TMI Tax Updates - e-Newsletter
March 30, 2019

Case Laws in this Newsletter:

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

TMI SMS

• NCCD - Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character - benefit of exemption allowed

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Highlights / Catch Notes

• GST:

  Supply or not - Job work - dispatch of consumable materials - the zinc, furnace oil or nickel exhausted in the process of galvanising need not be physically returned. If the galvanized structures are returned that will be sufficient compliance of section 143(1)(a) of the GST Act.
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• GST:

  Charitable Activities or not - activities of the Trust in providing hostel accommodation facilities to the students who come to Pune for education do not fall within the ambit of charitable activities.
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• GST:

  GST on donations - the donations received without any instruction would not be taxable however where the donor is clearly receiving identifiable benefits in return either in terms of advertising or publicity, the said donation amount received is to be treated as a consideration for supply of goods or services or both and liable to GST.
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• GST:

  Classification of Polypropylene Mats (Floor Mats) - appropriate heading for Polypropylene Mats made from plaiting materials is 4601 and the relevant sub-heading is 4601 99.
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• GST:

  Profiteering - the benefit of additional ITC of 3.04% of the taxable turnover during the period w.e.f. 01.07.2017 to 31.08.2018 and the amount outstanding as on 31.08.2018, has accrued to the Respondent and the same was required to be passed on to the Applicants and the other flat buyers. - Penalty proceedings initiated.
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• Income Tax:

  Approval of the Government of India has been accorded for setting up of an industrial park by M/s Romell Real Estate Pvt. Ltd.
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• Income Tax:

  Revision u/s 263 by CIT - when transfer price is consonance with the fair market price then conditions of this section gets satisfied. Hence applicability of section 80IA(8) has been examined by the AO - revision order quashed.
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• Income Tax:

  Taxability of rental receipt - developing the shopping mall and let out the same by providing a variety of services, facilities and amenities in the mall is not just letting out of property simpliciter - taxable as business income
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• Income Tax:

  Power of AO to extend time for the submission of the audit report directed u/s 142(2C) - suo motu extension without an application by the assessee - amendment w.e.f effect from 01.04 2008 by the FA, 2008 was intended to remove an ambiguity and is clarificatory in nature - Decision of HC overruled.
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• Income Tax:

  Penalty u/s 271B - imposition of penalty u/s 271B is discretionary not mandatory as word used in section is "may" - no penalty if there is existence of reasonable cause.
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• Income Tax:

  Penalty u/s 271B - in absence of maintenance of books of account, question to get accounts audited u/s 44AB doesn't arise - No penalty
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• Income Tax:

  Addition u/s. 40(a)(ia) for failure of TDS u/s 194C - if the payees have reflected the payment in their respective Return of Income and has paid tax and fulfils the conditions stipulated u/s. 200, then no disallowance u/s. 40(a)(ia) is warranted.
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• Income Tax:

  Revision u/s 263 - sale of agriculture land or not - AO asked for the explanation but never made any enquiry or verification of assessee claim and allowed the relief - Explanation 2 to section 263 is clearly attracted i.e deemed to be erroneous and prejudicial to the interests of the Revenue
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• Income Tax:

  Management Fees paid to its holding company - once assessee had established its case of availment of said services, disallowance on the basis that invoices were serially numbered and paid at the close of the year is not permissible
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• Income Tax:

  Penalty u/s 271(1)(c) - Quantum additions upheld by all the appellate authorities - in absence of cogent incriminating material to show that the assessee had infact furnished inaccurate particulars of income or had concealed its particulars of income, penalty u/s 271(1)(c) is not leviable
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• Income Tax:

  Interest received on FDRs/ICDs - funds are inextricably linked to the development of port terminal and other infrastructure at Karanja Creek which is yet to be completed and commissioned - development work of the port delayed due to late issuance of permissions/clearances by the Govt authorities - capital receipt neither taxable u/s 56 nor u/s 115JB
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• Income Tax:

  Computation of LTCG - applicability of Section 50C - property under sale was under various encumbrances and the assessee was not having the absolute marketable title of the said property - adoption of stamp valuation as a sale consideration u/s 50C was not justified
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• Customs:

  Rrelease of consignments - Toor whole - issuance of ‘Detention Certificate’ for waiver of Demurrage and Container Detention Charges in terms of Handling of Cargo in Customs Areas Regulations 2009 - demurrage charges waived.
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• Customs:

  The goods detained constitute stationery, gift and decorations for children’s parties - demurrage and detention charges for the entire period form date of detention to the date of clearance stand waived.
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• Customs:

  Advance Authorisation Scheme - Once the importation of goods was permitted in terms of SION Norms and the export obligation stands fulfilled, the appellant were entitled to use the remaining goods in manufacture of goods which were cleared into DTA.
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• Customs:

  Duty free benefits under a transferable duty free import authorization (DFIA) - the imported goods walnut in shell is covered under the description of relevant food flavor/flavouring agent/flavor improvers’ and dietary fibre as claimed by the appellant.
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• Customs:

  Levy of Penalty based on statements - Smuggling - The appellant is neither the owner nor the exporter of the goods also. There is no direct evidence that the appellant had handled or had rendered any positive act for the smuggling of goods out of India. - No penalty.
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• Customs:

  Under Valuation of imported goods - in the absence of corroboration and cogent evidence, the Department’s case is based upon assumption and presumption, that the goods in normal packing were having the same value as the branded and vacuumed packed goods - Demand set aside.
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• Customs:

  Goods imported from South Asian Association for Regional Co-operation [SAARC] countries - the subject goods are not fulfilling the Origin Criteria as prescribed in the said notification and hence not eligible for the benefit of notification.
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• FEMA:

  Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities
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• FEMA:

  Foreign Exchange Management (Deposit) Regulations, 2016 - Opening of NRO Accounts by Long Term Visa (LTV) holders, changes related to Special Non-Resident Rupee (SNRR) Account and Escrow Account
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• Service Tax:

  Commercial Training or Coaching Service - they are imparting coaching for courses leading to recognised certificates, diplomas and degrees issued by lawfully constituted academic bodies - when such institutes also carry on training schedules to prepare students for competitive exams, categorised as “commercial coaching”; as per the clarification issued by the CBCE, they stand exempted.
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• Service Tax:

  Classification of services - The activity comprises a variety of activities starting from the development of the product suitable for the market based on API to conducting tests and turnover information to their clients for further use. - to be classified as ‘Scientific and Technical Consultancy Services’.
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• Service Tax:

  Cleaning of toilets and compartments - railway coaches or rolling stock of the railways meant for transport and cannot be considered as a commercial or industrial building or factory or plant or machinery. - No service tax liability.
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• Service Tax:

  Classification of Horticulture service - activity of Plantation of trees, shrubs etc, Horticulture cleaning daily of garden and removal foe laves and unwanted vegetation - The activity is falling under the definition of 'Horticulture' which is part of agricultural activity only and not liable for any service tax
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• Service Tax:

  Rejection of VCES Scheme - the amounts paid before VCES came into existence can also be considered for as towards compliance of the declaration made. - Declaration accepted.
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• Service Tax:

  Imposition of penalties - Mere collection and delay to remit to the Government cannot be considered as an act of suppression - The penalty imposed u/s 78 is unwarranted.
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• Service Tax:

  Renting of Immovable Property Service - there was no reason to add notional interest in the monthly rent for the purpose of assessment of service tax
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• Service Tax:

  Refund of service tax paid wrongly - there is no infirmity in the LAA accepting the expert opinion - Once the activity is found to be falling within the fold of supply of tangible goods service, said tax was collected without authority of law - Refund allowed - Period of limitation not applicable.
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• Service Tax:

  Venting of refrigerators to their dealers/ distributors - admittedly appellant have paid VAT/Sales Tax - the appellant is not liable to pay service tax on this activity under the category Supply of Tangible Goods Service (SOTG).
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• Central Excise:

  National Calamity Contingent Duty (NCCD) - area based exemption - Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification.
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• Central Excise:

  CENVAT Credit - capital goods - change in constitution of the company - invoice in the name of predecessor entity - This itself would not be a ground to deny them CENVAT Credit.
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• Central Excise:

  Classification of Polyurethane Foam - The polyurethane article made specifically for fitting on furniture or coach seats, etc., and is not a seat in itself. - correctly classifiable under 3926 3010 and not under 9401 as seats.
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• Central Excise:

  Suo-moto credit - The only allegation is that the appellant ought to have sought for refund instead of taking suo motto credit. Since it was an error which has been intimated to the department and thereafter, no demand raised with respect to the amount indicated in these invoices - Demand set aside.
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Articles

• GST : TO DO / TO REMEMBER LIST BEFORE RETURN FILING FOR MARCH 2019

Notifications

• Customs

• 10/2019 - dated 28-3-2019 - Cus
  Amend notification No. 69/2011-Customs dated 29.07.2011 to extend deeper tariff concessions to imports of specified goods from Japan under India-Japan CEPA (IJCEPA) with effect from 1st April, 2019.

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• GST - States

• F-10-12/2019/CT/V(33) - 02/2019-State Tax (Rate) - dated 7-3-2019 - Chhattisgarh SGST
  To give composition scheme for supplier of services with a tax rate of 6% having annual turnover in preceding year upto ₹ 50 lakhs

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• F-10-06/2019/CT/V(09) - 02/2019-State Tax - dated 6-2-2019 - Chhattisgarh SGST
  The Chhattisgarh Goods and Services Tax (Second Removal of Difficulties) Order, 2019.

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• F-10-05/2019/CT/V(08) - 01/2019-State Tax - dated 1-2-2019 - Chhattisgarh SGST
  The Chhattisgarh Goods and Services Tax (Removal of Difficulties) Order, 2019

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• F-10-04/2019/CT/V(07) - 01/2019-State Tax (Rate) - dated 29-1-2019 - Chhattisgarh SGST
  Rescinds the Notification in the Commercial Tax Department, No. 8/2017-State Tax(Rate) notification No. F-10-43/2017/CT/V(76), dated the 28th June, 2017.

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• F-10-04/2019/CT/V(06) - 06/2019-State Tax - dated 29-1-2019 - Chhattisgarh SGST
  Amendments in the Notification of the of the State Government, in the Commercial Tax Department, No. 65/2017-State Tax notification No. F-10-93/2017/CT/V(171), dated the 15th November, 2017.

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• F-10-04/2019/CT/V(05) - 05/2019-State Tax - dated 29-1-2019 - Chhattisgarh SGST
  Amendments in the Notification of the State Government, in the Commercial Tax Department, No. 8/2017-State Tax notification No. F-10-46/2017/CT/V(90), dated the 1st July, 2017.

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• F-10-04/2019/CT/V(04) - 03/2019-State Tax - dated 29-1-2019 - Chhattisgarh SGST
  The Chhattisgarh Goods and Services Tax (Amendment) Rules,2019

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• F-10-04/2019/CT/V(03) - 02/2019-State Tax - dated 29-1-2019 - Chhattisgarh SGST
  Appoints the 1st day of February,2019, as the date on which the provisions of the Chhattisgarh Goods and Services Tax (Amendment) Act, 2018 (25 of 2018), except clause (b) of section 8, section 17, section 18, clause (a) of section 20 of this Amendment Act, shall come into force.

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• F-10-03/2019/CT/V(02) - 01/2019-State Tax - dated 29-1-2019 - Chhattisgarh SGST
  Amendment in the notification Commercial Tax Department, No. 48/2017-State Tax notification No. F-10-87/2017/CT/V(153), dated the 18th October, 2017.

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• F-10-65/2018/CT/V(111) - 27/2018-State Tax (Rate) - dated 31-12-2018 - Chhattisgarh SGST
  Amendments in the Notification the Commercial Tax Department, No. 11/2017-State Tax (Rate) notification No. F-10-43/2017/CT/V(79), dated the 28th June, 2017.

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• F-10-65/2018/CT/V(110) - 26/2018-State Tax (Rate) - dated 31-12-2018 - Chhattisgarh SGST
  Exempts the intra-State supply of gold falling in heading 7108 when supplied by Nominated Agency under the scheme for “Export Against Supply by Nominated Agency”.

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• F-10-65/2018/CT/V(109) - 25/2018-State Tax (Rate) - dated 31-12-2018 - Chhattisgarh SGST
  Amendments in the notification of the State Government, in the Commercial Tax Department, No. 2/2017-State Tax (Rate) notification No. F-10-43/2017/CT/V(70), dated the 28th June, 2017.

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• F-10-65/2018/CT/V(108) - 24/2018-State Tax (Rate) - dated 31-12-2018 - Chhattisgarh SGST
  Amendments in the notification of the State Government, in the Commercial Tax Department, No. 1/2017-State Tax (Rate) notification No. F-10-43/2017/CT/V(69), dated the 28th June, 2017

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• Income Tax

• 29/2019 - dated 28-3-2019 - IT
  Approval of the Government of India has been accorded for setting up of an industrial park by M/s Romell Real Estate Pvt. Ltd.

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Circulars / Instructions / Orders

• FEMA - 27 - dated 28-3-2019
  Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities
• FEMA - 28 - dated 28-3-2019
  Foreign Exchange Management (Deposit) Regulations, 2016 - Opening of NRO Accounts by Long Term Visa (LTV) holders, changes related to Special Non-Resident Rupee (SNRR) Account and Escrow Account
• Customs - Facility No. 07/2019 - dated 14-3-2019
  Unloading Point at Indian Oil Corporation Ltd., Bishalgarh LPG Bottling Plant, Tripura
• Customs - Facility No. 06/2019 - dated 5-3-2019
  Removal of restrictions as regards Golakganj LCS
• Customs - FACILITY No. 05/2019 - dated 21-2-2019
  Customs Areas of Land Customs Station, Shellabazar

News

• Income Tax Department carries out more search actions in the J&K Region

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• Review of the Monthly Account of the Government of India up to the month of February 2019 for the Financial Year 2018-19

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• GI Certification for five varieties of Indian coffee

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• Interaction on Trade and Economic Cooperation with Ambassadors and High Commissioners of European and Oceania Countries

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Case Laws:

• GST

• 2019 (3) TMI 1475
  Supply or not - Job work - dispatch of consumable materials from the principal to the job worker - goods not returned physically as inputs , being consumed in the process of galvanising - compliance in terms of section 143(3) of the GST Act - whether the goods not returned can be treated as 'Supply' or not? - Held that:- The goods that are used up in the galvanising process cannot be separated from the galvanised goods. The meaning attributed to inputs in the Explanation to section 143 takes care of the difference between the inputs sent to the job-worker and the goods returned after some intermediate treatment/process like galvanisation that may exhaust some of the inputs sent out. It expands the meaning of inputs to the intermediate goods that include, as embedded, attached or consumed, the inputs that are exhausted in the process of manufacturing the intermediate goods. Thus, the zinc, furnace oil or nickel exhausted in the process of galvanising need not be physically returned. If the galvanized structures are returned that will be sufficient compliance of section 143(1)(a) of the GST Act.

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• 2019 (3) TMI 1474
  Classification of supply - composite supply or not - Rate of GST - restaurant service offered along with the supply of food, services like valet parking, music, decoration and other such services associated with organizing social gatherings etc. - input tax credit for services other than the supply of food - bundling of services - Held that:- Supply of food, by way of or as part of any service or in any other manner whatsoever, is a composite supply, which shall be treated as service in terms of Para 6(b) of Schedule II of the GST Act. It is classifiable under SAC 9963 and taxable under different clauses of Sl No. 7 of the Rate Notification. If food is supplied by way of or as part of the services associated with organizing social events at the club premises, together with renting of such premises, it will be taxable under Sl No. 7(vii) of the Rate Notification. Supply of any other goods in such an event will also be taxable under Sl No. 7(vii) of the Rate Notification - All other services offered by the Applicant, being services of a membership organization, are classifiable under SAC 9995 and taxable under Sl No. 33 of the Rate Notification. They include swimming and other facilities and services that are not bundled with the supply of food and charged separately, whether or not provided at the restaurant or at any other place. If the Applicant charges GST under Sl No. 7(i) of the Rate Notification on his supplies from the restaurant, he will not be able to claim a credit of input tax on such supplies - The Applicant should apply the provisions under section 17(2) (6) for apportionment of the input tax credit, treating supplies, if any, taxable under Sl No. 7(i) of the Rate Notification, as exempt supplies.

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• 2019 (3) TMI 1473
  Charitable Activities or not - hostel accommodation provided by Trusts to students - exemption under Sl. No. 1 of N/N. 12/2017-CT (Rate) - donations received to meet the expenses for running the hostel - levy of GST. Whether hostel accommodation provided by Trusts to students is covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No.12/2017-CT (Rate)? - Held that:- From the Notification Entry no. 1 and the meaning assigned to the expression charitable activities , it is found that activities of the Trust in providing hostel accommodation facilities to the students who come to Pune for education do not fall within the ambit of charitable activities - this is in conformity with the clarification issued by the Tax Research Unit vide Circular No. 32/06/2018-GST dated 12th February 2018 - the hostel accommodation provided by Trusts to students is not covered by exemption Notification Entry No.1 of Notification No. 12/2017-CT (Rate). Whether different treatment would be required for use of hostel rooms given by us for residential purposes but ultimately been used by the hirer for commercial use? - Held that:- As per the clarification issued vide Circular No. 32/06/2018-GST dated 12th February 2018, that the distinction between services by a hotel, inn guest house club or composite, by whatever name called, for residential or lodging purposes and Hostel accommodation services is done away. In the present case applicant submits that during the vacation period hostel is offered for residential purpose and hired for labourers of a commercial organization - the description of service is use based, meaning that if the accommodation is used for residential or lodging purpose then it is immaterial who the user is. The services provided by such hostel, for residential and lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose. Whether the said notification would be applicable if the accommodation if decided to be given for commercial purposes in future whether the activity still would be able to enjoy exemption under said notification? - Held that:- We reiterate the scope of exemption entry 14 of the Notification 12/2017 which is applicable to accommodation unit when used only for residential or lodging purpose. Whether the large donations given by the donors would be treated as service and taxed accordingly and whether only sponsored donations are believed to be covered under said mega exemption notification? - Held that:- Even though the concept is explained in the context of the Charitable Religious Trust, we find that the principle that emerges from it is equally applicable to the case at hand and that if the income is in nature of donation received without any instructions, then it would not be subject to GST - the donations received without any instruction would not be taxable however where the donor is clearly receiving identifiable benefits in return either in terms of advertising or publicity, the said donation amount received is to be treated as a consideration for supply of goods or services or both and liable to GST.

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• 2019 (3) TMI 1472
  Classification of goods - rate of tax - Polypropylene Mats (Floor Mats) - whether classified under 4601 or otherwise? - whether CGST / SGST Tax Rate is to be considered as 2.5% or 6%? - Held that:- The expression plaiting materials covers monofilament, strip and the likes of plastics . Further, Chapter 46 contain articles made by interlacing, weaving or by similar methods of assembling unspun materials particularly including monofilament and strip and the like of plastics of Chapter 39 and that it covers products of plaiting materials, bound together in parallel strands or woven, in sheet form, whether or not being finished articles for example mats, matting, screens either obtained directly from plaiting materials or products of plaiting materials - In the present case and as submitted by the applicant, plastic mat is manufactured out of plastic tubes of diameter 1.5 mm inter-woven in to sheets forming mats. The plastic tubes of diameter of 1.5 mm used for the manufacture of PP mat would be covered within the expression Plaiting materials including strips and the likes of plastics as per Chapter Note 1 of chapter 46 and the terms of heading 4601 that covers plaiting materials bound together in parallel strands or woven in sheet form as finished articles (for example, mats, mattings, screens) - In the instant case we find that the extruded fine plastic tubes are woven into sheet forms and finished into articles as mats and hence covered in heading 4601. We further find from the note to heading 4602 that the mats being products of plaiting materials, which have acquired the character of finished articles by reason of being bound together in parallel strands or woven in sheet form, are excluded from the scope of heading 4602. Hence the items in question do not go beyond the heading 4601. Circular No. 4/2018 dated 24.01.2018, amending All Industry Rates of Duty Drawback effective from 25.01.2018 (Customs) issued from File No. 609/12/2018- DBK re-confirms the classification of Polypropylene Mats under tariff Item 460101 in Part 2 (c) of the same and deletes any other entry from the drawback schedule for Polypropylene Mats. On comparison of the HSN and First Schedule to the Indian Customs Tariff, we find that there is an inadvertent error in the First Schedule to the Indian Customs Tariff at heading 4601. The HSN contains two single dash entries in heading 4601 that divides the items into two groups: (i) Mats, matting and screens of vegetable materials: and (ii) Other: In the Indian Customs Tariff however, the second single dash entry - Other: is missing. In the absence of the second single dash -Other: after the tariff item 4601 29 00, all the tariff items having double dashes in the heading 4601 will come under the scope of single dash having the description Mats, matting and screens of vegetable materials and as a result, ambiguity arose as to whether mats made of plastic materials would fall outside the scope of heading 4601. If the single dash -Other: is included after the tariff item 4601 29 00, in alignment with the HS, the mats made of plastics would fall under the sub-heading 4601 99 - Notwithstanding the above mentioned discrepancy, in pursuance of Note 1 to Chapter 46, the General Note 3 Of the Explanatory Notes of Chapter 46, and the terms of heading 4601, we come to the finding that the heading appropriate for Polypropylene Mats made from plaiting materials is 4601 and the relevant sub-heading is 4601 99. However as it is not necessary to go beyond four digit level for the purpose of this Advance Ruling, we hold that the product of manufactured by the applicant falls in heading 4601 of First Schedule of the Indian Customs Tariff Act, 1975. Other question not answered as the question is withdrawn by the applicant in view of Notification No. 6/2018 - Central Tax (Rate) -dated 25/01/2018.

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• 2019 (3) TMI 1471
  Extension of time period for filing of GST Tran-1 - transitional credit - transition to GST regime - Held that:- The respondents are directed to open the portal before 31st of March 2019. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - List this matter on 30.04.2019.

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• 2019 (3) TMI 1470
  Profiteering - purchase of Flat No. A701, constructed by the Respondent in his “Vrindavan Yojna Project”, Rae Bareli Road, Lucknow - increase in the price of the flat after implementation of the Goods & Service Tax (GST) w.e.f. 01.07.2017 - benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the flat purchased by them not passed on - contravention of the provisions of Section 171 of the CGST Act, 2017. Held that:- It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax hence, this issue is not relevant in this case. On the issue of passing on the benefit of ITC in the post-GST era, it has been revealed by the DGAP's Report that the benefit of additional ITC of 3.04% of the taxable turnover during the period w.e.f. 01.07.2017 to 31.08.2018 and the amount outstanding as on 31.08.2018, has accrued to the Respondent and the same was required to be passed on to the Applicants and the other flat buyers. The DGAP has calculated the amount of ITC as ₹ 37,24,923/- which was availed by the Respondent vide Table-D supra on the basis of the information supplied by the Respondent and hence the calculation done by him can be relied upon. The DGAP has also computed the amount of profiteering as ₹ 38,29,753/- vide Table-F on the basis of the details supplied by the Respondent himself which he has not challenged and hence the amount of profiteering assessed by the DGAP can be deemed to be correct. The DGAP has also computed the details of the benefit of ITC which is required to be passed on by the Respondent to each flat buyer as per Annexure-14 which has been accepted by the Respondent. The Respondent at no stage has objected to the calculation of the additional ITC availed by him or the profiteered amount made by the DGAP and has rather admitted the computation of both as correct and agreed to pay the above benefit as per the details prepared by the DGAP vide Annexure-14. The amount of profiteering in terms of Rule 133 (1) of the CGST Rules, 2017 is determined as ₹ 38,29,753/- including the GST @12% on the base profiteered amount of ₹ 34,19,422/- as per the details furnished by the DGAP. Accordingly, under Rule 133 (3) (a) of the CGST Rules, 2017 it is ordered that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC availed by him. Penalty - Held that:- Although notice for imposition of penalty has already been issued to the Respondent on 06.12.2018 however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence.

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• Income Tax

• 2019 (3) TMI 1469
  Nature of amendment - prospective or retrospective - clarificatory amendment to remove ambiguity - Power of AO to extend time for the submission of the audit report directed u/s 142(2C) - Tribunal came to the conclusion that prior to the insertion of the expression suo motu with effect from 1 April 2008 in Section 142(2C) AO had no jurisdiction to extend time for the submission of the report of an auditor appointed under sub section (2A), of his own accord - also assessment which was made under Section 153A, in respect of the assessment years in question, was barred by limitation - Revenue adopted a contrary position, submitting that even before 1 April 2008, the jurisdiction of the assessing officer to extend time for the submission of the audit report was not confined to a situation in which the assessee had made an application for extension - HC dismissed revenue appeal - HELD THAT:- No substance in the submission urged on behalf of the assessees that to adopt an interpretation which we have placed on the provisions of Section 142(2C) would enable the assessing officer to extend the period of limitation for making an assessment under Section 153B. Explanation (iii) to Section 153B(1), as it stood at the material time, provided for the exclusion of the period commencing from the date on which the assessing officer had directed the assessee to get his accounts audited under sub-section (2A) of Section 142 and ending on the day on which the assesee is required to furnish a report under that sub-section. The day on which the assessee is required to furnish a report of the audit under sub-section (2A) marks the culmination of the period of exclusion for the purpose of limitation. Where the assessing officer had extended the time, the period, commencing from the date on which the audit was ordered and ending with the date on which the assessee is required to furnish a report, would be excluded in computing the period of limitation for framing the assessment under Section 153B. The principle governing the exclusion of time remains the same. The act on which the exclusion culminates is the date which the assessing officer fixes originally, or on extension for submission of the report. The provisions of Section 142(2C) as they stood prior to the amendment which was enacted with effect from 1 April 2008 by the Finance Act, 2008 did not preclude the exercise of jurisdiction and authority by the assessing officer to extend time for the submission of the audit report directed under subsection (2A), without an application by the assessee. We hold and declare that the amendment was intended to remove an ambiguity and is clarificatory in nature. As a consequence of our decision, we specifically overrule the judgment of a Division Bench of the Delhi High Court in Commissioner of Income Tax v Bishan Swaroop Ram Kishan Agro Pvt. Ltd. [2011 (5) TMI 540 - DELHI HIGH COURT] - Decided in favor of Revenue.

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• 2019 (3) TMI 1468
  Taxability of rental income - letting out the shop rooms in the mall constructed by it - correct head of income – “income from house property” or “profits and gains of business” - HELD THAT:- In the instant case, it is not a letting out of property simpliciter, without anything more. A host of services are being provided by the assessee at the shopping mall. The assessee is engaged in a complex set of activities at the shopping mall. Management of the shopping mall is done by the assessee. The basic purpose is commercial exploitation of the property. The assessee has earned the income not merely by letting out the shop rooms but also by providing amenities and facilities at the shopping mall. Such amenities and facilities are not the basic facilities required for occupation of a shop room by a tenant. They are the special facilities for running the shopping mall and are meant to attract the customers and provide them the comfort and convenience of shopping. In cases where the income received is not from the bare letting out the property but on account of the facilities and services rendered, the operations involved in such letting out is in the nature of business and the income derived therefrom has to be treated as business income and not income from property. The income derived by the assessee cannot be regarded as simply from the exercise of property right. Where the assessee company has developed the shopping mall and let out the same by providing a variety of services, facilities and amenities in the mall, it can be found that the primary intention of the assessee was commercial exploitation of the property and where it has derived substantial part of its income by such activity, which constitutes its main business, the income so derived would be business income of the assessee. We, therefore, agree with the view of the Tribunal that the income derived by the assessee by letting out the shops in the mall has to be assessed as income from business and not as income from house property. - Decided in favour of assessee

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• 2019 (3) TMI 1467
  Stay petition - recovery proceedings - AO directing the petitioner to deposit 20% of the tax demand, upon which the rest of the recovery would be stayed - HELD THAT:- No recovery pending the appeal before the appellate Commissioner could be carried out. This Court in the case of UTI Mutual Fund Vs. ITO [2012 (3) TMI 333 - BOMBAY HIGH COURT] had observed that, “If the Assessing Officer has taken a view contrary to what has been held in the preceding previous years without there being a material change in facts or law, that is a relevant consideration in deciding the application for stay. In the present case, prima facie, the Revenue is unable to point out any material change in the facts or law on the basis of which the Assessing Officer has made the additions. Under the circumstances, while allowing the Revenue to file reply and adjourning this group of petitions to 22nd March, 2019, we prevent the respondents from carrying out recoveries arising out of the orders of assessment.

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• 2019 (3) TMI 1466
  Penalty u/s 271B - delay caused in complying with the provisions of Section 44AB - delay in filing the audit report along with the returns - HELD THAT:- The provision of Section 271B of the Act makes it clear that the imposition of penalty for non-compliance with the provision of Section 44AB is not mandatory, though the filing of such report may be mandatory, as the word used in Section 44AB is 'shall'. But the the word 'may' used in section 271B gives discretion to the Assessing Officer to impose penalty or not to impose penalty. The provision of Section 273B contains a non obstante clause and provides that notwithstanding the provision of Section 271B, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for the said failure. The assessee has given an explanation regarding the delay in filing the audit report. There is no unreasonable delay in filing the report. It is not mandatory that in every case of default penalty has to be imposed. In the instant case, there was only a delay of two months in filing the audit report along with the returns which delay was caused due to a valid explanation as submitted by the assessee. On an overall conspectus of the matter, we are firmly of the opinion that the assessee has proved the existence of reasonable cause under Section 271B - Decided in favour of the assessee

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• 2019 (3) TMI 1465
  Benefit of set off of unaccounted loss incurred in the undisclosed transaction against the business income derived by the assessee in transactions involving trading of derivatives - HELD THAT:- Transactions in the exchange was recorded in the name of the assessee, details have been given in the assessment order and has found as a fact that the assessee had not recorded the sales which resulted in profit as well as resulted in loss out of such transaction. AO being a quasi judicial body had to act in a fair, just and reasonable manner and should have only taxed the right income (even if undisclosed). We note that the profit as well as the loss are from the derivative trading only and therefore, have to be deemed as business income by virtue of sec. 43(5). In such a scenario, not allowing the set off of the loss component from the profit from the same transaction though un-recorded, is not just, fair or reasonable order of the AO. Therefore, relying on the ratio laid by the Hon’ble Supreme Court in Ch. Atchaiah [1995 (12) TMI 1 - SUPREME COURT] as well as in the case of Maneka Gandhi Vs. Union of India [1978 (1) TMI 161 - SUPREME COURT] in which order the law has been laid down that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by the Hon’ble Supreme Court. So, we uphold the order of the CIT(A) directing the AO to restrict the addition after giving set off of the loss which does not require any interference from our part and so we confirm the same. Addition u/s 14A - HELD THAT:- AO the assessee in its submission dated 10.02.2015 had explained that out of the total STT, sum of ₹ 2,24,983/- was directly attributable to the investments and that the said amount had already been disallowed and added back to the total income. As regards the STT of ₹ 6,84,939/- paid on derivatives, it brought to our notice that the aforesaid amount was erroneously disallowed by the AO presuming it to be as direct expenditure under Rule 8D(2)(i). We note that the AO seems to have not understood that STT was directly & intrinsically related to the activity of trading in derivatives, which yielded only taxable income, and which was also assessed to tax at normal rates. These charges had no correlation either with investments or for that matter with earning of dividend. In the circumstances the STT being not relatable to investments was wrongly disallowed by the AO under Section 14A read with Rule 8D(2)(i). Therefore the AO is directed to delete the impugned disallowance to the extent of ₹ 6,84,939/-. Appeal of revenue is dismissed and assessee’s Rule 27 application is allowed as discussed above

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• 2019 (3) TMI 1464
  Penalty u/s 271B - failure to get accounts audited u/s 44AB - statutory obligation to maintain books of accounts not adhered to - HELD THAT:- AO himself recorded that no books were maintained by the assessee and penalty u/s 271B of the Act is to be imposed when any person fails to get his accounts audited. Admittedly there is no dispute that no books were maintained by the assessee and as rightly argued by the Ld.AR getting the same audited does not arise at all. Therefore, we find force in the arguments of AR and taking the support from the decision of Hon’ble High Court of Allahabad in the case of CIT vs Bisauli Tractors [2007 (5) TMI 181 - ALLAHABAD HIGH COURT] When there are no books of account, the question of their audit does notarise. If there is any fault in the matter, the said fault can be examined with reference to non-maintenance of Books of Account. There are certainly no defaults for not obtaining the said Audit Reports for years under consideration. The requirement of audit is in relation to the books maintained. When there are no books, there is nothing to audit. - We cancel the penalty imposed by the AO u/s 271B - Decided in favour of assessee.

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• 2019 (3) TMI 1463
  Addition u/s. 40(a)(ia) for failure of TDS u/s 194C - payments made relating to Freight charges without deducting tds - limited prayer of the assessee that after the amendment in sec. 200/201 when the recipient of the amounts have shown in their return of income, the amount in question and has been assessed to tax, then disallowance is not warranted - HELD THAT:- We find force in the contention of the assessee and direct the AO to adjudicate the issue afresh. And direct that if the payees have reflected this payment in question towards them in their respective Return of Income and have taken into account this sum of amount in their Return of Income and has paid tax due on the income declared in the Return of Income, and fulfils the conditions stipulated u/s. 200 of the Act, then no disallowance u/s. 40(a)(ia) of the Act is warranted. Needless to say, the AO may call for the aforesaid details from the payees in case it is found necessary. So, we set aside the order of Ld. CIT(A) and remand the matter back to AO for fresh adjudication as directed above. - Appeal of assessee are allowed for statistical purposes. Deemed dividend addition u/s 2(22)(e) - HELD THAT:- We note that assessee firm is not a shareholder of M/s. Modern Solaurum Pvt. Ltd. So, sec. 2(22)(e) of the Act is not attracted against the assessee firm and so the impugned addition invoking sec. 2(22)(e) of the Act cannot be sustained as held by the Hon’ble Delhi High Court in Ankitech pvt ltd [2011 (5) TMI 325 - DELHI HIGH COURT] wherein this principal/ratio has been held. So since the Firm being not a shareholder of the Pvt. Ltd. company which lent the money cannot be taxed by applying sec. 2(22)(e) of the Act. So, the addition is deleted. This ground of appeal of assessee is allowed.

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• 2019 (3) TMI 1462
  Levy of penalty u/s 271AAA - additional income offered to tax by the assessee as his undisclosed income - search and seizure action u/s 132 - Assessment order u/s 153A - HELD THAT:- The issue is covered in favour of the assessee by order of ITAT Delhi ‘F’ Bench in the case of Mahavir Prasad Jaipuria [2017 (10) TMI 875 - ITAT DELHI] who is also connected with the same search and connected with the group. On identical facts, the similar penalty has been cancelled by the Tribunal. In the case of the assessee also, assessee declared additional income at the assessment proceedings vide letter dated 04.03.2014 in a sum of ₹ 3,64,602/-. Further, the assessee has explained the items which have been surrendered at the assessment proceedings. Therefore, no penalty is leviable. - Decided in favour of assessee.

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• 2019 (3) TMI 1461
  Revision u/s 263 by Pr. CIT - non consideration of taxability of sale proceeds under the provisions of Income Tax Act - HELD THAT:- Assessment order passed by the AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue, if the assessment order is passed without making enquiries or verification which should have been made by the AO and that orders have been passed allowing any relief without enquiry into the claim. The above facts clearly show that though the AO asked for the explanation of the assessee but the AO never made any enquiry or verification of such a claim and allowed the relief to the assessee without passing any order thereon and without enquiry into the claim of the assessee. Therefore, Explanation 2 to section 263 is clearly attracted in the case of the assessee. Assessee submitted that since AO has taken one of the possible view, therefore, Pr. CIT has no jurisdiction to take a different view. AO has not taken any view on the matter in issue about taxability of sale proceeds under the provisions of Income Tax Act, therefore, there is no question of taking the AO one of the possible view into the matter. Therefore, the decisions relied for assessee would not support the claim of the assessee. During the course of arguments, for assessee admitted that AO after making enquiry into the matter in issue i.e. issue of taxability of sale proceeds on the above referred sale deeds has rejected the claim of the assessee and made the addition against the assessee which is subject matter in appeal before CIT(A). This fact would strengthen the findings of the Ld. Pr. CIT that AO did not examine the issue as per law. Therefore, CIT correctly considered the assessment order to be erroneous in so far as prejudicial to the interest of the Revenue. No infirmity in the impugned order. - Decided against assessee.

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• 2019 (3) TMI 1460
  Penalty u/s 271(1)(c) - non specification of charge - defective notice as it does not spell out the grounds on which the penalty is sought to be imposed - HELD THAT:- As decided in COMMISSIONER OF INCOME TAX, BANGALORE AND THE INCOME TAX OFFICER, WARD-6 (3) , BANGALORE VERSUS M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] as relying on M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT]imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. As observed 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. In these circumstances, we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee

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• 2019 (3) TMI 1459
  Penalty u/s 271(1)(c) - assessee was showing reasonably big quantities of sale of milk in its books of accounts in survey no documentary evidences was found - Statement of director recorded u/s. 131 - assessment completed u/s 153A/143(3) - Allegation of department that company is engaged in milk products- Gross Profit rate of milk product was applied to the sale of milk declared by the assessee to estimate higher profits - Quantum additions as were made by the AO were upheld by all the appellate authorities concurrently upto Hon ble Bombay High Court - HELD THAT:- Merely because quantum additions are upheld by appellate authorities as one of the possible view will not automatically lead to levying of penalty u/s 271(1)(c) is a well settled position of law and the AO ought to have brought on record cogent incriminating material to show that the assessee had infact furnished inaccurate particulars of income or had concealed its particulars of income in the return of income filed with the Revenue, before fastening liability to penalty u/s 271(1)(c) of the 1961 Act. AO could not brought on record any cogent material/evidences to conclusively prove that the milk was diverted toward production of milk products and the production of milk products was camouflaged as sale of milk with a view of suppress profit and evade taxes. The additions have been made on preponderance of probability by estimating of profits by treating sale of milk being unproved and applying GP ratio of milk products, but no enquiry was made by the authorities as to the installed capacity of the factory to process milk and produce milk products vis-a-vis production achieved during the period or to prove that milk was diverted for producing milk products but sales were camouflaged as sale of milk. No correlation of electricity consumed, raw material consumed, labour employed, milk processed, milk products produced etc were done to prove that milk was never sold as such but were infact used for producing milk products but camouflaged in books of accounts as sale of milk. There is no evidences on record to show that any excess stock of milk product was found from factory outlet or the sales outlet vis-a-vis records maintained by the assessee. The books of accounts were available at the time of survey on 08.5.2007 but survey team who conducted survey u/s 133A did not examine the same on 08.05.2007 and neither impounded the available books of accounts. The assessee however submitted purchase and sale of milk record before the AO as well analysis of purchase and sale of milk was submitted before the AO. No discrepancy was found by the AO in these record except that the whole story of sale of milk was disbelieved. The assessee has also brought on records VAT audit report before learned CIT(A) to substantiate that the assessee was engaged in the sale of milk but that was also rejected. The books of accounts might not have been produced before investigation wing or proper productions/ consumption records were not kept could be sufficient to reject books of accounts u/s 145(3) and to estimate profits based on premise that sales of milk was not proved on the touchstone of preponderance of probabilities but is not sufficient to fasten liability to penalty u/s 271(1)(c) as in penalty proceedings, the assessee has come out with a bonafide explanations and its burden stood discharged but it was for the AO to have rebut the contentions of the assessee and brought on record clinching evidence that the assessee furnished inaccurate particulars of income or concealed the particulars of income while filing return of income with the Revenue, which in our considered view as per detailed discussions above the AO failed to bring on record clinching evidence justifying leviability of penalty u/s 271(1)(c) - Decided in favour of assessee.

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• 2019 (3) TMI 1458
  Disallowance of Management Fees paid to its holding company IMC Inc, USA- Allegation that assessee had failed to prove that any benefit had accrued from the expenses - bills are serially numbered and booked at close of the year - HELD THAT:- The liability of assessee was to make payments to its holding company on the basis of invoices raised by holding company on monthly basis; copy of invoices are also placed. The perusal of said invoices would reflect the breakup under the head ‘Services and Labour’, under which names of personnel providing the services are written and different amounts payable to each of them are mentioned. Further details are given in respect of travel of the persons, if any telecommunication of computer charges and delivery expenses under the head ‘Travel / other expenses’. Such are the details which were available from month to month and the amounts in each month vary. The objection of authorities below in this regard was that though invoices have been raised but the same were serially numbered and also that the amounts were due to be paid at the close of the year. We find no merit in the stand of authorities below. It is an understanding between the parties, which has to be looked into and the expenses have to be allowed on accrual basis specially where the assessee is following mercantile system of accounting. Merely because the amounts were due at the close of the year, would not disentitle the assessee from claiming the said expenditure. coming to the next aspect of the disallowance of assessee on the ground whether any services were availed or not. The assessee in this regard has furnished additional evidence before the CIT(A), copies of which are placed at pages 79 to 173 of Paper Book. The said evidence is in the form of various emails exchanged between employees of the assessee and personnel of holding company. We have gone through the said evidence and we are of the view that the assessee had established its case of availment of said services. Following the same parity of reasoning in the case of Emerson Climate Technologies (India) Ltd. Vs. DCIT [2017 (12) TMI 1568 - ITAT PUNE] and EATON FLUID POWER LIMITED VERSUS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-8, [2018 (6) TMI 1266 - ITAT PUNE], we hold that entire expenditure booked under the Management Fees is to be allowed as deduction in the hands of assessee. The grounds of appeal raised by assessee are thus, allowed.

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• 2019 (3) TMI 1457
  Interest received on FDRs/ICDs with bank/NBFCs - Capital receipt or revenue receipt - unutilized funds which could not be used in the development of the port terminal due to various reasons such as clearances from Govt. Authorities and due to local protests by the public - addition under the normal provisions of the Act as well as u/s 115JB - funds were received as share capital solely for the development of port terminal and other facilities at Karanja Creek and were raised on Landon stock exchange - HELD THAT:- We hold that the interest income received by the assessee from the FDRs/ICDs made out of funds are inextricably linked to the development of port terminal and other infrastructure at Karanja Creek which is yet to be completed and commissioned. We would like to add that the these funds could not be used for the development work of the port due to late issuance of permissions/clearances by the Govt authorities and also due to some local issues. Therefore, the interest income is a capital receipt and is not taxable at all both under the normal provisions of the Act as well as u/s 115JB of the Act. The appeal of the assessee is allowed.

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• 2019 (3) TMI 1456
  Trading addition - books of accounts rejected by invoking of provisions of section 145(3) - AO estimated the G.P rate of 16.47% on the declared turnover of the assessee and which has been upheld by the ld CIT(A) - HELD THAT:- It is a settled legal proposition that mere rejection of books of accounts are not sufficient to hold that the trading additions have to be necessarily made in the hands of the assessee company. Where the assessee company has declared a better trading results as compared to previous years, such results provide a reasonable basis to hold that there should not be any addition in the hands of the assessee company. The trading addition so made by the AO and so confirmed by the ld CIT(A) are hereby directed to be deleted and the trading results so declared by the assessee are directed to be accepted. The issue regarding rejection of books of accounts so raised by the assessee thus becomes academic and we donot deem it appropriate to adjudicate the same on merits. Addition of 10% of telephone, conveyance & car maintenance expenses - CIT(A) confirmed the addition so made (except the addition on account of depreciation) holding that the assessee has failed to file any evidence which established that the observation made by AO are not correct - HELD THAT:- These are purely adhoc addition made by the Assessing Officer which cannot be sustained in eyes of law. It is not the case of the Revenue that these are bogus expenditure or the expenditure has not been incurred for the purposes of business. A mere suspicion that given the nature of expenses, it is likely that incurrence of such expenditure is for non-business purposes, in our view, cannot be a basis for making the addition in the hands of the assessee. Accordingly, the adhoc addition so made is hereby directed to be deleted. Disallowance of 10% of the labour and staff welfare expenses - expenses are not fully supported by the proper bills/evidences and payments in some cases were made in cash on self made vouchers due to which these expenses could not be verified completely and 10% of such expenses were disallowed which was sustained by the ld CIT(A) - HELD THAT:- The addition is again adhoc in nature and the same cannot be sustained in the eyes of law and is hereby directed to be deleted - Appeal of assessee allowed.

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• 2019 (3) TMI 1455
  Computation of LTCG - Addition U/s 50C - determination of price at which capital asset sold - Transfer of clear and marketable title - assessee is a Private Family Discretionary Trust settled by Sir Mohammed Yusuf in 1929 - assessee-trust was in possession of certain right in the land which was in the name of assessee, however, the assessee was not in possession - assessee trust issued a public notice for inviting bids for sale of their rights in the said properties on the basis of “as is where is” vide public notice published - bid of M/s Essa Associates was accepted being highest bidder - Fair Market Value of the right was ascertained by the assessee on the basis of highest bidder of the participants received by assessee, which was duly approved by Hon’ble Bombay High Court accepted and granted the approval - HELD THAT:- There is no doubt from the Public notice issued by the assessee for sale of the piece of the land and from MOI that other documentary evidence produced by the assessee that the was sufficient to indicate that the property was under various encumbrances and the assessee could not be said to be the absolute marketable title of the said property. At the same time, it is also true that the said documentary evidence read with the MOI entered into by the assessee with M/s. Essa Associate that the assessee was still holding certain rights in the property and the same constituting capital asset. Moreover, the MOI was duly approved by Hon’ble Bombay High Court in its order dated 01.10.2004. The value adopted for the purpose of payment of stamp duty is not disputed by the assessee. The assessing officer has not brought on record that the property under sale was not was under various encumbrances and the assessee was having the absolute marketable title of the said property. No material is brought on record by assessing officer that the assessee has received much more consideration than shown in the MOI. AO treated the stamp valuation rate as the value of consideration, dispite the facts that the assessee throughout the proceedings contended that the assessee was neither having possessing of the impugned piece of land nor having marketable title. The assessee offered the said piece of land on the basis ‘as is where is’. These vital facts were ignored by the lower authorities. As relying on KP VARGHESE [1981 (9) TMI 1 - SUPREME COURT] and KHOOBSURAT RESORTS PVT. LTD. [2012 (11) TMI 590 - DELHI HIGH COURT] when the land under sale was having encumbrances the adoption of stamp valuation as a sale consideration by applying the provisions of section 50C was not justified by assessing officer, in absence of any evidence that the sale consideration was more than the value shown in the MOI. Therefore, we direct the assessing officer to work out the capital gain on the basis of consideration shown by the assessee. Addition under the head ‘income from other sources’ - amounts distributed in the hands of beneficiary have been taxed at the hand of assessee, though it has been offered to tax in their individual return - HELD THAT:- CIT(A) has recorded that the assessee failed to established the shares of the various beneficiary on the basis of trust deed and their return of income to substantiate that the sums received from the assessee have been offered to tax by those individual. Considering the contention of both the parties this issue is restored to the file of assessing officer to verify the fact and grant relief to the assessee in accordance with law. Needless to direct that the assessing officer shall grant opportunity to the assessee for filing relevant documentary evidences to substantiate its contention - thus ground of appeal is allowed for statistical purpose.

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• 2019 (3) TMI 1454
  Revision u/s 263 by CIT - three ground, deduction of 80IA on sale of industrial park, non disallowance u/s 14A and non examination of domestic transfer price on sale of undertaking to subsidiary - HELD THAT:- It cannot be held that under the law the profit earned on sale of industrial park is not eligible for deduction u/s 80 IA Provisions of section 80IA (8) provides that, where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee or to any eligible business, then consideration for such transfer should correspond to the market value of such goods as on the date of transfer. It provides that the profits and gains from transfer or sale of the eligible business should be computed as if the transfer has been made at market value of such goods or services. This provision itself clarifies that profits from transfer of the eligible business is a business income eligible for deduction u/s 80 IA. In fact, this provision endorses our view that the profits from transfer of eligible business are eligible for deduction u/s 80 IA. One very important fact in this case is that, assessee has shown entire profit from sale of industrial profit as business income and once such business income has been accepted and no adverse comment has been given by Ld. CIT, then such a profit arising from sale of industrial park ostensibly falls within section 80 IA (4). Hence, there was no legal infirmity by Assessing Officer in allowing the claim of deduction on the profits earned from the sale of industrial park. In so far as the Ld. CIT observing that Assessing Officer has failed to examine applicability of section 80 IA(8) it is seen that it is not in dispute that the Assessing Officer during the course of assessment proceedings has examined the Approved Valuer s Report who has given a detailed report of the market value of the transfer of industrial park and also transfer pricing report by the accountant has also been furnished by the assessee. Thus, when transfer price is consonance with the fair market price then conditions of this section gets satisfied. Hence applicability of section 80IA (8) has been examined by the Assessing Officer Applicability of provision of section 14A - HELD THAT:- If AO is satisfied or having regard to the accounts no expenditure can be attributed then no disallowance is called for. Nothing has been brought on record by Ld. CIT that satisfaction could have been arrived having regard to the accounts maintained by the assessee that some disallowance is called for. There is no whisper by the Ld. CIT as to why disallowance u/s 14 A was called for on the facts of the case. The disallowance under section 14A is not automatic whenever there is any kind of exempt income. It has to be seen with regard to nature of expenses debited and whether any expenditure can be calculated. Thus, simple observation that AO should have examine the applicability of 14A without any specific finding or examination of facts and material on record, Ld. CIT cannot set aside the assessment. The revisionary jurisdiction u/s 263 cannot be exercised simply to make roving and fishing enquiry. Here in this case, we have already found that Assessing Officer has made proper enquiries and verification after calling for all the records and after applying his mind has allowed the deduction in accordance with law. The Ld. CIT now cannot sit on the judgment of the Assessing Officer without pointing out any legal or factual infirmity or without carrying out his own enquiry. He simply cannot set aside the order of the Assessing Officer stating that no proper enquiry has been done - Decided in favour of assessee

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• 2019 (3) TMI 1453
  Condonation of delay of 661 days - an inadvertent omission on the part of a member of the staff - HELD THAT:- The coordinate Bench has condoned the delay of 658 days in the assessee’s case for the A.Y. 2003-04, HATHWAY C-NET PRIVATE LIMITED VERSUS THE TAX RECOVERY OFFICER (TDS) -1, MUMBAI [2018 (2) TMI 179 - ITAT MUMBAI] and the reasons for delay in the present case are identical, hence, respectfully following the findings of the coordinate Bench, we condone the delay of 661 days in filing the present appeal in the interest of justice and allowed the Ld. counsel for the assessee to argue its case on merits. Order u/s 201 (1) and 201(IA) being barred by limitation - non deduction of TDS u/s 194C - Consequences of failure to deduct or pay - HELD THAT:- In the present case, the Tax Recovery Officer passed the order u/s 201 and 201 (IA) on 28.03.2011, which is beyond the period of one year from the end of the financial year in which the proceedings were initiated as this appeal pertains to the assessment year 2001-02. We further notice that the coordinate Bench has quashed the impugned order by following the judgment of Director of Income Tax (International taxation) vs. Mahindra and Mahindra Ltd. [2014 (7) TMI 265 - BOMBAY HIGH COURT]. Since, the facts of the case pertaining to the A.Y. 2003-04 are identical to the facts of the present case and the coordinate Bench has decided the identical issue in favour of the assessee, we respectfully following the decision of the coordinate Bench allow the legal ground raised by the assessee and quash the order passed by the AO u/s 201 (1) and 201 (IA) of the Act. - Decided in favour of assessee.

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• 2019 (3) TMI 1410
  Difference in method of accounting adopted - correct Method of accounting - one method of accounting for the income tax purpose to attract lesser tax and other method to show higher income in its balance sheet and profit and loss statement - Equated monthly instalment method to account the finance charges for the income tax purposes only - assessee justification in following the sum of digits Method to account the finance charges to arrive at balance sheet and profit and loss statements only - HELD THAT:- Assessee has been following the same method of E.M.I for bifurcation of its income into Principal and interest component for all these years in question. The S.O.D method gives higher finance charges (interest) for the initial years and lower finance charges (interest) for the later years, i.e, the Sum of Digits is sum total of the number of years e.g. If the Hire Purchase Agreement is for 10 years, the SOD is 55 (1+2+3+4+5+6+7+8+9+10 = 55). Therefore, total financial charges for the first year would be 10/55, for the second year 9/55, for third year 8/55 and so forth which would clearly give higher financial charges for interest taxable in the first year. This SOD method even though adopted by the Assessee in its Book of Accounts on the basis of Guidelines issued by the Institute of Chartered Accountants of India was not adopted in the Returns of Income filed by it which consistently adopted EMI method for taxability of interest income all these years. Since, for the previous assessment years, this Court has already approved such bifurcation of income and has held that interest income (Finance charges) on consistently adopted basis of E.M.I. would be taxable in the hands of the Assessee, the mere change of Accounting method in its Book of Accounts on the basis of S.O.D. does not alter the position in the tax in the hands of the assessee. since in the case of the same Assessee, the Coordinate Bench of this Court [2012 (7) TMI 590 - MADRAS HIGH COURT] has upheld the taxability with regard to interest income on EMI method, which has been consistently followed, there is no reason to take a different view in the matter for the present Assessment years. - decided against revenue

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• Customs

• 2019 (3) TMI 1452
  Rrelease of consignments - Toor whole - issuance of ‘Detention Certificate’ for waiver of Demurrage and Container Detention Charges in terms of Handling of Cargo in Customs Areas Regulations 2009 - Held that:- The identical issue as arising in these Writ Petitions has been considered in the case of M/s.Royal Impex V. Commissioner of Customs [2019 (3) TMI 312 - MADRAS HIGH COURT], where it was held that Prohibition promulgated by a statutory order in terms of Section 5 read with the relevant provisions of the policy decision in the light of Sub-section (2) of Section 3 of the 1992 Act can only have a prospective effect. By reason of a policy, a vested or accrued right cannot be taken away. Such a right, therefore, cannot a fortiori be taken away by an amendment thereof. The petitioner will remit the entire duty component of the consignments imported by them in cases were such duty is leviable as per paragraph 15(iii) above along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignments shall be released forthwith - The petitioner has also prayed for waiver of demurrage charges incurred in respect of the detained consignments. In the light of Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off.

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• 2019 (3) TMI 1451
  Release of consignments - section 110A of CA - import of gift and stationery items - seizure of goods - parallel set of invoices - scope of the term provisional release and provisional assessment of goods - Held that:- The Division Bench of the Delhi High Court in the case of Bhaiya Fibres Ltd., [2007 (12) TMI 330 - DELHI HIGH COURT] had arrived at the conclusion that there was no distinction between provisional release and provisional assessment of goods. This was since provisional release of goods, in terms of Section 110A of the Customs Act, 1962, was also based on the rate adopted for the provisional assessment of goods and in the case of valuation, the worksheet prepared by the Department as against that prepared by the petitioner. The facts of the present case do not warrant deviation from the consistent view that has been taken, not only by the Benches of this Court, but also by the decisions arrived at by the Delhi High Court in the case of Navshakti Industries [2010 (5) TMI 592 - DELHI HIGH COURT]. In the present case, the items on hand constitute stationery and gift items and decorations to be used in children s parties. The Circular relied on by the revenue is one that would apply if the proceedings for adjudication had been completed and the liability quantified. This is not so in the present case where proceedings for adjudication are yet to be initiated - In the facts and circumstances of the present case, it would suffice that the petitioner remit 30% of the differential duty and execute a personal bond for the remaining 70%, upon remittance and furnishing of which, the goods shall be released forthwith. On the aspect of under invoicing, the Department is at liberty to initiate proceedings for adjudication that will be concluded after hearing the petitioner and in accordance with law. Since the goods detained constitute stationery, gift and decorations for children s parties, and in the light of Regulation 6(l) of the Handling of Cargos in Customs Area Regulations, 1963, demurrage and detention charges for the entire period form date of detention to the date of clearance stand waived. Petition disposed off.

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• 2019 (3) TMI 1450
  Advance Authorisation Scheme - non-fulfillment of export obligation - import of duty free material against advance licence for manufacture of goods for export or deemed export - It was alleged that the materials imported duty free but which were in excess of the actual requirement were not exempted from payment of duty and were required to suffer custom duty - Held that:- It is not in dispute that the appellant assessee had procured the goods under Advance authorisations as per SION Norms. The imported material was used/ consumed in manufacture of export goods and the export obligations against the Advance authorisations stands fulfilled. The SION Norms has been promulgated in order to ward off the disputes pertaining to consumption of inputs. Once the norms are fixed, it is imperative for the assessee to follow such norms. If the assessee is not able to produce the goods as per the said norms and fails to fulfil the export obligation, he is liable to pay the customs duty covered by the advance authorisations. Once the SION Norms are fixed and the manufacturer has manufactured goods under the said norms and the export obligation stands fulfilled the revenue cannot demand duty on the ground that the actual consumption was less than SION. If such practice is adopted, it will lead to SION becoming redundant and it will open Pandora box of disputes. The SION Norms has been fixed after taking into consideration all the relevant factors and the overlooking of the same is not permissible. The whole purpose of fixing the SION norms is to avoid physical check of actual consumption of inputs in the manufacture of final products. For that very reason there is no mechanism provided for check or audit of actual consumption of imported goods if the same is covered under the SION norms. Once the importation of goods was permitted in terms of SION Norms and the export obligation stands fulfilled, the appellant were entitled to use the remaining goods in manufacture of goods which were cleared into DTA. We also find that the appellant have not suppressed any fact and the utilisation of the imported material and manufacture of finished goods stands recorded in their records as well as shown in monthly returns - the demands raised against the appellant are also hit by limitation of time. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1449
  Duty free benefits under a transferable duty free import authorization (DFIA) - Export of Biscuits as per Standard Input/output Norms (SION E-5) for the import of Wallnuts in Shell - Held that:- There is no dispute that goods exported are Biscuits and are covered by SION E-5. The said SION E-5 inter alia permit duty free import of relevant food flavor/flavouring agent/flavor improvers (Sl No. 6) and dietary fibre (Sl No.11). The Ld. Advocate has produced IIT Certificate and technical reference books and several wrappers to show that Walnuts are indeed used as relevant food flavor/flavouring agent/flavor improvers and dietary fibre in biscuits manufacturing. We agree with the contentions of the Ld. Counsel in this regard - The usability of Walnuts in Biscuits is beyond doubt. It is settled law that it would not be open to any one to take contrary stand, unless and until such technical opinion is displaced by specific and cogent evidence in the form of another technical opinion. As regards, the mismatching of ITC (HS) Numbers, we find that the Hon.Tribunal (Mumbai) in the case of USMS Saffron Co [2015 (11) TMI 820 - CESTAT MUMBAI] has held that the ITC (HS) number is not a criteria for extending DFIA benefit under custom notification No. 98/2009. We further find that neither SION nor the relevant notification specifies that relevance of ITC (HS) numbers for claiming DFIA benefits. We therefore accept the contentions of Ld. Counsel for the appellant in this regard. Thus, the imported goods walnut in shell is covered under the description of relevant food flavor/flavouring agent/flavor improvers and dietary fibre as claimed by the appellant. The denial of exemption is not justified - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1448
  Penalty - Smuggling of the prohibited goods out of India - Ketamine Hydrochloride - requirement of No Objection Certificate - Held that:- N/N. 67/2007 mentions that no objection certificate is to be obtained for Ketamine. The notification does not say that No Objection Certificate is required for Ketamine Hydrochloride - The ld. counsel has also produced Notification dated 10.2.2011 in F. No. N/11012/4/2010-NC-II. In the said notification, Ketamine has been notified as psychotropic substance. The department has not been able to put forward that Ketamine Hydrochloride has been notified vide notification 67/2007. The appellant was arrested while he was standing near Mahalakshmi Tower Lodge at Kovilpatti by the DRI officers. The shipping bill was not filed by the appellant. The appellant is neither the owner nor the exporter of the goods also. There is no direct evidence that the appellant had handled or had rendered any positive act for the smuggling of goods out of India. The entire evidence for imposing penalty upon the appellant is based on statements. The penalty imposed cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1447
  Under Valuation of imported goods - Mis-declaration of imported goods - import of of Cubic Zirconia (cut and polished) - the appellant is engaged in importation of Cubic Zirconia (cut and polished) by mis-declaring the quality by declaring the superior quality as inferior quality before the assessment by the Customs at Air Cargo Complex, Jaipur - retraction of statements - Held that:- It is on record that the proprietor of the appellant has accepted the mis-declaration in their various statements and also paid a substantial portion of demand prior to adjudication by the lower adjudicating authority. Although the various case law has been submitted by the ld. Advocate on the issue of undervaluation and reopening of the assessed Bill of Entry on which duty has been finally paid and goods have been cleared from the Customs area - the record has been obtained from the computer of the appellant company and the same was never disputed by their proprietor. The various statements which were tendered under Section 108 of Customs Act were never ever retracted. In the case at hand duty has been demanded under Rule 4(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as indicates that Department is adopting two different methodologies of valuation in the same proceedings emanating from same search and demand for the previous period - in relation to same proceedings, two different methods have been adopted and if in the decision cited supra in relation to seized goods, residual method has been adopted and upheld, then the same cannot have any precedent value for the proceedings in this case as Valuation Method on the basis of which Department proceeds in the instant impugned Show Cause Notice is different being based on Rule 4 of identical goods. Since branding, grading on the basis of quality and packing are processes which are carried out in India, even as per the Show Cause Notice, therefore, the goods as were cleared by the Customs after proper assessment in normal packing cannot be termed to be the same as were being sold by them or imported by them in vacuum packing, after branding and grading. We accordingly held that in the absence of corroboration and cogent evidence, the Department s case is based upon assumption and presumption, that the goods in normal packing were having the same value as the branded and vacuumed packed goods, which in any case cannot be a pragmatic value in commercial world. It is not uncommon to do labour and processing on various imported goods in India as the same compare to India is normally expensive in overseas market. We setting aside of the sustained portion of the demand also. On the same basis, as Ld. Commissioner (Appeals) has held for portion of demand pertaining to earlier period in the impugned Show Cause Notice. - decided in favor of appellant.

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• 2019 (3) TMI 1446
  Condonation of delay of 11 days in filing the appeal - Held that:- The Order-in-Original dated 12.06.2017 was received by the assessee on 15.06.2017 and accordingly, they were required to file the appeal before the lower appellate authority on or before 16.08.2017. However, the appeal was filed only on 08.09.2017 i.e. after a delay of 23 days - though the appeal has been filed beyond the statutory period of 60 days but the same has been filed within the condonable period of thirty days. The delay in filing the appeal before the lower appellate authroity is condoned. It would be appropriate to remit the matter back to the ld.Commissioner (Appeals) to decide the appeal on merit.

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• 2019 (3) TMI 1445
  Goods imported from South Asian Association for Regional Co-operation [SAARC] countries - Benefit of N/N. 105/99-Cus. - benefit of notification denied on the ground of non-fulfillment of Origin criteria - Held that:- Division Bench of the High Court of Kerala, in the case of Director-General of Foreign Trade, New Delhi Vs M/s. Mustafa Traders [2016 (9) TMI 669 - KERALA HIGH COURT], has reiterated that DGFT had jurisdiction to issue notification under section 5 of the FTDR Act. Percentage content in respect of non-origin material - percentage raised to 70% by Notification No.73/1995 (NT), dated 07.12.1995 - Held that:- As per II (b)(3) of the Schedule to the Customs Notification No73/1995 (NT), dated 07.12.1995 when the importer is claiming Special Origin Criteria under para 10 of the said Schedule in the box 8 of the Country of Origin Certificate letter D should be entered. Whereas, the Country of Origin Certificate submitted by the importer shows Origin Criteria as B 65.83%. Therefore, the subject goods are not fulfilling the Origin Criteria as prescribed in the said notification and hence not eligible for the benefit of Customs Notification No.105/1999-Cus. Appeal dismissed - decided against appellant.

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• 2019 (3) TMI 1444
  Export of prohibited item - allegation against the appellant is that they have exported rice, pulses and semolina in the guise of non-prohibited items - DGFT N/N. 33/2007, dated 08.10.2007, No.93/2008, dated 04.04.2008 and 15/2006, dated 27.06.2006 as amended - principles of natural justice - Held that:- The foremost point raised by the appellant is that they have not been supplied with copy of the actual invoices submitted by them to the department at the time of export. It is alleged by the department that the invoices submitted at the time of export of prohibited items but appellant has actually exported such items. For this, the proforma invoices retrieved from computer is relied. Thus, it is the case of department that the actual invoices were altered - In the first round of litigation, the appellant had put forward their grievance that they were not supplied the relied upon documents and, therefore, were not able to defend the case. Inspite of specific direction by Tribunal and repeated requests on the part of the appellant, it is seen that the department has not been able to give copies of the relied upon documents. This is clear from the letter issued by the department dated 23.10.2017. When the show-cause notice is issued proposing to impose such huge penalties, the department ought to have taken sufficient care to supply all relied upon documents to the appellants - The adjudication conducted without supply of entire relied upon documents is against principles of natural justice and vitiated. Inspite of the order of the Tribunal the department has given some screen shots only and have not supplied the copy of documents. For this reason itself, the confiscation and penalty cannot sustain. Admissibility of evidences - Held that:- Section 138C of the Customs Act deals with admissibility of micro-film, facsimile, copies of documents and computer printouts, as documents and evidence. The said section provides for certain requirements to be complied to make the statement from the computer to be admissible in evidence. In the present case, there is no certificate produced as required under sub-section (4) of section 138C. The department is founded on suspicion and assumptions and not supported by any material or evidence. So also, the non-supply of documents to the appellant inspite of the direction given in the remand order by the Tribunal has seriously vitiated the proceedings - the department has failed to prove the allegations raised in the show-cause notice - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1443
  Classification of imported goods - Shell Bangles, Plastic Toys and Kitchen items - re-classification of shell bangles under CTH 9601 9040 and toys of plastics under CTH 9503 0030 - prohibited goods or not - rejection of declared value - Held that:- There is no finding on the legal submissions of the assessee nor is there any discussion as to the correctness or otherwise of such submissions and we have to say that the findings arrived at and upheld by the First Appellate Authority, are incoherent as far as the facts are concerned. At this juncture, it is very useful to refer to one of the pleas of the assessee that it had sought for re-export of the goods back to its supplier on account of mis-match and apparently the same is not at all discussed by the lower authorities - also, there is no justification given by the adjudicating authority in re-determining the value at almost ten times the declared value nor is there any working given by the adjudicating authority before arriving at his value. Further, the adjudicating authority has also not discussed about the prevailing market value of the goods involved before imposing redemption fine nor has he discussed about applicability of Section 125 since, admittedly, the Revenue has not made out a case that the goods sought to be imported are prohibited under the Customs Act or under any other law for the time being in force and therefore the redemption fine appears to be disproportionate. Matter remanded back to the file of the adjudicating authority who shall pass a denovo adjudication order, after considering the explanations as also the various case laws relied upon up the assessee - appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2019 (3) TMI 1442
  Corporate Insolvency Resolution Process - pre-existing dispute in regard to the quality of goods supplied by the Operational Creditor to the Corporate Debtor as alleged - Application as barred by the Laws of Limitation as alleged - HELD THAT:- There are proofs of delivery of invoices in the case in hand. Corporate Debtor has failed in proving a pre-existing dispute in regard to the quality of goods and rate of goods evidently delivered to the Corporate Debtor in the light of the proposition laid down in the above cited decisions. The dispute raised by way of issuing reply notice is not at all a pre-existing dispute. It cannot be ruled out that the dispute raised in the case in hand is a dispute to stage-manage false evidence so as to defeat the claim of the Operational Creditor. This point is answered accordingly. Period of limitation - The Application seen filed after 31/2years of the starting of period of limitation. There is no acknowledgment in writing as laid down under Section 18 of the Limitation Act, 1963 in the case in hand. Applying Section 19 of the Limitation Act, 1963, the period of limitation in the case in hand would run from the payment of part consideration of the amount due i.e. 01-07-2014. It is significant to note here that the Code has been amended by adding Section 238A to Section 238 of the Code by applying the provisions of the Limitation Act, 1963 to the proceedings or appeals before the Adjudicating Authority. That being so, no doubt the application in the case in hand has been filed beyond the period of limitation and therefore, even if the Corporate Debtor has failed in establishing a pre-existing dispute, the application is not maintainable as per the law of limitation. This point is answered accordingly. The application filed under section 9 of I&B Code, is complete, however, the Applicant failed to prove that the application is maintainable as per the provisions of Limitation Act,1963. The claim of the Operational Creditor/Applicant is found barred by Law of Limitation. Therefore, the application is liable to be dismissed.

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• PMLA

• 2019 (3) TMI 1441
  Retention of property for the purpose of adjudication under section 8 of PMLA - number of days retention can be continued - Non satisfying the statutory requirement enshrined in provisions of section 20 of PMLA which mandates that the officer authorised by the Director is under an obligation to record the ‘reason to believe’ in writing as to why the seized property is to be retained for the purposes of adjudication under section 8 - HELD THAT:- In the present case, the statutory obligations laid down in section 20 (1), 20(2), 20 (4) and 21(4) of PMLA are not at all complied with and a deliberate attempt has been made to retain the seized property & records without recording any ‘reason to believe’ qua the properties and records of the Appellant. In view of thereof, the appellant submitted that the order passed by the learned Adjudicating Authority is liable to be quashed and set aside. Reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property within the meaning of sub-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable. The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days. In the instant case, the search of the residential premises was conducted on 31.11.2017 and the Adjudicating Authority has confirmed the OA on 22.05.2018. It is admitted position that no prosecution complaint has been filed against the Appellant herein. The properties and records of the Appellant were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already elapsed. Thus, we allow the appeal. We direct the respondent to return the properties retained by the respondent as the prescribed period of 90 days under section 8(3)(a) has already been expired. The seizure lapses after the said period if no prosecution complaint is filed.

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• Service Tax

• 2019 (3) TMI 1440
  Commercial Training or Coaching Service - benefit of Para 2.2.2 and 2.2.3 of the CBEC Circular No.59/8/2003 dated 20.06.2003 - Held that:- The assessee herein is also imparting education to obtain recognised degrees/diplomas from Universities and that apart the students are also being provided training to appear for competitive examinations, entrance tests, etc. It is not necessary that the respondent-firm should issue a certificate, diploma or degree. The students given coaching by the appellant are issued with certificates, diplomas and degrees, as issued by the Universities; identical to regular colleges and parallel colleges also. The students are being prepared for courses and are imparted training to appear for competitive examinations as well. The decision of this Court in Malappuram District Parallel College Association [2005 (8) TMI 336 - HIGH COURT OF KERALA] would squarely apply to the respondent-firm, since they are imparting coaching for courses leading to recognised certificates, diplomas and degrees issued by lawfully constituted academic bodies. Hence when such institutes also carry on training schedules to prepare students for competitive exams, categorised as commercial coaching ; as per the clarification issued by the CBCE, they stand exempted. Franchisee services provided by the respondent has been excluded by the Adjudicating Authority as well as the Tribunal from exemption. It is only the service tax pertaining to commercial training or coaching services that the exemption is extended - there is no infirmity, whatsoever, in the impugned order of the Tribunal and the appeal is only to be dismissed answering the question framed in favour of the respondent and against the department-appellant.

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• 2019 (3) TMI 1439
  Works contract service - Non/Short payment of service tax - various contracts executed by him under works contract services - rendering of service to Religious institutions - extended period of limitation - Held that:- In the case in hand, the issue of rendering of services to religious institutions, the period needs bifurcated pre and post 01.07.2012. There is no dispute as to the fact that appellant had constructed guest houses for the temples at Srisailam and Kanipakam. The said work order which is attached to the appeal memoranda indicates that the construction is for VIP guest houses at the temples. The adjudicating authority has come to a conclusion that the said services rendered by the appellant to the religious institutions claiming exemption is based on the nature of organisation for which construction services have been provided or the use of the building or the civil structure constructed by them and also focussed wrongly on the non-profit motive of such organisation. For the period post 01.07.2012, Mega-exemption Notification No 25/2012-ST dated 20.06.2012 at Sl No 13 (c) exempts the tax liability on a building owned by an entity registered under Section 12 AA of the Income Tax Act 1961 and meant predominantly for religious use by general public. This exemption clearly covers the case of the appellant post 01.07.2012 as it is undisputed that appellant is registered with the income tax authorities under Section 12AA as a charitable institutions for the period pre and post 01.07.2012. The exemption granted by Notification No 25/2012 ST (13) (c) would apply in full force. Accordingly, the demand of the service tax on the services rendered of works contract services to the religious institution does not survive and are liable to be set aside as we do so. Demand of service tax - buildings constructed for C-DAC, NFC and APHMHIDC - Held that:- The APHMHIDC has been stated to be engaged in creating infrastructure facilities of accommodation for medical institutions and quarters, and maintenance of hospital buildings, procurement and distribution of drugs, surgical and consumables and equipment and for storage of these items and that the said APHMHIDC is functioning as no profit and no loss basis. The said hand-out also specifically states that it is an enterprise of Govt of Andhra Pradesh. On perusal of the profile of NFC, it states that it has been established in the year 1971 as a major industrial unit of Department of Atomic Energy, Govt of India and the complex is responsible for supply of fuel and reactor core components for all the nuclear power reactors operating in India. The said NFC has been clearly indicated as a Unit of Department of Atomic energy, Govt of India. As regards the C-DAC, it is indicated in the profile of C-DAC that it is a premium R D organisation of the Ministry of Electronics and Information Technology (MEIT) for carrying out R D in IT, electronics, and associated areas - these buildings constructed by the appellant and the services rendered under works contract services are not taxable pre or post 01.07.2012. Service tax liability on the buildings constructed for ICFAI - Held that:- The issue is no more res integra as the Tribunal in the case of VIJ Construction Pvt Ltd Vs CCE New Delhi [2018 (4) TMI 598 - CESTAT NEW DELHI] was considering the very same issue of taxability of the services for construction of buildings for ICFAI and in paragraph No. 6 has held that in regard to campus for ICFAI University Dehradun, the buildings are for use of a recognised university for education and the same cannot be considered as commercial buildings. ICFAI University is having pan India presence, operating in various campuses, it has to be considered as an educational institution - the service tax liability on the construction of buildings for ICFAI Bangalore, Jaipur and Hyderabad for the period pre and post 01.07.2012 is unsustainable and liable to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1438
  100% EOU - Refund claim - export of services - SCN was issued only on the ground of non-submission of certain documents whereas the impugned order has been passed on the ground that the appellant has not registered in Bangalore for its Pune and Hyderabad Units - Scope of SCN - Held that:- The appellant filed refund claim pertaining to accumulated unutilized CENVAT credit which was initially objected to by the department for non-submission of certain documents. Finally, Asst. Commissioner rejected the said refund against which the appellant filed appeal before the Commissioner (A) who allowed the appeal and remanded the matter back to the original authority and the original authority in de novo proceedings has partially allowed the refund claim and partially rejected the refund only on the ground that the appellant s two units situated at Hyderabad and Pune are not registered in Bangalore, therefore, refund claim filed in Bangalore is not maintainable on account of jurisdiction. Further, after the centralized registration, any refund claim pertaining to the appellant will lie only in Bangalore because all the records are available at Bangalore and there is a centralized accounting system being followed at Bangalore. There is no force in the contention of the learned AR saying that the records pertaining to Pune and Hyderabad are available with the said jurisdictional authorities alone, because the appellant along with refund application has filed all the documents in support of the refund claim but both the authorities without examining the record have rejected the refund claim merely on the ground of territorial jurisdiction, which according to me is not tenable under law; that too once the appellant has obtained centralized registration and has filed the refund claim after obtaining the centralized registration. The grounds on which refund has been rejected is not sustainable in law - case remanded to the original authority for examination and verification of the documents pertaining to refund and thereafter, grant refund in accordance with law - appeal allowed by way of remand.

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• 2019 (3) TMI 1437
  Classification of services - assessee was providing services to their clients M/s Sagent Pharmaceuticals Inc., USA - whether classified under Scientific and Technical Consultancy Service or otherwise or technical testing and analysis service? - Held that:- The nature of activities undertaken by the appellant is undoubtedly much more than mere testing and analysis. It comprises a variety of activities starting from the development of the product suitable for the market based on API to conducting tests and turnover information to their clients for further use. These activities cannot be called mere ‘technical testing and analysis’ but fall under ‘Scientific and Technical Consultancy’ Service - On an identical case, in the case of Midas Care Pharmaceuticals Pvt. Ltd. [2014 (8) TMI 743 - CESTAT MUMBAI], the coordinate Bench held that the nature of activity for development of a pharmaceutical product testing etc. falls under the category scientific and technical consultancy service - the services rendered by the appellant in this case have to be classified as ‘Scientific and Technical Consultancy Services’. CENVAT Credit - common input services used both in dutiable as well as exempt goods - non-maintenance of separate records - Appellant have been reversing proportionate amount of credit attributable to exempted goods as per the formula prescribed in Rule 6(3A)(b)(iii) of CENVAT Credit Rules, 2004 - Held that:- This wrong availment of CENVAT credit needs to be reversed by the appellant and the demand on this ground made in the impugned order needs to be sustained - although the appellant has been filing the returns with the department, they are also expected to not violate any provisions of the Acts or Rules or orders made there under to avail excess CENVAT Credit and thereby evade duty. The ST-3 returns do not require the details of the calculation made as it is expected that the assessee does the calculation on their own correctly. In this case, where there is no ambiguity in the rule itself, the appellant has clearly violated the rule and availed the ineligible CENVAT Credit and therefore the same needs to be reversed for the entire period of demand. The demand of excess CENVAT Credit taken by the appellant under Rule 14 of CCR 2004 read with Section 73(1) of the Finance Act 1994 along with interest under section 75 as well as penalty under rule 15(3) of CCR 2004 needs to be upheld - appeal disposed off.

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• 2019 (3) TMI 1436
  Classification of services - Business Auxiliary Service or not - Supply of bedrolls to Indian Railways and IRCTC - time limitation - Held that:- It is the case of the Revenue that such supply of bed rolls amount to supplying services to Indian Railways and IRCTC and the same is chargeable to service tax under the head of business auxiliary services. At the stage of adjudication and first appeal, the appellant contested their tax liability on this head. Ld. Counsel for the appellant fairly submits that this issue has now been settled against them and therefore he is not contesting the same on merits. Therefore the appellant is liable to pay service tax on the supply of bed rolls under business auxiliary services. Cleaning of toilets and compartments - cleaning services or not - Held that:- The Principal Bench of Tribunal at Delhi has, in the case of R.K. Refreshments Enterprises Pvt. Ltd. and others [2018 (2) TMI 1412 - CESTAT NEW DELHI] held that the railway coaches or rolling stock of the railways meant for transport and cannot be considered as a commercial or industrial building or factory or plant or machinery. Therefore, the cleaning services rendered in the railway coaches are not covered by the taxing statute - railway coaches cannot be considered as commercial premises, being the rolling stock. If it had been the intention of the Legislature to cover even cleaning of railway coaches, busses, Air crafts, Ships etc., they would have been specifically covered. A taxing statute has to be strictly interpreted and if some one gets out of tax net because of the way the taxing statute has been drafted, this cannot be the remedied through a judicial/quasi judicial order - the appellant is not liable to pay service tax on the cleaning services. Outdoor catering services - Sale of food items and beverages in train and on platforms alongside the train - demand of service tax - Held that:- A similar case came up before Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-op Society Limited [2014 (4) TMI 407 - ALLAHABAD HIGH COURT] in which it has been held that services rendered by the assessee in the canteen or the principals is liable to be charged as service tax as outdoor catering service. - the present case is similar to this inasmuch as the assessee herein were supplying food items either cooked by them or supplied by IRCTC kitchen to various persons in a place which is known namely the railway coaches and railway platforms. Therefore, the ratio of the judgment of Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-op Society Limited squarely applies to the present case - the appellant is liable to pay service tax on supply of food items on outdoor catering services. Extended period of limitation - Held that:- The narration of facts in the show cause notice itself shows full cooperation of the assessee during investigation even though they had held a different view from the department that they are not liable to pay service tax. Under these circumstances, we find that no case, whatsoever, has been made in the show cause notice to invoke the extended period of limitation - Similarly the imposition of fine under section 78 on the same grounds in this show cause notice also does not sustain. Appeal disposed off.

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• 2019 (3) TMI 1435
  Classification of services - Management, Maintenance and Repair Services or not - Respondent were undertaking activity of Plantation of trees, shrubs etc, Horticulture cleaning daily of garden and removal foe laves and unwanted vegetation, application of farm yard manure, application of fertilizers, edging of lawn, flower beds and weeding regularly, plant protection by using suitable insecticides and pesticides, pruning of trees when required - period involved is before 01.07.2012 and post 01.07.2012. Held that:- The definition of management, maintenance or repair Services nowhere leads to the inference that the activity of the Respondent falls under the above description of service. The property involve should either be movable or immovable property. Section 3 of the Transfer of Property Act, 1882 defines immovable property which says that immovable property does not include standing timber, growing crops and grass. Admittedly the activity of the appellant does not fall under the above category and the nature of activity as given supra is very much different - there is no reason to classify the activity under the impugned heading. The term agriculture is of wide compass and it covers horticulture which in turn cover the gardening also. In case of Puran Singh M Verma Vs. CIT the Hon ble Gujarat High Court while interpreting the term agriculture income has held that if the basic operation such as cultivation of land weeding, watering, manuring etc are undertaken, the same would qualify under the term agriculture . In our view looking to the nature of activity performed by Respondent as described above since they have undertaken such operations hence their activity would fall under the definition of Horticulture . Thus, such activities undertaken by the Respondent would not fall under the definition of 'management, maintenance or repair service' - the activity undertaken by the Respondent since falling under the definition of 'Horticulture' which is part of agricultural activity only and not liable for any service tax - demand set aside - appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1434
  Rejection of VCES Scheme - rejection on the ground that the amount should have been paid after the enactment and payment before the date of enactment i.e., 10.5.2013 would take the amounts deposited by the appellant out of the scheme - Held that:- A similar issue came up before the Hon’ble High Court of Gujarat in the case of Sadguru Construction Co [2014 (5) TMI 219 - GUJARAT HIGH COURT]. The issue involved in that case was whether the amounts paid by the declarants under VCES before VCES came into statute by the Finance Act can be considered as amount paid towards VCES or otherwise. Their Lordships, after considering the entire scheme has held that the amounts paid before VCES came into existence can also be considered for as towards compliance of the declaration made. Appeal is allowed holding that VCES declarations made by the appellant be accepted.

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• 2019 (3) TMI 1433
  Imposition of penalty u/s 78 of FA - service tax with interest and penalty u/s 77 paid on being pointed out - no intent to evade - extended period of limitation - Held that:- The appellant has discharged the service tax of ₹ 36,69,976/- along with interest under Manpower Recruitment or Supply Agency Service and Business Auxiliary Service much before the issuance of the Show Cause Notice - Further, apart from a bald allegation that the appellants have suppressed facts with an intention to evade payment of service tax, there is no positive act of suppression brought forth by the Department so as to attract the ingredients of invocation of extended period of limitation - the imposition of penalty under Section 78 on the amounts under Manpower Recruitment or Supply Agency Service and Business Auxiliary Service are unwarranted and requires to be set aside. Time limitation in respect of the TDS amount - Held that:- No positive act of suppression has been adduced by the Department. Further, as per records, the appellant had not discharged the service tax on the TDS amount for the reason that the bills with respect to this amount were pending for more than five years. Taking all these facts into consideration, the demand of service tax on the TDS amount is time-barred - The demand under this category is therefore set aside on the ground of limitation. The impugned Order is modified to the extent of setting aside the penalty with respect to Manpower Recruitment or Supply Agency Service and Business Auxiliary Service - demand for non-inclusion of TDS amount is set aside on the ground of limitation - appeal allowed in part.

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• 2019 (3) TMI 1432
  Imposition of penalties - service tax collected but failure to remit the same to the Government - suppression of facts or not - Held that:- Other than the allegation that the appellants collected service tax and failed to remit the same to the Government, there is no positive act of suppression alleged in the Show Cause Notice and established by the Department - Various courts have held that the word “suppression” is qualified by the word “wilful” and therefore, there should be some positive act of suppression with an intention to evade payment of service tax. Mere collection and delay to remit to the Government cannot be considered as an act of suppression. The Hon’ble jurisdictional High Court in the case of C.S.T., Chennai Vs. M/s. Lawson Travel and Tours (I) Pvt. Ltd. [2015 (1) TMI 232 - MADRAS HIGH COURT] held that when the assessee faced financial crisis due to criminal breach of trust committed by their sub-agent and thereafter paid the service tax voluntarily, the penalties imposed should have been rightly set aside by invoking Section 80 of the Act. The penalty imposed under Section 78 ibid is unwarranted and requires to be set aside - impugned Order is modified to the extent of setting aside the penalty imposed under Section 78 ibid only without disturbing the demand of service tax, interest or the penalty imposed under Section 77 ibid - appeal allowed in part.

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• 2019 (3) TMI 1431
  Renting of Immovable Property Service - notional interest accrued on advance amount received - Held that:- The issue decided in favor of appellant in the case of M/S PHOENIX INTERNATIONAL LTD. VERSUS THE COMMISSIONER, CENTRAL EXCISE & SERVICE TAX, NOIDA [2018 (12) TMI 256 - CESTAT ALLAHABAD], where it was held that there was no reason to add notional interest in the monthly rent for the purpose of assessment of service tax - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1430
  Reverse charge mechanism - Security Agency Services - N/N. 30/2012-ST, dated 20.06.2012 - it was alleged that the appellants are liable to discharge 100% of the service tax without opting for reverse charge mechanism - Held that:- The appellants, who are the service providers have discharged 25% of the service tax, whereas, the service recipient has discharged and paid to the Government 75% of the service tax on services provided. Thus, it is not disputed that the services rendered by appellants have suffered service tax. Merely for the erroneous manner of discharging the service tax by opting for the benefit of N/N. 30/2012-ST, dated 20.06.2012 and discharging it to the Government under reverse charge mechanism, the demand has been raised - Since the service tax on the entire services has been paid to the Government, a further demand on such services cannot sustain. Penalty - Held that:- The situation is contravention of the relevant provisions by wrongly availing the notification benefit. Taking this into consideration, the penalty of ₹ 6,105/- imposed is required to be sustained - The impugned order is, therefore, modified to the extent of setting aside the demand of service tax but upholding the penalty of ₹ 6,150/- imposed under section 76 of the Finance Act, 1994. Appeal allowed in part.

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• 2019 (3) TMI 1429
  Refund of service tax paid wrongly - Classification of services - mining services - service tax paid erroneously for the period 01.06.2007 to 15.05.2008 - supply of tangible goods service - Revenue have argued that the activity carried out by Aban was not merely post-production activity and that the same would require to be brought under the fold of “mining service” and that service tax was therefore correctly paid by Aban - time limitation - Held that:- The expert opinion had been produced by the respondent from independent sources, namely, from three Professors of the Indian School of Mines, Department of Petroleum Engineering, Dhanbad, wherein inter alia, it had been opined that the impugned floating production system is not capable of carrying out any drilling or work-over operations; that they are exclusively used only for post-production operations; therefore activity of the contractor is only post-mining. In the Grounds of Appeal, the Revenue have contended that the said technical opinion is not acceptable and that the activity cannot be called post-production activity. However, no evidence or technical reasoning has been put forth by Revenue to support their non-acceptance of the expert opinion produced by the respondent. Nor has the department come forth with any counter expert opinion from another independent and credible authority. Indubitably, the Indian School of Mines, Dhanbad is a National Institute of repute, and, independent opinion given by the three Professors of the Department of Petroleum Engineering of that Institute deserves to be given respect and credibility, unless that opinion is contradicted by another expert authority of equal standing, which is not the case here - there is no infirmity in the LAA accepting the expert opinion submitted by the respondent to assist in his conclusions that the activity of supply of floating rigs by Aban would be covered under the category of “supply of tangible goods service” and that therefore there is no liability to pay service tax for the said supply of floating rigs during the disputed period. The certificates issued by Aban and by CPCL as also the agreement between CPCL and the respondent, the invoices issued by respondents to CPCL, which have been submitted by the Ld. Counsel in the course of arguments all serve to indicate that unjust enrichment is not applicable in the instant case and that price fixation is beyond the control of respondent and further that the invoices raised by respondents to CPCL do not contain any element of service tax nor whether any separate invoices raised for services tax. This being so, no infirmity is found in the same conclusions arrived at by LAA in para 6.1 of the impugned order. Once the activity is found to be falling within the fold of supply of tangible goods service, the consequential finding would only be that said tax was collected without authority of law - the Ld. counsel for respondent is correct in his assertion on the case laws relied upon by him to argue that limitation period of one year is not applicable in the present case. Appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1428
  Levy of service tax - Supply of Tangible Goods Service - venting of refrigerators to their dealers/ distributors - Held that:- It is an admitted fact that the appellant-assessee have delivered the refrigerator to the distributor dealer. Such dealer/ distributor is in effective control of the refrigerator post delivery. The appellant only receives an annual rent and on such a rent admittedly appellant have paid VAT/Sales Tax - the appellant is not liable to pay service tax on this activity under the category SOTG. Levy of service tax - reimbursement of advertisement expenses and other sales promotion expenses from their principal Coco-Cola Co. Ltd - Held that:- There is no element of receipt of any found toward service. Further, the appellant is not a service provider to Coca-Cola Company Ltd., they are working on principal to principal basis - decision of Tribunal in the case of Narmada Drinks (P) Ltd. Vs Commissioner of Central Excise, Raipur [2017 (3) TMI 1106 - CESTAT NEW DELHI] followed - the appellant is not liable to pay service tax on reimbursement of such expenses from Coca-Cola Company Limited. Levy of Service tax - Bundle Holding Charges under the category SOTG - Held that:- As it is true that bottles and carets are not capital goods or equipment or appliance, accordingly, no such levy of service tax is possible on the amount of penalty recovered by the appellant-assessee towards over keeping/ or detaining of the bottles and carets by their distributors - Further the receipt under this head is not for providing any service but a levy by way of panel charges on the distributors to encourage them to return the bottles and carets expeditiously back to the appellant for re-use - demand set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (3) TMI 1427
  Area based exemption - Liability towards National Calamity Contingent Duty (NCCD), Education Cess and Secondary Higher Education Cess - manufacturing establishment which is exempted from payment of Central Excise Duty - appellant was apparently paying an automobile cess, but the NCCD, Education Cess and Secondary Higher Education Cess were not being paid - Section 136 of the Finance Act, 2001. Held that:- Sections 91 93 of the Finance Act, 2004 introduced the Education Cess as a duty of excise calculated on the aggregate of all duties of excise. Sections 136 138 of the Finance Act of 2007 similarly imposed Secondary Higher Education Cess, on the same pattern as the Education Cess - It is relevant to note that in terms of the show cause notice, the cesses were being so demanded on account of the fact that they had not been specifically exempted, even though they were a duty in the nature of excise, whether leviable on the product (NCCD) or on the amount of excise duty payable (Education Cess and Secondary Higher Education Cess). The Department took a legal stand that the exemption notification had to be construed strictly and that there had been wilful suppression of facts. The demand raised was also specified. There was an initiative for development of industries in the North-Eastern States of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh, etc. A Notification exempting goods from payment of excise duties was issued in respect of those States. Education Cess and Secondary Higher Education Cess, as imposed under the Finance Acts of 2004 and 2007, respectively were also sought to be levied on the appellant therein. The gravamen of the reasoning of this Court is that since these cesses are a surcharge levied and collected on the total value of the excise duty, and the excise duty itself is exempted, there cannot be any question of any recovery of these cesses, as the substratum does not exist. Not only that, this Court also took into account how the Department itself had viewed the situation regarding Education Cess and Secondary Higher Education Cess, which are payable as surcharge on the excise duty, once the excise duty is exempted. Levy of NCCD - Held that:- The exemption notifications, like the one in question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. The rationale for the same is well enunciated in Novopan India Ltd., Hyderabad v. CCE and Customs, Hyderabad, [1994 (9) TMI 67 - SUPREME COURT OF INDIA] apart from in other judicial pronouncements. In such cases, it is not as if the principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage, i.e., to determine whether the exemption is applicable to the assessee or not. Once such exemption is indeed found to be applicable to the assessee in question, a liberal approach is to be adopted by the Court in construing the language, such as to allow the benefit to be reaped by the beneficiary in question. When NCCD, at the time of collection, takes the character of a duty on the product, whatever may be the rationale behind it, it is also subject to the provisions relating to excise duty, applicable to it in the manner of collection as well as the obligation of the taxpayer to discharge the duty. Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification. The exemption notification also states that the exemption is from the whole of the duty of excise or additional duty of excise . Also the exemption itself is for a period of ten years from the date of commercial production of the unit - the appellant would not be liable to pay the NCCD. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1426
  Deemed credit - Interpretation of statute - N/N. 29/96-CE (N.T.), dated 03.09.1996 as amended by N/N. 28/98-CE (NT), dated 18.07.1998 - benefit of deemed credit of duty paid on the inputs used for manufacture of final products - manufacture of various kinds of fabrics - Held that:- In Hello Minerals Water (P) Ltd. [2004 (7) TMI 98 - ALLAHABAD HIGH COURT] referred to in Precot Meridian Ltd [2015 (11) TMI 323 - SUPREME COURT], the facts were that certain final products of Chapter 39 of the Schedule to the Central Excise Tariff Act were fully exempted from Central Excise Duty under Notification No.15/94-C.E., dated 01/03/1994. The condition for exemption was that no MODVAT Credit should be availed on the inputs used in manufacturing of these final products. The assessee had availed the credit on the inputs but reversed subsequently. The issue was whether reversal of credit after availment can satisfy the condition of nonavailment of credit under the exemption notification. When these findings are tested on the anvil of the law laid down in Hello Minerals Water (P) Ltd. and Precot Meridian Ltd, we are of the considered opinon that the Tribunal is well within its jursidction in regularizing the deemed credit under Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 as the benefit taken by the assessee under Rule 57H was paid back, i.e.: reversed. In the factual aspect of present case where there is no prohibition in the Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 from reversing the Credit availed on the input to avail the benefit under said Notification No.29/96-CE (N.T.), dated 03.09.1996 as amended by Notification No.28/98-CE (NT), dated 18.07.1998 and the law laid down Hello Minerals Water (P) Ltd. and Precot Meridian Ltd, we are of the considered opinion that the appellants are not benefitted by the law laid down in Dilip Kumar and Company and others [2018 (7) TMI 1826 - SUPREME COURT OF INDIA], where it was held that When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. Appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1425
  Maintainability of appeal - non-compliance with mandatory pre-deposit - section 35F of the Central Excise Act, 1944 - Held that:- Since the petitioner did not deposit the compulsory pre-deposit as required under section 35F of the Central Excise Act, 1944 (hereinafter referred to as „the Act‟), the appeal preferred by the petitioner was dismissed - Section 35F of the Act provides that the Appellate Tribunal shall not entertain any appeal against the decision or order passed by the Commissioner of Customs, Central Excise and Service Tax, unless the appellant has deposited seven and a half per cent of the duty and penalty as imposed. In the case of the petitioner, while filing the appeal before the Appellate Tribunal, the petitioner did not deposit the amount as required by Section 35F of the Act. Therefore, the learned Appellate Tribunal has not committed any error in dismissing the appeal. Petition dismissed.

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• 2019 (3) TMI 1423
  CENVAT Credit - capital goods - change in constitution of the company - invoice in the name of predecessor entity - period January 2014 to April 2014 - Held that:- This is a rather unusual case where the assessee lost the invoice of capital goods purchased in 2008. Thereafter, they changed the name and constitution of their company twice. Each time, on their request, the department has changed the name of their company in their Central Excise registration certificates, without changing the registration number - Since the name of the company has been changed, the invoice is in a different name and not in the name of the appellant; it was in their former name. There is nothing in the rules which disentitles an assessee to avail CENVAT Credit if they change their name and the invoice is in their former name. In fact, it is also not required for the invoice to be in the name of the assessee as long as the goods in question are received and used. In the case of mergers/acquisitions for instance, the assets and liabilities gets transferred to the successor entity while the invoices will be in the name of the predecessor entity. This itself would not be a ground to deny them CENVAT Credit. Similarly in case of job work, the inputs might have been used by the job worker but the invoice might have been raised in the name of the principal who purchased the goods, which also would not disentitle them to CENVAT Credit - there is no reason to deny the CENVAT Credit on the ground that the invoice is issued in the name of a different company. CENVAT Credit - second objection is that the CENVAT Credit has been taken after a gap of six years - Held that:- There is no limit of demand within which the capital goods credit can be taken or the time within which the goods should be put to use or the extent to which the capital goods must be used for manufacture of dutiable goods. Therefore, this ground also does not sustain. CENVAT Credit - duty paying documents - photocopy of the invoice - Rule 9 of CCR - Held that:- Rule 9 of CCR 2004 indicates that the documents on the strength of which CENVAT Credit can be taken, Rule 9 (a)(i)(I) indicates that an invoice issued by the manufacturer or a service provider for clearance of inputs for capital goods CENVAT Credit. In this case, the original invoice and the duplicate copy of the transporter invoice issued by M/s BHEL Bhopal is lost, hence the appellant could not avail the CENVAT Credit on a photocopy of the invoice duly certified by the supplier M/s BHEL, Bhopal. There is no evidence whatsoever on record that the goods in question were not received by the appellant or were not put to use. There is also no evidence on record to show that the appellant has already availed CENVAT Credit on the strength of the invoice and this is a duplication of credit - appellant was entitled to CENVAT Credit taken by them and the same is not required to be reversed. Time limitation - Held that:- The credit was taken in January 2014 to April 2014 and the audit was conducted the next month i.e. May 2014 during which this issue was pointed out as a discrepancy but the show cause notice was issued only on 29.06.2016 or beyond the normal period of limitation when the department was fully aware of the sequences of events - the entire demand is also hit by limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1422
  CENVAT credit - input services - fabrication and erection work - Industrial Construction Service or not - Held that:- The description of the work as per the purchase order clearly states that it is work order for mechanical work at Sinter Plant. Further, the service provider had admittedly paid service tax under the category of erection, commissioning and installation of equipment or machinery and the appellant has taken the credit under the concerned category - The nature of the service involved in the present case clearly falls within the definition of input service and has not been excluded from the amendment to the definition of input service. Time limitation - Held that:- The SCN which was issued on 22/04/2014 was also barred by limitation because the period involved is from September 2011 to August 2012 and audit report was submitted on 17/05/2012 and the show-cause notice was issued on the basis of the observation in the audit report. Further when the entire details regarding the transaction was recorded in the books of accounts, there cannot be any allegation of suppression of facts and further the same was verified by audit party - invoking of longer period of limitation is not tenable under law. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1421
  100% EOU - clandestine removal - terry towels - normal goods or substandard goods - penalty u/s 11AC - SCN alleges that they have cleared the goods without raising invoices clandestinely and presumes that the goods which they have cleared are similar to the goods which they would otherwise have cleared. Held that:- It is no longer disputed that the goods were cleared by the appellant without raising invoices and without paying duty and without making necessary entries in the records. In some cases, the recipients of these goods have given letters saying that they received samples free of cost and some cases the recipients have sent letters stating that the goods were seconds. If the goods were sent as samples to their respective customers to enhance their business, it is inconceivable that any businessman would send rejected sub-standard samples to promote their prime goods - the appellant has not substantiated his claim that the goods which they cleared were sub-standard goods. If they were, indeed, sub-standard goods, there was no reason for them to not to raise any invoice accordingly and make appropriate entries in their records. Thus, the appellant has cleared the goods clandestinely but has not been able to substantiate their claim that the goods were rejects or of substandard nature. Penalty u/s 11AC - Held that:- There is no ground to reduce the penalty under Section 11AC because they paid some amount of duty during investigation. However, after recomputing the demand taking the value of goods as cum duty value, corresponding changes need to be done in the penalty. The appeal is partly allowed by remanding the matter to the original authority for the sole purpose of recomputing the value of the goods as cum duty value and consequently recomputing penalty if necessary.

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• 2019 (3) TMI 1420
  Classification of goods - Polyurethane Foam - whether the polyurethane products manufactured by the appellant are classifiable under 9401 as seats or under chapter heading 39263010 as fittings for furniture, coach work or the like of polyurethane ? - Held that:- It is not in dispute that the articles in question are made of polyurethane and nothing else but they can be used only for seats. It is also not in dispute that they are not seats by themselves but become seats when attached to the frame and covered with upholstery. Chapter note 1(d) of chapter 94 excludes articles falling under chapter 39 from this chapter. Similarly, chapter note 2(x) of chapter 39 excludes articles falling under chapter 94. Thus, the chapter notes mutually excluding each other do not help in determining the classification. Therefore, Rule 3(a) of the general rules of interpretation must be applied to which is a more specific entry. The article in question is a polyurethane article made specifically for fitting on furniture or coach seats, etc., and is not a seat in itself. This, is a more specific description of the goods in question than a seat. Therefore, the goods in question are correctly classifiable under 3926 3010. Confiscation - Penalty - Held that:- The classification in favour of the revenue. However, this being a classification issue, we find that the assessee may have entertained a genuine belief that their goods were classifiable under 9401. Therefore, no allegation of fraud, misstatement or suppression of facts can be attributed to them - Confiscation of the goods and imposition of penalties are also not justified in this case. Appeal allowed in part.

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• 2019 (3) TMI 1419
  CENVAT Credit - Credit availed on the strength of the invoices issued by M/s. Shah Foils Ltd., without receipt and use of the inputs for intended purpose in the factory premises - amount reversed alongwith interest - benefit of reduced penalty - Held that:- The appellant is the partner of M/s. Magma Industries - On perusal of the case records, it is found that the appellant had played active role in availment of wrong Cenvat Credit by Magma Industries. Thus, imposition of penalty under Rule 26 of the rules on him is justified - However, considering the fact that the adjudication order had imposed penalty of 25% of duty on the partnership firm M/s. Magma Industries, the benefit of reduced amount of penalty should also be available to the appellant, being the partner of the said partnership firm. The appellant should be provided with the option to pay reduced amount of penalty - Appeal disposed off.

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• 2019 (3) TMI 1418
  CENVAT Credit - input services - insurance and group mediclaim policy - dismantling services - Held that:- such extension of insurance benefits to the employees is a statutory requirement without which a manufacturing unit of the appellant s stature cannot manufacture the final product, besides the fact that the appellant claims that unless it provides medical facilities and insurance coverage to its employees and they are assured of proper medical attention that would generally affect their wellbeing, productivity and consequently, the manufacturing business of the appellant would suffer. - the credit taken by the appellant on insurance and group mediclaim policy services is admissible credit. Dismantling services availed to different another unit - Held that:- the appellant s claim that part of process is carried out will not be accepted for the reason that no activities in the appellant s Mouda complex had taken place that would have any bearing on production at the appellant s unit. - the same credit cannot be availed by the appellant Extended period of limitation - wilful intention or not - Held that:- the extended period should not have been invoked enabling the adjudicating authority to impose penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, when such credits were held by the Commissioner (Appeals) to have been taken only in the Books of Account and verified by him to have not been availed by it. Appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1417
  Stay of operation of the impugned order - refund of the amounts of Central Excise duty paid on “Portland Cement” - N/N. 04/2006-CE as amended - Held that:- Holding that the respondent M/s Penna Cements is eligible for such exemption Notification in the case of PENNA CEMENT INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, TIRUPATI [2018 (2) TMI 1306 - CESTAT HYDERABAD] has allowed appeal of Penna Cements. We find that the First Appellate Authority in this case has followed the law which has been laid down by the various decisions of the Tribunal. Appeal dismissed - decided against Revenue.

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• 2019 (3) TMI 1416
  Refund claim or suo-moto credit - appellant on realizing that they have already discharged duty by way of cash/credit for such invoices had availed suo motto credit - Held that:- Undisputedly, the appellant had intimated the department that these invoices are cancelled. After intimating the department they have corrected the error and taken credit of the said amount. The only allegation is that the appellant ought to have sought for refund instead of taking suo motto credit. Since it was an error which has been intimated to the department and thereafter, no demand raised with respect to the amount indicated in these invoices - the suo motto credit availed in order to correct the accounts is legal and proper. Short-payment of service tax - GTA Service - Held that:- There is some mistake in calculating the figures with regard to ST-3 returns. It is not understood on what basis the figures under ST-3 returns has been mentioned in the table - the issue requires to be remanded to the adjudicating authority, who is directed to re-adjudicate this issue. Rent-a-Cab Service - demand of service tax - Held that:-The learned counsel for the appellant has submitted that thought they furnished the documents supporting their contention before the authorities below the same has not been considered at all - the said issue requires to be remanded and the adjudicating authority is directed to look into the receipt/documents produced by appellant to ensure whether the service tax has been discharged on the services. Imposition of penalty - Held that:- The appellant having taken over the Unit only in 2013-14 cannot be saddled with guilt of non-filing of returns for the period prior to that. Further, it is seen that all the returns have been filed along with late fee by the appellant - the penalties imposed in this regard are unsustainable and requires to be set aside. Appeal allowed in part and part matter remanded.

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• 2019 (3) TMI 1415
  Clandestine removal - Cavity Sheets - Upholstery Sheets - Department took the view that appellant had not manufactured US; that whatever CS manufactured by them had been partly accounted as CS and the rest as US - remand order - limited purpose of remand was to reconsider the demand of duty on CS found to have been removed as US by taking into account the observation of the Vice President and Third Member. Held that:- In de novo proceedings adjudicating authority had requested the appellants for a number of seized documents which had been returned by the department to appellants. The adjudicating authority has stated both in paras 4.1 and 5.10 that only certain documents were made available to appellants. However in para 10 of the order a reference is also made to Memorandum dt. 14.12.2010 stating that the files listed from Sl.No.1 to 15 therein were hard to find as appellant's representatives who received such records were no longer in their employment. The adjudicating authority thereafter has proceeded to conduct de novo adjudication based on available records. When the adjudicating authority has repeatedly expressed his difficulty to decide the matter with the available evidence on record, we are unable to fathom how the lower authority has arrived at a very specific figures of production and clearance of CS and US for the period 1981-85 in Annexure-A to the order. No clear indication has been given by the adjudicating authority as to how these figures have been arrived at, notwithstanding his being "constrained at not having all the evidence on hand". There is no hesitation in holding that the conclusions arrived at in the impugned order not only suffer from lack of evidence and investigation and further, is in total disconnect with CESTAT remand directions contained in the earlier Final Order No.302/2008 dt.31.3.2008 - appeal allowed - decided in favor of appellant.

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• 2019 (3) TMI 1409
  SSI Exemption - clubbing of clearances - bye-passing the alternative remedy of appeal by directly invoking the writ jurisdiction of this Court - principles of natural justice - Held that:- This Court should have the benefit of the order passed by the CESTAT, Chennai in the appeal filed by the ADR Plastics. Therefore, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai is directed to dispose of the appeal No. E/40595/2015 filed by the ADR Agencies against the order in Original No.7 of 2014 dated 22.12.2014 passed by the respondent herein on merits and in accordance with law on or before 31.03.2019. The status quo that obtains as on date shall continue till final orders are passed in this writ petition.

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• CST, VAT & Sales Tax

• 2019 (3) TMI 1424
  Applicability of provisions of Section 16(2) of the TNGST Act - Held that:- A clear factual finding has been recorded that what has been done by the Assessing Officer is purely based on guess work and without conducting necessary work as mandatory under the statute. The Revenue has not been able to point out any question of law, as the entire argument put forth are fully based upon the factual position. In a tax case revision filed under 38 of the TNGST Act, we are required to examine as to whether there is any question of law arising for consideration - Since we find none, we reject this tax case revision. The tax case revision is dismissed.

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• 2019 (3) TMI 1414
  Supervisory jurisdiction - compliance with the interim order passed by the Kerala Value Added Tax Appellate Tribunal - compounded rate of tax - Held that:- In the case at hand, we find that the petitioner has not remitted any amount during the pendency of the appeal. However, considering the entire circumstances as mentioned above, we are inclined to make a reduction with respect to the condition imposed by the Tribunal, as a gesture of equity by making it clear that the case cannot be considered as a precedent in any matter. While dismissing the above original petition, we modify Ext.P12 order passed by the Appellate Tribunal by reducing the condition for deposit of the amount, from 30% to 20% of the total amount due. The deposit as directed by us shall be made within one month from today.

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• 2019 (3) TMI 1413
  Validity of assessment order - bast judgement assessment - TNVAT Act - case of the appellant is that the Assessing Officer, without conducting any independent enquiry, merely went by the proposal of the officials of the Enforcement Wing, which amounted to abdication of his statutory duty as an Assessing Officer - Held that:- It is to be noted that though the assessments were completed in the year 2015/2017, the respondent has not been able to recover a single pie towards tax or penalty and the assessment orders remained as paper orders - That apart, the revision of assessment was based upon a report submitted by the officials of the Enforcement Wing. Hence, we are of the considered view that an opportunity can be granted to the appellant to put forth their contentions, since already the appellant remitted tax along with their returns, as the allegation is stock difference. The orders dated 19.12.2018 passed in the said writ petitions are modified by directing the appellant to pay 15% of the tax demanded for each of the assessment years within three weeks from the date of receipt of a copy of this judgment - appeal disposed off.

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• Indian Laws

• 2019 (3) TMI 1412
  Dishonor of Cheque - insufficiency of funds - acquittal of the respondent - Section 138 of the Negotiable Instruments Act - Held that:- The respondent has led sufficient evidence to prove that his cheque book containing signed and unsigned cheque was lost. On 30.8.2010 the respondent in fact had not only lodged complaint to his banker Ext. D-1 but had also lodged a complaint with the police Ex.DW-3/A. The version putforth by the respondent is duly corroborated by DW-1 Kusam Chand, Branch Manager, Kangra Central Cooperative Bank , Katrain and DW-3 HHC Uttam Chand - Apart from the above, in case the appellant/complainant had in fact supplied milk to the respondent, even then the least that was expected from him was to have maintained some accounts. There is no illegality with the orders passed by the learned Court below whereby the respondent has been acquitted - even the presumption as is attached to the Negotiable Instruments Act under Sections 118 and 139 of the Act is of no assistance to the appellant. Appeal dismissed.

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• 2019 (3) TMI 1411
  Extension of time for completing investigation and submission of investigation report - validity of ex post facto extension granted - Held that:- Under sub-Section (3) where the investigation is so assigned by the Central Government to SFIO, the investigation must be conducted in the manner and in accordance with the procedure provided in the Chapter and a report has to be submitted to the Central Government within such period as may be specified. This provision contemplates submission of a report within the period as may be specified. The subsequent provisions then contemplate various stages of investigation including arrest under sub-Section (8) and that SFIO is to submit an interim report to the Central Government, if it is so directed under sub Section (11). Further, according to sub-Section (12), on completion of the investigation, SFIO is to submit the investigation report to the Central Government. This report under sub-Section (12) may lead to further follow up actions. Under sub-Section (13) a copy of the investigation report could be obtained by any concerned person by making an application in that behalf to the Court while under sub-Section (14) on receipt of said investigation report the Central Government may direct SFIO to initiate prosecution against the Company. The investigation report under sub-Section (12) is to be submitted on completion of the investigation whereas report under sub-Section (11) is in the nature of an interim report and is to be submitted if the Central Government so directs. In the backdrop of these provisions we must now consider whether the period within which a report is contemplated to be submitted to the Central Government under sub-Section (3) is mandatory and what is the scope and extent of such stipulation. It must also be stated here that the provisions of Section 43(2) of 2008 Act do not postulate any such period and the assignment in the present case to SFIO was under the concerned provisions of 2013 Act as well as under 2008 Act. Section 212(3) of 2013 Act by itself does not lay down any fixed period within which the report has to be submitted. Even under sub-Section (12) which is regarding investigation report , again there is no stipulation of any period. In fact such a report under sub-Section (12) is to be submitted on completion of the investigation . There is no stipulation of any fixed period for completion of investigation which is consistent with normal principles under the general law - sub-Section (2) of Section 213 of 2013 Act does not speak of any period for which the other Investigating Agencies are to hold their hands, nor does the provision speak of any re-transfer of the relevant documents and records from SFIO back to said Investigating Agencies after any period or occurring of an event The very expression assign in Section 212(3) of 2013 Act contemplates transfer of investigation for all purposes whereafter the original Investigating Agencies of the Central Government or any State Government are completely denuded of any power to conduct and complete the investigation in respect of the offences contemplated therein. The idea under sub-Section (2) is complete transfer of investigation. The transfer under sub- Section (2) of Section 213 would not stand revoked or recalled in any contingency. If a time limit is construed and contemplated within which the investigation must be completed then logically, the provisions would have dealt with as to what must happen if the time limit is not adhered to. It is well settled that while laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Furthermore, the provision has to be seen in the context in which it occurs in the Statute. The only logical end as contemplated is after completion of investigation when a final report or investigation report is submitted in terms of sub-Section (12) of Section 212. It cannot therefore be said that in the instant case the mandate came to an end on 19.09.2018 and the arrest effected on 10.12.2018 under the orders passed by Director, SFIO was in any way illegal or unauthorised by law. In any case, extension was granted in the present case by the Central Government on 14.12.2018. But that is completely besides the point since the original arrest itself was not in any way illegal - the High Court completely erred in proceeding on that premise and in passing the order under appeal. Appeal allowed - writ petitioners namely Rahul Modi and Mukesh Modi are directed to surrender and remain present on 01.04.2019 at 11.00 a.m. before the Special Court, Gurugram. The Special Court may then consider the matter on merits and whether the accused are required to be remanded to custody.

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