TMI Tax Updates - e-Newsletter
July 16, 2020

Case Laws in this Newsletter:

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

TMI SMS

• Transfer (sale) of ongoing business concern - As excluded form list of supply of goods, would automatically fall under supply of services

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• Coaching services provided to CA aspiring students not a qualification recognized by any law for the time being in force - Liable to GST

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Highlights / Catch Notes

• GST:

  Clarification on issue of GST rate on alcohol based hand sanitizers - News
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• GST:

  Exemption from GST - Lease Agreement between the Applicant Company i.e. the Lessee and RLDA for a period of 99 years - RLDA is just providing a parcel of land which is in its ownership therefore; the lease of the same cannot be categorized as meeting condition of industrial plot and for the purpose of financial business. - This activity is not exempted from levy of GST.
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• GST:

  Classification of supply - composite supply or not - the supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract do not qualify as composite supply.
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• GST:

  Determination of liability - classification to pay GST - reimbursement received by the Applicant under the Contract from the Customer towards Lost in Hole/Damage Beyond Repair of equipment/tool (in short equipment) during execution of the services mentioned in the Contract - Liable to GST as supply of goods.
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• GST:

  Exemption from GST - vocational training courses - the applicant was granted affiliation by the National Council for Vocational Training (NCVT) in respect of vocational skills pertaining to Formal Trades viz., Diesel Mechanic, Computer Operator and Programming Assistance (COPA), Welder, Dress Making and Motor Mechanic. These vocational course are attracting NIL rate of tax
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• GST:

  Levy of GST and Service tax - coaching provided by the applicant to its students - it cannot be said that the coaching / training given by the applicant to CA aspiring students (for appearing and qualifying in the examinations) would lead to grant of certificate/qualification recognized by law. Therefore, the service rendered by the applicant is Not a service by way of ‘education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force’.
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• GST:

  Nature of supply - sales goods after import - single supply or two independent supplies - the Applicant, under a contractual obligation, is required to import drill bits by themselves as an importer and undertake to supply drill bits to the delivery location of ONGC on consignment basis i.e. sale on approval basis - the activity of import and subsequent supply of drill bits by the Applicant to ONGC does not qualify as one single supply.
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• GST:

  Export of services or not - Intermediary service or not - marketing and consultancy services supplied by the applicant - the condition that transaction not being done on his own account makes the applicant rightly fit into the definition of intermediary in the instant case.
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• GST:

  Classification of Supply - transfer (sale) of ongoing business / unit - supply of goods or supply of services or supply of goods services - The definition of services qualifies ‘anything other than goods’ as service. In this context it is obvious that the ‘going concern’, which was excluded form list of ‘supply of goods’, would automatically fall under ‘supply of services’
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• GST:

  Classification of vessel - rate of IGST - Tug Jupiter, let out under a charter for 730 days (with an option to extend the contract one year more) - Tug Jupiter let out by the applicant to RIL on charter basis is classifiable under Sl.No.10 of Heading 9966
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• GST:

  Profiteering - restaurant services - allegation that benefit of reduction in GST rate not passed on by way of commensurate reduction in prices - contravention of section 171 of CGST Act - since the recipients of the benefit, as determined, are not identifiable, the respondent is directed to deposit the amount in two equal parts in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund.
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• Income Tax:

  Income derived from letting out of property to the tenants - Industrial park / SEZ unit - in the case of an undertaking which develops, develops and operates or maintains and operates an industrial park/SEZ notified in accordance with the scheme framed and notified by the Government, the income from letting out the premises / developed space along with other facilities in an industrial park/SEZ is to be charged to tax under the head 'Profits and Gains of Business'.
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• Income Tax:

  Disallowance u/s 14A - though the tribunal directs the assessee to work out the expenditure component towards administrative and managerial aspect so that the same shall be disallowed in the computation of income, but has not issued any specific directions to the AO as to what has to be done after the assessee files the working sheet. Therefore, to that extent the tribunal has committed an error.
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• Income Tax:

  Addition on account of loss in trading of stock option - suspicious trades including reversal trades - In the absence of any investigation carried-out by the authorities below, we are of the view that assessee has been able to establish that assessee company has suffered genuine business loss as had also been suffered in earlier years, therefore, authorities below should not have disallowed the same against the assessee.
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• Income Tax:

  Income from sale of land - Income from business OR capital gain - object of the assessee to purchase the land to convert into small plots and then sale these small plots on profit - the assessee is fulfilling the condition of section 28 of the Act, being a business, therefore, we direct the Assessing Officer to treat the transaction under the head income from business and compute the tax liability accordingly.
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• Income Tax:

  Revision u/s 263 - there was no allegation by the Ld. revenue authorities that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to interests of revenue only because the A.O. made the assessment without discussing such details therein.
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• Customs:

  Misdeclaration of goods - Levy of penalty on CHA - appellant himself has sought benefit of the exemption notification by classifying the goods under chapter sub-heading CTH 13012000, which was allowed by provisionally assessing the Bills of entry subject to chemical test by the Department itself, the Department is not justified in alleging any malafide on the part of the CHA firm and its Director.
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• Customs:

  Classification of imported goods - import of natural gum / Gum Arabic - it is established that the consignments are not Gum Arabic but other Natural Gum, it has to be held that the imported consignment were classifiable under Chapter sub-heading 13019019 and are not entitled for exemption notification benefit.
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• Service Tax:

  Extended period of limitation - demand of service tax - By delaying the payment, the appellant would only be liable to pay interest which also cannot be claimed as CENVAT credit. Thus, by not paying Service Tax, the appellant would have lost something but gained nothing - there is no ground to invoke extended period of limitation.
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• Central Excise:

  Valuation - manufacturing / construction at site - pre-fabricated canopies supplied by the appellant to oil companies - the primary activity is of manufacturing and fabrication and then only goods are being taken for assembly, erection or commissioning at a given petrol pump - By no stretch of imagination, the benefit of Notification No. 12/2012-CE can be extended to a manufacturing activity which is being undertaken at a factory and thereafter the fully manufactured pre-fabricated structures are taken in the form of the CKD/SKD condition for installation at the given site.
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• Central Excise:

  Clandestine removal - double jeopardy - Both the show cause notices have alleged different offences to have been committed by the appellants, which are punishable under different provisions of the law - Penalty for both the show cause notices irrespective that they are arising out of the same transaction of acts cannot be called as double jeopardy.
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• Central Excise:

  Clandestine Removal - No document in the form of receipts of any cash or kind on account of clandestine clearance and sale of goods has been seized from the parties. No evidences of removal of excisable goods or procurement of raw-materials and its consumption are on record - there is no evidence in corroboration to the presumption of the department, demand cannot be sustained.
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Articles

• Dividend Striping- A new look after amendment in Budget 2020 and Bonus Stripping
• Refund amidst COVID crisis: Section 96B of CGST Act, 2017
• SLP DISMISSAL IN CASE OF SUMAN PODDAR , AND HIGH COURTS DISMISSING APPEAL WITHOUT FRAMING AND ANSWERING SUBSTANTIAL QUESTION OF LAW NEED RECONSIDERATION

Notifications

• GST - States

• 01/2020- State Tax - dated 14-7-2020 - Delhi SGST
  Lt. Governor of NCT of Delhi appoints the 1st day of January, 2020, as the date on which the provisions of sections 2 to 21, except section 2, section 7, section 10 and sections 13 to 20 of the Delhi Goods and Services Tax (Amendment) Act, 2019 shall come into force.

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• 38/1/2017-Fin(R&C)(155) - dated 10-7-2020 - Goa SGST
  Government of Goa appoints the 30th day of June, 2020, as the date on which the provisions of sections 2, and 12 of the Goa Goods and Services Tax (Amendment) Ordinance, 2020, shall come into force.

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• 38/1/2017-Fin(R&C)(154) - dated 10-7-2020 - Goa SGST
  Goa Goods and Services Tax (Sixth Amendment) Rules, 2020.

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• 58/2020-State Tax - dated 8-7-2020 - Maharashtra SGST
  Maharashtra Goods and Services Tax (Eighth Amendment) Rules, 2020.

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• 661/XI-2-9(42)/17-U.P. Act-1-2017-Order-(128)-2020 - dated 7-7-2020 - Uttar Pradesh SGST
  Appoints the 8th day of June, 2020, as the date from which the provisions of the Uttar Pradesh Goods and Services Tax (Fortieth Amendment) Rules, 2020, shall come into force.

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• 663/XI-2-20-9 (47)/17-U.P. Act-1-2017-Order-(127)-2020 - dated 1-7-2020 - Uttar Pradesh SGST
  Amendment in Notification No. 445/XI-2-9 (47)/17-U.P. Act-1-2017-Order-(118)-2020 dated 11 May 2020

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• 662/XI-2-20-9 (47)/17-U.P. Act-1-2017-Order-(126)-2020 - dated 1-7-2020 - Uttar Pradesh SGST
  Extend due date of compliance which falls during the period from “20.03.2020 to 29.06.2020” till 30.06.2020 and extend validity of e-way bills under section 168A of the UPGST Act.

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• Income Tax

• 47/2020 - dated 13-7-2020 - IT
  U/s 10(46) of IT Act 1961 - Central Government notifies "Real Estate Regulatory Authority" in respect of the specified income arising to that Authority

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• 46/2020 - dated 13-7-2020 - IT
  U/s 10(46) of IT Act 1961 - Central Government notifies “National Aviation Security Fee Trust” a trust established by the Central Government, in respect of the specified income arising to that trust

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• SEZ

• S.O. 2323(E) - dated 10-7-2020 - SEZ
  Central Government de-notifies an area of 6.5074 hectare, thereby making the resultant area as 32.8645 hectares at Villages Pallippuram & Vailoor, District Thiruvanathapuram in the State of Kerala

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/DDHS/CIR/P/2020/121 - dated 15-7-2020
  Relaxation from compliance with provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“ILDS Regulation”), SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 (“NCRPS Regulations”) and SEBI Circulars relating to Listing of Commercial Papers.
• Customs - 33/2020 - dated 15-7-2020
  Amendments to the All Industry Rates of Duty Drawback effective from 15.07.2020

News

• Clarification on issue of GST rate on alcohol based hand sanitizers

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• INDIA’S FOREIGN TRADE: JUNE 2020

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• Shri Piyush Goyal reiterates the extraordinary momentum developed in the India-US bilateral ties, driven by strong shared interests in promoting global stability, security and economic prosperity

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Case Laws:

• GST

• 2020 (7) TMI 353
  Exemption from GST - Lease Agreement between the Applicant Company i.e. the Lessee and RLDA for a period of 99 years - Amount transferred by the Applicant Company as Security Deposit in pursuance to the tender and lease agreement - amount deposited during February, 2019 - Applicability of N/N. 04/2019-Central Tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017 - HELD THAT:- The elements regarding long term lease (present lease is 99 years) and entity having 20% or more of ownership of Central Government are satisfied (RLDA being the statutory body of Government of India) - but the two other conditions namely, industrial plots or plots for development of infrastructure for financial business and that to award such lease to developers in any financial business area needs examination. RLDA is not awarding industrial plots to applicant but a portion of land over which some residential infrastructures are meant to be built. An industrial plot is the one in which developer is granted permission by competent authority be it Central Government/ State Government in reference to some scheme of development. These plots are for a specific purpose and if plot-holders in future tries to engage in some other work or lease conditions of agreement are breached, then the developer has every right to eject that plot-holder. In the present case, RLDA is just providing a parcel of land which is in its ownership therefore; the lease of the same cannot be categorized as meeting condition of industrial plot and for the purpose of financial business. RLDA has leased ordinary plots for residential purpose consequently the conditions of the said notification are not satisfied. Therefore, the said notification is not applicable in the instant case. Thus, The Lease Agreement between the Applicant Company i.e. the Lessee and RLDA for a period of 99 years is not exempted from levy of GST in view of the Notification No. 04/2019-Central Tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017 - the amount of ₹ 158657105/- which is transferred by the Applicant/SPV in pursuance to the tender and lease agreement dated 08.11.2019 is not exempted under GST in view of the Notification No. 04/2019-Central tax(rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax(rate) dated 28.06.2017 - amount of ₹ 158657105/- deposited during February, 2019 is not exempted from GST vide Notification No. 04/2019-Central Tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017.

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• 2020 (7) TMI 352
  Classification of supply - composite supply or not - supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract - classified under Entry 9986 (ii) - Service of exploration, mining or drilling of petroleum crude or natural gas or both? - eligibility for concessional GST rate of 5% against an Essentiality Certificate ( EC ) under Notification No. 50/2017-Customs dated 30 June 2017. HELD THAT:- The applicant is obligated to provide complete Mud Engineering and Drilling Waste Management Services. For provision of such services, it is essential to have all technical support (equipment/tools), technical personnel and required chemicals/additives. These components are clearly incidental and ancillary to main supply i.e. providing of mud engineering and drilling waste management Services for 3(three) HTHP Wells in KG Basin. If any one or more of these components is removed, the very nature of main supply i.e. provision of mud engineering and drilling waste management services would be affected. It also defeats the very purpose of the Contract and in such a scenario; there appears no service to be provided by the Applicant. Thus, the scope of the work to be provided by the Applicant under the Contract is a combination of supply of service and supply of goods which are naturally bundled in the ordinary course of business - wherein the principal supply is supply of service (mud engineering or drilling waste management services) and supply of goods viz. mud chemicals and mud additives which form incidental or ancillary supply to the principal supply. t is observed that for Mud Engineering and Drilling Waste Management Services , the scope of work was detailed under Section-II of the Contract. The said scope of work consists of deployment of personnel (mud coordinator, Mud Engineer etc,)- Ref: Clauses 11.1 to 11.3 Technical support (clause-17), Laboratory Equipment (clause-15), Logistics (clause-16). It is observed that though the contract is for Mud engineering and Drilling waste management services , the scope of work or the consideration for such services is not based on quantum or volume of the service. The scope of work under the contract encompasses the events viz. supply of technical personnel, technical equipment (on rental basis) and supply of additives/chemicals/consumables. Consideration receivable by the applicant is with reference to provision of such each event (reference to Section-HI of the Contract). Thus, all these components are not supplied or provided as a package at a single price. The supply of imported mud-chemicals and mud additives provided on consumption basis shall be classifiable as supply of goods under respective EISNs of goods as specified under CGST Act, 2017. Similarly, it is found that the other events supply of goods (on rental basis) and supply of services (supply of technical personnel) shall be accordingly classifiable independently under respective HSNs of Services/Goods as the case may be. Thus, the supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract do not qualify as composite supply - question related to classification not applicable - The benefits under referred Customs Notification is available to supply of such goods at the time of their importation subject to fulfilment of description, tariff item, lists and conditions specified therein and subject to the satisfaction of the Proper Officer.

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• 2020 (7) TMI 351
  Determination of liability - classification to pay GST - reimbursement received by the Applicant under the Contract from the Customer towards Lost in Hole/Damage Beyond Repair of equipment/tool (in short equipment) during execution of the services mentioned in the Contract - HELD THAT:- By virtue of powers vested under Sub-Section (3) of Section-7 of the CGST Act, 2017, the Government, on recommendations of the Council, specify by a notification, the transactions that are to be treated as supply of goods and not as a supply of services or a supply of service and not as a supply of goods . Further, under sub-section (2) of the Section-7 ibid {notwithstanding anything contained in sub-section (1)}, the activities or transactions specified in Schedule-III shall be treated neither as supply of services nor a supply of services. It is observed that the activities of the applicant (on which they sought advance ruling) under the subject contract did not figure in the list of activities or transactions as notified in Schedule-III. Therefore, the subject activity or transaction shall constitute a supply under sub-section (1) of Section-7 of the Act ibid in as much as the said activity or transactions is for a consideration and in the course of or furtherance of business - In case of damage of the equipment or tools, such reimbursement shall be repair cost (subject to maximum of the cost of equipment/tools to be reimbursed in case of the same were lost) and whereas in case of loss of equipment or tools, the amount to be reimbursed shall be the amount limited to original cost (F.O.B nearest port) reduced by depreciation at the rate of 10% per year to be proportioned for each completed month or part thereof subject to maximum depreciation of 50%. The equipment/tools are tangible and movable. The amount of reimbursement of equipment/tools which are damaged beyond repair or loss is at an agreed depreciated value of the Original FoB Price of such equipment/tools. Going by the methodology and by nature of the equipment/tools, the activity of reimbursement towards Lost in hole/Damage Beyond repair of equipment /tools is rightly classifiable as Supply of Goods in terms of Section-7 of the CGST Act, 2017. Depending upon the nature of actual goods involved in the subject activity, their classification is as per HSN notified for the goods and the Classification Rules made in this regard. Accordingly, the provisions relating to chargeability and levy of GST under the CGST Act and the Rules made there under as applicable to the supply of goods will apply. Thus, the reimbursement received towards LIH equipment is to be considered as a supply as per Section 7 of the CGST Act, 2017 and hence, liable to GST - The reimbursement received towards LIH equipment is classifiable as Supply of Goods in terms of Section-7 of the CGST Act, 2017. Depending upon the nature of actual goods involved in the subject activity, their classification is as per HSN notified for the goods and the Classification Rules made in this regard. Accordingly, the provisions relating to chargeability and levy of GST under the CGST Act and the Rules made there under as applicable to the supply of goods will apply.

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• 2020 (7) TMI 350
  Classification of services - Project Management Consultancy services provided to Andhra Pradesh Panchayat Raj Engineering Department for Andhra Pradesh Rural Road Project (APRRP) for Road Construction - pure services or not - applicability of Sl. No. 3 - (Chapter 99) of Table mentioned in G.O.Ms.No.588 - (Andhra Pradesh) State Tax (Rate) Dated 12/12/2017 - HELD THAT:- The services rendered by the applicant include a wide range of services like, Review verification of the Project DPRs, Project Management (execution) and Monitoring, Construction Supervision and Contract Management, including QAC and ensuring that the ESMPs are properly prepared and implemented. Exemption under Sl.No.3 of Notification No 12/2017 dated 28.07.2017 as amended - HELD THAT:- Sl.No.3 of the notification describes pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the constitution or in relation to any function entrusted to a Municipality under article 243W of the constitution. The services provided by the Applicant are exempted under Sl.No.3 of Notification No. 12/2017 dated 28.07.2017 as amended further by Notification No. 32/2017 - Central Tax (Rate), dated: 13.10.2017.

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• 2020 (7) TMI 349
  Exemption from GST - services provided under vocational training courses recognised by National Council for Vocational Training (NCVT) - whether exempted either under Entry No.64 of exemptions list of Goods and Services Tax Act, 2017 or under Educational Institution defined under Notification 12/Central Tax (Rate)? - HELD THAT:- The applicant falls under definition of education vide the Clause No. 2 (y) (iii) as education as a part of approved vocational education training in GST Notification No.12/2017 of Central Tax Rate dated 25th June 2017. The approved vocational education course is also defined in clause 2(h) of the above mentioned Notification No.12/2017 dated 28th June, 2017 and it is observed that the applicant was granted affiliation by the National Council for Vocational Training (NCVT) in respect of vocational skills pertaining to Formal Trades viz., Diesel Mechanic, Computer Operator and Programming Assistance (COPA), Welder, Dress Making and Motor Mechanic. These vocational course are attracting NIL rate of tax under GST Act, 2017 (Entry 66 of Notification NO.12/2017 CT Rate dated 28th June 2017).

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• 2020 (7) TMI 348
  Levy of GST and Service tax - coaching provided by the applicant to its students - scope of the term educational institution as defined under Notification No. 12/2017-Central Tax (Rate) dt.28.06.2017 - whether applicant is supplying the services to the students as an educational institution? - service of supply of food i.e. catering and accommodation to the students for these courses. Whether the services of supply of service of education as per the curriculum prescribed by the statutory authorities/ government to the students of the applicant tor obtaining qualifications/ certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification NO.12/2017-CT (Rate) dt.28.06.2017 (entry No.66(a)), as amended or Not? HELD THAT:- In the instant case, the coaching or training service provided in respect of the courses pertaining to CA (Inter Final) and ICWA (Inter Final) does Not fall under clause (i) of the above said definition, as the same is Not related to pre-school education and education up to higher secondary school or equivalent. Similarly, the service provided by the applicant also does Not fall under clause (iii), as the same is Not related to imparting of education as a part of an approved vocational education course (which is generally a Non-academic course and a specific trade / vocation oriented course) - In the instant case, the coaching or training provided by the applicant is for preparing the students for wTiting/appearing CA(Inter Final) and ICWA (Inter Final) Exams conducted by ICAI/ ICWAI. The said coaching or training per se does Not lead to grant of a certificate or diploma or degree or qualification which is recognized by any law. It only aims at giving a better preparation to the students and improves their chances in the examination. It is similar to any other coaching or training given in respect of competitive / entrance examinations such as IIT, EAMCET etc. It is pertinent to mention that the coaching or training as imparted by the applicant is neither mandatory Nor sine qua Non to the students appearing for CA / ICWA examination. Students, who prepare on their own, can also appear for these examinations and qualify basing on their performance. Hence, as stated supra, the coaching or training imparted by the applicant is only a facilitation / improvisation of the preparation for the said exams and canNot be considered as a coaching/training leading to grant of certificate, qualification etc. recognized by law - the coaching or training service provided by the applicant to the aspirants of CA-Foundation, CA-lnter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate is Not the service provided by means of education as a part of curriculum that has been prescribed for obtaining a qualification prescribed by law . Hence it cannot be said that the coaching / training given by the applicant to CA aspiring students (for appearing and qualifying in the examinations) would lead to grant of certificate/qualification recognized by law. Therefore, the service rendered by the applicant is Not a service by way of education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force . Supply of food and accommodation to the students of the applicant - Applicability of Entry No.66 of Notification No.i2/20i7-Central Tax (Rate) dt.28.06.2017 as amended by Notification No.2/2018-Central Tax (Rate) dated 25.01.2018 - HELD THAT:- The services of provision of food and accommodation to the students perusing the said courses are liable to GST under the same Notification and also as clarified vide CBIC Circular NO.85/04/2019-GST, dt.01.01.2019 that supply of food, beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, vide SI. No. 66 w.e.f. oi-oj-2017 itself. As applicant Not qualified as an educational institute, the above exemptions won t be applicable.

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• 2020 (7) TMI 347
  Nature of supply - sales goods after import - single supply or two independent supplies - - applicable rate of tax - import of drill bits for supply to ONGC at its location in India on consumption basis involves two supplies namely, Import into India of drill bits - Indigenous movement from the port of import to ONGC s location - If two supplies are involved in the abovementioned transaction then whether two Essentiality Certificates (EC) are required to be issued for availing benefits with respect to concessional duties of IGST and CGST - HELD THAT:- It is a self-asserted and admitted fact on record that the Applicant, under a contractual obligation, is required to import drill bits by themselves as an importer and undertake to supply drill bits to the delivery location of ONGC on consignment basis i.e. sale on approval basis - the activity of import and subsequent supply of drill bits by the Applicant to ONGC does not qualify as one single supply. In terms of Section 7(2) of the Integrated Goods and Services Tax Act, 2017, the supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. As per Section 2(4) of the Integrated Goods and Services Tax (IGST) Act, 2017, read with Section 2(11) of the Customs Act, 1962, customs frontiers of India means the limits of a customs area viz. the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities - It is a settled legal proposition that once the goods imported are cleared by the Customs authorities, all the provisions of the Customs Law (relates to imported goods) ceases to be applicable or extendable to such goods. It is therefore, clear that the activity of import of drill bits by the Applicant is a distinct activity of supply of goods in the course of inter-state trade or commerce. The post import activity of the Applicant is therefore, clearly falls within the scope of inclusive portion of expression supply under Section-7(a) of the Central Goods and Services Act, 2017. Depending upon the nature of supply, such supply of drill bits done by the Applicant are taxable services and is leviable or chargeable to CGST or IGST under CGST Act, 2017 or IGST Act, 2017, as the case may be. Any exemption from the whole or part of the tax, either absolutely or subject to conditions as may be specified, is only through a Notification issued by the Government by virtue of power vested in Section 11 of the CGST Act, 2017 or Section-6 of the IGST Act, 2017, as the case may be. It is evident that the exemption granted under Notification No. 3/2017-Central Tax (Rate) dated 28.06.2017 is a conditional one. It is a settled law that the benefits or exemption of a Notification (a conditional in nature) is available or eligible to the goods, only if the conditions specified therein are fulfilled or complied with.

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• 2020 (7) TMI 346
  Export of services or not - Intermediary service or not - marketing and consultancy services supplied by the applicant - HELD THAT:- It is evident from prima fade understanding of the issue that supplier of service i.e., the applicant is located in India and the recipient of the services i.e., Grace Davison (Singapore) is located outside India. But the third parameter i.e., the place of supply of service being outside India is mil applicable in the instant case basing on the facts as submitted by the applicant. The applicant renders its marketing and consultancy services to its overseas client and carries out all the functions in India as necessitated by its client. The mere fact that the payment has been received in convertible foreign exchange by the applicant will not qualify the transaction of the applicant as export of services. The applicant in the present case by providing marketing and consultancy services, facilitates the supply of goods i.e., fluid cracking catalysts and its additives from Grace Davison(Singapore) to it's clients in the Territory i.e, India. Besides, the condition that transaction not being done on his own account makes the applicant rightly fit into the definition of intermediary in the instant case - In the instant case the intermediary services are provided to the recipient located outside India and the Inter-state provisions as contained under Section 7 (5) (c) shall be applicable and hence IGST is payable under such transaction.

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• 2020 (7) TMI 345
  Classification of Supply - transfer (sale) of ongoing business / unit - supply of goods or supply of services or supply of goods services - Research Development work in Active Pharmaceutical Ingredient (API) formulation molecules manufacture of formulation products in small quantity for R D purpose - SI.No.2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 - transfer of unutilized credit - HELD THAT:- In the instant case the activity of the transfer is made for a consideration, but neither in the course of the business nor for the furtherance of the business. A going concern is a onetime affair made where the business is sold including assets in entirety or an independent part thereof. Even though this transaction does not amount to a supply as per definition, but qualified to be one under the scope of supply as it is backed by the term includes in Section 7(1) of the CGST Act, 2017. Thus, in the broadened interpretation of the term includes , this activity is brought under the scope of supply. Whether ongoing concern is to be treated as supply of goods or supply of services ? - HELD THAT:- The definition of services qualifies anything other than goods as service. In this context it is obvious that the going concern , which was excluded form list of supply of goods as discussed above, would automatically fall under supply of services - Further, the description of services under SI.No.2 of Chapter 99 of Notification No. 12/2017 - Central Tax (Rate) dated 28.6.2017 provides for Services by way of transfer of a going concern, as a whole or an independent part thereof as nil rated. Hence, the transaction is not liable to tax. Whether the applicant can file GST ITC-02 return and transfer unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit? - HELD THAT:- In case of sale or transfer, the transferor can transfer unutilised input tax credit to the transferee, which is lying in his electronic credit ledger, by filing Form GST ITC-02. The transaction would amount to supply of services - the transaction would cover SI.No.2 of the Notification No.12/2017- Central Tax (Rate) dated 28.6.2017 - the unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit can be transferred by filing GST ITC-02.

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• 2020 (7) TMI 344
  Classification of vessel - rate of IGST - Tug Jupiter, let out under a charter for 730 days (with an option to extend the contract one year more) - Whether classifiable under SAC 996602 or under SAC 997319? - HELD THAT:- Hon ble Tribunal in the case of SHIPPING CORPORATION OF INDIA LTD. VERSUS COMMR. OF CUS. (IMPORT) , MUMBAI [ 2013 (7) TMI 881 - CESTAT MUMBAI ] categorically, held that they are not machinery, equipment or tools. In an appeal to High Court in the case, the court ratified the same and hence a tug is not a machinery, equipment or tools independently but considered to be a vessel. Thus, Tug Jupiter let out by the applicant to RIL on charter basis is classifiable under Sl.No.10 of Heading 9966, vide Notification No. 1/2018-IT(Rate) dated 25.01.2018 read with Notification No. 8/2017-IT(Rate) dated 28.06.2017.

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• 2020 (7) TMI 343
  Participation in the proceedings - permission to make copies of the seized documents - HELD THAT:- There is a provision in law as has been placed by Mr. Dugar that the person from whose custody documents are seized under subsection (2) shall be entitled to make copies thereof. - There is no ambiguity or illegality or infirmity in the impugned order. However, we direct the appellant/petitioner to take steps in terms of Section 67 subsection 5 under Chapter XIV of the Central Goods and Services Tax Act, 2017, if he is so advised. If the appellant/petitioner takes steps as per said subsection 5 of Section 67 under Chapter XIV of the Central Goods and Services Tax Act, 2017, then the respondent no. 3 is directed to allow the appellant/petitioner to make copies of the seized documents by 13th July, 2020 subject to compliance of statutory formalities. The appellant /petitioner is directed to give written reply to the show cause notice by 20th July, 2020.

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• 2020 (7) TMI 342
  Grant of Bail - Input Tax Credit - fake bills - allegation against the petitioner who is a Chartered Accountant is of making fake firms who later on claimed input tax credit - HELD THAT:- It is deemed proper to allow the bail application. This bail application is, accordingly, allowed and it is directed that accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- each to the satisfaction of the trial Court with the stipulation that he shall appear before that Court and any Court to which the matter be transferred, on all subsequent dates of hearing and as and when called upon to do so.

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• 2020 (7) TMI 341
  Grant of Bail - offence under Section 132(1) 1 Central Goods Service Tax Act, 2017, P.S. Commissionerate, District Meerut - HELD THAT:- Learned A.G.A. could not dispute the fact that the co-accused has already been released on bail on his furnishing a personal bond. The applicants-Mohd. Shamshad and Sajjad are directed to be released on bail, under Section 132(1)1 Central Goods and Services Tax Act, 2017, P.S.- Commissionerate, District- Meerut on their furnishing a personal bond only to the satisfaction of the jail authorities, where the applicants are languishing - Application disposed off.

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• 2020 (7) TMI 340
  Profiteering - restaurant services - allegation that benefit of reduction in GST rate not passed on by way of commensurate reduction in prices - contravention of section 171 of CGST Act - penalty - HELD THAT:- The profiteered amount is determined as ₹ 41,93,431/- as has been computed in Annexure-14 of DGAP's Report dated 27.12.2019 - Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133(3)(a) of the above rules - Further, since the recipients of the benefit, as determined, are not identifiable, the respondent is directed to deposit an amount of ₹ 41, 93,431/- in two equal parts of ₹ 20,96,715.50 each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund as per the provisions of Rule 133(3)(c) of the CGST Rules, 2017 alongwith interest payable @ 18% to be calculated from the respondent from his recipients till the date of its deposit. The above amount of ₹ 41, 93, 431/- shall be deposited, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners. Penalty - HELD THAT:- The respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of section 171(1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore he is loable to penal action under the provisions of the section - accordingly, a notice be issued to him directing him to explain why the penalty prescribed under section 171 (3A) of the Act read with Rule 133 (3) (d) of CGST Rules, 2017 should not be imposed on him.

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• Income Tax

• 2020 (7) TMI 339
  Disallowance u/s 14A - procedure to be followed by AO under Section 14A - as per tribunal Assessing Officer is not justified in making excessive disallowance and that the CIT(A) rightly restricted the disallowance to the extent the dividend income declared by the assessee - HELD THAT:- AO must, in the first instance, determine whether the claim of the assessee in that regard is correct and the determination must be made having regard to the accounts of the assessee. The satisfaction of the AO must be arrived at on an objective basis. It is only when the AO is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. Sub-s. (3) of s. 14A provides for the application of sub-s. (2) also to a situation where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under the Act. See GODREJ AND BOYCE MFG. CO. LTD [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided in favour of assessee. Income derived from letting out of property to the tenants - Property in an industrial park/SEZ including the amenities - income from other sources or business income or income from house property - HELD THAT:- We need not labour much on this issue, on account of the circular No.16 of 2017 issued by the CBDT dated 25.04.2017. The CBDT after taking note of the two decisions of the Karnataka High Court held that it is now a settled position that in the case of an undertaking which develops, develops and operates or maintains and operates an industrial park/SEZ notified in accordance with the scheme framed and notified by the Government, the income from letting out the premises / developed space along with other facilities in an industrial park/SEZ is to be charged to tax under the head 'Profits and Gains of Business'. As rightly pointed out by Mr.R.Vijaya Raghavan, the emphasis is on not only letting out of the premises / developed space but along with other facilities in an industrial park/SEZ. The tribunal in this regard followed a decision of the Division Bench of this Court in the case of CIT Vs. Elnet Technologies Limited [ 2012 (11) TMI 671 - MADRAS HIGH COURT] - Decided in favour of assessee.

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• 2020 (7) TMI 338
  Disallowance u/s 14A - whether the tribunal was right in coming to the conclusion that the Assessing Officer has not recorded his mandatory satisfaction as required u/s 14A(2)? - HELD THAT:- AO after going through the submission made by the petitioner pointed out that the assessee had computed the disallowance of dividend by invoking the provisions of Rule 8D, but while doing so, ignored sub rule iii of the said rule. It appears that this was pointed out to the assessee. Assessee though filed a response on 09.01.2014, the Assessing Officer states that the assessee did not address the issue of computation of the third limb of Rule 8D. The finding recorded by the AO is sufficient and a clear indication of his compliance of the procedure under Section 14A(2), the AO at the first instance has considered whether the claim of the assessee is correct and thereafter only has proceeded to determine the amount by adopting the procedure under Rule 8D. For assessment year 2011-12 - it cannot be stated to be the case where there is a failure to follow the procedure under Section 14A (2) So far as the order passed for the assessment year 2012-13 on a closer reading of impugned order, we find that though the tribunal directs the assessee to work out the expenditure component towards administrative and managerial aspect so that the same shall be disallowed in the computation of income, but has not issued any specific directions to the AO as to what has to be done after the assessee files the working sheet. Therefore, to that extent the tribunal has committed an error. Hence, we are of the considered view that the matter should be remanded for fresh consideration of the Assessing Officer in accordance with law. - Decided in favour of revenue.

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• 2020 (7) TMI 337
  Stay petition - Lockdown due to Covid-19 Pandemic - prayer for interim stay and appropriate direction issued to the appellate authority for the disposal of interim application along with the appeal within a reasonable period after lock down is over subject to deposit of the 20% of the demanded amount which is not phenomenal - HELD THAT:- This writ petition can be disposed of, with a direction to the 2nd respondent to take a call on application of stay within two months from the date of receipt of a copy of this judgment after affording an opportunity of hearing to the petitioner and pass a speaking and reasoned order. However, till such time, the revenue recovery proceedings based on Ext.P4 shall be kept in abeyance, subject to the condition that the petitioner deposits 10% of the demand raised within a period of one month.

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• 2020 (7) TMI 336
  Penalty u/s 271(1)(c) - Assessment u/ 153A - addition towards bogus long term capital gain and addition towards unexplained cash expenditure - HELD THAT:- No penalty under Explanation-5 to Section 271(1)(c) of the Act could be levied in respect of undisclosed income found in the course of search but which were duly returned by the assessee in the return filed u/s.153A of the Act together with compliance of other conditions submitted in Clause-2 of Explanation-5 to Section 271(1)(c) of the Act which provides immunity to the assessee from levy of penalty. By this, the penalty levied for all the assessment years in the total sum is deleted. In respect of penalty on additions made during the course of assessments framed u/s.153A of the Act for three assessment years i.e. A.Yrs 2001-02, 2003-04 and 2007-08, we hold that the same is deleted for recording improper satisfaction on the part of the ld. AO by not mentioning the specific offence committed by the assessee in the quantum assessment order and also for initiating penalty on one limb and levying penalty on the other limb of the alleged offence. By this, the penalty levied for three assessment years is deleted. - Decided in favour of assessee.

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• 2020 (7) TMI 335
  Disallowance u/s.40(a)(ia) - Scope of second proviso of Section 40(a)(ia) r.w.s. 201(1) as amended - exhibition expenses paid to Idea House Pvt. Ltd. without deduction of tax at source - HELD THAT:- The said amendment has been held to be retrospective in operation in the case of CIT vs. Ansal Landmark Housing Development Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] . We find that the decision in the case of Thomas George Muthoot vs. CIT [ 2015 (7) TMI 810 - KERALA HIGH COURT] is against the assessee on the very same issue wherein the second proviso to Section 40(a)(ia) r.w.s. 201(1) of the Act had been held to be prospective in operation. We could find that there are divergent views taken by different non-jurisdictional High Courts. In such a scenario, the Hon ble Supreme Court in the case of Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] had held that the construction that is favourable to the assessee should have to be considered. Accordingly, we would like to place reliance on the decision of the Hon ble Delhi High Court referred to supra and hold that assessee herein being a payer cannot be treated as an assessee in default and consequently, no disallowance u/s.40(a)(ia) of the Act could be made in the hands of the assessee herein. - Decided in favour of assessee. TDS u/s 194C - Disallowance u/s.40(a)(ia) - advertisement expenses incurred without deduction of tax at source - HELD THAT:- There is absolutely no dispute that the said payment was made towards advertisement charges to Harsha Agencies which is a franchisee of The Hindu . On bare reading of provisions of Section 194C of the Act, we find that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract shall deduct tax at source thereon. Explanation to Section 194C of the Act defines the term work to include advertising . Hence, the very fact that assessee had given the advertisement material to M/s. Harsha Agencies, constitutes a contract entered into by assessee and Harsha Agencies - all the ingredients of Section 194C of the Act get squarely attracted in the instant case - assessee is indeed liable for deduction of tax at source on the said payment -AO is justified in making disallowance u/s.40(a)(ia) - Decided against assessee. Disallowance of transport expenses u/s.40(a)(ia) on non-deduction of tax at source - HELD THAT:- Assessee submitted that since PAN was obtained from the respective transporters to whom payments were made, pursuant to the amendment brought in the provisions of Section 194C of the Act w.e.f. 01/10/2009, there was no requirement for the assessee payer to deduct tax at source once PAN is obtained. AO however, ignored the contentions of the assessee and observed that the said payment would attract provisions of Section 194C and proceeded to make disallowance u/s.40(a)(ia) in the assessment - before the ld. CIT(A), the assessee had indeed made a submission that the respective transporters had included these sums in their returns and hence, the assessee should not be invited with disallowance u/s.40(a)(ia) of the Act in terms of second proviso to Section 40(a)(ia) r.w.s. 201(1) . CIT(A) had not discussed on this particular submission of the assessee at all and had not given any finding in its appellate order regarding the same. We find that this is a statutory benefit provided to the assessee which should not be taken away. Even before us, we find that the ld.AR except making oral statement that the payees have included the said receipts in their income tax returns, had not produced any documentary evidence before us. However, in order to avoid double taxation, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO for the limited purpose of verification of the income tax returns for the Asst Year 2010-11 of the respective payees in the light of the second proviso of Section 40(a) (ia) r.w.s. 201(1) - as already held that second proviso has already been held to be retrospective in operation - if the payees have included the subject mentioned transaction in their income tax returns, then the assessee payer should not be treated as assessee in default and disallowance u/s.40(a)(ia) of the Act should be deleted in its hands - Decided in favour of assessee for statistical purposes.

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• 2020 (7) TMI 334
  Addition u/s 68 or 69A - assessee failed to prove the source of income in the hands of the persons who gave DD in favour of the Excise Commissioner on behalf of the assessee - no pan numbers were given in their confirmation letters - HELD THAT:- If we go through the observations of the Tribunal, it is very clear that the Tribunal has concluded the issue of applicability of provisions of sec.68 or 69A of the Act, without allowing further scope to challenge the issue. Therefore, we are of the considered view that, there is no merit in the arguments of the ld. AR of the assessee that the provisions of sec.68 or 69A of the Act has no application to the impugned amounts. As regards the additions made towards the DDs taken from certain parties, on perusal of confirmation letters filed by the assessee before the AO, the copies of which are made available to us in paper book, we find M/s Sangameshwara Enterprises from whom a sum of ₹ 5.00 lakh has been taken by the assessee was confirmed that they have issued DD in favour of the assessee and said DD has been taken from M/s Vysya Bank, Bidar Branch. We further noted that M/s Sangameshwara Enterprises is also assessed to income tax at Gulbarga. Therefore, we are of the considered view that, no additions could be made in respect of DD taken from M/s Sangameshwara Enterprises. As regards amount received from Sheri. Negara, although the assessee has filed confirmation letter along with affidavit from the person who gave the DD, but fact remains that the details of pan numbers and income tax assessment of Shri Nagaraj has not been furnished so as to ascertain whether Shri Nagaraj is having sufficient source of income to explain the DD issued on behalf of assessee. From the above, it is clear that addition made towards DD taken from Shri. Nagaraj to the extent of ₹ 5.00 lakhs remains unexplained. There is no error in the findings recorded by the AO as well as the ld.CIT (A) to confirm the addition. Addition made for DD received from Shri V.B.Manik Rao - As explained in the light of the findings of the Tribunal Therefore, we are of the considered opinion that once the assessee has given the details of income tax assessment of person who gave the DD, merely for the reason that pan number is not furnished, no addition could be made. Hence, we direct the AO to delete the addition made towards DD taken in the name of Shri V.B.Manik Rao. Out of additions sustained by the ld. CIT (A) of ₹ 22.00 lakhs, the assessee gets a relief to the extent of ₹ 15.00 lakhs towards Demand Drafts received from M/s Sangameshwaran Enterprises, Shri N.R.Veerappa and Shri V.B,Manik Rao. The balance amount of ₹ 7.00 lakhs being amount received from Shri Nagaraj and Shri U.G.Rohit is still unexplained and hence, we confirm the additions made by the AO towards Demand Drafts claimed to have received from above two parties. Appeal filed by the assessee is partly allowed.

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• 2020 (7) TMI 333
  Disallowance u/s 14A read with Rule 8D - HELD THAT:- Assessee has received dividend income of ₹ 1,80,717/- only. The Hon ble Delhi High Court in the case of Joint Investment Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] held that the disallowance u/s 14A cannot be more than to that of the exempt income. Since in the present case the dividend income earned by assessee is of ₹ 1,80,717/- which is claimed exempt under section 10(34) therefore, disallowance under section 14A read with Rule 8D should not exceed the exempt income. We, therefore, set aside the Orders of the authorities below and restrict the addition. Addition on account of loss in trading of stock option - AO confronted the Order of the SEBI to the assessee in which it was alleged that assessee had made losses in indulging in suspicious trades including reversal trades - HELD THAT:- In the present case, the A.O. / Ld. CIT(A) have not gone into the facts and material evidence on record and merely referring to the interim order of the SEBI and subsequent order have decided the issue against the assessee. Since in the case of Rakhi Trading Pvt. Ltd. [2018 (2) TMI 580 - SUPREME COURT ] the issue under Income Tax Act was also not adjudicated upon, therefore, in our humble opinion the decision in the case of Rakhi Trading Pvt. Ltd., (supra), would not support the case of Revenue. In the absence of any investigation carried-out by the authorities below, we are of the view that assessee has been able to establish that assessee company has suffered genuine business loss as had also been suffered in earlier years, therefore, authorities below should not have disallowed the same against the assessee. In view of the above findings, we set aside the Orders of the authorities below and delete the entire addition. In the result, Ground No.1 of the appeal of Assessee is allowed.

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• 2020 (7) TMI 332
  Income from sale of land - Income from business OR capital gain - object of the assessee to purchase the land to convert into small plots and then sale these small plots on profit - AO and CIT-A held that since the assessee s main business is to do liasoning work in the real estate property and therefore assessee is not a business man in property - HELD THAT:- Presumption of the Assessing Officer that since the assessee does liasoning work in the real estate transaction therefore he cannot do the business, is not tenable. We note that the business is defined u/s 2(13) - Business as contemplated by section 28 of the Act, is an activity capable of earning of profit which can be taxed. One of the ingredients of business is that it must be carried on with profit motive. However, while doing the business, the loss may also be incurred but the person who starts the business has always a profit motive. We note that Hon ble Supreme Court in the case of Mercantile Corporation Pvt. Ltd. [ 1972 (1) TMI 2 - SUPREME COURT ] held that the company dealing in real estate can be said to carry on business which develops a market- place, and lease out shops, sales plots. We note that in the assessee s case under consideration, the assessee is fulfilling the condition of section 28 of the Act, being a business, therefore, we direct the Assessing Officer to treat the transaction under the head income from business and compute the tax liability accordingly. The assessee is directed to submit necessary details to compute income from business from such transaction. Addition made on account of opening capital balance - assessee submitted before the Assessing Officer that the opening capital balance represents the capital which has been accumulated over years as per the returns of income filed with the Income tax Department - HELD THAT:- As assessee contends before us that in the income tax return there was no any requirement to file the figure of the proprietor s capital account and in fact there was no column in the income tax return to show the proprietor s capital account therefore, in the income tax return, the figure of ₹ 34,80,000/- is not getting reflected, this issue needs to be remitted back to the file of AO to examine afresh the balance sheets of the assessee vis- -vis income tax returns filed by the assessee. We direct the Assessing Officer to examine the income tax returns and the copy of the balance sheet and profit and loss account of the assessee and adjudicate this issue in accordance with law. For statistical purposes this ground is treated to be allowed. Unexplained cash credit - HELD THAT:- We note that before us the assessee submitted the SBI saving bank account details wherein we noticed that the respective amount have been deposited by way of account payee cheque and it is not a cash deposit, as wrongly admitted by the assessee during the assessment stage. The purpose of taxation law is to tax the right income in the hands of the right person and in the right assessment year. Therefore, we remit this issue back to the file of the Assessing Officer to examine the bank statement and adjudicate the issue in accordance with law. The assessee is directed to file the copy of bank statement of A/c of SBI saving bank account. For statistical purposes, the third issue is treated to be allowed. Penalty u/s 271(1) (c) - HELD THAT:- Since we have adjudicated the appeal of the assessee on merits and deleted some additions and we also remitted some issues back to the file of Assessing Officer to adjudicate these issues afresh. Since the quantum has been deleted by us therefore the penalty should not survive. That is, since we have deleted the additions/ issues remitted back to the file of the AO for fresh adjudication therefore penalty u/s 271(1) (c) does not survive hence we cancel the penalty U/s 271(1) (c).

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• 2020 (7) TMI 331
  Revision u/s 263 - assessment order passed by the assessing officer under section 153A/ 143(3) - HELD THAT:- It is a settled position in law that provisions of sec. 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the Ld. revenue authorities that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to interests of revenue only because the A.O. made the assessment without discussing such details therein, as held in the case of Chroma Business Ltd. vs. DCIT [ 2003 (10) TMI 256 - ITAT CALCUTTA-C]. Revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. A.O. and verified by him in original assessment order u/s 153A / 143(3) dated 28.12.2016 and second assessment order u/s 143(3) r.w.s 263 of the Act dated 31.12.2018 and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed. Therefore, based on these facts and precedents narrated above, we quash the second 263 order of ld. PCIT. - Appeal filed by the assessee is allowed.

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• 2020 (7) TMI 330
  Addition 36(1)(va) read with Section 2(24)(x) - delayed PF and ESI payments - payments of employees contribution by the Assessee towards provident fund and Employees State Insurance which are not deposited on or before the due date to the respective organizations but which are deposited before the due date for filing return of income u/s.139(1) - HELD THAT:- The Hon ble Karnataka High Court in the case of CIT Vs. Sabari Enterprises [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] has taken the view that contributions made by the Assessee to PF and ESI are allowable deductions even though made beyond stipulated period as contemplated under the mandatory provisions off Sec.36(1)(va) read with Section 2(24)(x) of the Act provided such contributions are paid by the Assessee on or before the due date for furnishing the return of income as per Sec.139(1) of the Act. Decided in favour of assessee. Determination of arm's length price (ALP) in respect of international transaction of rendering software development services by the assessee to its Associated Enterprise (AE) u/s. 92 - Comparable selection - HELD THAT:- Referring to software development services provided by the assessee we are of the view that Persistent Systems Ltd. should be excluded from the list of comparable companies as into software products and software solutions and no segmental details were available and therefore the profit margin in the software development services segment could not be compared with the assessee's profit margin. RPT filter applied by the TPO - Related Party Transaction - As far as Tech Mahindra Ltd. is concerned, the learned counsel made a prayer that the related party transaction (RPT) of this company was more than 25% - it would be just and proper to set aside the order of DRP on this issue and remand the issue to AO/TPO for consideration of the contention of the assessee with regard to the exclusion of this company by application of RPT filter. Ad justment on account of working capital at 5.23% - In keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the Assessee should be allowed. We hold and direct accordingly. Exclusion of Larsen Toubro Infotech Ltd. , is not considered because this company was chosen by the Assessee as a comparable company in its TP study. Though the Assessee is entitled to challenge the inclusion even though it was chosen by the Assessee as comparable company, in the present case we do not wish to go into this question for the reason that by reason of the relief allowed to the Assessee the profit margin of the Assessee after working capital adjustment would be within ALP. Similarly, inclusion of ICRA techno Analytics Ltd., and Mindteck (I) Ltd., is not considered because by reason of the relief allowed to the Assessee the profit margin of the Assessee after working capital adjustment would be within ALP.

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• 2020 (7) TMI 329
  Validity u/s 143(3) r.w.s 144C(3) - scheme of merger conceived - Entity non-existent on the date on which the assessment order was passed - HELD THAT:- Assessee viz. Satyam Computers Services Ltd. w.e.f 1-4-2011 merged with M/s Tech Mahindra Ltd. After the said merger, all the proceedings against Satyam Computer Services Ltd. were taken over by Tech Mahindra Ltd. Assessment order passed by the A.O u/s 143(3) r.w.s 144C(3), dated 25-5-2015 in the hands of M/s Satyam Computers Services ltd., i.e an entity that was non-existent on the date on which the assessment order was passed, the same would thus be non-est in the eyes of law.

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• 2020 (7) TMI 328
  Unexplained investment u/s 69 - Explanation to source of investment - HELD THAT:- A perusal of the order of the first appellate authority does not reveal that any notice of enhancement was issued to the assessee and prior to such notice it is not known whether the CIT(A) has asked the assessee to explain the source of investment. Though there is a passing reference that the assessee was required to explain the source of investment but evidences filed by the assessee have been simply rubbished by the ld. CIT(A). CIT(A) ought to have asked the assessee to explain the source of investment and if not satisfied, then should have issued notice of enhancement. Since the Assessing Officer had no opportunity to examine the evidences, we deem it fit to restore the entire issues to the file of the CIT(A). CIT(A) is directed to examine the evidences relating to the source of investment and after satisfying himself, should proceed further keeping in mind that the AO has not made any addition u/s 69 as relying on SARDARI LAL CO [ 2001 (9) TMI 1130 - DELHI HIGH COURT] and SHRI. B.P. SHERAFUDIN [ 2017 (11) TMI 128 - KERALA HIGH COURT] - Appeal of the assessee is treated as allowed for statistical purposes.

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• 2020 (7) TMI 327
  Long-term capital gain - FMV determination - HELD THAT:- Fair market value of the property as on 01.04.1981 was claimed by the assessee on the basis of actual sale instance of the comparable property but the same was not accepted by the AO, who adopted the fair market value of the property as on 01.04.1981 on the basis of the valuation made by the Departmental Valuation Officer (DVO). He has contended that the copy of the DVO s valuation report, however, was never given by the AO to the assessee and even the objections raised by the assessee in respect of the valuation determined by the DVO before the ld. CIT(Appeals) were not properly considered by him. As contended that even the sale instances relied upon by the assessee to justify the fair market value of the property as on 01.04.1981 taken by him were not properly appreciated either by the Assessing Officer or by the ld. CIT(Appeals) - a similar issue involved in the case of co-owner Shri Samaresh Kumar Mondal, brother of the assessee, has already been sent back by the Tribunal to the Assessing Officer for reconsideration - A perusal of the order of the Tribunal passed in the case of Samaresh Kumar Mondal, however, shows that a similar issue involved in the said case in the identical facts and circumstances was remitted by the Tribunal back to the ld. CIT(Appeals) for fresh adjudication - Appeal of the assessee is treated as allowed for statistical purposes.

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• Customs

• 2020 (7) TMI 326
  Valuation of imported goods - Provisional release of goods - Plain White Papers in Rolls - enhancement of value without any basis - HELD THAT:- Though the DRI has seized the goods for the reason that goods were undervalued but no documentary evidence shows that from where the value was adopted as against the value declared by the appellant. Since the case is under investigation, we do not want to comment whether enhancement of value is legal or illegal. However, considering the various judgments and facts of the present case, we find that terms of bank guarantee fixed by learned Principal Commissioner at ₹ 1.6 Crore is very excessive as against the total differential duty involved ₹ 59 Lakh approx. - the goods were seized on the basis of prima facie nature of the case of undervaluation and detailed investigation is yet to be carried out. Terms and condition of bank guarantee - HELD THAT:- There cannot be a fixed criteria for the amount of security to be given along with bond for provisional release of goods and it varies from facts of each case. Therefore, considering the overall facts and circumstances of the present case, we are of the view that ends of justice will be met if the appellant execute bond of 100% value of the goods and bank guarantee for 100% of differential duty amount. Appeal allowed.

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• 2020 (7) TMI 325
  Classification of imported goods - import of natural gum / Gum Arabic - prohibited goods or not - benefit of Notification No. 96/2008 Customs dated 13 August 2008 - exemption from Counter Veiling Duty (CVD) - applicability of CBEC Circular dated 28 June 2007 - requirements for Gum Arabic as per standard specification of IS 6795-2007 met or not - HELD THAT:- It is found that the Department did not reject the claim of the appellant for classifying the subject consignment under the CTH 13012000 straight away at the time of filing of the bills of entry, though there is no document which may indicate that import consignments are Gum Arabic. The goods were assessed provisionally as per the importers claim and sent for chemical examination for determining the true nature of the import goods. Benefit of N/N. 96/2008 Customs dated 13 August 2008 - HELD THAT:- The import documents and the chemical examination report of the consignments establish that consignments were other Natural Gum . As the exemption Notification No. 96/2008 Customs dated 13 August 2008 exempts only Gum Arabic, classifiable under CTH 13012000 from the levy of the customs duty and it is established that the consignments are not Gum Arabic but other Natural Gum, it has to be held that the imported consignment were classifiable under Chapter sub-heading 13019019 and are not entitled for exemption notification benefit under Notification No. 96/2008 Customs dated 13 August 2008. Thus, there are no infirmity in the order of the Commissioner (Appeals) and, accordingly, we uphold the findings made in this regard. Incorrect details and declarations regarding the description and classification under CTH 13012000 or not - HELD THAT:- The custom house agent firm namely M/s Bharti Freight Forwarders Pvt. Ltd. and its Director Anil Kumar Tiwari only described the goods in the bills of entry as provided in the bills of landing and the invoices. It is also a matter of record that in the show cause notice no evidence has been brought forward to indicate that the clearing agent and its Director had conscientiously done anything to evade the customs duty - No malafide can be attached to such a mistake, when the goods were provisionally assessed and samples were drawn from the import consignments to determine the true nature and identity of the import consignments. Thus, there is no substance that the clearing agent did any omission and commission consciously which led to evasion of customs duty. Imposition of penalty on the CHA firm and its Director under Section 112 (b) of CA - HELD THAT:- None of the requirements provided under Section 112 (b) have been established against the clearing agent. Since the importer - appellant himself has sought benefit of the exemption notification by classifying the goods under chapter sub-heading CTH 13012000, which was allowed by provisionally assessing the Bills of entry subject to chemical test by the Department itself, the Department is not justified in alleging any malafide on the part of the CHA firm and its Director. Thus, there is no ground to levy any penalty on the appellant CHA firm M/s Bharti Freight Forwarders Pvt. Ltd. and its Director Anil Kumar Tiwari - Penalty set aside. There is no merit in the appeal filed by M/s B.L. Goyal and it deserves to be dismissed - the Appeals filed by M/s Bharti Freight Forwarders Pvt. Ltd. and its Director Anil Kumar Tiwari, deserve to be allowed - Application disposed off.

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• Securities / SEBI

• 2020 (7) TMI 324
  Guilty of causing false media report causing the rise in the price of the scrip - temporary prohibitory order - WTM directing the present appellants to disgorge an amount of ₹ 22,69,461/-along with interest at the rate of 12% per annum from December 22, 2008 - HELD THAT:- Appellants submitted that there is a delay in the proceeding, the documents filed by the appellants themselves would show that before the WTM they were pressing time and again for more documents from the respondents before filing reply to the show cause notice. Even though a compact disk was supplied to them the demand continued which ultimately led to filing of reply belatedly. Though the practice of keeping temporary prohibitory order continuing for a long period cannot be accepted, it is to be noted that ultimately the said order is revoked. Therefore, the issue does not survive. WTM had taken into consideration the earlier dealing of the appellants in the scrip of PSTL wherein the appellants were charged for last traded price manipulation. The appellants and deceased noticees were exonerated from the charges and only charge remained for trading of the appellants and deceased noticees for a period from December 17 to 22, 2008. The trading of period of December 16 is also taken into consideration by the WTM. However, finding that there was sudden increase in purchase of the shares of PSTL by the appellants and the deceased noticees during December 17-19, 2008 as detailed and off-loading of all those shares on December 22 before 10:30 am the order was passed. It is an admitted fact that Nirmal Kotecha had close relations with the appellants. Many business transactions as well as gratuitous transactions of advancing interest free loan between them is an admitted fact. Out of interest free loan granted by Nirmal Kotecha to the appellants, admittedly appellants utilized some portion for the business purpose. Admittedly, they always had telephonic conversation. Admittedly, the appellants form a family group as further explained in the paragraph 1 of the synopsis itself. The appellants had pleaded before the WTM that the proceedings against them be kept in abeyance till the proceedings against Nirmal Kotecha would come to an end i.e. appeal filed by Nirmal Kotecha in this Tribunal is decided. Judicial notice can be taken that the appeal filed by Nirmal Kotecha, is finally dismissed by this Tribunal on merit holding him guilty of causing false media report causing the rise in the price of the scrip. In the circumstances, the findings recorded by the learned WTM needs no interference.

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• Insolvency & Bankruptcy

• 2020 (7) TMI 323
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- There is no formal contract between the Operational Creditor and Corporate Debtor relating to the Job or Service undertaken/to be undertaken - No evidence record of Debt or acknowledgement letter from the Corporate Debtor is made available by the Operational Creditor. Application rejected.

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• 2020 (7) TMI 322
  Disciplinary action against the Insolvency Resolution Professional (IP) - allegation that IP had contravened provisions of the Code, Regulations, and directions - Liquidation of Corporate Debtor - HELD THAT:- The Code envisages the role of an Insolvency Professional to manage the entire resolution process and to conduct liquidation of a Corporate Debtor. The RP is appointed by the Adjudication Authority and is given wide power by them to effectively run and manage the entity as a going concern, and also to manage the assets of the entity at all times during the process of CIRP. Further, the RP have been given immense powers under the Code, but they also have the corresponding responsibility to abide by the Code, rules, regulations and guidelines at all times. In India today, there are professionals and intermediaries that offer services to resolve financial distress of both registered entities as well as individuals. These include lawyers, accountants and auditors, valuers and specialist resolution managers. However, given the critical role that the Code envisages for these entities in the resolution process, the Committee believes that the Board should set minimum standards for the selection of these professionals, along with their licensing, appointment, functioning and conduct under the Code. The duties of IP and CoC are clearly provided under the provisions of the Code. In the present case, the RP permitted conduct of third valuation upon the desire of CoC despite his disbelief in conducting the third valuation. He further incurred additional financial costs upon an over-burdened CD through conduct of such third valuation. Thus, he allowed the members of CoC to usurp his powers thereby putting additional burden on an already ailing CD - Regulation 4(3) of IBBI (Liquidation Process) Regulations, 2016 clearly states that in cases where the Liquidator fees has not been decided by the CoC, then the liquidator is entitled to a fee as per the table provided in the abovementioned provision. Despite such clear and unambiguous position of the law, the IP continued to charge the same fees during liquidation process which he was charging while acting as an RP. The DC, in exercise of the powers conferred under section 220 of the Code read with Regulation 13 (3) of the IBBI (Inspection and Investigation) Regulations, 2017 and sub-regulations (7) and (8) of Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, DC hereby directs Mr. Bhupesh Gupta to deposit an amount of ₹ 31,09,000/- (Rs. Thirty-One Lakh Nine Thousand only) in the Liquidation Estate of CD which he has drawn without any authorisation during the period 8th August 2018 to 31st October 2019 while acting as liquidator. However, Mr. Bhupesh Gupta is at liberty to claim liquidator fee in accordance with the provisions of Regulation 4(3) of the IBBI (Liquidation Process) Regulations, 2016. This Order shall come into force on expiry of 30 days from the date of its issue.

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• Service Tax

• 2020 (7) TMI 321
  Refund of CENVAT credit - denial of credit on the ground that the premises in question from where the services in question were exported, were not registered with the Revenue Department - Rule 5 of CCR Rules, 2004 - HELD THAT:- In a recent decision in BNP Paribas Sundaram Global Securities Operations Pvt. Ltd, [ 2018 (6) TMI 676 - MADRAS HIGH COURT ], the Hon'ble High Court of Madras, has interalia held that Rule 5 of CCR, 2004, does not stipulate registration of premises as a necessary pre-requisite for claiming a refund. The relevant rules, notifications and earlier judgments of the Coordinate Bench having been considered while allowing the appeal filed by the Assessee, the learned Tribunal held that refund claimed by the Assessee on Cenvat Credit cannot be disallowed merely because the premises in question was not registered with the Revenue Department. It is brought to our notice that the Assessee had applied for such registration and the same was granted by the Department on 1.6.2009 and the present controversy pertains to the period prior to 01.06.2009, the date of grant of registration. Appeal dismissed - decided against Revenue.

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• 2020 (7) TMI 320
  Extended period of limitation - demand of service tax - banking and other financial services or not - appellant availed services for placing Foreign Currency Convertible Bonds (FCCB) in the International Capital Market to raise capital - reverse charge mechansim - Section 66A of the Finance Act, 1994 - HELD THAT:- It is not in dispute that the appellant availed the services from foreign service providers in relation to floating of FCCBs in those countries The nature of services referred by the service providers falls squarely within the definition of merchant banker in terms of the SEBI (MBR 1990).Therefore, in terms of Section 65(12)(a)(iii) the services referred squarely fall under the definition of bank and other financial services. As the recipient of these services, the appellant was required to pay service tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 r/w Rule 2 of Service Tax Rules, 1994 - It is not in dispute that the appellant has not paid the service tax and had not disclosed these facts to the Revenue at any stage. Investigation by the officers revealed these facts and on being pointed out the appellant paid the entire amount of service tax along with some interest - decided in favor of Revenue. Time Limitation - Penalty - HELD THAT:- There are no evidence in the particular facts and circumstances of this case that the appellant tried to actively suppress or misstate facts. It is true that they have not paid service tax which they were required to. It is equally true had they paid the service tax they could have immediately taken the CENVAT credit of the entire amount so paid and utilized it. By delaying the payment, the appellant would only be liable to pay interest which also cannot be claimed as CENVAT credit. Thus, by not paying Service Tax, the appellant would have lost something but gained nothing - there is no ground to invoke extended period of limitation. As the entire period of demand is beyond the normal period the same needs to be set aside along with the interest - penalty u/s 78 also set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (7) TMI 319
  CENVAT Credit - input services - outward transportation of goods from their premises to the buyers premises or otherwise - sale of goods on FOR (buyer s premises) basis - place of removal - HELD THAT:- This issue is no longer Res integra. It has been settled by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] and the issues were identical. In that case, the original adjudicating authority namely the Assistant Commissioner had denied the benefit of CENVAT credit on the outward transportation of the goods from the factory to the buyer s premises when the sale was on FOR destination basis. The assessee challenged the order of the original authority and the Commissioner (Appeals), relying on the Board Circular dated 23.08.2007 has held that the appellant is entitled to the benefit of CENVAT credit on the outward transportation of goods up to the buyer s premises. This order of the Commissioner (Appeals) was also upheld by the Hon ble CESTAT, Bangalore and Hon ble High Court of Karnataka. The Hon ble Apex Court has laid down that where the goods are sold on FOR destination basis i.e., where the ownership of the goods gets transferred only at the buyer s premises also no CENVAT credit is admissible for transportation of goods to the buyer s premises. No CENVAT credit is admissible to the appellant - Appeal dismissed - decided against appellant.

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• 2020 (7) TMI 318
  Valuation - electrical transformers - inclusion of cost of transportation and transit insurance from the factory to the buyer s premises in assessable value - place of removal - whether place of removal is buyers premises or not - HELD THAT:- It is clear that for the period from 28-9-1996 up to 1-7-2000, the place of removal has reference only to places from which goods are to be sold by the manufacturer, and has no reference to the place of delivery which may be either the buyer s premises or such other premises as the buyer may direct the manufacturer to send his goods. As a matter of law therefore, the Commissioner s order and Revenue s argument based on that order that freight charges must be included as the sale in the present facts took place at the buyer s premises is incorrect. Further, for the period 1-7-2000 to 31-3-2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. Appeal allowed - decided in favor of appellant.

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• 2020 (7) TMI 317
  Valuation - manufacturing / construction at site - Benefit of exemption - pre-fabricated canopies supplied by the appellant to oil companies - Department is of the view that the transaction value of the pre-fabricated canopies/structures should be taken by deducting the cost of erection, installation and commissioning of these canopies - benefit of N/N. 8/1996-CE dated 23 July 1996 and Notification No. 12/2012-CE dated 17 March 2012 - Cenvat credit on all the inputs which have gone in manufacture of both dutiable as well as non-dutiable goods - HELD THAT:- The appellant is having an independent manufacturing unit at Bhopal where the appellant is carrying out fabrication and manufacturing activity. The pre-fabricated structures classifiable under Central Excise Tariff Heading 73089010 are being taken in the CKD/SKD condition to different locations all over India. Manufacturing is the primary work undertaken at the factory of the appellant and the pre-fabricated structures are only erected, installed and commissioned at the site of the various petrol pumps. Applicability of the Notification No. 12/2012-CE - HELD THAT:- The construction work of a road or flyover is being primarily undertaken at the site and only some components, blocks are manufactured by the contractor at different site. In that case the benefit of the Notification No. 12/2012-CE is available. However, in case of the appellant, the primary activity is of manufacturing and fabrication and then only goods are being taken for assembly, erection or commissioning at a given petrol pump. We are of the view that by no stretch of imagination, the benefit of Notification No. 12/2012-CE can be extended to a manufacturing activity which is being undertaken at a factory and thereafter the fully manufactured pre-fabricated structures are taken in the form of the CKD/SKD condition for installation at the given site.pplicability of the Notification No. 12/2012-CE is concerned, the construction work of a road or flyover is being primarily undertaken at the site and only some components, blocks are manufactured by the contractor at different site. In that case the benefit of the Notification No. 12/2012-CE is available. However, in case of the appellant, the primary activity is of manufacturing and fabrication and then only goods are being taken for assembly, erection or commissioning at a given petrol pump - By no stretch of imagination, the benefit of Notification No. 12/2012-CE can be extended to a manufacturing activity which is being undertaken at a factory and thereafter the fully manufactured pre-fabricated structures are taken in the form of the CKD/SKD condition for installation at the given site. Cenvat credit on all the inputs which have gone in manufacture of both dutiable as well as non-dutiable goods - HELD THAT:- It is seen that the Adjudicating Authority has gone in detail on this subject and the impugned order has discussed in the financial statement of the company and it is only after a meticulous perusal of the trial balance and other financial details that the Adjudicating Authority reached conclusion that the respondent/assessee had maintained a separate record with regard to inputs which have gone in the manufacture of non-taxable goods/services. The Department has not adduced any concrete evidence to contradict the findings given by the Adjudicating Authority. There is, therefore, no substance in the appeal filed by the Department. Appeal allowed in part.

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• 2020 (7) TMI 316
  Clandestine removal - double jeopardy - two show cause notices - Confiscation of Currency - confiscation of goods - penalty - HELD THAT:- Apparently and admittedly, two separate show cause notices were served upon the appellant, one proposing the confiscation of recovered finished goods, unfinished goods, raw material and the impugned amount holding the same to be the sale proceed of clandestinely removed goods. Evasion of Central Excise duty with recovery thereof was proposed vide a subsequent separate show cause notice. The confirmation of ₹ 4,10,000/- was proposed under the provision of Rule 25 of Central Excise Rules, 2002 whereas the duty was demanded alongwith interest and penalty was proposed under the provisions of Section 11A/11AA/11AC of Central Excise Act, 1944. Both the show cause notices have alleged different offences to have been committed by the appellants, which are punishable under different provisions of the law - Penalty for both the show cause notices irrespective that they are arising out of the same transaction of acts cannot be called as double jeopardy. Appeal dismissed.

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• 2020 (7) TMI 315
  Clandestine Removal - procuring of unaccounted raw-materials for illicit manufacture of finished goods - admission in the statement of the Director of the appellant about calndestine removal - Drivers admitted transporting goods without invoices - No documents relating to job work were submitted at the time of investigation - manner of stock taking was never objected - extended period of limitation - suppression of facts or not - HELD THAT:- The stock verification on the basis of eye estimation and the statements recorded at the time of investigation are the only source of reliance for the adjudicating authority to confirm the demand. Though the documents as recovered at the time of search are also been held to be the evidence proving the clandestine removal by the appellant, but I observe that documents explaining the noticed shortage were submitted by the appellant at the very initial stage of replying the show cause notice. There is no denial about receipt of the said documents. However, same are alleged to be an afterthought. The documents as relied upon by adjudicating authority below, while confirming the demand are delivery challan, estimated invoice, outgoing sheet etc. but these documents admittedly and apparently have not been co-related with the documents submitted by the appellant - perusal of documents makes it clear that the Department has ignored the supportive documents which are sufficient enough to falsify the opinion of the Revenue formed at the time of the investigation. The another ground for confirming the demand is the shortage noticed after physical verification of the goods, admittedly the goods were verified on the basis of eye estimation - HELD THAT:- Tribunal Delhi in the case of COMMISSIONER OF CENTRAL EXCISE LUCKNOW VERSUS M/S. SIGMA CASTINGS LTD. [ 2012 (5) TMI 325 - CESTAT, NEW DELHI] has held that where the shortages have been made purely on eye estimation basis without any actual weighment of the goods the demand alleging clandestine removal cannot be upheld. The removal of inputs was also not taken into consideration while alleging the shortage of stock. The eye estimation of stock without any other corroborative evidence of removal of inputs cannot be the evidence for the quantity of inputs to be short or to have been clandestinely removed - Allahabad Tribunal in the case of RADHA MADHAV CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., DAMAN [ 2013 (6) TMI 395 - CESTAT, AHMEDABAD] wherein it was specifically held that charge of clandestine removal is to be established on the basis of preponderance of probabilities, it cannot be merely on the basis of assumptions and presumptions. Clandestine removal has to be established beyond doubt by adducing strong, sufficient and positive evidence and the burden of proving the same is on the Department. Also, there is no evidence of procurement of raw-material and consumption thereof. No single payment detail of clandestine sale has been discussed. Nor there is any evidence of any excessive power consumption which is otherwise required for the alleged large scale production. Nor there is any record of recruitment of workers or staff required for alleged massive production with no payment of record of salary and wages to such workers. No document in the form of receipts of any cash or kind on account of clandestine clearance and sale of goods has been seized from the parties. No evidences of removal of excisable goods or procurement of raw-materials and its consumption are on record - there is no evidence in corroboration to the presumption of the department, demand cannot be sustained. Extended period of Limitation - Suppression of facts or not - HELD THAT:- It is an admitted fact that monthly E.R. Returns have regularly been filed by the appellant. It becomes clear that all the relevant facts were in knowledge of the Department authorities since beginning. Except omission to file the declaration about job work from Sona Wires in terms of Notification No. 214/86-CE dated 25.03.1986 there is no other allegation which may amount as suppression. Law has been settled that every omission cannot be suppression - The Department is not entitled to invoke the extended period of limitation. The entire demand being beyond the normal period is not sustainable. The findings of the adjudicating authority being merely on the basis of their own presumption, on the basis of wrong interpretation of the statement of the witnesses as admission and for wrongly holding the late declaration as suppression are, therefore, not sustainable - demand do not sustain - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (7) TMI 314
  Principles of Natural Justice - allegation is that no show-cause notice was served on the petitioner and even details of the show-cause notice like reference number or date of the show cause notice are not mentioned in the impugned order - petitioner claims to have closed down its business in June, 2017 - HELD THAT:- Sri J.Anil Kumar, Special Counsel for Commercial Taxes states, on instructions, that since the petitioner claims to have closed down its business in June, 2017, and since the impugned order does not make any reference to the date of service of the show-cause notice or intimation of personal hearing to the petitioner, the impugned order be set aside and the matter be remitted to the 1st respondent. Thus, without serving a show-cause notice on the petitioner, it was not open to the 1st respondent to pass the impugned order and the 1st respondent also could not have denied a personal hearing to the petitioner since the assessment in question relates to April, 2015 to March, 2016 and the impugned order was passed almost four (4) years after the expiry of the said period - the 1st respondent is directed to serve a show-cause notice in person or by RPAD on the petitioner; the petitioner is granted four (4) weeks time from the date of receipt of the show-cause notice to file explanation thereto along with supporting material - petition allowed by way of remand.

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• 2020 (7) TMI 313
  Restoration of registration certificate of the petitioner - Reversal of Input Tax Credit - purchases made from registered dealers - assessment years 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15 - HELD THAT:- The respondent has erred in reversing the entire claim of Input Tax Credit for the assessment years 2010-11, 2011- 12, 2012-13, 2013-14 and 2014-15 based on the notice dated 06.08.2014 relating to assessment year 2013-14 which was issued only in respect of reversal of one particular claim of Input Tax Credit and not for the entire claim during the said year. In such view of the matter, the impugned proceedings are set aside and the matter is remitted back to the respondent for passing orders afresh. Petition allowed by way of remand.

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• Indian Laws

• 2020 (7) TMI 312
  Smuggling - white powdery substance - prosecution s case rests almost entirely on the alleged voluntary statements of the appellants (accused) recorded under Section 67 of the NDPS Act, and the statements of Sagar Iyer Subramanium (PW8) and Mushahid Ali (PW18) - HELD THAT:- The Trial Court erred in not examining the material placed on record and accepted the prosecution s case even though there is sufficient material to doubt the case set up by the prosecution. The Trial Court had completely ignored that the parcel seized by NCB weighed 2.4 kgs and the parcel allegedly received by Nitesh Patel weighed 36 kgs and this belied the prosecution s case that the parcel dispatched by Sagar Iyer was the same that was received by Nitesh Patel from Chennai - There is a doubt whether the sample of the substance seized is the same as the sample received by the Central Revenue Control Laboratory because the weight of the sample sent and received is different. NCB has failed to garner any hard evidence either on account of being highly economical in carrying out any investigation or for some ulterior motives. The net result of the exercise conducted by the NCB is also that the person (sagar Iyer) who is admittedly guilty of fabricating the invoice; falsely signing on behalf of the shipper of the parcel; and shipping the parcel, has been absolved of his role in the said offence. This is despite his statements indicating the reasons for doing so are not consistent. Further, there is no credible explanation as to why he was chosen to book the parcel by another courier agent (Nitesh Patel) even though he was not the franchisee of Fedex and the parcel was booked through Freight Centre (as reflected on the Airway Bill in question) - The impugned judgment convicting the appellants and the impugned order are set aside - appeal allowed - decided in favor of appellant.

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