower Authorities recorded that various products manufactured in the distillery unit are not excluded from the area based exemption. There is contradiction in the approach by the Revenue while denying the credit on capital goods and input services which were admittedly used in setting up and further manufacture in distillery unit. This aspect requires a fresh consideration - appeal allowed by way of remand.

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• 2018 (2) TMI 1386
  100% EOU - N/N. 23 of 2003-CE dated 31.03.2003 - Revenue held a view that Zinc powder cleared to DTA is not similar to Zinc ingots exported by the appellant and accordingly, denied the exemption - Held that: - Admittedly, Zinc is manufactured by the appellant and exported in the form of ingots. Some of the zinc is cleared to DTA in the form of powder - there is no reason to deny the exemption to the appellant as the products cleared for export to DTA can be considered “similar” in absence of specific definition restricting the said scope of the said term - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1385
  Liability of duty - job-work - lunch carry bag under the brand name of “Tupperware” - Held that: - since the duty liability is essentially on the manufacturer, i.e. job-worker in the present case, the duty liability will need to be recovered from them. The appellant cannot be held liable for payment of such duty for the period prior to such undertaking - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1384
  Valuation - product manufactured by the assessee-appellants which is neither used in the production nor manufacture of final product, but consumed for the purpose of erection of tower - applicability of Rule 11, residuary clause - Held that: - The Hon’ble Supreme Court in the case of PCC Pole Factory Vs. CCE, [2003 (10) TMI 53 - SUPREME COURT OF INDIA], allowed the claim of the assessee-appellants where PCC Poles were used for transmission of the electric energy. There was no further activity of manufacture and no business was carried out by the Electricity Board - Identically, in the instant case, the towers were used by the assessee-appellants for only transmission of the signals without carrying out any further business activity. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (2) TMI 1383
  Scope of the powers of Tribunal - while deciding the issue of Pre-deposit tribunal deleted the penalty - whether the Commissioner was right in imposing certain predeposit condition and consequently right in rejecting the appeal upon the assessee failing to fulfill such condition? - Held that: - In the present case, admittedly first appeal lied before the Commissioner and the Tribunal would be involved in deciding the contentious issues only after the Commissioner applied his mind. Such filtering of the issues is of paramount importance since when the High Court is finally called upon to judge the question of law, it is confident that the questions of facts have been properly threshed out by the Tribunal at first or second appellate stage as the case may be. The scheme of the Act would not permit the Tribunal to jettison the first appeal before the Commissioner and allow itself to act as first Appellate Authority. If the second appeal lies before the Tribunal and the Tribunal were to disregard the first appellate forum and convert itself into first Appellate Authority, the same would be froth with two difficulties. The Tribunal had all legal options at its command while considering this issue but certainly under no circumstances had the option of deciding all disputes between the parties on merits by itself, relegating the Commissioner to the position of mere appendage. Appeal allowed.

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• 2018 (2) TMI 1382
  Penalty - attachment of bank accounts - the petitioner has sought for a direction upon the second respondent to authorize and empower the third respondent to take on file the Revision Petition - Held that: - this issue need not be gone into, in the present case, since the petitioner has paid the entire tax amount and therefore, the attachment of the petitioner's bank account should be immediately lifted and the petitioner should be permitted to pursue his revisional remedy, challenging the levy of penalty. Since the petitioner has paid the entire tax amount, rather what has been assessed by the fifth respondent, the fifth respondent shall forthwith lift the attachment of the petitioner's bank account, and issue necessary instructions to the petitioner's bankers - The second respondent is directed to empower the third respondent to take on file the petitioner's Revision Petition, dated 02.08.2017, which was initially filed in the Office of the third respondent, dated 03.08.2007, and such order, empowering the third respondent to deal with the Revision Petition. Petition allowed.

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• Indian Laws

• 2018 (2) TMI 1418
  Whether the compromise recorded by the Single Judge in orders dated 17th March, 2017, 24th March, 2017 and 26th April, 2017, is valid and legal as per the provisions of Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (‘CPC’, for short), and whether the same was entered into with the consent of the parties? Held that: - On the day when the consent terms were recorded, i.e. 17th March 2017, the appellants were duly represented by their counsel who had filed the petition challenging the award. A perusal of the said order clearly reveals that the 18% interest was to apply with monthly rest till the date of award and thereafter, simple interest of 18% per annum was payable till the date of payment. This order precedes the date when the computation chart was filed i.e. 24th March, 2017 - It is not the case of the appellants that as per order dated 17th March 2017, 18% simple interest was payable. This was not so recorded. The order is categorical and brooks no confusion. Pre-award interest as agreed was 18%, with monthly rests. The stand of the appellant in IA No.5078/2017 is that the terms recorded in the order dated 17th March, 2017 “are not in line with the instructions given by the petitioner to its erstwhile counsel, is obviously wrong and unacceptable”. It is not for this Court, in an appeal, to go behind the terms duly recorded by the Single Judge. A perusal of the order sheets in the OMP 530/2016 clearly reveals that the appellants were always represented by their counsel and in fact a Senior Advocate on most occasions. Order sheets also reveal that the discussions were continuously taking place during the hearings of the OMP 530/2016. After due consideration and deliberations, the respondent had agreed to terms which were less favourable to it. The award was to be modified. It is now not open to the appellant to resile from the terms as recorded by the Single Judge. This would be unjust and unfair. Order dated 17th March, 2017 is lawful and no reason exists for setting aside the same - appeal dismissed - decided against appellant.

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• 2018 (2) TMI 1417
  Suit for recovery of possession and damages - Since the defendant failed to vacate the suit property, therefore, the present suit for possession and damages came to be filed - whether a disputed question of fact arises that the plaintiff is not the owner of the suit property? - Held that: - the suit property falls as one of the properties at Serial no. 1(a) of the Schedule II of the Scheme of Arrangement approved vide order 3.1.1983 by this Court. Therefore, in my opinion, once there is finality to the order of this Court dated 3.1.1983 accompanied by the Scheme of Arrangement, and existence of which is not denied and could not be denied by the defendant, plaintiff has to be held to be the owner of the suit property. Defendant has contended that it is not the plaintiff but one M/s Birla Textile Mills a partnership firm which is the owner of the suit property, however law is well settled that vague pleadings do not constitute sufficient pleadings. The defendant is a legally well-versed person. Defendant wants to cross all limits of dishonesty because the defendant wants to most illegally and dishonestly continue in possession of the suit premises although the defendant has no legal right to the same. Defendant being a legal person has endeavoured his best to create legal and factual defences as per the written statement, however surely law is that much substantive that a dishonest defendant should not be allowed to succeed on illegal grounds, and therefore, it is ordered that this application is allowed. Decree is passed in favour of the plaintiff and against the defendant.

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