TMI Tax Updates - e-Newsletter
May 10, 2019

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Provisional attachment of Bank Accounts - SC dismissed the SLP against the decision of High Court vacating the order of provisional attachment.
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• GST:

  Classification of books - whether the books ‘Sulekh Sarita Parts I to V’ are ‘Printed Books’ classifiable under ‘HSN 4901’ or ‘Exercise Books’ under ‘HSN 4820’ of the Central Goods and Service Tax Act? - the books published and sold by the Petitioner are classifiable under HSN 49.01 and not HSN 48.02 - Wholly exempted from GST.
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• GST:

  Validity of constitution of the National Anti-Profiteering Authority (NAPA) as well as provisions and rules related to NAPA are challenged - order imposing penalty by NAPA - order stayed and notice issued
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• Income Tax:

  Accrual of interest liability - loans was classified as NPA - Assessee failed to prove that as per any agreement entered into by the assessee with the bank though the interest in question accrued during the year under consideration but its payability was deferred to any point of time in future. - claim not allowed.
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• Income Tax:

  Registration u/s 12AA - assessee was free to avail registration under any alternative provision if more than one alternatives were available - CIT(E) has not doubted the objects and genuineness of the activities of the society which were charitable in nature - eligible for registration u/s 12AA
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• Income Tax:

  Revision u/s 263 by PCIT - alleged that cash deposits being not satisfactorily explained and failure of AO to bring the same to tax - ignoring the factum of inquiry by the AO, the material on record and the conclusions arrived at, the proceeding initiated by the PCIT u/s 263 without application of mind, has rightly been held invalid by the ITAT
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• Income Tax:

  Constitutional validity of Section 234E - Court recalled its earlier order upholding validity - Section 234E though uses the word ‘fee’ but, it is in fact in the nature of penalty - applying the law in relation to the distinction between a ‘tax’ and a ‘fee’ alone will not be apposite in testing the validity
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• Income Tax:

  Extension of limitation - due date of passing order by Settlement Commission within eighteen months from the date of filing the applications - earlier application was rejected by Commission which was restored by High Court - time taken by the petitioners in pursuing the remedy before High court should be excluded
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• Income Tax:

  Grant registration/approval u/s 12AA/80G - independent reasons by ITAT in order - Tribunal was required either to accept the reasons and dismiss the appeal or not to accept it - If it did not accept the reasons, it was obliged to give its own reasons and dispose of the appeal
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• Income Tax:

  Disallowance of bad debts - sales tax component included in the sundry debtors - If the assessee had made the payment of sales tax then the debtor of the assessee has to pay back the said amount and therefore it will assume the character of a debt - If ultimately the customer does not pay this amount to the assessee, it has to be regarded as bad debt written off and allowed as deduction u/s 36(1)(vii)
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• Income Tax:

  Addition u/s 69B - applicability of Section 50C - difference between the market value assessed by the stamp authority and the purchase price as shown by the respondent assessee is not taxable as an unexplained investment u/s 69B in absence of material in the hand of purchaser - deeming fiction not applicable on purchaser
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• Income Tax:

  Exemption u/s.11 - deemed registration u/s 12AA - applicability of Proviso to Section 12A sub-section (2) during appeal proceedings or restricted to assessment proceedings - benefit of proviso is available not only when the assessment proceedings are pending before the AO but also when an appeal against the assessment order is pending before the ld. CIT(A)- exemption allowed
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• Income Tax:

  Disallowance u/s 40(a)(ia) on payment of salary - TDS u/s 192B - in Section 40(a)(ia), the word “Salary” have not been incorporated - no disallowance
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• Income Tax:

  Penalty u/s. 271(1)(c) - cash deposit - defective notice - notice is stereo typed printed notice in which either of the clauses as to whether penalty was invoked for furnishing of inaccurate particulars of income or for concealment of income was not struck off - Principles of natural justice were adhered to by Revenue - it is a curable defect within meaning of Section 292B and 29BB
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• Income Tax:

  Exemption u/s 11 - charitable purpose as per u/s 2(15) - stall rent and entry fees of trade exhibition - To conduct / undertake and participate in national/regional exhibitions and to organize industrial exhibitions, conferences and seminars on related issues is one of the main object of the society - none of the object reflects is non-charitable in nature - exemption granted
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• Customs:

  Extended period of limitation of issuance of SCN - initial SCN clearly indicated the description of the goods imported, classification of such goods under the CTH, and claim of exemption provided for such goods - not the case of misstatement, suppression of facts, etc - subsequent SCN issued beyond the normal period should not stand for judicial scrutiny and accordingly, barred by limitation
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• Customs:

  Misdeclaration of export goods - role of CHA - in such cases of economic offences where such fraudster are playing with the economic fabric of the country strict actions as provided under the law is warranted
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• Customs:

  The dispute is on the utilization of the imported goods at a premises other than that of the importer. Such utilization is not fatal to the benefit of the exemption notification as it may be appropriately regularized by the licensing authority. - A breach of condition of import is not at par with failure to fulfill export obligation
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• Corporate Law:

  Validity and legal force of an order passed under the erstwhile companies act 1956 after enactment of companies act 2013 - the Order dated 17th September 2013 passed by this Court in exercise of its powers under Section 446 of the 1956 Act, shall be deemed to be an Order passed under Section 279 of the 2013 Act.
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• Corporate Law:

  Oppression and mismanagement - It is settled law when a matter is before NCLT or before this Appellate Tribunal, arising under Sections 241 and 242 of the new Act, read with Rule 11, irrespective of what the parties plead, say or do, the paramount consideration of the Tribunal is to keep in view as to what is in the interest of the Company.
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• Corporate Law:

  Liability of Stamp Duty - scheme of amalgamation - The words “whichever is higher” used in those two sub-clauses cannot be read to mean that, the highest stamp duty of six per cent as prescribed in Article 23 is payable in respect of the four scenarios noted in Article 23A. Giving such an interpretation will render the entirety of Article 23A where it prescribes proper stamp duty as otiose, surplusage and redundant.
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• Corporate Law:

  Maintainability of petition before NCLT - oppression and mismanagement - contentions in application u/s 17 of the Arbitration and Conciliation Act and the contentions in the main company petition are separate - application filed u/s 17 of the Arbitration and Conciliation Act does not preclude the petitioner to agitate their grievance of oppression and mismanagement
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• Indian Laws:

  Dishonor of Cheque - section 138 of NI Act - whether a Director of the Company can challenge issuance of notice at the threshold or it would be available to him/her at the time of his/her defence? - in what capacity the Director could be held responsible is completely vague. - petition dismissed.
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• Service Tax:

  Demand from deceased person - The law does not provide to proceed in any case against a deceased person, therefore, the order passed by the adjudicating authority is not legal and correct.
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• Service Tax:

  Value based exemption - N/N. 06/05-ST - exemption to small service provider - Though the appellant have paid the service tax but first time opted for the exemption and as per the condition of the Notification once the exemption is opted, the same cannot be withdrawn.
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• Service Tax:

  Rejection of refund claim - the CESTAT’s view that separate show cause notice is necessary u/s 11B is in consonance with the principle of fairness. If a general show cause notice is issued, invoking Section 11, there is no automatic assumption that the assessee would be faced ultimately with an order, u/s 11B.
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• Service Tax:

  Advertisement Services - Scope of SCN - Clearly Commissioner has travelled beyond the show cause notice. Since no demand has been made in the show cause notice under this category, the order of Commissioner demand service tax under this category cannot sustain.
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• Central Excise:

  CENVAT Credit - input services - scope of the expression ‘directly and indirectly’ and ‘in or in relation to’ manufacture - all the services have been used for fabrication and erection of various equipment and machinery and has not been used for setting up of the plant or civil structure - credit allowed.
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• VAT:

  Rate of tax - cream milk mixed - flavoured milk - The department itself has issued a circular clearly holding that the flavoured milk is covered by the entry 'milk' - no demand can be raised.
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• VAT:

  Attachment of property of the wife of director - recovery of tax dues - When it is not permissible for the respondent to proceed against the Director of the company for recovery of the tax dues of the company, the question of recovering such dues from the property which belongs to the wife of the Director would not arise.
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Articles

• Directors- monthly payment, perquisites hiring and firing, etc. considered essential to establish employer-employee relationship between company and director be CESTAT. – Case of Brahm Alloy Ltd needed better representation, judgment deserve reconsideration
• TAXABILITY OF MARINE CONSULTANCY SERVICES

Notifications

• Central Excise

• 01/2019 - dated 8-5-2019 - CE (NT)
  Seeks to amend Notification No. 7/2015-Central Excise (N.T.) dated 1st March, 2015

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• Companies Law

• F. No. 1/30/2013 CL.V - dated 8-5-2019 - Co. Law
  National Company Law Tribunal (Second Amendment) Rules, 2019

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• F. No. 1/28/2013-CL-V(Part) - dated 8-5-2019 - Co. Law
  Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019

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• Customs

• 21/2019 - dated 9-5-2019 - ADD
  Seeks to amend notification No. 23/2013-Customs(ADD), dated the 10th October, 2013 to extend the anti-dumping duty on ductile iron pipes originating in, or exported from China PR till 23rd June, 2019.

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• GST - States

• Order No. 04/2019-State Tax - dated 6-5-2019 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019.

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• 4/2019-State Tax (Rate) - dated 6-5-2019 - Himachal Pradesh SGST
  Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017

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• 07/2019-State Tax (Rate) - dated 6-5-2019 - Himachal Pradesh SGST
  Notify certain services to be taxed under RCM under Section 9(4) of the HPGST Act, 2017

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• 06/2019-State Tax (Rate) - dated 6-5-2019 - Himachal Pradesh SGST
  Notify certain class of registered persons under HPGST Act, 2017

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• 05/2019-State Tax (Rate) - dated 6-5-2019 - Himachal Pradesh SGST
  Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017

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• 16540 – FIN-CT1-TAX-0043/2017/FIN - S.R.O. No.155/2019 - dated 24-4-2019 - Orissa SGST
  Notification on commencement of the provisions of rule 138E of the OGST Rules w.e.f 21st June, 2019

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• 16536 – FIN-CT1-TAX-0043/2017/FIN - S.R.O. No.154/2019 - dated 24-4-2019 - Orissa SGST
  Notify the registered persons paying tax under the provisions of Section 10.

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• 16532 – FIN-CT1-TAX-0043/2017/FIN - S.R.O. No.153/2019 - dated 24-4-2019 - Orissa SGST
  Cancellation of registration by proper officer.

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• 16528 – FIN-CT1-TAX-0043/2017/FIN - S.R.O. No.152/2019 - dated 24-4-2019 - Orissa SGST
  The Odisha Goods and Services Tax (Third Amendment) Rules, 2019.

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• G.O. Ms. No. 29 - 04/2019-State Tax - dated 31-3-2019 - Puducherry SGST
  THE PUDUCHERRY GOODS AND SERVICES TAX (FOURTH REMOVAL OF DIFFICULTIES) ORDER, 2019.

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• G.O. Ms. No. 28 - dated 31-3-2019 - Puducherry SGST
  The Puducherry Goods and Services Tax (Second Amendment) Rules, 2019.

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• G.O. Ms. No. 09/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Amendments in the notification of the Government of Puducherry, Commercial Taxes Department issued vide G.O. Ms. No.2/2019-Puducherry GST (Rate) dated the 13th March, 2019 - Compounding tax for supplier of Services.

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• G.O. Ms. No. 08/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  GST rate on supply of any goods other than capital goods and cement by an unregistered person to a promoter - Amendments in the Notification of the Government of Puducherry, Commercial Taxes Secretariat issued vide G.O. Ms. No.1/2017-Puducherry GST (Rate), dated the 29th June, 2017.

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• G.O. Ms. No. 07/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Seeks to notify certain services to be taxed under RCM under section 9(4) of SGST Act as recommended by Goods and Services Tax Council for real estate sector.

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• G.O. Ms. No. 06/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Notifies the following classes of registered persons.

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• G.O. Ms. No. 05/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Amendments in the Notification of the Government of Puducherry, Commercial Taxes Secretariat, issued vide G.O. Ms. No.13/2017-Puducherry GST (Rate), dated the 29th June, 2017.

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• G.O. Ms. No. 04/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Amendments in the Notification of the Commercial Taxes Secretariat, Government of Puducherry issued vide G.O. Ms. No. 12/2017-Puducherry GST (Rate), dated the 29th June, 2017.

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• G.O. Ms. No. 03/2019-Puducherry GST (Rate) - dated 31-3-2019 - Puducherry SGST
  Amendments in the Notification of the Government of Puducherry, Commercial Taxes Secretariat issued vide G.O. Ms. No.11/2017-Puducherry GST (Rate), dated the 29th June, 2017.

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• G.O. Ms. No. 27 - 03/2019-State Tax - dated 13-3-2019 - Puducherry SGST
  THE PUDUCHERRY GOODS AND SERVICES TAX (THIRD REMOVAL OF DIFFICULTIES) ORDER, 2019.

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• G.O. Ms. No. 26 - dated 13-3-2019 - Puducherry SGST
  Extending the limit of threshold turnover - Availing Composition Scheme u/s 10.

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• G.O. Ms. No. 25 - dated 13-3-2019 - Puducherry SGST
  Due date for FORM GST-1 - Aggregate turnover upto ₹ 1.5 Crores for the month of April, May & June 2019.

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• G.O. Ms. No. 02/2019-Puducherry GST (Rate) - dated 13-3-2019 - Puducherry SGST
  Composition scheme - Supplier of service - Notifies that the State tax, on the intra-State supply of goods or services or both.

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• Income Tax

• 1/2019 - S.O. 1706 (E) - dated 8-5-2019 - IT
  Central Government extend the tenure of persons as Chairman and members of the National Committee for Promotion of Social and Economic Welfare for a further period of six months

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• SEBI

• SEBI/LAD-NRO/GN/2019/14 - dated 7-5-2019 - SEBI
  Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2019

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• SEBI/LAD-NRO/GN/2019/13 - dated 7-5-2019 - SEBI
  Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2019

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• SEBI/LAD-NRO/GN/2019/12 - dated 7-5-2019 - SEBI
  Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2019.

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Circulars / Instructions / Orders

• GST - States - No. 6039/CT/POL-56/2/2019-Policy - dated 27-4-2019
  Clarification in respect of utilization of input tax credit under GST
• GST - States - Trade Notice No. 05/2019 - dated 26-3-2019
  Clarification on various doubts related to treatment of sales promotion schemes under GST.
• GST - Trade Notice No. 03/2019 - dated 14-2-2019
  Changes in Circulars issued earlier under the CGST Act, 2017
• DGFT - TRADE NOTICE NO. 10/2019-20 - dated 9-5-2019
  Low Usage of Self-Ratification scheme under para 4.07 A of the Foreign Trade Policy
• Central Excise - 1069/02/2019 - dated 8-5-2019
  Revised Procedure for electronic filing of Central Excise returns and for electronic payment of Excise duty and Service tax arrears under the new portal www.cbic-gst.gov.in.

News

• ICSI Auditing Standards - (CSAS -1 to CSAS – 4)

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• Invitation of Public Comments on the draft Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors), Rules, 2019.

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• India and China sign protocol for Export of Indian Chilli Meal

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• Finance Commission meets Eminent Economists in Mumbai

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• GDP Estimates- A clarification 8.5.2019

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Case Laws:

• GST

• 2019 (5) TMI 643

  Classification of books - whether the books ‘Sulekh Sarita Parts I to V’ are ‘Printed Books’ classifiable under ‘HSN 4901’ or ‘Exercise Books’ under ‘HSN 4820’ of the Central Goods and Service Tax Act?

  HELD THAT:- The Court is conscious that in the note appended to the HSN, it has been stated that Heading 49.01 excludes ‘children’s workbook consisting essential pictures with complementary text, for writing another exercises’. But then none of the books which form the subject matter of the present petition can be viewed as a mere text ‘for writing or other exercises’. These books are meant to help the child think, apply his or her mind and come up with some creative answers. It also tests the listening, comprehension and retention skills of the child; of what is spoken in the classroom and for testing the understanding of the child of that which has been taught.

  This Court is satisfied that in the present case, the books published and sold by the Petitioner are classifiable under HSN 49.01 and not HSN 48.02. In terms of Notification No.2/2017-Central Tax (Trade) dated 28th June, 2017 i.e. Entry No.119 thereunder, such goods classifiable under HSN 49.01 i.e. ‘printed books, including Braille books’ are wholly exempted from tax.

  Since, this is the only question that has been raised before the Court, the impugned order dated 9th April 2018 to that extent is hereby set aside - petition allowed.

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• 2019 (5) TMI 642

  Release of seized goods - GSTN stated in the e-way bill etc. obtained fraudulently - Confiscation - HELD THAT:- On a perusal of the order of confiscation made under section 130 of the Goods and Services Tax Act, 2017 read with the relevant provisions of the State Goods and Services Tax Act/ integrated Goods and Services Tax Act, it is evident that the authority concerned has not applied its mind to the objections raised by the petitioner and has perfunctorily passed the impugned order confiscating the conveyance of the petitioner.

  The petitioner has made out a strong prima facie case for grant of interim relief.

  Issue Rule returnable on 19th June, 2019.

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• 2019 (5) TMI 641

  Provisional attachment of Bank Accounts - HELD THAT:- Impugned order upheld - there is no need to interfere with the SLP - Special Leave Petition dismissed.

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• 2019 (5) TMI 568

  Challenge to an order passed by the National Anti-Profiteering Authority (NAPA) - validity of constitution of the NAPA - HELD THAT:- Under Rule 122 (a) of the CGST Rules the NAPA consists of a Chairman who holds or has held a post equivalent in rank to the Secretary of Government of India. Under Rule 122 (b) the 4 technical members are those who are or have been Commissioners of State Tax or Central Tax for at least one year or have held an equivalent post under the existing law. The Chairman and Members of the NAPA are to be nominated by the GST Council. In other words, there is no judicial member in the NAPA.

  As far as the facts of the present case are concerned, one grievance is that although the Petitioners deal in as many as 393 products, and even according to the NAPA they are compliant in regard to the price of many of such products, the NAPA has been selective in drawing an adverse conclusion in respect of the price charged for a few of the products.

  It is open to Petitioner No.1, notwithstanding the reduction in the rate of tax after 15 November 2017 to raise the base price of the product so that the ultimate price payable by the customer inclusive of tax remains what it was prior to 15 November 2017. Mr. Rohatgi points out that simultaneously with the reduction of tax the ITC was taken away and this is an additional factor that has to be considered while determining whether the Petitioner could be held to be a “profiteer‟ from the reduction of rate of tax.

  The Petitioners are required to deposit an amount of ₹ 41,42,97,629.35 with the Central and State Consumer Welfare Funds in a 50:50 ratio - subject to the Petitioners depositing the sum of ₹ 20 crores with the Central CWF within a period of four weeks from today, there shall be a stay of the impugned order dated 31st January 2019 of the NAPA as well as stay of further proceedings pursuant to the impugned notice dated 4th February 2019 issued by the Respondent No.2.

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• Income Tax

• 2019 (5) TMI 640

  Extension of limitation - due date of passing order by Settlement Commission within eighteen months from the date of filing the applications - time taken by the petitioners in pursuing the remedy before High court would be excluded - earlier application was rejected by Commission which was restored by High Court - HELD THAT: - Sub-section (4A) of section 245D mandates that the Settlement Commission passes an order u/s 245D(4) within eighteen months from the end of the month in which the application was made which period would be over on 31st May, and 30th June respectively. In this case, the Settlement Commission passed orders u/s 245D(2C) treating the applications made by the petitioners to be invalid. Against such orders, the petitioners approached this court by way of writ petitions, which came to be allowed by a judgment and order dated 4.2.2019 whereby the orders dated 2.2.2018 came to be set aside and the matters were restored to the file of the Settlement Commission. However, the operation of the judgment and order dated 4.2.2019 was stayed for a further period of four weeks so as to enable the respondent to approach the superior forum.

  Thus, for the period between 2.2.2018 till four weeks after 4.2.2019, there were no applications pending before the Settlement Commission and such applications were restored to the file of the Settlement Commission only pursuant to the order of this court. Therefore, the period between 2.2.2018 to four weeks after 4.2.2019 when the applications stood disposed of, cannot be taken into consideration for the purpose of computing the period of eighteen months as contemplated u/s 245D(4A).

  It is held that the period from 2.2.2018 to four weeks after 4.2.2019 shall stand excluded while computing the period of eighteen months for passing the order under section 245D(4). Needless to state that the Settlement Commission should not wait for the entire period of eighteen months for passing the order u/s 245D(4), to be over and may decide the application as expeditiously as possible - petitions are allowed

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• 2019 (5) TMI 629

  Addition towards excessive sugarcane price paid to members as well as non-members of the assessee - deductible expenditure u/s 37(1) - application of provisions of section 40A(2) - assessee is a Co-operative Society engaged in the business of manufacturing and sale of sugar and its bye-products - HELD THAT:- Both the sides are unanimously agreeable that the extant issue of deduction for payment of excessive price for purchase of sugarcane, raised in the appeal under consideration, is squarely covered by the case of C.I.T. BOMBAY VERSUS TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT]

  We set-aside the impugned order on this score and remit the matter to the file of the A.O for deciding it afresh as per law in consonance with the articulation of law by the Hon’ble Supreme Court in the aforenoted judgment. AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure.

  The distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon’ble Supreme Court supra - Decided in favour of assessee for statistical purposes.

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• 2019 (5) TMI 628

  Addition u/s 40A(2) - Excessive sugarcane price paid to members as well as non-members of the assessee - HELD THAT:- Set-aside the impugned order on this score and remit the matter to the file of the A.O for deciding it afresh as per law in consonance with the articulation of law by the TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT] AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause.

  The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure.

  It is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) as has been held by the Hon’ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue.

  Since we have remitted the matter to the file of AO with certain directions as enunciated above, the cross objection filed by the assessee becomes infructuous. - Revenue’s appeal is allowed for statistical purposes

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• 2019 (5) TMI 627

  Levy of penalty u/s 271(1)(c) - unabsorbed depreciation carry forward - depreciation were available to the AO in the return filed u/s 139(1) and return filed u/s 153C - explanation of assessee shows that there was unabsorbed depreciation in preceding AY 2005-06 which was claimed in assessment year under appeal i.e. 2006-07 u/s 139(1) of the Act. However, while filing the return of income for assessment year under appeal i.e. 2006-07 u/s 153C, the same figure of unabsorbed depreciation has been picked up by the system. Therefore, it is a mistake on the part of the assessee in taking the same figure while filing the return of income u/s 153C - HELD THAT:- Error occurred because of figures automatically picked up by the system itself. Thus, the assessee disclosed all the facts in the computation. It, therefore, appears that it was an inadvertent mistake. The explanation of assessee shows that there was unabsorbed depreciation in preceding AY 2005-06 which was claimed in assessment year under appeal i.e. 2006-07 u/s 139(1)

  While filing the return of income for assessment year under appeal i.e. 2006-07 u/s 153C, the same figure of unabsorbed depreciation has been picked up by the system. Therefore, it is a mistake on the part of the assessee in taking the same figure while filing the return of income u/s 153C of the Act. However, all the facts relating to unabsorbed depreciation were available to the AO in the return filed u/s 139(1) of the Act and return filed u/s 153C of the Act. In the case of Price Water House Coopers Pvt. Ltd. Vs. CIT [2012 (9) TMI 775 - SUPREME COURT] cancelled the penalty because the claim of gratuity was not allowable deduction which was inadvertent silly mistake on the part of the assessee - nature of addition made by the authorities below, we are of the view that it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. We, accordingly, set aside the orders of the authorities below and cancel the penalty. - Appeal of assessee is allowed.

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• 2019 (5) TMI 626

  Rectification u/s 154 - Levy of penalty u/s 234E - creating charge for levy of fee for certain defaults in filing statements - fee levied even for the period prior to coming into operation of Section 200A - debatable issue - apparent mistake in the order of the AO levying late fee under Section 234E - HELD THAT:- As considered the arguments of both the sides and perused the material placed before us. We entirely agree with the contention of the learned DR that it is a debatable issue because there are contrary decisions – one by Hon’ble Gujarat High Court in the case of Rajesh Kourani [2017 (7) TMI 458 - GUJARAT HIGH COURT] in favour of the Revenue and the other case of Fatheraj Singhvi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] in favour of the assessee. It is a settled law that a debatable issue cannot be rectified under Section 154 of the Act. In view of the above, we uphold the order of learned CIT(A) and dismiss the appeals filed by the assessee. - Appeals of the assessee are dismissed.

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• 2019 (5) TMI 625

  Penalty levied u/s. 271(1)(c) - Defective notice - non strike out the inappropriate words - undisclosed gain of LTCG - Suppressed income as well as undisclosed portion of income - HELD THAT:- 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 .See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.

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• 2019 (5) TMI 624

  Reassessment proceedings u/s 147 - bogus share transaction - the statement of Shri Mukesh Chokshi, which was the very basis of reassessment proceedings, was not placed / available on record or folder? - revenue has controverted the same by submitting letter dated 24/07/2018 issued by concerned ITO-33(1)(1) enclosing the statement of Shri Mukesh Chokshi dated 16/01/2013 which formed the basis of reopening and also list of beneficiaries for FY 2007-08 uploaded on the ITD System - HELD THAT:- The said information is being supplied as per the direction of the bench vide order sheet entry dated 28/06/2018. Upon perusal of the Ld. AO’s reply, prima-facie, it appears that the requisite information in the shape of statement of Shri Mukesh Chokshi along with list of beneficiaries was very much available on the record so as to trigger reassessment proceedings. Therefore, we are not inclined to agree with the submission made by AR that the reassessment proceedings were not valid. The legal grounds stand dismissed.

  Exemption u/s 10(38) - sale of IFCI, Indian Bank & Jai Corp scrips - HELD THAT:- The payment of purchase of scrips has been made through banking channels as evident from assessee’s bank statements, ledger confirmation etc. Upon perusal of financial statements, we find that the investment in the scrips was duly reflected by the assessee in its Balance Sheet as on 31/03/2006 & 31/03/2007, which is un-controverted fact. The sale of scrips during impugned AY has taken place in stock exchange through an independent broker namely M/s JCSL and the delivery of the shares have been given from the assessee’s demat account and the sale consideration has been received through banking channels. The assessee is in possession of broker bills & contract notes in respect to purchase as well as sale of these scrips. There is credit and debit of shares in assessee’s demat account. The scrips are of reputed corporate entities like IFCI, Indian Bank & Jai Corp. Nothing on record establishes that the broker namely M/s JCSL was, in any manner, connected with the tainted group.

  Therefore, there could be no occasion to treat the sale transactions as bogus transaction. As a natural corollary, since there could be no sale of scrips without actual purchase of scrips, the purchase transactions could not be termed as bogus transactions.

  AO, in the process of making additions, has heavily relied upon the statement of Shri Mukesh Chokshi without bringing on record any cogent material to establish that the sale transactions carried out by the assessee though M/s JCSL were bogus transactions. In fact, the lower authorities, in our opinion, has missed out the fact that the sale transactions had taken place through an independent broker namely M/s JCSL and not through M/s AINPL. Another aspect is that additions have been made merely by relying upon third party statements which were never confronted to the assessee in violation of principle of natural justice.

  The assessee, in our opinion, discharged the primary onus of proving the stated transactions by submitting purchases bills, contract notes of purchase of shares, holding letter from the broker, bank pass book evidencing payment through banking channels towards purchase of shares, copy of ledger account in the books of share broker, sales bills and sale contract notes issued by M/s JCSL, copy of ledger account in the books of M/s JSCL, delivery position and global net position demat report, bank pass book evidencing receipt of sale consideration through banking channels.

  Unexplained investments - Upon perusal of financial statement for impugned AY, it is noted that the stated investments have duly been reflected in assessee’s Balance Sheet as on 31/03/2008 and there could be no occasion to consider them as unexplained investment. In support of the purchases, the assessee has placed on requisite documentary evidences in the shape of broker bills, contract notes, ledger confirmation etc. The payment of the same has been made through banking channels. Therefore, the same could not be treated as unexplained investments. By deleting the same, we allow this ground of appeal.

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• 2019 (5) TMI 623

  Penalty u/s 274 r.w.s. 271(1) - defective notice - non-striking off of the inappropriate words - HELD THAT:- From the notice dated 25/3/2014 produced by the AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon’ble Supreme Court in case of M/s SSA’ Emerald Meadow. [2016 (8) TMI 1145 - SC ORDER]

  Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR has relied on various decisions to the proposition that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, all these decisions are of non-jurisdictional High Court decisions. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied. - Decided in favour of assessee.

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• 2019 (5) TMI 622

  TPA - comparable selection - functional dissimilarity - captive Data processing services - HELD THAT:- Eclerx services Ltd is not a comparable company with the ITeS segment of the assessee. Therefore, we direct the learned transfer pricing officer/AO to exclude this company.

  Infosys BPO Ltd - Exclude the same from the comparability analysis for the reasons of having huge brand value.

  TCS E serve international Ltd is a subsidiary of Tata consultancy services Ltd. - it belongs to a Tata group and has paid contribution for Tata brand. We have also perused the annual report of the comparable company which is placed on careful analysis of the annual report it is found that in schedule ‘N’, Tata brand equity contribution of this comparable companies is ₹ 46065 thousands. Therefore we direct the learned transfer pricing officer to exclude the above comparable from the comparability analysis.

  Mphasis Fincources Ltd - is not a suitable comparable as it has been selected by the assessee on the basis of the data for a financial year 2008 – 09 despite the fact that assessee has used companies with financial year for FY 2009 – 10 as a filter.

  Further according to the TPO the functional profile is also different and employee compensation is a percentage to total expenses is less than 25%. The learned dispute resolution panel also accepted the reasons recorded by the learned transfer pricing officer for its rejection.

  We have carefully considered the contention of the assessee on this aspect. In the transfer pricing study report submitted before the learned transfer pricing officer the assessee did not submit the financial for Year 2009 – 10 of this comparable company.

  Risk adjustment - the appellant undertakes minimum business risk as against comparable companies that are full-fledged risk entrepreneurs - TPO & DRP has rejected the argument of the assessee for the reason that assessee failed to demonstrate before them that the risk profile of the assessee is making a difference in the margins earned by the assessee and the comparables - HELD THAT:- Before us also assessee could not demonstrate that how the risk profile is making a difference in the margin of the comparable companies as well as the assessee. Therefore we do not find any reason to interfere in the decision of the learned transfer pricing officer and approved by the learned dispute resolution panel.

  Accordingly we direct the learned transfer pricing officer to exclude Accentia technology Ltd, E Clerx services Ltd, Infosys BPO Ltd, TCS E serve international Ltd and TCS E serve limited.

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• 2019 (5) TMI 621

  TPA - comparable selection - functional comparability - HELD THAT:- Infosys technologies Ltd has been excluded from the comparability analysis following the decision of the honourable jurisdictional High Court. Therefore respectfully following the decision of the coordinate bench in assessee’s own case we also direct the learned AO/transfer pricing officer to exclude Infosys technologies Ltd from the comparability analysis of software development segment.

  Inclusion of persistent systems Ltd included by the learned transfer pricing officer for which which assessee prays for the exclusion. - assessee has submitted that if the Infosys Ltd has been excluded from the final list of the comparability analysis the ground of the assessee for the exclusion of this comparable will become academic in nature in respect of software development segment. As we have already directed the learned AO/TPO to exclude the Infosys Ltd from the comparability analysis, we leave the ground of contest of the assessee for exclusion of persistent systems Ltd open. Accordingly ground number 2 of the appeal of the assessee is allowed with above directions.

  Adjustment on account of the receivables - The assessee has been granted a working capital adjustment by the DRP. When the working capital adjustment has been granted it definitely takes into account the impact of outstanding receivable on the profitability and therefore there is no separate adjustment is warranted on account of overdue outstanding advances.

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• 2019 (5) TMI 620

  Exemption u/s 11 - charitable purpose as per u/s 2(15) - assessee had charged certain fees from the participants of the trade exhibition, thus the revenue has came to a conclusion that the appellant was engaged in the activities in the nature of trade and commerce - stand taken by the assessee that it did not render any services in relation to trade, commerce or business - HELD THAT:- To conduct / undertake and participate in national/regional exhibitions and to organize industrial exhibitions, conferences and seminars from time to time to create awareness and to focus the issues affecting trade, commerce and industry and economical development of the country is one of the main object of the registered society of the appellant which was on record and not been denied by the authorities below. Further that, none of the object reflects is non-charitable in nature.

  Surplus and/or income from holding such exhibition is to be treated as income eligible for exemption u/s 11 of the Act particularly taking into consideration the objects as laid down in the Memorandum of Rules and Regulations of the appellant society. We, thus direct the Learned AO to grant exemption as directed above. - Assessee’s appeal is thus allowed.

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• 2019 (5) TMI 639

  Disallowance u/s 14A read with Rule 8D - disallowance of expenditure even where tax payer in particular year has not earned any exempt income - HELD THAT:- Issue covered by the judgment of this Court in Principal Commissioner of Income Tax-I, Chandigarh v. M/s Vardhman Chemtech Private Limited, Chandigarh [2018 (10) TMI 1037 - PUNJAB AND HARYANA HIGH COURT] wherein the appeal filed by the revenue was dismissed.

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• 2019 (5) TMI 619

  Allowability of advance write off - business loss on account of advances toward audio rights to Karishma International as irrecoverable - HELD THAT:- Assessee need to put all the facts of the case in proper perspective before the authorities below surrounding this write off of ₹ 20 lacs and authorities below are also directed to appreciate the facts in proper perspective after considering all the details to arrive at conclusion that this can be allowed as business loss or not. Thus, keeping in view our detailed discussions as above, we are of the considered view that matter need to be restored to the file of the AO for denovo assessment.

  Disallowance u/s. 36(1)(iii) - expenditure on account of interest paid on term loans and other loans - AO rejected the contention of the assessee that free reserves were utilised for giving said interest free rent deposit - alleged to utilised the interest bearing funds to advance the interest free rent deposits - HELD THAT:- perusal of audited financial statements for all these years clearly reveals as detailed above that the availability of interest free funds with the assessee were much higher than interest free refundable rent deposit of ₹ 9 crores advanced by the assessee and in the absence of any cogent material inextricably linking interest bearing borrowings with the interest free refundable rent deposit granted by the assessee, the presumption will apply that the assessee has released the interest free refundable rent deposit out of interest free funds available with it. The decision of Hon‟ble Bombay High Court in the case of Reliance Utilities and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] is relevant. - Decided in favour of assessee

  Expenditure incurred towards audio rights - nature of expenditure - revenue or capital - HELD THAT:- No distinguishing facts are brought on record by both the rival parties in the year under consideration before the Bench vis-a-vis facts as were there in preceding years. Further, no judgment of Superior Court is brought on record by both the rival parties holding against the assessee. Thus, we have no reason to take a different stand than what was taken by tribunal consistently over preceding years in assessee‟s own case. Respectfully, following the decision of tribunal for AY 2010-11 [2018 (8) TMI 1802 - ITAT MUMBAI] , we hold that the expenditure incurred by the assessee in acquiring audio rights are revenue expenses and learned CIT(A) appeal has rightly deleted the additions as were made by the AO.

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• 2019 (5) TMI 618

  Exemption u/s.11 - deemed registration u/s 12AA - applicability of Proviso to Section 12A sub-section (2) during appeal proceedings or restricted to assessment proceedings - registration granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A) - HELD THAT:- What AO can do, can be done by CIT(A) in an appeal before him. Even what the AO could have done but failed to do, can also be done by him. It shows that the powers of a CIT(A) in an appeal against an assessment order are almost similar to those of an AO. If extend this analogy to the provisions of section 12A(2), an irresistible conclusion which follows is that the benefit of the proviso is available not only when the assessment proceedings are pending before the AO but also when an appeal against the assessment order is pending before the ld. CIT(A). It is so for the reason that the appeal proceedings are nothing but continuation of the assessment proceedings.

  As at the time of granting registration by the ld. CIT (Exemptions) to the assessee, the appeal of the assessee was pending before the ld. CIT(A), in my considered opinion, the benefit of first proviso to section 12A(2) ought to have been granted.

  My view is fortified by the judgment of Hon’ble Rajasthan High Court in CIT (Exemptions) Vs. Shree Shyam Mandir Committee [2017 (10) TMI 1450 - RAJASTHAN HIGH COURT] in which it has been held that “ An assessment proceedings which is pending in appeal before the appellate authority should be deemed to be “assessment proceedings pending before the AO.” within the meaning of the term as envisaged under the proviso. It follows there from that the assessee which obtained registration u/s.12AA of the Act during the pending of appeal was entitled for exemption claimed u/s.11.

  The additional ground thus raised is allowed by holding that the assessee would be entitled to exemption u/ss. 11 and 12 of the Act for the year under consideration on the reason that the registration was, in fact, granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A).

  In the light of my above conclusion on the additional ground, the impugned order is set-aside and the matter is restored to the file of AO for framing a de novo assessment as per law after allowing a reasonable opportunity of hearing to the assessee. Needless to say, the assessee in such assessment proceedings would be considered to have been granted registration and the provisions of sections 11 and 12 shall apply pro tanto. Appeal is allowed for statistical purposes.

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• 2019 (5) TMI 617

  Penalty u/s. 271(1)(c) - addition on income on completion of project, in respect of cash deposit and Short term capital gain on sale of depreciable assets - HELD THAT:- CIT(A) deleted the penalty levied by the AO u/s 271(1)(c) with respect to offering of aforesaid income from 27 flats constructed by the assessee in Project Carmel at Kamothe in three years by following decision of ITAT, Mumbai [2016 (6) TMI 171 - ITAT MUMBAI] . Thus,in any case this issue is not before us in the appeal filed by the assessee of which we are presently seized of.

  Penalty on Cash deposits - We do not find any reasons to believe the contentions of the assessee that the said sum was received on the occasion of marriage of son of the assessee as there is no evidence before us to accept this explanation and we have no hesitation in rejecting the same as it is not supported by any evidence whatsoever. We hereby confirm penalty as levied by the AO u/s 271(1)(c) on the cash deposit of ₹ 3,00,000/- in bank account, which stood later confirmed by learned CIT(A).

  Defective notice - whether curable defect u/s 292B - as alleged notice is stereo typed printed notice in which either of the clauses as to whether penalty was invoked for furnishing of inaccurate particulars of income or for concealment of income was not struck off - HELD THAT:- The assessee did not raise this legal ground before the learned CIT(A) and also before us, no such specific ground of appeal was taken in memo of appeal filed with tribunal nor any additional ground of appeal was taken challenging levy of penalty u/s 271(1)(c) on legal grounds. However , arguments were advanced by both the parties on legal ground. Thus, keeping in view the relevance and importance of the challenge on legal grounds as to defect in notice u/s 271(1)(c) r.w.s 274 which goes to the root of the matter , we have considered it appropriate and proper to adjudicate this issue in the interest of substantial justice.

  No prejudice caused to the assessee by non striking of the offences in the notice dated 28.12.2011 issued by the AO u/s 271(1)(c) r.w.s 274, keeping in view factual matrix of the case as discussed above. In our considered view decision of Hon’ble Bombay High Court in the case of CIT v. Smt. Kaushalaya [1995 (1) TMI 25 - BOMBAY HIGH COURT] is relevant. Principles of natural justice were adhered to by Revenue. In any case, if there was any defect in notice dated 28.12.2011 issued by the AO u/s 271(1)(c) r.w.s 274, that is a curable defect within meaning of Section 292B and 29BB of the 1961 Act.

  Thus, this legal ground is also adjudicated against the assessee. Thus, the assessee fails on both legal ground as well on merits of the issue with respect to deposit of cash of ₹ 3,00,000/- in bank account for which penalty as levied by the AO u/s 271(1)(c)

  Penalty on capital gains - additions made to the income of the assessee in quantum on account of capital gains on sale of depreciable assets - assessee merged lease premium paid to CIDCO on plot of land with cost of construction of the factory building as one asset under the same block of asset viz. Building and claimed depreciation - HELD THAT:- The computation of income so made by the assessee of capital gains earned on sale of land and factory building at Nerul as merged asset while filing its return of income with Revenue was clearly erroneous dehors provisions of the 1961 Act. No doubt the assessee showed lower w.d.v. as on 31.03.2009 which was carried to succeeding years on which it continued to take lower depreciation in succeeding years as wdv of Block of asset was lower but the fact remains that the assessee could not have a formed belief that land would form part of the cost of factory building for claiming depreciation or for computing capital gains chargeable to tax . This is completely an erroneous action on the part of the assessee who is supported by a qualified chartered accountant and whose accounts are audited to treat land as part of block of asset viz. building and is against the basic fundamentals of the accounting as the land could not be a depreciable asset which could form part of the Block of Asset viz Building. The Revenue on its part did not get the Revenue which it was legitimately entitled to on long term gains arising on sale of land component by the erroneous accounting done by the assessee.

  Explanation offered by the assessee cannot be considered to be a bonafide and it will not take the assessee out of clutches of penalty provisions as are contained in Section 271(1)(c) of the 1961 Act read with Explanation 1 to Section 271(1)(c) - Decided against assessee.

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• 2019 (5) TMI 638

  Constitutional validity of Section 234E - late furnishing of statements within the time prescribed under Section 200 (3) and the proviso to Section 206 C (3) - as urged that although the title to Section 234 E of the Act and the provision itself uses the word ‘fee’ to describe the levy, it is in fact in the nature of penalty, therefore applying the law in relation to the distinction between a ‘tax’ and a ‘fee’ alone will not be apposite in testing the validity of such provision - as seeked to distinguish the judgments of the High Courts of Rajasthan, Karnataka and Kerala that have negatived the challenge to the constitutional validity of Section 234 E - HELD THAT:- The judgment under review proceeds essentially on the basis that the challenge to the provision is because it does not satisfy the pre-requisites in law to be considered as a ‘fee’. The other points now urged, although forming part of the petition, were perhaps not urged during oral arguments and therefore not considered. Nevertheless, the Court is of the view that the said points do require another detailed examination.

  Accordingly, the judgment BISWAJIT DAS VERSUS UNION OF INDIA & ORS. [2019 (1) TMI 604 - DELHI HIGH COURT] is recalled. The review petition is allowed

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• 2019 (5) TMI 637

  Revision u/s 263 by PCIT - alleged that cash deposits being not satisfactorily explained by the assessee and failure of AO to bring the same to tax - HELD THAT:- While recording the conclusion that the order passed by the AO is erroneous and prejudicial to the interest of the revenue, apparently the record of the assessment proceedings was not examined by the PCIT(A) in its entirety and objectivity. PCIT(A) while relying upon certain decisions of the High Court has merely recorded its ipse dixit that the AO has not examined the genuineness of the deposits claimed in the name of various persons.

  A perusal of the order passed by the AO reflects that the conclusion arrived at that the deposits stand reconciled was preceded by a proper inquiry. The office note appended to the Assessment Order categorically records that the assessee had produced the statement of the bank account, the copies of the bills issued to the purchasers of the tractors as also the books of account showing the entries of the deposits made in the bank. It is pertinent to note that the assessee had produced the bank statement showing that entries appearing are through transfer from another bank accounts from the account of customers for purchase of tractors either by cheque or other made.

  AO recorded the categorical finding that entries in the bank account are verifiable from the cash book and also the bills produced by the assessee. In this view of the matter, ignoring the factum of inquiry by the AO, the material on record and the conclusions arrived at , the proceeding initiated by the PCIT(A) u/s 263 of the Act without application of mind, has rightly been held invalid by the ITAT - no substantial question of law

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• 2019 (5) TMI 636

  Stay petition - first respondent has summarily rejected the stay application on the ground that the petitioner has not complied with the CBDT's modified guidelines, vide Instruction No.1914 dated 29.02.2016 by making a pre-deposit of 20% of the demand - HELD THAT:- As relying on PRINCIPAL COMMISSIONER OF INCOME TAX 5 & ORS. VERSUS M/S. LG ELECTRONICS INDIA PVT. LTD. [2018 (7) TMI 1905 - SC ORDER] and UTHANGARAI SRI VIDYA MANDIR EDUCATIONAL AND SOCIAL WELFARE TRUST [2019 (3) TMI 1552 - MADRAS HIGH COURT] the impugned order has been passed by total non-application of mind and is bad in law and it has to be quashed.

  In the result, the impugned order dated 15.03.2019 passed by the first respondent in his proceedings PAN:AABCT6418R is hereby quashed. The first respondent is directed to dispose the Appeal filed by the petitioner as against the Assessment order dated 29.12.2018 for the Assessment year 2011-12 within a period of four months from the date of receipt of a copy of this order and till the disposal of the Appeal, this Court grants stay of recovery of the demand amount of ₹ 1,91,31,620/- against the petitioner, as per the assessment order dated 29.12.2018 for the assessment year 2011-12.

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• 2019 (5) TMI 635

  Revision by CIT u/s 263 - issue on revision directed are disallowance u/s 14A ; undervaluation of the closing stocks; interest on borrowed funds w.r.to interest free loan to its sister concerns; and commission on sales - CIT also directed that AO is free to examine any other issues which have not been covered in this order except those issues which have already been considered and decided by the CIT (A) - The ITAT held that it was incumbent upon the CIT to have shown as to how the assessment order was prejudicial to the interest of the Revenue and this had to be done on the basis of an assessment of the material on objective criteria and quashed the revision - HELD THAT:-

  Disallowance under Section 14A - A substantial portion of the borrowings stood repaid in the preceding year out of internal accruals. The question that had to be answered was whether the Assessee had made any investment out of the borrowed funds in the AY in question i.e. 2000-01. On this specific aspect, the ITAT found that there is merit in the Assessee’s contention that “all its present borrowings” were for ‘earmarked purposes’ and “none of them was for investment in shares”. The ITAT also followed the rule of consistency after noticing that in the previous years and in the immediate succeeding AY 2001-02, no disallowance was made u/s 14A.

  Disallowance of interest expenditure - The ITAT importantly found that the AO did examine this issue. By a letter dated 14th January, 2003, he had called for the relevant information from the Assessee and the Assessee had filed such information with the AO. The secured loans were indeed earmarked and could not be utilized for making investments or advancing further loans. Further, the Assessee had its own interest free funds of ₹ 209.74 crore which could easily take care of the investment in the shares of ₹ 67.22 crore, apart from lending funds at lower rates to the subsidiaries. In the circumstances, the Court concurs with the view expressed by the ITAT that this issue did not require to be revisited u/s 263

  Valuation of stock - The ITAT found that approach of the CIT and that its conclusion that there was an error in valuation of closing stock was neither correct nor justified. Point No.8 of Schedule 22 of the Assessee’s balance sheet contained the disclosure in this regard and this change was consistent with the accounting standards prescribed by the ICAI. On this aspect also, the view taken by the ITAT appears to be justified and does not call for interference.

  Commission on sales - ITAT found that it had to be inquired into by the AO. He had obtained a written explanation on non reduction of TDS on commission payment to non-resident parties. The ITAT found nothing unusual about the commission payment. Importantly, this was not a case where the AO had not made any inquiry.

  For all of the aforementioned reasons, the Court finds that the impugned order of the ITAT suffers from no legal infirmities, requiring any interference - decided in favour of the Assessee

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• 2019 (5) TMI 634

  Grant registration u/s 12AA and grant approval u/s 80G - objectives of the assessee society are not charitable in nature or not? - independent reasons by ITAT in order - HELD THAT:- Tribunal was required either to accept the reasons and dismiss the appeal or not to accept it. If it did not accept the reasons, it was obliged to give its own reasons and dispose of the appeal. In the alternative, it had the option of remanding the matter back to the commissioner. It had followed neither of the two courses.

  This impugned order of the tribunalis absolutely erroneous in law. It is set aside.

  We remand the matter back to the tribunal to decide the issues involved in accordance with law within a period of six months from the date of communication of this order with reasons and upon hearing the parties. The tribunal will have the option to remand the matter back to the commissioner with proper reasons, if the occasion so arises.

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• 2019 (5) TMI 633

  Deduction u/s 10B - allowability of loss due to exchange fluctuation - tribunal relied on decision which was reversed by supreme court - contingent and notional - allowability of claim of the appellant before CIT(A) when no such claim was made before the AO - HELD THAT:- Matter deserves to be restored back to the learned Tribunal for considering the entire appeal filed by the Revenue de novo, in view of the subsequent development of law by the aforesaid judgment of the Hon'ble Supreme Court in the case of Oil & Natural Gas Corporation Limited, [2010 (3) TMI 81 - SUPREME COURT] , and also other case laws, which the Assessee may rely upon, for the purpose of 'Deduction' u/s 10B.

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• 2019 (5) TMI 632

  Addition u/s 69B - unexplained investment - provisions of Section 50C applied for making addition u/s 69B - applicability of Section 50C on purchaser - HELD THAT:- AO has sought to treat the difference between the market value assessed by the stamp authority and the purchase price as shown by the respondent assessee as an unexplained investment u/s 69B.

  This court in SARJAN REALITIES LTD. [2012 (9) TMI 1076 - GUJARAT HIGH COURT] has held that section 50C by deeming fiction substitutes the consideration received on sale of a capital asset by stamp duty valuation. Such deeming fiction however, is applicable only in the case of a seller for the purpose of section 48.

  It is an admitted position that the respondent assessee is the purchaser and not the seller and hence, the valuation adopted by the Stamp authority could not have been made the basis from coming to the conclusion that there is unexplained investment. As observed by the Commissioner (Appeals), no material was brought on record by the AO to prove that the assessee had in fact made investments over and above that recorded in the books in the year under consideration. - Decided against revenue.

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• 2019 (5) TMI 631

  Grant of registration u/s 12AA - objection of the CIT(E) that the assessee had been claiming exemption u/s 10(23C)(iiiad) and, therefore, should not have filed the application u/s 12AA - ITAT directing the registration to be accorded instead of reverting it back for re-examination - recording of satisfaction Registering Authority - HELD THAT:- Assessee was free to avail registration under any alternative provision if more than one alternatives were available and the assessee was eligible for registration u/s 12AA for which it had applied.

  Regarding the second objection that the assessee when declared as autonomous body should have changed the objects and memorandum of Association, has no force as the facts and circumstances of society and constitution of members remained the same and objects of the society also remained the same and the only purpose of declaring the society as autonomous body was that it should be run as an autonomous body with the rules laid down by the All India Council of Technical Education. The amendment in the byelaws of the society had nothing to do with the objects of the society which undoubtedly were charitable in nature.

  At the time of registration of a society u/s 12AA, the only requirement was that the CIT(E) should be satisfied about the objects and genuineness of the activities of the society. In the present case, the CIT(E) has not doubted the objects and genuineness of the activities of the society which were charitable in nature.

  No illegality or perversity could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal which may warrant interference by this Court. No substantial question of law arises in the appeal. Consequently, finding no merit in the appeal, the same is hereby dismissed.

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• 2019 (5) TMI 630

  Rectification u/s 254 - non passing of specific order on second part of the additional grounds - genuineness of the agreement - HELD THAT:- Tribunal has erred in law in not passing any specific order on second part of the additional grounds as noted above. We are therefore inclined to set aside order to the extent of second part of the additional grounds and direct that the application filed by the appellant-assessee shall stand allowed in toto with respect to both the parts of the additional grounds as we are informed that the appeal that was restored for hearing on first part of the additional grounds, has not been decided yet, may now be heard and decided on both the grounds.

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• 2019 (5) TMI 616

  Disallowance u/s 40(a)(ia) on payment of salary - TDS deducted but not deposited - HELD THAT:- The A.O. in the assessment order noted that as regards Section 192B, the amount on which TDS is to be deducted comes to ₹ 29,01,190/- on which, TDS of ₹ 2,90,119/- have been deducted but was not paid by assessee. Learned Counsel for the Assessee rightly contended that the amount in question relates to payment of salary and according to Section 40(a)(ia), the word “Salary” have not been incorporated in the Act.

  Therefore, assessee would not be in default of TDS u/s 40(a)(ia) because such provision is not attracted in this Section. Therefore, Section 40(a)(ia) is not application on such transaction. This addition is, therefore, liable to be deleted. We, accordingly, set aside the Orders of the authorities below and delete the addition of ₹ 29,01,190/-. This ground of appeal of assessee is allowed.

  Disallowance u/s 40(a)(ia) - TDS u/s 194C,194I & 194J - Tax paid by deductees - amendments by the Finance Act, 2014, w.e.f. 01.04.2015 - HELD THAT:- The provision contained in second proviso to Section 40(a)(ia) is not applicable to the case of the assessee because assessee had fully deducted the TDS, but, did not deposit the same into the Government account. However, assessee explained reasonable cause for failure to comply with such provision, on which, CIT(A) admitted the additional evidences.

  In case the deductees have also paid the taxes on such receipts and offered the amount for taxation, it would certainly amount to double taxation in the hands of the assessee as well as the deductee of the same amount. Further, the assessee has raised this issue for the first time, therefore, it requires reconsideration at the level of assessing officer. Set aside the orders of the authorities below and restore this issue to the file of assessing officer with a direction to verify if the deductees have offered the amount of ₹ 4.92 crores for taxation and paid the taxes thereon.

  It is clear that assessee has ultimately deposited the TDS amount in question to the account of the Government. According to explanation of assessee, deductees have also paid the taxes on the same income, therefore, as per provisions of Section 40(a)(ia) the benefit of same shall have to be granted to assessee by the assessing officer, in the year, in which, such tax have been deposited.

  We, accordingly, direct the assessing officer to verify the claim of assessee and allow deduction of the TDS amount paid by assessee subsequently in computation of income of the previous year, in which, such tax has been paid. This Ground is allowed for statistical purposes.

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• 2019 (5) TMI 615

  Addition u/s 43B(e) - claim for interest paid to State Bank of Patiala - loans was classified as NPA - HELD THAT:- We find that in spite of the fact that the Bank has not shown amount of interest in question as receivable from the assessee, the assessee claimed the said amount as its business expense of the period under consideration. The assessee has claimed because as per the terms of loan agreement, the said interest accrued. As per the very same loan agreement with the Bank, the amount also become due or payable by the assessee. The payability or amount becoming due does not depend on the accounting entries passed by the bank or the creditor in its books of account but the same depends upon the terms of agreement.

  We, therefore, do not find force in the above contention of the assessee. The assessee has brought no material either before the lower authorities or before us to show that as per any agreement entered into by the assessee with the bank though the interest in question accrued during the year under consideration but its payability was deferred to any point of time in future. In absence of such an evidence, submission of the assessee cannot be agreed to.

  Case the assessee furnished an agreement dated 12.07.1989 entered into with ICICI Bank whereby the payability of interest was deferred by the bank. No such agreement could be produced by the assessee in the instant case.

  The assessee also relied upon the decision M/s Bharat Earth Movers Vs CIT [2000 (8) TMI 4 - SUPREME COURT] where the issue was not of Section 43B but was in relation to accrual of liability even when the actual quantification of liability could not be made. The above decision does not help the case of the assessee as in the instant case, the issue is not of accrual of liability but the issue relates to adding back of unpaid liability u/s 43B(e).

  Similarly, the other decision relied upon by the assessee also does not touch upon the issue under consideration which is of Section 43B(e). We thus, confirm the orders of the lower authorities and dismiss the grounds of appeal of the assessee.

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• 2019 (5) TMI 614

  Grant of registration u/s 12AA rejected - charitable activity or not? - aims and objects of the assessee society were to set up, run and maintain dispensaries and hospitals for the general public irrespective of caste or creed, and to do all such ancillary activities in order to facilitate furtherance of the said object - CIT(E) had expressed his doubts as to how setting up a multi-speciality hospital would qualify for ‘medical relief’ as envisaged in Sec. 2(15) as he held a conviction that the same may be in the nature of a commercial activity with no element of ‘medical relief’ whatsoever - HELD THAT:- View taken by the CIT(E) that the envisaged activities of setting up a multispeciality hospital by the assessee society may turn out to be a commercial activity with no element of “medical relief” whatsoever, is an aspect which has to be looked into by the assessing officer at the stage when the assessee filed its return of income and also by the commissioner for cancelling the registration in exercise of his powers u/s 12AA(3), in case if the activities of the assessee society are at any stage found by him as not being carried out in accordance with its aims and objects.

  CIT(E) as per the mandate of law, at the stage of considering the application of the assessee society for grant of registration u/s 12AA was supposed to confine himself to two aspects viz. (i) examination of objects of the society or institution; and (ii) satisfaction of the registering authority about the genuineness of the activities of the society or institution on the basis of inquiries. As observed by us hereinabove, it was not correct on the part of the CIT(E) to have rejected the application filed by the assessee society for grant of registration u/s 12AA for the reason that the activities envisaged in the aims and objects had not been carried out by the assessee society, which as observed by us hereinabove was in its nascent stage. We thus in all fairness restore the matter to the file of the CIT(E), who shall dispose off the application filed by the assessee by confining himself to two aspects viz. (i) examination of objects of the society or institution; and (ii) satisfaction about the genuineness of the activities of the society or institution on the basis of inquiries as he may deem fit.

  Application filed by the assessee society for grant of registration u/s 12AA is restored to the file of the CIT(E) for fresh adjudication in terms of our aforesaid observations. - Decided in favour of assessee for statistical purposes.

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• Customs

• 2019 (5) TMI 613

  Exemption under N/N. 97/2004-Cus dated 17th September 2004 - Utilization of the imported goods at a premises other than that of the importer - HELD THAT:- The dispute is on the utilization of the imported goods at a premises other than that of the importer. Such utilization is not fatal to the benefit of the exemption notification as it may be appropriately regularized by the licensing authority. However, the continued utilization, without making any reference to the licensing authority, constitutes breach of the eligibility at the threshold that was not regularized. The precedential value of the decision of the Tribunal is not derogated from. It is the facts and circumstances that should apply and we find no variance in the facts and circumstances therein and the present dispute.

  A breach of condition of import is not at par with failure to fulfill export obligation which the notification itself has rendered flexible enough to be regularized and that breach, such as the present, must inevitably lead to confiscation. The imposition of penalty is a natural consequence.

  Penalty on Director - HELD THAT:- There is no evidence of his role in deliberately utilizing the goods at a different location. It is also clear from the records that they had been advised that such utilization is within the scope of the scheme. Hence, it may be inappropriate to visit with penalty on the individual - the penalty on the director, Shri Vishnu Sureka is set aside.

  Appeal disposed off.

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• 2019 (5) TMI 610

  Monetary amount involved in the appeal - Maintainability of appeal - HELD THAT:- In view of the low tax amount involved, the Civil Appeal is dismissed, leaving all the questions of law open.

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• 2019 (5) TMI 612

  Time limitation of issuance of SCN - the period of importation of subject goods, i.e. High Allumina Balls was during period July, 2007; whereas, the notice was issued on 15/07/2008 - fraud/wilful suppression of facts or not - Change in classification - HELD THAT:- The said notice was issued beyond the period of 6 months from the date of filing of the Bill of Entry, and was issued under the Section 28 of the Act. So far as Section 28 of the Act is concerned, the statute mandates that in case of non-payment or short payment of the duty amount, the department should issue Show Cause Notice within 6 months from the relevant date. The proviso clause appended to section 28 ibid provides that in case of non levy, short levy of duty, etc., on account of collusion or willful mis-statement or suppression of facts by the importer, the period of “6 months” should be read as “5 years”.

  In the instant case, it is not the case of Revenue that non-payment/ short-payment of duty by the appellant was owing to the reason of misstatement, suppression of facts, etc., in as much as the initial Show Cause Notices issued by the department clearly indicated the description of the goods imported by the appellant, classification of such goods under the CTH, and claim of exemption provided for such goods. Thus, under the circumstances of the case, the subsequent Show Cause Notice dated 15/07/2008 issued beyond the normal period should not stand for judicial scrutiny and accordingly, proceedings initiated based thereon cannot be sustained as barred by limitation of time.

  Change in classification of the subject goods - HELD THAT:- Since classification made in the assessment order was not proposed in the Show Cause Notice, the said order cannot go beyond the scope and ambit of the Show Cause Notice and should only confine to the findings, whether the proposals made in the Show Cause Notices for different classification should sustain or not - Since the Adjudicating Order had entirely changed the classification of the product, as proposed in the Show Cause Notice from 69149090 to 69099090, without issuing any notice to the appellant, the differential duty confirmed under the changed classification should also not stand for judicial scrutiny.

  Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 611

  Misdeclaration of export goods - cheap stone powder was exported by declaring the same as Pharmaceutical Products - role of CHA in fraud committed by exporters - Principles of natural justice - HELD THAT:- In the present case the notices have been issued to all the appellant at number of times, but there was no response from most of the appellants except M/s Fast Forward. Since all the matters arise out of the same order which is of 2009 and nearly 10 years have elapsed in interest of justice all the appeals have been taken up for consideration and disposal.

  From the findings of the Commissioner as recorded above the case of export fraud has been well made out against all the other appellants except the two CHAs. Sufficient evidence has been brought on record to uphold the charges made against them and the penalties proposed on them along with confiscation of goods and demand of duties are justified. In our opinion in such cases of economic offences where such fraudster are playing with the economic fabric of the country strict actions as provided under the law is warranted - In case of the CHA namely M/s Fast Forward and M/s Santon Shipping Services when Commissioner himself is recommending the action under CHALR, 2004 there are no justifiable reason for imposition of penalty under Section 112(b) of the Customs Act, 1962.

  Appeal allowed in part.

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• Corporate Laws

• 2019 (5) TMI 609

  Grant of Leave to the Original Petitioner to bring the Official Liquidator of the Company on record in a suit - winding up of Company - HELD THAT:- It is ex facie clear that Section 430 of the 2013 Act, which was not even a statutory provision in force at the relevant time of orders in the present Company Petition, can have no bearing on the authority or jurisdiction of this Court to grant leave under Section 446 of the 1956 Act in a petition that was and continues to remain within the jurisdiction of this Court. At the relevant time this Court undoubtedly had jurisdiction to consider the Application for leave under Section 446 of the 1956 Act.

  Section 465(2) of the 2013 Act states that notwithstanding the repeal of the 1956 Act, any Order made under the 1956 Act, shall be deemed to have been made under the corresponding provision of the 2013 Act, provided that such Order is not inconsistent with the provisions of the 2013 Act. Section 446 of the 1956 Act corresponds to Section 279 of the 2013 Act and is not, in any manner whatsoever, inconsistent with the provisions thereof - In any view of the matter the Order dated 17th September 2013 passed by this Court in exercise of its powers under Section 446 of the 1956 Act, shall be deemed to be an Order passed under Section 279 of the 2013 Act. Accordingly, any reliance on Section 430 of the 2013 Act to contend that the said Order is annulled or void by the enaction of Section 430 of the 2013 Act is without any basis whatsoever, as the said Order would be expressly saved by Section 465 read with Section 279 of the 2013 Act.

  The Company Application is accordingly dismissed.

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• 2019 (5) TMI 608

  Liability of Stamp Duty - scheme of amalgamation between the transferor and the transferee companies - interpretation of statute - It is the contention of the parties that, the words “whichever is higher” used in the two sub-clauses in the column of proper stamp duty leviable, is causing problems, both for the person seeking to register the order sanctioning the scheme as also for the registering authority.

  HELD THAT:- The words “whichever is higher” used in those two sub-clauses cannot be read to mean that, the highest stamp duty of six per cent as prescribed in Article 23 is payable in respect of the four scenarios noted in Article 23A. Giving such an interpretation will render the entirety of Article 23A where it prescribes proper stamp duty as otiose, surplusage and redundant. An interpretation which does not allow such an eventuality to happen should be preferred to that which renders words used in a statute as otiose, surplusage and of no consequence.

  In the facts of the present case, Article 23A by itself is unambiguous. The quantum of stamp duty payable in the specific scenarios enumerated in Article 23A is not governed by the highest stamp duty payable in respect of Article 23.

  The authorities have adjudicated the stamp duty payable in respect of the scheme of amalgamation, by the impugned writing dated February 8, 2018, at ₹ 17,65,500/-. The authorities have arrived at a figure, after calculating the value paid by the transferee company to be at ₹ 2,94,25,000/-. The authorities have applied 6 per cent rate on the sum of ₹ 2,94,25,000/- to arrive at the figure of ₹ 17,65,500/-. In view of the discussions above, the rate applicable would be half per cent on the value paid by the transferee company.

  Petition disposed off.

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• 2019 (5) TMI 607

  Oppression and mismanagement - whether the issues raised in the Company Petition qua allegations of oppression and mismanagement are arbitrable?

  HELD THAT:- The Tribunal, empowered under Section 242 (2) of Companies Act, 2013 may, with a view to bring to an end the matters complained of, make such order as it thinks fit - On a plain reading of Section 242, it is manifestly clear that the facts should justify the making of a winding up order on just and equitable grounds. Admittedly, Arbitrator would have no jurisdiction to pass a winding up order on the ground that it is just and equitable which falls within the exclusive domain of the Tribunal under Section 271(e). That apart acts of non-service of notice of meetings, financial discrepancies and non-appointment of Directors being matters specifically dealt with under Companies Act and falling within the domain of the Tribunal to consider grant of relief under Section 242 of Companies Act render the dispute non-arbitrable though it cannot be disputed as a broad proposition that the dispute arising out of breach of contractual obligations referable to the MOUs or otherwise would be arbitrable.

  It is also indisputable that the statutory powers and plenary jurisdiction vested in the Tribunal renders it the appropriate forum to deliver result oriented justice. Admittedly, the statutory jurisdiction vested in the Tribunal cannot be exercised by the Arbitrator.

  Given the nature of allegations in the Company Petition in the context of reliefs that survive for consideration there is no escape from the conclusion that the dispute raised in the Company Petition and sought to be referred for arbitration is non-arbitrable.

  Impugned order upheld - appeal dismissed.

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• 2019 (5) TMI 606

  Oppression and mismanagement - transfer of entire shareholding to the original Respondents or their nominees as per the Valuation Report dated 20.07.2012 - fair value of shares - HELD THAT:- It is clear that the learned NCLT was not articulate when it directed the Petitioners to sell their entire shareholding held in the Respondent No.1 Company to “the Respondents”. It was necessary for NCLT to clearly identify the Respondents as Respondent No.1 was a Company and the other Respondents were shareholders. Rights and Procedure for Company to buy back its shares and Rights and Procedure for sale of shares inter-se shareholders are different. The Impugned Order nowhere even slightly or in the passing indicates that the learned NCLT had in its mind to order buy back of shares by the Company. Learned Counsel for both the sides tell us that in a case of oppression and mismanagement, NCLT has a right to even direct buy back of shares without the powers being circumscribed to rely on decisions of the Company in that regard.

  There is no doubt that in the facts of a given matter when case of oppression and mismanagement is there and NCLT finds it just, it can direct Company also to buy back shares. It has the authority to do so. But then that should be stated. There is not a word even remotely stated in the Impugned Order that NCLT found it appropriate that it should direct the Company to buy back its shares.

  It is settled law when a matter is before NCLT or before this Appellate Tribunal, arising under Sections 241 and 242 of the new Act, read with Rule 11, irrespective of what the parties plead, say or do, the paramount consideration of the Tribunal is to keep in view as to what is in the interest of the Company. The interest of parties is subservient to interest of Company. It is necessary for the Tribunal to first consider interest of the Company. The health of the Company reflects on the health of economy and that is what matters - CLB had found that the parties do not see eye to eye and found it appropriate to get valuation done so that original Petitioners could go out of the Company. As such, they should be able to leave but with fair value and fair interest.

  The Petitioners are directed to sell their entire share holding held by them in Respondent No.1 Company as on the date of filing the Petition to the Respondents 2 to 9 either jointly or severally at the fair price of ₹ 10.35 per share as arrived at by the independent valuer upon consent appointed by CLB - appeal disposed off.

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• 2019 (5) TMI 605

  Rectification of Register of Members - allotment of shares made to 146 persons - Section 59 of Companies Act, 2013 - HELD THAT:- The appellant has not placed copy of the power of attorney and also the copy of the deed of assignment before the Appellate Tribunal to enable us to come to the definite conclusion. We further observe that the alleged allotees has not placed any shares certificates before the Tribunal. We also observed that the appellant have also not agitated that the shares certificates have not been received by them. We further observe that the shares are freely tradeable and the same can be transferred.

  The appellant is agitating that the shares have been transferred but has not produced any proof to substantiate his version. In the absence of any material on record we cannot reach at a conclusion that the shares cannot be transferred or has not been transferred without adequate reason. Such substantiation has to be done by the appellant and we feel that he has apparently failed to do so both before the NCLT.

  Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 604

  Winding up of respondent-company M/s. Indiaontime Express P. Ltd. - appointment of official liquidator attached with the hon'ble High Court of Karnataka, etc. - HELD THAT:- Considering the submission made by the petitioner-counsel as also the fact as stated in the petition, it seems that the corporate debtor has not entered into any manpower supply contract with the operational creditor nor the corporate debtor has placed any purchase order/supply order as also the operational creditor is even unable to locate corporate debtor or its director, the case is not ripe to be taken up under sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016. Moreover the petitioner has even failed to comply with the National Company Law Tribunal, Bangalore Bench order dated July 20, 2018 vide which the Tribunal allowed I. A. No. 187 of 2018 granting prayer for paper publication.

  The petitioner failed to substantiate the impugned amount with proper evidence. The efforts made by the petitioner to serve the notice failed, even though the Tribunal ordered to serve notice to the respondent. Moreover the claim itself is not proved and the prima facia barred by the law of limitation.

  This is not a fit case to be admitted and is liable to be rejected - petition dismissed.

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• 2019 (5) TMI 603

  Maintainability of petition before NCLT - oppression and mismanagement - section 8 of the Arbitration and Conciliation Act, 1996 - Jurisdiction - Whether the petition is barred under law in view of the application filed under section 17 of the Arbitration and Conciliation Act before the sole arbitrator and the petitioner voluntarily submitting himself to the jurisdiction of arbitral tribunal? - Whether the acts complained of in the petition can be adjudicated by the sole arbitrator while adjudicating issues before him? - HELD THAT:- The contentions with which the application under section 17 of the Arbitration and Conciliation Act is filed and the contentions raised in the main company petition are separate. Hence the application filed under section 17 of the Arbitration and Conciliation Act does not preclude the petitioner herein to agitate their grievance of oppression and mismanagement in the petition. Apart from that the acts complained of, as said above, cannot be adjudicated by the sole arbitrator since the powers available to this Tribunal cannot be exercised by him and the reliefs as sought in the petition are not arising out of any contractual obligation - Issues settled in favor of petitioner.

  Whether the petition is dressed up to suit the requirements under sections 241 and 242 of the Companies Act, 2013? - HELD THAT:- The facts stated in the petition relate to financial discrepancies, non-service of notice of the extraordinary general meeting/annual general meeting and appointment of directors, etc. The said contentions are such that the National Company Law Tribunal alone can hear and decide the said issues. Hence, the contention of the applicant that the main company petition is dressed up to suit the requirements under sections 240 and 241 of the Companies Act is not acceptable - the issue settled in favour of the petitioner in the main company petition.

  The company petition is maintainable - List the matter for final hearing on October 4, 2018.

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• Insolvency & Bankruptcy

• 2019 (5) TMI 602

  Arbitral Award - interest on delayed payments - Section 9 of Insolvency and Bankruptcy Code, 2016 - pre-existing dispute with regard to quantum of liability - HELD THAT:- As per Section 9 of the IBC, the only requirement for Adjudicating Authority is to see in such application under Section 9, if there is record of dispute. In the present matter, when the Notice under Section 8 was sent by the Appellant, the Respondent sent Reply (Copy at Annexure - A-6) referring to the litigation between the parties.

  It is a simple matter where there is an Award and Sections 34 and 37 proceedings under the Arbitration Act have been disposed of. The litigation clearly shows serious disputes pending between the parties with regard to the calculations of dues. Admittedly, the amount of Award has been paid but the dispute appears to be continuing with regard to the interest - In the facts of the present matter, considering the developments of the litigation as pointed out by the learned Counsel for the Respondent, we find that there is pre-existing dispute with regard to calculation of dues and we do not find any fault with the Orders passed by the Adjudicating Authority rejecting the application.

  Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 601

  Approval of the resolution plan and its implementation - Corporate debtor - section 30(6) of the I and B Code, 2016 - HELD THAT:- The CoC has considered the resolution plan afresh in the light of the objection raised by this Authority. The explanation provided in the supplementary affidavit is satisfactory.

  The "resolution plan" filed with typed set to the application meets the requirements of section 30(2) of the I and B Code, 2016 and regulations 37, 38, 38(1A) and 39 of the IBBI (CIRP) Regulations, 2016. The "resolution plan" is also not in contravention of any of the provisions of section 29A, Therefore, this Authority in exercise of the powers conferred under sub- section (1) of section 31 of the I and B Code, 2016, approves the "resolution plan" annexed with M. A. No. 515/IB/2018 filed in C. P. No. 689/IB/2017 by granting concession/exemptions as enumerated under paragraph 7.2 (A and B), paragraph 8.1 (A, N, O, P, Q, R, S), paragraphs 8.3, 8.5, 8,6, 8.7, 8.8 and 8.9 of the resolution plan - The resolution plan approved shall be binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.

  The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub- section (1) or within such period as provided for in such law, whichever is later.

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• Service Tax

• 2019 (5) TMI 599

  Non-payment of service tax - Tour operator services - Appellant providing point to point bus service and chartered bus service - demands made on the appellants put in three categories viz (a) Tour Operator Services (Chartered Bus Booking) (b) Tour Operator Service (Point to Point Bus Service) & (c) Advertisement Services.

  Tour Operator Service - Point to Point Bus Service - HELD THAT:- Reliance placed in the case of M/S HANS TRAVELS VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2015 (10) TMI 458 - CESTAT NEW DELHI] where it was held that the impugned service rendered by the appellant using a contract carriage would fall under the category of tour operator service - demand upheld.

  Tour Operator Services - Chartered Bus Booking - Notification No 20/2009-ST dated 07.07.2009 ,as amended by Notification No GSR 622(E) Dated 31.08.2009 - HELD THAT:- In respect of the Services provided in category of Chartered Bus Booking, we find that these services fall within the exclusion category in the said notification. No other exemption has been pointed out which exempts such services. By putting these services under exclusion category in the Notification it is clear that these category of taxable services are not being exempted - demand do not sustain.

  Advertisement Services - Scope of SCN - HELD THAT:- Commissioner has considered the issue by considering the demand under the taxable category defined by Section 65(105)(zzzzm) viz “sale of space or time for advertisement”. He has after referring to the submissions made and definition as provided by Section 65(105)(zzzzm), held the tax to be demandable in that category. Clearly Commissioner has travelled beyond the show cause notice. Since no demand has been made in the show cause notice under this category we are not in position to sustain the order of Commissioner in this respect - Demand do not sustain.

  Time limitation - Interest - penalties - HELD THAT:- There are no merits in the submissions made by the appellant against the order of Commissioner, in respect of limitation, interest and penalties - these charges can now be sustained only in respect of the demands which can be sustained on merits i.e. in respect of the Chartered Bus Services.

  Refund of service tax - time limitation - HELD THAT:- The bar of unjust enrichment as enshrined in Section 11B still needs to be satisfied before the refund could have been paid to the appellant. The order of Commissioner (Appeal) holding that appellants have passed on the burden of the service tax paid on to the recipient of services has not been set aside in appeal before us. Then it is not understood how in subsequent proceedings in respect of same amounts Commissioner (Appeal) has held contrary - Matter needs to be investigated by the Chief Commissioner, because it is submission of the appellants before us that this appeal is infructuous as the amount claimed as refund by them has already been paid to them.

  Appeal allowed in part.

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• 2019 (5) TMI 598

  Refund of unutilised CENVAT credit - export of ‘Information Technology Software Services’ - rejection on the ground that FIRCs received from bank, do not show the invoice detail on the remittance certificate issued by the bank - HELD THAT:- Apparently the adjudicating authority had made his observation that FIRCs received from bank had no co-relationship with export invoice may be due to such arrear payment pertaining to previous financial year made after March, 2015. Be that as it may, since the appellate authority himself tallied the same and found no error in the re-conciliation statement of the appellant, rejection of refund claim on the ground that FIRCs statement submitted by the bank did not contained invoice no. is contrary to the procedural requirement in view of clarificatory Circular dated 12.03.2009.

  Refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 597

  Rectification of mistake - though Shri Ajay Banarjee, Advocate for the appellant was available on the date of hearing on 07.05.2018 and presented the case on behalf of the appellant, but in the preamble as well as in the body of the order, it has been mentioned as “None appeared for the assessee” - HELD THAT:- The averments made in the miscellaneous application merits consideration for recalling the final order dated 06.09.2018. Accordingly, the said order is recalled and the appeal is restored to its original number for hearing and disposal of the appeal on the limited issue of ascertaining the fact, whether such issue of show cause notice is barred by limitation or not.

  Appeal to come for final hearing on 28.05.2019.

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• 2019 (5) TMI 596

  Condonation of delay of three months in filing the appeal - Delay occurred for the reason that Mr Vivekanand Naik, Accountant of the firm looking after the taxation matter had slip disc and was advised complete bed rest - HELD THAT:- The delay in filing the appeal has been explained on the basis of the ill health of the concerned employee (accountant) of the firm. The delay was not intentional and sufficient grounds exist for condonation of delay in the present matter.

  The delay of three months in filing the present appeal can be condoned - application for COD allowed.

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• 2019 (5) TMI 600

  Refund claim - principles of unjust enrichment - applicability of Section 11B of CEA - HELD THAT:- This court is of the opinion that no substantial question of law arises. It is immediately apparent that the service tax department has taken two contrary positions – while allowing the substantial sum of over ₹ 1 crore as refund, for the same work, i.e. as sub-contractors in respect of hospitals, no impediment or difficulty was faced. However, in respect of the construction of residential barracks, a para military organisation of the State, an entirely different approach for the subcontractor appears to have been taken.

  This is completely illogical and could have been the only ground on which the CESTAT could have set aside the refusal. This court is also of the opinion that the CESTAT’s view that separate show cause notice is necessary under Section 11B is in consonance with the principle of fairness. If a general show cause notice is issued, invoking Section 11, there is no automatic assumption that the assessee would be faced ultimately with an order, under Section 11B. In this case, the assessee in fact applied for refund. It was all the more incumbent upon the authority to put the assesee to notice about the likely application of section 11B.

  Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 595

  Value based exemption - N/N. 06/05-ST dated 01.03.2005 - Department’s contention is that since the appellant had paid the service tax in the month of April-07 they have not opted the exemption and accordingly they were not entitled for the exemption - HELD THAT:- Though the appellant have paid the service tax but first time opted for the exemption and as per the condition of the Notification once the exemption is opted, the same cannot be withdrawn. Therefore, the appellant is entitled for the exemption up till the aggregate value of ₹ 8 lakhs.

  This identical issue in respect of Notification 01/2003-CE, the Tribunal in the case of SHREE CABLES AND CONDUCTORS (P) LTD. VERSUS COMMR. OF C. EX., BHOPAL [1999 (4) TMI 394 - CEGAT, NEW DELHI] interpreted the identical condition and held that even though the excise duty was paid in the beginning of the financial year, but subsequently exemption is available.

  The appellant is entitled for the Small Scale exemption Notification 6/2005-ST. - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 594

  Extended period of limitation - Maintenance or Repair Service - suppression, mis-statement, etc or not - HELD THAT:- It is not the case of the Revenue that the respondent had recovered any amount representing Service Tax in respect of the taxable service provided by it and retained such amount without depositing into the Government Exchequer. Non-payment of Service Tax during the disputed period i.e, 09.07.2004 to 31.03.2006 was owing to the reason that there were confusions with regard to levy of Service Tax on the disputed service, which is apparent from various notifications and circulars issued by the Government from time to time. Thus, under such circumstances, extended period of limitation cannot be invoked, without proper substantiation that the respondent had really indulged into the activities concerning fraud, collusion, etc with the intent to defraud the Government Revenue.

  The issue regarding levy of service tax on the taxable category of service of maintenance or repair was not free from doubt in as much as different views are expressed by the Board from time to time - the department is not justified in invoking the extended period of limitation.

  Appeal dismissed - decided against Revenue.

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• 2019 (5) TMI 593

  Taxability - renting of immovable property service - the issue is now referred to Larger Bench in the case of UNION OF INDIA AND ORS. VERSUS UTV NEWS LTD. [2018 (5) TMI 1367 - SUPREME COURT] therefore this matter may be kept in abeyance - HELD THAT:- The appeal is adjourned sine die - Both sides have liberty to mention as and when the matter is finally decided by the Larger Bench of the Supreme Court.

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• 2019 (5) TMI 592

  Demand from deceased person - Ld. Counsel before passing the adjudication order the appellant had died in such circumstances, no order should have been passed against the deceased person - HELD THAT:- The impugned order was passed against deceased person i.e. the Proprietor appellant. The law does not provide to proceed in any case against a deceased person, therefore, the order passed by the adjudicating authority is not legal and correct.

  The impugned order passed against a deceased person will not sustain - Appeal allowed.

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• 2019 (5) TMI 591

  Liability of service tax - lease rent - appellant are supplying gas cylinders on lease basis on which they are paying VAT - HELD THAT:- The lease rent is not liable to Service Tax - Issue is covered by the decision in the case of MATHESON K. AIR INDIA PVT. LTD VERSUS COMMISSIONER OF CENTRAL EX. & S.T., PUNE [2017 (3) TMI 1722 - CESTAT MUMBAI].

  Early hearing application is allowed. To be listed on 03/04/2019.

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• 2019 (5) TMI 590

  Time Limitation - suppression of facts or not - demand of service tax on repair and maintenance of computer UPS, computer systems and computer peripherals for the period 2003 - HELD THAT:- The appellant had not suo-moto disclosed their intention of not paying the service on the belief that the activity is not taxable to the department. It is only when the department started inquiry by writing letter dated 30/09/2004, the appellant responded that the service is not taxable, therefore, before initiation of the inquiry, the appellant has never disclosed the fact that they do not intend to pay service tax on their bonafide belief therefore, the fact which was digged out by the Revenue, shows that the appellant have not disclosed the fact and they have suppressed the facts.

  Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 589

  Penalty u/s 76 and 78 of FA - service of repairing and maintenance, Erection of Equipments, piping fabrication etc. - Service tax with interest paid before issuance of SCN - HELD THAT:- The appellant have not discharged the service tax under bonafide belief that service provided to 100% EOU is export of service. The service provided along with value has been declared in the ST-3 return. This clearly shows that the appellant under bonafide belief that service to 100% EOU is not chargeable to service tax, not paid service tax accordingly, they have made fit case for waiver of penalty imposed under Section 76 & 78.

  Since there is bonafide on the part of the appellant, the penalty under Section 78 is set aside by invoking Section 80 of the Finance Act - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (5) TMI 587

  CENVAT Credit - input services - fabrication of steel items and other services used for setting up of the factory - Rule 2(l) of CCR, 2004, as per amended Rules w.e.f. 01.04.2012 - deletion of word “setting up” from the inclusive part of input services definition w.e.f. 01.04.2011 - HELD THAT:- In the present case, the impugned services have been used not for initial setting up of the plant but they have been used in fabrication, erection and installation services of equipment like Hoppers, Chutes, Ducts and Air Tubes and not used for setting up of a factory or office building or for laying foundation.

  The definition of ‘input service’ even after amendment from 01.04.2011 includes any service used by the manufacturers ‘directly or indirectly’ and ‘in or in relation to’ manufacture of final product - Further, perusal of the invoices placed on record clearly shows that all the services have been used for fabrication and erection of various equipment and machinery and has not been used for setting up of the plant or civil structure.

  In the case of M/S. DEEPAK FERTILIZERS AND PETROCHEMICALS CORPORATION LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [2013 (4) TMI 44 - BOMBAY HIGH COURT] , the Hon’ble High Court of Bombay held that the expression ‘directly and indirectly’ and ‘in or in relation to’ manufacture of final products used in the definition under Rule 2(l) of CCR, 2004 has broader meaning.

  Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 586

  CENVAT Credit - various input services - denial on account of nexus - credit availed after 01.04.2011, when the provision of service has been completed prior to 01.04.2011 - HELD THAT:- Most of these services are availed by the appellant for carrying out the business of manufacture. During the relevant period, the definition of “input service” had a wide ambit as it included the phrase “activities relating to business” - Various decisions of the Tribunal as well as the Hon’ble High Courts have held the above services to be eligible for credit.

  The disallowance of credit is unjustified - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 585

  CENVAT Credit - Debonding of unit - Credit on the duty paid on capital goods received under Notification No. 22/2003-CE dated 31.03.2003 and Notification No. 52/2003-Cus. dated 31.03.2003 at the time of de-bonding allowed or not - HELD THAT:- Board has issued Circular No. 185/19/96/CX dated 19.03.1996 wherein it was clarified that the assessee would be eligible for availing credit on the CVD paid at the time of de-bonding on the capital goods which are imported.

  The Tribunal in the case of COMMISSIONER OF C. EX., PUNE VERSUS RAJDHANI FAB. PVT. LTD. [2007 (10) TMI 102 - CESTAT, MUMBAI] had occasion to analyze the issue of the credit availed on Excise Duty paid on indigenous capital goods before the amendment was brought forth to Rule 3(1) by adding the proviso. In the said decision, the Tribunal had held that the Board Circular clarifies with regard to the eligibility of credit on the CVD paid on imported capital goods.

  Thus, the credit availed for the balance 50% in the subsequent period is in order - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 588

  Levy of penalty - CENVAT Credit - Tribunal while allowing the appeal of the respondent, the issue of eligibility CENVAT credit to the respondent was remanded for fresh consideration - HELD THAT:- Tribunal is the fact finding authority under the Act and is required to deal both with the question of fact and law. The Tribunal should not as a matter of course remand the issues before it to the Adjudicating Authority, unless investigation into facts is required and this can be best carried out by the Adjudicating Authority.

  In the present case, the impugned order only records certain decisions and proceeds to conclude that the said decisions were not considered by the Adjudicating Authority and therefore, the issue of eligibility of CENVAT credit was remanded to the Adjudicating Authority. In the appeal before the Tribunal, there were no fresh issues of facts which were required to be investigated. In fact there was no dispute on facts.

  The impugned order of the Tribunal while remanding the matter does not give any reasons to support its remand i.e. why it cannot adjudicate upon the matter on the basis of the material on record. Further, the impugned order deleted the penalty when the issue on merits is remanded to the Adjudicating Authority. This manner of dealing with an appeal is a classic case of putting the cart before the horse.

  The impugned order dated 21st July 2017 passed by the Tribunal is set aside - Appeal of the respondent is restored to the Tribunal for passing the fresh order in accordance with law.

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• 2019 (5) TMI 584

  SSI Exemption - crossing of threshold limit - appellant submits that show cause notices were not issued to V K Industries and Harsh Enterprise, therefore, the entire case of the department does not sustain - validity of SCN - HELD THAT:- In the show cause notice itself, the value of trading sale has not been clubbed in the aggregate sale of value of M/s Dhara Engineering Works, Riya Industries and N K Engineering, therefore, the said issue has already been addressed.

  The case was made out by the officers wherein there is no any doubt as the transaction were found recorded in the books of M/s V K Industries and Harsh Enterprise and the same was endorsed by the partners and proprietor of the manufacturing unit by giving confessional statements, therefore, the demand in principle confirmed by the lower authority is legal and correct.

  Benefit of Cum-duty price - the lower authority has rejected the plea of appellant only on the ground that appellant have suppressed the fact - HELD THAT:- The findings of the lower authority is not convincing for the reason that even in case of clandestine removal, for computing the demand, the cum duty benefit has to be extended to the assessee, accordingly, the demand needs to be re-computed by considering the price as cum duty.

  Matter remanded to the adjudicating authority for limited purpose of quantification of demand - appeal allowed by way of remand.

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• 2019 (5) TMI 583

  Rectification of Mistake - is it permissible to ascertain RSP for the purpose of assessment under Section 4A of CEA, 1944, in respect of clearances made prior to issue of notification 13/2008-CE(NT) dated 1-3-2008? - Ld. Counsel pointed out that this ROM application is with reference to order of the Tribunal dated 10.01.2019. He pointed out that the said order is an interim order referring certain issues to Hon'ble President for constitution of Larger Bench.

  HELD THAT:- The issue regarding liability to pay Central Excise duty of manufacturer vis. a. vis dealer also needs to be referred to the Larger Bench - necessary deletions and substitutions made - ROM disposed off.

  Registry is directed to place the matter before the Hon'ble President for doing the needful.

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• 2019 (5) TMI 582

  Rectification of Mistake - HELD THAT:- Since the service of the order has not been ascertained, the registry is directed to submit a report as regards the service of the order to the applicant. The matter is posted for hearing on 22.04.2019.

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• 2019 (5) TMI 581

  100% EOU - short payment of duty - manufacture and export of goods - leakage in transit - duty paid at effective rate under Notification 23/03-CE dated 31.03.2003 (Concessional rate of duty) - case of the department is that the appellant being 100% EOU are required to pay duty equal to the amount of the aggregate of duties of customs in terms of Proviso to sub-section (1) of Section 3 of Central Excise Act, 1944 on the said consignment.

  HELD THAT:- From Proviso to sub-section (1) of section 3 of Central Excise Act, 1944, it is clear that any manufactured goods by 100% EOU when cleared in DTA are liable for duty equal to the amount of the aggregate of duty of customs.

  This issue is covered by the decision of this Tribunal in the case of CCE & ST-Surat-I Vs. Rajvani Synthetics Pvt. Ltd [2018 (12) TMI 1175 - CESTAT AHMEDABAD] where it was held that the duty liability on goods not specifically allowed by the Development Commissioner to be cleared to the DTA, would arise under section 3(1) of the Central Excise Act, 1944 and not under the proviso to section 3(1) of the Central Excise Act, 1944.

  Demand upheld - appeal dismissed - decided against appellant.

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• 2019 (5) TMI 580

  CENVAT Credit - duty paying documents - it was alleged that since the Bill of Entries were in the name of M/s Castrol, the Appellant have wrongly availed the credit on the basis of invalid document in contravention of Rule 9 of the Cenvat Credit Rules - HELD THAT:- When the goods has reached the Appellant under the cover of declaration by M/s Castrol and there is no dispute about the non availment of credit by M/s Castrol as well as the use of inputs by the Appellant in manufacture of finished goods which is evident from the lorry receipts, goods receipt note, maintenance of raw material account in that case there is no reason to deny credit to the Appellant - it is also found from the Public Notice 34/2006 dated 24.05.2006 issued by the Commissioner, Customs, JNCH that the requirement of endorsement by the Customs officer on Bill of Entry has been dispensed with.

  The Appellant are eligible for CENVAT credit on impugned Bills of Entry - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 579

  CENVAT Credit - input used in manufacture of dutiable as well as exempt goods - appellant have reversed the proportionate Cenvat credit attributed to the exempted goods along with interest - whether the appellant is liable to pay 10% as per Rule 6(3)(b) of Cenvat Credit Rules, 2004 or equal Cenvat Credit attributed to the exempted goods?

  HELD THAT:- The period in this case is covered by the amendment in Finance Act 2010 whereby rule 6 was retrospectively amended. Accordingly, the appellant as per the said amendment was required to reverse only proportionate credit attributed to the exempted goods which they have admittedly reversed.

  This issue has been considered by this Tribunal in the case of M/S GUJARAT INFRAPIPES PVT. LTD. VERSUS COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-II [2016 (1) TMI 268 - CESTAT AHMEDABAD] where it was held that Once, the appellant have foregone the proportionate cenvat credit in respect of input services used in or in relation of the manufacture of exempted final product, they have to be treated as complied with the provisions of sub Rule (3) of Rule 6 and hence, there cannot be any demand of amount under Rule 6(3) (b).

  Thus the appellant is not required to pay 10% of the value of exempted goods and the payment made equal to the cenvat credit is the sufficient compliance of amended Rule 6 retrospectively - appeal dismissed - decided against Revenue.

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• 2019 (5) TMI 578

  SSI Exemption - exemption was denied on the ground that the appellant have not filed the declaration as required under notification no. 22/98-C.E. (N.T.) dated 04.06.1998 whereby exemption is granted from obtaining the registration - HELD THAT:- This notification grants exemption to an assessee from obtaining the registration if the goods manufactured is cleared under exemption or goods attract nil rate of duty. As regard Notification no. 08/2000-CE, nowhere the condition is provided that if the declaration under notification 22/98 is not filed, exempted under 08/2000 is not available. Therefore, the notification no 22/98-CE(N.T.) is an independent notification for a different purpose non filing the declaration under the said notification cannot disentitle the assessee from availing the exemption under notification 08/2000-C.E.

  The demand for the period 01/04/2000-31/08/2000, up to the aggregate value of 50 lakhs is not sustainable and the same is set aside. Demand on the value exceeding ₹ 50 lakhs is sustainable - However the appellant may be, given the cum-duty benefit and accordingly the demand on the value exceeding 50 lakhs be re-computed by the Adjudicating Authority by extending the benefit of cum duty price.

  Penalty on proprietor - HELD THAT:- It is a settled law that once the penalty on the proprietorship is imposed, no separate penalty on the proprietor can be imposed for the reason that proprietorship firm and proprietor is one and the same person. Accordingly, the penalty imposed on the proprietor under Rule 209A is set aside.

  Appeal disposed off by way of remand.

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• 2019 (5) TMI 577

  CENVAT Credit - job-work - semi processed goods which were sent back to the principal manufacturers were exempted goods or not - Sub-rule (3) of Rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- The goods which were processed by the respondent on being received from the principal manufacturer, which were returned back to the principal manufacturer were not exempted goods since the same subjected to Central Excise duty and responsibility to Central Excise duty on the said goods was on the principal manufacturer as per the provisions of Notification No. 214/86-CE dated 25/03/1986.

  Demand do not sustain - appeal dismissed - decided against Revenue.

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• 2019 (5) TMI 576

  Valuation - Cylinder - inclusion of amortization cost in the assessable value - HELD THAT:- As per Rule 6 of Central Excise Valuation Rules, since the cylinder was owned by the buyer of the finished goods which were used by the appellant, its amortization cost is to be added in the value of the goods i.e. plastic pouches. As per the facts of the case, Revenue has demanded the duty on the entire value of the cylinder, which is not correct and legal, and only amortised cost of each product is to be added and on that basis first, amortized cost according to the capacity of the cylinder has to be worked out and the said amortised cost can only be added in respect of number of products manufactured and cleared by the appellant. Therefore, the method adopted i.e. demand on the entire value of cylinder is incorrect.

  For the purpose of amortization cost, Chartered Engineer can certify the capacity of the cylinder and corresponding amortization cost per piece of product. Since the said exercise was not carried out and the demand was confirmed on the basis of value of cylinder, it is not correct and legal.

  Matter remanded to Adjudicating Authority to decide the matter afresh after ascertaining the correct amortized cost of the cylinder - appeal allowed by way of remand.

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• 2019 (5) TMI 575

  Valuation - Physician samples manufactured and sold on Principle to Principle basis to the brand name owner - HELD THAT:- The appellant is clearing the physician samples on sale basis to their brand name owner and the transaction is of sale on Principle to Principle basis. Since, the physician sample is not ultimately sold, does not carry any MRP, in such a case, the valuation of the Physician sample, which is other than trade pack, if sold, should be governed by section 4 of Central Excise Act, 1944. Accordingly, the duty is required to be paid on transaction value.

  This issue has been considered time and again by this Tribunal and held that in case of Physician samples sold, the valuation should be done on transaction value in terms of Section 4 - demand not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 574

  Classification of Mixed Fuel Oil - whether the Mixed Fuel Oil is classified as Motor Spirit under heading 2710 19 90? - HELD THAT:- On identical facts and the legal issue involved in the present case has already been considered by this Tribunal in the judgments cited by Ld. Counsel in the case of M/S GAIL (INDIA) LTD. VERSUS C.C.E & S.T. VADODARA-II (VICE-VERSA) [2019 (1) TMI 174 - CESTAT AHMEDABAD] where it was held that Revenue has not produced the necessary evidence to classify the product as motor spirit falling under heading 2710.99 (prior to 31.03.2005) and under tariff Heading 2710 19 90 (after 31.03.2005).

  The identical issue involved in the case has been decided in the favour of assessee - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 573

  Rate of tax - cream milk mixed - flavoured milk - assessment year 2000-01 - HELD THAT:- From pleading and from the perusal of the documents enclosed along with the present revision, it is not in dispute that the dealer/assessee has sold flavoured milk and cream milk mixed. The department itself has issued a circular clearly holding that the flavoured milk is covered by the entry 'milk' - In the instant case, the Tribunal has rightly dismissed the appeal filed by the Commissioner while affirming the order of the first appellate authority. The first appellate authority has quashed the proceedings under Section 21 of the Act. Assessee itself has admitted the tax on cream milk mixed and flavoured milk at the rate of 8%.

  The orders passed by the first appellate authority and Commercial Tax Tribunal are upheld - revision dismissed.

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• 2019 (5) TMI 572

  Whether the medicines sold by the revisionist as CNF Agent is the Generic Salt Chloramphenicol which is exempt under the notification of the State Government dated 31.03.1992 issued under Section 4 (a) of the U.P. Sales (Trade) Tax Act, 1948 or not? - Whether the said medicine under the brand name 'Paraxin' is exempted from tax under the notification dated 31.03.1992 or not?

  HELD THAT:- Before the Commercial Tax Tribunal, the revisionist-applicant has produced the material on the basis of which the composition of the product could be examined, but the Tribunal failed to exercise its jurisdiction and therefore it was the duty of the Tribunal to get the said product examined and verified by the expert authority who can give definite finding about this product that as to whether the 'Chloramphenicol' as mentioned in the Notification dated 31.03.1992 is exempted - The trade tax tribunal is duty bound to examine the products of the revisionist-applicant and give definite finding with regard to 'Chloramphenicol' product is liable for exemption or not.

  The matter is remanded back to the Commercial Trade Tax Tribunal, who will reexamine the products of the revisionist-applicant - revision allowed by way of remand.

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• 2019 (5) TMI 570

  Condonation of delay - Tribunal refused to condoned the delay of 448 days which occurred in filing of the Reference applications - HELD THAT:- Impugned order upheld - n need to interfere with the SLP - SLP dismissed.

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• 2019 (5) TMI 571

  Attachment of property of the wife of the Director - recovery of tax dues - section 155 of the Bombay Land Revenue Code - recovery of alleged outstanding sales tax dues of Company from the property belonging to the wife of Director - HELD THAT:- This court in the case of M.R. Choksi v. State of Gujarat [ 2012 (3) TMI 392 - GUJARAT HIGH COURT ] has observed that there is no statutory provision in the Gujarat Sales Tax Act, 1969 which empowers the sales tax authorities to fasten the liability of the company on its Director in the matter of payment of sales tax dues - Similarly, there is no provision in the Gujarat Value Added Tax Act, 2003 also, which empowers the authorities acting thereunder to recover the dues of a private limited company from its Directors.

  When it is not permissible for the respondent to proceed against the Director of the company for recovery of the tax dues of the company, the question of recovering such dues from the property which belongs to the wife of the Director would not arise.

  Demand do not sustain - appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2019 (5) TMI 569

  Dishonor of Cheque - section 138 of NI Act - whether a Director of the Company can challenge issuance of notice at the threshold or it would be available to him/her at the time of his/her defence? - HELD THAT:- A perusal of the complaint which is connected to the petition would purport that the complaint is completely silent except it has described the names of the accused and the complainant. Therefore, prima facie, it appears that except the description in cryptic manner, nothing is averred in the complaint under Section 138 of the Act, 1881.

  In the complaint, only the names of the Directors are shown and except that nothing has been averred. Therefore, in what capacity the Director could be held responsible is completely vague.

  Petition dismissed.

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