TMI Tax Updates - e-Newsletter
August 10, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Exemption u/s 11 - supply of midday meals - assessee is engaged in a business and there can be no registration as a charitable institution

  ---

Highlights / Catch Notes

• GST:

  Transitional Credit - Krishi Kalyan Cess (KKC) - The accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the Appellant under CGST Act 2017, shall not be allowed to be taken as admissible input tax credit - the order of AAR confirmed.
  Visit to Get Source

  ---

• GST:

  Classification of the product - Caesarstone - whether classified under HSN code 2506 or 6810 for the purpose of levy of GST? - to be classified under HSN code 6810 - order of AAR confirmed.
  Visit to Get Source

  ---

• Income Tax:

  Cancellation of registration u/s 12AA - Exemption u/s 11 - supply of midday meals - The assessee, as rightly found, is engaged in a business and there can be no registration u/s 12AA as a charitable institution.
  Visit to Get Source

  ---

• Income Tax:

  Capital gain tax u/s 45 - shares distributed in family settlement - this Tribunal is of the considered opinion that there is no transfer of capital asset, hence, it is not taxable for capital gain tax under Section 45 of the Act. Moreover, it is also not a case of the Revenue that capital gain tax is leviable.
  Visit to Get Source

  ---

• Income Tax:

  Deduction u/s 54F - where the assessee purchased new house out of his money, exempt ion under s.54F cannot be denied to the assessee, regardless of the fact that the assessee holds the property in joint ownership alongwith other parties as per the purchase deed.
  Visit to Get Source

  ---

• Income Tax:

  TDS u/s 194J OR 194C - carriage fee/ Channel Placement fee paid - No stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted
  Visit to Get Source

  ---

• Income Tax:

  Gain on sale of shares - accommodation entry or not - the income in question is a bonafide Long Term Capital Gain arising from the sale of shares and hence exempt from income tax
  Visit to Get Source

  ---

• Income Tax:

  Addition u/s 69 - Until and unless these witnesses were present during the assessment proceedings, the assessee was denied the proper opportunity of cross examination. Merely supplying of statement to the assessee at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine the witness when the witness himself was not available at the place.
  Visit to Get Source

  ---

• Income Tax:

  Penalty u/s 271(1)(c) - recording of satisfaction - mere direction in the assessment order to initiate penalty proceedings - Concealment/furnishing inaccurate particulars of income - penalty set aside.
  Visit to Get Source

  ---

• Customs:

  Application - Regulation 2 of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 as amended.
  Visit to Get Source

  ---

• Customs:

  Courier Imports and Exports (Clearance) Amendment Regulations, 2018 as amended.
  Visit to Get Source

  ---

• Customs:

  Extension of time for re-import of goods - In this case, export consignment could not pass the test of FDA, and accordingly, the appellant has no option for re-importation of goods which has done in this case. The Commissioner order of refusal of extension of time of re-importation is not correct.
  Visit to Get Source

  ---

• DGFT:

  The Merchandise Exports from India Scheme (MEIS) rates for certain items has been enhanced for exports made on or after 01.11.2017
  Visit to Get Source

  ---

• DGFT:

  Procedure for filling online application for IEC/ modification in IEC/eIEC is laid down. IEC will henceforth be system generated and applicant will have the facility of taking a print out of IEC.
  Visit to Get Source

  ---

• DGFT:

  Panipat (Haryana) is included in the list of towns of export excellence for Carpets, Other Textile Floor Coverings and Bed Linen.
  Visit to Get Source

  ---

• DGFT:

  List of items not allowed for import under Export From India Schemes under Chapter 3 - All items removed - Now there is no restriction as per Appendix-3A
  Visit to Get Source

  ---

• Corporate Law:

  Matters to be included in Board's Report for One Person Company and Small Company - Rule 8A of the Companies (Accounts) Rules, 2014
  Visit to Get Source

  ---

• Corporate Law:

  Matters to be included in Board’s report - information related to cost records and one more item included - Rule 8 of the Companies (Accounts) Rules, 2014
  Visit to Get Source

  ---

• Service Tax:

  Levy of service tax - Goodwill - reimbursable expense - It is the case of the Department that the amount is the consideration received by the appellant for services provided by foreign service providers - Reverse charge mechanism - in the absence of any service agreement, demand cannot sustain - demand set aside.
  Visit to Get Source

  ---

• Service Tax:

  CENVAT Credit - duty paying documents in original are required to be produced by the appellants to the adjudicating authority. Thereafter, the Adjudicating Authority will verify the same and allow the credit, if found correct.
  Visit to Get Source

  ---

• Service Tax:

  Classification of services - payments are only actual charges paid to the various statutory bodies and for electricity maintenance in common area and the same is therefore, not liable to service tax and if so, abatement is available to them under the Service Tax Law.
  Visit to Get Source

  ---

• Service Tax:

  Penalty u/s 76, 77 and 78 of FA - No malafide can be attributed to the respondent, who is organized under Government of India - No penalty.
  Visit to Get Source

  ---

• Service Tax:

  Franchise services - business of refining of crude oil and marketing of petroleum products - HPCL have not provided franchise service to the dealers. The agreement made by HPCL is not a franchise agreement. - demand of service tax set aside.
  Visit to Get Source

  ---

• Central Excise:

  Reversal of CENVAT Credit - The demand under Rule 6 can be raised only if it is established that the appellant have availed CENVAT credit in respect of the inputs which have gone into the manufacture of exempted goods. Without establishing this, the demand under rule 6, merely on the basis that the assessee has not maintained the separate account, cannot be confirmed
  Visit to Get Source

  ---

• Central Excise:

  Clandestine removal - the computer printouts in the facts at hand do not fulfill the mandatory provisions of Section 36B-(2) & (4) of the Central Excise Act, in so far as there are serious irregularities about the manner of sealing of the computers as pointed out hereinabove and one computer not sealed at all. The provisions of Section 36B(4) have also not been fully complied with - demand set aside.
  Visit to Get Source

  ---

• Central Excise:

  Cenvat Credit - The words ‘exempted goods’ refer only to a situation where the goods are exempted from all kinds of excise duties in so far as Rule 6(1) of the Cenvat Credit Rules, 2004 is concerned. If the Cenvat credit is denied in respect of inputs and capital goods merely on the interpretation that basic excise duty on the finished goods is exempted, then it would lead to an anomalous situation.
  Visit to Get Source

  ---

• Central Excise:

  CENVAT Credit - input services - Dredging Service is nothing to do with the customer to whom final product is sold. The service charge of Dredging Service is borne by the appellant only, which stands absorbed in the overall cost of manufacturing of cement. Therefore, it cannot be said that the Dredging Service is used for the removal of final product from place of removal - credit allowed.
  Visit to Get Source

  ---

• Central Excise:

  CENVAT Credit - duty paying documents - ‘Suppression’ being altogether contradictory to ‘Confusion’, the same cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record amounting suppression of fact. Mere failure of ascertaining about the exclusion part of Rule 9 (1) (b) cannot be held to be the act of suppression or collusion on part of the appellant.
  Visit to Get Source

  ---

• VAT:

  Input Tax Credit - Reduction in set off - Axis Gold ETF Scheme - denial of ITC as the goods purchased by the petitioner on which input tax credit is claimed are not resold within a period of six months from the date of purchase - Rule 53 of the MVAT Rules, 2005 - Order of Tribunal confirmed.
  Visit to Get Source

  ---

Notifications

• GST - States

• 24/2018-State Tax - dated 19-6-2018 - Arunachal Pradesh SGST
  The Arunachal Pradesh Goods and Services Tax (Sixth Amendment) Rules, 2018.

  ---

• CT/GST-14/2017/130-11/2018-GST - dated 30-7-2018 - Assam SGST
  Extends the time limit for furnishing the return by an input Service Distributor in FORM GSTR-6.

  ---

• FTX.56/2017/Pt-III/256-12/2018 - dated 25-7-2018 - Assam SGST
  Amendment in the Notification of the Government of Assam, in the Finance (Taxation) Department, No.FTX.56/2017/21 (Notification No. 8/2017) dated the 29th June, 2017.

  ---

• FTX.56/2017/Pt-III/115 - dated 25-7-2018 - Assam SGST
  The Assam Goods and Services Tax (Sixth Amendment) Rules, 2018.

  ---

• FTX.56/2017/Pt-III/110 - dated 25-7-2018 - Assam SGST
  Goods or the class of goods after its seizure be disposed by the proper officer.

  ---

• FTX.56/2017/Pt-III/105 - dated 25-7-2018 - Assam SGST
  The Assam Goods and Services Tax (Fifth Amendment) Rules, 2018.

  ---

• FTX.56/2017/247-11/2018 - dated 29-6-2018 - Assam SGST
  Amendments in the Notification of the Government of Assam, in the Finance (Taxation) Department, No. FTX.56/2017/17 (Notification No. 4) dated the 29th June, 2017.

  ---

• S.O. 221 - dated 6-8-2018 - Bihar SGST
  Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

  ---

• 22/2018-State Tax (Rate)-S.O. 220 - dated 6-8-2018 - Bihar SGST
  Amendment in the Notification No.8/2017 – State Tax (Rate), dated the 29th June, 2017.

  ---

• F-10-36/2018/CT/V (56) - dated 24-7-2018 - Chhattisgarh SGST
  Designation of officer (as specified in Chhattisgarh Value Added Tax Act, 2005)

  ---

• F-10-36/2018/CT/V (55) - dated 23-7-2018 - Chhattisgarh SGST
  The Chhattisgarh Goods and Services Tax Rules, 2017

  ---

• F-10-33/2018/CT/V (50)-12/2018-State Tax (Rate) - dated 29-6-2018 - Chhattisgarh SGST
  Amendment in the Notification of the State Government, in the Commercial Tax Department, No. 8/2017-State Tax (Rate), F-10-43/2017/CT/V (76), dated the 28th June, 2017.

  ---

• 38/1/2017-Fin(R&C)(15/2018-Rate) - dated 26-7-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate) dated the 30th June, 2017,

  ---

• 38/1/2017-Fin(R&C)(14/2018-Rate) - dated 26-7-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C) (12/2017-Rate) dated the 30th June, 2017

  ---

• 38/1/2017-Fin(R&C)(13/2018-Rate) - dated 26-7-2018 - Goa SGST
  Amendment in Notification No. 38/1/2017-Fin(R&C) (11/2017-Rate) dated the 30th June, 2017

  ---

• Income Tax

• 37/2018 - dated 8-8-2018 - IT
  U/s 280A(1) Of IT Act 1961, Central Government, in consultation with the Chief Justice of the Gauhati High Court designate the Court of Munsiff No. 3 -cum-Judicial Magistrate, 1st Class, Kamrup (M), Guwahati as the Special Court for the North Eastern Region

  ---

• Money Laundering

• 06/2018 - dated 6-8-2018 - PMLA
  Appointment of Additional Director for the purpose of the Prevention of Money-laundering Act, 2002.

  ---

• SEZ

• S.O. 3872(E) - dated 1-8-2018 - SEZ
  Central Government notifies an additional area of 4.1925 hectares, as a part of above Special Economic Zone, thereby making total area of the SEZ as 21.2826 hectares at Village Manjari Budruk, Taluka Haveli, District Pune, Maharashtra

  ---

Circulars / Instructions / Orders

• GST - States - CT/GST-12/2017/73-07/2018-GST - dated 25-7-2018
  Name of the authorised Officers in order to process the application for enrolment of tax practitioners under ASSAM GST Act 2017.
• DGFT - Trade Notice No. 23/2018-19 - dated 8-8-2018
  Amendment in Policy and Procedure for online IEC applications – regd.

News

• Cabinet approves continuation and revision of “Post Matric Scholarship for OBC Students for studying in India”

  ---

• Cabinet approves release of pulses procured from farmers under Price Support Scheme to States with Central Subsidy of ₹ 15 per Kg for utilization under Welfare Schemes

  ---

• Cabinet approves signing of MoU between India and Canada on collaboration among Chartered Accountant Institutions

  ---

• Cabinet approves MoU between India and Korea on Trade Remedy Cooperation

  ---

• NITI Aayog will host Investors’ Conference to attract investments for the development of eco-tourism on PPP basis in Andaman & Nicobar, and Lakshadweep Islands

  ---

Case Laws:

• GST

• 2018 (8) TMI 524
  Transitional Credit - Krishi Kalyan Cess (KKC) - migration to GST Regime - admissibility of the KKC credit transitioned by the appellant - Utilization of KKC Credit for payment of excise duty/service tax - Held that:- It is clear that KKC could be utilized towards payment of KKC only. The KKC cannot be adjusted or cross utilized against the payment of excise duty or service tax. It was made expressly clear that CENVAT credit of input duty specified in the sub rule above i.e. excise duty, additional excise duty cannot be utilized for payment of KKC. Similarly the CENVAT credit in respect of KKC cannot be utilized for payment of excise duty or service tax. It could be utilized only for payment of KKC. Thus the CENVAT rules made an exception in respect of credit of KKC. Delhi High Court in the case of Cellular Operators Association of India v. UOI [2018 (2) TMI 1264 - DELHI HIGH COURT] has held that cess and duty are separate levies and cannot be equated - In the present case KKC cannot be treated as excise duty or service tax. It is to be utilized for payment of KKC only. Ruling:- The accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the Appellant under CGST Act 2017, shall not be allowed to be taken as admissible input tax credit.

  ---

• 2018 (8) TMI 523
  Classification of the product - Caesarstone - whether classified under HSN code 2506 or 6810 for the purpose of levy of GST? Held that:- The Appellants are importing the goods in question and are clearing the same by paying Customs duty and IGST through self-assessment method under the Customs tariff heading 6810, and are availing credit of the IGST paid under GST. Thus, when there is no dispute about the classification of the goods in question when the appellants assess these goods on their own under HSN 6810 of the Customs Tariff, the HSN Code for the purpose CGST/SGST ought to be the same. It is evident that Caesarstone is not a natural stone, as its registered name appears to suggest, but is an engineered product, manufactured after a series of processes which are in no way simple mechanical or physical processes covered by Chapter note 1 to Chapter 25. Therefore, the claim of Appellant that Caesarstone, viz: that the product is a mixture of 93% Quartz, with some minor additions of other materials; and that the same undergoes only simple mechanical and physical processes; and thus should be classified by invoking Rule 2 (a) and 3(b) of interpretation rules, does not hold ground. If some lumps or powder of quartz would have been presented along with some polyester resins in form of a mixture, the classification would have been decided under heading 2506 only based on the Rule 2(b) read with Rule 3, as it would not have been possible to decide the classification in terms of Rule 1 in that situation. Here, the case is different. The processes being undertaken by the manufacturer for this product are much beyond the processes mentioned in Chapter Note 1 to Chapter 25, and thus the said goods cannot be classified under this Chapter. Competing entry HSN 6810 - Held that:- Even though Caesarstone is made from natural quartz, it is clearly classifiable as an article of artificial stone, in view of the processes it has undergone and the form in which it has been presented - the said goods are classifiable under 6810 based on the terms of the heading as ‘Articles of Artificial Stones’ read with the Explanatory Notes to HSN 6810 and are excluded from Chapter 25 in terms of the Chapter Note 1 of Chapter 25, read with explanatory notes to HSN 2506. Ruling:- Caesarstone imported by the Applicant is to be classified under HSN code 6810.

  ---

• Income Tax

• 2018 (8) TMI 522
  Rectification Application under Section 254(2) - non-speaking order - guienity of shareholding investment by the five Companies - Held that:- Though the order dated 13th February, 2015 does render a finding that no positive material was brought on record, there is no discussion whatsoever of the various case laws detailed in the submissions which according to the petitioner clinches the issues in support of its case that the shareholding investment by the five Companies was genuine. In the above view, the Tribunal ought to have allowed the petitioner's Rectification Application and considered the petitioner's Appeal before it on merits, inter-alia, taking into account the material and case laws which has been already filed by the petitioner's during the hearing leading to the order dated 13th February, 2015. In view of the peculiar facts of the present case, we are not only setting aside the impugned order dated 4th May, 2018 but also the order dated 13th February, 2018 to the extent it dismissed the petitioner's Appeal before it. This for the reason that, we find the order dated 13th February, 2015 in the context of the material available on record, to be a non-speaking order as it gives no reasons to reject the appeal in the context of the decisions admittedly relied upon at the hearing by the petitioners.

  ---

• 2018 (8) TMI 521
  Carry forward and set-off of unabsorbed depreciation - unabsorbed depreciation eligibility for carry forward and set-off against business profits - Held that:- Question raised herein stands finally concluded by the decision of this Court in Hindustan Unilever [2016 (7) TMI 1245 - BOMBAY HIGH COURT] wherein on identical facts it was held that the unabsorbed depreciation for the Assessment Year 1997-98 upto Assessment Year 2001-02 could be allowed to be set off, if it was still unabsorbed on 1st April, 2001. The above decision also placed upon the CBDT circular No.14 of 2001 dated 22nd November, 2001 to hold that any unabsorbed depreciation which is available on 1st day of April, 2001 would be dealt with in accordance with the provisions of Section 32(2) of the Act as amended by the Finance Act of 2001. Moreover, the Circular No.14 of 2001 issued by the CBDT clarifies that restriction of eight years to carry forward and set off the unabsorbed depreciation has been dispensed with. Consequently, unabsorbed depreciation for the intervening periods between assessment 1997-98 upto 2001-02, if available in the assessment year 2002-03 would be allowable as part of carried forward depreciation from Assessment Year 2002-03 onwards - decided against revenue

  ---

• 2018 (8) TMI 520
  Reopening of assessment - invalid notice - contention of assessee is that the notice was not issued with the prior sanction of the Joint Commissioner, but sanction was accorded by the Additional Commissioner therefore, notice u/s 148 issued by the A.O. was without jurisdiction - Held that:- Section 2 of the Act is Definitions Section. Clause (28C) of Section 2 of the Act defines the word “Joint Commissioner” and explains it means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under sub-section (1) of Section 117. Thus, the Joint Commissioner includes an Additional Commissioner as well. See Dharam Pal Singh Rao Vs. Income-Tax Officer and another, [2004 (8) TMI 88 - ALLAHABAD HIGH COURT] - decided against assessee

  ---

• 2018 (8) TMI 519
  Disallowance made under Section 36(1)(Va) read with Section 2(24)(x) - Employees' Contributions to ESIC paid by the assessee-Company beyond the due dates under ESIC Act - Held that:- The issue arising herein stands concluded against the Revenue and in favour of the respondent-Assessee by the decision of this Court in Commissioner of Income-Tax, (Central), Pune V/s. Ghatge Patil Transports Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT). Claim of set-off of unabsorbed depreciation of assessment year 2000-01 beyond the period of 8 years - Held that:- SMS communication by Mr. Pinto to the Associate of this Court is contrary to the statement made on behalf of the Revenue yesterday by the learned Additional Solicitor General, assisted by Mr. Mohanty, learned advocate for the Revenue. Requesting an Advocate to put in a praecipe the facts which correctly records the reason for having the matters taken out of turn and being put on board, does not in any manner detract from dignity of an advocate. We are not sure, whether this indignation on the the part of the Advocate Mr. Pinto stems from not understanding our view or it is a made up indignation so as to accuse of us of pressurizing him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by Associate. Our endeavor is only to ensure that the law is settled for the tax payers within the State of Maharashtra till the time the Apex Court takes a final view on the issue arising before us. Failing this, the Officers of the Revenue may arbitrarily decide which view of this Court it should follow and the justification would be (even in the absence of any distinguishing facts) the contradictory views of this Court. We have time and again reiterated that equality of treatment at the hands of law is an essential attribute of the Rule of Law, about which we as a State are justifiably proud..In the above view, for the aforesaid reasons we list the following appeals on board tomorrow i.e. on 3rd August, 2018

  ---

• 2018 (8) TMI 518
  Cancellation of registration u/s 12AA - Exemption u/s 11 - supply of midday meals - whether preparation of food and making available the same by the assessee sub contractor to the contractor is a charitable activity? - Held that:- when a particular institution, as in the above case, is involved in implementation of welfare schemes of the Government, we cannot find any charity in that. The mere assertion that there is no profit motive will not suffice especially when for implementing the schemes the assessee takes money from the State Government or the intermediary. The Commissioner, initially, had granted registration clearly specifying the exemption to be available only on the satisfaction of the AO. The instant proceedings were on the report of the AO that the objects of the Trust are deviated from. We do not find a mere change of opinion, and the Commissioner has dealt with the transactions of the assessee and also examined the accounts for the two years, which squarely fall under the exercise as provided for under sub- Section (3) of Section 12AA. The Commissioner was satisfied that the activities of the Trust are not being carried out in accordance with the objects of the Trust. The assessee, as rightly found, is engaged in a business and there can be no registration as a charitable institution. - Decided against the assessee

  ---

• 2018 (8) TMI 517
  Appeal filed by the Revenue against the order of the learned Tribunal - maintainability of appeal - Transfer pricing adjustments - reference to TPO - acceptable comparable - Held that:- M.Janardhana Rao Vs. Joint Commissioner of Income Tax [2005 (1) TMI 14 - SUPREME COURT the Supreme Court held that the principles contemplated under Section 100 of the Code of Civil Procedure would apply to Section 260-A of the IT Act too. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal only in a case which involves substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. Tribunal considering all materials and relevant facts, including the functional profile of M/s.Stewarts & Lloyds India Limited for successive years, arrived at the conclusion that M/s.Stewarts & Lloyds India Limited was a good comparable. There is no question of law, not to speak any substantial question of law, involved in this appeal.

  ---

• 2018 (8) TMI 516
  Capital gain tax u/s 45 - shares distributed in family settlement - Held that:- Under normal circumstances, when the asset of the firm was distributed to the partners on retirement, it is liable for capital gain tax under Section 45. There was a family settlement by which all the coparceners agreed to pay specified sum to the retiring partner - This family settlement was to protect the family business among the coparceners of the Hindu Undivided Family. Therefore, this Tribunal is of the considered opinion that there is no transfer of capital asset, hence, it is not taxable for capital gain tax under Section 45 of the Act. Moreover, it is also not a case of the Revenue that capital gain tax is leviable. AO found that it is not an expenditure relatable to the business or the royalty. This Tribunal is of the considered opinion that it is not a payment made towards business expenditure or towards royalty, but it is only a distribution of asset of the partnership firm on retirement of the partner due to family settlement. Since the business and its assets were kept by the coparceners intact, Shri Rengasamy and Smt. Vellaiammal were compensated by making payment of ₹ 2, 03, 40, 000/- and a sum of ₹ 22, 60, 000/- respectively. Therefore, even though it cannot be construed as expenditure for business or for royalty, certainly it is a division / distribution of partnership firm’s asset by way of paying compensation to Shri Rengasamy and Smt. Vellaiammal. Merely because the payment was made to financial institutions and banks at the instructions of Shri Rengasamy and Smt. Vellaiammal, that may not change the character of payment. Since the capital of the assessee was kept intact and the business was continued by other coparceners / partners, this Tribunal is of the considered opinion that this payment made to Shri Rengasamy and Smt. Vellaiammal, consequent to family settlement, is allowable / deductible while computing the taxable income. Disallowance made by the Assessing Officer as confirmed by the CIT(Appeals) is deleted. - decided in favour of assessee.

  ---

• 2018 (8) TMI 515
  Reopening of assessment - information received from the investigation wing - borrowed satisfaction by AO - non independent application of mind - Held that:- Information received from the director of investigation wing and the AO without making any effort to examine and discuss the material received from the Investigation Wing and without application of the mind to the same formed a reason to believe that income had escaped assessment. This shows that the AO proceeded to initiate reassessment proceedings on the basis of borrowed satisfaction without any application of mind and exercise on the information received from the Investigation Wing of the Department. No hesitation to hold that the AO proceeded to initiate reassessment proceedings u/s. 147 and to issue notice u/s. 148 on the basis of borrowed satisfaction and without any application of mind and examination of the so called material and information received from the investigation wing to establish any nexus, even prima-facie, with the such information. In our considered opinion the initiation of reassessment proceedings u/s. 147, notice u/s. 148 reassessment proceedings and all consequent proceeding and orders, including impugned reassessment and first appellate order, are bad in law and thus, not sustainable and we hold so. - Decided in favour of assessee.

  ---

• 2018 (8) TMI 514
  Maintainability of appeal - appeal within the limit prescribed by CBDT Circular No.21/2015 - Held that:- These instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should have withdrawn the instant appeals filed before the Tribunal. All the appeals of the Revenue are dismissed. As the appeal of the revenue in the case of M/s Sound Craft is dismissed, Cross Objection becomes infructuous and is dismissed as such.

  ---

• 2018 (8) TMI 513
  Deduction u/s 54F - whether the deduction 54F can be restricted in proportion to the number of joint owners in the new asset disregarding the fact of full payment appropriated by the assessee towards such acquisition - assessee claims that entire deemed sale consideration (computed under s.50C of the Act) stands invested in the purchase of new asset (residential property) out of resources of Assessee - Held that:- We are in complete agreement with the claim of the assessee that where the investment in the new asset has been made (alongwith other co-owners) and where all money has been paid by the assessee, it is the assessee which will be entitled to deduction in respect of investments. What is crucial is the act of investment which will override the fact of joint ownership in so far as eligibility of deduction under s. 54F is concerned. The case of the assessee is covered by the decision of the Tribunal in the case of Jitendra V Faria [2017 (5) TMI 12 - ITAT MUMBAI] where the decisions of several High Courts were referred while holding the issue in favour of the assessee. In conclusion, where the assessee purchased new house out of his money, exempt ion under s.54F cannot be denied to the assessee, regardless of the fact that the assessee holds the property in joint ownership alongwith other parties as per the purchase deed. Consequently, we direct the AO to grant deduction under s. 54F of the Act with reference to the amount utilized by the assessee towards purchase of new asset in joint ownership. - decided in favour of the assessee

  ---

• 2018 (8) TMI 512
  TDS u/s 194J OR 194C - disallowance made by AO on account of carriage fee/ Channel Placement fee paid for non-deduction of TDS - Held that:- The work of subtitling will be naturally a part of production of programmes. Apart from confirming the finding of fact recorded by the Commissioner (Appeals) on both the aspects on placement fee and subtitling charges, the Appellate Tribunal has noted that both Sections 194C and 194J having introduced into the Income Tax Act on the same day, it is observed that the activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in terms. Therefore, for the activities covered by Section 194C, Section 194J cannot be applied being more general out of the two. We have agreed with the findings of fact based on material on record that when the payment is made towards standard fee or placement fee, the activity involved is the same in both cases. As stated earlier, when services are rendered as per the contract by accepting placement fee or carriage fee, the same are similar to the services rendered against the payment of standard fee paid for broadcasting of channels on any frequency. In the present case, the placement fees are paid under the contract between the respondent and the cable operators/MSOs. No stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted - See THE COMMISSIONER OF INCOME TAX, TDS 2 MUMBAI VERSUS M/S. UTV ENTERTAINMENT TELEVISION LTD. [2017 (11) TMI 915 - BOMBAY HIGH COURT] - Decided against revenue

  ---

• 2018 (8) TMI 511
  Disallowing employee's contribution towards PF and ESIC u/s 36(1)(va) r.w.s.2(24)(x) - Held that:- AR before us has submitted that the due date for depositing the employee’s contribution towards PF/ESI should be seen from the date of the payment and not from the due date. In this regard, we note that the Jurisdictional Tribunal in the identical facts and circumstance in the case of Suzlon Energy Ltd.(supra) has restored this issue to the file of the AO for fresh adjudication. Respectfully following the same we are inclined to restore the issue on hand to the file of AO for fresh adjudication and in accordance to the provision of law as well as after considering the order of this Tribunal in the case of Suzlon Energy Ltd. (Supra). Thus, the ground of appeal of the assessee is allowed for statistical purpose.

  ---

• 2018 (8) TMI 510
  Jurisdiction under section 153C - recording of no satisfaction note - Held that:- Notice under section 153C was issued on the same day when satisfaction note was recorded by the A.O. of the asseessee-firm i.e., other person. The same A.O. who recorded satisfaction in the case of the asseessee-firm passed the assessment order under section 143(3)/153C. Therefore, the condition precedent for issuing notice under section 153C are not satisfied in this case because no satisfaction note have been recorded under section 153C in the case of the person searched and no specific incriminating material was seized pertaining to assessment year under appeal. Therefore, assumption of jurisdiction under section 153C of the I.T. Act is illegal and bad in law. It is also an admitted fact that no satisfaction note have been recorded under section 153C of the I.T. Act and no notice under section 153C have been issued against the assessee-firm. The A.O. misunderstood it to be a year of search. The Proviso to Section 153C of the I.T. Act provides that six assessment years for which assessments/ reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. Therefore, the six assessment years under section 153C of the Act in the case of the assessee-firm would be A.Ys. 2001-2002 to 2006-2007. The A.O, therefore, shall have to pass the assessment order under section 153C of the I.T. Act. However, A.O. has not done so and passed the order under section 143(3) of the I.T. Act. Therefore, the issue of notice under section 153C and recording of satisfaction being mandatory have not been complied by the A.O. Therefore, conditions of Section 153C are not satisfied in the present case

  ---

• 2018 (8) TMI 509
  Gain on sale of shares - allegation of taking accommodation taken for the purpose of bogus longterm capital gains to claim exempt income - LTCG or busniss income - Held that:- Assessing Officer at best could have considered the investigation report as a starting point of investigation. The report only informed the assessing officer that some persons may have misused the script for the purpose of collusive transaction. The Assessing Officer was duty bound to make inquiry from all concerned parties relating to the transaction and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. We, however, find that the Assessing Officer has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. We are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is a bonafide Long Term Capital Gain arising from the sale of shares and hence exempt from income tax. - Decided in favour of assessee.

  ---

• 2018 (8) TMI 508
  Addition u/s 69 - unaccounted income in the shape of long term capital gain - Held that:- As regards the statement recorded by the ITO Investigation Indore of one Shri Mahesh Pancholi, it is recorded by the AO that the said person was in the employment only for the past four years and further the said witness has not denied the confirmation issued by the broker, but has given a vague statement of having any knowledge of such transaction of shares sold to the assessee. These enquiries were conducted at Indore and the statement was recorded at the same place and rather at the back of the assessee. Until and unless these witnesses were present during the assessment proceedings, the assessee was denied the proper opportunity of cross examination. Merely supplying of statement to the assessee at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine the witness when the witness himself was not available at the place. Accordingly, we hold that the denial of the claim on the basis of suspicion without any cogent material to show that the assessee has brought back his own unaccounted income in the shape of long term capital gain, the said action of the AO is not sustainable. The authorities below qua this issue and delete the addition made by the AO on this account. - Decided in favour of assessee

  ---

• 2018 (8) TMI 507
  Penalty u/s 271(1)(c) - recording of satisfaction - mere direction in the assessment order to initiate penalty proceedings - Concealment/furnishing inaccurate particulars of income - Held that:- When the AO is satisfied at the stage of initiation of penalty proceedings of a clear-cut charge against the assessee in any of the three situations discussed above (say, concealment of particulars of income), but imposes penalty by holding the assessee as guilty of the other charge (say, furnishing of inaccurate particulars of income) or an uncertain charge (concealment of particulars of income/furnishing of inaccurate particulars of income), the penalty cannot be sustained. The sum and substance of submissions is that the penalty orders cannot be declared invalid on a wrong mentioning of the charge either in the penalty notices or penalty orders, since such a wrong mentioning is nothing but a mere procedural irregularity. The view canvassed by the ld. DR cannot be countenanced because the action of the AO is not a mere procedural error. These defaults go to the root of the matter. All the Hon’ble High courts are consensus ad idem in their opinion on the above issue. Not even a single contrary judgment has been brought on record by the ld. DR. Insofar as invoking section 292B of the Act is concerned, in my view, the same has no applicability, as it is triggered only when there is some mistake, defect or omission in a notice or an order etc., which is otherwise in substance and effect in conformity with or according to the intent and purpose of this Act. The extant defaults in the penalty notices/orders are so fundamental that they cannot be construed as elementary or basic mistakes etc. so as to leave them in substance and effect in conformity with the intent and purpose of the Act. The penalty was wrongly imposed and confirmed in all the four appeals under consideration. I, ergo, agree with the ld. JM. in striking down all the penalty orders. The question posed is, therefore, answered in affirmative to the effect that where the satisfaction of the AO while initiating penalty proceedings u/s 271(1)(c) is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable.

  ---

• 2018 (8) TMI 447
  Addition u/s 36(1)(va) r.w.s. 2(24)(x) for the late payment of Employees’ Contribution to PF/ESI - Held that:- While any delayed deposit of PF/ESI is to be disallowed, in terms of Hon’ble Gujarat High Court’s judgment in the case of Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT), the question as to whether there is a delay or not may be decided by the Assessing Officer in the light of above observations by the coordinate bench. The assessee will get relief, if found admissible, on that basis. In the result, appeals of the assessee are allowed for statistical purposes.

  ---

• Customs

• 2018 (8) TMI 505
  Mis-declaration of quantity of export goods - extra bottle supplied by the foreign supplier in respect of some of the items - Revenue has alleged misdeclaration on the sole ground that the quantity of goods declared in the Bill of entry is less than the quantity of actual bottles imported by the appellant - Held that:- The appellant in the column of description in the Bill of Entry has clearly mentioned against the involved entries as two bottles , though under the column quantity of each package, the said extra bottles have not been specified. The fact of mentioning two bottles against the concerned serial numbers in respect of some of the supplements is indicative of the appellant‟s bona fide - Revenue has not produced any evidence to show that the appellant has paid any extra amount for the one bottle supplied free of cost by the foreign supplier. As such, the total transaction value paid for the entire consignment has to be treated as the assessable value for the consignment and in the absence of any evidence of any extra payment made by the importer, the enhancement done by the Revenue cannot be held to be justifiable. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 504
  Quantum of Redemption Fine - personal penalties imposed on individuals - improper import without payment of duty on diesel - Held that:- The total quantity of diesel seized was admittedly 103.657 MT on which the amount of duty comes to ₹ 8.78 lakhs only. Therefore, the redemption fine of ₹ 13 lakhs imposed on confiscation of diesel oil is not justified, therefore, redemption fine on this count deserved to be reduced. Confiscation of non-existent goods - Held that:- This quantity was not available as the same was disposed of therefore, the goods which were not available for seizure the confiscation of non-existent goods cannot be made and no redemption fine can be demanded. Confiscation of the tug - Held that:- Firstly, the valuation of tug was wrongly taken as ₹ 6.75 crores whereas it’s admitted insured value declared is 1.90 Crores. Secondly, once the equal to duty amount redemption fine was imposed on the goods, the redemption fine of ₹ 1.75 Crore in respect of tug is exorbitant and not justified - redemption fine is to be reduced. Personal penalties on employees, namely, Sh. P P Radhakrishnan and Sh. Hanzel A Malik - Held that:- These person are mere employees and performing their duties as per the instruction of their employer. There is no evidence that they have got any incentive out of the benefit derived by the appellant company - the employees cannot be penalized as they do not have belief that the goods are liable for confiscation, moreover, they are mere employee of the company working on fixed salary basis and there is no evidence on record that they were benefited by any act of evasion of duty by the company, therefore, the employees are not liable for penalty. As regard the appeal of Sh. Zoharbhai A Mallampattiwala, since the appellant is expired, his appeal shall stand abated. Appeal disposed off.

  ---

• 2018 (8) TMI 503
  Suspension of CHA License - principles of Natural Justice - It is the contention of the appellant that the immediacy warranting prohibition did not exist as the alleged incident occurred five months before and that no opportunity had been granted to them to be heard in their defence - Held that:- Once the requisites of law and principles of natural justice are not found wanting in an order under the Regulations, no authority appellate, executive or oversight, should interfere in the operational functioning of a customs house - In disposal of this appeal, our scrutiny shall be limited to conformity with the law and compliance with principles of natural justice in the impugned order. The impugned order makes no express mention of satisfaction that prohibition was necessary in the said circumstances. On the contrary, the a priori conclusion appears to be mere replication of an investigative opinion, not of the Commissioner, and there is a certain thriftiness of expression that implies lack of consideration of the whole. The lapse of time between the incident and prohibition erases the immediacy that is a pre-requisite for resort to the detriment. The Commissioner is not adequately cognizant of the limits of the prohibitory power vested in him. Prohibition is to be imposed for non-fulfillment of obligation in carrying out functions in a section (or sections) of the customs station. And the prohibition is to be restricted to that sections (or sections) of the customs station. It cannot extend to the entire zone as the impugned order does - The correct implementation of this provision may require the authority concerned to obtain from archival record a comprehension of the structural division of customs houses. The order of prohibition for failing to comply with the limitation placed on exercise of power by the Commissioner of Customs under regulation 15 of Customs Broker Licensing Regulations, 2018 set aside - appeal allowed.

  ---

• 2018 (8) TMI 502
  Re-import of export consignments - extension of time for re-import of goods - N/N. 94/96-Cus dt. 16.12.1996 - whether the extension of time for the re-importation of goods by the appellant is under the aforesaid notification or not? - Held that:- The consignment has been exported after the re-importation to the buyer in Vietnam and also appellant has deposited the DEPB-benefit to the Department and hence, there is no loss to the Revenue - In this case, export consignment could not pass the test of FDA, and accordingly, the appellant has no option for re-importation of goods which has done in this case. The Commissioner order of refusal of extension of time of re-importation is not correct. This is one of the deserving case where the extension of time is required to be allowed in the facts and circumstances of the case - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 501
  Refund credited to consumer welfare fund - unjust enrichment - Held that:- Whether the incidence of excess paid duty was passed on or otherwise has not been established for the reason that the assessee have not produced the necessary documents before both the lower authorities. In these circumstances, an opportunity can be given to the assesse to produce all the documents before the adjudicating authority to establish that whether the incidence of excess paid duty during the provisional assessment was passed on to any other person - matter on remand. Demand of Interest - provisional assessment - Held that:- Before 13.07.2006, there was no provision for interest in case of any duty stand payable on finalization of the provisional assessment. Therefore, in case of provisional assessment being finalized, Section 28AB is not applicable. When Government realized that there should be a provision of interest even in case of provisional assessment when it is finalized a specific provision by inserting sub Section (3) was made in Section 18 of the Customs Act, 1962 - demand of interest for the period prior to 13.07.2006 set aside. Appeal allowed in part and part matter on remand.

  ---

• 2018 (8) TMI 500
  Recovery of Refund of SAD - N/N. 102/2007-Customs, dated 14.09.2007 - It was alleged that the importer has knowingly and deliberately submitted a forged and fabricated certificate of Chartered Accountant to fulfill the unjust enrichment condition to get refund of 4% Special Additional Duty paid at the time of importation. Whether the demand of erroneously refunded amount of Special Additional Duty to the appellant by the lower authority in terms of Section 28(8) of the Customs Act, 1962 is recoverable alongwith interest and penalty? Held that:- In the present case the importer has knowingly and deliberately submitted a forged and fabricated certificate of Chartered Accountant to fulfill the condition that there is no unjust enrichment to get refund of 4% Special Additional Duty paid at the time of importation - the recovery of refund amount is allowed alongwith interest and penalty. Appeal dismissed - decided against appellant.

  ---

• 2018 (8) TMI 499
  Suspension of CHA License - Rule 19 of Customs Broker License Regulation 2013 - Held that:- The appellant and Sh. Bajrang Lal Sharma are two separate legal entities. Since no proceedings were initiated against the appellant and there is no penalty or any other action proposed against the appellant and the adjudication process has already been completed without any penalty or any other action, there is no justification of continuation of the suspension of the licence of the appellant - the prayer of the appellant for revoking the suspension order dt. 11.05.2017 is granted and the suspension order is revoked. Prohibition Order - case of appellant is that order of prohibition dated 18.04.2017 had been passed without giving them any opportunity of being heard personally and an ex-parte order has been passed resulting in gross violation of principles of natural justice - Held that:- Since the appellant was not given any opportunity of being heard personally, it would be in the interest of justice if the matter relating to prohibition under regulation 23 is remanded back to the adjudicating authority to pass a fresh order after giving sufficient opportunity to the appellant to defend themselves - matter on remand. Appeal allowed in part and part matter on remand.

  ---

• 2018 (8) TMI 498
  Maintainability of appeal - appeal was dismissed on the ground that the appeals do not lie against a Bill of Entry in terms of Section 128 of the Customs Act, 1962 - Held that:- The order of assessment passed under Section 17 of the Customs Act,1962, and the order of clearance passed under Section 47 of the Customs Act, 1962, are quasi-judicial orders under Section 128 of the Customs Act, 1962, which can be set aside only by the competent appellate authority, on an appeal being filed against the same. Import of mobile phones - Concessional rate of CVD (duty of excise) subject to the condition that no cenvat credit has been availed - Held that:- As per Sl.No.263A of Notification No.12/2012-C.E. dated 17.03.2012, Excise duty shall be levied at the rate of 1%, subject to the condition that no Cenvat has been availed under Rule 3 or Rule 13 of Cenvat Credit Rules, 2004, in respect of inputs or capital goods used in the manufacture of such goods - In the present case, since mobile phones are imported, the question of availment of Cenvat on the inputs or the capital goods, does not arise. Since the ld.Commissioner (Appeals) has not decided the matter on merit, it would be appropriate to remand the matter to the Commissioner (Appeals) for deciding the matter afresh on merit and to pass an order in accordance with law - appeal allowed by way of remand.

  ---

• Corporate Laws

• 2018 (8) TMI 506
  Winding up petition - Non payment of dues - Held that:- In the present case, the petitioner had issued a notice to the Company demanding the dues, which has been duly served on the Company and despite that, the Company has neglected to pay the sum or to secure or compound it, within the meaning of Section 434 of the Act. As further appears from the independent Auditors Report dated 04.09.2017 that the Company is a loss making Company and that there is erosion of the capital of the Company and there is mismatch of the assets and liabilities of the Company, in as much as, the liability exceeds the assets. It is submitted that it is otherwise not in public interest that the Company continues its operations. Having regard to the fact that the Company, inspite of the notice, has neglected to pay the outstanding dues or to secure or compound for it to the reasonable satisfaction of the petitioner, within the meaning of Section 434 (1) (a) of the Act, the Company would be “deemed to be unable to pay its debts”. In that view of the matter, the Company is liable to be wound up under Section 433 (e) of the Act.

  ---

• Service Tax

• 2018 (8) TMI 496
  EOU - Reverse charge mechanism - Business Auxiliary Services - received services from Foreign companies, which did not have office in India, in respect of the services rendered abroad - case of appellant is that Section 66A could not have been made applicable retrospectively as it came into force only from 18.04.2006 - Held that:- In respect of the service provider being abroad, the liability to pay Service Tax on “reverse charge mechanism” has come into effect only from 18.04.2006; this has been held by various judgments and particularly, the Indian National Ship Owners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] - there is no need to deliberate on the issue as being a settled one. Whether the requisition received by the appellants after 18.04.2006 are taxable to Service Tax? - Held that:- The appellants are in India but the services are rendered by the company which is outside India and the services are also rendered outside India, however, it is not denying that the appellants are receivers and beneficiaries of the services rendered abroad - the demand needs to be made limited to the period from 18.04.2006 to 31.12.2006 and penalty under Section 78 would also be equivalent as per the amount of duty payable for the period. Service Tax for the period from 18.04.2006 onwards - CENVAT Credit - revenue neutrality - Held that:- The facts of the case and the submissions of the appellants did not make it clear whether the appellants are registered as Service Tax providers and whether they are availing facility under CENVAT Credit Rules and are following proper procedure - the appellants are liable to pay the Service Tax for the period from 18.04.2006 to 31.12.2006. If the appellants are otherwise liable to take credit of the same and to obtain a refund of the same cannot be decided at this end - As no refund claim is filed, the issue cannot be decided at this stage. For this reason the issue needs to go back to the original authority. Appeal allowed by way of remand.

  ---

• 2018 (8) TMI 495
  Extended period of limitation - Reverse Charge Mechanism - External Commercial Borrowings obtained from abroad - Revenue Neutrality - Held that:- Revenue has not disputed the fact that appellant has paid the service tax and has also availed the Cenvat credit thereof. In this circumstance, it is apparent that the situation is Revenue neutral. In view of the Revenue neutral situation, as held in the case of Jay Yushin Limited [2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI], extended period of limitation cannot be invoked. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 494
  100% EOU - Refund of service tax paid - input services - denial on the ground of nexus with the output service provided by the appellant - Held that:- With regard to establishing the nexus between the input and output services, the Tax Research Unit of CBEC vide letter dated 16.3.2012, has clarified that the new scheme introduced by substituting Rule 5 does not require the kind of correlation between exports and input services, which were hitherto provided under the unamended rules. It has been further clarified that service tax paid on the input services will be entitled for refund, on the basis of the ratio of the export turnover to total turnover. Since the TRU has clarified the legislative intent behind the amendment of Rule 5 of the Rules, explaining that no nexus need to be established, denial of refund benefit on sole ground of non-establishment of nexus cannot be sustained for judicial scrutiny - The refund benefit denied to the appellant in respect of those disputed services is not proper and justified and the appellant should be entitled for the benefit of refund of service tax paid. Nonsubmission of invoices - non-payment of value of services to the overseas vendors and non-submission of document - showing payment of service tax on the import of services - Held that:- The relevant documents are presently available with the appellant, which have also been produced by the learned Advocate during the course of hearing. However, since those documents are required to be verified by the refund sanctioning authority for consideration of the benefit of refund, the matter should go back to the original authority for the purpose of verification of those documents/records for extending the refund benefit to the appellant - the matter is remanded to the original authority for passing of fresh adjudication order with regard to the documents, which were not produced at the time of original proceedings. Appeal allowed in part and part matter on remand.

  ---

• 2018 (8) TMI 493
  Levy of service tax - Goodwill - reimbursable expense - It is the case of the Department that the amount is the consideration received by the appellant for services provided by foreign service providers - Reverse charge mechanism - Held that:- Undisputedly, the services are in respect of due diligence, legal compliance requirements, market analysis, etc., made by the foreign service providers before incorporation of the appellant-company. The appellant-company has been issued certificate of incorporation only on 01.05.2008. These services are provided much prior to the date of incorporation. There has been no agreement between the appellant and the foreign service providers for providing service. It is actually M/s. RIHL which is the foreign company who has required the service providers to provide various services of due diligence before acquisition. In such event, merely because the said amount is shown in the books of the appellant, the activity cannot be considered as service provided to appellant so as to attract the levy of service tax. To levy service tax, the activity/transaction should involve a relationship of service provider and service recipient. In CBEC Education Guide (T.R.U.- Circular 20/ 2012), the Board has clarified the necessity to look into the quid pro quo in a transaction. It is explained therein that the concept of ‘activity for consideration’ involves an element of contractual relationship, wherein the person doing an activity does so on the desire of the person for whom the activity is done in exchange of consideration - In the present case, there is no desire on the part of appellant to the service providers that they should do any service to the appellant. Neither is there an offer nor an agreement by the service providers to provide service to the appellant. The consideration has also not been passed by the appellant to the service providers. In such event, the activity does not attract levy of service tax and the demand cannot sustain. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 492
  CENVAT Credit - common input service used for both taxable and exempted services - Rule 6(3) of CENVAT Credit Rules - Held that:- The lower authority has failed to make any justifiable grounds before confirmation of demand in respect of submission of the appellant that they never availed and utilised Input service credit towards exempted service in respect of road construction. The department also failed to submit any calculation sheet/reconciliation statement specifying the details of such alleged Cenvat Credit with supportive evidence and in absence of any such evidence this appellate forum is not in a position to make the correct decision. Before raising such demand, proper investigation is required and in absence of any material facts with corroborative evidence, the same is not maintainable. Appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 491
  CENVAT Credit - duty paying documents - demand on the ground that the appellant has not been able to produce the original duty paying documents, for which they have taken the CENVAT Credit - Held that:- The original invoices could not be produced by the appellants before the ld.Ádjudicating Authority, which are now available with the appellant as per the ld.Advocate for the appellant - these duty paying documents in original are required to be produced by the appellants to the adjudicating authority. Thereafter, the Adjudicating Authority will verify the same and allow the credit, if found correct. The Adjudicating Authority is required to recompute the demand while adjudicating the case afresh, so as to avoid the overlapping period in the various demands - appeal allowed by way of remand.

  ---

• 2018 (8) TMI 490
  Tour operator service - N/N. 20/2009-ST - effect of amendment - The demand was confirmed on the services of tour operator for the period prior to 07.07.2009 - Held that:- The Finance Bill in the Finance Act, 2011, N/N. 20/2009-ST dated 07.07.2009 was given retrospective effect vide section 72 of Finance Act, 2011, whereby the services of Tour operator was exempted from 1st April, 2009. The period in the present case is 01.10.2001 to 30.09.2006 which is covered by retrospective effect vide exemption N/N. 20/2009-ST which was retrospectively validated from 1st April, 2000. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 489
  Levy of Service Tax - Management, maintenance and repair Service - It is the case of the Revenue that the Respondent-Assessee are providing repair and maintenance of road services and were not showing the service and value thereof in the ST-3 Returns submitted by them - Held that:- The Finance Act, 1994, has been amended by introducing Section 97(1) wherein special exemption has been granted for management, maintenance and repair of roads for the period from 16.06.2005 to 26.07.2009 (both days inclusive) - In the present case, the period is subsequent to 16.06.2005, when the entries of for management, maintenance and repair of roads, came into existence. Appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 488
  Outdoor Caterer Services - it was alleged that appellant have not discharged the service tax in respect of services provided to M/s IOCL Gujarat refinery and M/s IPCL, Dahej - Held that:- As regards, the service tax liability upon the appellant, there is absolutely no dispute and the appellant is liable to pay, hence the Service Tax demand confirmed in the impugned order is not under dispute - the demand of service tax and interest there on upheld. Penalty - Held that:- The appellant despite obtaining the registration in 2005 did not discharge the service tax only on the reason stated by the Ld. Counsel that the appellant were not reimbursed the service tax amount by the service tax recipient - merely for this reason, the appellant cannot be absolved from the liability of payment of service tax. Therefore, this lame excuse does not help the appellant - the appellant could not make out any case for waiver of penalties under section 80. However, the penalties under different sections 76 and 78 of Finance Act, 1994 shall not be imposed simultaneously, thus, penalty u/s 76 set aside, while upholding penalty u/s 78. Appeal allowed in part.

  ---

• 2018 (8) TMI 487
  CENVAT Credit - duty paying documents - case of Revenue is that the appellant is not entitled to avail Cenvat Credit on the basis of the Debit Notes as the DHS–Mumbai cannot be said to have an office or any other premises of DHS- Kolkata and they cannot be considered as an “Input Service Distributor” as it failed to satisfy the definition as provided in Rule 2(m) of the Cenvat Credit Rules, 2004. Held that:- There is no dispute that the DHS- Mumbai had issued the Debit Notes towards the proportionate share in the Subscription Fee paid to Deloitte Global along with Service Tax of the appellant DHS-Kolkata - Tribunal in the case of Amra Raja Power Systems Limited Vs. Commissioner of Customs & Central Excise, Tirupati [2015 (12) TMI 1558 - CESTAT HYDERABAD] held that when Service Tax has been duly discharged by the service provider, service recipient cannot be denied credit of Service Tax borne by him. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 486
  Business Auxiliary Service or Manufacture - supply the steam and electricity to M/s SAIL as per their requirement. Held that:- The issue is no more res-integra in view of the decision of the Tribunal in the case of CMS (India) Operations & Maintenance Co. P.Ltd. [2007 (5) TMI 74 - CESTAT, CHENNAI], where it was held that It is a settled position that electricity is goods manufactured in the sense envisaged in clause (f) of Section 2 of the Central Excise Act, 1944 - demand set aside - appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 485
  Classification of services - the appellant is rendered by various services, which the Revenue is attempting to classify under the Builders Special Services classifiable under Chapter Heading 65(105)(zzzu) of the Finance Act,1994 - Principles of Natural Justice - Held that:- On going through the various documents enclosed in the appeal memorandum, as such, agreement of sale, bank statement, bills provided by the various vendors, it is found that the appellant has returned excess amount to the flat owners after collection of various fees, as such, Association formation deposit, Common meter deposit, common maintenance deposit, common electricity charges etc. The same has been rendered after collection of actual amount spent for payment of this deposit/fees/base area on behalf of 120 flat owners - thus, this payments are only actual charges paid to the various statutory bodies and for electricity maintenance in common area and the same is therefore, not liable to service tax and if so, abatement is available to them under the Service Tax Law. Principles of Natural Justice - Held that:- The adjudicating authority has passed not speaking order without discussing the submissions made by the Appellant and passed very cryptic order and has not quantified the demand in respect of penalty imposed under Sections 75, 77 of the Act and Rule 15 of Cenvat Credit Rules, 2004 - the Commissioner (Appeals) has also imposed penalty on the appellant, which was not specified by the lower adjudicating authority without affording an opportunity by way of issuance of show-cause notice before imposition of such penalty. Its itself amount to violation of principle of natural justice and the order is liable to be set aside on this count also. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 484
  Penalty u/s 76, 77 and 78 of FA - non-payment of service tax along with Interest - appellant, an organised sector under Government of India - Held that:- It is on record that the Respondent failed to pay service tax on the services rendered by them during the period in question, which is not in dispute that the Respondent has rendered the taxable services under “Scientific and Technical Consultancy Services”, which is taxable as per Sub-section 105 of Section 65 of the Act. It is fact that the Respondent has failed to take registration under Section 69 of the Act as well as also did not make payment as required under Section 68 read with Rule 6 of Service Tax Rules, 1994. Also no service tax return as per Section 70 of the Act read with Rule 7 of the Rules, has filed by the Respondent and therefore, they are liable to pay service tax along with interest and penalty. It is also fact that during this period, the respondent has not collected any service tax from their clients and agreed to pay the amount from the Suspense Account of Ministry of Mines under which they are functioning. It is also not in dispute that the respondent is organized under the Government of India under Ministry of Mines. They have under the bonafide belief, failed to pay the service tax, which is not payable by the respondent on the services rendered by them and not collected from their clients - After knowing that they are liable to pay service tax and they have taken the registration and started to follow the procedure and Rules in respect of payment of service tax and started paying the same. No malafide can be attributed to the respondent, who is organized under Government of India. Penalty not warranted - appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 483
  Penalty u/s 78 - payemnt of tax demand on being pointed out - no intent to evade - Held that:- The appellants have now paid the entire amount of Service Tax demanded by the Adjudication Order and have also paid ₹ 50,000/- towards their interest liability - there is no material on record to establish any fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of Chapter 5 or the Rules, with intent to evade payment of Service tax on the part of the appellant. The appellant willfully intends to pay the Service Tax. Penalty u/s 78 set aside - appeal allowed in part.

  ---

• 2018 (8) TMI 482
  Refund claim - appellant discharged Service Tax liability twice in the same service - rejection of refund on the ground of Unjust enrichment - Held that:- The appellant paid the tax twice on the same service. There is no dispute that their client paid taxes/once. When this fact was not disputed, the denial of refund is unjustified. The Tribunal in the case of Commissioner of Central Excise Pune-I Vs. Volkswagen India Private Limited [2013 (11) TMI 1534 - CESTAT MUMBAI] observed that Excise duty paid second time by mistake on clearance of goods, question of unjust enrichment would not arise. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 481
  Franchise services - business of refining of crude oil and marketing of petroleum products - Held that:- HPCL and dealers are not granted representational right to sale the petroleum products procured from other companies independently for selling the same as the products of HPCL - HPCL have not provided franchise service to the dealers. The agreement made by HPCL is not a franchise agreement. The said services were not to be considered under the purview of franchise service as per Section 65(105)(zze) of the Finance Act, 1994 - appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 480
  GTA Service - case of appellant is that the service tax pertaining to the GTA service in respect of transport invoices issued by the transporter, had also been paid by the transporter - Held that:- The ld.Advocate further submits that there is no discrepancy in the figure of ₹ 13,261/- upto 30th June, 2012, but the demand of ₹ 59,349/- for the balance period, should be ₹ 38,848/- only. Since, the service tax to that extent had been charged by the transporter, which was duly paid by the appellant assessee. This fact has to be verified by the adjudicating authority. The penalty imposed under Section 77 (1)(c)(ii) and Section 78 by invoking the provision of Section 80 is set aside - Regarding service tax demand of ₹ 59,349/-, the matter is remanded to the adjudicating authority to consider the submissions of the appellant - appeal allowed by way of remand.

  ---

• 2018 (8) TMI 479
  Collection of Service tax made but failure to deposit to Exchequer - Security agency service - demand invoking extended period of limitation - no suppression of facts - Held that:- There is no doubt that citing of the wrong provision will not, of itself, vitiate the demand. However, with a clear finding that the ingredients for invoking the extended period does not exist, the scope for recovery fails. The claim of the respondent that they are not engaged in the business of providing ‘security agency service’ merely because they are registered under relevant labour law does not stand the test of law to exclude them from tax liability and as the impugned order has examined the scope of services and scope of contract in detail, demand does not sustain owing to bar of limitation. Appeal dismissed - decided against Revenue.

  ---

• Central Excise

• 2018 (8) TMI 478
  Liability of Interest and Penalty - reversal of wrongly availed CENVAT Credit before issuance of SCN - whether the appellants are liable to pay interest and penalty on the wrongly availed Cenvat Credit amounting to ₹ 94,208/- despite the fact that much before the issuance of show cause notice they have reversed the same? Held that:- The appellants immediately reversed the Cenvat Credit wrongly availed by them on pointing out by the Department. This itself shows that there is no intention on the part of the appellants to evade payment of tax rather they were having sufficient balance in their Cenvat Credit account - To attract levy of penalty as per the provisions of Section 11AC of the Central Excise Act 1944 the Revenue has to prove that the appellant has availed the Cenvat Credit wrongly by reason of fraud or collusion or any willful misstatement or suppression of facts, which the Department has failed to establish in the present case. Since the appellants did not utilized the cenvat credit wrongly taken and reversed it before utilization, therefore, it amounts to non-taking of credit. Hon’ble High Court of Karnataka at Bangalore in the matter of CCE & ST, Bangalore V/s Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that since the appellants therein was having sufficient balance in their Cenvat Credit account, therefore, the appellant is not liable to pay the interest. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 477
  Clandestine removal - shortages and excesses of goods - Revenue entertained a view that the short found quantity of 1650.426 MT of SS Coils totally valued at ₹ 8.74 Crores (approx.) involving duty of ₹ 90.09 Lakhs stand removed by the appellant clandestinely without issue of Central Excise invoices and without their accountal in the statutory records - for excess found goods it was believed that the same were not entered in the records with an intent to clear the same without payment of duty. Held that:- It is seen that the excesses and the shortages found by the officers are much on the higher side and there is nothing on record to show as to how such huge stock of finished products and raw materials was weighed by the officers. There are no inventories prepared and no methodology adopted by the Revenue for weighing such a huge stock stands placed on record. As per the appellant they do not have any weighing scale in their factory and for verification of the stock, 360 trucks are required to be engaged. There is nothing on record to show as to whether the trucks were put into services for weighing the huge stock - Admittedly the iron and steel items are heavy items and cannot be weighed without engaging a proper procedure to weigh the same. The stock-taking was not actually done by the visiting staff and the alleged shortages and excesses are based upon eye-estimation. In such a scenario the allegations of shortages of the goods cannot be accepted. The stock-taking undertaken by the visiting officers was not actual, but based upon eye-estimation and as such the result of the same has to be ignored, in any case, the entire case of the Revenue is based upon such shortages leading to the allegations of clandestine removal - The question which arises is as to whether the shortages by themselves can lead to the findings of clandestine removal of the goods or not stands dealt with by the Tribunal in number of precedent decisions. It is well-settled law that the allegations of clandestine manufacture and removal are required to be proved by the Revenue by production of positive, tangible and legal evidences. The onus to prove so lies heavily on the Revenue and is required to be discharged by production of admissible evidence. In the present case, apart from the shortages, which are also of doubtful nature, the Revenue has not produced any evidence in the shape of actual manufacture of the goods, their removal by engaging transportation, the identity of the buyers and the receipt of consideration etc., to show that the goods have actually been sold by the assessee. No statement of any employee or the production manager of the company has been recorded to establish that the goods were actually manufactured in the factory. No source of raw material stands disclosed by the Revenue - mere shortages cannot lead to the allegations and findings of clandestine manufacture. In the present case also the Revenue’s entire case is solely based upon the shortages so detected by them and there is no other independent evidence to corroborate the said charges. No efforts have been made by the Revenue to find out the source of raw material, the manufacture of the goods in the assessee’s factory and their clearances from the factory. The goods alleged to be removed clandestinely require huge raw materials for their manufacture and there being is not even an iota of evidence on record to show that from where such huge raw material has been procured by the assessee. Excesses of goods - Held that:- The stock-taking was not proper and as such the alleged excesses have to be held as pseudo - In the absence of any evidence to show that such excesses, even if real, were not recorded in the statutory records with a mala fide intention to clear the same without payment of duty, their confiscation is not justified - confiscation set aside. There is no justification for imposition of penalty on the Director of the company Shri Sanjeev Agarwal - penalty set aside. Appeal disposed off.

  ---

• 2018 (8) TMI 476
  Clandestine removal - shortages and excesses of goods - Held that:- The entire case of the Revenue is based upon the shortages detected in Unit No.1 and the excesses found in Unit No.2, 3 & 4. Whereas the Revenue has considered the shortages in Unit No.1 as clandestine clearance, the excesses found in the other units stand confiscated along with imposition of penalties - shortages by themselves, without there being any corroborative evidence cannot lead to the finding of clandestine removal. Apart from the shortages, Revenue has not referred to any other evidence on record to indicate or to establish that the short found goods stand cleared by Unit No.1 without payment of duty - the findings of clandestine removal against the said Unit are unsustainable. The shortages found in Unit No.1 were almost equal to the goods seized in Unit No.2, 3 & 4. The Revenue has confiscated the excess found goods in Unit No.2, 3 & 4 even though the said units were not registered with the Department and there was no requirement for their registration inasmuch as they were doing the job work for Unit No.1 and was not manufacturing any final product - No justification for confiscation of the said excess found goods in their premises, which are nothing but the shortages detected in the Unit No. 1. The confiscation of the same and imposition of penalties on the said units are set aside - Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 475
  CENVAT Credit - common input services used in the manufacture of dutiable and exempted goods - non-maintenance of separate records - Rule 6 (3) of CENVAT Credit Rules, 2004 - Held that:- The adjudicating authority dropped the demand on the basis of verification of the factual position and came to the finding that the separate account are being maintained and no modvat credit is being availed in respect of the input used in the manufacture of final product. Ld. Commissioner (Appeals) reversed the same on his own analysis - It is also a fact that only one incidence of availing CENVAT credit on 30HP motor was relied upon. The appellant admittedly reversed credit on the said motor. No evidence was brought on record that the appellant have availed CENVAT credit in respect of any other inputs used in the manufacture of exempted goods. The demand under Rule 6 can be raised only if it is established that the appellant have availed CENVAT credit in respect of the inputs which have gone into the manufacture of exempted goods. Without establishing this, the demand under rule 6, merely on the basis that the assessee has not maintained the separate account, cannot be confirmed - In the present case it is admitted facts that the appellant have maintained 2 separate accounts one for cenvatable input in RG-23A/C part-I register and for non cenvatable inputs record is maintained in Form-IV register. The closing balance of any of the input was not shown as minus balance therefore, in respect of total 8 dutiable boiler, the quantity of inputs were sufficient in manufacture of such 8 boiler. This shown that no cenvatable input was used in the manufacture of exempted boiler - Moreover, since there is no evidence on record that the appellant have used inputs for manufacture of exempted boiler on which credit was availed, the demand under Rule 6 is not legal and correct. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 474
  CENVAT Credit - duty paying documents - supplementary invoices - exclusion clause of Rule 9(1)(b) of Cenvat Credit Rules, 2004 - issue pending adjudication before Supreme Court - suppression of facts or not? Whether the Appellants are entitled to Cenvat Credit on the basis of supplementary invoices issued by the coal companies and whether the said credit stands denied in terms of Rule 9(1)(b) of the Cenvat Credit Rules which denies the credit if the supplementary invoices are issued for duties which became payable by the manufacturer on account of willful misstatement or suppression of facts on their part? Held that:- It is an admitted position that demand raised by the department against M/s. SECL is under challenge before the Hon’ble Supreme Court and therefore the Cenvat credit can be availed by the manufacturer on the strength of supplementary invoice since such amount of duty cannot be said to be paid on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty - a consistent view has been taken by this Tribunal on this issue in favour of the Assessee in a number of decisions. In the case of M/S BIRLA CORPORATION LTD. VERSUS CGST, CC & CE, JABALPUR [2018 (7) TMI 1264 - CESTAT NEW DELHI], in identical set of facts involving the same coal company i.e. M/s. SECL, this Tribunal has allowed the Cenvat Credit holding that there cannot be suppression of fact when the issue of liability of payment of Excise duty at the end of the coal companies was a debatable issue which is pending adjudication before the Hon’ble Supreme Court. Appellant is entitled to take Cenvat Credit on the supplementary invoices in question - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 473
  Clandestine removal - paints and varnishes - main evidence which has been relied upon by the Revenue are the computer printouts retrieved from the computers, which were seized from the factory as well as office premises of the appellants - whether the appellants indulged in clandestine clearance of paints and varnishes during the period, 2010-11 to 2013-14 or not? Held that:- There are serious irregularities in preparing panchnamas both at the factory premises of the appellants as well as their office on different dates. These irregularities are clearly emerging from the cross examination of the two investigating officers namely Sh. B.C. Aggarwal and Sh. Subodh Tiwari. Thereafter, the cross examination of six panchas was also allowed, out of which three panchas appeared for cross examination and other three panchas who did not appear for cross examination. It is evident from the cross examination of the panchas that two of the three panchas were the employees of the appellants and were illiterate persons. Further, they never witnessed the search operations and were only asked to put their signatures at the time of the conclusion of the search operations. Apart from the irregularities in the panchnama proceedings there are also inherent contradictions in the manner in which the seized computers were sealed and de-sealed. The computer which was handed over by the appellants to the investigating officer on 20.10.2012 was never sealed - the entire computer data which has been relied upon substantiate the duty demand to be highly unreliable for want of procedural irregularities. The computer printouts cannot be held to be an admissible evidence unless the conditions as laid in the provisions of Section 36B of the Central Excise Act are fully complied with. A perusal of section 36B would indicate that the Act has prescribed very stringent conditions for computer printouts to be a piece of admissible evidence - the computer printouts in the facts at hand do not fulfill the mandatory provisions of Section 36B-(2) & (4) of the Central Excise Act, in so far as there are serious irregularities about the manner of sealing of the computers as pointed out hereinabove and one computer not sealed at all. The provisions of Section 36B(4) have also not been fully complied with. The charges of clandestine removal of excisable goods can’t be upheld merely on assumptions and presumptions but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. - the onus of proof of bringing clinching evidence is on the Revenue. Duty demand cannot sustain - penalties also set aside - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 472
  CENVAT Credit - shortage of inputs - Held that:- The appellant had stored the cenvatable inputs out of their registered factory premises without the permission of jurisdictional authorities which is a technical lapse, but contended that the violation occurred owing to shortage of space - demand set aside - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 471
  Clandestine manufacture and removal - It is the case of the appellant assessee that the entries in the Jabeda Khata are not in respect of the plywood manufactured by them but represents the trading activities undertaken by the appellant assessee - Held that:- The appellant assessee is a SSI unit having its factory at Bogram, P.S.-Karnajor, in the District of Uttar Dinajpur. The appellant manufactures commercial plywood out of veneer purchased from the market. They do not have any plant for manufacture of veneer. They are also trading the commercial plywood. The appellant availed the benefit of the Notification as granted to the Small Scale Unit up to the clearance value of ₹ 30 lakhs as was available during the period under consideration and after crossing the said limit the appellant had been paying duty on a concessional rate as envisaged in the Notification. It is well settled that the charge of clandestine manufacture of dutiable goods and removal thereof, without discharging the duty by the assessee, cannot be established on assumptions and presumptions. Such charge has to be based on complete and tangible evidence. The adjudicating authority have not brought forth the corroborative evidence on record to prove purchase of raw materials, manufacture of goods, consumption of excess power, payment of additional wages and sale of the final product. The department satisfied itself with the entries in the seized records and statements. There should have been some corroborative evidence. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 470
  Clandestine removal - cross-examination of various persons not provided - principles of natural justice - Held that:- It is seen that most of the entries are made in such a way that it is difficult to arrive at a conclusion about sales and purchase of raw materials and finished goods. From the records and registers made available, the entries are made in a cryptic manner that too after so many alterations. This leads to conclude that Appellant has indulged in the clandestine removal. The statements recorded by the various persons wherein in some statements, it is stated that there was cash sales also but this in itself would not be sufficient to prove the clandestine removal without the further corroborative evidence. Regarding acceptance of computer printouts as the evidence only after passing the test of examination and cross examination of the person responsible for feeding such data. Before acceptance of computer printouts the rigours of Section 36B of CEA, 1944 has to be fulfilled but the same has not been followed in their case - The Revenue has not conducted investigation regarding the supply made to the person whose name is found to be entered in the Register if it is for clearance of finished goods clandestinely. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 469
  Recovery of cenvat credit - demand on the ground that the finished goods were not fully exempted from excise duty Notification No.8/2004-CE dated 21.01.2004, as amended, provided exemption only from basic excise duty, additional excise duty of Goods of Special Importance Act, 1957, but did not provide any exemption to the additional duty payable under the Finance Act, 2005 and education cess payable on such additional duty - Notification No. 8/2004-C.E., dated 21.1.2004. Held that:- The Government of India had announced a special scheme of incentives in excise duty in 1999. Accordingly, Notification No.32/99 and 33/99 dated 08.07.1999, were issued by the Ministry of Finance, Department of Revenue to provide exemption from excise duty, on specified goods, manufactured in specified areas of North East. The exemption was on the excise duty payable on value addition. This exemption was given effect to by way of providing refund of the excise duty paid by the manufacturer through PLA, i.e., in cash. Under the Cenvat Credit Rules, the credit is admissible as soon as the essential conditions are specified. In the case of National Calamity Contingent Duty, it is the condition that credit of no duty, other than the credit in respect of NCCD itself can be used for payment of such duty under Rule 3(4) of the Cenvat Credit Rules, 2004 - The words “exempted goods” appearing in Rule 6 of the Cenvat Credit Rules are to be read and interpreted in the relevant context. It is not the correct interpretation that when a product is chargeable to different kinds of excise duties, the words “exempted goods” refer only to exemption from basic excise duty. The words ‘exempted goods’ refer only to a situation where the goods are exempted from all kinds of excise duties in so far as Rule 6(1) of the Cenvat Credit Rules, 2004 is concerned. If the Cenvat credit is denied in respect of inputs and capital goods merely on the interpretation that basic excise duty on the finished goods is exempted, then it would lead to an anomalous situation. It is found from the records that the appellants have been depositing the entire amount of excise duty payable on the finished goods in the ESCROW account. The Cenvat Credit being a beneficial scheme, the benefit intended to the manufacturer cannot be denied. As such the appellants are entitled to take credit of the excise duty paid on inputs or capital goods. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 468
  CENVAT Credit - it was alleged that certain duty paying documents for input services had been raised on the Regional Sales Offices, instead of the Head Office of the company - Held that:- The CENVAT invoices should be verified and the matter should be decided accordingly. Penalty u/s 78 - Held that:- There is no material on record to establish fraud, collusion, willful misstatement or suppression of facts on the part of the appellant. Therefore, penalty under Section 78 of the Finance Act is unwarranted and is set aside. Appeal allowed by way of remand.

  ---

• 2018 (8) TMI 467
  Payment of duty by utilizing CENVAT Credit account - N/N. 20/2007-CE dated 25.04.2007 as amended - Held that:- Para 2B of the said Notification makes it clear that the appellant is required to utilize the Cenvat Credit first and thereafter they have to pay the duty - In the instant case, the appellant had not utilised the credit first, instead they paid the duty from the PLA and claimed the refund, which is contrary to the provisions of the Notification. CBEC vide letter dated 11.06.2012 clarified that excess amount of refund to the extent of Cenvat Credit was not taken, will either be deducted from the refund payable to the assessee or recovered along with the interest as the case may be. Appeal dismissed - decided against appellant.

  ---

• 2018 (8) TMI 466
  Valuation - after sale from the depot they reimbursed the freight or hamali charges (delivery of goods by rickshaws and manual labourers) incurred by the purchaser for the delivery of excisable goods to the premises of the purchaser and accounted those expenses under the head of ‘other charges’ - inclusion of such expenses in assessable value - Held that:- The Hon’ble Supreme Court in the case of Prabhat Zarda Factory Ltd. vs. Commissioner of Central Excise & Anr. [2002 (11) TMI 95 - SUPREME COURT OF INDIA] have held that freight charges are to be included in the assessable value up to the sale depot for the purposes of excise duty but where the sale are made from the depot, the freight charges for the purpose of delivery to the customers from the depot, would not be so includable - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 465
  Rectification of Mistake - location of factory to be rectified - Held that:- Rectification of factory location as Assam in place of Meghalaya in paragraph 1 of the order dated 04.05.2018, since the mistake is apparent on the face of the records the same is hereby rectified. Prayer regarding the change of Cause Title from Yamakhya Cosmetics and Pharmaceuticals Private Limited' to "Modi-Mundipharma Beauty Products Private Limited' cannot be entertained at this stage since Final Order has already been passed by this Bench. ROM application allowed.

  ---

• 2018 (8) TMI 464
  Cum duty benefit - clandestine removal of goods not in dispute - Held that:- It is observed that the appellant have charged and collected the value at the time of clearance of the goods, subsequent to making out a case of demand of duty, the amount collected from the customers remained same, there is no extra consideration given to the appellant. In such case, value collected even though towards clandestine removal but the fact remains the price charged to the customer did not change even after the demand of duty, therefore, the price charged to the customer is a cum duty price and the benefit of cum duty price should have been given to the appellant. The appeal is disposed of by way of remand to the adjudicating authority for recalculating the demand after allowing the cum duty benefit.

  ---

• 2018 (8) TMI 463
  CENVAT Credit - job-worker instead of availing benefit of exemption paid duty - N/N. 214/86-CE dated 25.03.86 - Case of the department is that the job worker was supposed to avail the exemption N/N. 214/86-CE dated 25.03.86, therefore, whatever duty was paid by the job worker shall not be available as a Cenvat Credit to the appellant - Held that:- N/N. 214/86-CE was not availed by the job worker, instead he paid the excise duty on the job worked goods. The department has raised no objection with regard to the payment of duty by the job worker. In such case, the duty was legally stand paid by the job worker. Even if, the job worker has not availed the exemption notification No. 214/86-CE which is conditional one, it cannot be said that he has done anything wrong. Accordingly, whatever duty paid by the job worker is legally cenvatable in the hand of the appellant. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 462
  Rebate claim sanctioned, was appropriated against the confirmed demand - appellant was not put to notice regarding this - principles of Natural Justice - Held that:- It is observed from the original order that though the adjudicating authority has sanctioned the rebate but suo moto appropriated the same against the demand confirmed in some other case. The appellant was not put to notice regarding this appropriation, therefore, there is a gross violation of principles of nature justice. The matter remanded to the adjudicating authority for passing fresh order particularly on appropriation after affording an opportunity to the appellant of being heard - appeal allowed by way of remand.

  ---

• 2018 (8) TMI 461
  CENVAT Credit - inputs - clinker cleared as such for export to Bangladesh - case of the Revenue is that as per the provisions of Rule 3 (5) of CENVAT Credit Rules, 2004, the inputs on which credit has been taken can be removed as such, on payment of the credit availed, equivalent to CENVAT Credit - Held that:- The inputs on which the credit has been availed, were exports under due intimation to the Department - the Tribunal in various decisions have held that there is no bar in removal of inputs as such, underbond and there is no requirement to reverse the CENVAT Credit availed. The removal of Clinker without payment of duty for export to Bangladesh is in accordance with law - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 460
  CENVAT Credit - input services - Dredging Services - case of department is that since the Dredging Services is availed outside the registered premises and the same is neither used for manufacture nor for removal of goods, it is not qualified that as input service - Held that:- The Jetty is a captive active Jetty of the appellant, which is exclusively used by the appellant, only. At time, the appellant have to get the Dredging done at the Jetty for proper function of Jetty to improve the draft. Since Jetty is used primarily for import of coal which is used in the manufacture of final product, Dredging Service is qualified as input service - merely because the service was availed outside the factory of the appellant the credit cannot be denied. It is also a fact that Dredging Service is nothing to do with the customer to whom final product is sold. The service charge of Dredging Service is borne by the appellant only, which stands absorbed in the overall cost of manufacturing of cement. Therefore, it cannot be said that the Dredging Service is used for the removal of final product from place of removal. Credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 459
  Seizure of excesses stock found during stock taking - Separate SCN was issued for the seizure portion of the excess stock found, in that matter the appellant was in appeal before this Tribunal wherein the matter was remanded - Held that:- Since both the proceedings are from the same investigation. In the earlier case against the same stock taking, there was an excess goods found for which separate SCN was issued. In the present case, in the same stock taking, some shortages were found in which the excise duty demand was confirmed. Since both the stocks are arising from the same investigation, I need to follow earlier order of the Tribunal wherein the Tribunal has held that the Adjudicating authority should have examined the evidences before passing this order. Appeal allowed by way of remand.

  ---

• 2018 (8) TMI 458
  Requirement of Affixation of Retail Sale Price - sale of Cement to individual customer - whether the appellant are entitled for the concession vide notification No. 4/2006-C.E. dated 01.03.2006 (exemption entry S. no. 1C) in respect of cement supplied without affixing MRP to the customer sold directly by the appellant manufacturer to the said customer? - Held that:- In the facts of the present case, the goods were sold directly by the appellant manufacturer to the customer and no retail agency or other intermediary is involved. Therefore, the sale does not fall under the definition of retail sale. In such a case, retail sale price is not required to be affixed - such supply is not covered by Exemption Notification No. 4/2006-C.E. dated 01.03.2006 (Serial no. 1C) read with 3rd proviso of the explanation of the goods given in the said notification. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 457
  Clandestine removal - granulated slag - demand on the ground of difference between the quantity of the granulated slag shown in their Annual Operational Statistical Report and the quantity shown in the monthly ER-I Return, filed by the appellantassessee during the period from July, 2004 to March, 2008 - Held that:- The demand of Excise duty has been calculated on granulated slag based on the differential quantity of 6,91,315 MT of the slag between the quantity appearing in the operational statistical report at 9,33,117 MT and ER I at 2,41,802 MT. Reliance is placed in the case of Centurian Laboratories Vs. CCE [2013 (9) TMI 245 - CESTAT AHMEDABAD] wherein it has been held that demand cannot be confirmed based on private/internal records. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 456
  Classification of goods - Jute matting - benefit of N/N. 29/95-CE dated 16.03.95 - whether classified under Heading No.5705.00 of the 1st Schedule to the Central Excise Tariff Act, 1985 or under Sl.No.1 of the afore-mentioned Notification under Heading Carpets and other textile floor coverings? - Held that:- Tribunal’s decision in the case of Commr. of Central Excise, Haldia Vs. Gloster Jute Mills Ltd. [2016 (3) TMI 224 - CESTAT KOLKATA], is squarely applicable to the facts of the case, wherein it is held that the jute matting is entitled to the benefit of N/N. 29/95-CE dated 16.03.95 at Sl.No.3 - appeal dismissed - decided against Revenue.

  ---

• 2018 (8) TMI 455
  Recovery of CENVAT Credit with Interest and penalty - Illegal availment and utilization of input service credit on service tax on Commission paid - Held that:- The Commissioner (Appeals) should decide the matter afresh taking into account the points raised by the Revenue in their grounds of appeal. Accordingly, the matter is remitted back to the Commissioner (Appeals) of Customs to consider the grounds of appeal filed by the Revenue and to pass the order in accordance with law - appeal allowed by way of remand.

  ---

• 2018 (8) TMI 454
  Clandestine removal - clearance of 13244 kgs of lead dross - it was alleged that the appellant had not maintained a Daily Stock Register and the clearance and value of the impugned goods were not shown in the monthly ER1 returns - Held that:- The Hon’ble Bombay High Court in the case of Hindalco Industries Limited Vs. Union of India [2014 (12) TMI 657 - BOMBAY HIGH COURT] allowed the petition of the Assessee and held that the decision of the Larger Bench of the Tribunal in the case of Hindalco Industries Limited Vs. CCE Belapur, Mumbai [2014 (11) TMI 385 - CESTAT MUMBAI (LB)] was perverse, vitiated by error of law apparent on the face of record. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 453
  CENVAT Credit - input - various steel items like HR Plate. HR Steel etc. - Held that:- The Tribunal in the case of Subramaniya Siva Co-operative Sugar Mills Limited Vs. Commissioner of Central Excise Salem [2010 (1) TMI 1081 - CESTAT CHENNAI] allowed the Cenvat Credit on the H.R. Sheets and Steel used for manufacture of storage tank - credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 449
  CENVAT Credit - duty paying documents - supplementary invoices issued by the Coal Companies - Rule 9 (1) (b) of Cenvat Credit Rules - matter pending adjudication - Held that:- The connected matters of South Eastern Coal Field Ltd. are pending adjudication before the Hon’ble Apex Court. Issue being already sub-judiced the element of confusion cannot be ruled out. ‘Suppression’ being altogether contradictory to ‘Confusion’, the same cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record amounting suppression of fact. Mere failure of ascertaining about the exclusion part of Rule 9 (1) (b) cannot be held to be the act of suppression or collusion on part of the appellant. Above all, the supplementary invoice has been issued by the Coal Companies which are the undertakings of the Government of India, there can be no presumption, unless rebutted, of any alleged suppression or collusion. It is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon’ble Apex Court - the issue of wrong availment on part of M/s SECL is still a debatable issue. In such circumstances, the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant.

  ---

• 2018 (8) TMI 448
  CENVAT Credit - duty paying invoices - supplementary invoices, raised by M/s. South Eastern Coalfields Ltd., for supply of coal - Rule 9(1)(b) of CCR 2004 - matter pending adjudication - Held that:- Tribunal in connected matter of South Eastern Coalfield Ltd. in Appeal No.52023-52026/2014-DB dated 3.4.2017 vide Final Order No.52723-52726/2017 dated 3.4.2017, taking notice of pendency of similar matter before the Hon’ble Supreme Court in the case of South Eastern Coal Fields Ltd. and ors. and also other cases, referred to in the above case, disposed of the appeal of the South Eastern Coal Fields Ltd., granting liberty to them to come again after having final verdict from the Hon’ble Supreme Court. The appellant is entitled to take cenvat credit on the supplementary invoices in question - There is no element of fraud and suppression on the part of the appellant. The issue herein is recurring in nature - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2018 (8) TMI 452
  Input Tax Credit - Reduction in set off - Axis Gold ETF Scheme - denial of ITC as the goods purchased by the petitioner on which input tax credit is claimed are not resold within a period of six months from the date of purchase - Rule 53 of the MVAT Rules, 2005 - Separate legal entity of Trust - clubbing of receipts of different schemes, of which the same person acts as a trustee - Held that:- There is a single Deed of Trust. There may be separate schemes, but there was never any intent as is now sought to be culled out and to create separate Trust. This is not a case where separate Trusts were created and hence, the principle relied upon by Mr. Sridharan from several works on Law of Trust and to the effect that receipts from Axis Mutual Fund ETF alone have to be considered for there is formation of more than one trust by the Deed of Trust and that is permissible, has no application. This is not a case where the settlor has created more trusts under a single Trust Deed. This is a clear case where the Deed of Trust permits floating one or more schemes. That is not equivalent to creation of separate Trusts. It is in these circumstances that the assessing officer, the first appellate authority and the tribunal all rightly concluded that the set-off available under Rule 53 has to be reduced. Petition dismissed - decided against petitioner.

  ---

• 2018 (8) TMI 451
  Whether in the facts and under the circumstances of the case the impugned order staying the realization of disputed amount of penalty/demand to the tune of 65% stands justified even though the demand prima- facie reflects the arbitrary, illegal and conjectural approach? Held that:- In view of law laid down in the case of Tata Motors Limited [2016 (7) TMI 1300 - ALLAHABAD HIGH COURT], the order of the Tribunal dated 6.7.2018 insofar as it relates to grant of interim protection of only 65% of the penalty to the revisionist is concerned does not meet the requirement of law and accordingly the order of the Tribunal is set aside - The order dated 1.6.2018 passed by the first appellate authority insofar as it relates to grant of interim protection to the revisionist is concerned, which does not meet the requirement of law is also set aside. The instant revision is disposed of with the direction to the First Appellate Authority to consider the issue with regard to grant of interim protection to the revisionist afresh by means of reasoned and speaking order.

  ---

• 2018 (8) TMI 450
  Export sale - Section 3(4) of the Act - respondent had purchased goods against Form XVII declarations and used the same in the manufacture of goods which were sold outside the state - Held that:- Identical set of facts decided in the case of Tube Investment of India Ltd., v. State of Tamil Nadu [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - Revision dismissed - decided against Revenue.

  ---

• Indian Laws

• 2018 (8) TMI 497
  Reversal of Order of Conviction - Offence under Section 138 of the Negotiable Instruments Act, 1881 - Held that:- P.W.1 [P.Venkatesan], who is the Power of Attorney admitted in his cross examination that he did not know the particulars about the lending of money to the respondent. In this regard, in his cross-examination, he specifically stated that he did not know the transaction happened between his wife and the respondent - The said circumstances shows that P.W.1 is not having due knowledge with regard to the loan transaction happened between the complainant and the accused - the said lapse on the part of the appellant will shake the very root of her case. Promissory note - case of respondent is that the recitals of the promissory note clearly proves that it has not been executed in favour of the appellant - Held that:- As per the recitals found in the promissory note, it is clearly proved that the loan amount of ₹ 75,000/- was received by the respondent only on 05.02.2007. But, P.W.1 to P.W.3 categorically mentioned in the proof affidavit that only ₹ 25,000/- was paid as a loan on 05.02.2007. Hence, the existing liability of the respondent has not been proved by the appellant through the cogent and convincing evidence - interference is not necessary in the findings of the First Appellate Court. Appeal dismissed.

  ---