TMI Tax Updates - e-Newsletter
August 30, 2019

Case Laws in this Newsletter:

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

TMI SMS

• GST evasion - issuing bogus, false & fabricated bills - showing false supply of goods - since investigation is going on, bail not granted

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• Addition for the lesser cash in hand found as compared with the books of account - sections 68 or 69A are not applicable - No additions

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• CST Refunds to EOU - in case of a conflict, FTP policy prevails - the appendix or Handbook of Procedures cannot override the FTP provisions

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Highlights / Catch Notes

• GST:

  Benefit of the exemption from GST - sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. - They do not involve farmer education and training. - Benefit of exemption not available.
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• GST:

  Levy of GST - amount received on or after 01.07.2017 towards interest, late fee penalty relating to the services other than continuous supply of services(CSS) rendered before 01.07.2017 - The service namely agreeing to tolerate an act, is squarely covered under the classification scheme of the services - Taxable under GST.
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• GST:

  Classification of goods - Cattle Feed in Cake form - from the invoices raised by them the product is identified as ‘Cattle feed’ and not as ‘groundnut oil cake’ - The same is exempted in case of intra-state supplies.
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• GST:

  Rate of GST - supply of ‘Complementary Weaning Food Containing Amylase Activity’ - the food is packed in units containers - delivery at the designated centers - the GST rate for the composite supply at ICDS centers is 2.5% CGST and 2.5% SGST i.e. 5% of GST
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• GST:

  Rate of GST - transportation of goods using the vehicle owned by the supplier for delivering the goods at the place as per direction of the ICDS Department - As the entire supply of the food and delivery together is a composite supply, the transportation/ delivery alone is not a "Goods Transport Agency service".
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• GST:

  Input tax credit - Procurement of medicines for personal consumption of employees - as per Section 17 (5) (g) of CGST/TNGST ACT, input tax credit is not available for the medicine that the applicant is procuring for the consumption of its employees and pensioners and their dependents.
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• GST:

  Input tax credit (ITC) - Procurement of health benefit equipments for personal consumption of employees - The fact of who pays for the goods and services here is irrelevant to the usage of the said goods and services. They are used by the employees and dependents and hence are for personal consumption and the applicant is ineligible to take input tax credit.
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• GST:

  GST evasion - issuing bogus, false & fabricated bills - showing false supply of goods - the Commissioner is having power to arrest u/s 67 of CGST, if he has reasons to believe that a person has committed an offence specified in Clause (a) or (b) or (c) Section 132(1) of the GST Act - since investigation is going on, so at this stage court is not inclined to grant bail to the applicant
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• GST:

  Levy of GST - GTA service - the cotton seed oil cake is not exempted under the GST Act in general and is also not covered under Notification No. 12/2017, thus being recipient of GTA services the applicant is liable to pay tax under Reverse Charge Mechanism
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• Income Tax:

  Disallowance u/s 37(1) - contribution/donation to educational institutions, trust etc. - the disallowance under Explanation 2 to Section 37(1) comes into play only when expenses incurred for discharge of CSR as statutory obligation not on voluntary basis - the correct test should be of commercial expediency and not whether the payment was compulsory for the assessee to make or not - duly allowable
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• Income Tax:

  Central Government constituted the National Committee for Promotion Social and Economic Welfare
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• Income Tax:

  Bogus loss - when ultimate buyer and the seller operate from the same premises, why is the assessee roped in every time, and every time that happens, assessee incurs a loss - the “ease of business” for every connected party operating from the same premises is too vague an explanation to merit judicial approval - loss not allowable
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• Income Tax:

  MAT computation - deduction of capital gains which are exempt u/s.54EC - the adjusted book profits would be further eligible to the benefits set out in the other provisions of the Act and the plain language of Section 115 JB thus admits of the grant of relief u/s 54 EC
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• Income Tax:

  Penalty u/s 271AAB - income surrendered based on diary found in search - the assessee was having only income from house property and interest and not carrying on any business, he was not required to maintain any such books of account under the law - the amount so surrendered cannot be said to be undisclosed income - no penalty
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• Income Tax:

  Penalty u/s. 271(1)(c) - scope of Section 275(1A) - once substantial question of law against quantum additions are admitted by Hon’ble HC u/s 260A, the tribunal shall refrain from deciding even penalty on merits and the most appropriate course of action in such situations for tribunal shall be restore the matter back to the AO to adjudicate afresh levy of penalty u/s 271(1)(c) against assessee r.w.s. 274 & 275(1A) - remanded
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• Income Tax:

  Income accrued in India - FTS - Section 9(1)(vii)/DTAA with India-USA - service relates to supply chain Human Resources, Strategic Planning and marketing, Finance and information systems - the concept of make available requires that the fruits of the services should remain available to the service recipients in some concrete shape such as technical knowledge, experience, skills etc. which is met in the instant case as can be reflected from the nature and duration of the contract - FTS
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• Income Tax:

  Revision u/s 263 - AO drop the proceedings u/s 147 satisfying that no escapement earlier alleged - when for the AO it was no more open for him to travel to other unconnected and unrelated issues then Pr. CIT could not achieve it by resorting to proceedings u/s 263 - SCN issued for revision is legally unsustainable
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• Income Tax:

  Addition of suppression of income from sale of wastage - assessee has considered the rate of wastage sale generated @ 0.73 per kg in the Books of accounts but has adopted rate 1.13 per kg. to buy peace by enhancing the rate by 0.40 per kg in the Return of income u/s 153A - the AO though made the specific observations but could not support with any logical and documentary evidence - addition without any cogent evidence and cannot be sustained
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• Income Tax:

  Income from the sale of the property - capital gains or business income - the quantum or number of investments i.e. whether the assessee invested in a single property or in many small properties to get better appreciation, does not change the nature of the investment to categorize it as business transaction - directed to treat the income from the sale of property as under the head ‘capital gain’
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• Income Tax:

  Violation of Section 144C - along with this draft assessment order, the AO has issued notice of demand u/s 156 and penalty notice u/s.274 r.w.s.271(1)(c) and therefore, procedure laid down in Section 144C has been violated - the draft assessment order to be bad in law and void-ab-initio
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• Income Tax:

  Penalty u/s 271(1)(c) - exemption u/s 10(4)(ii) - the assessee was under bonafide impression that she is a ‘person resident outside India’ as defined under FEMA - the explanation furnished by the assessee in not disclosing the interest income in the return appears to be quite genuine, bonafide and acceptable - no penalty
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• Income Tax:

  Addition for the lesser cash in hand found as compared with the books of account - applicability of section 68 or 69A - it was not a case where money is not recorded in the books of account and in the present case cash in hand in the books of account was found to be more than the actual cash found during the course of search - not suffice to make addition under any of the above propositions
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• Income Tax:

  Power of Tribunal u/s 254 to dismiss the appeal in limine - non prosecution - the Tribunal erred in dismissing the appeal only on the ground of non prosecution without adverting to the merits of the matter - order are set aside and the appeals are restored to the file of the Tribunal for a decision on merits
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• Income Tax:

  Computation of LTCG - not granted of benefit of cost of acquisition - the tribunal has recorded reasons for remanding the matters to the AO in the light of the claim of the assessee for substituting the FMV as on 1/4/1981 and to consider the claim of exemption as per the provisions of the law in light of the relevant CBDT Circular - no error has been committed by the Tribunal
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• Customs:

  Illicit clearance - penalty on transporters - brass and copper scrap - any transporter, in the commercial sense, is merely required to deliver goods at the consigned address and there is no evidence that the delivery had been effected to a different location - neither required of the provenance of the articles carried by them nor to be conversant with the schemes of Customs Act or to act as watchdogs of officers of customs - no penalty
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• Customs:

  Seizure of imported goods - misdeclaration of goods - when the mis-declaration was only in respect of 81 bales, Commissioner proceeded to redetermine the entire quantity of goods without giving any reasons for rejecting the value of the goods is arbitrary - the valuation declared by the appellant for other goods is to be accepted and remanded for valuation of disputed goods
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• Customs:

  Reduction redemption fine & penalty - when the larger Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions then no reason to interfere with the findings of the Ld. Commissioner (Appeals)
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• Customs:

  Grant of CST Refunds - The FTP makes it clear that an EOU shall be entitled to the reimbursement of the CST on goods manufactured in India - the provisions in the FTP govern the statutory scheme of the policy, and in case of a conflict, the FTP provisions should prevail vis-a-vis the appendix in Handbook of Procedures, which are nothing but a subordinate legislation - refund allowable
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• Corporate Law:

  Companies (Incorporation) Seventh Amendment Rules, 2019 - forms RD-1 and RD GNL-5, substituted.
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• Service Tax:

  Whether activity of garbage disposal is liable to service tax - Dispute between service provider and recipient - Return of Fixed Deposit Receipts (FDRs) retained - Writ proceedings are not an appropriate forum to decide this issue.
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• Service Tax:

  Scientific and technical consultancy service - the essential character of the service rendered by the appellant is scientific and technical consultancy service and the same cannot be divided into different services for the purpose of calculation of service tax.
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• Central Excise:

  Classification of goods - Multi Micro Nutrient Mixtures etc. - the correct classification of these items is under 3002 and not 3808
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• Central Excise:

  CENVAT credit - common input services - the effect of reversal is as if no credit was availed in respect of the common services which were utilized for trading of the goods - In such a scenario, further demand of a particular percentage of the value of the traded goods in terms of Rule 6(3) is neither in accordance with the provisions of CCR nor with the settled principle of law - demand unsustainable
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• Central Excise:

  Invocation of extended period of limitation - SCNs issued earlier are quashed - while issuing the present SCN, the same and/or similar set of facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities - not justified in invoking the extended period of limitation
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• VAT:

  Decision on objections - notice of Default assessment of tax, Interest and penalty - neither the three months period specified u/s 74(8) having been complied with nor the Commissioner having notified the Petitioner of its decision within 15 days of service upon him of the notice - the objections of the Petitioner are deemed to have been allowed u/s 74(8) r.w.s 74(9) of the DVAT Act - directed to grant refund
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• VAT:

  Maintainability of appeal - statutory deposit - once an appeal was filed within the limitation period but the deposit of 12.5% of the disputed amount of tax is made beyond the limitation prescribed, the delay in compliance ought to be condoned thereby requiring the appeal to be decided on merits by the appellate authority
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Articles

• Quick Reference on Incorporation of Section 8 Companies
• CGST annual filing : Extension is for FY 2017-18, whether extension is also desirable for FY 2018-19 – reasonableness is required to avoid unproductive work and publicity hype for seeking extensions and allowing extensions to avoid brain drain.

Notifications

• Companies Law

• S.O. 3120(E) - dated 28-8-2019 - Co. Law
  Supersession the Notification Number S.O. 2564(E), dated, the 17th July, 2019

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• S.O. 3119(E) - dated 28-8-2019 - Co. Law
  Seeks to amend Notification No. number S.O. 1796(E), dated, the 18th May, 2016

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• F. No. 1/13/2013 CL-V, Vol. 4 - dated 28-8-2019 - Co. Law
  Companies (Incorporation) Seventh Amendment Rules, 2019

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• Customs

• 38/2019-Customs (N.T./CAA/DRI) - dated 26-8-2019 - Cus (NT)
  Appointment of CAA by Pr. DGRI

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• 37/2019-Customs (N.T./CAA/DRI) - dated 26-8-2019 - Cus (NT)
  Appointment of CAA by Pr. DGRI

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• Income Tax

• S.O. 3122(E) - dated 28-8-2019 - IT
  Central Government constituted the National Committee for Promotion Social and Economic Welfare

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• 58/2019 - dated 27-8-2019 - IT
  Agreement between the Government of the Republic of India and the Kingdom of Spain for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes

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• Indian Laws

• S.O. 3121(E) - dated 28-8-2019 - Indian Law
  Central Government, appointed Shri Bhagwant Singh Bishnoi (IFS:1983) as Member of the Competition Commission of India, with effect from the 17th July, 2019

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• SEZ

• S.O. 3106(E) - dated 23-8-2019 - SEZ
  Central Government de-notifies an area of 14.162 hectares at Pocharam Village, Hayathnagar Taluka, Ghatkesar Mandal, Ranga Reddy District, Hyderabad in the State of Telangana (erstwhile Andhra Pradesh), thereby making the resultant area as 12.733 hectares

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Circulars / Instructions / Orders

• SEZ - Instruction No. 98 - dated 29-8-2019
  Review of lease period in case of developer, co-developer and units in Special Economic Zones
• SEZ - Minutes of the 91th meeting of the SEZ - dated 6-8-2019
  Minutes of the 91th meeting of the. Board of Approval for SEZ held on 6th August, 2019 to consider setting up of Special Economic Zones and other miscellaneous proposals
• SEBI - SEBI/HO/MIRSD/DOP/CIR/P/2019/95 - dated 29-8-2019
  Handling of Clients’ Securities by Trading Members / Clearing Members

News

• Cabinet approves Sugar export policy for evacuation of surplus stocks during sugar season 2019-20

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• Cabinet approves proposal for Review of FDI policy on various sectors

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Case Laws:

• GST

• 2019 (8) TMI 1287
  Benefit of the exemption from GST - sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. - it is contended that the authorities below have not properly taken into consideration and extended to them the benefit of the exemption - challenge to AAR decision - Condonation of delay of 13 days in filing appeal - HELD THAT:- considering the fact that the appellant is a registered society by MPEDA, an autonomous body created by an Act of Parliament and following the decision of Hon ble S.C. in the case of INDIAN OIL CORPORATION LTD. VERSUS SUBRATA BORAH CHOWLEK [ 2010 (11) TMI 857 - SUPREME COURT] we condone the delay and take the appeal for consideration. The activities undertaken by the appellant is of diverse nature ranging from sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. - The exemption provided at Sl.No. 1 of Notification No. 12/2017-C.T.(Rate) exempts payment of GST only in respect of services provided by way of Charitable activities relating to Preservation of environment including watershed, forests and wildlife (entry related to the proceedings in hand) and the construction of the exemption is not to provide exemption to all the activities undertaken by an entity registered under Section 12A of the Income tax Act, which is involved in activities relating to Preservation of environment . The appellant who are the R D arm of MPEDA, whose mission is to undertake research, give consultancy and technical services to the farmers, entrepreneurs, and scale up the technologies developed, etc. after assuring the commercial viability of aqua products undertakes various activities to attain the aim of the society. By the construction of the exemption, it is clear and unambiguous that the exemption, is applicable only to Services relating to Preservation of environment when provided by an entity registered under Section 12AA of Income Tax Act and not to the entire activities of such entity - the appellant as an entity in entirety is not exempted from payment of GST or in other words, the exemption under Sl.No. 1 of Notification No. 12/2017 -C. T. (Rate) dated 28.06.2017 is not applicable to all the supplies made by the appellant and therefore the appellant is required to get registered under GST Laws subject to them making taxable supplies and other conditions Spelt under Section 23 of GST Acts. Whether the Research and development activities imported by the appellant is covered under agricultural extension service-SAC 9986 and exempted vide Entry No. 54 of Notification No. 12/2017 -C. T. (Rate) dated 28.06.2017 as amended - HELD THAT:- It is stated that R D activities of RGCA entering into/ engaging experts/ consultants outside India who are having either Techn010U or experience in the field of Aquaculture to set up Aquaculture facilities in line with objectives of RGCA to disseminate such Techn010U throughout India. These engagements are in the nature of collaborative Agreements to bring best Technology available in any part of world of Aquaculture - By the definition, it is evident that only application of scientific research and knowledge to agricultural practices through farmer education or training is considered as agricultural extension service and exempted vide the said entry. Research and development imported by the appellant are technology development for breeding and farming of new/ alternative species with high commercial value Viz. fish, prawn, shrimp, crab etc. SAC 998114 covers the activities. They do not involve farmer education and training. As given in the preface of the Explanatory notes, more specific description to be preferred to general one. The R D imported by the appellant are of those detailed under this SAC. Therefore, their activities are not covered under the Entry No. 54 of Notfn. No. 12/2017 which covers Support services to agriculture, hunting, forestry, fishing, mining. SAC-9986 . Whether the testing services undertaken by them are agricultural extension services considering that the testing services ultimately result in imparting knowledge to the farmers rearing or cultivating the shrimp or prawns and therefore exempted vide Entry No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended? - HELD THAT:- Testing activities undertaken by the appellant definitely do not fall under the agricultural extension service as the same as per definition in the notification is limited to application of research and knowledge through farmer education or training, whereas the testing done by the appellant does not involve farmer education or training. The testing done by them is a service to the farmers for a consideration. Whether the training activities undertaken by RGCA to students, academia who are not directly involved in rearing of fish, aquaculture etc. are covered under SAC 9992 and liable to GST as held by the Original Authority and these are also not Agricultural extension Services and therefore exempted vide Entry No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended? - HELD THAT:- In the case at hand, it is not disputed that the training extended by the appellant to student, academia, etc for a charge, is the activity of training / imparting the skill in aquaculture. The entire spectra of Education (Primary, Secondary, Higher), Specialized education, Other education and training services are covered under SAC 9992. Even if the activity of the appellant is considered as not covered under the specific heading 999293-Commercial Training and Coaching the activity, is still classifiable under the same heading 9992 in SAC 999294 as other Education and Training Service nowhere else classified and the supply is taxable to GST at the appropriate rates - the rate of tax ruled by the Original authority on the activity of training extended to student, academia, etc by the appellant to be covered under the SAC 9992 and taxable at 9% CGST under Sl no 30 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under Sl no 30 of Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended holds and do not need any interference. Classification of Artemia Cyst - whether classified under CTH 0511 or under CTH 2309 or CTH 03? - HELD THAT:- In the instant case the product though a crustacean, is not fit for human consumption therefore do not fall under this CTH, as per the description of the tariff heading - To be classified under CTH 2309, the product should not be specified elsewhere, should be obtained by processing animal materials to such an extent that the essential characteristics of the original material is lost in the processing. From the note furnished, it is seen that artemia biomass the product supplied by the appellant when incubated in seawater with light and aeration tiny artemia Nauplii comes out from cyst which is the feed for fish. In the process of transformation of artemia cyst/ biomass to artemia Nauplii, the essential characteristics of the original material is not lost in as much as the frozen embryo is hatched in hatcheries under certain conditions to have live nauplii, the feed. Following the chapter note as above, the artemia cyst/ biomass is not classifiable under CTH 2309. The ruling of Advance Ruling authority upheld.

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• 2019 (8) TMI 1286
  Classification of goods - Cattle Feed in Cake form - exempt goods or not - Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017 - whether the product is classifiable under CTH 2305 or under CTH 2309? HELD THAT:- The product in hand, the Cattle feed is manufactured using Groundnut oil cake as a raw material along with other raw materials. Further, as per the test reports, the content of ash, protein, salt, fat, moisture, calcium, phosphorous etc in a sample of groundnut oil cake vary in percentage from a sample of the product as furnished by the applicant in the test reports furnished by them - Also, from the invoices raised by them the product is identified as Cattle feed and not as groundnut oil cake . By applying the General rules for interpretation of Customs Tariff as applicable to GST Tariff, the product in hand is correctly classifiable under Chapter Heading 2309 of the GST Tariff as Preparation of a kind used in Animal Feeding - Compounded animal feed, 2309 90 10. The same is exempted in case of intra-state supplies vide sl.no. 102 of Notification No. 2/2017 -Central Tax (Rate) dated 28 th June 2017 as amended and sl.no. 102 of Notification No. II(2)/CTR/532(d-5)/2017 dated 29 th June 2017 as amended and in case of interstate supplies vide Sl.No. 102 of Notification No. 2/2017 -Integrated Tax(Rate) dated 28 th June 2017 as amended.

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• 2019 (8) TMI 1285
  Levy of GST - amount received on or after 01.07.2017 towards interest, late fee penalty relating to the services other than continuous supply of services(CSS) rendered by the applicant before 01.07.2017 - agreeing to tolerate an act - Pre-GST regime - HELD THAT:- The question relates to the services rendered by the applicant in Pre-GST regime, i.e., during service tax regime of taxation. We find that the applicant leases/ rents the port space and collects lease rentals. The applicant as per the license/ rent agreement/ contracts collect lease rental charges and in cases of belated payment/ default, late-fee/ penal interest as stipulated in the contracts are collected by them, for which a separate invoice (RCA) is raised. It is stated that the invoices have been raised during the service tax regime and service tax paid but the applicant has received interest, late fee, penalty in the current period, i.e., under GST regime of taxation as the consideration was received belatedly. The provisions of Section 13 of CGST and TNGST Act come into effect from 1 st July 2017. From 1 st July 2017 onwards, the liability to pay GST on supply of services is determined by the time of supply in Section 13 - In the instant case, the applicant has collected an amount as interest/ late fee/ penalty for the delayed payment of consideration for the original service. This amount was received after 1 st July 2017 and separate invoices Rent Claim Advance (RCA) Receipt are raised by the applicant. There is a payment of a separate consideration for this tolerance of delayed payment of lease / rent. This payment is a part of the contract for supply of services of the applicant to the port user in the course of their business. It can be said that as the applicant has tolerated the delayed payment of consideration of lease/ rent which the recipients should have paid much before. Therefore, this tolerance on the part of the applicant for the delayed payment of lease/ rent by collecting an interest/ late fee / penalty is a separate supply of service as covered under Section 7 (1) (a) of the Acts. The service namely agreeing to tolerate an act, is squarely covered under the classification scheme of the services. Further, the consideration for this was received and the invoice (RCA) raised both only after 1 st July 2017. Accordingly, the time of supply for this supply will be determined by Section 13(2) depending on the facts in each case. In any case, it would be after 1 st July 2017 and hence, this supply is liable to GST.

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• 2019 (8) TMI 1284
  Classification of goods - Cattle Feed in Cake form - exempt goods or not - whether the product is classifiable under CTH 2305 or under CTH 2309? HELD THAT:- The product in hand, the Cattle feed is manufactured using Groundnut oil cake as a raw material along with other raw materials. Further, as per the test reports, the content of ash, protein, salt, fat, moisture, calcium, phosphorous etc in a sample of groundnut oil cake vary in percentage from a sample of the product as furnished by the applicant in the test reports furnished by them - Also, from the invoices raised by them the product is identified as Cattle feed and not as groundnut oil cake . By applying the General rules for interpretation of Customs Tariff as applicable to GST Tariff, the product in hand is correctly classifiable under Chapter Heading 2309 of the GST Tariff as Preparation of a kind used in Animal Feeding - Compounded animal feed, 2309 90 10. The same is exempted in case of intra-state supplies vide sl.no. 102 of Notification No. 2/2017 -Central Tax (Rate) dated 28 th June 2017 as amended and sl.no. 102 of Notification No. II(2)/CTR/532(d-5)/2017 dated 29 th June 2017 as amended and in case of interstate supplies vide Sl.No. 102 of Notification No. 2/2017 -Integrated Tax(Rate) dated 28 th June 2017 as amended.

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• 2019 (8) TMI 1283
  Rate of GST - transportation of goods using the vehicle owned by the supplier for delivering the goods at the place as per direction of the ICDS Department and apart from selling the goods as per contract entered with Department of Integrated child Development Services (ICDS), Government of Tamil Nadu - GTA service or not - transport service provided by them - HELD THAT:- It is evident that the applicant is awarded the contract to supply Complementary Weaning Food Containing Amylase Activity at the designated centers as specified in the bid document which are Anganwadi centers in various blocks in all districts of the state. The applicant is paid at Per MT price, which includes transportation charges - The Bid document clearly asks for a breakup of the bid price for each unit/ MT under the heads of Ex-factory/Ex-warehouse Ex-showroom/ Off-the-shelf, Excise duty if any , Packing Forwarding , Transportation- Factory to Block/ Project , Transportation- Block/ Project to Center and Insurance and other local costs incidental to delivery . All of this together is used to arrive at the Unit Price per MT which is the bid price. Evaluation will take into account cost of inland transportation for delivery of goods to final destination. The bid and the agreements only mention a total quantity to be delivered in during the period in all destinations put together - The applicant cannot assign or sublet any portion of the contract whether it is manufacturing or delivery. Accordingly, the applicant in the have been transporting these products through goods carriage vehicle owned by them. Penalties are also prescribed for failure to deliver as indented with in the timelines specified. Thus any nonperformance on any component of the supply has penalties prescribed. As the entire supply of the food and delivery together is a composite supply, the transportation/ delivery alone is not a Goods Transport Agency service . Applicability of GST - supply of goods and transportation charge provided to an unregistered person - Rate of GST - Transportation charges for using the vehicles owned by the suppliers - natural bundling of services - HELD THAT:- The bid document clearly indicates that the bidder shall have the responsibility to deliver the specified quantities to all the centers. The bid price is also made inclusive of a fixed transportation charge instead of an actual basis. The applicant is also prohibited from assigning or sub lease any part of the contract including the delivery to a third party. The agreement signed and the invoicing also supports this. Therefore, in this case the supply of Complementary Weaning Food Containing Amylase Activity is naturally bundled with the delivery at the designated centers as specified as per the bid and agreement and hence, this is a composite supply as per Section 2(30) of the CGST/TNGST Act 2017. The principal supply in this case is the supply of Complementary Weaning Food Containing Amylase Activity as seen both in the bid document/ agreement and the pricing break up in that. Composite supply or not - section 8 of the CGST Act - supplier supplies the goods at the delivery point of the buyers and supplier raises invoice for the value of goods and transport charges separately as per the single contract/ purchase Order entered with the buyer - HELD THAT:- As per Section 8, the tax rate applicable to the principal supply is the rate applicable for such composite supply; therefore, in the case at hand, the tax rate applicable to the food products is the rate of tax for this composite supply. Notification No. 39/2017-Central Tax (Rate) dt 18.10.2017 notifies the central tax rate of 2.5 per cent on intrastate supplies of goods - In the instant case, the Complementary Weaning Food Containing Amylase Activity is being distributed at ICDS centers free as per the Government scheme and the food is packed in units containers. The applicant has also produced certificates as per the conditions of this notification. Accordingly, the GST rate for the composite supply of Complementary Weaning Food Containing Amylase Activity at ICDS centers is 2.5% CGST and 2.5% SGST subject to fulfillment of the conditions of these notifications. This rate is applicable on the entire composite supply.

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• 2019 (8) TMI 1282
  Input tax credit - Procurement of medicines for personal consumption of employees - inward supply of medicines which are used or intended to be used in the course or furtherance of business of the applicant - scope of blocked credit under section 17(5)(e), section 17(5)(h) and section 17(5)(i) of the Act - Medicines for consumption of its employees and pensioners and their dependents - HELD THAT:- The applicant has their own in-house hospital for use by the employees, retirees and their dependents. This is a free center where all the services and medicines are provided free to the employees. No consideration is charged from the employees for this. This provision of free medical care is mandatory as per the Regulations made under Major Ports Act. These are mandated to be provided to the applicant's employees, their dependents, pensioners and family pensioners for their own in-patient and out-patient treatments - These treatments include medicines which are also provided free of charge to the employees for their personal use. The medicines and medical facilities are proved by the applicant to its employees for their personal use. Therefore, as per Section 17 (5) (g) of CGST/TNGST ACT, input tax credit is not available for the medicine that the applicant is procuring for the consumption of its employees and pensioners and their dependents. The applicant has stated in their application that these are not goods for personal consumption as the applicant pays for the same - The argument does not hold - The fact of who pays for the medicines here is irrelevant to the usage of the said medicines. They are used by the employees and dependents and hence are for personal consumption and the applicant is ineligible to take input tax credit on the inward supply of medicines used to provide health facilities to its employees in its hospital. The applicant is not entitled to take credit of input tax charged on the inward supply of medicines which are used to provide medical facilities to the employees, pensioners and dependents in the in-house hospital.

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• 2019 (8) TMI 1281
  Input tax credit (ITC) - Procurement of health benefit equipments for personal consumption of employees - inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services - supply of port services and incidental supply of goods like disposal of discarded assets - blocked credit as per Section 17 (5) (g) of CGST/TNGST Act - medicines used for consumption of its employees and pensioners and their dependents - HELD THAT:- As per Section 17 (5) (g) of CGST/TNGST ACT, input tax credit is not available for medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these which the applicant is procuring for the consumption of its employees and pensioners and their dependents. The applicant has stated in their application that these are not goods or services used for personal consumption as the applicant pays for the same - The argument does not hold - The fact of who pays for the goods and services here is irrelevant to the usage of the said goods and services. They are used by the employees and dependents and hence are for personal consumption and the applicant is ineligible to take input tax credit on the inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these used to provide health facilities to its employees in its hospital. The applicant is not entitled to take credit of input tax charged on the inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these, which are used to provide medical facilities to the employees, pensioners and dependents in the in-house hospital.

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• 2019 (8) TMI 1280
  Classification of goods - Rate of tax - Oil Lubrication Systems - HSN Code - HELD THAT:- The application is rejected as the relevant technical details of the supply for which classification and rate of CGST/SGST is being sought, have not been produced.

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• 2019 (8) TMI 1279
  Permission for withdrawal of Advance Ruling Application - input tax credit of GST paid on long term lease of industrial plots taken from M/s. Mahindra World City (Jaipur) - HELD THAT:- Since the applicant has withdrawn the application, therefore no ruling is given.

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• 2019 (8) TMI 1278
  Permission for withdrawal of Advance Ruling application - levy of GST on lease amount - developer has taken the entire land from state of Rajasthan to further lease out to Industrial units - HELD THAT:- Since the applicant has withdrawn the application, therefore no ruling is given.

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• 2019 (8) TMI 1277
  Levy of GST - Reverse charge mechanism - freight paid by the applicant on transportation of cotton seed oil cake - HELD THAT:- The various products of human consumption like milk and food grains are exempted from GST as goods as well as their transportation. The same is notified through Notification No. 12/210 dated 28.06.2017. The cotton seed oil cake is not exempted under the GST Act in general and is also not covered under Notification No. 12/2017 (as amended from time to time). Thus being recipient of GTA services the applicant is liable to pay tax under Reverse Charge Mechanism. Thus, the applicant is liable to pay GST under Reverse Charge Mechanism being recipient of GTA services.

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• 2019 (8) TMI 1276
  Release of applicant on Bail - issuing bogus, false fabricated bills - showing false supply of goods - granting illegal financial profit to the recipients as input tax credit (ITC) - offences punishable under Section Madhya Pradesh Goods and Service Tax Act, 2017 and Section 132 (1)(b) (C) of Central Goods and Service Tax Act, 2017 - HELD THAT:- Under Section 69 of the Central Goods and Service Tax Act, 2017, the Commissioner is having power to arrest if he has reasons to believe that a person has committed an offence specified in Clause (a) or (b) or (c) of subsection (1) of Section 132 of the GST Act - Section 132(1) (a), (b) and (c) of GST Act define types of offences and according to which, whoever commits offence of supply of any goods or services without issue of any invoice or issues any invoice or bill without supply of goods or services of both or avails input tax credit using such invoice, shall be punished with imprisonment for a term which may extend to 5 years and with fine, if the amount involved is more than ₹ 500 Lakhs. It is alleged that the Applicant who was the accountant of M/s Commercial Corporation Seoni issued bogus false and fabricated bills and have shown false supply of goods through the same and also helped Deepesh Tiwari and Amit Awadhiya and thereby embezzled huge amount - Applicant in his statement recorded by Assistant Commissioner under Section 70 of Central Goods and Service Tax Act, 2017, admitted that he was the accountant of the said firm M/s Commercial Corporation Seoni and used to issue bills of bogus firms without supplying the goods. Investigation is going on, so at this stage this court is not inclined to grant bail to the applicant - bail application rejected.

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• Income Tax

• 2019 (8) TMI 1288
  Disallowance u/s 37(1) - expenses being contribution / donation to educational institutions, trust, local bodies - commercial expediency - HELD THAT:- The words used in Section 37(1) are wholly and exclusively for the purpose of business . In normal legal parlance the word wholly would mean entirely and the word exclusively would mean solely. Thus, it gives an impression or it could be argued that any element of expenditure not laid out entirely and solely for the purpose of profession or business would not be covered by Section 37(1). One needs to examine this from the perspective of the assessee who does make the expenditure. However, as explained in SASSOON J. DAVID AND CO. PVT. LIMITED VERSUS CIT [ 1979 (5) TMI 3 - SUPREME COURT] the expression wholly and exclusively does not mean necessarily . It is for the assessee to decide whether any expenditure should be incurred in the course of its business. Amendment in the scheme of Section 37(1) is not specifically stated to be retrospective and the said Explanation is inserted only with effect from 1st April 2015. In this view of the matter also, there is no reason to hold this provision to be retrospective in application. As a matter of fact, the amendment in law, which was accompanied by the statutory requirement with regard to discharging the corporate social responsibility, is a disabling provision which puts an additional tax burden on the assessee in the sense that the expenses that the assessee is required to incur, under a statutory obligation, in the course of his business are not allowed deduction in the computation of income. This disallowance is restricted to the expenses incurred by the assessee under a statutory obligation u/s 135 of Companies Act 2013, and there is thus now a line of demarcation between the expenses incurred by the assessee on discharging corporate social responsibility under such a statutory obligation and under a voluntary assumption of responsibility. As for the former, the disallowance under Explanation 2 to Section 37(1) comes into play, but, as for latter, there is no such disabling provision as long as the expenses, even in discharge of corporate social responsibility on voluntary basis, can be said to be wholly and exclusively for the purposes of business . There is no dispute that the expenses in question are not incurred under the aforesaid statutory obligation. For this reason also, as also for the basic reason that the Explanation 2 to Section 37(1) comes into play with effect from 1st April 2015, we hold that the disabling provision of Explanation 2 to Section 37(1) does not apply on the facts of this case. The assessee company in the case on hand is engaged in the business of manufacturing chemicals and chemical products. It has been fairly admitted by the learned counsel appearing for the assess-company that its client is a polluting company. The assessee-company is conscious of its social obligations towards the society at large. The assessee-company is a Government undertaking and, therefore, is obliged to ensure all the protective principles of State policy as enshrined in the Constitution of India. The moneys has been for various purposes as enumerated above cannot be regarded as outside the ambit of the business concerns of the assessee. The approval needs to be that of a practical and prudent businessman rather than from the Revenue s strict classification of a right. The correct test should be of commercial expediency and not whether the payment was compulsory for the assessee to make or not. ITAT has not erred in law and on facts in deleting disallowance u/s 37(1) in respect of expenses being contribution / donation to educational institutions, trust, local bodies - Decided in favour of assessee.

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• 2019 (8) TMI 1275
  Addition for the lesser cash in hand found as compared with the books of account - applicability of section 68 or 69A - difference of cash balance as reflected in the balance sheet and cash as per seized documents - HELD THAT: - Addition made of ₹ 37,30,710/-, which is lesser cash in hand as compared with the books of accounts in which the assess has shown more cash in hand, the Tribunal held that it is neither a case under Section 68 nor Section 69-A. The Tribunal further went on to hold that it was not a case where money is not recorded in the books of account of assessee, and in the present case cash in hand in the books of account was found to be more than the actual cash found during the course of search. At the most, authorities could have presumed that assessee has spent the difference of amount in question somewhere as per cash in hand, as per books of account and lesser cash as per seized documents, but that would also not suffice to make addition under any of the above propositions. Addition in respect of alleged business of potato - assessee is ruining a cold storage - allegation for violation of the provisions of U.P. Regulation of Cold Storage Act - HELD THAT:- Tribunal has also recorded a categorical finding that no evidence of purchase, sales or unaccounted stock belonging to the assessee during the course of search or survey was found or established, thus, there was no justification for the authorities to make or confirm the addition of the said amount. There is no doubt that the business of running a cold storage is governed by the U.P. Act of 1976 and it is only after the grant of licence by the licencing authority that a cold storage can run according to the terms and conditions of the licence. Any violation of the terms of licence has penal consequences as provided under Section 37 and 38 of the Act, for which the Magistrate of Ist Class is empowered to take cognizance of any offence so made by the licence holder. As, in the case in hand, during the search and survey in the business premises of the assessee, no such violation was found or recorded, nor any notice was given or action was taken against the asssessee, as is evident from the perusal of the documents before us. Further, the counsel for the Revenue also could not point out to any such violation made by the assessee of the U.P. Act of 1976. Once it is established that the assessee had not violated the terms of licence, so granted by the licencing authority, merely on the basis of presumption and assumption from any documents or papers seized during search and survey cannot be the basis for the addition of such an amount. Revenue has failed to establish that the order of the Tribunal is manifestly illegal and suffers from error apparent on face of the record. As the Tribunal being the last fact finding court has categorically recorded finding that the authorities below had wrongly made the additions without any material on record on the basis of mere presumption and assumption. - Decided in favour of the assessee.

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• 2019 (8) TMI 1274
  Power of Tribunal u/s 254 to dismiss the appeal in limine - non prosecution - non appearance of appellant - HELD THAT:- The correctness of the decision of the Tribunal in dismissing the appeals for non prosecution is no longer res integra and has been decided in several cases by this Court following the decision of the Hon'ble Supreme Court in the case of CIT Vs. S.Chenniappa Mudaliar [ 1969 (2) TMI 10 - SUPREME COURT]. Hence the Tribunal erred in dismissing the appeal only on the ground of non prosecution without adverting to the merits of the matter. In the light of the above, the order impugned in this appeal has to be necessarily set aside and the substantial questions of law are to be answered in favour of the assessee. - the impugned common order are set aside and the appeals are restored to the file of the Tribunal for a decision on merits. - Decided in favour of the assessee.

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• 2019 (8) TMI 1273
  Waiver of interest u/s 234B and 234C - HELD THAT:- There could be a due consideration in favour of the petitioner for the purpose of waiving the interest. It is also brought to the notice of this Court that the petitioner is a senior citizen and as such, it would be appropriate to remand the matter back to the respondent and stipulate a time limit for concluding the proceedings afresh. The impugned order dated 25.10.2011, is set aside and the matter is remanded back to the first respondent herein for fresh consideration. The petitioner is also at liberty to produce the copies of the Tax Case Appeal along with additional objections, if any. The first respondent herein shall consider all the materials and objections placed by the petitioner afresh and pass final orders, after giving due opportunity of personal hearing to the petitioner, as expeditiously as possible, in any event, within a period of 4 weeks from the date of receipt of a copy of this order.

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• 2019 (8) TMI 1272
  Computation of LTCG - transfer of property by way of part performance - on the basis of agreement to sale possession was given - disallowance of claim of the appellant u/s 54EC - ITAT held that the computation of capital gain has to be as per the provisions of the law and when the law has given an option to the assessee to adopt fair market value as on 1/4/1981 as cost of acquisition, the same cannot be denied to the assessee at any stage - HELD THAT:- No error has been committed by the tribunal in allowing the appeals and remanding the matters to the A.O. The tribunal has recorded reasons in para 7, 8 and 9 of the order, as reproduced hereinabove, for remanding the matters to the A.O. So far as the contention raised by the learned counsel for the respective assessee, as noted hereinaboave, is concerned, the same is rightly rejected by the tribunal by holding that the assessee has failed to demonstrate that he was unable to submit the evidence during the assessment proceedings or unable to take a ground before the A.O. on account of some reasonable cause. No such reasonable cost had been shown before the tribunal. The said evidence was rightly not considered by the A.O., Commissioner and the tribunal. The impugned orders passed by the tribunal in remanding the matter does not require any interference at the hands of this Court. No substantial question of law arise in both these appeals for consideration of this Court. Both the appeals are dismissed. Consequently, as held by the tribunal, now the A.O. to decide the issue afresh in the light of the claim of the assessee for substituting the fair market value as on 1/4/1981 as the cost of acquisition and the assessee is directed to furnish necessary details in support of its claim and the A.O. to consider the claim of exemption as per the provisions of the law in light of the relevant CBDT Circular and after giving reasonable opportunity of being heard to the assessee.

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• 2019 (8) TMI 1271
  Disallowance of commission - addition on the ground that such commission has been claimed by more than 1 broker for obtaining orders from the same company - notice u/s. 133(6) to which the parties confirmed that they have received commission - AO noted from the records that the assessee had not paid any such commission in the immediately preceding assessment year whereas assessee has paid substantial commission during this year to various parties - HELD THAT:- It is the settled proposition of law that for claiming any expenditure as an allowable deduction the onus is always on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer. However, in the instant case the Assessing Officer had made certain observations which according to him could not be explained satisfactorily by assessee. Considering the totality of the facts of the case and in the interest of justice I deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate the allowability of such commission and decide the issue as per fact and law. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2019 (8) TMI 1270
  Penalty u/s 271(1)(c) - defective notice - HELD THAT:- Notice issued u/s 274 r.w.s. 271 of the Act dated 28.12.10 reveals that the AO has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee, i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty u/s 271(1)(c) is sought to be levied. In this regard, we find that the Hon'ble High Court of Karnataka in its order in the case of M/s Manjunatah Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] relied on by the assessee, has held that such a notice, as has also been issued in the case on hand, is invalid and the consequential penalty proceedings are also not valid. Notice issued under section 274 r.w.s. 271 dated 28.12.10 for A.Y. 2008-09 for initiating penalty proceedings u/s 271(1)(c) in the case on hand is invalid and consequently, the penalty proceedings are also invalid. Penalty for Exemption u/s 10(4)(ii) - assessee had received interest on NRE deposit in the financial year 2007-08 - HELD THAT:- We find that the assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate concealment of income or furnishing inaccurate particulars of such income. The assessee was under bonafide impression that she is a person resident outside India as defined under FEMA. The explanation furnished by the assessee in not disclosing the interest income in the return appears to be quite genuine. We also do not agree with the findings of the authorities below that the explanation furnished by the assessee is not covered by Clause(B) of Explanation-1 to Section 271(1)(c). After examining chronology of events and documents on record, we are satisfied that the explanation furnished by assessee is bonafide and acceptable.

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• 2019 (8) TMI 1269
  Denial of deduction of claim u/s 80P(2) - AO has dealt on the interest income from investment / deposits in Banks, whereas the assessee society is engaged in business of carrying on banking and providing credit facilities - HELD THAT:- Restore the entire disputed issue to the file of AO to adjudicate afresh in the light of the decision of chargeability of interest income under the head income from other sources and the observations of Hon'ble Supreme Court in the case of Totgar s Co-operative Sales Society Ltd. Vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] and Tumkur Merchants Souharda Credit Co-operative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] . Whereas in respect of the claim of Nominal Members included in the definition of Member we find support on our view rely on the decision of Trapaj Vibhageeya Khet Udyog Mal Rupantar Food Processing Sahakari Mandali Ltd. Vs. DCIT [ 2018 (8) TMI 273 - ITAT AHMEDABAD] and Prin. CIT Vs. S-1308 Ammapet Primary Agricultural Co-operative Bank Ltd. [ 2019 (1) TMI 116 - MADRAS HIGH COURT] which is covered in favour of the assessee Nominal members are also eligible for the Benefits of credit society. Accordingly we restore entire disputed issue to the file of Assessing Officer to grant the benefit to the nominal members and the assessee should be provided adequate opportunity of hearing and co-operate in submitting the information for early disposal of the case and allow the grounds of appeal of the assessee for statistical purposes.

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• 2019 (8) TMI 1268
  Violation of Section 144C - validity of draft assessment order issued along with notice of demand and penalty notice - HELD THAT:- The Ld. AR demonstrated that the assessment order dated 15.01.2013 was draft assessment order which is evident from the very heading of the order. Along with this draft assessment order, the AO has issued notice of demand u/s.156 and penalty notice u/s.274 r.w.s.271(1)(c) and therefore, procedure laid down in Section 144C has been violated. The provisions of Section 144C spells out that on receipt of the draft order, the eligible assessee shall within thirty days of the receipt by him of the draft assessment order file his acceptance of the variations to the AO or file his objections, if any, to such variation with the DRP. Thereafter, the AO shall complete the assessment order on the basis of draft order. The issue is clearly identifiable and covered in favour of the assessee by the decisions rendered by the Co-ordinate Bench of the Tribunal, Pune in the case of Skoda Auto India Pvt. Ltd. Vs. ACIT [ 2019 (8) TMI 1157 - ITAT PUNE] and also in the case of DCIT, Circle-10, Pune Vs. Rehau Polymers (P) Ltd. ( [ 2017 (8) TMI 1294 - ITAT PUNE] ). Respectfully following the above referred decisions, we hold the draft assessment order to be bad in law and void-ab-initio and thereby allow the additional ground raised in appeal by the assessee

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• 2019 (8) TMI 1267
  Levy of penalty u/s 271AAB - income surrendered consequent to search action carried out on Maharaja Group of cases to which all the above assessees belonged - HELD THAT:- As per section 271AAB, penalty is levied on the undisclosed income found during search and the quantum of penalty varies from 10% to 30% of the undisclosed income, depending upon fulfillment of certain conditions by the assessee as specified in the section. The statement referred to by the Ld.DR of Sh. Sukhdarshan Kumar was not available in original, We consider it fit to restore the issue back to the Ld.CIT(A) with the direction to obtain the original copy of the statement recorded of Sh.Sukhdarshan Kumar and thereafter adjudicate the issue afresh. The Ld.CI T(A) may consider all other aspects as he deems fit and thereafter decide the issue in accordance with law. Needless to add the assessee be granted adequate opportunity of hearing. Appeals of the assessee are allowed for statistical purposes.

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• 2019 (8) TMI 1266
  Revision u/s 263 - appellant argued that the notice issued u/s 263(1) was beyond the period of limitation - disallowance of the appellant s claim u/s 80IC - AO disallowed in intimation then allowed by passing order u/s 154 - HELD THAT:- We are therefore convinced that the proceedings u/s 263, if any, qua the issue of grant of deduction u/s 80-IC, could have been initiated only with the period of two years from the end of the FY 2010-11 being the year in which the order u/s 154/143(1) was passed. This proposition is squarely supported by the decision of the Hon ble Apex Court in the case of CIT Vs Alagendran Finance Ltd [ 2007 (7) TMI 304 - SUPREME COURT] Section 246A enlists various orders against which a right of appeal is provided by the Legislature and u/s 246A(1)(a), an order u/s 143(1) is specifically made an appealable order. We therefore find that if the Legislature has provided right of appeal against an intimation u/s 143(1) then there is no reason to hold that such an order is not amenable to revision u/s 263 by the Commissioner. Hence, merely because in the present case the AO initiated reassessment proceeding u/s 147 with regard to some issue other than the grant of deduction u/s 80-IC, such fact by itself did not extend the limitation period with regard to such issue. Particularly, in view of the fact that this very issue regarding grant of deduction u/s 80IC was the subject matter of disallowance in the intimation u/s 143(1) which was subsequently deleted by the AO in his order u/s 154. If one goes by the ld. CIT s proposition that the grant of deduction u/s 80-IC was erroneous; then it is evident from the facts of the present case that the deduction was consciously allowed by the AO by an order u/s 154/143(1) dated 09.04.2010 and therefore error, if any, had crept in the said order, and not in the latter order u/s 147/143(3) dated 09.02.2016. Respectfully following the ratio decidendi laid down by the Hon ble Apex Court in the case of CIT Vs Alagendran Finance Ltd (supra), we therefore hold that the proceedings u/s 263 had become barred on 31.03.2013 and consequently therefore the impugned order dated 22.03.2018 is held to be bad in law and accordingly quashed. Revision based on order dropping proceeding u/s 147 - We also find merit in the alternate argument of the ld. AR that the ld. Pr.CIT could not have invoked her revisionary jurisdiction u/s 263 in the given facts of the appellant s case. As noted the proceedings u/s 147 were initiated by the AO on the basis of certain information received from Investigating Wing at New Delhi with regard to appellant s transaction with M/s Bhola Motors Pvt Ltd. With reference to these transactions alone the AO had recorded his satisfaction that in his opinion income chargeable to tax had escaped assessment. In the course of reassessment proceedings, after conducting independent enquiries from M/s Bhola Motors Pvt Ltd the AO was satisfied that no income had escaped assessment with reference to these transactions Once the AO found his reasons to believe, to be factually unsustainable, then the only course open for him was to close such proceedings and it was no more open for him to travel to other unconnected and unrelated issues. In the circumstances what the AO himself could not have done directly in the proceedings u/s 147, the ld. Pr. CIT could not achieve it by resorting to proceedings u/s 263. We hold that the order of the ld. Pr. CIT u/s 263 is legally unsustainable and accordingly the same is hereby cancelled. - Decided in favour of assessee.

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• 2019 (8) TMI 1265
  Addition of suppression of income from sale of wastage - AO observed that there is a difference in rate as per the books and the rate conducted for computation of income and Filing of return of income u/s 153A - AO on the information of few Distilleries of U.P. Region considered the market value of wastage rate is 1.22 per kg - HELD THAT:- We find the submissions of the ld. AR are duly supported with facts and the rate adopted by the assessee for the said assessment year in filing the Return filed u/s 153A was only to buy peace. Assessing authority though adopted the rate at 1.22 per kg by general enquiries but there is no concrete proof in support of rate at 1.22 per kg. In the present case, the assessee has considered the rate of wastage sale generated @ 0.73 per kg in the Books of accounts but whereas at the time of filing of Return of income u/s 153A that assessee has adopted rate 1.13 per kg. AR envisaged that to buy peace the assessee has enhanced the rate by 0.40 per kg and Disclosed in the Return of income. Whereas the Assessing authority without any supporting evidence except mentioning that the few Distilleries of U.P. Region also generates the wastage and they are selling at ₹ 1.22 per kg. cannot be a benchmark of unorganized sector. The Assessing authority though made the specific observations but could not support with any logical and documentary evidence. Therefore, addition of the AO is without any cogent evidence and cannot be sustained. Therefore, we set aside the order of the ld. CIT(A) and Direct the AO to delete the addition and allow the grounds of appeal of assessee Shortage of stock of empty bottles account - addition of alleged distribution of unaccounted surplus computed on the basis of shortage of stock of empty bottles of Radico brand found at the premises of the bottler - HELD THAT:- The contention of the ld. AR that the issue of shortages, has to be explained by the M/s N.V. Distilleries Breweries Ltd., with whom the assessee has tie up. Further there is no evidence to trace that the shortages has to be taxed in the hands of the assessee. We considering the facts and the findings of the ld. CIT(A) find the explanations of the assessee are not satisfactory though the ld. AR has referred and relied on obligations and warrantees of the assessee and similarly of M/s N.V. Distilleries Breweries Ltd. We find that without any relatable cause, the business of bottling cannot proceed. Further agreement was entered which is not disputed by the Revenue but the fact remained that the assessee could not explain the shortage of stock though referred to the permissions of bottling agreement. Whereas the Ld. AR contention that the difference has to be explained by the M/s N.V. Distilleries Breweries Ltd., to the Revenue but the facts remain that the assessee has business tie up with this company various brands of products, manufactured and bottled by M/s N.V. Distilleries Breweries Ltd., in the Bottling plant. The assessee has accepted that net distributable surplus after deducting the expenses and bottle charges as per agreement entered by with M/s N.V. Distilleries Breweries Ltd., dated 12.04.2004 and the distributable surplus shall be appropriated. We find there are inter related transactions which the Revenue has rightly made observations and the assessee could not overruled the finding of the Revenue with proper explanations or evidences. CIT(A) has considered the submissions, agreement and ratio of distributable surplus has passed a reasoned and logical order on this ground of appeal confirming the addition of the AO which we are not inclined to interfere and upheld the same and dismissed this ground of appeal of the assessee for the AY 2011-12

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• 2019 (8) TMI 1264
  Income accrued in India - FTS - Cost reimbursement received by the assessee towards providing support services to its group affiliates - taxability of the payment made by Heinz India towards the cost allocated by Heinz USA in respect of the activities carried out will depend upon the characterization of such payment - Taxability both u/s 9(1)(vii) of the Act as well as Article 12(4) of the DTAA - HELD THAT:- From the perusal of the records it can be seen that the assessee has entered into a global agreement effective from 3rd May, 2007 with its group entities (affiliates), including Heinze India Pvt. Ltd. (Heinze India) for the provision of support activities. The underlying objective of the agreement is to achieve consistency of approach and economies of scale for the group entities. The activities carried out by the Heinz, USA under the agreement are broadly in the area of supply chain Human Resources, Strategic Planning and marketing, Finance and information systems from the DTAA as well as the agreements entered into by the assessee company as well as Heinz, India Novel Define but services are coming while claiming the reimbursement. The approach of the assessee is that the services should not be considered as taxable contending that they are merely reimbursements and reimbursement cannot be taxed. But to come under the category of reimbursement of certain receipts of service, the same has to fulfill certain criteria for which the services have to be provided by the assessee to its affiliated companies. The assessing officer has observed that the services provided by the assessee are in the area of supply chain, human resources, strategic planning and marketing, finance and information systems under the agreement which is an admitted fact. Thus, services have been utilized by the Indian Company as well. The concept of make available requires that the fruits of the services should remain available to the service recipients in some concrete shape such as technical knowledge, experience, skills etc. which is met in the instant case as can be reflected from the nature and duration of the contract. The service recipient has to make use of such technical knowledge, skills etc. by himself in his business and for his own benefit. Thus, the short durability or permanent usage of the service envisages by the concept of make available services remains at the disposal of their service recipients. Thus, the consideration qualifies as fees for technical services (FTS) both under the Income Tax Act and under the tax treaty as well. - Decided against assessee. Non granting credit of taxes deducted at source - HELD THAT:- The issue is remanded back to the file of the assessing officer for granting due credit of TDS after proper verification. Needless to say the assessee be given opportunity of hearing by following principle of natural justice, therefore, ground no. 3 is allowed.

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• 2019 (8) TMI 1263
  Penalty u/s. 271(1)(c) - income accrued in India - income outside India from salaries - non-resident OR resident - period of stay outside India - HELD THAT:- The assessee on the strength of being outside India for a period of 205 days including said period of 30 days of stay outside India from 14.09.2008 to 13.10.2008 had claimed that his income outside India from salaries to the tune of ₹ 27,20,633/- is not chargeable to tax in India , but the AO was of the view that the said salary income is chargeable to tax in India as assessee stayed outside India in Abu Dhabi for the period from 14th September to 13th October 2008 not for the purposes of employment outside India as he was in employment with Triton Holding Limited, India and his salary as well reimbursement of expenses were paid by said company Triton Holding Limited, India . This involved interpretation of provisions of Section 6(1)(a) and (c) read with Explanation 1(a) and 2(30) of the 1961 Act. Once substantial question of law against quantum additions are admitted by Hon ble High Court in appeal filed u/s 260A, wherein the taxpayer is allowed to enter the doors of the Hon ble High Court, , the tribunal shall refrain from deciding the issue even in penalty proceedings u/s 271(1)(c) keeping in view judicial propriety and discipline, the tribunal being lower in hierarchy than Hon ble High Court. Once the High Court is seized of the issues which are admitted by Hon ble jurisdictional High Court against quantum additions, the tribunal shall refrain from deciding even penalty levied u/s 271(1)(c) on merits. Section 275(1A) comes to the rescue of Revenue as in the instant case before us and the most appropriate course of action in such situations for tribunal shall be restore the matter back to the file of the AO to adjudicate afresh levy of penalty u/s 271(1)(c) against assessee read with Section 274 275(1A), wherein the AO be directed to pass penalty order u/s 271(1)(c) r.w.s 274 275(1A). Thus, we are restoring issues in this appeal to the file of the AO for fresh adjudication keeping ,inter-alia, provisions of Section 275(1A).

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• 2019 (8) TMI 1262
  Penalty u/s 271AAB - assessee himself has surrendered undisclosed income - HELD THAT:- We found that during the course of search, one diary and Annexure-A exhibit 5 was found. In this diary certain advances given to various villagers amounting to ₹ 627 lacs was stated. Statement of assessee was also recorded U/s 132(4) of the Act on 23/1/2013 wherein in reply to question No. 8, the assessee himself has surrendered these advances as income. On this surrendered income, the A.O. has levied penalty U/s 271AAB - As observed that what have been found during the course of search are certain entries relating to investment made in purchase of land. However, the said entry in the loose paper giving advances for purchase of land itself is not an undisclosed income. Besides the said entries, there are no other documents/material in terms of any agreement to sell, description of the property etc. which was found during the course of search. As per the definition of undisclosed income u/s 271AAB, undisclosed investment in so called purchase of land cannot be stated to be income which is represented by any money bullion, jewellery or other valuable article or thing. We further observe that the assessee was having only income from house property and interest income. The diary was found on the basis of which disclosure was made also contained list of advances made which formed basis of disclosure by the assessee. Since the assessee was not carrying on any business, he was not required to maintain any such books of account under the law. The amount so surrendered was duly recorded in other documents maintained in the normal course and therefore, the same cannot be said to be undisclosed income. CIT(A) has dealt with the issue threadbare and after applying the various judicial pronouncements including pronouncements of the Coordinate Bench in the cases of Ravi Mathur Vs DCIT [ 2018 (6) TMI 1128 - ITAT JAIPUR] deleted the addition. - Decided against revenue.

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• 2019 (8) TMI 1261
  MAT computation - deduction of capital gains which are exempt u/s.54EC for the purpose of computing book profit u/s.115JB - HELD THAT:- In the light of the binding decision of CIT-III, Chennai vs. M/s.Metal Chromium Plater (P.) Ltd [ 2016 (11) TMI 1021 - MADRAS HIGH COURT] we hold that the capital gains which are exempt u/s.54EC cannot be reckoned for the purpose of computing book profit u/s.115JA. It was held that the adjusted book profits would be further eligible to the benefits set out in the other provisions of the Act and the plain language of Section 115 JB thus admits of the grant of relief u/s 54 EC in an assessment thereunder. - decided in favour of assessee

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• 2019 (8) TMI 1260
  Bogus loss in castor seed and castor oil trading - CIT (A) upholding the finding of the AO that the transactions in castor oil and castor seeds were sham transactions - good purchases from concern operating from same premises and sold at loss - HELD THAT:- The sequence of events, showing repeated loss transactions, do not make sense either. It is also difficult to understand that when ultimate buyer and the seller operate from the same premises, why is the assessee roped in every time, and every time that happens, assessee incurs a loss. There is no explanation about the nature of office sharing arrangement or the nature of their association. The ease of business for every connected party operating from the same premises is too vague an explanation to merit judicial approval. Genuineness is a matter of perception but essentially a call on genuineness of a transaction is to be taken in the light of well settled legal principles. There may be difference in subjective perception on such issues, on the same set of facts, but that cannot be a reason enough for the fact finding authorities to avoid taking subjective calls on these aspects, and remain confined to the findings on the basis of irrefutable evidences. Hon'ble Supreme Court has, in the case of Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] , observed that human minds may differ as to the reliability of a piece of evidence but in that sphere the decision of the final fact finding authority is made conclusive by law . This faith in the Tribunal by Hon'ble Courts above makes the job of the Tribunal even more onerous and demanding and, in my considered view, it does require the Tribunal to take a holistic view of the matter, in the light of surrounding circumstances, preponderance of probabilities and ground realities, rather than being swayed by the not so convincing, but apparently in order, documents and examining them, in a pedantic manner, with the blinkers on. In view of the above discussions and bearing in mind entirety of the case, we approve well reasoned order of the CIT(A) and decline to interfere in the matter.- Decided against assessee.

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• 2019 (8) TMI 1259
  Correct head of income - income earned from the sale of the property - capital gains or business income - HELD THAT:- In the case in hand, the assessee after sale of the land during the year under consideration had surplus money in his hand, which he invested in many small properties, out of which he had to resale six properties for the reason that the assessee was not expecting much gain from the said properties due to certain disputes / non preferred location etc. of these properties. However, rest of the properties have been retained by the assessee for long term. Merely because, the assessee had purchased many small properties that also itself is not good enough reason to hold that it was a business transaction. The quantum or number or number of investments i.e. whether the assessee invested in a single property or in many small properties to get better appreciation, does not change the nature of the investment to categorize it as business transaction. No justification on the part of the lower authorities in treating the income of the assessee from sale of property during the year as business income. The order of the lower authorities on this issue is set aside and the Assessing Officer is directed to treat the income from the sale of property as under the head capital gain . This issue is accordingly allowed in favour of the assessee. Deduction u/s 54F - amount spent for construction of residential house - assessee is owner of other commercial property - construction was not completed within three years - HELD THAT:- Except a share in the ancestral house in the property mentioned at S.No.4, the assessee did not possess any other residential property on the date of sale of the property and in view of above, the assessee has rightly claimed the deduction u/s 54/54F on construction of a residential house. So far as the rejection of the claim on the ground that the construction was not completed within three years from the date of sale of property is concerned, considering the beneficial provisions of this chapter intended to promote the construction of residential houses, and also considering the evidence furnished by the assessee of approved plan of municipal corporation regarding one single house constructed by the assessee, we do not find any justification on the part of the lower authorities in rejecting the claim of deduction on this ground. In view of this order of the lower authorities on this issue is set aside and the AO is directed to grant the deduction on account of construction of residential house under the relevant provisions of Section 54/54F. - Decided in favour of assessee.

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• 2019 (8) TMI 1248
  Deduction u/s 10AA - whether activity which has been carried out by the assessee was not manufacturing activities and rather it was trading ? - HELD THAT:- Special Leave Petition is dismissed on the ground of delay as well as on merits.

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• Customs

• 2019 (8) TMI 1258
  Grant of CST Refunds - goods supplied by EOUs to EOUs - HELD THAT:- This Court ruled that the Foreign Trade Policy 20042009 did not limit the benefit of CST reimbursement to an EOU on the purchases made only from a DTA unit. Prima facie , it appears that this decision has been overlooked by the appellate authority. The decision of this Court in Asahi Songwon [2017 (7) TMI 512 - GUJARAT HIGH COURT ] is dated 6th July 2017. When the show cause notice was issued, the orderinoriginal was passed, this judgement was not pronounced. When the appeal was being heard, this judgement was already pronounced. As observed by us, prima facie, it appears that the appellate authority has overlooked the position of law, as explained by this Court. We also take notice of the fact that the contention of Mr. Iyer with regard to the delay and recovery after a period of almost eight years is also taken care of by this Court in the case of Asahi Songwon . This Court, in Asahi Songwong, made it clear that it was not permissible for the respondent to make recovery after unduly long period of time. In Asahi Songwon, the delay was almost seven years. Whereas in the case on hand, it is almost more than eight years. Grant of CST refunds - DTA clearance - HELD THAT:- We may look into paragraph 6.11 of the Foreign Trade Policy 20042009. This policy provides for the refund of the CST suffered on the inputs used for the production of final product cleared into the DTA by an EOU - The reading of the Foreign Trade Policy referred to above as well as the condition in appendix 14-I-I of the Handbook of Procedures 20042-009 as it existed until 16th September 2008 appears to be in conflict with each other. The Foreign Trade Policy, more particularly, para 6.11(c)(i) makes it clear that an EOPU shall be entitled to the reimbursement of the CST goods manufactured in India. If that be so, then, in our opinion, the appendix of the Handbook of Procedures could not have been relied upon. There is merit in the submission of Mr. Iyer that the provisions in the FTP govern the statutory scheme of the policy, and in such circumstances, the appendix or the Handbook of Procedures cannot override the FTP provisions. In case of a conflict, the FTP provisions should prevail vis-a-vis the appendix in Handbook of Procedures, which are nothing but a subordinate legislation. The impugned order passed by the Director General of Foreign Trade dated 7th September 2018 is hereby quashed and set aside - Petition allowed.

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• 2019 (8) TMI 1257
  Seizure of imported goods - misdeclaration of goods - consignments consisting 229 bales, to the extent of 81 bales;81 bales were found to contain full pants and trousers in place of declared payjamas - penalties - HELD THAT:- The reason put forth by the Learned Counsel for the appellant, for importing full pants in place of indented pajamas, is not at all forthcoming from the said letter. The said letter does give any reason for the misdeclaration of 81 bales of cargo. Therefore, it is difficult to believe the submissions of the appellant that they had no Knowledge of the misdeclaration of the cargo. We find that Learned Commissioner has found that the goods are misdeclared; the appellants having filed bill of entry have misdeclared the goods. The valuation adopted in the impugned order is arbitrary. The Learned Commissioner has not recorded any reason for rejecting the declared value in respect of 148 bales. He proceeded to redetermine the value of all the goods when the misdeclaration was only in respect of 81 bales. Commissioner proceeded to redetermine the entire quantity of goods without giving any reasons for rejecting the value of the goods. The impugned order does not refer to any Valuation Rules and it does not make it clear if the CVR, 2007 have been followed sequentially. The valuation declared by the appellant is to be accepted. However, it is required to redetermine the value of 81 bales in dispute, which were misdeclared - the issue needs to go back to the adjudicating authority for proper appreciation of the Customs Valuation Rules and to redetermine the value accordingly - appeal allowed by way of remand. Penalty - HELD THAT:- The mens rea is not an essential ingredient either for the purposes of confiscation under Section 111 or for levy of penalty under 112(a)of the Customs Act, 1962. Therefore, the fact or otherwise of the appellant having intention or knowledge has no bearing on confiscation of the goods. To that extent, the impugned order is acceptable. The penalty imposable on the appellant will be equal to the duty that may be applicable on the 81 bales of garments misdeclared, subject to condition laid down in Section 112 (b) of the Customs Act, 1962.

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• 2019 (8) TMI 1256
  Illicit clearance - fraudulently obtained advance licence with intent to divert for sale instead of utilisation in manufacture - brass scrap and copper scrap - benefit of N/N. 43/02-Cus dated 19 April 2002 - Penalty on transporters - HELD THAT:- It is seen from the impugned order that the findings pertaining to the role of the transport undertakings is sketchy and devoid of facts that would link the activity of transportation with knowledge of the illicit nature of the movement. Any transporter, in the commercial sense, is merely required to deliver goods at the consigned address; there is no evidence here that the delivery had been effected to a different location. It is also not in the nature of their professional commitment to require establishment of the provenance of the articles carried by them or to be conversant with the various schemes of import or the provisions of Customs Act, 1962. Nor are they required, under section 151 of Customs Act, 1962, to act as watchdogs of officers of customs. In the absence of any evidence of their awareness that the goods transported by them should legally have been delivered at the address provided for in the advance licences, the imposition of penalty against them is not justified - the penalties imposed on Shri Gulbir Singh Anand and Shri Naresh D Bhanushali are set aside. Penalty on other conspirators - beneficiaries of, the diversion of brass scrap and copper scrap imported against fraudulently obtained advance licences purportedly for manufacture and export - HELD THAT:- Customs Act, 1962 prescribes limitations for the recovery of duty under section 28 of Customs Act, 1962. However, there is no such limitation insofar as confiscation proceedings are concerned and, likewise, on the imposition of penalty. There is no doubt that a reasonable proximity of detriment with the cause is a consummation devoutly to be sought for. Nevertheless, that cannot be a reason, or a ground, for failing to act within the confines of the statute that is intended to protect the country from the ill-effects of smuggling - there is no illegality in the imposition of penalties for incidents that have occurred more than five years prior. Retraction of statements - HELD THAT:- In the present instance, it is the link between the offending goods and Shri Goel that is sought to be established through the statements whose credibility is now cast in doubt. The adjudicating authority is directed to decide afresh the submissions in response to the show cause notice to the extent that we have not ruled upon - appeal allowed by way of remand.

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• 2019 (8) TMI 1255
  Reduction redemption fine penalty - HELD THAT:- The enhancement of value has been ordered by the First Appellate Authority on the basis of concurrence given by the importer for such enhancement. There is no challenge to the order of confiscation, but Revenue is challenging the quantum of redemption fine and penalty, which stand reduced by the Ld. Commissioner (Appeals). The Ld. Commissioner (Appeals) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by the Three Member Bench of CESTAT, Delhi in the case of Omex International Vs. Commissioner of Customs, [ 2015 (4) TMI 112 - CESTAT NEW DELHI (LB)] . The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions. - no reason to interfere with the findings of the Ld. Commissioner (Appeals) Appeal dismissed - decided against Revenue.

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• 2019 (8) TMI 1254
  Provisional release of imported goods - VRLA batteries - HELD THAT:- Considering the fact that the imported goods have already been released by the competent authority, we are of the view that the present appeal for provisional release of the imported goods cannot be considered at this juncture being infructuous. Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 1247
  Time Limitation - Confiscation of ship - non-filing of Bill of Entry at the time of import - failure to obtain the registration - imposition of redemption fine and penalty as well - HELD THAT:- There is no dispute on the date of import which has been admitted by Revenue and recorded in the SCN i.e. 24.04.2003, the SCN was issued on 27.08.2008 and it is clearly after five years. According to Section 28, the maximum time limit for the issuance of the SCN is five years - In the present case, admittedly the SCN was issued after the period of five years, therefore, relying on the decision of M/S. USHA STUD AGRICULTURAL FARMS (P) LTD. OTHERS VERSUS CC, NEW DELHI [ 2011 (5) TMI 604 - CESTAT, NEW DELHI] , since SCN has not been issued within a period of five years, the SCN itself is time bar and adjudication of such time barred SCN will not sustain. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 1246
  Permission for withdrawal of appeal - HELD THAT:- As nothing subsist in these appeals, we allow the Appellants to withdraw all these appeals. All the Interim Orders passed in these appeals are vacated.

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• 2019 (8) TMI 1245
  Withdrawal of appeal - Initiation of CIRP - Default in payment - The appeal was filed against the order initiating Corporate Insolvency Resolution Process against Reliance Communication Limited . In the said appeal, initially an interim order was passed, in view of the subsequent development, on behalf of the Appellant, prayer was made to allow the Appellants to withdraw the appeal. This Appellate Tribunal instead of allowing the Appellant to withdraw the appeals. HELD THAT:- It appears that the show-cause notices dated 14th March, 2019, 15th March, 2019 and letter dated 20th March, 2019 addressed by Department of Telecommunications, Ministry of Communications, Government of India, New Delhi is against the direction of this interim order passed by this Appellate Tribunal dated 4th February, 2019. However, to decide whether such show-cause notices and letter aforesaid are against the interim order or not, we intend to hear the Secretary, Department of Telecommunications, Ministry of Communications, Government of India. We direct the Appellant- Punit Garg to implead the Secretary, Department of Telecommunications, Ministry of Communications, Government of India (Wireless Planning and Finance Wing), Sanchar Bhawan, 20, Ashoka Road, New Delhi 110001 as Party Respondent - The impleading application No. 1075 of 2019 filed by Appellant- Punit Garg is allowed.

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• 2019 (8) TMI 1244
  Dissolution of the Corporate Person - Section 59 of the Insolvency and Bankruptcy Code, 2016 read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) - whether the liquidator has complied with all the provisions of Section 59 of the IB Code, 2016 read with Regulation 3 of the Regulations before initiating voluntary liquidation of the company? HELD THAT:- It is on record that the board of directors have passed necessary resolution on 16.09.2017 to liquidate the company voluntarily and the directors have also executed the Declaration of Solvency dated 16.09.2017 by way of an affidavit in terms of provisions of Section 59(3)(a) of the IB Code, 2016 - The Company has issued notice to all the shareholders and an Extraordinary General Meeting was also held on 16.10.2017 in which the approval for liquidating the company was also given. The Company has also filed MGT 14 informing the special resolution passed by the members to the ROC. The voluntary liquidator has complied with the requirement of the provisions of section 59 of the IB Code, 2016 and filed this Petition under section 59(7) of the IB Code, 2016 to dissolve the Petitioner/Corporate Person viz., Guntur Tobacco Limited. M/s. Guntur Tobacco Limited is ordered to be dissolved as envisaged under Section 59 of the Code with effect from the date of this Order. It is also directed the Company to transfer the unclaimed amount lying in the Bank Account should be transferred to the Companies Liquidation Account in the Public Account of India .

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• Service Tax

• 2019 (8) TMI 1243
  Levy of service tax - mobilization advance received - amount received from Indian Navy for the purpose of upgrading their infrastructure at the shipyard so as to facilitate they undertaking future refits for Indian Navy. HELD THAT:- Issue Notice.

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• 2019 (8) TMI 1242
  Classification of services - Business Support Service or not - removal of scrap and slag generated during the manufacturing premises of the steel manufacturers i.e. RINL and JSWSL - HELD THAT:- Issue notice on the application for condonation of delay as well as on the Civil Appeal, returnable in the second week of August, 2019.

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• 2019 (8) TMI 1241
  Commercial coaching or training services - providing education for different degree courses like BBA, BCA, B.Tech, which were recognised by law during the period under dispute i.e. 2005-2006 to 2010-2011 - demand of service tax - HELD THAT:- Application admitted.

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• 2019 (8) TMI 1240
  Condonation of delay in filing appeal - Management, Maintenance and Repair Service - commercial complex / shopping mall - providing services at no profit no loss - HELD THAT:- Issue notice on the applications for condonation of delay and in the appeal returnable in four weeks.

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• 2019 (8) TMI 1239
  Works contract service or not - construction of water treatment plant, sewage treatment plant constructed by the appellant - service, non-commercial in nature - HELD THAT:- Appeal admitted.

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• 2019 (8) TMI 1238
  Sharing of expenses - Business Auxiliary Service - promotion of business of group companies - expenses relating to sales, marketing and general business promotion of all the group companies and the said expense was shared in proportion to the turnover, with the said group companies. HELD THAT:- Issue notice on the application for condonation of delay as well as the appeal.

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• 2019 (8) TMI 1237
  Whether activity of garbage disposal is liable to service tax - Dispute between service provider and recipient - Return of Fixed Deposit Receipts (FDRs) retained - Pending adjudication of the said issue before the Service Tax Department, the respondents withheld the security deposits in the form of FDRs offered by the appellant/petitioner - invocation of arbitration clause - HELD THAT:- the contention of the learned counsel for the appellant that the judgment in the case of Airport Retail Pvt. Ltd. [ 2014 (8) TMI 102 - DELHI HIGH COURT] has for all effects and purposes, settled the issue of leviability of Service Tax on services rendered by the appellant/petitioner to the respondents in both the appeals, in terms of the License Agreement, is not borne out. Nor is learned counsel correct in asserting that since the said decision has been affirmed by the Supreme Court, nothing further survives for adjudication by the Appellate Authority under the Act and consequently, the security offered by the appellant in the form of FDRs ought to be released by the respondents forthwith. We are in complete agreement with the view expressed by the learned Single Judge that the dispute raised in the writ petitions cannot be a subject matter of judicial review under Article 226 of the Constitution of India. It is for the appellant to invoke the arbitration clause, if she so desires - Moreover, despite an opportunity afforded to the appellant/petitioner to participate in the appeal filed by the respondent No.1/AAI before the CESTAT against the order passed by the Commissioner, Service Tax in terms of the judgment dated 12.04.2012, for reasons best known to her, she has elected to stay away from the said proceedings that culminated in the order dated 02.01.2015, whereunder a particular aspect relating to quantification of Service Tax demanded by the Revenue Department has been remanded to the Commissioner, Service Tax for consideration. Writ proceedings are not an appropriate forum to decide as to whether Service Tax would be leviable on garbage collection charges and if the answer is in the affirmative, who would be liable to pay Service Tax more so, when the appellant/petitioner has not even impleaded the Service Tax Authorities as a party in the writ petitions. Impugned order upheld - appeal dismissed.

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• 2019 (8) TMI 1236
  Classification of service - whether the appellant was performing a statutory function? - main objective of the institute is to provide technical assistance and consultancy in applied research and training services in the area of environmental protection to various organisations in the fields related water and waste water treatment, air pollution control, Environmental Impact Assessment (EIA), etc. - HELD THAT:- The appellant is a society registered under Registration of Societies Act by the State Government supported by it but it is an autonomous organisation. The statute does not place any responsibility upon the society. The society provides training and consultancy in the field of environment - The definition of State under Part-III (Fundamental Rights) of the Constitution of India does not extend to several other parts of the Constitution or to other laws. In Para-III, the definition of State is meant to determine which are organisations have a responsibility to ensure right to equality, equality in matters of public employment , etc. - what the appellant was doing is more or less akin to the job of a Chartered Accountant with respect to the Income Tax Act, Companies Act, etc. Scientific and technical consultancy service - liability of service tax - the Assistant Commissioner has divided value of the services rendered by them under the scientific and technical consultancy service into testing charges and report preparation charges. He sought classify testing charges under technical testing and inspection services and held that the same were exempted as the service was rendered with respect to environmental clearances - HELD THAT:- As per Section 65A of the Finance Act, 1994, where a service is rendered is a composite service consisting a combination of different services it shall be classified as if they consisted of a service which gives them their essential character. In this case, the essential character of the service rendered by the appellant is scientific and technical consultancy service and the same cannot be divided into different services for the purpose of calculation of service tax. This mistake of the Assistant Commissioner was corrected by the Commissioner in his impugned Order-in- Revision. Therefore, we find no infirmity in said order. Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 1235
  Condonation of delay of four days in filing appeal - HELD THAT:- The delay of four days being nominal, the same is condoned. Ld. Counsel for the assessee requested that the connected appeal filed by the assessee viz. Appeal No. ST/42715/2018 may be linked up with the present appeal. The above request is acceded to. Registry is directed to list these appeals in due course.

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• Central Excise

• 2019 (8) TMI 1253
  CENVAT credit - common input services used in trading of goods as well as for dutiable goods - Rule 6(3) of the Cenvat Credit Rules, 2004 - Adjudicating Authority, however observed that though the head office has reversed the credit availed by them on common input services but the same was legally required to be reversed at the time of transfer of the credit to the noticee s factory. HELD THAT:- The Adjudicating Authority is not disputing the fact of reversal of Cenvat credit availed on common input services by the head office. He is also not doubting the correctness of the said reversal. The said reversal has been made by the head office alongwith payment of interest of ₹ 6,98,314/- lakhs. The effect of said reversal is as if no credit was availed by the appellant in respect of the common services which were utilized for trading of the goods - In such a scenario, further demand of a particular percentage of the value of the traded goods in terms of Rule 6(3) is neither in accordance with the provisions of Cenvat Credit Rules nor with the settled principle of law. It stands held by various decisions of the judicial and quasi-judicial authorities that in case of reversal of proportionate credit attributable to the exempted goods/services, further demand in terms of Rule 6(3) is unsustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1252
  Invocation of extended period of limitation by subsequent SCN - three show cause notices for larger period of limitation had been issued already to the appellants in the past for the same cause of dispute - duty demand on income of selling patterns/moulds - all the show cause notices were issued on basis of audit verification of balance sheets only HELD THAT:- It may be pertinent to note that the earlier also show cause notices were issued and same are quashed and set aside and therefore, the reference to intelligence in the impugned show cause notices is of no consequence, since all the said facts were already before the central excise authorities at the time when the earlier show cause notices came to be issued - it cannot be said that the impugned show cause notices are based on new or different facts than the earlier ones. Even the while issuing the present show cause notices, the same and/or similar set of facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Under the circumstances, the respondents were not justified in invoking the extended period of limitation in respect of earlier periods by issuing the impugned show cause notices, on the plea of suppression of facts by the appellants, as the facts were already in the knowledge of the Department. The controversy involved in the present petition is no longer res-integra in view of the decision of the Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [ 2006 (4) TMI 127 - SUPREME COURT] where it was held that while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1251
  Classification of goods - Multi Micro Nutrient Mixtures etc. - classified under 3105 of Central Excise Tariff Act 1985 or under Chapter heading 3808 9340 attracting higher rate of duty, as Plant Growth Regulators - HELD THAT:- The issue as to the classification of Micronutrients has been clarified by the Board vide Circular No. 1022/10/2016-CX dated 06.04.2016. It is explained in the circular that Plant Growth Regulators are different from nutrients (Micronutrients) - The Tribunal in the case of N SREENIVASA RAO, DIRECTOR, SHIVASHAKTHI BIO TECHNOLOGIES LIMITED VERSUS CCEC AND ST, HYDERABAD-I [ 2018 (5) TMI 533 - CESTAT HYDERABAD] had occasion to analyze the very same issue and observed that Micronutrients are properly classifiable under Chapter heading 3105 of CETA 1985 and not under heading 3808 - thus, the Micronutrients (single/multi) have to be classified under 3105 only - demand raised by the department classifying them as Plant Growth Regulators under 3808 cannot sustain and requires to be set aside. Bio-pesticides/bio-fertilizers of microbial origin - classified under 3105 or under 3002? - HELD THAT:- The Tribunal in the case of T. STANES CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE [ 2008 (10) TMI 109 - CESTAT, CHENNAI] has analyzed the said issue and held that the correct classification of these items is under 3002 and not 3808 - correct classification of these products are under 3002, attracting nil rate of duty - the demand of duty classifying the said products under 3105 and 3808 cannot sustain and requires to be set aside. Bio-pesticides / bio-fertilizers of plant / animal origin - classified under 3105 or under 3808 of CETA, 1985? - penalties - HELD THAT:- The original authority has set aside the demand beyond the normal period observing that the issue is of classification as well as interpretation - the entire issue is with respect to classification and interpretation of Tariff headings, we are of the considered opinion that the penalties imposed are unwarranted and require to be set aside. Appeal allowed in part.

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• 2019 (8) TMI 1234
  Supplies made to Ministry of Defence by specified organisation - benefit of N/N. 63/1995-CE dated 16th June 1995 (at serial no. 1 and serial no. 2) - HELD THAT:- The eligibility of appellant-company for exemption on goods supplied to M/s Bharat Earth Movers Ltd, which are, in turn, intended for Ministry of Defence is no longer res integra - the issue stands settled by the decision of the Hon ble High Court of Karnataka in THE COMMISSIONER OF CENTRAL EXCISE BENGALURU-V VERSUS M/S. DATASOL INNOVATIVE LABS [ 2017 (2) TMI 1171 - KARNATAKA HIGH COURT] and that the decision relied upon in the impugned order has since been overruled by the Hon ble High Court of Rajasthan in M/S NATIONAL ENGINEERING IND. LTD. VERSUS COMMISSIONER CENTRAL EXCISE-I, CENTRAL REVENUE BUILDING, STATUTE CIRCLE, C-SCHEME, JAIPUR [ 2017 (11) TMI 879 - RAJASTHAN HIGH COURT] - demand set aside. Goods required for setting up of water supply plants and pipes to deliver water from source to the ultimate storage facility - benefit of N/N. 03/2004-CE dated 8th January 2004 - HELD THAT:- In relation to the exemption intended for water supply plants, the denial arose from the deficiency of the certificate issued by the competent head of the district. The lower authorities have held so in the absence of a substitute certificate for the one that was misplaced by them while shifting their office. However, it is the plea of the Learned Counsel for the appellant that this is not the correct factual position inasmuch as the certificates had been submitted to the appropriate central excise authorities who were unable to trace the same - it is only proper that the original authority makes an effort to recover the said documents and render a finding thereafter on the eligibility thereof. In the absence of such certification, it was inappropriate for the lower authority to come to a conclusion that the appellant-assessee was not eligible for the exemption. Benefit of N/N. 6/2006-CE dated 1st March 2006 - parallel provisions in notification no. 21/2002-CE dated 1st March 2002 intended to confer non-discriminatory treatment to goods manufactured in India and to those imported for execution of projects contracted through international competitive bidding - HELD THAT:- It would appear that the lower authorities had not paid due attention to the conditions prescribed and the required level of compliance - matter placed on remand for reconsideration. Appeal allowed by way of remand.

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• 2019 (8) TMI 1233
  Valuation - job-work - clearance of physician samples to the principal manufacturer - period between January 2005 and November 2006 - HELD THAT:- There is no doubt that, prima facie, physician samples are not covered by the prescription in section 4A of Central Excise Act, 1944 and, therefore, subject to the default scheme envisaged under section 4 of Central Excise Act, 1944. The appellant has been discharging duty liability on the transaction value at which goods are cleared to M/s Novartis India Ltd on principal-to-principal basis. Such transaction value may be market determined or on cost plus basis and adoption of either does not detract from being transaction value. It would also appear that the clarification issued by Central Board of Excise Customs, in circular no. 813/10/2005-CX dated 25th April 2005 has been misconstrued by the central excise authorities inasmuch as it pertains to the clearance of physician samples by the manufacturers themselves. In Commissioner of Central Excise Customs, Surat v. Sun Pharmaceuticals Industries Ltd [2015 (326) ELT3 (SC)], the Hon ble Supreme Court approved the decision of the Tribunal that as long as physician samples are sold and the characteristics for the transaction conform to the enumeration in section 4(1)(a) of Central Excise Act, 1944, acceptance of the invoice price is not flawed. Appeal dismissed - decided against Revenue.

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• 2019 (8) TMI 1232
  Valuation - inclusion of transportation cost incurred by the appellant for movement of the goods from factory gate to depots which cost stands recovered by them from their customer, in the assessable value - HELD THAT:- The issue stands covered in the same assessee s case M/S BAYER MATERIAL SCIENCE PVT. LTD., M/S COVESTRO (INDIA) PVT. LTD. AND M/S COVESTRO (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NOIDA [ 2018 (5) TMI 1108 - CESTAT ALLAHABAD] , laying down that the said transportation expenses cannot be part of the excisable value of the final product - appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1231
  Imposition of penalty u/r 26 of CER, 2002 - dealing with the excisable goods without payment of duty - HELD THAT:- The penalty under Rule 26 can be imposed only if the goods are held liable for confiscation - Admittedly, the goods were not held liable for confiscation. In these terms, the provision of Rule 26 of the Central Excise Rules, 2002 is not invokable to the facts of this case - the penalties imposed on the appellants are set-aside. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1230
  Condonation of delay of 26 days in filing appeal - effective date when corrigendum issued - HELD THAT:- The appeal was filed within 90 days i.e. normal period of 60 days plus condonable period of 30 days. Moreover, appeal was filed within 60 days from the date of corrigendum. Once the corrigendum was issued the effective date of issue of order should be taken from the date of corrigendum, not from the initial order issued by the adjudicating authority. Therefore, on both the counts, the appeal should have been admitted and decided on merit. The he appeal was filed within 90 days i.e. normal period of 60 days plus condonable period of 30 days. Moreover, appeal was filed within 60 days from the date of corrigendum - Once the corrigendum was issued the effective date of issue of order should be taken from the date of corrigendum, not from the initial order issued by the adjudicating authority. Therefore, on both the counts, the appeal should have been admitted and decided on merit.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 1250
  Maintainability of appeal - compliance with the statutory deposit of 12.5% of the disputed amount of tax was not paid within time - HELD THAT:- In view of decision of Supreme Court in M/s. S.E. GRAPHITES PRIVATE LIMITED v. STATE OF TELANGANA [ 2019 (7) TMI 589 - SUPREME COURT] and M/s. INNOVATIVES SYSTEMS [ 2015 (2) TMI 1314 - SUPREME COURT], once an appeal was filed within the limitation period but the deposit of 12.5% of the disputed amount of tax, in respect of which the appeal was preferred, is made beyond the limitation prescribed in that regard, the delay in compliance ought to be condoned thereby requiring the appeal to be decided on merits by the appellate authority. It was not proper on the part of the Appellate Deputy Commissioner (CT), Secunderabad Division, Hyderabad, to reject the appeals filed by the petitioner-company on the ground of delayed deposit of 12.5% of the disputed amount of tax - The Appellate Deputy Commissioner shall proceed to hear the appeals on merits. In terms of the direction of the Supreme Court in M/s. S.E. GRAPHITES PRIVATE LIMITED(supra), the Appellate Deputy Commissioner shall dispose of the appeals not later than thirty (30) days from the date of receipt of a copy of this order. Petition allowed.

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• 2019 (8) TMI 1249
  Jurisdiction - issuance of notice of Default assessment of tax, Interest and penalty - Sections 32 and 33 of the DVAT Act - According to the Petitioner, the said assessments were issued by the VATO (Audit) without having jurisdiction and authority in DVAT-50 as per Section 68 of the DVAT Act read with Rule 65 of the DVAT Rules - whether the objections filed by the Petitioner before the OHA were still pending? HELD THAT:- The Petitioner did supply the self-attested copies of Form DVAT-38 by a letter dated 14th May, 2018. The date stamp of 14th May, 2018 of the VATO, Ward-41 on the covering letter written by the Petitioner is annexed as Annexure-P13 to the petition. These documents have not been denied by the Respondents, even in the affidavit dated 21st August, 2019. The whole object behind Section 74 (8) read with Section 74 (9) would stand defeated by requiring a dealer to repeatedly file attested copies of the DVAT-38 long after the deadline within which such objections are required to be decided, have been crossed. The Respondents have been unable to deny by producing any document the fact that the DVAT-38 was initially filed on 22nd July, 2011 i.e. more than 8 years ago and that the DVAT-41 was served on 18th December, 2017. They have also not been able to deny that the self-attested copies of the objections in Form DVAT-38 were submitted on 14th May, 2018. On 14th June 2018, the Petitioner again served notices under DVAT-41. Despite all of the above, the Respondents have chosen not to act on the repeated requests of the Petitioner. The resultant position is that the three months period specified under Section 74 (8) of the DVAT Act not having been complied with, and the Commission not having notified the Petitioner of its decision within 15 days of service upon him of the notice in Form DVAT-41 in terms of Section 74 (8) of the DVAT Act, the consequence spelt out in Section 74 (9) ensues, viz., that the objections filed by the Petitioner before the OHA shall be deemed to have been allowed . The objections of the Petitioner are declared as deemed to have been allowed under Section 74 (8) read with Section 74 (9) of the DVAT Act. Consequently, while setting aside the default notices of tax, interest and penalty, all dated 19th May 2011, issued by the VATO, Ward-41, this Court directs the Respondents to issue refund to the Petitioner in the sum of ₹ 1,34,35,473/- for the aforementioned periods i.e. May to December 2010, January to March 2011, March 2012, July 2012 and November 2012, within a period of four weeks from today by issuing appropriate orders in that regard - refund amount together with interest to be credited to the account of the Petitioner positively on or before 30th September, 2019 failing which the Respondents will additionally pay the Petitioner compensation of ₹ 50,000/-. Petition disposed off.

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• 2019 (8) TMI 1229
  Principles of natural justice - Service of notice - change of place of business of assessee - ex-parte assessment order - exparte assessment orders were passed for assessment year 2012-13 and 2013- 14 both under Act 2008 and CST Act and the said assessment order have been passed ex-parte without any service of notice upon the petitioner or opportunity of being heard provided therein - expiry of period of limitation prescribed under Section 29 (6) of the Act - assessment year 2013-14 - U.P. Act 2008 and CST Act. HELD THAT:- The service of notice has been made by affixation on the earlier address of the petitioner in spite of the fact being within their knowledge that the petitioner have changed the place of business to the new address but still with a mind set of passing the order hurriedly passed an ex-parte order under Act 2008 and CST Act creating huge demand against the petitioner. The record further reveals that the notice by affixation has been made on the earlier address of the petitioner even without satisfying the conditions as mentioned in the Rule. Even after service of notice by affixation, no such report has been brought on record as provided under the Rules - In spite of the fact being within the knowledge of the respondent that the petitioner has changed the place of business to the new address still notice by affixation has been made in the earlier address. The impugned order are hereby set aside - petition allowed.

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• 2019 (8) TMI 1228
  Maintainability of appeal - statutory remedy of appeal - Imposition of penalty - Section 67 of the Kerala Valued Added Tax Act, 2003 - HELD THAT:- The learned Single judge cannot be blamed for not considering the legality or sustainability of the order imposing penalty on its merits. An equitable relief has already been granted by way of directing the Appellate Authority to dispose of the stay petition on an early basis. The recovery was also directed to be deferred for a period of three months, in order to facilitate consideration of the stay petition. Under such circumstances, there exists no illegality, error or impropriety in the impugned judgment, warranting interference in this writ appeal. Appeal dismissed.

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• Indian Laws

• 2019 (8) TMI 1227
  Maintainability of application - whether the application under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable in view of Section 3G(5) of the National Highways Act, 1956 which provides for appointment of an Arbitrator by the Central Government? - HELD THAT: In view of the power being vested exclusively with the Central Government to appoint an Arbitrator under Section 3G(5) of the Act 1956, being a special enactment, the application filed under Section 11(6) of the Act 1996 for appointment of an Arbitrator was not maintainable and provisions of the Act, 1996 could not be invoked for the purpose. As the litigation has consumed a sufficient long time, we consider it appropriate to further observe that the Arbitrator so appointed by the Central Government may adjudicate and decide the dispute within a reasonable time but in no case later than six months after the respondent applicant record its presence in the proceedings. Appeal allowed.

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