TMI Tax Updates - e-Newsletter
August 8, 2018

Case Laws in this Newsletter:

GST Income Tax Customs FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Input Tax Credit Denial on Transport Services provided to Workers.

   By: Praveen Nair

2. GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XVI)

   By: Dr. Sanjiv Agarwal

3. FILING OF GSTR -6

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Climate Change Finance Unit

2. Audit of Banks

3. Action on those Converting Black Money into White during Demonetization

4. Income Tax Notices

5. Niti Aayog to organise Government and Business Partnership Conclave

6. Centralised Scrutiny and Prosecution Mechanism sends notice to 272 companies on CSR compliance for FY 2015-16

7. SFIO investigating 21 cases in 2017-18;

8. NITI Aayog holds daylong workshop with Civil Society Organizations of Jammu & Kashmir in Srinagar

9. APY Strategy cum Review Meeting for FY 2018-19 for South Based Banks held at Bengaluru; More than 10 lacs accounts have been mobilized during FY 2018-19 and cumulative APY subscriber base is 1.09 crore; Several online features to facilitate subscribers to access their Account without visiting the Bank/Post Branch

10. The draft Companies (Cost Records and Audit) Amendment Rules, 2018

11. NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (COST RECORDS AND AUDIT) AMENDMENT RULES, 2018

Notifications

Customs

1. 13/2018-Customs (N.T./CAA/DRI) - dated 7-8-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI-reg.

GST

2. 31/2018 - dated 6-8-2018 - CGST

Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process

3. 22/2018 – Central Tax (Rate) - dated 6-8-2018 - CGST Rate

Seeks to exempt payment of tax under section 9(4) of the CGST Act, 2017 till 30.09.2019.

4. 23/2018 - dated 6-8-2018 - IGST Rate

Seeks to exempt payment of tax under section 5(4) of the IGST Act, 2017 till 30.09.2019.

5. 22/2018 - dated 6-8-2018 - UTGST Rate

Seeks to exempt payment of tax under section 7(4) of the UT GST Act, 2017 till 30.09.2019

GST - States

6. (21/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Exempts the intra-state supplies of handicraft goods

7. (20/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (05/2017) FD 48 CSL 2017 dated the 29th June, 2017

8. (19/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (02/2017) FD 48 CSL 2017 dated 29th June, 2017

9. (18/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (01/2017) FD 48 CSL 2017 dated the 29th June, 2017

10. (17/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Seeks to insert explanation in an item in notification No.(11/2017) FD 48 CSL 2017 dated 29th June, 2017

11. (16/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (14/2017) FD 48 CSL 2017 dated the 29th June, 2017

12. (15/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (13/2017) FD 48 CSL 2017 dated the 29th June, 2017

13. (14/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (12/2017)FD 48 CSL 2017 dated the 29th June, 2017

14. (13/2018) FD 48 CSL 2017 - dated 26-7-2018 - Karnataka SGST

Amendment in Notification No. (11/2017) FD 48 CSL 2017 dated the 29th June, 2017

15. G.O. Ms. No. 94 - dated 26-7-2018 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-8)/2017 dated 29th June 2017

16. G.O. Ms. No. 93 - dated 26-7-2018 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-5)/2017 dated 29th June 2017

17. G.O. Ms. No. 92 - dated 26-7-2018 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532 (d-4)/2017, dated 29th June, 2017

18. G.O. Ms. No. 91 - dated 26-7-2018 - Tamil Nadu SGST

Seeks to insert explanation in an item in notification No.II (2)/CTR/532 (d-14)/2017 dated 29th June 2017

19. G.O. Ms. No. 90 - dated 26-7-2018 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-17)/2017 dated 29th June, 2017

Income Tax

20. 36/2018 - dated 31-7-2018 - IT

Central Government notifies NSE IFSC limited, Gandhinagar, Gujarat (PAN: AAFCN4161P) as a 'recognised stock exchange'

21. 35/2018 - dated 31-7-2018 - IT

Central Government Notifies India International Exchange (IFSC) Limited Gandhinagar, Gujarat (PAN: AAGCB8819B) as a ‘recognised stock exchange’

Highlights / Catch Notes

GST

• Special Procedure for Taxpayers with Provisional IDs to Complete Migration by August 31, 2018.

  Notifications : Special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process - window will remain open till 31.8.2018 - Person availing this facility will be deemed as registered since 1.7.2017.
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• Appellate Authority for Advance Ruling: UPS with external battery not a composite supply under GST due to independent use.

  Case-Laws - AAAR : Composite Supply/ Mixed Supply - UPS supplied with external storage battery - naturally bundled goods - The storage battery has multiple uses and can be put to different uses and when supplied separately with static converter (UPS) it cannot be considered as a composite supply or a naturally bundled supply. - Order of AAR confirmed by the Appellate AAR
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• Appellate Authority Confirms Appellant as Intermediary for University Course Promotion under IGST Act Section 2(13.

  Case-Laws - AAAR : Export of services or not? - The Appellant promotes the courses of the University, finds suitable prospective students to undertake the courses, and, in accordance with University procedures and requirements, recruits and assists in the recruitment of suitable students, and hence, the Appellant is to be considered as an intermediary in terms of Section 2(13) of the IGST Act. - Appellate AAR confirmed the order AAR.
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• Appellate Authority Modifies Initial Ruling on "SIKA Block Joining Mortar" Classification Under Tariff Item 3824.

  Case-Laws - AAAR : Classification of product, “SIKA Block Joining Mortar” - 'SIKA. Block Joining Mortar' is classified under Tariff Item 3824 - Appellate AAR modified the order of AAR.
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Income Tax

• Compensation for Not Engaging in Business Activity is Taxable Income u/s 28(va)(a) of Income Tax Act.

  Case-Laws - AT : The compensation so paid for not carrying any activity in relation to any business (commodity trading business) would be taxable going by the plain meaning of section 28(va)(a).
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• Unexplained Cash Credit: Donation via Cheque Accepted as Proof u/s 68, No Income Addition for Assessee.

  Case-Laws - AT : Unexplained cash credit u/s 68 - proof of donation received - the assessee not only disclosed its donation but also produced confirmation from the Secretary of the trust who has given the donation through cheque. The said donation was utilized for charitable activities - No additions.
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• Income Tax Appeals Commissioner Blocks Share Valuation for Artificial Loss, Citing Tax Avoidance Strategy.

  Case-Laws - AT : Disallowance of loss claimed - CIT(A) is correct in holding that the valuation of shares at a lesser price than the cost was resorted to only to claim notional loss.
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• Tax Officer Cannot Reduce Claimed Professional Charges u/s 37(1); Full Deduction Allowed if Not Personal or Capital.

  Case-Laws - AT : Disallowance of expenditure u/s. 37(1) - professional charges paid - quantum of allowance - There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full. Since the restrictions u/s. 37(1) are not applicable, the whole of the amount claimed is to be allowed as the expenditure is not proved to be personal or capital in nature.
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• Settlement Applications Denied u/s 245D Due to Lack of Full Disclosure; No Interference Under Article 226.

  Case-Laws - HC : Applications for settlement u/s 245D rejected - since there was no true and full disclosure, there is no scope for any interference under Article 226 of the Constitution of India.
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• Trust's Educational Purpose Under Scrutiny for Tax Exemption: Section 10(23C)(vi) Reassessment Ordered by Tax Director.

  Case-Laws - HC : Grant of exemption under Section 10(23C)(vi) - whether for the purpose of approval under Section 10(23c)(vi), the objects of the Trust should include only educational purpose? - DIT (Exemptions) directed to reconsider the matter.
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• Bonuses for Shareholder Employees Allowed u/s 36(1)(ii) of Income Tax Act, Not Considered Dividends.

  Case-Laws - HC : Payment of bonus to shareholder employees / directors - allowability u/s 36(1)(ii) - the payment made to the four employee directors of the company is not a payment made in lieu of dividend as in fact found on facts by the Tribunal. - No additions.
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Customs

• Section 8C Customs Tariff Act: Safeguard Duty on Carbon Black Imports Enforced per Notification No. 4/2012-Cus.

  Case-Laws - AT : Safeguard duty - Section 8C of the Customs Tariff Act, 1975 - Import of Carbon black - the safeguard duty imposed under Section 8C of the Customs Tariff Act, 1975, Vide Notification No. 4/2012-Cus is leviable, as the same is country specific.
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• No Evidence of Duty-Free Bunker Use on Coastal Run; No Breach of Customs Act Sections 86 and 87.

  Case-Laws - AT : Liability of duty - duty free bunker - there is absolutely no evidence to produced to show that the said bunker was used while the vessel was on coastal run. In these circumstances no violation of section 86 & 87 of the Customs Act has been made out by Revenue.
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• Import Violation: Fine and Penalty Reduced for Breaching Foreign Trade Policy Minimum Import Price Without Revenue Loss.

  Case-Laws - AT : Redemption fine and penalty - There is indeed violation of Foreign Trade Policy that despite the minimum import price fixed by the DGFT, the appellant have imported the goods which is carrying the value below minimum import price, therefore, they have violated the condition - however, this violation does not result into any Revenue loss - fine and penalty reduced.
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• Court Rules Importer Can Only Claim Customs Duty Exemption Based on Notification in Effect at Filing Time.

  Case-Laws - AT : Refund of duty paid under protest - Doctrine of promissory estoppel - the Bill of Entry was admittedly filed by the respondent only on 1.5.2008. - importer can then lay claim for exemption from customs duty on the basis of a customs notification, issued under the Customs Act, which was in force on 1.5.2008. - No benefit based on subsequent notification.
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Service Tax

• Service tax imposed on bulletproofing and mine-proofing vehicles for CRPF and BSF as processing goods for clients.

  Case-Laws - AT : Levy of service tax - Activity of Bullet proofing and Mine proofing vehicles for Para military force and CRPF and BSF - The appellant is liable to pay the service tax as they were processing the goods for their clients namely the Para Military forces, CRPF etc.
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• Assessee's Argument on Service Classification Fails Due to Lack of Support and Statutory Construction Principles.

  Case-Laws - HC : Interpretation of statute - classification of service - the assessee has not relied upon any authority to say that the specific exclusion of one head or one commercial activity can generally be read in relation to other specific heads. Such an interpretation is also not supported by any principle of statutory construction and therefore has to fail.
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Central Excise

• Export Unit Must Pay Duty on Empty Drums from Exempted Imports, Court Rules.

  Case-Laws - AT : 100% EOU - levy of duty on Empty Drums of inputs imported - whether the appellant being 100% EOU is liable to pay duty on Empty Drums of inputs imported under exemption Notification - Held Yes
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• Appellant's Export Failure: CDs/CD-Rs and Stampers Treated as Distinct Goods, Contradicting Previous Claims and Legal Requirements.

  Case-Laws - AT : 100% EOU - failure to fulfill the export conditions - the appellant themselves treated CD/ CD-R and Stamper as a different goods. Now their stand that both are similar goods is contrary to their own stand and on the fact - the nature of goods i.e. stamper and the CD/ CD-R are clearly distinct.
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• Refund of CENVAT Credit Allowed for Export of Exempted Goods Due to Wording Change in Rule 6(6), Cenvat Credit Rules.

  Case-Laws - HC : Refund of accumulated CENVAT Credit - export of exempted goods - The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term “excisable goods” instead of exempted goods is that the term `exempted goods’ may not cover the dutiable goods which are exported under bond - refund allowed.
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VAT

• Dealers Must Prove Stock Transfers Aren't Sales; Form 'F' Alone Isn't Enough for Tax Exemption.

  Case-Laws - HC : Levy of Tax - Stock Transfer of Goods - the Form 'F' would not be considered conclusive proof of Stock Transfer - the burden to prove that the transaction was of transfer of goods otherwise than by way of Sale was on the Revisionist-dealer.
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Case Laws:

• GST

• 2018 (8) TMI 393
  Classification of product, SIKA Block Joining Mortar under Tariff Heading 3214 90 90 - whether SIKA Block Joining Mortar manufactured and marketed by the Appellant, is to be classified under Tariff Head 3214 90 10, which the Appellant was declaring voluntarily for the past few years and which the WBAAR held as 3214 90 90 to be the correct classification or Tariff Head 3824 50 90, which the Appellant now insists is the correct classification? - Challenge to Advance Ruling. Held that:- It is clear that the SIKA Block Joining Mortar is non-refractory and that it is not used for preparation of surfaces - Considering the nature, use and commercial identity of the item in question and, notwithstanding the Appellant s earlier voluntary declaration about the classification of the item, its classification is to be accepted under Tariff Item 3214 instead, it is to be classified under Tariff Item 3824. The Ruling dated 09.04.2018 of the West Bengal Authority for Advance Ruling is modified to the extent that SIKA. Block Joining Mortar is classified under Tariff Item 3824 as notified taxable under Serial no. 97 of Schedule III vide Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 under the Central Good and Services Tax Act, 2017 and 1125-FT dated 28.06.2017 under West Bengal Goods and Services Tax Act, 2017. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 392
  Export of services or not? - promotion services - case of Applicant is that they not intermediary and therefore, is not liable to pay service tax in terms of Rule 6A of the Rules, 1994 read with Rule 9 of the said Rules - challenge to Advance Ruling . Held that:- Appellant s submission is that the Advance Ruling Authority wrongly considered them as recruitment agent facilitating the recruitment or enrolment of students to Foreign Universities, which is not tenable - The Appellant cannot have the liberty to pick and choose only some portions of the Agreement by saying that such and such clause is not being undertaken by it. The Agreement has to be considered in its entirety. The Appellant in the instant case was free to refer students to Australian Catholic University (ACU) or any other University of its choice. Further, the fee paid to the Appellant was not tied to the promotional activities or expenses incurred to promote Courses of ACU but as a percentage of fee paid by the students who got admitted to ACU - no consideration was paid in spite of incurring expenses by the Appellant for promoting activities of ACU, if no student joined ACU - The Appellant promotes the courses of the University, finds suitable prospective students to undertake the courses, and, in accordance with University procedures and requirements, recruits and assists in the recruitment of suitable students, and hence, the Appellant is to be considered as an intermediary in terms of Section 2(13) of the IGST Act. We are in conformity with the West Bengal Authority for Advance Ruling, that the services of the Appellant are not Export of Services under the GST Act, and are eligible to tax. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 391
  Release of detained goods - the petitioner s counsel, as an interim arrangement, pleads that the authorities may release the goods on the petitioner s providing the bank guarantee - Held that:- Pending adjudication, the first respondent will release the detained goods on the petitioner s providing the bank guarantee for the amount covered by Ext.P6 notice - petition disposed off.

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• 2018 (8) TMI 390
  Withdrawal of petition - Petitioner has filed a memo seeking leave of the Court to withdraw the writ petition with liberty to approach appropriate Authority for appropriate relief in accordance with law - Held that:- Memo is placed on record - The writ petition is dismissed as withdrawn.

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• Income Tax

• 2018 (8) TMI 388
  Entitlement to the benefit of Section 80P(2)(a)(i) - interest received from employees - Held that:- There is an inordinate delay of 478 days in filing the petition. We do not find any satisfactory explanation for condoning the delay. The special leave petitions are dismissed on the ground of delay.

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• 2018 (8) TMI 387
  Capital gain - transfer u/s 2(47) - revaluation of the satellite rights - Held that:- The special leave petition is dismissed both on the grounds of delay as well as merit.

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• 2018 (8) TMI 386
  Reopening of assessment - validity of sanction provided under section 151 - borrowed satisfaction - Held that:- We are not inclined to exercise our jurisdiction under Article 136 of the Constitution. The special leave petition is dismissed, leaving the question of law open.

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• 2018 (8) TMI 385
  Deduction u/s 10AA - whether activity which has been carried out by the assessee was not manufacturing activities and rather it was trading ? - Held that:- No merit in this petition. Special Leave Petition is accordingly dismissed. The question of law is, however left open.

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• 2018 (8) TMI 384
  Payment of bonus to shareholder employees / directors - allowability u/s 36(1)(ii) - Distribution of profit in lieu of dividend - Held that:- The payment of bonus made to the employee directors, it is clear that all the four employee directors own identical number of shares i.e. 12.20% aggregating to 49% shares in respect of company. Nevertheless the bonus which has been paid to each of them is different. This is evidence of the fact that the payment of bonus was a performance based payment and entirely dependent on the performance of the employee. This also explains the fact that employee directors were paid at a much higher rate than the other employees of the company as the payment of the bonus is performance based and not designation based. Thus the payment made to the four employee directors of the company is not a payment made in lieu of dividend as in fact found on facts by the Tribunal. No substantial question of law. TPA - M/s. ICSL is not a comparable to the assessee company under Section 10B(2)(i) and (ii)? - Held that:- Tribunal on consideration of all the facts before it has come to the conclusion that ICSL providing services of a merchant/investment banker. This finding of the Tribunal can only be said to be perverse if some material/evidence is placed on record which would establish that the conclusion reached by the Tribunal could not have been reached in the face of the material/evidence which is on record. Whether comparables can be rejected on the ground that the comparables have exceptionally high profit margin as compared to the assessee in transfer pricing analysis? - Held that:- This issue does not arise from the impugned order of the Tribunal. The impugned order of the Tribunal excluded ICSL from the list of comparables on the basis of functional test viz. ICSL carries out the function of merchant/investment banker which is different from a function carried out by the assessee of investment advisory. The exclusion of ICSL was not on the basis of a abnormally high profit margin so as to be not comparable with the respondent assessee. The question as proposed is academic in the present facts. Appeal dismissed.

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• 2018 (8) TMI 383
  Penalty u/s 271(1)(c) - undisclosed income related to on money paid for purchase of immovable property - Held that:- Tribunal reiterated the factual position before it came to the conclusion about the conduct of the assessee and that he is entitled for immunity available under Explanation 5 to Section 271(1)(c) of the Act on two counts - firstly, the immovable property is not an article or thing so as to apply Explanation 5 and secondly, even if Explanation 5 to Section 271(1)(c) of the Act is applicable, the assessee has given at best information regarding the source and particularly, no question was asked by the Department. Tribunal on re-appreciation of the factual position, deleted the levy of penalty. Thus, the entire issue revolves around the factual position and we find that no substantial question of law arises for consideration. Apart from that, we note that the quantum of penalty, which was levied by the Department, is lesser than the threshold limit prescribed in the Circulars of the Central Board of Direct Taxes prescribing the limits of the Revenue to pursue the appeals, which are pending before this Court.

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• 2018 (8) TMI 382
  Grant of exemption under Section 10(23C)(vi) - whether for the purpose of approval under Section 10(23c)(vi), the objects of the Trust should include only educational purpose? - Held that:- As relying on JAYPEE INSTITUTE OF INFORMATION TECHNOLOGY SOCIETY VERSUS DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS), DELHI [2009 (8) TMI 83 - DELHI HIGH COURT] the first respondent has not even made any observation as regards the elaborate submissions made by the petitioner with regard to the manner in which they are conducting the institution for over 13 years as of 2011. Further, the specific assertion made by the petitioner that for all the years they have been on academics only, has not been found to be incorrect by the first respondent. Thus, on account of narrow interpretation of the provisions, an erroneous order has been passed. Thus, for the above reasons, the writ petition is allowed and the impugned order is set aside . The first respondent is directed to consider the application of the petitioner and grant approval to the petitioner Trust under Section 10(23C)(vi) of the Act within a period of four weeks from the date of receipt of a copy of this order from the date of the application/relevant assessment year.

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• 2018 (8) TMI 381
  Settlement Commission - Applications for settlement u/s 245D rejected - Procedure on receipt of application - requirements to be satisfied by an assessee while making an application for settlement - whether once an order is passed under Section 245D (1), allowing the application to be proceeded with, on the ground that the application satisfied the requirements stipulated in Section 245C, the Settlement Commission is not thereafter entitled to review its own order and hold that the application cannot be proceeded with? - Held that:- The conclusion reached by the Commission that there was no true and full disclosure, cannot be termed as arbitrary or without any material worth consideration. In so far as the applications of nine individuals are concerned, out of whom, eight have come up with writ petitions, the Settlement Commission rejected their applications both on the ground of deficiency in disclosure and on the ground of not crossing the threshold limits. Let us presume for a moment that the finding relating to not crossing the threshold limits under Section 245C is not correct. Even then the finding with regard to non-disclosure cannot be assailed - Settlement Commission was not satisfied that there was a true and full disclosure. Therefore, they did what they did and which they are entitled to do under sub-section (2C). When the Settlement Commission has recorded reasons, which we have extracted above, to come to the conclusion, after perusing the report of the Principal Commissioner submitted under sub-section (2B) that there was no true and full disclosure, there is no scope for any interference under Article 226 of the Constitution of India. Hence, all the writ petitions are liable to be dismissed.

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• 2018 (8) TMI 380
  Disallowance of expenditure u/s. 37(1) - claim of professional charges paid and services received - The issue is about the quantum of allowance as there is no dispute about services being rendered - Held that:- Since the provisions of Section 37(1) does not have any restriction to allow the amount partly, so long as the expenditure was incurred for the purpose of the business wholly and exclusively, the same has to be allowed. The restrictions placed in other provisions like that 36(1)(iii) for the purpose of interest, u/s. 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed u/s. 30 and 31 does not apply to the facts of the case. AO has wrongly considered the claim. There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full. Since the restrictions u/s. 37(1) are not applicable, the whole of the amount claimed is to be allowed as the expenditure is not proved to be personal or capital in nature, as provided in the section itself. AO is directed to allow the claim in full. To that extent, the orders of AO and CIT(A) are modified. Thus, the grounds on this issue are allowed. Enhancement of amount by way of loss claimed on valuation of certain shares - CIT(A) has jurisdiction to consider the loss claimed of the assessee - Held that:- The provisions of Section 251(1)(a) empowers the CIT in an appeal against an order of assessment to confirm, reduce, enhance or annul the assessment. Thus, since the CIT(A) has not unearthed a new source of income, but only has gone by the annual report/ statements enclosed to the return in which assessee has claimed trading loss to set-off to other incomes, we are of the opinion that CIT(A) has power to enhance and accordingly the contentions of assessee on this issue are rejected. Coming to the merits of addition made by CIT(A) i.e., disallowance of loss claimed, it is to be noted that assessee having purchased shares of Rs. 155/- per share has valued the same at Rs. 10/- as on 31-03-2002, so as to claim a notional loss in the transaction of purchase of shares. As pointed out by CIT(A) in the order, there is no fall in the value of the share and the said company (DQ) has issued further shares to others at Rs. 167/- as on 30-11-2001 to Rs. 290/- on 16-07-2004 (as stated in pg.18 of the order). It is also to be noted that in the course of argument also, Ld. Counsel fairly admitted that the intrinsic value of the share is around Rs. 23.52 and therefore valuation of share at Rs. 10/- is certainly without any basis. Affirming the order of the CIT(A) in which he has discussed in detail the legal provisions and factual aspects, we agree with the CIT(A) that the valuation of shares at a lesser price than the cost was resorted to only to claim notional loss. Since we are affirming the order of the CIT(A) on this issue, the question of consideration of loss whether it is ‘speculation’ or not under the provisions of Section 73 Explanation does not arise. In view of that, we reject the contentions raised by assessee and grounds on this issue are rejected.

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• 2018 (8) TMI 379
  Disallowance of depreciation - Held that:- In the present case, undisputedly by virtue of C.A. the assessee has acquired the right to operate the toll road / bridge and collect toll charges in lieu of investment made by it in implementing the project. Therefore, the right to operate the toll road / bridge and collect toll charges is a business or commercial right as envisaged under section 32(1)(ii) r/w Explanation 3(b) of the said provisions. The assessee is eligible to claim depreciation on WDV as an intangible asset. Thus, we answer the question framed by the Special Bench as under:– The expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of the Act. Hence, assessee is eligible to claim depreciation on such asset at the specified rate - appeal of the revenue is dismissed.

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• 2018 (8) TMI 378
  Transfer pricing - transaction with AE at arm’s length or not - Taxpayer not contract manufacturer of its AE - Held that:- On facts as it transpired, the inferences of the TPO were not correct. The CIT (A) appraising the facts noted that there were negligible purchases of raw material from the AE and the total sales to its AE were also negligible. In the facts of the present case, we note that it has not been disputed by the Revenue that the total export sales of the assessee to the AE was only 5% of its total sales and the assessee conducts sales to some OEM outside India through the AE to utilize its capacity. Some of these companies are Ford, General Motors, etc. for their production facilities outside India and since the AE of the assessee is a global leader in automotive glass segment, the assessee takes advantage of the AE’s reputation and business base “to have exports on good commercial and price terms with secured payment from the AE for better logistic and best payment through the AE”. In the facts of the present case, the goods produced by the assessee are directly supplied to the OEMs and in the circumstances, out of the total consumption of raw material consumed by the assessee which, it has been noticed, is less than 20% procured from the AE and import of stores and spares from the AE is also 10% of the total consumption. The allegation of the TPO that the assessee has purchased raw material from the AE and is exporting again to the AE in the facts of the present case is misplaced. At the cost of reiteration, the export to the AE is only 5% and royalty paid on sales to the extent of 94% is for sales to non-AE and only 6% sale to the AE. The inferences drawn by the TPO, it is found, were de hors facts. It is also being claimed on behalf of the assessee that the export turnover of the assessee over the years has been reducing and most of the years, sales made to the AE is less than 2%. Be that as it may, in the facts of the present case, we find that where admittedly from the turnover of Rs. 1,300 crores, the export sales is only Rs. 65 crores and noting the fact that the assessee is domestically selling its product to Maruti Udyog Ltd., Honda Motors, Hyundai, Toyota, Mitsubishi, VoxWagon, General Motors, Skoda and Tata Motors, we find that the appeal of the Revenue on facts has to be dismissed. - Decided against revenue

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• 2018 (8) TMI 377
  Unexplained cash credit u/s 68 - proof of donation received - Held that:- In the present case, it is noticed that the assessee received a donation of Rs. 15,00,000/- from M/s Nav Jyoti Vikas Sansthan, Meerut vide cheque no. 084387 drawn on the Nainital Bank Ltd., Ghaziabad. The said cheque was signed by the Secretary of the Sansthan who also gave a confirmation letter. The said fact is evident from page no. 45 of the assessee’s paper book which is the copy of the cross examination on oath of Sh. Madan Giri who confirmed vide giving answer to question no. 3 that the donation was given to the assessee. It is also noticed that the assessee had shown the donation in its books of account. The said donation was utilized for construction of the building to be used for running of dental college setup in Village Dasna, Masuri to impart dental education. See COMMISSIONER OF INCOME TAX VERSUS M/S UTTARNCHAL WELFARE SOCIETY [2013 (9) TMI 965 - ALLAHABAD HIGH COURT] Thus the assessee not only disclosed its donation but also produced confirmation from the Secretary of the trust who has given the donation through cheque. The said donation was utilized for charitable activities. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was no justified and accordingly the same is deleted. - decided in favour of assessee.

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• 2018 (8) TMI 376
  Disallowance of expenditure u/s. 37(1) - Held that:- Since the provisions of Section 37(1) does not have any restriction to allow the amount partly, so long as the expenditure was incurred for the purpose of the business wholly and exclusively, the same has to be allowed. The restrictions placed in other provisions like that 36(1)(iii) for the purpose of interest, u/s. 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed u/s. 30 and 31 does not apply to the facts of the case. AO has wrongly considered the claim. There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full. Since the restrictions u/s. 37(1) are not applicable, the whole of the amount claimed is to be allowed as the expenditure is not proved to be personal or capital in nature, as provided in the section itself. AO is directed to allow the claim in full. To that extent, the orders of AO and CIT(A) are modified. Thus, the grounds on this issue are allowed. Enhancement of amount by way of loss claimed on valuation of certain shares - CIT(A) has jurisdiction to consider the loss claimed of the assessee - Held that:- The provisions of Section 251(1)(a) empowers the CIT in an appeal against an order of assessment to confirm, reduce, enhance or annul the assessment. Thus, since the CIT(A) has not unearthed a new source of income, but only has gone by the annual report/ statements enclosed to the return in which assessee has claimed trading loss to set-off to other incomes, we are of the opinion that CIT(A) has power to enhance and accordingly the contentions of assessee on this issue are rejected. Coming to the merits of addition made by CIT(A) i.e., disallowance of loss claimed, it is to be noted that assessee having purchased shares of Rs. 155/- per share has valued the same at Rs. 10/- as on 31-03-2002, so as to claim a notional loss in the transaction of purchase of shares. As pointed out by CIT(A) in the order, there is no fall in the value of the share and the said company (DQ) has issued further shares to others at Rs. 167/- as on 30-11-2001 to Rs. 290/- on 16-07-2004 (as stated in pg.18 of the order). It is also to be noted that in the course of argument also, Ld. Counsel fairly admitted that the intrinsic value of the share is around Rs. 23.52 and therefore valuation of share at Rs. 10/- is certainly without any basis. Affirming the order of the CIT(A) in which he has discussed in detail the legal provisions and factual aspects, we agree with the CIT(A) that the valuation of shares at a lesser price than the cost was resorted to only to claim notional loss. Since we are affirming the order of the CIT(A) on this issue, the question of consideration of loss whether it is ‘speculation’ or not under the provisions of Section 73 Explanation does not arise. In view of that, we reject the contentions raised by assessee and grounds on this issue are rejected. Disallowance of service charges paid to M/s. SRSR by restricting the amount paid to Rs. 25,000/- p.m., except that AO in AY.2004-05 calculated the amount to be allowed at Rs. 40,000/- p.m., but allowed only Rs. 3 Lakhs in the computation. However, in AY. 2005-06, AO allowed an amount of Rs. 4,80,000/- increasing the amount from Rs. 3 Lakhs. Ld.CIT(A) has not adjudicated the ground raised in AY. 2004-05 about calculation mistake. However, the claim of service charges was decided in AY. 2002-03 vide para 10 above. The facts are similar to the facts in AY. 2002-03, consequently, following the decision stated above on the issue, we direct the AO to allow the amount in full as claimed.

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• 2018 (8) TMI 375
  Sum received by the assessee for discontinuing its business of commodity trading is a taxable receipt - capital gain of busniss income - Held that:- Assessing Officer had come to a conclusion that there is no impairment in the loss of commodity trade to the group concern namely ‘Geojit’. Therefore, it was held that the profit making apparatus of the assessee-company / the group company was not impaired by the discontinuance of commodity trade business of the assessee per se. Since there is no sterilization of income / profit earning apparatus from the consolidate perspective of the group concerns, viz., ‘Geojit’, the amount so received by the assessee as compensation cannot be termed as a capital receipt not liable to be taxed under the provisions of the I.T.Act. Therefore, the finding of the Assessing Officer in this context is upheld. The assessee-company in the instant case, had received the compensation for not carrying on any activities in relation to its commodity trading business. The compensation so paid for not carrying any activity in relation to any business (commodity trading business) would be taxable going by the plain meaning of section 28(va)(a). Section 28(va) was introduced w.e.f. 01.04.2003. Though there was no written agreement for payment of compensation, the letters of BNP Paribas dated 23.05.2008 and 27.05.2008 and the Board Resolution of the assessee-company stating that it would discontinue the commodity trading business of the assessee on receipt of compensation of Rs. 40 crore, would come within the ambit of an arrangement / undertaking / action in concert, whether or not, the same was formal or in writing or it was intended to be enforceable by legal proceedings and that would tantamount to an agreement for the purpose of section 28(va). The wordings of section 28(va) of the I.T.Act is unambiguous and clear. The said section does not restrict, the bringing to tax only the non-compete fee but any sum that was received or receivable in cash or kind for not carrying out any activity in relation to any business. The exception for such taxation is only the cash received on account of transfer of right to manufacture, produce or process any article or thing or right to carry on any business, which is chargeable under the head “Capital gains”. - decided against assessee

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• 2018 (8) TMI 374
  Addition u/s 2(22)(e) - loan given to shareholder - Held that:- Deemed dividend is chargeable to tax in the hands of the shareholder in case there is a loan to a shareholder or any other concern. It is also triggered in case of a company making any payment on behalf of or for the individual benefit of such shareholder. The maximum cap of such deemed dividend is the accumulated profit possessed by the company making the payment or giving the loan. Therefore according to that provision to attract provisions of section 2(22)(e) of the act in case of a loan given to shareholder following conditions must be satisfied. In the lender company M/s Beverly Park Maintenance Services Ltd., assessee holds shares without any voting rights. Therefore the condition of 10% of holding in the lender company fails. Secondly the assessee must hold more than 20% in M/s Madhur Housing and development Co. In fact the assessee holds 15% noncumulative preference shares of Rs. 10 each with a fixed rate of dividend in that company. Thus in our considered opinion assessee cannot be said to be holder of 20% or more in equity shares of the borrowing company. Further the shares held by assessee on behalf of the partnership firm are also without any voting right. No infirmity in the order of the Ld. CIT (A). Accordingly the grounds raised by revenue stands dismissed.

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• Customs

• 2018 (8) TMI 373
  Refund of duty paid under protest - Doctrine of promissory estoppel - rejection on the grounds that the Bill of Entry was filed on 1.5.2008 and duty paid under protest on 7.5.2008, whereas the N/N. 64/2008-Cus. was issued on 09.05.2008 and further the said Bill of Entry was not reassessed - N/N. 64/2008-Cus. - Held that:- In the instant case, the Bill of Entry was admittedly filed by the respondent only on 1.5.2008. Applying the provisions of Section 15 (1) of the Act and the ratio of Dimexon judgment [2009 (8) TMI 76 - BOMBAY HIGH COURT], the respondent-importer can then lay claim for exemption from customs duty on the basis of a customs notification, issued under the Customs Act, which was in force on 1.5.2008. As per the facts of this case, the notification in force was EPCG N/N. 97/2004-Cus. This being so, the respondents cannot then get the rate of Customs duty which was actualized by Customs N/N. 64/2008-Cus. only on 9.5.2008. The Hon’ble Apex Court in the case of Sun Exports case [1997 (7) TMI 117 - SUPREME COURT OF INDIA] also held that there is no implied power of taxation and that tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. Appeal allowed - decided in favor of Revenue.

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• 2018 (8) TMI 372
  Revocation of CHA license of CHA-Firm - application for CHA License was made with delay - it was alleged that the the impugned order does not deal with the arguments made in the enquiry report - principles of Natural Justice. Held that:- There is merit in the enquiry report and the impugned order does not deal with the arguments made in the enquiry report. Moreover, the Ld. Counsel pointed that out of 4 partners of the firm, 3 had passed all the exams necessary for obtaining the CHL license - The facts have not been appreciated in proper perspective and the enquiry report has not been given due importance - The impugned order is set aside and the matter is remanded to give specific finding on the enquiry report - appeal allowed by way of remand.

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• 2018 (8) TMI 371
  Valuation of imported goods - it was alleged that appellant declared the price of the imported goods which is below the minimum import price fixed by DGFT for import of such goods - enhancement of value - Revenue has enhanced the value only on the basis of minimum import price - violation of condition of Foreign Trade Policy - N/N. 38/2015-2020 dated 5.2.2016. Whether DGFT has power to issue notification under Section 3 of FT(DR) Act, 1992 for fixing the minimum import price? - Held that:- The DGFT is empowered to impose restriction for import. The fixing of MIP is not to enhance the value of the goods but only to impose of restriction. Any type of restriction can be imposed by the DGFT by issuing the Notification, therefore, the DGFT is well within the power under Section 3 of FT (D&R) Act, 1992 to impose any condition for import. Whether enhancement of the value for the purpose of assessment on the basis of MIP is legal and correct? - Section 14 of Customs Act - Held that:- In the facts of the case the only reason for enhancement of the value is MIP fixed by DGFT. The MIP fixed by DGFT is only as a measure of restriction imposed for import of such goods. DGFT has not enhanced the value of the goods imported. If at all the custom intent to fix the value for the purpose of assessment in that case it can be done by issue of notification under the customs act for fixing the tariff value which is not the case here. Moreover, the custom authority have not carried out any investigation or brought any material on record to discard the value declared by the appellant. Therefore merely on the basis of MIP fixed by DGFT, the Customs valuation cannot be disturbed - the customs valuation cannot be altered or enhanced on the basis of minimum import price fixed by the DGFT - enhancement of value set aside. Whether redemption fine and penalty for the violation of Foreign Trade Policy is legal and correct? - Held that:- There is indeed violation of Foreign Trade Policy that despite the minimum import price fixed by the DGFT, the appellant have imported the goods which is carrying the value below minimum import price, therefore, they have violated the condition, however, this violation does not result into any Revenue loss to the Government or any undue gain to the appellants - the redemption fine and penalty is reduced. Appeal allowed in part.

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• 2018 (8) TMI 370
  Liability of duty - it was held that appellant were not entitled to receive duty free bunker as the vessel at the material time was on coastal run from Sikka to Hazira port - Held that:- The Tribunal in the case of Jaisu shipping co. Pvt. Ltd. [2007 (2) TMI 569 - CESTAT, AHMEDABAD] held that Status as vessel, whether coastal or foreign run, on is not relevant at the time when the duty free goods are received. The only requirement is that the duty free goods should be consumed when the vessel is on foreign run - In the instant case, there is absolutely no evidence to produced to show that the said bunker was used while the vessel was on coastal run. In these circumstances no violation of section 86 & 87 of the Customs Act has been made out by Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 369
  Penalties - Detention of goods with vehicle - carrying of scraps - carrying of two consignment notes - detention of truck on the ground that these goods were of the foreign origin - Held that:- The Adjudication Order suffers from inherent deficiency - It is difficult to understand that on what grounds, the Adjudicating Authority has arrived at the conclusion that the goods are of Bangladesh Origin whereas the report sent by their own Asstt. Commissioner states that it is not possible to substantially justify the origin of these scraps to be of Bangladesh origin - the letter of the Tripura Metal Scraps Merchant Association also states that the scraps, are locally produced scraps from different small hawkers, who collect them from different households of Tripura. Carrying of two consignment notes - Held that:- It is not clear from the investigation report that these consignment notes were of the same date. Possibly the driver of the truck has forgotten to unload the consignments of the previous journey, which has not been verified by the department. The adjudicating authority has not arrived at the correct conclusion by holding that the scraps are of Bangladesh origin - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 368
  Safeguard duty - Section 8C of the Customs Tariff Act, 1975 - Import of Carbon black - Revenue is of the view that these goods are not exempt from safeguard duty in terms of Section 8C of the Customs Tariff Act, 1975, therefore, these imported goods were subject to the proceedings for recovery of safeguard duty - Held that:- Issue is squarely covered by the decision in the case of Balkrishna Industries Ltd. [2015 (12) TMI 1390 - BOMBAY HIGH COURT], where it was held that the safeguard duty imposed under Section 8C of the Customs Tariff Act, 1975, Vide Notification No. 4/2012-Cus is leviable, as the same is country specific. The appellants are liable to pay duty in terms of Section 8C of the Customs Tariff Act 1975 - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 367
  Refund of customs duty paid in excess - Board Circular dated 10.11.2008 - rejection of refund on the ground that the assessment had become final, there being no challenge to such assessment - Held that:- On an identical issue in the case of Sameera Trading Company [2010 (5) TMI 518 - CESTAT, BANGALORE], it was held that The excess duty claimed by the respondents considering the FOB price as cum-duty price is in accordance with law and the original authority should have allowed the refund - refund allowed. The impugned order in the case in hand is unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 366
  Refund of customs duty paid in excess - Board Circular dated 10.11.2008 - rejection of refund on the ground that the assessment had become final, there being no challenge to such assessment - Held that:- On an identical issue in the case of Sameera Trading Company [2010 (5) TMI 518 - CESTAT, BANGALORE], it was held that The excess duty claimed by the respondents considering the FOB price as cum-duty price is in accordance with law and the original authority should have allowed the refund - refund allowed. The impugned order in the case in hand is unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant.

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• FEMA

• 2018 (8) TMI 365
  Adjustment of penalty from the frozen amount and FDR - review petition - Held that:- At no point of time, did the Enforcement Directorate either seize them or confiscate them so that they could be forfeited to the Central Government. The adjudicating authority has released these amounts from being frozen, by not confiscating them. This money belongs to the appellant/his son, and while directions for freezing was only a temporary measure, the adjudicating authority should have passed appropriate order of either releasing them or confiscating them. But he has mentioned that he is not confiscating them, meaning thereby that he is releasing them. Once no confiscation order has been passed it is not clear under which provisions of law the said amount was appropriated towards the penalty amount. Without going into the maintainability of the review petition under Section 19 (6), any merit in the review petition wherein they have prayed that the review petition may be allowed by modifying the impugned order to the extent that the principal amount should be confiscated (interest accrued has been appropriated to the Central Government by the impugned order). No merits in the appeal that this is a blatantly illegal order in as much as appropriation has been ordered of the money which has been released/not confiscated by the adjudicating authority himself. Once the principal amount is released, the question of allowing the “interest accrued on the blocked amount and FDR be credited to the Central Government” (to use the language in the impugned order) does not arise.

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• PMLA

• 2018 (8) TMI 364
  Offense under Prevention of Money Laundering Act - Held that:- The allegations against the petitioner are of having received cash to the tune of Rs.1,52,50,000/- in various Branches at Delhi and Mumbai withdrawn from various companies of SBL group in cash and thereafter by rotating it through various shell companies received the money in RAG Buildtech owned by his son, shares whereof were then inflated and from the money infused in RAG Buildtech various properties, movable and immovable, were purchased. Charge-sheet for offence punishable under Sections 13(1)(d) read with Section 13(2) of the PC Act is yet to be filed by the CBI. As per the mandate of Section 44 of PMLA, the trial in the scheduled offence and the complaint filed by the respondent is to be conducted jointly. Co-accused Gagan Dhawan has been granted bail by the learned ASJ on the ground that the case is based on documentary evidence and all the bank transactions are recorded which cannot be erased or tampered with by the influence of Gagan Dhawan and the Enforcement Directorate has already attached the plot of Gagan Dhawan worth Rs.1.17 crores situated in Gurgaon and that he remained in custody for 62 days. Offence defined under Section 3 and punishable under Section 4 PMLA entails a minimum punishment for 3 years imprisonment which may extend to 7 years imprisonment. The petitioner is in custody since 12th January, 2018. The petitioner is directed to be released on bail on his furnishing a personal bond in the sum of Rs.2,00,000/- with two surety bonds of the like amount, subject to the satisfaction of the Trial Court and further subject to the condition that:- (i) the petitioner will not leave country without prior permission of the Court concerned; (ii) in case of change of residential address the same will be intimated to the Court concerned by way of an affidavit; and (iii) the petitioner will not directly or indirectly influence the witnesses or interfere in the further investigation.

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• Service Tax

• 2018 (8) TMI 363
  Jurisdiction of the Commissioner of Goods and Service Tax (West) for pending matters - Petitioner submits that the Notification dated 19.06.2017 had the effect of transferring jurisdiction to the Commissioner now exercising jurisdiction over it - Held that:- The impugned order of the Commissioner in this case, especially, does not disclose that the petitioner has urged an issue of jurisdiction. This Court is of the opinion that given the circumstances of this case, it would be appropriate for the petitioner to approach the CESTAT against the impugned order - petition disposed off.

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• 2018 (8) TMI 362
  Interpretation of statute - agricultural and horticultural activities - Scope of Commercial or Industrial Construction Service - case of appellant is that there is absence of any levy in regard to landscape activity - Held that:- What the assessee/appellant is thus contending is that the parliamentary exclusion of service in relation to agricultural, horticultural, animal husbandry etc. carved out in respect of a distinct item or subject of levy (cleaning activity) ought to be read into as an exclusion of another entry altogether i.e. Section 65(64) of the Finance Act which relates to “management, maintenance or repair” activity - In support of its arguments, the assessee has not relied upon any authority to say that the specific exclusion of one head or one commercial activity can generally be read in relation to other specific heads. Such an interpretation is also not supported by any principle of statutory construction and therefore has to fail. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 361
  Classification of services - formulation of the terms of tenders for execution of works, scrutiny of the bids received pursuant to invitation to tender, scrutiny of the bids and award of contracts on appraisal of the bids and remittances of funds received from REC to the contractors after retaining a commission for channelizing the funds - Whether the services are Erection, commissioning or installation service or otherwise? - N/N. 45/2010-ST dated 20/07/2010. Held that:- Identical issue was decided by this Tribunal in the case of M/s M.P. Power Transmission Co. Ltd. Vs Commissioner of Customs, Central Excise, Bhopal [2011 (2) TMI 982 - CESTAT, NEW DELHI], where it was held that Notification No. 11/10-S.T., dated 27th February, 2010 exempts services relating to transmission and distribution of electricity provided by a person (service provider) to any other person (service receiver) from 27-2-2010. Further for the past period upto 26-2-10, Ministry has issued Notification No. 45/2010 dated 20-7-10 exempts such service invoking provision under Section 11C of the Central Excise Act read with Section 83 of the Finance Act, 1994, demand not sustainable. No service tax is payable by the assessee - penalties also set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 360
  Levy of service tax - Since appellant have some excess capacity and they also engaged in Bullet proofing and Mine proofing vehicles for Para military force and CRPF and BSF - benefit of N/N. 12/2003-ST - Extended period of limitation - Held that:- The appellant is liable to pay the service tax w.e.f 16.05.2005 as they were processing the goods for their clients namely the Para Military forces, CRPF etc. However, these activities of the appellant were fully in the knowledge of the Department and they have not suppressed any facts. In fact, the Department had themselves issued a show cause notices alleging that these activities amount to manufacture activity excise duties and subsequently, dropped those demands. Therefore, the extended period of limitation cannot be invoked in this regard and no penalty can also be imposed on the appellant for the same reason. Benefit of N/N. 12/2003-ST - Held that:- The Original Authority was fully willing to extended benefit of the abatement under the notification but the process had not submitted the relevant documents to substantiate for claim the abatement - It is a fit case to be remanded back to the Original Authority to enable the assessee to produce necessary documents. Appeal allowed in part and part matter on remand.

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• 2018 (8) TMI 359
  Maintainability of appeal - Works contract services - whether the construction of residential flats under Manyawar Shri Kanshi Ramji Shehari Garib Awas Yojna would be liable to service tax under the category of “Works Contract Services” or not? - Held that:- Revenue has not been able to give any details of the appeal filed before the Hon’ble High Court. Even, the fact as to whether the same stands admitted by the High Court or not, has not been placed. Also, the issue involved is the taxability of the services and applicability of exemption notification and as such the appeal was, in any case required to be filed before the Hon’ble Supreme Court and not before the Hon’ble High Court. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (8) TMI 358
  Refund of accumulated CENVAT Credit - case of Revenue is that since the final product viz., Battery Operated Cars were exempted with effect from 1.3.2008, the assessee was not entitled to refund of the CENVAT credit as per Rule 5 of the CENVAT Credit Rules, 2004 - Held that:- Reliance was placed in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA [2007 (12) TMI 209 - BOMBAY HIGH COURT], where it was held that The object and purpose of Rule 6(6) of Cenvat Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term “excisable goods” instead of exempted goods is that the term `exempted goods’ may not cover the dutiable goods which are exported under bond. Refund is to be allowed - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 357
  Adjustment/refund of the excess provisional duty - unjust enrichment - whether such a refund/adjustment deserves to be made under erstwhile u/r 9B(5) of the Central Excise Rules, 1944 or the Respondent-assessee has to claim such refund by adopting the procedure u/s 11B of the Act establishing before the Revenue Department that the incidence of duty has not been passed on to the customers, to avoid ‘unjust enrichment’ to the Respondent-assessee by making such refund/adjustment? Held that:- We are not impressed with the arguments raised by the learned counsel for the appellant-Revenue before us that in view of the Proviso of Rule 9B(5) of the Rules w.e.f. 25.07.1999 merely because the order u/r 9B(5) came to be passed after the date in the year 2006, the Respondent-assessee was required to take recourse of Section 11B of the Act. On the contrary, the adjustment/refund or short payment of provisional duty was required to be determined by the Assessing Authority under Rule 9B(5) of the Rules as it then existed during the contemporary period of taxable event of manufacture and removal of goods took place. The Rule governing the obligations or liability of the Respondent-assessee relevant on the date of removal of goods and payment of provisional duty will apply, rather than the Rule as amended subsequently after which, the belated order came to be passed by the Assessing Authority in the year 2006. No substantial question of law arises in the present appeals filed by the appellant-Revenue - appeal dismissed - decided against appellant-Revenue.

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• 2018 (8) TMI 356
  100% EOU - it was alleged that that the appellant had failed to physically export ‘stamper for CD’ admitted the fact that the appellant had cleared ‘stamper for CD’ on payment of concessional rate of duty in the domestic tariff area under the permission granted by the deputy / joint Development Commissioner, KSEZ Gandhidham - concessional rate of duty. Held that:- The appellant themselves treated both types of goods i.e. Stamper (Mother DVD) and CD/ CD-R as different goods and for that reason only they have obtained the permission for clearance of 50% of stamper in the DTA market vide development Commissioner’s Letter dated 20.12.2002, the said permission carrying the clear condition of adjustment of facility against future entitlements. Thereafter, when the appellant could not made export of stamper the 50% of FOB value for DTA clearance was not complied with. Since the appellant could not have adjusted the facility of DTA clearance against export of CD/ CD-R they kept on taking extension for that purpose from the Development Commissioner. Therefore, the appellant themselves treated CD/ CD-R and Stamper as a different goods. Now their stand that both are similar goods is contrary to their own stand and on the fact - the nature of goods i.e. stamper and the CD/ CD-R are clearly distinct. The stamper is used for making the CD/ CD-R whereas CD/ CD-R is loaded CD with the media/ data, therefore, both are completely distinct products. In the present case, it is an advanced DTA permission with specific conditions that the appellant will fulfill the condition of export of the similar goods and same will be adjusted in the future entitlements, therefore, in failure to comply with the said condition, the benefit of the said permission of the Development Commissioner is not available to the appellant. Extended period of limitation - Held that:- The appellant themselves opted for advanced DTA permission subject to condition that they will fulfill the condition of export in future and they themselves taken the extension for fulfilling the condition which has been extended upto 31.05.2004 by the Development Commissioner and as per letter dated 28.03.2003 the Development Commissioner allowed the two years from 06.12.2004 for adjustment of the DTA sale value - The SCN was issued on 26.06.2007 when it was found that the appellant could not comply with the condition of adjustment of value of DTA clearance since no export of stamper could be made, therefore, the SCN cannot be said to have been issued as time bar. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 355
  100% EOU - levy of duty on Empty Drums of inputs imported - whether the appellant being 100% EOU is liable to pay duty on Empty Drums of inputs imported under exemption Notification No. 22/2003-CE dated 31.03.2003 and 52/2003-CUS dated 31.03.2003? - penalty. Held that:- The empty drum which is arising after use of the inputs packed therein are plastic drums and which is durable in nature and admittedly used. Therefore, as per the nature of the packing material there is no doubt that the said plastic drums are durable and re-useable, therefore the clearance of such empty drum liable for payment of duty as per N/N. 22/2003-CE dated 31.03.2003 and 52/2003-CUS dated 31.03.2003 - the demand confirmed by the lower authority is hereby upheld. Penalty - Held that:- Firstly the demand was raised within the normal period, secondly, the issue involved is not suppression of fact but only of interpretation of law involved in the notification. Accordingly, there is no malafide intention on the part of the appellant - demand set aside. Appeal allowed in part.

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• 2018 (8) TMI 354
  Manufacture - Job-work - Rule 10A(ii) of Central Excise Valuation Rules, 2000 - it was alleged that M/s ISGEC is selling the goods as such as the appellants have manufactured the goods in complete form, therefore, in terms of Rule 10A(ii) of Central Excise Valuation Rules, 2000, the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods. Held that:- Identical issue decided in appellant own case SUYOG ENGINEERS PVT. LTD., YAMUNA FABRICATORS VERSUS CCE, PANCHKULA [2017 (10) TMI 893 - CESTAT CHANDIGARH], where it was held that Although we hold that the appellants are required to pay duty as per the Rule 10A(ii) of the Valuation Rules, 2000 but on the amount on which duty have been demanded from the appellants, duty has already been paid by the M/s ISGEC on the said amount. If the duty has been demanded from the appellant, in that circumstances, it will be the case of demand of duty twice on the same product which is not permissible in law - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 353
  Penalty - Reversal of CENVAT Credit - common input services used in manufacture of dutiable goods as well as exempted goods - Rule 6 (3A) of CENVAT Credit Rules, 2004 - Held that:- Admittedly, the appellant had sufficient balance in their CENVAT Credit account and had not utilized CENVAT credit in dispute. The show cause not does not make express allegation of suppression or wilful misstatement. In the absence of this, the penalty is liable to be set aside. In similar circumstances, where assessee had availed wrong Cenvat credit but had not utilized the same and had reversed the credit after being pointed out by the audit party, in the case of Flextronics Technologies (India) Pvt.Ltd. [2015 (10) TMI 709 - KARNATAKA HIGH COURT], it was held that penalty is liable to be set aside. The demand of duty is upheld - penalty set aside - appeal allowed in part.

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• 2018 (8) TMI 352
  Benefit of abatement - Interpretation of statute - Sub Section 2 of Section 3A of Central Excise Act - assessee claimed that they are entitled to the benefit of proviso to Sub Section 2 of Section 3A which cannot be denied to them because Rule 96ZP (3) does not bar them from availing the benefit of this notification - Difference of opinion - Held that:- Registry is directed to present the matter before Hon ble President of CESTAT for consideration of a Larger Bench to decide the question: Whether the Sub-Section (2) of Section 3A which only deals with the powers of the Government of India, can be treated as a provision for abatement of duty by itself? If so, how that abatement under sub section 2 of Section 3A should be followed read with Rule 2 of Rule 96ZP? Matter Referred to Larger Bench.

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• 2018 (8) TMI 351
  CENVAT Credit (entitlement to principal manufacturer) - Job-work - non-receipt of inputs by principal-manufacturer - denial on the ground that the inputs in question were not physically received by the principal manufacturer i.e. DSM Sinochem Pharmaceuticals India Pvt Ltd - Held that:- Although the job workers have issued the invoices with regard to the inputs in question which have been used by the job workers for processing the job worked goods and received thereof by the principal manufacturer. The said challan has not been disputed that the same is fake - after examining the said document, although there may be a procedural lapse on the part of the principal manufacturer, but it cannot be denied the inputs in question were not used in process of job worked goods by the job workers. In these circumstances, whatever inputs used in manufacturing of final product is entitled Cenvat credit to the principal manufacturer. The adjudicating authority has fell in error by holding that the job workers are clearing finished goods to the principal manufacturer, in fact as per the Annexure-I and the challan, the job workers are clearing the job work goods namely 6-APA Crude and the principal manufacturer is clearing the said goods in Refined form - Therefore, it is a factual error on the part of the adjudicating authority holding that the job workers are clearing finished goods to the principal manufacturer. The principal manufacturer is entitled to avail the Cenvat credit on the inputs in question and no penalty is imposable on the appellants - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 350
  Levy of Trade Tax - Stock Transfer of Goods - submission of statutory Form 'F' - inter-state sale or not. Whether, on the facts and in the circumstances of the case, Stock Transfer of Goods and submission of statutory Form ''F' attracts Trade-tax? Whether, on the facts and in the circumstances of the case, the Form 'F' would be considered conclusive proof of Stock Transfer? Whether, on the facts and in the circumstances of the case, Stock Transfer can be considered Inter-State Sale, without any cogent reason? Held that:- The Revisionist exercised its option of submitting Form-F issued by the Principal Officer of the other place of business i.e. Jaipur, before the Assessing Authority in the State of U.P. Based on it, it was contended that this was conclusive proof that the transactions were Stock Transfer and unless the particulars mentioned in Form-F were belied or proved to be wrong, incorrect, fraudulent, the Assessing Authority was bound to have treated the transaction as having been occasioned otherwise than as a result of Sale i.e. as Stock Transfer which was not liable to be taxed - The submission of Form-F by itself does not raise any un-rebutable or conclusive presumption regarding the transaction(s) being Stock Transfers - In the present case Form-F was not accepted by the Assessing Authority while exercising his power under Section 6-A(2), albeit at the time of assessment. In the case at hand after the matter was remanded back by the order of the Tribunal dated 26.09.2005, a show cause notice was sent to the Revisionist asking it to appear along with the original records, account books, the details of Stock Transfer to Jaipur and to get the same verified from the said account books but inspite of this notice the Revisionist did not produce the said records. All that was produced was a copy of the statement of accounts sent by the Clearing and Forwarding Agent from Jaipur. Each individual transaction of Stock Transfer was required to be verified and this could be done only from the relevant record requisitioned by the Assessing Authority and not otherwise. No reason cogent reason was put-forth by Sri Sachdeva for the non-production of records except to say that it was not required as Form-F was condusive proof of the transactions being a Stock transfer not an Inter-State sale, which, for the reasons already discussed, is untenable in law.In these circumstances if the Assessing Authority rejected the declaration submitted by the Revisionist in form-F and treated the transaction as Inter-State Sale liable to tax, he cannot be faulted nor can the First Appellate Authority and the Tribunal be faulted on this account - In the present case no plausible reason has been given by the Revisionist for non-production of the account books and other records as requisitioned by the Assessing Authority. Though, the scope of inquiry under Section 6-A(2) is limited to the veracity of the particulars mentioned in Form-F, the nature of the inquiry could encompass the requisitioning of relevant records and the IInd Ashok Leyland case does not lay down any proposition of law to the contrary. A case involving claim under Section 6-A of the Act stands on a different footing than the case of an Inter-State sale against Form-C. Thus, Stock Transfer of Goods and submission of statutory Form ''F' attracts Trade-tax - the Form 'F' would not be considered conclusive proof of Stock Transfer - the burden to prove that the transaction was of transfer of goods otherwise than by way of Sale was on the Revisionist-dealer and for the reasons aforesaid this burden was not discharged consequently the transaction has rightly been deemed to have been a Sale Inter-State as per Section 6-A(2) of the Act, 1956. Revision dismissed - decided against Revisionist.

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• 2018 (8) TMI 349
  Validity of assessment order - Pending stay petitions - Held that:- The petitioner has exercised on time its statutory remedy of filing an appeal. It appears that it has also filed a stay petition. Procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition. The writ petition disposed off directing the respondent authority to defer coercive steps until the 2nd respondent considers the stay petition.

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• 2018 (8) TMI 348
  Validity of Rules 42 and 43 of the Rules for the purpose of assessment under the provisions of the Karnataka Value Added Tax Act, 2003 - deduction of only 15% while estimating the suppressed turnover - KVAT Act. Held that:- The estimate of suppressed turnover by the authorities under the KVAT Act are findings of fact in the realm of best judgment assessment by the authorities and unless there is a perversity in the same, no question of law arises requiring consideration by this Court under Section 65 of the KVAT Act - Secondly, the contention raised by the learned counsel that the information or the documents maintained under Rules 42 and 43 of the Rules could not have been relied upon by the assessing authority under the provisions of the KVAT Act is misconceived. As a matter of fact, the actual removal of goods, minerals (granite in present case), the information and documents maintained by the Mining Department is indeed the best evidence which could be relied upon by the assessing authorities under the provisions of the KVAT Act. Assessment of suppressed turnover - Held that:- It is a matter of fact finding and best judgment assessment by the authorities under the Act. The assessee cannot claim as a right that deduction from gross turnover to the extent of more than 15% ought to have been given in the hands of the assessee based upon a communication by the Mysore Minerals Limited dated 8.10.2009 as extracted by the Joint Commissioner (Appeals) in Annexure-D dated 10.3.2011 - The deduction given by the assessing authority and as upheld by the two Appellate Authorities to the extent of 15% on the basis of which the suppressed turnover in the present case has been finally estimated to the extent of Rs. 28,64,220/ - appears to be reasonable and justified and therefore it cannot be held that such orders are perverse requiring our interference under Section 65 of the KVAT Act. Revision petition dismissed.

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